Credit deflation and the reflation cycle to come (part 6)

[sleepwello'nights]

6 hours ago, Foor said:

How old was he bud. I'm finding mid fifties particularly hard myself. I agree life is tough my sincere condolences.

 

That was a bad time for me. It was a time when I looked back and focussed on the decisions I'd made that didn't work out as I'd wanted. Mid life crisis maybe or perhaps hormonal imbalances, who knows.

What worked for me was reading "be kind to yourself". I also started physical exercise, much like Gerald Ratner did after his infamous prawn sandwich joke Once I started forgiving myself I realised it was a matter of perception. I had a tendency to look at those who I thought had made a better life for themselves than I had made of mine instead of counting my blessings. 

It was a phase that thankfully I passed through. Like Pilgrims Progress I had traversed the slough of despond.

 

 

[sleepwello'nights]

3 hours ago, Castlevania said:

Long duration has been crushed. Take the Austria 100 year bond issued in 2020 at a coupon rate of 0.85%. It’s currently trading at 40 cents to the Euro. That’s a loss of 60% on a MTM basis.

https://www.tradingview.com/symbols/TVC-AT100Y/
 

That's what I don't understand. I bought some index linked gilts in a Vanguard fund. The price shot up from 2016 onwards and fortunately I sold most in 2021. The ones I held onto dropped 30% in 2022. As far as I know the yield is index linked and so is the redemption value. 

The mark to market price has obviously fallen but if they're held to maturity the redemption yield will increase in line with inflation. A puzzle for me as to why index linked gilts have fallen the same as non-index linked.

Here's a link to the fund details: https://www.vanguardinvestor.co.uk/investments/vanguard-uk-inflation-linked-gilt-index-fund-gbp-acc/portfolio-data

Edited July 4, 2023 by sleepwello'nights
added link to fund details

[Axeman123]

I can't embed it, but according to Charlie Lamdin:

Quote

From 5pm today: Halifax 60% LTV 2yr fix - 6.52%

(he accompanied this with a GIF of an atomic bomb going off!)

If this is accurate we could see a rapid shift in sentiment, and it extending beyond just housing.

https://twitter.com/moving_charlie/status/1676260642594910216

[Loki]

Just now, Axeman123 said:

I can't embed it, but according to Charlie Lamdin:

(he accompanied this with a GIF of an atomic bomb going off!)

If this is accurate we could see a rapid shift in sentiment, and it extending beyond just housing.

https://twitter.com/moving_charlie/status/1676260642594910216

 

[JoeDavola]

2 hours ago, belfastchild said:

Carrickfergus marina.

I'm going to my mate's in Larne on Saturday evening so I'll stop off in Carrick on the way and you can take me out on the boat.

 

Edited July 4, 2023 by JoeDavola

[Wight Flight]

24 minutes ago, JoeDavola said:

I'm going to my mate's in Larne on Saturday evening so I'll stop off in Carrick on the way and you can take me out on the boat.

 

Are you designed for port or starboard tack?

[Festival]

Anyone got a view on either Close Brothers or Investec in terms of their financial stability going forward? Close Brothers is rated Aa3 from Moodys and Investec is Moodys A1.

Both are near the top of the best buy fixed bonds tables (paying nearly 6% for 1 and 2 year bonds). Is this another Icelandic Banks from 2008 or am I seeing spooks. Any views appreciated.

 

 

 

 

[Transistor Man]

21 minutes ago, Festival said:

Anyone got a view on either Close Brothers or Investec in terms of their financial stability going forward? Close Brothers is rated Aa3 from Moodys and Investec is Moodys A1.

Both are near the top of the best buy fixed bonds tables (paying nearly 6% for 1 and 2 year bonds). Is this another Icelandic Banks from 2008 or am I seeing spooks. Any views appreciated.

The Investec Fixed Rate Saver? 

It’s FSCS protected to £85k. Over that, you could put the rest somewhere else. 

[Pip321]

7 hours ago, DurhamBorn said:

Im sitting watching my roadmap unfold and thinking how much companies could of saved with macro advice.Yep gilts are the tell,government and BOE are locked in a padded cell.

 

2 hours ago, Festival said:

Anyone got a view on either Close Brothers or Investec in terms of their financial stability going forward? Close Brothers is rated Aa3 from Moodys and Investec is Moodys A1.

