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

[Lightscribe]

20 minutes ago, Stuey said:

They've cratered month-ahead about 10% this week 

You concentrate on that. Leads and lags dear boy 😉

Note what I said above re oil and gold. High oil prices will force up the rest especially with Middle East tensions.

Edited October 20, 2023 by Lightscribe

[Stuey]

5 minutes ago, Lightscribe said:

You concentrate on that. Leads and lags dear boy 😉

note what I said above oil and gold.

Oil is range bound. 

[Pip321]

3 hours ago, InLikeFlynn said:

I bought a bit (2k)of CTY.L today (city of London investment trust).

A very dull investment trust which holds all this thread's favourites (BAT, BP, SHEL etc). Yield >5% and trading at a small discount to NAV. 

I'm not a trader (I'm crap at market timing). I plan to hold this for years. 

I am increasingly thinking the same for really large amounts….ie boring funds or EFTs rather than shares.

I will always have a flutter on shares for short term positions. Plus a few holdings of some of our cheeky favourites shares ie BAT, miners and some Telecoms in my ISA. 

My Pru Pension is fairly awful in terms of ‘trading and buying individual shares’ but pays a whopping 5.18% on cash and is relatively cheap and I like the PruFund Growth as an alternative to a 60/40 fund. 

As I reduce my PruFund down from 80% to what will be an 20% total holding I have found some funds in the Pru that mirror this thread available in the pension.

There is JP Morgan natural resources has our favourites in it, Blackrock Gold & General and also Aberdeen Latin America. Spotted a Liontrust Russia fund, but that’s a bit high risk for a large amount and Sarison Food & Agricultural Opportunities Class P…which might be a bit left field but one to watch and see how it fits with this thread.

Some of these funds have had great runs though (wish I read this thread in 2020🤦🏻‍♂️)….so I am holding fire a little until I see a better opportunity to move into them. So I like to ‘understand’ like an investor but still can’t help a little bit of trying to time the trade even with large foundation investments.

I guess I am trying to fit a round peg into a square hole with the Pru….but combined with my direct investments in the ISA and some physical assets I will be in a lot better position thanks to this thread than I was 18 months ago. And ready to go if the BK does arrive….

For anyone who is interested, some of the funds are below…not great but the first two look ok  

JPM Natural Resourses. 🛢️⛏️ 

https://www.fundslibrary.co.uk/FundsLibrary.BrandedTools/Pru/DataOnline/HtmlFactsheet/6e07e86d-db90-4c32-80ff-927705924437?displayThirdPartyFactsheetLink=True&fundType=retirement_account.pru#essentials

Aberdeen Latin America 🇲🇽🇧🇷🌮

 https://www.fundslibrary.co.uk/FundsLibrary.BrandedTools/Pru/DataOnline/HtmlFactsheet/9bb44328-81e5-4f21-a4d6-0c510c0f9428?displayThirdPartyFactsheetLink=True&fundType=retirement_account.pru#essentials

RUSSIA 🇷🇺🪆https://www.fundslibrary.co.uk/FundsLibrary.BrandedTools/Pru/DataOnline/HtmlFactsheet/2b605e6f-94d8-4d2b-b049-f93e3f70c4d3?displayThirdPartyFactsheetLink=True&fundType=retirement_account.pru#essentials

Sarison Agriculture 🚜🥔🐄

https://www.fundslibrary.co.uk/FundsLibrary.BrandedTools/Pru/DataOnline/HtmlFactsheet/3bec39dc-2bf3-4966-b761-3b48f485da74?displayThirdPartyFactsheetLink=True&fundType=retirement_account.pru#essentials

 

Edited October 20, 2023 by Pip321

[Castlevania]

2 hours ago, BWW said:

I have decided to get out of bhp and aal (thinking about rio , anto also likely and glen maybe) but buy hbr and maybe wg. since i am too long shel ....15%++ of total portfolio  at curr values so should sell shel to buy these. iow this is effectively going more long shel

alt buy was uk bonds to get 6-12mo tax free 4-5% annualized. i think oilies will do better  than that and will sell down shel and bp when the miners bottom out to buy back into them.

dyor ... my recent trading punt was not one to follow.

 

Not advice, but personally I’d diversify out of Shell if it was that much of my portfolio. Might be worth taking a look at Petrobras as they’ve been smashing it production wise (record high production the last quarter) and at these oil prices pay out a lot in dividends.

[CannonFodder]

been looking at this NIC report, concludes hydrogen doesn't work for home heating and sets 2050 as the end date for the gas network. all will need to be heat pumps then I guess.

