Credit deflation and the reflation cycle to come (part 3)

[M S E Refugee]

You can still fill your Car up for a couple of Quid in real money, 8 Silver Crowns (£2) is worth around £110 in scrap but probably around £300 in numismatic value depending on condition.

And 240 old pennies (£1) weighing 2256 grams are worth £14.15 in scrap.

I do find these calculations fascinating.

[Napoleon Dynamite]

iweb opening fee halved from £100 to £50 for July, thought it may be useful to somebody 

https://www.iweb-sharedealing.co.uk/our-accounts/account-opening-offer.html

 

 

[JMD]

1 hour ago, Democorruptcy said:

I wasn't passing any comment about Aberdeen, I was only talking about how fluid displayed dividends are. Though you mentioned a firm (any firm) might have dropped (or stopped) their dividend. This was something I complained to HL about in 2020. They still displayed dividends, at very high rates because share prices had dropped which obviously inflated displayed dividends, even if a firm had suspended their dividend. HL's argument was that it wasn't their data but came from a 3rd party. My argument was that it should be filtered and say "n/a" if no dividend was currently being paid. They did change and now display "n/a", here's an old favourite doing that! Some firms e.g. BP dropped from 12% to 3.9% overnight, on the day their much larger four 2019 dividends dropped out of the calculation. It wasn't even staggered to reflect an average of say 2 larger 2019 dividends and 2 smaller 2020.

Re a firm (any firm I'm not talking ABRDN!) cutting it's dividend, so it can't drop lower and future income is guaranteed, seems to be suggesting a firm can't go bust. I'm not sure why "inflation etc." means any firm can't cut their dividend again? What if a firm's profit margins are crushed by inflation, why can't they cut again before their sad demise? Isn't this what the thread is all about, some sectors will do better than others re inflation etc?

Re dividends and inflation you have touched on another point. If a firm paid 50p last year and increases it by 1% to 50.5p this year it's a real terms cut. If inflation is 10% that 50.5p only has the buying power of just over 45p. Dividend investing also needs a bit of capital gain?

 

 

I accept I should not have written (any) 'divi bug', I am of course a (cycle focused + total return) 'deflation-reflation divi bug'. And wasn't really attempting to make conclusions about Aberdeen solvency or general inflation, was merely trying to fathom out some general yardsticks for comment, if they don't exist that's fine.                                                                                                                                                                               Yes, I agree the trading platforms are often shocking in their presentation of some crucial info such as dividends (and have read your previous informative posts on this), especially as they are also not transparent about how they calculate it, etc. However I hope this is perhaps indicative of how 'under the radar' dividend paying stocks are and therefore undervalued by many investors, leaving all the more for us!                                                                                                                                                                                         I subscribe to Simply WallStreet because of their graphs which enable me to very quickly gleam many types of stock info., though once I've stopped researching so many stocks (soon I hope) I may cancel because platform is a bit limited beyond having those 'pretty graphs'!                                                                        Btw you triggered me with your 'old favorite' link, very bad form old chap!!

[janch]

Seems the FED is still money printing by the back door.  It's from interest payments for reserves parked there and is rising:

https://www.zerohedge.com/markets/fed-quietly-handing-out-250-million-handful-happy-recipients-every-single-day

.........nearly a quarter billion, or to be precise $242 million and rising, in interest payments by the Fed - this is money which is printed into existence - every single day.

 

...........The Fed will be paying half a billion in interest every single day to a handful of mostly unknown counterparties every day, money which for said counterparties is also known as (riskless) profit and which is only the result of the Fed's previous money printing.

[feed]

I’ve been playing around with the RPI and HPI figures, basically testing my assertion that house prices went nowhere post GFC for 15 years, adjusted for inflation.  And
 

 

 

[Majorpain]

1 hour ago, ThoughtCriminal said:

German guy on twitter just said his electric bill has gone from 250 to 700 euro a month. 😳

 

I thought demand destruction was supposed to take care of this by now?