Both are near the top of the best buy fixed bonds tables (paying nearly 6% for 1 and 2 year bonds). Is this another Icelandic Banks from 2008 or am I seeing spooks. Any views appreciated.

Whilst we don’t follow the retail investment crowd on this thread it’s interesting to note I have seen a shift in ‘retail investment advice’ away from generic equity funds and moving towards cash, PM hedging and short term gilts.

I spoke with an IFA today and took the time to listen to their position rather than tell them what I think. Their advice was why mess with the Pru Fund aiming for 6/7% pa but last 12 months achieving 0.3%, why take the risk?  (ie vanilla generic funds are moving out of favour). 

I know 2 other people with managed portfolio’s and that has also been the shift in the advice and sentiment, plus a family member who went on an ‘event’ in Leeds with lots of ‘Bloomberg type speakers’ that were again talking cash/short term gilts rather than generic funds. 

That doesn’t mean they suggest their customers replace all the equities with cash/gilts but rather if you are a vanilla investor who has a vanilla fund for the first 30% of your investments as a reliable safe foundation of your investments then replace it (at the moment) with cash/short gilts. 

None of the IFAs are mentioning the EMs though. That’s a macro step too far😉

As an aside the IFA also mentioned some of my money (ie 10/15%) should be in what he  called ‘absolute return’ investments Ie PMs and commodities.

It’s this thread and those other investments (above and beyond cash) that may help try take us above and beyond inflation because cash will only lose money over the cycle.

In summary I guess I am saying increasing base rate to 5% has made cash to become ‘an increasing part’ of the portfolio in the ‘retail balanced portfolio advice world’ to replace vanilla foundation funds.

Edited July 4, 2023 by Pip321

[Funn3r]

27 minutes ago, Pip321 said:

a family member who went on an ‘event’ in Leeds with lots of ‘Bloomberg type speakers’ that were again talking cask

This cask thing again I thought we moved position into lout

[belfastchild]

3 hours ago, JoeDavola said:

I'm going to my mate's in Larne on Saturday evening so I'll stop off in Carrick on the way and you can take me out on the boat.

 

Saturday? Saturdays are strictly DD access only.

[Bobthebuilder]

1 hour ago, Pip321 said:

None of the IFAs are mentioning the EMs though. That’s a macro step too far😉

That has been a general reliable basis of this thread for over 5 years, no IFA in the land would have told you to buy oil and potash companies in 2020. I dipped into EMs a while ago because of the thread, TEF+20%, Blackpool rock +20%.

[King Penda]

5 hours ago, DurhamBorn said:

Ever the contrarian id be on suicide watch if i HAD to get married.I think finance is the big one,and it simply shows up as divorce when really its not the divorce so much,its the being skint after it.At least back in the 90s a 50 year old could go and buy a cheap terrace to live in,now someone that age would really struggle to afford a mortgage and bills on a normal wage.Growing up in the poorest town in England at its poorest time really taught me a lot.Loads of men late 40s onwards who lost their jobs,never worked again and seemed to just slowly walk the dog,the same way,the same time,even the same coat.I remember one bloke like that i was walking home one night and his wife was getting banged over a gravestone by some younger bloke,a decent women,but i guess her husband just became a walking corpse and she needed to feel something to numb the pain.

Having no money at that age must be terrible,and most blokes let themselves go as well when they are married etc,so at the shock of divorce they are not in any shape to be interesting to other women.

Indeed I’ve made a fuck up to some extent with my life but it’s been great fun .if I died tonight I’m only worth 130k .but it’s 130 more than many people I know and some have posh cars go abroad 3/4 times a year but rent and lived on credit .

[sancho panza]

8 hours ago, Castlevania said:

Long duration has been crushed. Take the Austria 100 year bond issued in 2020 at a coupon rate of 0.85%. It’s currently trading at 40 cents to the Euro. That’s a loss of 60% on a MTM basis.

https://www.tradingview.com/symbols/TVC-AT100Y/
 

Only 97 years to run before you get your 1000 Euros back.........

[AWW]

All this talk of yachts reminds me of a time when I was a student and asked a girl from the sailing society if I could come on her boat. Happily, she said yes.

