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

[King Penda]

5 minutes ago, DurhamBorn said:

Im currently waiting on Attendance Allowance for my dad,il then claim carers allowance,£150 a week roughly between the two,we are going to use it for the kids,they are working etc so gets them most tax back.I should really make up a bullshit CV and go for a job with the council or housing association and just drop on the sick after a day and wait 6 months before they sack me.Government is the enemy of decent people and should be treated as such.

 

Exactly I’ve now got that option once the kids go back to mum I’m quite happy to go back to work but it’s all about options the more the better .I could get that terrace I put up on another thread get 3 lodgers or 2 lodgers or no lodgers if my mum gets to bad move her in the spare downstairs room my sisters don’t have room .I could foster with a spare room and still look after my mum the difference between me and my sisters is my adaptablelity that’s the catch 22 I get a 3 bed x council house you get the garden off rd parking but it’s often the terraces that are the more adaptable houses 

[JMD]

3 hours ago, DurhamBorn said:

Yes very much,but we have to consider the huge risks here in the UK so we want maybe more earning outside of sterling.Like BAT for instance,a huge sterling hedge.

Thanks DB, excellent reminder for owning companies with Stirling hedge/large foreign earnings. I actually bought a load of bat/imp last year but had not thought too much since about that particular hedge. Now need to think about other sectors, but just to check I'm on the right tract - are Rolls Royce and Diageo good examples of the type of companies which earn significantly from foreign earnings? Plus I expect companies operating across Asia/EMs are even better prospects, given that those regions will probably grow much faster than Western markets?

[wherebee]

1 hour ago, King Penda said:

A bail in would worry me if I had the money some of you guys have .cash under the mattress or in a bank is indeed loosing 10% or so at the moment due to inflation.but if you only  have 10k you’ve only got to squirrel 1k extra a year and your treading water .so in short if you have 100k in cash you’ve got to find 10k extra or save it and if you’ve got 10k it’s 1k a year extra to save to avoid the same fate.if you have elderly parents who struggle around the house but are to proud to claim anything now is the time to look into if they are entitled to anything they might thank you in time some are not means tested 

As a family we've spent about 200k in the past 18 months on our main house to make it multigenerational and as energy efficient as possible.  That includes a new roof and guttering - rain and water is a major source of problems here in Oz.

A key reason for that is cash in the bank was going to be losing value at 10%+ a year AND the risk of bail in.

And as we laid in materials almost a year ahead for most of the work (used a mates big wool shed to store it), we saved a shedload (hah!) already as everything has gone up in price.  My sparkie mate told me that his basic copper wiring has gone up 50% in a year.

[WICAO]

Reserve Bank of Australia just raised 0.5%.  Official rate now 1.35% with inflation at 5.1%.

So far behind the curve it's not funny...

[Plan-b]

I must say it's good to have the 2 Aussies wherebee and WICAO on the nightshift keeping an eye on things.

Good on Ya fellas 

[jamtomorrow]

5 hours ago, JMD said:

Thanks DB, excellent reminder for owning companies with Stirling hedge/large foreign earnings. I actually bought a load of bat/imp last year but had not thought too much since about that particular hedge. Now need to think about other sectors, but just to check I'm on the right tract - are Rolls Royce and Diageo good examples of the type of companies which earn significantly from foreign earnings? Plus I expect companies operating across Asia/EMs are even better prospects, given that those regions will probably grow much faster than Western markets?

Foreign earnings breakdowns are not so easy to round up, and especially not on a well-normalised like-for-like basis.

And as a tail risk nerd, my preference is to hold equity in my own jurisdiction, but that can leave you way over-exposed domestically - so foreign earnings info is vital.

I've found the Russell 350 Global Exposure index somewhat helpful. They only list out the top 10 in their updates, but that alone is 60% of the index:

https://research.ftserussell.com/Analytics/Factsheets/Home/DownloadSingleIssue?issueName=NMXDE&IsManual=false

Certainly some thread darlings in amongst:

It's the main reason I own chunk of Anglo, that one has flirted with 3 or 4 bagging since 2020 lows. 

[RJT1979]

2 hours ago, Plan-b said:

I must say it's good to have the 2 Aussies wherebee and WICAO on the nightshift keeping an eye on things.

Good on Ya fellas 

Have a vb on us

[AWW]

Some anecdata for the thread. After going permie when contractors got shafted during Lockdown, then being given a derisory pay rise, I'm back in the contracting game. Day rates are 15% higher than they were two years ago, in a sector that is historically very sensitive to economic conditions.

[Democorruptcy]

The governbankment has launched a consultation on changes to sovereign immunity from direct taxation. Currently:

Quote

All UK sourced income and gains, including income from commercial activities, of sovereign immune persons is currently exempt from direct tax.This means that sovereign persons who have been granted sovereign immunity will not pay any Income Tax, Capital Gains Tax or Corporation Tax to which they would otherwise be liable.

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1087699/SI_reform_consultation.pdf

 

Of course the UK is the most generous place and currently even includes property:

 

 

 

[DurhamBorn]

7 hours ago, JMD said:

Thanks DB, excellent reminder for owning companies with Stirling hedge/large foreign earnings. I actually bought a load of bat/imp last year but had not thought too much since about that particular hedge. Now need to think about other sectors, but just to check I'm on the right tract - are Rolls Royce and Diageo good examples of the type of companies which earn significantly from foreign earnings? Plus I expect companies operating across Asia/EMs are even better prospects, given that those regions will probably grow much faster than Western markets?

Iv been going through every stock i own working out how much they earn outside sterling.They need to be inflation areas o course.Im not going to sell BT and buy more TEF,but at the same time if i wanted to add more telcos (i dont im full) then id more likely add one with more EM exposure.