Destruction of something, but not demand at the minute.  Its July and people are worrying about gas prices ffs, what's October/November going to look like on the continent??!!

[RJT1979]

3 hours ago, ThoughtCriminal said:

I don't share your optimism, I think we'll be as fucked as anyone other than Germany.

No chance. All the lng comes into the uk. Only so much capacity to forward to Europe. We will have too much. Prices I'm not so sure of

[JimmyTheBruce]

44 minutes ago, feed said:

I’ve been playing around with the RPI and HPI figures, basically testing my assertion that house prices went nowhere post GFC for 15 years, adjusted for inflation.  And
 

 

 

Good to see that, whilst wages flatlined, everything was getting more expensive, not just houses. 

[feed]

31 minutes ago, JimmyTheBruce said:

Good to see that, whilst wages flatlined, everything was getting more expensive, not just houses. 

Added pay. 

Yhese are quick and dirty, averages and real broad figures and it's an arbitrary start point. As i was just trying to find differences between 2010 - 2019 and the covid printing.   But the trend is very real. 

No real revelations. 
Pay lags RPI, RPI lags HPI, and HPI tracks money supply.
 

 

[sancho panza]

5 hours ago, WICAO said:

I am still trading some of my valuable time for $'s which means all my lovely end of Q2 dividends aren't needed to eat.  So instead they've been put to use in three ways - some held back in cash for the home build, some deployed into gold and some deployed into Japan equites.

With half of the year gone it looks like my half year return measured in £'s is going to end up down around -7.9%.

I'm never one to let a good crisis go to waste so I'm really pleased that in the first half of the year I've been able to use the downturn to move a significant chunk of wealth from the UK and now have it nicely tax sheltered in the Australian Superannuation system with zero capital gains tax to pay for my efforts.  Don't feed the beast...

Amazingly, this current market sees me still sleeping very soundly.  I don't know whether it's that I've very likely finally found home or whether it's that I've finally realised I might just have won the financial game...

Wicao @Sugarlips posted an excellent chart the otehr day of IR rises on mortgage fixes.

to either of you

Are you starting to see an uptick in savings rates down there? are aussies starting to notice the rate rises?has the mood music changed yet or are msot people still to catch on?

 

2 hours ago, Calcutta said:

I don't spend a massive amount of time on social media or the msm, but today I've already noticed 4 different stories about banks having issues of some kind. 

Are they lubing us for something? 

I do wonder about that takeover of kensington(dog poo sandwich of a mortgage book) getting taken over by Barclays.Made no sense.

[sancho panza]

jsut psoted in teh japan thread but relevant here

https://www.japantimes.co.jp/news/2022/06/30/business/economy-business/factory-output-drop-may/

Japan’s factory output posted the biggest monthly drop in two years in May as China’s COVID-19 lockdowns and semiconductor and other parts shortages hit manufacturers, adding more pressure on an economy struggling to mount a strong recovery.

Factory output slumped a seasonally adjusted 7.2% in May from the previous month, official data showed on Thursday, as production of items such as cars as well as electrical and general-purpose machinery dropped sharply.

The decline, which marked the sharpest monthly reduction since a 10.5% month-on-month drop in May 2020, was much bigger than a 0.3% fall expected by economists in a Reuters poll.

[Plan-b]

5 minutes ago, sancho panza said:

Are you starting to see an uptick in savings rates down there? are aussies starting to notice the rate rises?has the mood music changed yet or are msot people still to catch on?

The Aussie Dollar is down 1.85% right now, not looking good.

The pounds not far behind, nice effect on UK Gold price.

 

[DoINeedOne]

BT workers vote to strike amid culture of fear

https://telecoms.com/516198/bt-workers-vote-to-strike-amid-culture-of-fear/

[WICAO]

4 minutes ago, sancho panza said:

Wicao @Sugarlips posted an excellent chart the otehr day of IR rises on mortgage fixes.

to either of you

Are you starting to see an uptick in savings rates down there? are aussies starting to notice the rate rises?has the mood music changed yet or are msot people still to catch on?

