Credit deflation and the reflation cycle to come (part 8)

[Axeman123]

1 hour ago, Pip321 said:

So UK 2 year swap suggests rates could be going up. Gold is rallying like it does when rates are going to fall. Oil prices suggest economic demand increasing.
All over the place…let’s see if I have this right  

Swap rates are anticipating future inflation and showing that rates SHOULD rise.

Gold is rallying because rates will be cut instead, simply down to the cost of govt borrowing.

Oil production keeps being cut due to falling demand, but even this can't get the price back to where it was not that long ago. Allegedly (iirc) Saudi had its budget balanced based on a $95/barrel average oil price, and hence is now cutting big projects it had previously started.

Stagflation explains all three.

[onlyme]

4 minutes ago, Axeman123 said:

Swap rates are anticipating future inflation and showing that rates SHOULD rise.

Gold is rallying because rates will be cut instead, simply down to the cost of govt borrowing.

Oil production keeps being cut due to falling demand, but even this can't get the price back to where it was not that long ago. Allegedly (iirc) Saudi had its budget balanced based on a $95/barrel average oil price, and hence is now cutting big projects it had previously started.

Stagflation explains all three.

Russia agreed to cuts in output at the request of Russia, then Russia gets drone attacked, 10% of refinery out of commision for a while and is now importing refined product from Belarus.  Pressure is there for more rises, doesn't US driving season have a positive demand effect as well so a seasonal element?

[Axeman123]

15 minutes ago, Jay said:

Ecb meets today.. I think that they will go first so should an interesting session..the fed has positive real rates so a quarter point cut will be possible with minimal economic consequences…oil is the problem if it goes higher and holds..

us is in better position than uk and Europe..Goldilocks still has not left the house yet..

The US needs a weaker dollar IMO, so will want to go first (and force everyone else to wait)

The jaw-boneing by the Fed etc getting cuts priced out by markets makes total sense as a tactic to pressure other CBs to hold. The Fed will want shock and awe on their side when they do cut, rather than it having been priced in ahead of time.

Interesting related tweet:

 

[M S E Refugee]

27 minutes ago, DurhamBorn said:

I was worried the Graf reporter who follows us had died,but fear not,they are back reading us again.

https://www.telegraph.co.uk/business/2024/04/11/public-sector-destroy-whats-left-uk-economy/

Of course the size of the state and bennies is what is destroying us,but its mainly because it is all inflation linked.There is no incentive to lower bennies for instance if you are in charge of policy in the public sector on £100k with an inflation linked pension.You like fat Shaz getting inflation uplifts on her £25k a year,because it ensures you get inflation increases on your £75k a year pension.

As we know on here,the days of simply stealing off everyone else through taxation are long gone because it is not enough,now they need to take saved labour as well through monetising and the de value of most assets.Im tracking this as close as i can,and its more experience than hard numbers,but i suspect in the last 4 to 5 years the state has taken around 30% of lifetime savings to keep itself in clover.We are moving past the point where there is no coming back from.

I take a look at the pensions of the best paid private sector employer in a local town compared to bennies and retired coppers.Since 2020 its close to 50% difference.These are banana republic numbers.

Iv managed 98% now on family wealth (outside of housing),but its been a lot of work.They really are evil.

In Carlisle town centre many of the large shops have closed down so it's a mix of charity shops, with an M&S,Primark and a Boots.

There are a few fairly expensive Coffee/Bistro Bars that are usually rammed with retirees.

I assume most of their patrons are retired public sector workers.

[crashmonitor]

We've had the most fundamental shift in the 2 year UK swap in ages, now a full quarter point rise since the US inflation shocker. Not one indebted journo has deigned to mention it today. Had it been a quarter point reversal they would be swarming all over it, lauding Swati Dinghra and castigating Bailey for his failure yet to cut.

