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

[HousePriceMania]

46 minutes ago, crashmonitor said:

ECB have held," if current trends continue it will be appropriate to ease". No date specified.

The corollary of that is...

 

" if current trends changes it will be appropriate to tighten"

[Mandalorian]

6 hours ago, headrow said:

 

 

I also tagged the 3 top fallers in the ftse100 , Phoenix , Aviva and Lloyds as they all went ex div.

Trouble maker....

[JMD]

1 hour ago, sancho panza said:

talkign of beautfiil things

Obviously all the NEST pension holders are looking forlornly on as their betters decided to offload at £10 in 2020 to help the drive to net zero.

if they move to the US it'll be £40 I suspect and therfore a tripple bagger for the basement dwelling community

You mention stock re-listings...

Recently I watched a Steven Bartlett podcast, only because I thought his guest looked interesting but unfortunately wasn't. Bartlett is on Dragons Den but more relevant is that he's apparently worth £100million+, and is a serial entrepreneur. Anyway he mentioned in the podcast that over the years he has had frequent meetings with investment bankers when discussing taking his investment projects public, and he remarked that the value the bankers estimate if company is listed in the US is usually 2-3 times that of a UK listing. 

[Alifelessbinary]

24 minutes ago, Joncrete Cungle said:

We are planning on using ISAS and LISAS to try and mitigate more SIPP moving of the goalposts. I guess the LISA penalty free access age will remain at 60 even when SIPP is older than 60.

Use the s&s ISAS divvies to coast in late 40's early 50's and SIPP everything above the tax free allowance / cut back on hours worked.

Pack up at 60 when LISA can be accessed and take tax free divvies from both ISAS and LISA. Take SIPP whenever access age is upto tax free allowance each year and forget state pension.

No doubt the bastards in Westminster will try and put a stop to it over the next couple of decades plus.c

 

I’ve been adopting the ISA approach for over 10 years now and have been making full transfers.

My concern is that they’ll adopt a life time limit and then use fiscal drag to get back the unpaid tax in the future (completely forgetting that I’ve already paid eye watering sums of tax before transferring to my ISA).

Im generally an optimist, but I do think a reckoning is coming . Unlike other periods of history we have no easy solutions like North Sea, public asset disposals, or privatisation to kick the can down the road.

Id rather see state subsidised government industry than pay huge swath of the working populace to stay at home and get depressed. 

We’ll happily send a young man to prison for £40k a year rather than teaching him to be a man in the army for the same price. 

From an investing point the world is a crazy price but I’ll continue to cost average into the markets as just about have faith that capitalism will still drive better growth than sitting on a huge pile of cash, although I am holding more of the stuff recently after losing my nerve.

 

[Harley]

3 hours ago, M S E Refugee said:

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

Agree about the risks.  I accessed it as soon as I could due to lack of trust.  25% and then later into drawdown, all done as tax efficiently as possible (which means smaller amounts over a longer time so start early).  Taking drawdown doesn't mean you need to spend it.....ISA's, etc.  Access/liquidity/security is one of the most important co-joined things for me.  Others are doing or about to do the same, all ex-high earners smelling the coffee and moving on.   

Edited April 11 by Harley

[snaga]

57 minutes ago, Sasquatch said:

Will be taking my 25% lump sum next April or perhaps 12 months later at the very latest.

I concur with your concerns. I think we will see a government in a panic in the reasonably near future. Anyone with private 'wealth' will be a target, however unfair it may seem.

but where do you put that 25%?

I can access mine now, but havn't as I'm already maximising family ISAs (which could also be targetted).  I could clear the mortgage, but I've got 30 months left fixed at 1.6% so not worth it. So for now leaving it in my SIPP seems like the best option.

[Mandalorian]

1 hour ago, spygirl said:

 he may be typing this out as hes got one hand pumping an OAP.

 

 

[Harley]

Ashmore finding support or just going to feck around some more like Aberdeen and co?

The investment managers, there are easier ways to make coin.  Presumably the div is to compensate for being jerked around.  Think we'll dump Aberdeen and stay out of the sector until some consistency takes hold.

[reformed nice guy]

1 hour ago, Lightscribe said:

How is stuey nowadays?

We went to the swimming at the weekend for the inflatables. He was pretty sullen. Even a hot chocolate afterwards with extra marshmallows wouldn't cheer him up.

He kept on muttering about a plateau.

[JMD]

2 hours ago, feed said:

Anecdotal and UK not US.  I was talking with a few acquaintances i have in the insurance industry over the Easter holiday.  And they were saying that the theft component for car cover isn't even close to high enough.  The 10% premium and 10% theft excess that an average £100k ungaraged vehicle in a city costs, is coming for more mundane vehicles.   

