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

[sancho panza]

4 hours ago, DurhamBorn said:

I have been flatlining for a year it seems,but im quite happy for it to continue because very large divis are landing regular,big ones from SEDY and TEF due,and i have a few US stocks im buying at the minute.Verizon,Walgreens,waiting on International Paper etc so id rather they stay down or get cheaper.Iv also been adding Ashmore back,i sold a lot in the £2.60s,but think they might be close to a multi year run higher.

SEDY goes ex div today paying 4% or so depending on your purchase price 40 pence or so.

Like you,I'm happy to have moved our BATs position from 3% to 10% ave price now has a 26 handle.BATs is one I'll likely never sell unless someone offers an egregious sum of moeny that makes the blood in urine go yellow.

The capital build pahse was during covid in the main(although goldies might still run),now it's about spreading that capital out to gain income as you say.

On the back of your heads up,we picked up some more HFEL,so many thanks.

No pressure,but Im tempted to sell VIV/TIMB (to free some moeny for YARIY) are you holding long here or trading.They're up handily.

17 hours ago, Cattle Prod said:

 I wonder how long the US tranny admiral would have lasted in the Pacific theatre WWII. My great uncle was a Marine there, not long by all accounts.

I thought that was an end of empire move at the time.Green light for Putin and Xi to end the dollar hegemony when the opposition military is more obsessed with tokenism than being an effective fighting force.

I thought the US withdrawal from Afghanistan was an epic clusterfuck and an insult to the people that bled and died there.

3 hours ago, sleepwello'nights said:

Interest rates as a tool to reduce inflation cannot work by focussing only on mortgage payers. They only represent a small proportion of the population. 

As I understand it the way interest rates work is by reducing demand. Holders of capital look at the return their capital can generate and will calculate how to generate that return. Any investment project then has to provide a greater return than the "risk" free return from keeping capital held as cash balance in consequence employment should shrink as the demand for labour falls. 

Some economists I have read say that the major factor in inflation, this time round, is insufficient supply. So the current policies do nothing to reduce the imbalance and exacerbate inflation because supply is constrained further. In other words

@DurhamBorn's thesis is correct because government policies direct money to those creating the demand. 

As I ponder the way it might work I start to contradict myself and my brain starts to hurt.  

 

As you say,interest rates dont work so well with cost push inflation.Indeed,they only suppress demand in the sections of society that are leveraged.

Having said that,they do work to raise the currency and thus do have an effect on the ability to buy supply.

[sancho panza]

20 minutes ago, MMax said:

Any advice on which banks or building societies are most/more resilient?

I can't give advice,I'm not qualified.I'm in healthcare.

If you look at the bigger picture,it makes sense to keep depostis below the FSCS limit and to be aware you only get one hit per parent company eg HSBC/First Direct.

Bigger depostis I think makes more sense to hold at systemic instituions,in gilts or NS&I.

It's hard to know whcih BS is mroe exposed.I think Dowd Buckner ratios are a great measure of leverage for lsited banks equity/total assets.That gives you an idea of what the market thinks of their equity statements(and vice versa too).BS's are much ahrder to assess due to the poverty of the data some of them issue and what they leave out of their annual accounts.

We dont have any small BS accounts.Actaully come to think of it,don't have any BS accounts.All systemic banks/NS&I

dyor etc

Edited June 15, 2023 by sancho panza

[sancho panza]

Ye olde Paul Hodges thesis.Westmisnter solution isn't to cut the cost of living but rather to support it by importing more young people.

Absolute travesty what they've done to our young folk with student debt for sh1t degrees/HTB/BTL tax breaks.

https://12ft.io/proxy?q=https%3A%2F%2Fwww.telegraph.co.uk%2Fpensions-retirement%2Fnews%2Fbritain-fertility-rate-baby-shortage-state-pension-crisis%2F

Britain has a baby shortage – and it could kill off the state pension

A falling fertility rate and ageing population is a toxic combination for Britain's retirees

Britain’s fertility rate has been caught in a downward spiral for years. 

It is proving harder for young people to start a family – sky-high childcare costs, a shortage of affordable homes and inflexible working patterns mean that parenthood has become a luxury that fewer and fewer people can afford. 

