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

[JoeDavola]

1 hour ago, Stuey said:

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

Quite possible, but the question is how big a cut.

Surely a cut to a level that's still very high by the standards of the last 15 years?

[sancho panza]

@Cattle Prod if you've time I've a few questions ref the recent licence auctions for the nroth sea.You mentioned only 100/900 got a bid.my questions are as follows

1) whats the timing of these auctions.is it once a year?once evry two?

2) I'm presuming normally you'd expect a larger bid szie,ie 600 or 700,or would they normally all get a bid.

3) does the fact that there were so few bidders mean the rpices were dire?if so have you a rough idea of the reduction in govt incomes as a result?

No pressure.

See below the oilies getting bid over the last week strongly.I'm unsure whether this is dollar related as well as oil price benefits from weak dollar.Physical supply deficits ebcoming appraent?

 

[Stuey]

5 minutes ago, JoeDavola said:

Quite possible, but the question is how big a cut.

Surely a cut to a level that's still very high by the standards of the last 15 years?

Slowly at first then all at once 

The debt load is too high for interest rates to stay above around 2% in the medium term. 

[Heart's Ease]

12 minutes ago, Jay said:

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..

I was having a look yesterday to see when the next MPC meetings were, and the date of next CPI figures.

Next CPI 19 July for June data.

September CPI data (all eyes on the bennies rise) will be considered November.

 

Thursday 3 August MPC Summary and minutes and August Monetary Policy Report

Thursday 21 September MPC Summary and minutes

Thursday 2 November MPC Summary and minutes and November Monetary Policy Report

Thursday 14 December MPC Summary and minutes 

[Castlevania]

49 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.

That’s what I have. Brazilian stocks are a bit weird in that many companies including Telefonica Brasil go ex dividend for a stream of dividends over a future period of up to 12 months. Basically, you get nothing for ages and even if you’ve long since sold you still receive dividends based on your holding at an ex dividend date months ago.

Edited July 13, 2023 by Castlevania

[AWW]

BoE independence from politicians is a myth. They are going to raise interest rates too far just so they can cut them a few times between now and the election, then the Tories can point at that and say "don't risk interest rate rises by voting Labour".

[Democorruptcy]

39 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 

Here you go:

What Is Ex-Dividend?

Quote

 

Ex-dividend describes a stock that is trading without the value of the next dividend payment. The ex-dividend date or "ex-date" is the day the stock starts trading without the value of its next dividend payment.

Typically, the ex-dividend date for a stock is one business day before the record date, meaning that an investor who buys the stock on its ex-dividend date or later will not be eligible to receive the declared dividend. Rather, the dividend payment is made to whoever owned the stock the day before the ex-dividend date.

https://www.investopedia.com/terms/e/ex-dividend.asp

 

Note the ex-div date is when the share starts trading without the value of the next dividend payment. They reduce the price but then give your money back to you. Unlike say having £100 in the bank and getting 5% interest, the value stays at £100 and doesn't drop to £95 so they can pay you the £5.

 

 

[DurhamBorn]

3 hours 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.

You need to hold shares before they go ex divi to get the divi.A great example is BAT,they went ex div this morning,so those who owned up until then,including those who bought at 4.29pm yesterday get the divi,those who bought this morning dont,but the shares are marked down to reflect they dont.I suspect you owned Telefonica B after it was already ex dividend,dont even try to work how its divis work,just let them arrive when they do.Most shares on HL show when their divis are paid.

Also if you click into Account settings,then Withdrawels,Income and Loyalty Bonus,check where it says Income Instructions it says Held on account,if not change it.

The income goes into your income account and needs moving to capital account,click on cash then income and loyalty bonus then on the right Transfer your income balance to your capital account.Also if you click on income it shows you all divis that have landed.

Edited July 13, 2023 by DurhamBorn

[jamtomorrow]

Another regional construction firm goes pop. Reporting says 400 staff, but I bet that's dwarfed by the number of affected employees at subbies.