Edited April 11 by crashmonitor

[JMD]

19 hours ago, DurhamBorn said:

https://www.telegraph.co.uk/business/2024/04/10/slash-benefits-to-get-more-men-into-work-imf-urges/

So the answer is more men in work (not fat Shaz),,,stop you getting your pension and import more Abduls to molest your granddaughters.Talk about doubling down.

 

The IMF said: “Policies designed to facilitate the flow and integration of migrant workers, alongside measures to boost labour force participation among older workers in advanced economies – through retirement reforms and labour market programs – could mitigate the increasing demographic pressures on labour supply.”

I wonder if the below is more evidence that IMF rule the world?... well the global economy at least - but which is of course effectively the same thing.

Was listening to LBC radio yesterday (I know, but I do enjoy gauging the level of spacticity of their phone-in callers!; at least for the sample of public that LBC allow on air!!) - the station presenters curiously appear to think, that the recent suggestion by the IMF of cutting benefits to boost work participation, might be a good idea. This I find surprising because I bet if the same idea had come from the 'evil' conservative government it would have been greeted with at least a mocking disdain, and most probably moral horror.

My interpretation for us in UK s that labour (have been given 'permission'(!) and) will reform benefits and are also probably planning all kind of cuts. After all Wes Streeting has already signalled NHS reforms are coming and that institution has been considered untouchable up to now. 

 

Edited April 11 by JMD

[Dave Bloke]

56 minutes ago, Jay said:

Ecb meets today

Chammy Face has said he has no problems leading the pack.

[DurhamBorn]

39 minutes ago, JMD said:

I wonder if the below is more evidence that IMF rule the world?... well the global economy at least - but which is of course effectively the same thing.

Was listening to LBC radio yesterday (I know, but I do enjoy gauging the level of spacticity of their phone-in callers!; at least for the sample of public that LBC allow on air!!) - the station presenters curiously appear to think, that the recent suggestion by the IMF of cutting benefits to boost work participation, might be a good idea. This I find surprising because I bet if the same idea had come from the 'evil' conservative government it would have been greeted with at least a mocking disdain, and most probably moral horror.

My interpretation for us in UK s that labour (have been given 'permission'(!) and) will reform benefits and are also probably planning all kind of cuts. After all Wes Streeting has already signalled NHS reforms are coming and that institution has been considered untouchable up to now. 

 

There will be war between lefties on the public tit and those not on it,because the lefties not on it,the ones with the BTLs and big mortgages,but love all the lefty shite will wake up to the fact rates will only go a lot lower once the state sponsored lefties lose their inflation linked freebies.Rents have increased of course,but the lefties will of been thinking mortgages would be back down before they had to  re-finance.Now they will all re-finance higher,and on top see that repair bills etc are through the roof.The Tories of course will have to split,but so will the left.

Labour will have to decide,bennies or nurses.They created the mess,but for the first time in a generation the Tories made it worse rather than fix when in.I fancy bennies will be a target under Rachel,but she wont scare the native until they see the size of their win.

[DurhamBorn]

1 hour ago, Axeman123 said:

Swap rates are anticipating future inflation and showing that rates SHOULD rise.

Gold is rallying because rates will be cut instead, simply down to the cost of govt borrowing.

Oil production keeps being cut due to falling demand, but even this can't get the price back to where it was not that long ago. Allegedly (iirc) Saudi had its budget balanced based on a $95/barrel average oil price, and hence is now cutting big projects it had previously started.

Stagflation explains all three.

Stagflation with an ongoing transfer of savings and income from the private sector to the public.So far this thread has kept in front of it,but we are pretty much just walking to the back of the Titanic ahead of everyone else..We die last unless The Californian responds to our rockets.

Edited April 11 by DurhamBorn

[onlyme]

Was gooing to mention this one back in Jan (honest) but slipped my intention, they seeem to successfulliy lining themselves up with various partnerships for SMR construction site works. Kicking myself for not having a tickle back then.