Or the companies are going to stop offering basic car insurance as a single product altogether.  It'll get bundled into profitable products.  Think complete cover house/life/car/accident bundles. 
 

Yes I think the large Insurance companies would rather 'smooth' premiums across all customers, however they are finding that this model no longer works in an increasingly diverse population. I believe they want to identify high risk customers and push those customer types onto specialist insurers. Thereby allowing them to lower their own generic premiums. 

The below article is an example of how the insurers are perhaps radically experimenting with their policy offerings. 

Talking of 'radical', I note the story source is BBC Verify (or as I prefer to call it: The Ministry of Truth), thus confirming that Verify is not merely a news fact checker - but is also a (progressively woke?) news generation outfit!! A very worrying development if you think about it.

https://www.motorfinanceonline.com/news/car-insurance-quotes-33-higher-in-most-ethnically-diverse-areas-bbc/

 

Edited April 11 by JMD

[DurhamBorn]

35 minutes ago, Harley said:

Agree about the risks.  I accessed it as soon as I could due to lack of trust.  25% and then later into drawdown, all done as tax efficiently as possible (which means smaller amounts over a longer time so start early).  Taking drawdown doesn't mean you need to spend it.....ISA's, etc.  Access/liquidity/security is one of the most important co-joined things for me.  Others are doing or about to do the same, all ex-high earners smelling the coffee and moving on.   

Problem for me though is im just under IHT at all times,so my SIPP is crucial because it shields a mill.If i draw more from the SIPP (the 25% lump sum for instance) i go way over IHT.Iv got trusts,that are 40% tax,so i pay the grandkids the tax allowance each year enough to get all the tax back but my daughter is getting sick of opening me bank accounts with cards etc so i can draw it out etc.If/when my dad dies the problem gets much worse,and if my brother then dies,whos money is in the trust then it gets crazy bad.The ISA of course is capital gains free so i can get the big profits out,but then need to get rid.I could buy all the kids a BTL,but they might end up splittin up etc and losing half.These allowance freezes are a nightmare.Its why im spending a lot now,because i have to try to keep things just growing or steady,could do with a BK just to wipe half my wealth out 

Edited April 11 by DurhamBorn

[Axeman123]

1 hour ago, JMD said:

he remarked that the value the bankers estimate if company is listed in the US is usually 2-3 times that of a UK listing. 

At least partly that is because they are allowed more lattitude in stating profits etc for shareholders, so higher profits on paper = higher valuation.

[JoeDavola]

1 hour ago, One percent said:

You are very well positioned Joe. Moving forward, I would suggest buying somewhere and paying the mortgage down asap.  Then, it doesn’t matter if your job goes, you will only need to earn enough to pay utilities and food. 

Gonna have to buy soon as depressingly prices continue to soar faster than most people could ever save.

[One percent]

19 minutes ago, JoeDavola said:

Gonna have to buy soon as depressingly prices continue to soar faster than most people could ever save.

Weird isn’t it. 

[Sasquatch]

1 hour ago, snaga said:

but where do you put that 25%?

I can access mine now, but havn't as I'm already maximising family ISAs (which could also be targetted).  I could clear the mortgage, but I've got 30 months left fixed at 1.6% so not worth it. So for now leaving it in my SIPP seems like the best option.

I have thought the same. I'm 57 so already able to access. Mrs S is two years behind me. We will need to clear our mortgage in early 2028 at the end of our fixed rate. I also want to keep maximising isa contributions and we won't be able to do this from earnings in a couple of years time as we wind down the business. The lump sums from the SIPPS will allow this for a little longer. We then have the ability to draw down income from our SIPPs up to or perhaps slightly over the current £12,570 tax threshold and then top up from the isas as and when needed.

I've been going spreadsheet mad the last couple of months trying to chart a path into retirement....and also the best way of winding down the business. 

I've actually found it quite stressful. There's no professional advice available as IFA's are all stuck in their ruts.

This place has been invaluable over the last few years. Many thanks to all who regularly contribute to this thread and to @spunko for hosting the whole shebang.

[PETR4]

20 hours ago, M S E Refugee said:

 

 

The most interesting snippet in this video is that in a high inflation environment banks won't lend for long durations due to value erosion of the loans.

This means large purchases like houses revert to cash. Without the financialisation of pricing, the purchase price will drop.

From that I infer the trigger for rolling back house purchase lending will be the scrapping of 35 year mortgages.

[Long time lurking]

 

[Axeman123]

15 minutes ago, PETR4 said:

The most interesting snippet in this video is that in a high inflation environment banks won't lend for long durations due to value erosion of the loans.