Yes, savings rates definitely increasing but from a very low base.  From what I can see there up around 0.5% against official rate increases of 0.75% so far.  I believe the Reserve Bank meets next week so let's see what happens next.

Housing market seems to also be losing some heat but it's off the back of ludicrous increases (think 30%+ in a single year and prices were already insane given the quality of builds here) after official rates were dropped to 0.1% on top of the government throwing money at housing in the last couple of years.  Sydney now down -2.8% quarter on quarter.  Melbourne now down -1.8% quarter on quarter.  Brisbane seems like it might be the next one to fall over.  Still up 2.7% quarter on quarter but there are now definitely down days so let's see...

[Pip321]

24 minutes ago, feed said:

Added pay. 

Yhese are quick and dirty, averages and real broad figures and it's an arbitrary start point. As i was just trying to find differences between 2010 - 2019 and the covid printing.   But the trend is very real. 

No real revelations. 
Pay lags RPI, RPI lags HPI, and HPI tracks money supply.
 

 

When my son bought his house early 2021 (it was good value) we factored in RPI inflation when doing comparisons on prices paid. We did this to ensure we were in the right ball park and weren’t under playing or overplaying our comparisons. Basically I was used to buying at massive discount and was coming to terms that my son wanted to buy and I needed to appreciate it was a ‘home’ first and an ‘investment’ second.   

Totally unrelated to HPI but I heard today on the radio that gold is at an almost all time high and the company (we buy gold and shit .com) will buy your gold.

Mars bars are at an all time high because they were 5p in the 1970’s and now 75p….but that’s because of inflation.

Gold feels cheap once inflation is factors in….I guess that’s why ‘we buy gold and shit .com’ want our gold 😉

[WICAO]

12 minutes ago, Plan-b said:

The Aussie Dollar is down 1.85% right now, not looking good.

The pounds not far behind, nice effect on UK Gold price.

 

Australia seems to be a quarry with a real estate agency as a gate house.  I'm no expert but I can imagine AUD strength or weakness is very linked to iron ore and coal prices.

I've heard we are self sufficient in food but maybe we just eat less when an iceberg lettuce costs £3.70.

[Plan-b]

3 minutes ago, WICAO said:

Australia seems to be a quarry with a real estate agency as a gate house.  I'm no expert but I can imagine AUD strength or weakness is very linked to iron ore and coal prices.

I've heard we are self sufficient in food but maybe we just eat less when an iceberg lettuce costs £3.70.

Sounds like your doing better than the UK, we import around 40% of our food and then theres this....

[WICAO]

4 minutes ago, Plan-b said:

Sounds like your doing better than the UK, we import around 40% of our food and then theres this....

This might be of interest https://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/FlagPost/2022/May/Australia_current_account_balance

Despite the abundance of natural resources it's of course being squandered.  Current account balance was negative for 44 years before slipping positive for the last few years.  But rest assured they're dealing with that with us predicted to go negative again for this financial year onwards.  Within a couple of years we should be at -6%...

[janch]

Shaun Richards on good form today and knows bond markets from a previous life as a bond trader.  He's comparing US, Japan and EU here:

https://notayesmanseconomics.wordpress.com/

Foreigners are selling their JGBs and the Bank of Japan is buying:

From tweets:

Foreigners are dramatically accelerating their selling of Japanese Government Bonds (almost $40bn sold in the latest week!)

According to the QUICK database, the outstanding value of long-term JGBs as of June 20 totaled 1,021.1 trillion yen, of which the BOJ held 514.9 trillion yen on a face-value basis. That translates to 50.4% of the total amount outstanding, up from 50.0% in February to March 2021.

