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

[wherebee]

1 hour ago, Noallegiance said:

I think this of myself, too.

Five people in my house. Every week the same - half full cardboard, food caddy, one plastics bag, one black bag. That's it.

I look down our street every morning and it's like people have had another Christmas.

There is a single woman on benefits in a house on our block.  Some medical thing -she's mid 30's but looks well enough to me.  Rent paid for by the state, so the local gossip says.  

Her bin is always fuller than ours.  And we are a family with kids who magic shit out of thin air and break it.

[AlfredTheLittle]

1 minute ago, wherebee said:

There is a single woman on benefits in a house on our block.  Some medical thing -she's mid 30's but looks well enough to me.  Rent paid for by the state, so the local gossip says.  

Her bin is always fuller than ours.  And we are a family with kids who magic shit out of thin air and break it.

Men used to go out to work to provide for their women, who stayed home and looked after the children.

Now men go out to work to pay taxes so that the state can support women, either by giving them pretend jobs so they can feel important, or giving them benefits.

Not much has changed, but I prefer the previous way. Not that I go out to work, I just sit around reading dosbods. Come to think of it, I'm not much of a man either.

[AWW]

16 minutes ago, AlfredTheLittle said:

Men used to go out to work to provide for their women, who stayed home and looked after the children.

Some of us still do.

17 minutes ago, AlfredTheLittle said:

Now men go out to work to pay taxes so that the state can support women, either by giving them pretend jobs so they can feel important, or giving them benefits.

...and this is the problem. I'm supporting my own family and then being shafted to support two or three others.

[Axeman123]

Interestingly enough, Trueflation* has the US at 2.21% today. Will it fall below 2% before the next fed meeting? Right now CME is pricing in 25bps at that meeting at >80%, so essentially certain, but depending on data over the next 21 days maybe that changes.

We could soon see the Fed declaring mission accomplished at 5.25% while the BoE scrambles to restore confidence.

(*Obviously Trueflation is just like an opinion, man)

[Joncrete Cungle]

2 hours ago, Noallegiance said:

They are doing the opposite. Lot of land will be going into wildflower growing.

[belfastchild]

2 hours ago, King Penda said:

I’ve just checked my bin it’s bin day tommorow and it made me chuckle . When I say I spend less than 20 a week on food I’m not actually joking . No waste in my bin next doors is aready full of takeaway wrappers . Im not inflation proof but I’ve more resilience to it than most people.

cant you collect the cans and cash them in somewhere? ;-)

[Bobthebuilder]

2 minutes ago, belfastchild said:

cant you collect the cans and cash them in somewhere? ;-)

Me and @King Penda did the sums on this some while back, iirc it was about 3000 empty beer cans for £100.

[belfastchild]

Just now, Bobthebuilder said:

Me and @King Penda did the sums on this some while back, iirc it was about 3000 empty beer cans for £100.

About a weeks worth from his street? ;-)
Friend works with a local charity and its something like that. They have builders bags at the entrance gate and people crush them up and throw them in there. Every so often they take them in and get the cash.

[Long time lurking]

49 minutes ago, Stuey said:

Yields might just have peaked already. 

https://www.zerohedge.com/markets/futures-tumble-yields-stumble-after-dire-pmis-china-europe

 

I`m sure that will convince the BOE 

Ever heard the saying beggars cant be choosers 

#UK

[Castlevania]

41 minutes ago, Bobthebuilder said:

Me and @King Penda did the sums on this some while back, iirc it was about 3000 empty beer cans for £100.

Steel or aluminium?

[Bobthebuilder]

2 minutes ago, Castlevania said:

Steel or aluminium?

Aluminium.

[Harley]

Let's dissect/elaborate that in a positive discussion way (lots in there):

6 hours ago, DurhamBorn said:

I remember back in the day a guy i knew who grew a good portfolio for then for a factory worker (£270k 25 years ago) and retired at 50.

I mourn the loss of those old days.  But such reflections force a longer perspective and what I then see are systems (financial and all the others) just increasing in intensity to some sort of crest from which they will collapse.  Nothing seems sustainable.  The risks are huge (as in tail risks) and beyond the more pedestrian ones we have been accustomed to.  IMO, that should be the current priority.  OK, maybe just a perspective born out of getting old or,......maybe wisdom!  Tbd!

He used to buy individual company bonds through Hargreaves,all through the post then.He used to show me the offers as i remember him getting a BT one at 7.99% and a Glaxo one at 8.1%.He had a £100 a week index linked pension and the state pension coming later and he was not bothered about his capital slowly losing value as like he said if it drifted down as his years left did so what.

Bond ladder, if you choose the right bond durations to match your cash flow needs.  Arguably a great asset allocation diversifier.  Superior to a bond fund as you can hold to maturity.  Funds have difficulty delivering the underlying performance due to investor purchases and withdrawals.      