[sancho panza]

6 hours ago, DurhamBorn said:

Ever the contrarian id be on suicide watch if i HAD to get married.I think finance is the big one,and it simply shows up as divorce when really its not the divorce so much,its the being skint after it.At least back in the 90s a 50 year old could go and buy a cheap terrace to live in,now someone that age would really struggle to afford a mortgage and bills on a normal wage.Growing up in the poorest town in England at its poorest time really taught me a lot.Loads of men late 40s onwards who lost their jobs,never worked again and seemed to just slowly walk the dog,the same way,the same time,even the same coat.I remember one bloke like that i was walking home one night and his wife was getting banged over a gravestone by some younger bloke,a decent women,but i guess her husband just became a walking corpse and she needed to feel something to numb the pain.

Having no money at that age must be terrible,and most blokes let themselves go as well when they are married etc,so at the shock of divorce they are not in any shape to be interesting to other women.

On reflection,I think you're right there DB.COrrelation doesnt mean causation.

Thats the reality I guess,you get divorced,if you've kids under 16,you lsoe the hosue,mainatenance paymetns etc,then it's either hosue share/back to family home.Renting a flat for £1000 all in isn't really an option.

Remember splitting with my ex and things were tight for a few years in my 30's.Luckily I was able to regroup and met Mrs P but it was pretty derpessing looking at your options post split.

I cna imagien if that happens in your 40's and you've less space to get the vehicle turned round then it's gonna hit hard.

5 hours ago, Axeman123 said:

 

Apparently that is a thing though, landlords offering houseshares only want young people and often won't let to people over a certain age. Imagine living in a houseshare in your forties because it is all you have the budget for with a bunch of twenty somethings, and having to hide your age etc. Imagine knowing in a few years no-one will rent you such a room. At least the twenty-somethings have hope of career progress and better housing in the future.

Thoguht provoking thread tonight Axey.

Ivemade some specualtive bets in my time,hence,I'm acutely aware of how the line between success and failure is very fine.Divorce,redundancy,specualtve debt etc can all humble the finest mind.

Lifes turned out OK for now for me,but it could have been very different.

[leonardratso]

Fundsmith update since i cleared it out about 13/14months ago but after that forgot to remove the £100/month DD, but then i though shag it its only a 100 quid a month ill let it ride, so far paid in £1700, think i might have left a few hundred to ride to begin with, and its worth 1803 today so about 6.10% in profit. So wasnt a bad idea to just leave it to ride.

Uncle terrys keeping up with the bank rates, but realistically falling short of real inflation, still ill carry on and see what old tel can do with it.

 

[Funn3r]

21 minutes ago, leonardratso said:

Fundsmith update since i cleared it out about 13/14months ago but after that forgot to remove the £100/month DD, but then i though shag it its only a 100 quid a month ill let it ride, so far paid in £1700, think i might have left a few hundred to ride to begin with, and its worth 1803 today so about 6.10% in profit. So wasnt a bad idea to just leave it to ride.

Uncle terrys keeping up with the bank rates, but realistically falling short of real inflation, still ill carry on and see what old tel can do with it.

 

Buggering fuck this is hard

Which of this lot have you got? What does it mean?

Fundsmith Equity (Class I) Accumulation Fund Price & Information

Fundsmith Equity (Class I) Income Fund Price & Information

Fundsmith Sustainable Equity (Class I) Accumulation Fund Price & Information

Fundsmith Sustainable Equity (Class I) Income Fund Price & Information

Fundsmith Equity (Class R) Accumulation Fund Price & Information

Fundsmith Equity (Class R) Income Fund Price & Information

[King Penda]

33 minutes ago, sancho panza said:

On reflection,I think you're right there DB.COrrelation doesnt mean causation.

Thats the reality I guess,you get divorced,if you've kids under 16,you lsoe the hosue,mainatenance paymetns etc,then it's either hosue share/back to family home.Renting a flat for £1000 all in isn't really an option.

Remember splitting with my ex and things were tight for a few years in my 30's.Luckily I was able to regroup and met Mrs P but it was pretty derpessing looking at your options post split.

I cna imagien if that happens in your 40's and you've less space to get the vehicle turned round then it's gonna hit hard.

Thoguht provoking thread tonight Axey.

Ivemade some specualtive bets in my time,hence,I'm acutely aware of how the line between success and failure is very fine.Divorce,redundancy,specualtve debt etc can all humble the finest mind.

Lifes turned out OK for now for me,but it could have been very different.

Divorce is the biggest danger to most men .it can half your wealth instantly in many cases it can take 60/70% 

[Funn3r]

2 minutes ago, King Penda said:

Divorce is the biggest danger to most men .it can half your wealth instantly in many cases it can take 60/70% 

We sold our house and it was split 60/40 and my solicitor told me could have been much worse.

