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

[Loki]

Just now, JMD said:

Re not seeing dividends. Maybe check in case the automaticaly reinvest income function is enabled.

https://www.hl.co.uk/help/isas/stocks-and-shares-isa/managing-your-isa/what-happens-to-any-income-from-my-investments-within-the-hl-stocks-and-shares-isa

 

I set mine to auto reinvest in POLY 

 

[sancho panza]

ANother down day in DXY,presumably due to US CPI

POtentially setting up the weak doallr phase of BK legend.

https://wolfstreet.com/2023/07/12/core-services-cpi-cools-to-still-red-hot-6-2-core-cpi-to-4-8-plunge-in-energy-prices-pulls-down-overall-cpi-to-3-0-food-prices-stabilize-at-very-high-levels/

Core CPI to 4.8%. Plunge in Energy Prices Pulls Down Overall CPI to 3.0%. Food Prices Stabilize at Very High Levels

by Wolf Richter • Jul 12, 2023 • 90 Comments

We already know the factors that will make this much tougher going forward.

By Wolf Richter for WOLF STREET.

The “Core” Consumer Price Index rose by a still hot 4.8% in June compared to a year ago, but that was down from an increase of 5.3% in May, according to data by the Bureau of Labor Statistics today. June was the smallest increase since October 2021. As a measure of underlying inflation, core CPI excludes the prices of food and energy products that tend to move wildly in either direction.

Overall CPI rose by 3.0% in June year-over-year, the lowest since March 2021.

The chart shows core CPI (red) and overall CPI (green). The year-over-year plunge in energy prices (-16.7%!) pushed the overall CPI increases below those of core CPI. When energy prices stop plunging on a year-over-year basis, overall CPI will once again be above core CPI.

[Loki]

1 minute ago, sancho panza said:

ANother down day in DXY,presumably due to US CPI

POtentially setting up the weak doallr phase of BK legend.

https://wolfstreet.com/2023/07/12/core-services-cpi-cools-to-still-red-hot-6-2-core-cpi-to-4-8-plunge-in-energy-prices-pulls-down-overall-cpi-to-3-0-food-prices-stabilize-at-very-high-levels/

Core CPI to 4.8%. Plunge in Energy Prices Pulls Down Overall CPI to 3.0%. Food Prices Stabilize at Very High Levels

by Wolf Richter • Jul 12, 2023 • 90 Comments

We already know the factors that will make this much tougher going forward.

By Wolf Richter for WOLF STREET.

The “Core” Consumer Price Index rose by a still hot 4.8% in June compared to a year ago, but that was down from an increase of 5.3% in May, according to data by the Bureau of Labor Statistics today. June was the smallest increase since October 2021. As a measure of underlying inflation, core CPI excludes the prices of food and energy products that tend to move wildly in either direction.

Overall CPI rose by 3.0% in June year-over-year, the lowest since March 2021.

The chart shows core CPI (red) and overall CPI (green). The year-over-year plunge in energy prices (-16.7%!) pushed the overall CPI increases below those of core CPI. When energy prices stop plunging on a year-over-year basis, overall CPI will once again be above core CPI.

And it's US PPI tomorrow (Well today)

I want that number to go down again and the other number to go up again

Today was a good day

[Sugarlips]

32 minutes ago, sancho panza said:

The death by a 1000 cuts continues

https://uk.finance.yahoo.com/news/1-3-million-households-missed-230100886.html

An estimated 1.3 million UK households missed or defaulted on an essential bill in a single month as cost-of-living pressures build up, a survey suggests.

Which? found 60% of those who could not afford a household bill such as energy, water or council tax, defaulted on more than one payment in the month to June 9.

It urged utility firms and supermarkets to work harder to support customers as pressures build on household finances.

 

Among those who missed one or more bills, two in five (42%) did not pay their energy bill, four in 10 (40%) missed their council tax payment, nearly four in 10 could not afford their water bill (38%) and a third (32%) struggled to pay for their broadband or television package.