What are payment terms like for subbies in construction these days? Is it nearer 120 days than 30 days?

https://www.theconstructionindex.co.uk/news/view/j-tomlinson-collapse-leaves-236m-of-contracts-in-limbo

[WICAO]

1 hour ago, JoeDavola said:

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.

http://www.retirementinvestingtoday.com/

I don't post there much any more either but it does track my journey as far back as 2009.

[Plan-b]

56 minutes ago, AWW said:

BoE independence from politicians is a myth. They are going to raise interest rates too far just so they can cut them a few times between now and the election, then the Tories can point at that and say "don't risk interest rate rises by voting Labour".

I agree, so if the jobs at BoE are of a political nature then there should be elections and voting for it members.

Again the myth of democracy is laid bare for those that care to see it.

 

Edited July 13, 2023 by Plan-b

[Bornagain]

11 minutes ago, WICAO said:

http://www.retirementinvestingtoday.com/

I don't post there much any more either but it does track my journey as far back as 2009.

That was one of my favourite site when I got really serious about quitting the rat-race....

Thanks for the inspiration that it provided.

 

 

 

[WICAO]

2 minutes ago, Bornagain said:

That was one of my favourite site when I got really serious about quitting the rat-race....

Thanks for the inspiration that it provided.

Thanks for the hat-tip @Bornagain.  I largely did it to keep myself accountable as running against the herd for so long can take quite a bit of determination.

The other hope was that I might just be able to help some others figure it out as well.  Over the years I've had some really great feedback from people who while not having done the same exactly have shaped their lives into something that better works for them.

Oh, and it's also been a bit Marmite with plenty of people being pretty negative and insulting but hey ho...

[Plan-b]

24 minutes ago, jamtomorrow said:

Another regional construction firm goes pop. Reporting says 400 staff, but I bet that's dwarfed by the number of affected employees at subbies.

What are payment terms like for subbies in construction these days? Is it nearer 120 days than 30 days?

https://www.theconstructionindex.co.uk/news/view/j-tomlinson-collapse-leaves-236m-of-contracts-in-limbo

They do a lot of Government/Council work but as long as the ever increasing Bennies and Huge Government Pensions are paid everything will be fine, for them anyway.

[Loki]

33 minutes ago, jamtomorrow said:

Another regional construction firm goes pop. Reporting says 400 staff, but I bet that's dwarfed by the number of affected employees at subbies.

What are payment terms like for subbies in construction these days? Is it nearer 120 days than 30 days?

https://www.theconstructionindex.co.uk/news/view/j-tomlinson-collapse-leaves-236m-of-contracts-in-limbo

I like the way they slip a sneaky "Blame it on COVID" in there, I was flat out during the lockdowns

[DurhamBorn]

1 hour ago, Stuey said:

Slowly at first then all at once 

The debt load is too high for interest rates to stay above around 2% in the medium term. 

66% total inflation over the cycle,rates 32% over the cycle,real loss of money 34%,we have had over a third of the inflation now,rates are lagging.So if the cycle is 8 years they should average just under 4%pa so we are above average on the rates now.I much prefer cycle numbers rather than short term as its much better for investing big portfolios.

The question is how much damage the initial high rates stage does,i suspect it will destroy a lot of BTLs,zombie companies etc that will then feed a 2nd wave inflation after we dip much lower first.

[Virgil Caine]

31 minutes ago, jamtomorrow said:

Another regional construction firm goes pop. Reporting says 400 staff, but I bet that's dwarfed by the number of affected employees at subbies.

What are payment terms like for subbies in construction these days? Is it nearer 120 days than 30 days?

https://www.theconstructionindex.co.uk/news/view/j-tomlinson-collapse-leaves-236m-of-contracts-in-limbo

I was talking to some ex colleagues last night who working for companies that have big IT contracts with the U.K.  government. Apparently lots of these are being terminated  or renegotiated, inflight projects are being cancelled and future capital expenditure zeroed. The rumour is there will be redundancies inbound later this year.

[reformed nice guy]

1 hour ago, Castlevania said:

That’s what I have. Brazilian stocks are a bit weird in that many companies including Telefonica Brasil go ex dividend for a stream of dividends over a future period of up to 12 months. Basically, you get nothing for ages and even if you’ve long since sold you still receive dividends based on your holding at an ex dividend date months ago.

