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

[reformed nice guy]

On the subject of gilts, I stumlbed across this site:

https://www.yieldgimp.com/

If you click on the top right it shows you real yields for linkers too

2024 + 2025 seems like a year where they will be rolling over a lot of debt.....

Looks like 5% gross is available up until Jan 2027 @Stuey

It is interesting that some banks are doing 6% for a 1 year fix but a similar gilt is 5.3ish%

Linkers are mostly 1% real for the long haul

Edited July 4, 2023 by reformed nice guy

[MightyTharg]

1 minute ago, reformed nice guy said:

 

https://www.yieldgimp.com/

 

Risky click! SFW?

[reformed nice guy]

3 minutes ago, MightyTharg said:

Risky click! SFW?

Nothing rude, the page looks like this:

[feed]

27 minutes ago, ILikeCake said:

Doesn't someone on here work for Ford?  Aren't they going all electric?

All electric EU.  RoW is a mix.  

[Pip321]

8 minutes ago, Castlevania said:

Long duration has been crushed. Take the Austria 100 year bond issued in 2020 at a coupon rate of 0.85%. It’s currently trading at 40 cents to the Euro. That’s a loss of 60% on a MTM basis.

https://www.tradingview.com/symbols/TVC-AT100Y/
 

Gotcha, i think....so if for example in the case you highlight interest rates go up the value of the gilt plummets, and that is because in this case its long dated i.e. you are guaranteed to get your Euro back but in 100 years. And in the meantime the yield is so bad (verses current and expected interest rates) no one wants it. Its these that can plummet. 

So in my example which is a one year gilt if interest rates rise to 30% no one will want to buy a crappy 6.25% yield and the value will drop of course, however because it offers £100 back in 12 months that will underpin the price and mean I do get the £100.

Of course it wont have been a great buy because 6.25% verses 30% interest rates wasn't clever but I guess that's the same as fixing any interest rate in cash using any instrument eg fixed savings account etc. 

[Loki]

2 minutes ago, reformed nice guy said:

Nothing rude, the page looks like this:

Look at the columns on that

[Eventually Right]

33 minutes ago, Sugarlips said:

Independence Day?

Yup, if I had to guess, the US being closed might have something to do with it.

[Inigo]

3 hours ago, Wight Flight said:

Yep.

Or even less.

https://www.cowesyachtagency.com/boats/?boatId=2399048

I've seen quite a few boats come up for free or £1.  Old tubs that need a lot of work perhaps.  For example: https://www.boat-disposal.co.uk/sadler-27

I like walking the dog through Iron Wharf in Faversham.  There are loads of decaying old boats, with decaying old men working on them.  I don't believe any of them will float again, but they are entertaining themselves.

 

[sancho panza]

13 hours ago, wherebee said:

she'd never go for it though - grew up in the african bush, and likes running water and no snakes under the bed too much.

Oz has more snakes than Africa iirc.where was she raised.Mrs P a saffer from the cape.They're quite a robust breed mentally speaking.Porbably explaisn why the kids are rough.Her genes have over powered my more senstive ones

5 hours ago, DurhamBorn said:

Gilts are maybe a decent buy,but the reason i wouldnt is because there is a risk of wipe out on them,90% down in a month sort of thing.Its an outlier,but a risk,and id much rather be outside the UK in other assets.

Agreed.Unlikely but within the realms of possiblitiy.Prob safer to buy USTs if you're that way inclined.USD still has one sh1tshow rise in it imho

6 hours ago, DoINeedOne said:

I don't want to throw this thread off subject, but last night I found out a good friend of mine that I've known since we were kids committed suicide over the weekend

Im struggling to believe its true, as he seemed one of the happiest guys I knew,

Often the way.And when they've made their mind up they can appear really relaxed with life.

Heartbreaking suicides are.Especailly young men but more common than you think.Highest cause of death in males under 44 iirc

https://www.bbc.com/future/article/20190313-why-more-men-kill-themselves-than-women

https://www.swlstg.nhs.uk/documents/related-documents/news-and-events/reporting-guidelines/reporting-suicides/105-suicide-factsheet/file

Among men, the highest rate of suicide since
1997 has been in those aged 15-44 years.