I think the difference for us now is that there is much higher risk of an inflation "event" ie something gives and it blasts through 50% or something.Its an outlier,but one that would destroy every single retirement that has a lot of bonds in the mix.Thats my worry on the.In the above equities would of course suffer as a whole,but many would be able to at least capture the inflation.

I would view currency risk the higher risk atm given what has already happened and that a currency "collapse" may be more likely to precede that scenario (indeed cause it).  Also vying for #2 would be default risk.  Governments maybe, but I've banged on about company balance sheets for long enough and we may now have one trigger.  I'm more bullish EM bonds.  Maybe a USD risk (but only a maybe for several reasons) but they already have high interest rates and as you have mused in the past, some are relatively (to say the UK, etc) inflation protected (at the front-of-the-chain producer).

There is a key difference with equities in an inflation period.They might pay a 6% div like a bond, BUT if they capture the inflation of say 12%,they should keep the holder ahead of inflation.

Maybe, but as always, depends what you buy and the price you buy them at.  2020 was exceptional and may prove to be the only or at least rare exception for us.  You have to have high levels of effort and abilities to sufficiently succeed at that.  Asset allocation is likely to be a larger driver for most than stock/sector/etc picking, so back to the (claimed) role of bonds....!   

This thread was really about two things.First about getting the mind ready for what was coming,and it did,nobody on here was shocked at the covid falls,i was jumping for joy and prepared,but it was also really to try to do one thing.

I missed it (mainly because I was consumed with the practical stuff around Covid and because we're at the wealth protection stage).  But anyways that was yesterday and we all need to move on.  There's a danger in falling back on past victories so I do worry about the persistence of this comment. 

Keep everyone saved labour on here,or reading ahead of inflation.£10k or a mill it doesnt matter,so far so good as a whole.

An un-caveated kudos to you and well done to those who jumped.  I trust those looking for more than a one-off have used the opportunity to acquire fishing rods to know how to keep the gains!   We have a mixed audience here.  Some mature, some not.  Some managing real money with real responsibilities/accountabilities, some not.  Some £100's, some £millions.  It's going to be a right hotpotch of relevancy. 

Gilts and bonds on the surface will likely match inflation over 5 years,so are probably good buys,but i wont touch them for the simple reason there is far too much risk of something systemic happening.

There is now a new dimension to portfolio construction/asset allocation and that's "Grid" (for the sake of a better phrase).  IMO you need to be on and off grid financially (and elsewhere) and pay any required premium.  It refers to the extent you are tied/controlled/at the mercy of the whims of the established system.  Nothing is 100% off-grid but there are mitigations.  Outright bond holdings may be one.

 

Edited July 5, 2023 by Harley

[Harley]

6 hours ago, King Penda said:

True but if you online bank all pounds are digital 

AND, you do not own them clear and free.  You have lent them.  You are a creditor.  And Tommy, Farage and co would add other perspectives.  The only absolutes in this world are the ones we tell ourselves.

Edited July 5, 2023 by Harley

[Harley]

5 hours ago, Axeman123 said:

Great news everybody:

Bailey under fresh pressure to raise rates as pay surges - latest updates

https://uk.finance.yahoo.com/news/bank-england-considers-clampdown-foreign-063037943.html

(weird URL for the above headine?)

It looks like 50bps is on the table for the next FOMC, which is maybe what Halifax were pricing into their mortgage rates last night (of course they will get advance sight of figures like this IMO). Doesn't bode well for other lenders not following suit, or rates coming back down soon.

I think panic is coming for a lot of people.

Fits/confirms the narrative we are to blame for inflation and not MV=PT.  You have to admire these people's ability.  Shame they use it to such pitiful ends.  We all die too soon but only some can sit in eternity at Odin's side.

Edited July 5, 2023 by Harley

[Loki]

FOMC minutes tonight 7pm, might give us (Well, not me) as clue as to what Uncle Powell is doing with rates

[Axeman123]

10 minutes ago, Loki said:

FOMC minutes tonight 7pm, might give us (Well, not me) as clue as to what Uncle Powell is doing with rates

It really is such a pantomime. Minutes from 3 weeks ago to move markets, when the participants at that meeting have been talking non-stop the whole time since.

[Gordie Lastchance]

5 hours ago, Wight Flight said:

It's the senior but he is in the Mid West.

Whilst googling that I came across snollygoster which is equally good.

We might need an interesting words thread.

Would this help turn around the view held by some that Dosbods is a far-right clamjamfry?

As for snollygosters, you can't move for them!

[Plan-b]

18 minutes ago, Loki said:

FOMC minutes tonight 7pm, might give us (Well, not me) as clue as to what Uncle Powell is doing with rates

The great and the good (so not us) will already have the details so it will likely already be priced in.