For the generation who laid down roots decades ago and now sits atop the family tree, this may seem like of little consequence – other than waiting longer for fewer grandchildren or great-grandchildren. But a falling fertility rate and an ageing population is a toxic combination for the future of the state pension.

Government spending on the state pension is already stretched. It is an “unfunded” system, so there is no pot of savings that retirees draw from – payments are instead funded by taxes as they come. 

 

This system is expected to cost taxpayers £110bn this year. This is going to increase to £148bn by the 2027/28 tax year, according to official forecasts, thanks in part to the Conservatives’ “triple lock” policy. 

While expensive, this mechanism works if enough workers are taxed to fund the payments. But the scales are beginning to tip in the wrong direction: there were roughly four workers for every pensioner in Britain last year. By 2072, this is expected to fall to three.

Patrick Thomson, of the think tank Phoenix Insights, said Britain was no longer a young country – instead middle-aged, and greying fast.

“In 2001, there were just six local authorities who found the average age was 45 or over. In 2021, there were 129. That is a huge increase and shows how quickly we are ageing.” 

It means the cost of the state pension will continue to grow, and will be shared among fewer and fewer workers. Eventually, the Government will have to choose between higher taxation, or funnelling money from other public services into retirees’ pockets, an independent review into the state pension age found earlier this year. 

Britain is not alone in this conundrum. Italy has one of the most generous state pension systems in Europe, as well as one of the fastest ageing populations: more than a fifth are aged over 65. 

Yet Italians are entitled to old-age benefits if they have accrued just 20 years of contributions and meet the minimum age requirement of 67. 

Meanwhile in China, which has one of the largest populations of pensioners in the world, a policy dating from the 1950s means women can retire as early as 50 and men at 60. It is perhaps unsurprising then that here too, the system is creaking. 

[RWJ]

2 hours ago, SpectrumFX said:

I'm finance rather than IT, so the rates I would get aren't quite as attractive but once I've got my mortgage covered and can take more risk, then spending my last few years in work contracting at stupid rates with a few big gaps between contracts sounds ideal.

I considered doing this after paying my mortgage off in Jan.  Work the winter and have a few months off in summer.  Unfortunately I need to be able to salary sacrifice to pension so I don't get clobbered by child maintenance, otherwise I'd be all over it.

[DurhamBorn]

38 minutes ago, sancho panza said:

SEDY goes ex div today paying 4% or so depending on your purchase price 40 pence or so.

Like you,I'm happy to have moved our BATs position from 3% to 10% ave price now has a 26 handle.BATs is one I'll likely never sell unless someone offers an egregious sum of moeny that makes the blood in urine go yellow.

The capital build pahse was during covid in the main(although goldies might still run),now it's about spreading that capital out to gain income as you say.

On the back of your heads up,we picked up some more HFEL,so many thanks.

No pressure,but Im tempted to sell VIV/TIMB (to free some moeny for YARIY) are you holding long here or trading.They're up handily.

I thought that was an end of empire move at the time.Green light for Putin and Xi to end the dollar hegemony when the opposition military is more obsessed with tokenism than being an effective fighting force.

I thought the US withdrawal from Afghanistan was an epic clusterfuck and an insult to the people that bled and died there.

As you say,interest rates dont work so well with cost push inflation.Indeed,they only suppress demand in the sections of society that are leveraged.

Having said that,they do work to raise the currency and thus do have an effect on the ability to buy supply.

Iv sold VIV and bought SK Telecom and Verizon with the money.I was very heavy Latin America,but took some profits and into some US divi stocks i think might be decent value long term.I have been selling runners where i can get similar with bigger divs etc.Iv got my eye on a few US stocks as i think we are at terminal rates in the US so some cyclicals could be close to bottom for a cycle.Im buying some Leggett and Platt Inc today,im adding Walgreens Boots as well.I might get a few AT&T,but im past my limit on telcos so will wait to see on those.

[montecristo]

24 minutes ago, RWJ said:

I considered doing this after paying my mortgage off in Jan.  Work the winter and have a few months off in summer.  Unfortunately I need to be able to salary sacrifice to pension so I don't get clobbered by child maintenance, otherwise I'd be all over it.

go ltd you pay yourself a small directors wage under the NIC threshold and your ltd pays a shit load into your sipp.  or go umbrella and salary sacrifice.