According to a World Health Organization working group, there is ample evidence
that social conditions that are liable to change (such as the constant risk of losing
one's job) are among the determinants of suicide.
Marital status affects a person's risk of suicide. In the early 1970s and late 1980s,
suicides among men under 45 years of age were linked to remaining single or
becoming divorced. [17]
More recent research suggests that divorce is still a risk factor for suicide,
particularly for men. [18]
Alcohol and drug misuse can also influence suicide risk. [19]. Rates of drug and
alcohol consumption are higher among men than women, and are particularly high
among younger people. [2

Suicide and mental health
A number of studies show that as many as 90 per cent of people who die by suicide
had one or more psychiatric disorders at the time of death, and that each diagnosed
mental illness was associated with an increased suicide risk

[Axeman123]

25 minutes ago, Inigo said:

I like walking the dog through Iron Wharf in Faversham.  There are loads of decaying old boats, with decaying old men working on them.  I don't believe any of them will float again, but they are entertaining themselves.

That paragraph is quite something.

[sancho panza]

3 hours ago, DoINeedOne said:

Only 41, and when I hit 40 shit seemed weird I can see why men go through a mid-life crisis as you start wondering what could have been if you made different decisions

The problem is the past is the past it can't be changed but going forward can

I always like the quote 

Progress Not Perfection

At 40ish,it's easy to make comparisons and that make you feel bad about yourself.Quite often it's an age more associated with divorce and end up living in what you might call reduced circumstances.Also your youth has gone and you'll never be able to compete athletically in the open category as it were.Lot of Depression in this age group,not surpirisngly.

1 hour ago, onlyme said:

That seems crazily cheap.

Thats what happens when a market goes no bid.

My dads trying to offload a boat.He bought badly 5 years back ,has spent a fortune on mainatenance and now looking to offload. from what @belfastchild and @Wight Flight are saying,he might jsut have to scrap it.

1 hour ago, Himura said:

OK so update on the credit crunch...it's here.

Friend of mine co-owns a company that does property, 4 partners in total.  The biggest holding they have is a block of 62 student flats in Nottingham.  All full and cashflow positive but..

Their lien of credit is due to be renewed in November, currently £6.2m @4%.  The bank has been in touch and offered a maximum of £5.2m @7.89.  The partners need to come up with 250k each, no additional credit has been made available by any normal lender. In short, they are scrambling, the cashflow at 7.89 is severely impacted and 2 of the partners rely on that income to service other debts and no access to that kind of capital (£250k).  In summary, they are screwed and at each others throats. 

If this is a sign of what's happening out there, the credit deflation will hit like a cat 5 hurricane.  With Gilts where they are the govt can't do shit, corporate bankruptcy will overshadow housing in the news for a while.  BTL and leveraged homeowners will be eviscerated in the background.  

Take care out there.

Wow,thats a super anecdotal and when you look at the maths you cna see the banks trying to eke out some more equity from the partners in case it goes t1ts up.

The bank may also beleive that they have a chance of offloading to other investors still hence why they're asking for them to pony up or let go.Looks like the bank have effectively margin called them @paddles. LTV has likely breached loan covenants.

AS you say,doesn't bode well for expanding laon books from hereonin.

Keep usposted if you can please.

[janch]

10 minutes ago, sancho panza said:

Her genes have over powered my more senstive ones

I love it.   In my family we have an "awkward gene" which one of my sons inherited from their father.................. (of course)  and my ex, and now my daughter thinks her son has it too.

[janch]

3 minutes ago, sancho panza said:

At 40ish,it's easy to make comparisons and that make you feel bad about yourself.Quite often it's an age more associated with divorce and end up living in what you might call reduced circumstances.Also your youth has gone and you'll never be able to compete athletically in the open category as it were.Lot of Depression in this age group,not surpirisngly.

This is the hardest age I think as you often have to come to terms with not living up to your own (or family) expectations.  It's also the time when most people have a lot of demands on them especially if children are growing up and they have high wants/needs.  Often their aging parents also need looking after.  On top of that relationship breakdown and the worry of losing a job and/or finances in general.........

I don't envy anyone in that position now.  Things are much much worse now for many and I thought it was bad when I was at that stage of life.  It took me a long time to come to terms with divorce and no career to speak of. 

But we are here to learn these life lessons so every hardship is a learning opportunity even if it doesn't seem like it at the time.  All you can do is "keep bu****ing on" and hope you can come out the other side more or less intact.  It does get easier.......

[Errol]

56 minutes ago, reformed nice guy said:

Nothing rude, the page looks like this:

Absolute filth.

[Long time lurking]

1 hour ago, ILikeCake said:

Doesn't someone on here work for Ford?  Aren't they going all electric?