Strong recent price target revisions but  tiny analyst coverage (ony two on Marketscreener)

https://www.marketscreener.com/quote/stock/ROYAL-BAM-GROUP-N-V-6378/consensus/

[sancho panza]

3 hours ago, crashmonitor said:

UK 2 year swap blew out to 4.8% at close or a rise of 3% on the day from 4.65%. We are now knocking on the door of 2024 highs of 29th February whence we were at about 4.9%. It will be interesting to see where it goes today.

I'm not sure we can go it alone on cuts in June if the FED holds going forward, we would get absolutely spanked on FOREX and as an importer we would be struggling to hold 2% target after the forthcoming dip in  inflation.

whats intersting is how little the 2 yr gilt rate dropped back when inflation pulled back from 10% last year.

which hints the bond market never quite beleived that inflation fairies were gone even tho the bank of england said they were.

below below is inflation chart back to 2014 as per the 2 yr chart.

even if the fed cuts,Im not sure we could follow.$ is the workd reserve still...for now.£ is tmrws toilet paper the way the govt are behaivng on borrowing for bennies and NHS spendo.

1 hour ago, DurhamBorn said:

https://www.telegraph.co.uk/business/2024/04/11/public-sector-destroy-whats-left-uk-economy/

As we know on here,the days of simply stealing off everyone else through taxation are long gone because it is not enough,now they need to take saved labour as well through monetising and the de value of most assets.Im tracking this as close as i can,and its more experience than hard numbers,but i suspect in the last 4 to 5 years the state has taken around 30% of lifetime savings to keep itself in clover.We are moving past the point where there is no coming back from.

I take a look at the pensions of the best paid private sector employer in a local town compared to bennies and retired coppers.Since 2020 its close to 50% difference.These are banana republic numbers.

Iv managed 98% now on family wealth (outside of housing),but its been a lot of work.They really are evil.

wahts fascinating is the scale of the fincaical rape of the middle classes needed to keep the plates spinning let alone clearing some of the debt

see we're fgoing form 3mn 40% taxpayers in 2010 to 5.6mn in 2024 to 7.8mn in 2027...........................................it's no wonder people give up.

ref the second point,I think if people checked their pension statments as often as they checked their bank statement they'd be raging.

the hosing from bond yield going from 2% to 4.5% has yet to be felt by the DC mananged pension schemes imho

https://www.telegraph.co.uk/money/tax/income/one-in-five-now-paying-higher-rate-tax-under-the-tories/

In 2023/24, 18pc of income taxpayers are projected to pay either the higher or additional rate, according to Office for Budget Responsibility (OBR) figures. This is up from 10.4pc when the Conservatives came to power in 2010.

Income tax thresholds are set to stay frozen until 2027/28 thanks to the Chancellor, dragging millions of taxpayers into higher brackets.

There were 3.03m higher rate taxpayers and 236,000 additional rate taxpayers in 2010/11, representing 9.6pc and 0.8pc of the total number of income tax-payers respectively.

These numbers are projected to rise to 5.6m (15.6pc) and 862,000 (2.4pc) in 2023/24, according to OBR figures.

 

[onlyme]

19 minutes ago, Jesus Wept said:

Looks interesting:

 

Think it is the promise of SMR contracts alone that has caused the stir. MOU's/partnerships with RR in both Netherlands and UK and also with Holtec for the UK. Interesting in particular in UK that they have multi-partnered on the SMR front.

Bit like Micron, get the pick and shovel companies associated with the high profile attention grabbers.

Edited April 11 by onlyme

[JoeDavola]

Retiring in your 60s is becoming an impossible goal. Is 75 the new 65?

https://www.bbc.com/worklife/article/20240404-global-retirement-increase-65-to-75

Seems the best place to post this - beeb seeking to normalize the wealth transfer taking place. Work till ya die, or until just before you die.

And no, 75 is not the new 65.

I took a walk around the docks area of Belfast the other day and passed a few modern open plan offices, was reminded how awful most open plan offices are now and the idea that you'd spend 50 years in one is just horrific.