[sancho panza]

cross psot from banking crisis thread but worth wider consideration imho.This chart goes to show how skewed the risks in the BTL marekt are skewed to the larger portfolio owners-they may have more equity on paper but much less able to subsidize the loans once the cashflow goes negative.

If ever one chart summed up the Mother Ships problems,it's this one

 

Leverage in BTL is heavily skewed to the 5+ houses brigade.,

As ships sink,slowly at first then quickly.

[leonardratso]

good teeth on that rag head.

[Chewing Grass]

18 minutes ago, sancho panza said:

cross psot from banking crisis thread but worth wider consideration imho.This chart goes to show how skewed the risks in the BTL marekt are skewed to the larger portfolio owners-they may have more equity on paper but much less able to subsidize the loans once the cashflow goes negative.

If ever one chart summed up the Mother Ships problems,it's this one

 

Leverage in BTL is heavily skewed to the 5+ houses brigade.,

As ships sink,slowly at first then quickly.

5 plus houses is proper bankruptcy.

[Castlevania]

32 minutes ago, montecristo said:

go ltd you pay yourself a small directors wage under the NIC threshold and your ltd pays a shit load into your sipp.  or go umbrella and salary sacrifice.

Your limited company can’t pay in an amount greater than your earnings. So if you pay yourself a salary of £12,500 then you can’t pay more than £12,500 into a SIPP. A lot of the tax advantages of having a limited company have been removed. 

[leonardratso]

Last landg derailment;
i asked about partial transfers and going to cash before hand; reply:

Thank you for your message.

Yes partial transfer are techninally allowed. The minimum is £2000 to do a partial
transfer. You can put a request in but its upto our legal team to approve it. When you
transfer to another pension we sell down the units first before transferring.

Edited June 15, 2023 by leonardratso

[leonardratso]

2 minutes ago, Castlevania said:

Your limited company can’t pay in an amount greater than your earnings. So if you pay yourself a salary of £12,500 then you can’t pay more than £12,500 into a SIPP. A lot of the tax advantages of having a limited company have been removed. 

what do you do with the rest, can you still take a huge dividend and pay 20% corp tax or whatever it is these days?

[AlfredTheLittle]

4 minutes ago, Castlevania said:

Your limited company can’t pay in an amount greater than your earnings. So if you pay yourself a salary of £12,500 then you can’t pay more than £12,500 into a SIPP. A lot of the tax advantages of having a limited company have been removed. 

Yes it can, there's nothing stopping you paying £60k into your pension and no salary at all if you like:

https://adviser.royallondon.com/technical-central/pensions/contributions-and-tax-relief/pension-contributions-the-basics/

[afly]

3 minutes ago, leonardratso said:

what do you do with the rest, can you still take a huge dividend and pay 20% corp tax or whatever it is these days?

pay tax on divies over 1k now outside of a wrapper. Like 30% or some crazy shit. add on the 20% corp tax you had to pay to get it and its not much of a solution anymore

 

Party of business my arse

[afly]

3 minutes ago, AlfredTheLittle said:

Yes it can, there's nothing stopping you paying £60k into your pension and no salary at all if you like:

https://adviser.royallondon.com/technical-central/pensions/contributions-and-tax-relief/pension-contributions-the-basics/

Yes i did it last year. biz put 100% of earnings into a pension contribution for me. Tax deductible too so no corp tax to pay. 

[Starsend]

9 minutes ago, Castlevania said:

Your limited company can’t pay in an amount greater than your earnings. So if you pay yourself a salary of £12,500 then you can’t pay more than £12,500 into a SIPP. A lot of the tax advantages of having a limited company have been removed. 

Yes it can, long as it's the company itself that is making a gross contribution and not you personally.

[HousePriceMania]

1 hour ago, MMax said:

Any advice on which banks or building societies are most/more resilient?

NS and I

 

Wouldn't have my money anywhere else

 

[Castlevania]

15 minutes ago, AlfredTheLittle said:

Yes it can, there's nothing stopping you paying £60k into your pension and no salary at all if you like:

https://adviser.royallondon.com/technical-central/pensions/contributions-and-tax-relief/pension-contributions-the-basics/

Only if you have another job paying at least £60k. You’re still limited by your salary/PAYE earnings. 