Which?’s consumer insight tracker also estimates that 560,000 households missed or defaulted on a housing payment over the month, with one in 20 renters (5.2%) and 1.4 per cent of mortgage holders missing a housing payment.

Overall, two million households missed or defaulted on at least one mortgage, rent, loan, credit card or bill.

The 7.2% missed payment rate is in line with the level seen at the same time in the last two years, but higher than June 2020’s 4%.

What so everyone paid their tv license  🤪 

[Loki]

Just now, Sugarlips said:

What so everyone paid their tv license  🤪 

How else would they stay safe? 

[WICAO]

I don't post much any more because I don't really have much more to say in regards to my financial plan but given I'm a real world FIRE science experiment an occasional share on how things are going might add some value to the thread.

We continue to love the life we've carved out for ourselves here in Australia.  Of course never say never but we now cannot see us ever returning to the UK.  Thank-you FIRE.

Since first FIRE'ing at the back end of 2018 I've worked a bit full-time, haven't worked and have also worked part time.  Right now I'm working 2 days per week fully remote.  Absolutely no stress or bullsh*t and if it appeared and wasn't very short term I'd be gone.  Work can be fun when you don't need to be there to pay the rent...  When I first started my blog back in 2009 I called early retirement, which is what I was chasing as I don't think the term FIRE existed at that point, a scenario where work became optional and funnily enough that's how it's worked out.  No margaritas daily on the beach but instead a great balanced life interleaved with a bit of paid work.  Thank-you FIRE.

Health wise I'm still not generally drinking alcohol although do have a glass or two on very special occasions.  Generally eat vegetarian but when I do eat meat it's exceptional quality stuff.  99% of what we eat is now cooked from scratch.  No cigarettes or other vices.  Lots of swimming, cycling and walking tops off me being in the best health I think I've ever been even though I'm now on the right hand side of 50.  It's amazing what can be achieved when you have time to focus on it.  Thank-you FIRE.

Financially, I just generally keep at our passive investing strategy that was laid out years ago and which I shared in my book, on my blog, on this site and at TOS.  The only real change is switching home bias from the UK to Australia, repositioning the investment products/wrappers to minimise fees/taxes because of the move and now holding a bigger chunk of equities because we spend so little of our wealth.  It's funny the richer you become the more volatility/risk you can stomach, at least that's how it's worked out for me.  Otherwise it's now pretty much on auto pilot.  Generally buy the market (asset classes and countries) and then rebalance either with new money or dividends.  June gave a big chunk of lovely divi's which I used to buy more emerging market equities.

It's now not far from 5 years that I've been actually FIRE and 16 years since I started on my FIRE plan.  Measuring in AUD our wealth is up by about 20% in inflation adjusted terms since first FIRE'ing.  Over the past couple of years it's gone backwards in real terms but not yet enough to offset what came before.  Wealth in nominal terms is at a record high.

Life really is very good.  Deciding to pursue FIRE in 2007 (which was Plan B at the time) rather than buying an over priced UK house (which was Plan A) really was a defining moment in our lives.

[DurhamBorn]

7 hours ago, sancho panza said:

The death by a 1000 cuts continues

https://uk.finance.yahoo.com/news/1-3-million-households-missed-230100886.html

An estimated 1.3 million UK households missed or defaulted on an essential bill in a single month as cost-of-living pressures build up, a survey suggests.

Which? found 60% of those who could not afford a household bill such as energy, water or council tax, defaulted on more than one payment in the month to June 9.

It urged utility firms and supermarkets to work harder to support customers as pressures build on household finances.

 

Among those who missed one or more bills, two in five (42%) did not pay their energy bill, four in 10 (40%) missed their council tax payment, nearly four in 10 could not afford their water bill (38%) and a third (32%) struggled to pay for their broadband or television package.

Which?’s consumer insight tracker also estimates that 560,000 households missed or defaulted on a housing payment over the month, with one in 20 renters (5.2%) and 1.4 per cent of mortgage holders missing a housing payment.

Overall, two million households missed or defaulted on at least one mortgage, rent, loan, credit card or bill.

