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

[desertorchid]

Well done to the BOE and the Treasury

 

[Balding Badger]

In my business we haven't had any price rises since the start of the year and some raw materials have begun to edge down. The pressure on wages is a problem though as we are finding, trying to recruit currently.

We are definitely encountering more businesses struggling and a few in distress but overall the picture is mixed. These inflation figures will only lead to higher interest rates and that will harm even more to get the desired result.

My feeling is that there are quite a few businesses nearing breaking point - I know there were record company insolvencies in the last monthly figures published- but this will increase significantly in the next few months. Once unemployment turns then my guess is a lot of the stats will accelerate and the BoE will have to be pretty nimble about judging its actions; something it hasn't excelled at in recent times.

[Axeman123]

9 minutes ago, Lightscribe said:

How can you be born in this generation bracket and still have fucked up so spectacularly?…

That second one admits:

Quote

When my wife died a few years ago, I made some bad financial decisions that you shouldn’t take straight after a bereavement, which ended up with me losing quite a lot of capital. I had some quite severe mental health problems triggered by her death, with a period of reckless spending, and a mad attempt to set up a business in France. 

I can't help feeling sympathy for anyone hit hard by a bereavement, so he gets a pass from me.

Maybe the business involved a chateau?

[Wight Flight]

6 minutes ago, Balding Badger said:

My feeling is that there are quite a few businesses nearing breaking point - I know there were record company insolvencies in the last monthly figures published- but this will increase significantly in the next few months. Once unemployment turns then my guess is a lot of the stats will accelerate and the BoE will have to be pretty nimble about judging its actions; something it hasn't excelled at in recent times.

Add in that this month bounce back loans start needing repaying.

Many may just throw in the towel.

[Axeman123]

8 minutes ago, Balding Badger said:

Once unemployment turns then my guess is a lot of the stats will accelerate and the BoE will have to be pretty nimble about judging its actions; something it hasn't excelled at in recent times.

If Gilt yields make a definite move down I expect they will be nimble as fuck to halt rate rises or cut.

Cut like a lion and Hike like a mouse.

[Balding Badger]

Just now, Axeman123 said:

If Gilt yields make a definite move down I expect they will be nimble as fuck to halt rate rises or cut.

Cut like a lion and Hike like a mouse.

Hmm, you are probably right there!

I suppose I was thinking about a quick descent into recession, with unemployment rising sharply but inflation still significantly above target. It will be difficult to judge the right time to first stop the increases but more particularly when to start cutting. They know they can't afford to cut rates too soon because history tells them that inflation comes back if you don't kill it. But not cutting brings more pain and for longer. Bailey doesn't strike me as a man with the backbone to resist the pressure he will be under. I don't have much faith they will get it right.

[Sugarlips]

40 minutes ago, Lightscribe said:

https://inews.co.uk/news/politics/universal-credit-low-cover-basics-high-inflation-rates-mp-2424884#:~:text=Universal credit is “too low,a parliamentary group has said.
 

bennies are too low you heartless bastards.

Can we split off this subsection of society and create them their own bullshit currency so they can Zimbabwe it without dragging down the rest of society (appreciate its a bit late now..)

[MrXxxx]

14 minutes ago, desertorchid said:

Well done to the BOE and the Treasury

 

0.25 or 0.5 tomorrow?....let be honest if they do the former it is going to make FA difference, its got to be 0.5, and we know what that means for the mortgage rates...I can see the BS/Banks pulling already, and can hear the BTL crowing now!

[desertorchid]

1 minute ago, MrXxxx said:

0.25 or 0.5 tomorrow?....let be honest if they do the former it is going to make FA difference, its got to be 0.5, and we know what that means for the mortgage rates...I can see the BS/Banks pulling already, and can hear the BTL crowing now!

2 of them will still say no change to protect their portfolios.

June 2022 was 9.4%, in June 2023 it is 8.7%. This is a fair clip of price rises over 2 years.

It would take a mere 8 years at this rate for ALL PRICES TO DOUBLE

[Jay]

3 minutes ago, MrXxxx said:

0.25 or 0.5 tomorrow?....let be honest if they do the former it is going to make FA difference, its got to be 0.5, and we know what that means for the mortgage rates...I can see the BS/Banks pulling already, and can hear the BTL crowing now!

Apparently 50% of 0.5 tomorrow..

[Balding Badger]

 I think it will be 0.5% now. They probably don't want to do it but things have spiralled this last week and these figures show that the current levels just aren't having the effect they want. If they could have shown ongoing, steady progress then they could make a case for no or little change. This suggests that they must do more and soon.

[Jay]

2 minutes ago, desertorchid said:

2 of them will still say no change to protect their portfolios.

June 2022 was 9.4%, in June 2023 it is 8.7%. This is a fair clip of price rises over 2 years.

It would take a mere 8 years at this rate for ALL PRICES TO DOUBLE

I think that the time is coming when they realise it is time to cut public spending…recession is better than a depression..wishful thinking maybe..

[Sugarlips]

At least lenders down under have learnt their lessons about being prudent

 

 

 

[MrXxxx]

6 minutes ago, desertorchid said:

June 2022 was 9.4%, in June 2023 it is 8.7%. This is a fair clip of price rises over 2 years

But that wasn't core, and so included the initial Ukraine fuel shock....moving forward from this point after the next few months [and moving towards the winter] the fuel inflation will begin to have a greater impact again..I tell you...

 

[MrXxxx]

10 minutes ago, Jay said:

Apparently 50% of 0.5 tomorrow..

Yes, just caught that on Bloomberg as well...we will see...either way, mortgage rates are going up.

[MrXxxx]

9 minutes ago, Balding Badger said:

 I think it will be 0.5% now. They probably don't want to do it but things have spiralled this last week and these figures show that the current levels just aren't having the effect they want. If they could have shown ongoing, steady progress then they could make a case for no or little change. This suggests that they must do more and soon.