For a Brazil stock to do a dividend it has to first make a sacrifice to the appropriate gods. For example telecoms are made to the parrot headed god of communication.

The blood from the sacrifice flows down from the top a small stepped pyramid that the offering is made on and the time taken for the flow to step down each step determines when part of the dividend is paid out over the coming months. When it stops flowing the final dividend for the year is paid.

That is why Brazilian dividends are unpredictable - only the gods know the payment dates

[Lightscribe]

Largely been happy with my positioning in PM miners this year having snagged the tops and bottoms in most.

I was more cautious selling out in May however (sell in May go away etc), with BRICS rumblings and central banks gold buying, as I thought that may put some support under the miners but in retrospect I should have sold more.

Still happy with nabbing the tops and bottoms in ABRA multiple times, getting near the deflationary realisation now before strapping in before the big stagflationary stage upwards in PMs.

 

[Stuey]

8 minutes ago, DurhamBorn said:

 

The question is how much damage the initial high rates stage does,i suspect it will destroy a lot of BTLs,zombie companies etc that will then feed a 2nd wave inflation after we dip much lower first.

I suspect much of this increase in interest rates is not to cause actual pain but to remind the market they can still cause it, ie get rid of the Greenspan Put. This is behind my idea of a short sharp spike in rates that won't persist. 

[Lightscribe]

Lots of signs flashing at the mo

Even the US is going in hard on the disability bennies

[Harley]

20 hours ago, janch said:

BRLA is on a tear today so I was considering selling now and buying back later as the rise could be more than the divi (it goes ex-divi tomorrow) but it's not really worth it for me when I factor in buy/sell costs. 

Since it seems to bounce around a bit it might be worth it for some with larger holdings (not financial advice etc etc)

Fat finger me only bought a fraction of the intended a short while back and decided not to chase which was a bad idea given the 20%.  Hopefully a post div pullback.

[Calcutta]

4 minutes ago, Lightscribe said:

Lots of signs flashing at the mo

Even the US is going in hard on the disability bennies

Even I'm starting to wonder if I should throw in the towel and claim some disability Tony Tokens. Pretty sure I could swing it, got a pretty sad extensive medical history of head injuries, broken my back a couple of times, it wouldn't be too difficult if I could be bothered to go to the doctor and lay it on.

My only real problem is the 16k or 6k savings limit. I'd have to find an ex-LA flat with low service charges that I could buy outright and only leave myself under 6k in the bank.

While doing that I could probably go on the sick from work and keep a bit of cash coming in, no idea how long that'll last tho so might have to investigate.

After that's burned off I should be entitled to a little bit of Jobseekers to keep me going till the real freebies start coming in.

My kids mum is on the benefit cap as well, so she doesn't even get paid for my kids, wouldn't be an issue to claim one of them lives with me.

Fag packet maths I'd be bringing in £350 a week, which is about the same as a minimum wage job.

Wouldn't have a lump in an isa but would be saving £10k pa in rent. 

It's just that fucking easy.

 

[JMD]

I accept that exposure to copper is a good thing - for balanced portfolio, etc. But I am hearing more and more comment that aluminium will replace a lot of current and future copper use/demand. Some say upto 40% of copper product could ultimately be replaced by aluminium product, especially when copper supply is squeezed and prices rocket.

Seems a 'no brainer' to buy some aluminium exposure, along with copper...  But is that strategy correct?

I wonder is anyone here seeking out the smaller aluminium (bauxit) miners and/or industrial sector producers? Or perhaps just sticking to the big conglomerates such as Rio? 

Found this article which is an interesting read...

https://www.alcircle.com/news/top-five-bauxite-mining-companies-in-the-world-26315

 

Edited July 13, 2023 by JMD

[Sasquatch]

48 minutes ago, Loki said:

I like the way they slip a sneaky "Blame it on COVID" in there, I was flat out during the lockdowns

Yes, absolute bollocks. It's usually down to bad management.