The 7.2% missed payment rate is in line with the level seen at the same time in the last two years, but higher than June 2020’s 4%.

I wonder how many bills would of been missed if council tax was around £50 a month where it should be.Everywhere you look its government causing the problems,increasing the costs.Eve food is mostly government.Bennies mean employers need higher wages all along the chain.I remember when rents or mortgage would be around 17% of earnings ,so a few savings would tide people over.Still seeing more and more house coming up for sale with tenant in situ,some just going to auction.Going to be a shit show soon with homeless bennies.

[Stuey]

US inflation cratering - ours to follow 

UK growth negative

An interest rate winter cut is looking to be baked in IMO. 

[Calcutta]

7 hours ago, RJT1979 said:

Is it really easy for people with no assets but who have kids to never pay a water bill? Just moving from rental to rental never paying?

Yes.

They can't turn the water off.

Ignore all letters, bills, fines. Just never have any contact with them. Don't tell them you live there. 

They could in theory take you to court, if you've got nothing to lose anyway it'd be rather pointless.

[DoINeedOne]

Went to London yesterday for a few beers with a couple of friends who are currently working there, fitting out office space

Seems plenty of work there fitting out offices, fuck knows why

I know it was Wednesday but like the Australian video i posted few pages back come 9:30 struggling to find somewhere to eat and most places were taking last orders or shut

A couple are or were on varible mortgages talked about getting letters monthly with rising costs, eventually fixed

Seemed like some forgot interest rates used to be 4-6% when we were younger, the last decade + of low rates has certainly made people forgot and seem shocked at them now, as if it was impossible

Lease cars for the wifes have been downgraded still nice cars 

Was home and in bed hungry by 11pm

 

 

[Democorruptcy]

On 12/07/2023 at 07:08, Axeman123 said:

 Latest figure I can find is that housing benefits costs £23.4billion per year*. To put that in context:

I don't doubt Labour are retarded, but how much could LHA actually increase by without making cuts elsewhere before the Bond market steps in?

I certainly think there could be cost neutral fiddling (off the top of my head making more kids share so fewer bedrooms needed and then boosting rates perhaps). Maybe 10% extra total spend on LHA could be shaved off other departments, but do you think that would massively change the numbers? I can't get past how tied Labour's hands will be, especially as they have (effectively) announced they will stick to Conservative spending plans until growth returns** eg:

Will giving additional taxpayer money to "greedy private landlords" be the hill they choose to die on after gaining power? It would be an odd choice IMO.

* (New Statesman): https://archive.li/2QYjb

** (The Times): https://archive.li/QK8uW

Also putting your £23.4bn into context.

When Kwarteng tried to save his job and backtrack on his plan to stop the Treasury paying banks the base rate on their overnight deposits at the BoE, the cost to taxpayers was put at a lot more than that. £200bn over the next 5 years and now there's talk about the base rate going higher than the 5% suggested then. 

https://archive.ph/m4rdA

[headrow]

10 minutes ago, Calcutta said:

Yes.

They can't turn the water off.

Ignore all letters, bills, fines. Just never have any contact with them. Don't tell them you live there. 

They could in theory take you to court, if you've got nothing to lose anyway it'd be rather pointless.

Yorkshire Water took me to court for non payment even though I paid by DD and had the bank statements to prove to the court I'd paid. I even got costs for my day out at County Court , they trashed my credit record though , but I don't ever want to borrow anything anyway so didn't really give a fuck.

[Pip321]

1 hour ago, WICAO said:

I don't post much any more because I don't really have much more to say in regards to my financial plan but given I'm a real world FIRE science experiment an occasional share on how things are going might add some value to the thread.

We continue to love the life we've carved out for ourselves here in Australia.  Of course never say never but we now cannot see us ever returning to the UK.  Thank-you FIRE.