[Castlevania]

3 minutes ago, CannonFodder said:

been looking at this NIC report, concludes hydrogen doesn't work for home heating and sets 2050 as the end date for the gas network. all will need to be heat pumps then I guess.

Good luck with that!

[DurhamBorn]

5 hours ago, Red Debt Redemption said:

I'm in, if drops further I'll buy more and more and more  Overtime flying off the shelf at work biggest wage packet I've ever had next month and biggest divi with me Ashmore.

I've missed quite a few things by waiting it out to see like Thungela, that turkish telecom thing Durhamborn posted before and others. Ladder in when price looks tempting and no ragrets is my new game.

Getting a bit TOSsie everything's going zero and gold $10000 but it somehow keeps struggling on another 5 year, 10 year, 20 year. I've enough powder left aside to jump in further if needs be.

Its served me well over the years,very very well.Always tough seeing things red and more red,but 20% off here and there are nothing once you get a simple double on one.Ashmore could go to zero (well half from here as they have half the value in cash),but IF AUM can turn and head higher,given its the start of the cycle they could easily treble.I think the divi will be under pressure next year though unless AUM does head higher.

[Red Debt Redemption]

59 minutes ago, CannonFodder said:

been looking at this NIC report, concludes hydrogen doesn't work for home heating and sets 2050 as the end date for the gas network. all will need to be heat pumps then I guess.

All the schemes are failing / being delayed fear porn to coax people into parting with cash. 

[onlyme]

20 minutes ago, Red Debt Redemption said:

All the schemes are failing / being delayed fear porn to coax people into parting with cash. 

ESG and green funds are turning into a disaster, just ins't the follow through and needs too much money to make a lot of it work, inflation / interest rates have pinched off the easy money supply that made a lot fo the investment somewhat worthwhile.

Solaredge down nearly 30% today, a biggie and leading supplier in the industry and they are having trouble particularly in Europe with customers not  following thruogh with orders in the timescale expected (or at all). The failed wind farm auction in the UK the other week is another sign things not adding up the way they were in terms of subsidies / payback in previous years, let alone the sort of exponential growth needed for anything like the tranistions the politicans wish woudl happen but won't.

 

[Long time lurking]

 

[ThoughtCriminal]

This is an interesting way to view the interest rate increase: number of people who can afford the average priced US house, more than halved in the course of a year.

 

Similar effect in the UK?

Edited October 21, 2023 by ThoughtCriminal

[One percent]

2 minutes ago, ThoughtCriminal said:

This is an interesting way to view the interest rate increase: number of people who can afford the average priced US house, more than halved in the course of a year.

 

Similar effect in the UK?

400k is a very substantial mortgage. Maybe the figures point to the cost of housing being too high and completely out of sync with wages.  

[CannonFodder]

11 hours ago, Castlevania said:

Good luck with that!

 

10 hours ago, Red Debt Redemption said:

All the schemes are failing / being delayed fear porn to coax people into parting with cash. 

ofgem can simply state the energy companies cannot use bill payers money to maintain the grid if it becomes gov policy.

regulators have complete power over what cannot or can be spent by the companies revenue that they regulate

NIC is an executive agency of HM Treasury , it's a bit more than a lobby group.

the energy companies won't fund this from back pocket if they can't recover the cash

next 5 year funding settlements will likely be running down network, little to no maintenance and keeping bills slightly lower in short term - great for election but it will decay faster.

but as someone point out John armit is connected to Siemens who make heat pumps - it's all seems very vested interest.

 

[wherebee]

18 minutes ago, One percent said:

400k is a very substantial mortgage. Maybe the figures point to the cost of housing being too high and completely out of sync with wages.  

400k will enable most people in most states who are looking to buy to get something.  Less than that, you're cutting out a huge amount of the US.  More than that, and you're ignoring the fact that in some states you can get a great house for 200k near half decent work (red states only :P)

https://www.zillow.com/homedetails/3728-Reder-St-Rapid-City-SD-57702/117825723_zpid/

[Sugarlips]

11 minutes ago, wherebee said:

400k will enable most people in most states who are looking to buy to get something.  Less than that, you're cutting out a huge amount of the US.  More than that, and you're ignoring the fact that in some states you can get a great house for 200k near half decent work (red states only :P)

https://www.zillow.com/homedetails/3728-Reder-St-Rapid-City-SD-57702/117825723_zpid/

..and new citizens can just walk in across the border according to Elon’s recent videos.

State/property tax is worth investigating + jingle mail if anyone is considering this.