Agree, if they don't Bailey will just be viewed as a passive 'tinkerer'....if he's not already!

[Pip321]

15 minutes ago, Axeman123 said:

That second one admits:

I can't help feeling sympathy for anyone hit hard by a bereavement, so he gets a pass from me.

Maybe the business involved a chateau?

If he was a man down the pub quietly sharing how hard it’s been then that’s different. He is getting attention….maybe he just likes attention and spending money. 

He is in a newspaper ‘moaning’ about finances and interest rates….so sticking to his finances it sounds like he has been more than just careless.

They never give the full financial details ie his posh job salary, what his investments decisions were etc and until they do my sympathy comes and goes.

 

21 minutes ago, desertorchid said:

Well done to the BOE and the Treasury

 

Thanks. Interesting to see.

Have to remind myself this is just ‘Bloomberg’ noise….as will be the BoE reaction. It would have mattered had inflation been 5%.

As mentioned yesterday it’s the cycle that matters….this is just short term sentiment so those who want to trade can make a few quid. Next month will be a whole new set if headlines.

The water is still just running down hill but it’s path is difficult to predict.

Maybe some trading today….GLA. 🎲🎲

[crashmonitor]

13 minutes ago, Balding Badger said:

 I think it will be 0.5% now. They probably don't want to do it but things have spiralled this last week and these figures show that the current levels just aren't having the effect they want. If they could have shown ongoing, steady progress then they could make a case for no or little change. This suggests that they must do more and soon.

Must be at least worth a pause in interest rates for Tenreyro  and Dinghra. We're relying on the other 7 to do the right thing.

[Virgil Caine]

41 minutes ago, Balding Badger said:

In my business we haven't had any price rises since the start of the year and some raw materials have begun to edge down. The pressure on wages is a problem though as we are finding, trying to recruit currently.

We are definitely encountering more businesses struggling and a few in distress but overall the picture is mixed. These inflation figures will only lead to higher interest rates and that will harm even more to get the desired result.

My feeling is that there are quite a few businesses nearing breaking point - I know there were record company insolvencies in the last monthly figures published- but this will increase significantly in the next few months. Once unemployment turns then my guess is a lot of the stats will accelerate and the BoE will have to be pretty nimble about judging its actions; something it hasn't excelled at in recent times.

Insolvencies is an area to watch as they can cause cascades of business failures (i.e multiple firms may be suppliers and have offered credit terms to a company that had gone bust). It sometimes only takes one customer to default on their bills to create a cash flow crisis to put an another otherwise viable business under.

Edited June 21, 2023 by Virgil Caine

[Wight Flight]

8 minutes ago, Pip321 said:

The water is still just running down hill but it’s path is difficult to predict.

I'm nicking that.

[Democorruptcy]

3 minutes ago, crashmonitor said:

Must be at least worth a pause in interest rates for Tenreyro  and Dinghra. We're relying on the other 7 to do the right thing.

Tenreyo's last meeting

https://www.cityam.com/megan-greene-to-replace-silvana-tenreyro-on-bank-of-englands-rate-setting-committee-this-summer/

[Pip321]

It’s Brexit, it’s always Brexit….just ask the BBC.

Wonder when they will ask us to rejoin the money pit again.

As the song say “Things, can only get shitter.” 

[M S E Refugee]

3 minutes ago, Virgil Caine said:

Insolvencies is an area to watch as they can cause cascades of business failures (i.e multiple firms may be suppliers and have offered credit terms to a company that had gone bust). It sometimes only takes one customer to default on their bills to create a cash flow crisis to put an another otherwise viable business under.

I've got a little bit of money invested in Begbie Traynor in my Freetrade account.

They deal with insolvencies and debt restructuring.

[Yadda yadda yadda]

1 hour ago, Lightscribe said:

https://12ft.io/proxy?q=https%3A%2F%2Finews.co.uk%2Finews-lifestyle%2Fmoney%2Fmortgage-gone-up-forced-move-house-2424124
 

https://12ft.io/proxy?q=https%3A%2F%2Finews.co.uk%2Finews-lifestyle%2Fmortgage-doubled-losing-home-2421994
 

How can you be born in this generation bracket and still have fucked up so spectacularly?…

Are these stories designed to seed a "fuck them" attitude in the public? The idea that the people struggling are feckless bankrupts and morons paying interest only in their 60s?

These outliers certainly aren't going to illicit sympathy. Perhaps they know that rates are going higher, there is nothing they can do to stop it, mortgage bailouts are unaffordable and that repossessions are inevitable. Therefore make such bailouts unattractive to the public. Perhaps we will have articles showing some benefits recipients to be complete clueless imbeciles soon? Nudge nudge.

Edited June 21, 2023 by Yadda yadda yadda

[Virgil Caine]

30 minutes ago, M S E Refugee said:

I've got a little bit of money invested in Begbie Traynor in my Freetrade account.

They deal with insolvencies and debt restructuring.

It is a very appropriate counter cyclical hedge as they tend to make bumper profits if everyone else is going bust. They also get first dibs on any money left in a business. Of course, companies and individuals  with no assets at all tend to wind up with the Official Receivers office.  Worth keeping an eye on the statistics. May 2023 figures show a 40% jump on the previous 2022 figures for the month

https://www.gov.uk/government/statistics/monthly-insolvency-statistics-may-2023/commentary-monthly-insolvency-statistics-may-2023

At the moment Voluntary Liquidations are going up faster than Compulsory Liquidations. The latter will begin to spike if the shit really hits the fan.

It should be noted that bankruptcies and liquidations like unemployment are lagging indicators.

Edited June 21, 2023 by Virgil Caine