This means large purchases like houses revert to cash. Without the financialisation of pricing, the purchase price will drop.

From that I infer the trigger for rolling back house purchase lending will be the scrapping of 35 year mortgages.

It makes total sense that in a flat or falling inflation market lenders will happily hug base rate on lending, and think of only margin, whereas in an environment of long-term higher expected inflation they will want a larger margin on any fix or even insist on lending at floating rates.

[Eventually Right]

8 minutes ago, Long time lurking said:

 

Is that actually true?

I ask because the source is a (clearly massively lefty) science teacher

[Harley]

1 hour ago, snaga said:

but where do you put that 25%?

I can access mine now, but havn't as I'm already maximising family ISAs (which could also be targetted).  I could clear the mortgage, but I've got 30 months left fixed at 1.6% so not worth it. So for now leaving it in my SIPP seems like the best option.

I've identified quite a few options.  Sure, not as good as a pension tax shelter, but that's before factoring the real risks of said shelters.  As always, a bit of a spread for me.

[Democorruptcy]

On 10/04/2024 at 14:35, DurhamBorn said:

I think they will cut in June because the reverse repo is nearly empty and they need to kick in a private sector credit cycle or the US government goes bust.Inflation will not come into it now.PMs know the above.This shake out will clear some weak hands and might throw up the chance to add to some positions before the real moves begin.

It seems a bit hopeful to say it's stabilized based on the chart. It had gone up for 2 months and then dropped back. Tax receipts are supposed to help?

Quote

 

The drawdown of balances at a key Federal Reserve facility appears to have bottomed out for now, providing a liquidity cushion for the central bank’s reserves during tax season.

Use of the Fed’s overnight reverse repurchase agreement facility — where counterparties like money-market funds park cash to earn 5.3% — has plummeted some $1.75 trillion since June. That’s when the government suspended the debt ceiling, unleashing trillions of dollars of Treasury bill supply and giving investors an alternative to just holding money at the Fed.

The funds in the facility began to stabilize in recent weeks, settling around $440 billion, close to the lowest level since 2021. Last month is when tax receipts began to ramp up, filling the government’s coffers and leading the Treasury to slash
T-bill issuance. With more money to put to work than collateral available, eligible counterparties are shifting back to the Fed’s RRP.

The shifting dynamics may also give the central bank more time to decide when to slow and eventually stop the reduction of its balance sheet — a process known as quantitative tightening — because there will still be cash parked at the RRP even as tax payments drain a chunk of bank reserves.

https://www.bloomberg.com/news/articles/2024-04-09/ebbing-drawdown-of-fed-repo-facility-offers-cushion-for-reserves

 

 

[Harley]

2 hours ago, DurhamBorn said:

Problem for me though is im just under IHT at all times,so my SIPP is crucial because it shields a mill.If i draw more from the SIPP (the 25% lump sum for instance) i go way over IHT.Iv got trusts,that are 40% tax,so i pay the grandkids the tax allowance each year enough to get all the tax back but my daughter is getting sick of opening me bank accounts with cards etc so i can draw it out etc.If/when my dad dies the problem gets much worse,and if my brother then dies,whos money is in the trust then it gets crazy bad.The ISA of course is capital gains free so i can get the big profits out,but then need to get rid.I could buy all the kids a BTL,but they might end up splittin up etc and losing half.These allowance freezes are a nightmare.Its why im spending a lot now,because i have to try to keep things just growing or steady,could do with a BK just to wipe half my wealth out 

I'm struggling.  Don't want to exceed the IHT limit so the kids get it at the risk they don't due to pension changes, etc when you can gift it to them now, but then worried they'll split up, etc.  I don't think giving someone money in your will stops them splitting up, etc any more than giving it to them before you die?!  Not my specific area and I'm sure you know better but then there is the old adage of not letting the tax tail wag the dog!

PS:  Nothing to do with me, none of my business, I'm just thinking aloud!

Edited April 11 by Harley

[Mandalorian]

1 hour ago, DurhamBorn said:

Problem for me though is im just under IHT at all times,

Well just don't die then.

[ThoughtCriminal]

Ok, which one of you fuckers was it?

"Yes, we at DOSBODS oil Corporation have very much oil for you. Please deposit $400 million in this Hargreaves Lansdown account. Ta very much".

 

 

[Loki]

3 minutes ago, ThoughtCriminal said:

Ok, which one of you fuckers was it?

"Yes, we at DOSBODS oil Corporation have very much oil for you. Please deposit $400 million in this Hargreaves Lansdown account. Ta very much".

 

 

No refunds