Since first FIRE'ing at the back end of 2018 I've worked a bit full-time, haven't worked and have also worked part time.  Right now I'm working 2 days per week fully remote.  Absolutely no stress or bullsh*t and if it appeared and wasn't very short term I'd be gone.  Work can be fun when you don't need to be there to pay the rent...  When I first started my blog back in 2009 I called early retirement, which is what I was chasing as I don't think the term FIRE existed at that point, a scenario where work became optional and funnily enough that's how it's worked out.  No margaritas daily on the beach but instead a great balanced life interleaved with a bit of paid work.  Thank-you FIRE.

Health wise I'm still not generally drinking alcohol although do have a glass or two on very special occasions.  Generally eat vegetarian but when I do eat meat it's exceptional quality stuff.  99% of what we eat is now cooked from scratch.  No cigarettes or other vices.  Lots of swimming, cycling and walking tops off me being in the best health I think I've ever been even though I'm now on the right hand side of 50.  It's amazing what can be achieved when you have time to focus on it.  Thank-you FIRE.

Financially, I just generally keep at our passive investing strategy that was laid out years ago and which I shared in my book, on my blog, on this site and at TOS.  The only real change is switching home bias from the UK to Australia, repositioning the investment products/wrappers to minimise fees/taxes because of the move and now holding a bigger chunk of equities because we spend so little of our wealth.  It's funny the richer you become the more volatility/risk you can stomach, at least that's how it's worked out for me.  Otherwise it's now pretty much on auto pilot.  Generally buy the market (asset classes and countries) and then rebalance either with new money or dividends.  June gave a big chunk of lovely divi's which I used to buy more emerging market equities.

It's now not far from 5 years that I've been actually FIRE and 16 years since I started on my FIRE plan.  Measuring in AUD our wealth is up by about 20% in inflation adjusted terms since first FIRE'ing.  Over the past couple of years it's gone backwards in real terms but not yet enough to offset what came before.  Wealth in nominal terms is at a record high.

Life really is very good.  Deciding to pursue FIRE in 2007 (which was Plan B at the time) rather than buying an over priced UK house (which was Plan A) really was a defining moment in our lives.

Many thanks for generously sharing your journey and the chats we had whilst I was deliberating when to time my ‘retirement’ and transfer my DB pension it helped nudge me along. As I recall we left work about the same time. 

Very lucky to transfer out of a pension scheme when interest rates (and investment return expectations) were so low…..with rates now higher it presents people in my position an opportunity to try take advantage of that change. 

I find it interesting that many of us have different drivers, different family circumstances, different investment approaches and different political viewpoints but have come to very similar points. @DurhamBorn uses some of his time to save his kids paying for things, saves their labour as do I. This week painting my daughters hallway. Just one of many examples. 

We embraced the travel side but Covid stopped that and we are out of the habit. Also care responsibilities for parents, family bereavements etc can make an easy excuse not to travel.

I am selling property as and when it comes empty….that’s enough work for me. 

We live in a great town, kids and grandkids all local and full family gatherings each week at our house. 

More focus on health particularly what I eat (I do play football 3x a week) and travel……other than that, retirement fairly much what I hoped for. 👍

Thanks for the update and glad all is well. 😉

[Funn3r]

8 hours ago, JMD said:

Re not seeing dividends. Maybe check in case the automaticaly reinvest income function is enabled.

https://www.hl.co.uk/help/isas/stocks-and-shares-isa/managing-your-isa/what-happens-to-any-income-from-my-investments-within-the-hl-stocks-and-shares-isa

 

I have got the settings below. Like I said I think maybe I am just getting ahead of myself. One of my shares is "Telefonica Brasil SA ADR EACH REPR 1 ORD SH SPON" and a while back I thought there was talk on here about let's rub hands together as nice divi  coming up soon. Which I never got so I thought something was up. But when I looked yesterday on dividends.com that share doesn't pay any divi. 

I think I was expecting too much in terms of divi I thought that was the main point of holding shares and was wrong-footed when there wasn't a steady trickle of income. I got too used to cash ISA and savings accounts where each month I can see tangible income numbers.

• Held on account: Income will be held on your account pending your further investment instructions.