 

Plus the ECB is buying up bonds Italy, Spain, Portugal and Greece:

SINTRA, Portugal, June 30 (Reuters) – The European Central Bank will buy bonds from Italy, Spain, Portugal and Greece with some of the proceeds it receives from maturing German, French and Dutch debt in a bid to cap spreads between their borrowing costs, sources told Reuters

More at the link

[Joncrete Cungle]

5 minutes ago, Cattle Prod said:

Was it three years ago we kicked off our wood stove and firewood discussions here? Seriously, if a group of random ordinary people can see what's coming, how stupid are our policymakers (and the people who elect them) What is wrong with people? I genuinely can't figure it out, we're not 'stable geniuses' or anything special really. Apart from DBs roadmap that is, that is something that most people have no clue about in fairness as he says himself.

It's not really happened yet in the UK, the free firewood pages I follow on social media. Have all seen a marked increase in new members joining and asking the same basic newbie questions ad infinitum. Since March / April this year, also purchased logs / split firewood has gone up in price a lot over the past 12 months.

[baffledbyzirp]

Fantastic interview by John Collison, the founder of Stripe, and Stan Druckenmiller, the legendary investor with Soros.

The bearish bias that Druckenmiller describes matches many of the commentators on this site and chimes with my own. The real worry is that history teaches us when oil prices go up, interest rates go up and the dollar strengthens the storm clouds are gathering. This brilliant discussion between two heavyweight realists is well worth a watch. Ask not for whom the bell tolls.

[feed]

11 minutes ago, Cattle Prod said:

 What is wrong with people? I genuinely can't figure it out, we're not 'stable geniuses' or anything special really. Apart from DBs roadmap that is, that is something that most people have no clue about in fairness as he says himself.

Problem is, we are.
Well maybe not genius, but we are on the right hand side of that bell curve.  

Hands up anyone that wants to run this shitshow.  
Starting from here.  

[jamanda]

21 minutes ago, Cattle Prod said:

Was it three years ago we kicked off our wood stove and firewood discussions here? Seriously, if a group of random ordinary people can see what's coming, how stupid are our policymakers (and the people who elect them) What is wrong with people? I genuinely can't figure it out, we're not 'stable geniuses' or anything special really. Apart from DBs roadmap that is, that is something that most people have no clue about in fairness as he says himself.

If you really think about it, how many people do you know who have simple basic common sense?

[M S E Refugee]

1 minute ago, jamanda said:

If you really think about it, how many people do you know who have simple basic common sense?

People will only panic when the Man on the Telly instructs them to.

I lost my faith in humanity during Covid, I've very little sympathy for most people, they deserve what's coming to them.

[Ma2]

18 minutes ago, Cattle Prod said:

Was it three years ago we kicked off our wood stove and firewood discussions here? Seriously, if a group of random ordinary people can see what's coming, how stupid are our policymakers (and the people who elect them) What is wrong with people? I genuinely can't figure it out, we're not 'stable geniuses' or anything special really. Apart from DBs roadmap that is, that is something that most people have no clue about in fairness as he says himself.

Most people will now have no choice but to rely on their government for energy basics to heat, eat and travel. Is this what the game is? People cannot feel free when this is the case. They may be grateful (Stockhom Syndrome), but not free. They will be able to be totally controlled, look how people reacted to furlough.

We have our stove being installed next month and 3 of those dumper bags of wood on order. Reason, yes to heat, but to be able to heat independent of the governement, so I feel free(er).

Same with stocks of food etc.

My worry is, as there are many more who will have nothing vs us who may have enough, they will just take it by force or otherwise.

Have to be stealthy (tough in a terrace!) or look after those close around you so they protect you, but then who can you really trust when it's 9 meals from anarchy?

My feeling is that in times past people would have had enough nous to look after themselves and would never have become or indeed wanted to become so reliant on the government.

But maybe in past cycles this was exactly the case, nothing ever changes for us humans it seems