Watch the dollar on any announcements it goes and up down before it settles, burns retail investors stops and positions.

To 'them' We are just sheep to be shorn.

[Loki]

1 hour ago, Axeman123 said:

It really is such a pantomime. Minutes from 3 weeks ago to move markets, when the participants at that meeting have been talking non-stop the whole time since.

Yeah it does remind me of tales/stories of the old regimes where everyone really knows what's going on but we all clap along about this months tractor production numbers or whatever 

[sancho panza]

4 hours ago, onlyme said:

Oops.

Shock tumble in completions during first six months of 2023

https://thenegotiator.co.uk/completions-tumble-by-54-in-first-six-months-of-2023/

Across the nation both completions and total market values of homes sold fell by more than 50% across every area of England and Wales, Land Registry figures reveal.

nice find  from @onlyme int eh property crash thread.......stunnign figures.Going to be a brutal year for banks...but then I would say that wouldn't I? The implications are huge for banks with excessive exposure to the SE and Londinium.WHich is msot of the BS's tbh.....

Estate agents prob worse

Persimmon report tmrw and Barratts next week.

They're comparing the five motnhs to Dec 22 which would mostly ahve been funded at circa 2% levels

from the article linked

 

The completions pipeline has fallen dramatically during the first half of the year with just 147,223 homes sold across England and Wales sold for an estimated £52.5 billion – a whopping 54% drop in transactions, research from agency Barrows and Forrester reveals today.

And there has also been a massive 57% reduction in the total market value of homes sold when compared to the five months prior.

The estate and lettings agent analysed sold price data from the Land Registry looking at the level of property transactions to have completed between January and May of this year (latest available), the total estimated market value of these transactions and how this level of market activity compares to the five months prior (August to December 2022).

The average sold price of these properties also dropped by 7% and as a result the estimated total market value of homes sold so far in 2023 sits at £52.4 billion – some 57% below the total market value of homes sold during the previous five months.

The London market witnessed the greatest decline in transaction volumes with just 15,638 homes sold so far this year, a drop of 57%. The East of England (-56%) and South East (-56%) have also seen some of the largest reductions in transaction levels.

[crashmonitor]

7 hours ago, Axeman123 said:

Great news everybody:

Bailey under fresh pressure to raise rates as pay surges - latest updates

https://uk.finance.yahoo.com/news/bank-england-considers-clampdown-foreign-063037943.html

(weird URL for the above headine?)

It looks like 50bps is on the table for the next FOMC, which is maybe what Halifax were pricing into their mortgage rates last night (of course they will get advance sight of figures like this IMO). Doesn't bode well for other lenders not following suit, or rates coming back down soon.

I think panic is coming for a lot of people.

As a saver you just hope he does the right thing. Having printed 25% of inflation since the start of the Pandemic, I don't feel that confident.

 

[King Penda]

4 hours ago, belfastchild said:

cant you collect the cans and cash them in somewhere? ;-)

The east Europeans a few doors away can regularly fill there bin with just beer cans

[King Penda]

4 hours ago, Axeman123 said:

In the US perhaps, dollar weakness would tend to accompany them reaching peak rate before the other major economies so that is all very much what I would expect.

Anyway, another wonderful headline:

‘Absolute carnage’ as High Street lenders including Halifax and Santander lift mortgage rates once again

As you would expect just from the headline to start. This OTOH is odd to see openly printed:

Another surprising quote here:

 

Stop posting porn

[Loki]

Anyone wanting to get into TLT this might be your moment 

[Cattle Prod]

6 hours ago, sancho panza said:

is needs pointing out for a variety of reasons.Where's the doom porn on TV?

I blame Brexit.

There was a circus of anti Brexit lunatics in Parliament Square today. I had my noise cancelling headphones on (mandatory London kit) so couldn’t hear most of it, but they were singing an anti Brexit song to the tune of GSTQ..festooned in EU regalia all blue and stars. Plod shutting off the footpaths causing commuters to walk in front of buses, it was bonkers. They were loving the attention from the Asian tourists who will bring the photos home to laugh at.

Placards to the effect that the UK is the titanic because of Brexit. Mostly older people, no doubt on public sector pensions giving them the time and money to go to the virtue signaling Olympiad.

Burn it the fuck down. 

If I was British, I’d want them in the Tower on short rations. It’s simple  treason to me.

Edit:

It all makes me think that Britain hasn’t had to revolt since the Normans, and even then didn’t seem to mind so much. You lot are out of practice! 

Edit edit:

You should have revolted against Cromwell, we’d have told you that had you asked. Lord Protector my arse

Edited July 5, 2023 by Cattle Prod