@montecristo has the right idea, make some money and then move somewhere cheap and sunny

[M S E Refugee]

13 minutes ago, JoeDavola said:

Retiring in your 60s is becoming an impossible goal. Is 75 the new 65?

https://www.bbc.com/worklife/article/20240404-global-retirement-increase-65-to-75

Seems the best place to post this - beeb seeking to normalize the wealth transfer taking place. Work till ya die, or until just before you die.

And no, 75 is not the new 65.

I took a walk around the docks area of Belfast the other day and passed a few modern open plan offices, was reminded how awful most open plan offices are now and the idea that you'd spend 50 years in one is just horrific.

@montecristo has the right idea, make some money and then move somewhere cheap and sunny

I think anyone who doesn't access their Pension at 55 and soon to be 57, is taking a massive gamble.

You could see the Government harmonising the age you can take your work/private pension with the old age pension.

[Lightscribe]

3 hours ago, headrow said:

Bailed on Fres this morning , a month ago I was £2.5k down on them , I've got out this morning with £600 profit.

 

I also tagged the 3 top fallers in the ftse100 , Phoenix , Aviva and Lloyds as they all went ex div. The next 2 months are my best months of the year for divis coming through.

https://archive.ph/Ao7vu

 

The second wave is only just beginning 

[montecristo]

17 minutes ago, JoeDavola said:

Retiring in your 60s is becoming an impossible goal. Is 75 the new 65?

https://www.bbc.com/worklife/article/20240404-global-retirement-increase-65-to-75

Seems the best place to post this - beeb seeking to normalize the wealth transfer taking place. Work till ya die, or until just before you die.

And no, 75 is not the new 65.

I took a walk around the docks area of Belfast the other day and passed a few modern open plan offices, was reminded how awful most open plan offices are now and the idea that you'd spend 50 years in one is just horrific.

@montecristo has the right idea, make some money and then move somewhere cheap and sunny

Yes, looking back i'm kicking myself for not doing it earlier.  Wasting money leasing cars, credit cards etc  etc.  Could have made the move years ago. Now I have no credit cards or even direct debits.

[Castlevania]

7 minutes ago, Jesus Wept said:

OK - I am going to be contrarian here….. bear with me. 

Below is yesterdays US inflation data of 3.5% drilled down into its components.

Have a detailed look.

A big part of the 3.5% appears to be made up of:

1. Transportation services (car Insurance): 10.7%

2. Electricity: 5.0%

3. Shelter (mortgage rates): 5.7%

The first two Car insurance and electricity can in the main be explained by profiteering by car insurance companies and energy companies. (E.g. Aviva and Centrica doing the same here ATH share price recently as profits so large). When their costs are pretty low. 

The third one Shelter is ironically caused by high interest rates causing mortgage rates to be high. Reducing IRs would reduce shelter and lower inflation. 

So without these THREE above ‘real inflation’ is pretty low (that’s if we believe the figures of course).

So what I cannot understand is given the reverse repo concerns by the US government, and that they really actually need to lower IRs to reduce their debt burden - why don’t they explain the above to the general public -  and just go ahead and lower IR’s ? 

Am I being naive / dumb here? Thoughts? 

 

 

 

Shelter is rent. Mortgage rates aren’t included. It’s a lagging measure. Inflation was much higher than reported a year ago and is lower now because of the way they measure rents.

[Axeman123]

@Jesus Wept The insurance thing is perplexing, by all accounts falling repair and replacement costs should be feeding in by now. 

Electricity isn't necessarily about profiteering, so much as idiocy like net zero and sanctions.

I think the Fed will cut, perhaps as soon as May but more likely June. They will want to manage messaging around this carefully though. The last thing they want is to be seen as blowing a stock market bubble in an election year, having worked hard on "credibility" (ie convincing markets they will do whatever they say) they won't want to be seen as backing down to market expectations etc.