Edited July 13, 2023 by Funn3r
clarify

[nirvana]

39 minutes ago, Stuey said:

An interest rate winter cut is looking to be baked in IMO.

no need, they have an alternative plan....

Top economist: Central bankers are planning CBDC currency implants ‘under your skin’

it's our old matey Richard Werner again

https://www.lifesitenews.com/news/top-economist-central-bankers-are-planning-cbdc-currency-implants-under-your-skin

[honkydonkey]

6 minutes ago, Funn3r said:

I have got the settings below. Like I said I think maybe I am just getting ahead of myself. One of my shares is "Telefonica Brasil SA ADR EACH REPR 1 ORD SH SPON" and a while back I thought there was talk on here about let's rub hands together as nice divi  coming up soon. Which I never got so I thought something was up. But when I looked yesterday on dividends.com that share doesn't pay any divi. 

I think I was expecting too much in terms of divi I thought that was the main point of holding shares and was wrong-footed when there wasn't a steady trickle of income. I got too used to cash ISA and savings accounts where each month I can see tangible income numbers.

• Held on account: Income will be held on your account pending your further investment instructions.

They were talking about TEF not VIV. TEF is Telefonica Spain, VIV is Telefonica Brasil.

[nirvana]

[Heart's Ease]

9 minutes ago, Funn3r said:

I have got the settings below. Like I said I think maybe I am just getting ahead of myself. One of my shares is "Telefonica Brasil SA ADR EACH REPR 1 ORD SH SPON" and a while back I thought there was talk on here about let's rub hands together as nice divi  coming up soon. Which I never got so I thought something was up. But when I looked yesterday on dividends.com that share doesn't pay any divi. 

I think I was expecting too much in terms of divi I thought that was the main point of holding shares and was wrong-footed when there wasn't a steady trickle of income. I got too used to cash ISA and savings accounts where each month I can see tangible income numbers.

• Held on account: Income will be held on your account pending your further investment instructions.

We hold that - VIV on the ticker. Last dividend was 11 May paid into HL. A quick look around shows the ex div date being 6 January (!).  Did you buy after that date?

We also 'hold on account' rather than autoinvest.

[onlyme]

35 minutes ago, DoINeedOne said:

Went to London yesterday for a few beers with a couple of friends who are currently working there, fitting out office space

Seems plenty of work there fitting out offices, fuck knows why

 

One factor maybe - setting out offices better for hot desking  - big switch from 5 days in to 2 or 3.

 

[Funn3r]

1 minute ago, Heart's Ease said:

We hold that - VIV on the ticker. Last dividend was 11 May paid into HL. A quick look around shows the ex div date being 6 January (!).  Did you buy after that date?

We also 'hold on account' rather than autoinvest.

Yes I did buy after 6 January. I have heard of "going ex-div" but understood that it was something that happened a few days before you got paid. Guess I was wrong.

Equities are a big learning curve for me and always reminds me why I never did any all my life. Or maybe 6 Jan just an unlucky date it certainly was for those FBI victims 

[wherebee]

4 minutes ago, onlyme said:

One factor maybe - setting out offices better for hot desking  - big switch from 5 days in to 2 or 3.

 

problem is that every company I know in Aus is shifting to a 2-3 days in the office rule, with everyone expected on THE SAME DAYS.  So... they still need a big desk number.

DOH

[Calcutta]

3 minutes ago, Funn3r said:

Yes I did buy after 6 January. I have heard of "going ex-div" but understood that it was something that happened a few days before you got paid. Guess I was wrong.

Equities are a big learning curve for me and always reminds me why I never did any all my life. Or maybe 6 Jan just an unlucky date it certainly was for those FBI victims 

Sometimes I buy a few quid worth of the shares on here just so I don't feel left out when everyone is collecting their divs.

Other than that it's reckless gambling with my children's future. Love it.

[Jay]

40 minutes ago, Stuey said:

US inflation cratering - ours to follow 

UK growth negative

An interest rate winter cut is looking to be baked in IMO. 