[wherebee]

10 hours ago, janch said:

I love it.   In my family we have an "awkward gene" which one of my sons inherited from their father.................. (of course)  and my ex, and now my daughter thinks her son has it too.

2 of my three kids have the 'heal really fast and cuts/knocks aren't a problem".  1 has my wifes 'brush my arm with a feather and a bruise will appear'

Makes it REALLY hard to work out who to punish when they fight....

[Democorruptcy]

15 hours ago, DurhamBorn said:

Real yes,and the market prices them different all the time,so if your underwater 25% and need the cash tough,you need to sell.Gilts are always in real terms as they will never default they will just print,but inflation could be 1000% a year,so the gilts would be worthless,companies can put prices up,in a reflation cash and gilts are terrible investments over anything but the short term to hide from bank defaults and stocks market crash etc.

Re holding short term, I read that big hitters with cash outside ISAs and SIPPs were piling into gilts, those not long from expiry and selling below par because the yield was poor. The profit being in the uplift from the below par price to £100 on maturity because it's CGT free on gilts.

[Democorruptcy]

22 hours ago, belfastchild said:

Just chatted with one of my neighbours, they owe 7 grand on the mortgage, got a letter yesterday, their variable rate is now 7.99%

Update on marinawatch. Small boats berths are pretty much full (6m or thereabouts). Fees are charged per metre per month. A lot of empty spaces in the larger yacht category. Might explain why some are being sold at any price recently. Yes 10 grand for a decent 26ft yacht but thats around 4 grand a year to berth.. Cant really trailer those sorts of sizes of boats, so have to be stored somewhere. Saw a few boats with things printed out and stuck to them. Those are the ones with arrears on berthing fees. Never seen that before.

If I could buy a bargain to live on, would you drive it to a sunnier country with cheaper moorings for me? Cheers.

[geordie_lurch]

The digital £ keeps creeping on... https://finbold.com/uk-finance-wants-banks-to-limit-digital-pound-holdings-to-5000/ emphasis mine

On July 4, UK Finance, an organization that represents UK-based banks and financial firms, weighed in on this matter. 

Namely, the group said the individual holdings of the proposed digital pound should be limited to £3,000-£5,000 in a bid to avoid panic and the risk of bank runs.

UK Finance’s suggestions come after initial recommendations from the British government and central bank to impose a temporary cap of £10,000-£20,000 to help banks evade deposit flights. 

The finance membership organization said the limit should be significantly lower, citing risks of the digital pound potentially exacerbating deposit runs in times of financial turmoil. 

In addition, the group argued that the UK authorities are yet to lay out “clearly what objectives and needs the digital pound is expected to meet and why it is best suited to meet those needs. It is not clear from the consultation what place in the market digital central bank money is expected to take.”

The UK Treasury and the central bank are still exploring potential use cases of a CBDC, with the final decision being expected by 2025. 

Yeah I'm sure it's not a done deal and they don't know exactly how they will enslave millions more with their CDBC

Edited July 5, 2023 by geordie_lurch

[King Penda]

29 minutes ago, geordie_lurch said:

The digital £ keeps creeping on... https://finbold.com/uk-finance-wants-banks-to-limit-digital-pound-holdings-to-5000/ emphasis mine

On July 4, UK Finance, an organization that represents UK-based banks and financial firms, weighed in on this matter. 

Namely, the group said the individual holdings of the proposed digital pound should be limited to £3,000-£5,000 in a bid to avoid panic and the risk of bank runs.

UK Finance’s suggestions come after initial recommendations from the British government and central bank to impose a temporary cap of £10,000-£20,000 to help banks evade deposit flights. 

The finance membership organization said the limit should be significantly lower, citing risks of the digital pound potentially exacerbating deposit runs in times of financial turmoil. 

In addition, the group argued that the UK authorities are yet to lay out “clearly what objectives and needs the digital pound is expected to meet and why it is best suited to meet those needs. It is not clear from the consultation what place in the market digital central bank money is expected to take.”

The UK Treasury and the central bank are still exploring potential use cases of a CBDC, with the final decision being expected by 2025. 

Yeah I'm sure it's not a done deal and they don't know exactly how they will enslave millions more with their CDBC

True but if you online bank all pounds are digital