DDMB thinks they will end QT first, which would obviously help with debt costs.

https://twitter.com/DiMartinoBooth/status/1778126422394949644

 

[Axeman123]

8 minutes ago, Castlevania said:

Shelter is rent. Mortgage rates aren’t included. It’s a lagging measure. Inflation was much higher than reported a year ago and is lower now because of the way they measure rents.

Lots of lags seem set to move reported inflation lower in the near term even if nothing else actually changes.

[Axeman123]

5 minutes ago, Jesus Wept said:

Surely rent is also linked to mortgage rates. As rates go up the landlords have to pass on this cost to their tenants? 

Many places rents are falling.

[snaga]

25 minutes ago, Jesus Wept said:

OK - I am going to be contrarian here….. bear with me. 

Below is yesterdays US inflation data of 3.5% drilled down into its components.

(Nearly all the others are far below or just above the 3.5%). 

Have a detailed look.

A big part of the 3.5% appears to be made up of:

1. Transportation services (car Insurance): 10.7%

2. Electricity: 5.0%

3. Shelter (mortgage rates): 5.7%

The first two Car insurance and electricity can in the main be explained by profiteering by car insurance companies and energy companies. (E.g. Aviva and Centrica are examples of UK companies doing the same here. They have ATH share prices recently - as profits so large). When their costs are pretty low. 

The third one Shelter is ironically caused by high interest rates causing mortgage rates to be high. Reducing IRs would reduce shelter and lower inflation. 

So without these THREE above ‘real inflation’ is pretty low (that’s if we believe the figures of course).

So what I cannot understand is given the reverse repo concerns by the US government, and that they really actually need to lower IRs to reduce their debt burden - why don’t they explain the above to the general public -  and just go ahead and lower IR’s ? 

Am I being naive / dumb here? Thoughts? 

 

 

 

you are Sasha?

 

[Castlevania]

14 minutes ago, Jesus Wept said:

A more detailed drill down into SHELTER component. What is is…

@Castlevania - is “SHELTER” not BOTH rent and what one pays in mortgage costs? See definition above. Surely rent is also linked to mortgage rates. As rates go up the landlords have to pass on this cost to their tenants? 

No. There’s rent for renters and imputed rent for owner occupiers. 

[Pip321]

3 hours ago, Axeman123 said:

Swap rates are anticipating future inflation and showing that rates SHOULD rise.

Gold is rallying because rates will be cut instead, simply down to the cost of govt borrowing.

Oil production keeps being cut due to falling demand, but even this can't get the price back to where it was not that long ago. Allegedly (iirc) Saudi had its budget balanced based on a $95/barrel average oil price, and hence is now cutting big projects it had previously started.

Stagflation explains all three.

Agree...my statement was rhetorical to illustrate the bewilderment of the 'Bloomberg trader' rather than those on this thread looking beyond the 'current data'. 

Main thrust now I see is that the central banks are less able to control things, fiscal dominance starting.....

I see a small drop in rates in the next few months (elections are here, so entirely political) but the market (driven by traders and non macro investors) massively over reacting and Dave Hunters melt up.....then the election happens, the party stops and reality starts to hit. That's the next great big buying opportunity if the US haven't started WW3 to avoid civil riots.

I think we are moving through the phases now.... length of each phase, polo actions to extend things.... so as ever though is almost an impossibility to predict real timings. 

[One percent]

39 minutes ago, Jesus Wept said:

A more detailed drill down into SHELTER component. What is is…

@Castlevania - is “SHELTER” not BOTH rent and what one pays in mortgage costs? See definition above. Surely rent is also linked to mortgage rates. As rates go up the landlords have to pass on this cost to their tenants? 

I don’t understand a word of that bollox, it’s all made up shit full of ‘ifs’. In other words, it’s an attempt to deceive. 

[One percent]

25 minutes ago, Castlevania said:

No. There’s rent for renters and imputed rent for owner occupiers. 

Made up bollox for the purpose to deceive