Agree that U.S. inflation is moving down..still needs to fall a couple of percentage points more which is the hard part..yes they have real interest rates..

uk is imo a different kettle of fish…inflation is still high and sticky..base rates will rise next month..so that leaves around 3 meetings before year end..they will need to pause for a couple of meetings before they even think about cutting..very tight timeframe for your cut..not impossible but highly unlikely..so a very brave call..

demand destruction will help as flatter increases in input costs..but wages are apparently rising..maybe further fiscal stimulus ahead..more visas given and the current scenario of slow marginal economic growth with sticky inflation and support for Ukraine and benefits/pensions spending means fiscal expansion..without cutting spending rates will stay where they are as a smoke diversion from the the real issue..

all speculation on my part..could be completely wrong but could be right..be lucky..

[Harley]

23 hours ago, Yadda yadda yadda said:

I've topped up on BAT today even though they're up a bit on yesterday. Ex-div tomorrow for 57.72p per share. Maybe they will be under £25 by the end of the week but the long term risk looks good to me.

I succumbed and had a nibble.  Down today of course after going ex div.  Maybe down as much as the div?  But will have my main course later!

[JoeDavola]

2 hours ago, WICAO said:

I don't post much any more because I don't really have much more to say in regards to my financial plan but given I'm a real world FIRE science experiment an occasional share on how things are going might add some value to the thread.

We continue to love the life we've carved out for ourselves here in Australia.  Of course never say never but we now cannot see us ever returning to the UK.  Thank-you FIRE.

Since first FIRE'ing at the back end of 2018 I've worked a bit full-time, haven't worked and have also worked part time.  Right now I'm working 2 days per week fully remote.  Absolutely no stress or bullsh*t and if it appeared and wasn't very short term I'd be gone.  Work can be fun when you don't need to be there to pay the rent...  When I first started my blog back in 2009 I called early retirement, which is what I was chasing as I don't think the term FIRE existed at that point, a scenario where work became optional and funnily enough that's how it's worked out.  No margaritas daily on the beach but instead a great balanced life interleaved with a bit of paid work.  Thank-you FIRE.

Health wise I'm still not generally drinking alcohol although do have a glass or two on very special occasions.  Generally eat vegetarian but when I do eat meat it's exceptional quality stuff.  99% of what we eat is now cooked from scratch.  No cigarettes or other vices.  Lots of swimming, cycling and walking tops off me being in the best health I think I've ever been even though I'm now on the right hand side of 50.  It's amazing what can be achieved when you have time to focus on it.  Thank-you FIRE.

Financially, I just generally keep at our passive investing strategy that was laid out years ago and which I shared in my book, on my blog, on this site and at TOS.  The only real change is switching home bias from the UK to Australia, repositioning the investment products/wrappers to minimise fees/taxes because of the move and now holding a bigger chunk of equities because we spend so little of our wealth.  It's funny the richer you become the more volatility/risk you can stomach, at least that's how it's worked out for me.  Otherwise it's now pretty much on auto pilot.  Generally buy the market (asset classes and countries) and then rebalance either with new money or dividends.  June gave a big chunk of lovely divi's which I used to buy more emerging market equities.

It's now not far from 5 years that I've been actually FIRE and 16 years since I started on my FIRE plan.  Measuring in AUD our wealth is up by about 20% in inflation adjusted terms since first FIRE'ing.  Over the past couple of years it's gone backwards in real terms but not yet enough to offset what came before.  Wealth in nominal terms is at a record high.

Life really is very good.  Deciding to pursue FIRE in 2007 (which was Plan B at the time) rather than buying an over priced UK house (which was Plan A) really was a defining moment in our lives.

Can you or someone else please link to your blog/book?

Working 2 days a week sounds perfect - even 3 days would be grand - I've always seen the idea of 'retirement' as being on a sliding scale anyway. I think what most people want to escape it not work altogether, it's the hell of a one hour commute each way to an office 5 days a week for 40+ years.

I can see how you'd natrually drink less and eat healthier - the UK is a nation of functional alcholics for a reason, and I think you've removed the main problems in your life that drive most people to drink.