[Pip321]

4 minutes ago, One percent said:

400k is a very substantial mortgage. Maybe the figures point to the cost of housing being too high and completely out of sync with wages.  

Agree.

The post by @ThoughtCriminal triggered a thought and highlights something I have seen in the market in that mid higher end market is struggling the most. People either can’t or won’t borrow that sort of money.  I think a lot of this is ‘debt perception’…..£400k at 1% is a very different debt than a debt at 7%.

I know that seems obvious but I have been there and felt it….around 10 years ago I held a chunk of debt at an average of say 2.5%, held almost enough cash to repay the debt and then an opportunity came.

A huge house came up on a respected road in town…around £750k and worth in a better market and some magic farrow and ball paint £1.1m and I wanted it as our forever home. Virgin offered me a 1.5% mortgage and I was going to do a BTL and borrow say £500k ie only £7500 per year interest (£625 pcm) and the place would let out for £2000 pcm with a lick of paint, a bathroom and some touches.  

Now the deal was a good one and would have worked (for a frugal git like me) but at that moment it hit me that the new debt, together with what I already owed (maybe £650k at the time) was mental….it was beyond what I should be able to borrow. It’s not about reaching for the stars it was that knowing there are limits and risks to be managed.

I have always paid around 60/70% of values and the market had been more than kind so my equity was huge….but the debt and cash flow were an unnecessary risk. Plus I knew of someone who was worth £4m but had just gone bankrupt which didn’t make sense. 

So rather than buy the house we sold one…risk management increased further, plus an assessment of what scale I needed (and didn’t need). It’s fair to say I have less now than I would have done but I still have more than I need. 

I know several individuals who went on borrowing more and more….way over what an individual ‘normal person’ should…with no thought of rising rates in the future. Mostly they are now in bother but still thinking rates will fall soon. 

Respect for debt and recognising the scale of how daft some figure are has, mostly, returned. 

Governments saying we need £100 billion for Ukraine etc sets this maddening agenda that money is almost infinite….and of course it is if it’s not your money.

I think the over leveraged are about to get a good kicking, and that includes some governments too. 

[Stuey]

37 minutes ago, One percent said:

400k is a very substantial mortgage. Maybe the figures point to the cost of housing being too high and completely out of sync with wages.  

They don't need to be in sync with wages any more when you have the Bank of Boomer recycling funds back round into it through sons/daughters/nieces/nephews. 

[feed]

44 minutes ago, ThoughtCriminal said:

This is an interesting way to view the interest rate increase: number of people who can afford the average priced US house, more than halved in the course of a year.

 

Similar effect in the UK?

Just another way of saying that house prices are a function of the availability (and price) of credit. 

But that's social media, people saying that same thing over and over, just in slightly different ways.  

 

[crashmonitor]

Bailey up to his old tricks and undermining the pound.

Looks like a rate freeze is odds on. The 1.6% MOM rise in CPI in October 22 will come crashing out of the rolling stats  sending CPI sub 6%. We have always known this would happen, but Bailey is treating it like he has caused the coming fall recently; it was baked in a year ago you absolute tool Mr. Bailey.

 

Meanwhile progress thereafter will be difficult, as Swati, Pill et al continue to inflate CPI by about 0.5% every month. Continuing their covert policy of inflating away the value of our money and helping debtors. Terrorism against savers.

 

https://www.poundsterlinglive.com/eur/19394-bailey-adds-to-pounds-woes-with-strong-hint-bank-of-england-to-keep-rates-on-hold-in-november

Edited October 21, 2023 by crashmonitor

[Harley]

1 hour ago, crashmonitor said:

Bailey up to his old tricks and undermining the pound.

Looks like a rate freeze is odds on. The 1.6% MOM rise in CPI in October 22 will come crashing out of the rolling stats  sending CPI sub 6%. We have always known this would happen, but Bailey is treating it like he has caused the coming fall recently; it was baked in a year ago you absolute tool Mr. Bailey.

 

Meanwhile progress thereafter will be difficult, as Swati, Pill et al continue to inflate CPI by about 0.5% every month. Continuing their covert policy of inflating away the value of our money and helping debtors. Terrorism against savers.

 

https://www.poundsterlinglive.com/eur/19394-bailey-adds-to-pounds-woes-with-strong-hint-bank-of-england-to-keep-rates-on-hold-in-november

Some times it's worth taking a step back.  The TradingView app enables you to scroll through multi-term charts for a watchlist.