[Chewing Grass]

45 minutes ago, Castlevania said:

Your limited company can’t pay in an amount greater than your earnings. So if you pay yourself a salary of £12,500 then you can’t pay more than £12,500 into a SIPP. A lot of the tax advantages of having a limited company have been removed. 

Agreed, I shut mine down and now work less hours on PAYE out of shear spite and hatred of anything this government does. No point grafting just to stick it in a pension scheme that will be robbed again, 2021/2 robbery was nearly 20% of pot values so I expect second shots and boosters soon as they dream up green scams to force pension money into.

[AlfredTheLittle]

40 minutes ago, Castlevania said:

Only if you have another job paying at least £60k. You’re still limited by your salary/PAYE earnings. 

No you're not. The relevant earnings limit doesn't apply to employer contributions (which makes logical sense, because employer contributions are earnings). The only limit is the annual allowance of £60k.

[onlyme]

5 hours ago, Sasquatch said:

Interesting work related anecdote.

Was on a building site yesterday and talking to one of the builder's directors. He was bemoaning the fact that they were slipping behind the programme and that their roofer had left site at lunchtime. This was seriously affecting the critical path as they wanted to strike the scaffold to finish off the hard pavings. 

Straight forward roof coverings (pantiles) on a new building so relatively easy stuff.

I was told that the mindset of lots of subcontractors had changed since covid and they were struggling to find people prepared to put in a full days work. I'm not sure if this is a true reflection of the marketplace but it does dovetail into some of the thoughts on this thread.

Without any wind gruesome working on a roof - had two days of that last week and by no means doing anything strenuous like laying 100's tiles per day. Like working in a clay oven.

Trades have had a good run, no point killing yourself, high taxes over a certain amount given away to scammers or scum or worse people who actively hate the country they have invaded.

 

[Calcutta]

1 hour ago, leonardratso said:

good teeth on that rag head.

Probably another fucking crisis actor.

[montecristo]

1 hour ago, Castlevania said:

Only if you have another job paying at least £60k. You’re still limited by your salary/PAYE earnings. 

You're incorrect. 

https://www.unbiased.co.uk/discover/tax-business/running-a-business/contributing-to-your-pension-via-a-limited-company-explained

 

edit: 60k allowance now.

How much can my company contribute to my pension as a company director?

Unlike personal contributions, there’s no limit on what the company is allowed to pay into your pension and obtain tax relief, providing it meets HMRC’s ‘wholly and exclusively’ test. Employer contributions are also not limited to your relevant UK earnings, but do count towards your annual allowance, which is currently £40,000.

Edited June 15, 2023 by montecristo

[Axeman123]

An entirely predictable end to a scheme that could only have attracted financing during the easy-money fever dream:

Pioneering electric plane shelved as batteries only last a few hundred flights

Quote

...Tecnam said its main challenge was the energy density of the batteries available today, which are relatively too heavy for the amount of power they can store.

The problem was amplified by a demand for quick charging to ensure the craft were not grounded for extended periods.

Repeated quick charging can kill a battery’s capacity. Whereas cars’ cells can be preserved by only charging to 85pc, and doing so slowly overnight, undercharging would make the energy density of a plane’s power source even worse.

With slow charging and undercharging, the capacity of the batteries in the P-volt would be below 170 watt-hours per kilogramme, Tecnam said.

Even under these circumstances, the cells would only last a few hundred flights on a given route, making planning difficult for commercial buyers, and “would drive operators to replace the entire storage unit, with a dramatic increase in direct operating costs”.

By comparison, jet fuel has an energy density of 12,000 watt-hours per kilogram.

Research by scientists at Carnegie Mellon University published in 2020 suggested that regional aircraft would need an energy density of 500 Wh/kg for a range equal to just a quarter of that of combustion-powered craft...

https://uk.finance.yahoo.com/news/pioneering-electric-plane-shelved-batteries-141234706.html

[JMD]

2 hours ago, leonardratso said:

good teeth on that rag head.

Yes, but did you notice the state of his fingernails?!