Ford ,not sure if it`s just a USA figure but expect it is have said they are currently loosing $30K on each vehicle they sell 

If that don`t answer your question ford is going die 

[Long time lurking]

54 minutes ago, Inigo said:

I've seen quite a few boats come up for free or £1.  Old tubs that need a lot of work perhaps.  For example: https://www.boat-disposal.co.uk/sadler-27

I like walking the dog through Iron Wharf in Faversham.  There are loads of decaying old boats, with decaying old men working on them.  I don't believe any of them will float again, but they are entertaining themselves.

 

I was always told the definition of a boat is a hole in the water you throw money into ,it`s even more relevant if the boat is made from trees

[Long time lurking]

1 hour ago, Castlevania said:

Long duration has been crushed. Take the Austria 100 year bond issued in 2020 at a coupon rate of 0.85%. It’s currently trading at 40 cents to the Euro. That’s a loss of 60% on a MTM basis.

https://www.tradingview.com/symbols/TVC-AT100Y/
 

Ask the pension companies ,the higher the yields go on new issuance the greater the loses for what they already hold

Then you have to remember UK pension providers have to by law hold something like 20%+ in AAA rated assets which are generally government bonds  

[belfastchild]

3 hours ago, Long time lurking said:

4K a year for 26ft that`s crazy money where is that ?

I have been looking at fishing boats of that size i can get moorings for £600  in Cardiff bay but you do have to buy the pontoon for £2-3K which you can sell if you ever get shot of the boat 

Carrickfergus marina. You can get cheaper moorings, just none near me unless its inland on Lough Neagh. Fine if you want to just go boating etc but I bought it as a sea fishing boat.
I think Belfast Marina is cheaper but its smack in the city centre, have to navigate the shipping channel to get in or out and have to go to Carrick or Bangor to get to any decent fishing marks.
Could just do my own berth in Strangford but its a balls to get to from where I live and then theres the paddling out to the boat etc.
Would love somewhere a bit more up the coast but theres something like a 10 year waiting list. Obviously plenty of berths in Carrick and Bangor marinas.

[belfastchild]

30 minutes ago, Long time lurking said:

I was always told the definition of a boat is a hole in the water you throw money into ,it`s even more relevant if the boat is made from trees

boat - bung out another thousand.

If its made of trees or steel, usually just walk away.

58 minutes ago, sancho panza said:

My dads trying to offload a boat.He bought badly 5 years back ,has spent a fortune on mainatenance and now looking to offload. from what @belfastchild and @Wight Flight are saying,he might jsut have to scrap it.

Depends on the size. I went for a 6m boat as its 'easy' to trailer. I can tow it to antrim or craigavon, launch, have a day out and recover and its a bit of a faff but doable. Stick it in the garage in winter or out on the drive and make sure its watertight (from the top). Smaller than that and you can have great craic and easy launching/towing with plenty of days out.
Anything bigger than that and yes its possible but you want somewhere you can just decide on half hours notice to be on it fishing instead of tying down straps, putting on light board, checking for stale fuel etc etc.

For a lot of the yachts I was looking at, the purchase price was the bit you tended to overlook, particularly if it hadnt been used in a while.
A couple of aul retirees (who would fit in well on here) gave me a hand to launch it and they both had boats but just went out fishing on sundays with a load of lads on a commercial boat. Their own boats are too big and too expensive to moor (and too much now to handle at their age), both said they had got by before on their pensions but since covid and hiking of marina fees.

[DurhamBorn]

2 hours ago, Pip321 said:

Apologies for the question but how can Gilts devalue in the way you describe....do you mean Gilt Funds/EFTs? Or do you mean actual gilts and the way they lose 90% because they are fixed incomes and inflation may rocket or the pound may plummet (or indeed both)....so you mean the 'real' value may plummet rather than the nominal value

As I understand it I buy a Gilt for example at £94 which has a maturity value next year of £100 and will pay a coupon of £0.25, so I am guaranteed £100.25, ie I will make £6.25.

This isn't me trying to challenge but rather I am looking to move my SIPP. I am looking at individual Gilts and I may be tempted as an alternative to the shitty vanilla funds out there. Obviously then with balance using the commodities, PM, EM type investments in equities to compliment the overall picture.

 

Real yes,and the market prices them different all the time,so if your underwater 25% and need the cash tough,you need to sell.Gilts are always in real terms as they will never default they will just print,but inflation could be 1000% a year,so the gilts would be worthless,companies can put prices up,in a reflation cash and gilts are terrible investments over anything but the short term to hide from bank defaults and stocks market crash etc.