I just scrolled through my currency watchlist of GBP pairs for the last year.  I was surprised how little GBP had deteriorated overall.  For example, USDGBP is down 7.15%.  That is, sterling is up.  Over five years USD is up 4.96%.

Sure there's been some moves within the year but how many trade that and how many are any good at doing so.

Lots of accompanying noise and yap over that time but probably very few did anything so more of a consuming spectator sport.

Looking at other assets (via ETFs) provides some further grounding.  Very little has gone anywhere.  At least Gold in GBP is up 11% this last year and 71% over the last five.  It's been a great backbone for our portfolios.

So maybe the best approaches would have been to sit back for the divs (only a few of what I look at pay divs though) and/or trade the swings.

Looking ahead, as you must, offers another fascinating set of insights........

PS:  Ya need to look but the div option at the ETF level is suspect as most ETFs have moved more than their div.  Of the bad, IBZL (Brazil) has a current yield of just under 7% but is down about 14% for the year.

For me for ETFs, hide in interest bearing cash, pop out for a good intermediate term trade (better risk/reward over that term), and treat any div as a bonus.

PPS:  All without even mentioning inflationary debasement.

Edited October 21, 2023 by Harley

[DurhamBorn]

1 hour ago, ThoughtCriminal said:

This is an interesting way to view the interest rate increase: number of people who can afford the average priced US house, more than halved in the course of a year.

 

Similar effect in the UK?

Cross market the macro on this what does it tell us?.

It tells us house prices must fall BUT it also tells us the thing everyone will miss.Once they fall with elevated input costs,although there is huge demand you wont be able to build at the price needed.Its saying we must use our housing stock much better.I think the economy will force this over time.Likely very few single people will have their own homes for instance.So many huge problems in the economy thanks to 30 years of welfare splurging.

[Plan-b]

1 hour ago, One percent said:

400k is a very substantial mortgage. Maybe the figures point to the cost of housing being too high and completely out of sync with wages.  

38 minutes ago, Stuey said:

They don't need to be in sync with wages any more when you have the Bank of Boomer recycling funds back round into it through sons/daughters/nieces/nephews. 

33 minutes ago, feed said:

Just another way of saying that house prices are a function of the availability (and price) of credit. 

But that's social media, people saying that same thing over and over, just in slightly different ways.  

 

I'm sure you noticed It's a report from America, where most mortgages are fixed for thirty years and underwritten by the Fed and ultimately the US government, through entities Like Fanny Mae and Freddie Mac.

For us here in the UK we can't really perceive what that means given our predatory and hostile housing and mortgage and rental industries that have been allowed to go rogue for over 25yrs with no UkGov legislation or oversite so now we're in a position where the whole shit-show is able to crash and create great mass homelessness and job losses and loss off assets.

Indeed it could be argued the UkGov has actually encouraged and nurtured the housing shit-show.

Fucking disgusting out of control grifting is what it is.

[NogintheNog]

15 hours ago, BWW said:

18 hours ago, No One said:

I just sold my Shell for +85% profit. Will stay cash for the big drops.

I have decided to get out of bhp and aal (thinking about rio , anto also likely and glen maybe) but buy hbr and maybe wg. since i am too long shel ....15%++ of total portfolio  at curr values so should sell shel to buy these. iow this is effectively going more long shel

alt buy was uk bonds to get 6-12mo tax free 4-5% annualized. i think oilies will do better  than that and will sell down shel and bp when the miners bottom out to buy back into them.

dyor ... my recent trading punt was not one to follow.

Each to their own here, but I think some of these trades maybe mistakes, however DYOR.

Bearing in mind the likes of BHP and AAL have foreign currency running through their veins and we know that the pound sterling is highly likely to just get weaker, why sell?

If you think they are being run badly, sure then sell. But are they going to be run any worse than UK plc? If you are shorting (as with any share) then there may be money to be made (or lost!)

Which one do I trust more, the management of BHP/AAL, or the managers running UK plc!

[Stuey]

45 minutes ago, crashmonitor said:

Bailey up to his old tricks and undermining the pound.

Looks like a rate freeze is odds on. The 1.6% MOM rise in CPI in October 22 will come crashing out of the rolling stats  sending CPI sub 6%. We have always known this would happen, 

I called this in July or August while it was all Moar Rate Rises here (and elsewhere ). 

They are rightly looking 12 months ahead. Next move should be a cut. 

[Plan-b]

18 minutes ago, Harley said:

Looking at other assets provides some further grounding.  Very little has gone anywhere.  At least Gold in GBP is up 11% this last year and 71% over the last five.  It's been a great backbone for our portfolios.