In many ways the UK is well placed,but our institutions have been taken over by lefties who will keep pushing for inflation because they are immune on the government teat.The current direction is systemic collapse territory.Of course unlikely we get to the destination,but how far along we get before change is key and it wont be pretty.

Mostly the cost of this isnt falling on taxpayers,its falling on bond holders,but its likely they will then decide not to continue buying or holding gilts or indeed treasuries.I think one of the huge outcomes will be massive amounts of Asian savings go into their stock markets instead of western debt markets.Im pretty much directing all divi income etc to the area.

 

[Chewing Grass]

2 minutes ago, AWW said:

Some anecdata for the thread. After going permie when contractors got shafted during Lockdown, then being given a derisory pay rise, I'm back in the contracting game. Day rates are 15% higher than they were two years ago, in a sector that is historically very sensitive to economic conditions.

Ltd or PAYE?

[stoobs]

Could Sri Lanka be on the leading edge of a wave of ex-colonial nations cutting residual links with their former occupiers and joining future empires on a willing basis?

I'd expect much of the Indian sub-continent would be comfortable with closer ties to Russia, and large chunks of Africa have been strongly linked to China for a decade or two.

South-East Asia may be suspicious of China alone, but might feel more comfortable in a wider BRICS arrangement with Russia balancing out any over-bearing influence from China.

South America is in a slightly trickier position due to proximity to the US, but Brazil has already set the precedent.

Europe has continued to benefit economically, strategically and politically from its old empires for the best part of a century. If that fell away it could be another stone piled on top to push it further into the mud.

[HousePriceMania]

9 minutes ago, stoobs said:

Could Sri Lanka be on the leading edge of a wave of ex-colonial nations cutting residual links with their former occupiers and joining future empires on a willing basis?

I'd expect much of the Indian sub-continent would be comfortable with closer ties to Russia, and large chunks of Africa have been strongly linked to China for a decade or two.

South-East Asia may be suspicious of China alone, but might feel more comfortable in a wider BRICS arrangement with Russia balancing out any over-bearing influence from China.

South America is in a slightly trickier position due to proximity to the US, but Brazil has already set the precedent.

Europe has continued to benefit economically, strategically and politically from its old empires for the best part of a century. If that fell away it could be another stone piled on top to push it further into the mud.

 

 

 

 

                                                                                  WAR IS COMING

 

 

 

 

[Chewing Grass]

4 minutes ago, HousePriceMania said:

 

 

 

 

                                                                                  WAR IS COMING

 

 

 

 

The game of Risk

[RJT1979]

10 minutes ago, Chewing Grass said:

The game of Risk

That's from a game?

[wherebee]

3 hours ago, Plan-b said:

I must say it's good to have the 2 Aussies wherebee and WICAO on the nightshift keeping an eye on things.

Good on Ya fellas 

I don't need to keep an eye on it.  We have a Labor/Green gvt.  They will act too late, too slow, and too little, whilst throwing money around like paper.

Give you an example.  The Victorian government (Labor) just gave me 250 bucks.  What for?  I went to an energy comparison website they run and uploaded a bill.
 

250 bucks.  

For 'being green' when I have done nothing to reduce energy use.

[Chewing Grass]

9 minutes ago, RJT1979 said:

That's from a game?

Yep, strange how the world is turning out, put your soldiers on the map, take a risk, roll the dice.

[Boon]

Something seems to have spooked the market quickly right now... miners seem to have taken the brunt of it.

[belfastchild]

2 minutes ago, Boon said:

Something seems to have spooked the market quickly right now... miners seem to have taken the brunt of it.

I bought the junior gold miners etf yesterday.

As you were.

[stoobs]

18 minutes ago, Chewing Grass said:

Yep, strange how the world is turning out, put your soldiers on the map, take a risk, roll the dice.

One of the great boardgames.

The Walking Dead version is excellent too. Very different slant when there is an additional army (the zombies) that inexorably increase in number as the game progresses and eventually wipe everyone out.

[ThoughtCriminal]

Interesting 30 second video showing housing cost versus wage growth since 2000.

 

Nothing we don't know, but watching that divergence in real-time is pretty jaw dropping.

[Chewing Grass]

3 minutes ago, ThoughtCriminal said:

Interesting 30 second video showing housing cost versus wage growth since 2000.

 

Nothing we don't know, but watching that divergence in real-time is pretty jaw dropping.

Add on a line for falling interest rates (cheap credit) and that chart would be complete.

UK is screwed.

[BurntBread]

5 minutes ago, ThoughtCriminal said:

Interesting 30 second video showing housing cost versus wage growth since 2000.

 

Nothing we don't know, but watching that divergence in real-time is pretty jaw dropping.

Although it's quite mesmerising, these sorts of videos seem to consist of putting in a lot of effort to avoid just using a log scale on the vertical axis.

[Noallegiance]

1 hour ago, DurhamBorn said:

The current direction is systemic collapse territory. Of course unlikely we get to the destination, but how far along we get before change is key and it wont be pretty.

Another way of saying that reality will be ignored until it can no longer be ignored.

That is the point at which already being on the other side of the boat will pay.

[Boon]

TBH it makes a lot of sense to me.

The pre-GFC era had a lot of irresponsible lending like self-cert and 110% mortgages, flushed out by the GFC.

The next leg up was caused by HTB and shared ownership as well as falling interest rates. The bulk of this pump was over by 2016/2017.

The next leg up was caused by rate cuts, the pandemic inducing FOMO and free money to people for not working.

Without another 'something' to change the game the chart only can go down.