[DurhamBorn]

1 hour ago, sancho panza said:

Oz has more snakes than Africa iirc.where was she raised.Mrs P a saffer from the cape.They're quite a robust breed mentally speaking.Porbably explaisn why the kids are rough.Her genes have over powered my more senstive ones

Agreed.Unlikely but within the realms of possiblitiy.Prob safer to buy USTs if you're that way inclined.USD still has one sh1tshow rise in it imho

Often the way.And when they've made their mind up they can appear really relaxed with life.

Heartbreaking suicides are.Especailly young men but more common than you think.Highest cause of death in males under 44 iirc

https://www.bbc.com/future/article/20190313-why-more-men-kill-themselves-than-women

https://www.swlstg.nhs.uk/documents/related-documents/news-and-events/reporting-guidelines/reporting-suicides/105-suicide-factsheet/file

Among men, the highest rate of suicide since
1997 has been in those aged 15-44 years.

According to a World Health Organization working group, there is ample evidence
that social conditions that are liable to change (such as the constant risk of losing
one's job) are among the determinants of suicide.
Marital status affects a person's risk of suicide. In the early 1970s and late 1980s,
suicides among men under 45 years of age were linked to remaining single or
becoming divorced. [17]
More recent research suggests that divorce is still a risk factor for suicide,
particularly for men. [18]
Alcohol and drug misuse can also influence suicide risk. [19]. Rates of drug and
alcohol consumption are higher among men than women, and are particularly high
among younger people. [2

Suicide and mental health
A number of studies show that as many as 90 per cent of people who die by suicide
had one or more psychiatric disorders at the time of death, and that each diagnosed
mental illness was associated with an increased suicide risk

Ever the contrarian id be on suicide watch if i HAD to get married.I think finance is the big one,and it simply shows up as divorce when really its not the divorce so much,its the being skint after it.At least back in the 90s a 50 year old could go and buy a cheap terrace to live in,now someone that age would really struggle to afford a mortgage and bills on a normal wage.Growing up in the poorest town in England at its poorest time really taught me a lot.Loads of men late 40s onwards who lost their jobs,never worked again and seemed to just slowly walk the dog,the same way,the same time,even the same coat.I remember one bloke like that i was walking home one night and his wife was getting banged over a gravestone by some younger bloke,a decent women,but i guess her husband just became a walking corpse and she needed to feel something to numb the pain.

Having no money at that age must be terrible,and most blokes let themselves go as well when they are married etc,so at the shock of divorce they are not in any shape to be interesting to other women.

[PaulParanoia]

3 hours ago, ILikeCake said:

Doesn't someone on here work for Ford?  Aren't they going all electric?

A friend of mine works at  Ford.  He says they are 100% committed to being all electric in Europe by 2030.  He didn't like it when I told him they wouldn't be selling many cars if that's true.

[SpectrumFX]

28 minutes ago, DurhamBorn said:

Ever the contrarian id be on suicide watch if i HAD to get married.I think finance is the big one,and it simply shows up as divorce when really its not the divorce so much,its the being skint after it.At least back in the 90s a 50 year old could go and buy a cheap terrace to live in,now someone that age would really struggle to afford a mortgage and bills on a normal wage.Growing up in the poorest town in England at its poorest time really taught me a lot.Loads of men late 40s onwards who lost their jobs,never worked again and seemed to just slowly walk the dog,the same way,the same time,even the same coat.I remember one bloke like that i was walking home one night and his wife was getting banged over a gravestone by some younger bloke,a decent women,but i guess her husband just became a walking corpse and she needed to feel something to numb the pain.

Having no money at that age must be terrible,and most blokes let themselves go as well when they are married etc,so at the shock of divorce they are not in any shape to be interesting to other women.

After reading that I think I need to try harder at work.

[Axeman123]

25 minutes ago, DurhamBorn said:

At least back in the 90s a 50 year old could go and buy a cheap terrace to live in,now someone that age would really struggle to afford a mortgage and bills on a normal wage.

An aqaintance used to be in a house share in London. They had a fella in his late forties move in for a bit pretending to be late thirties, and then later get removed by the landlord when he was found out. He was apparently an arsehole in general, and others in the houseshare saw to it that he was found out to get rid.

Apparently that is a thing though, landlords offering houseshares only want young people and often won't let to people over a certain age. Imagine living in a houseshare in your forties because it is all you have the budget for with a bunch of twenty somethings, and having to hide your age etc. Imagine knowing in a few years no-one will rent you such a room. At least the twenty-somethings have hope of career progress and better housing in the future.

[Errol]

Historically it's actually completely normal for those 40+ to be renting rooms. It's ownership that is the anomaly.