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

[Pip321]

5 hours ago, JMD said:

Some US property taxes are higher than here but overall don't appear eye watering to me. For example Texas LVT is considered high yet many move there because its other state taxes are low, so swings and roundabouts. Plus it's only on residential land, not commercial and where they apply capital gains taxes, so don't think it's a good LVT example.

https://smartasset.com/taxes/lowest-property-tax-states

 

The average conservative MPs house (not picking on Tories…it’s just I found it in a Mirror article) is £1.3m.

It wouldn’t even occur to them to have a LVT….why would it.? Well maybe but only if MPs (and retired MPs) were exempt. 

If the average house price is say £250k and the average rates are say £2k then that’s just shy of a 1% current charge. So let’s replace with a 1% levy based on values….

But that would mean a £1.3m house pays £13k and imagine those MPs with second homes ie almost all of them.

To tax property is counterintuitive to TPTB. It would be a mix of those not wanting to pay more, those who feel so entitled they shouldn’t even have to pay more and those who it would even occur to them to introduce something that doesn’t benefit them so they haven’t even thought about it. 

[Libspero]

5 hours ago, JMD said:

Some US property taxes are higher than here but overall don't appear eye watering to me. For example Texas LVT is considered high yet many move there because its other state taxes are low, so swings and roundabouts. Plus it's only on residential land, not commercial and where they apply capital gains taxes, so don't think it's a good LVT example.

https://smartasset.com/taxes/lowest-property-tax-states

 

In some cases living on a state line is popular..   buy a house in Massachusetts (low property tax) shop in the Merrimack in New Hampshire (no sales tax).

[No One]

21 hours ago, DurhamBorn said:

I use around 30 indicators i track,i add and remove the odd one,but the real trick is the multipliers.Its trying to see through the data to the things than cause a much bigger reaction than economists think.Its those multipliers that move the roadmap vertical.Why?,well for example the multiplier i use on "none producing consuming" ie bennies and retired has gone past the point where it can be covered by the productive.So the multiplier is increasing from that into other areas its so powerful,a bit like a huge wave sweeping inland.The indicators are the backbone of the roadmap but those could be done by anyone half decent once they know what they are.The real skill,and although i joke,im very very very good at it is cross market reading it.Its the cross market work from the roadmap that interests me the most.Roadmaps change and are simply a direction tool.Right now the UK one is vertical because the data is horrific feeding in and without massive changes it will see huge changes in society,wealth etc.I spend about 1 hour a month on the road map,i spend sometimes full days doing cross market off it.The BOE models failed because they are rigid based on classical economics and cannot see cross market.Macro strategy is not just the numbers,its what do those numbers mean in the real world.

Simple one,i told the thread about bennies etc passing that point a few years ago.What is happening now?.Huge numbers pretending to be ill to get on disability bennies,nearly 10 million adults deciding not to work.That was cross market from the roadmap due to multipliers.The bennie increases were so large they engulfed the productive economy.The next step is products being not affordable for lots of workers,they cannot cover themselves and the bennies.Its already happened in housing as we know.

Thank you for the explanation. I think I poseted a video that seems to show what you describe in bold (bold by me).

[No One]

9 hours ago, King Penda said:

Well we do and don’t like money I’m quite happy to do lots of hours but only if it suits me . Don’t compare what I earn to you rich professionals concider my council house mentality to yours . Do you think I like paying this much tax  ?  And do you think I’m going to do something about it in the near future stunts like you lot can’t do because of large mortgages debt or simply how others think of you . Dam right I’m thinking fuck this I’ve earnt that on shit wages in a bit over 7 months my patience is wearing thin . I can live on 2 shifts a week probably take home 270 a week and pay next to no tax .once I’ve got my next house I’m doing the bare fucking minimum I might even become a carer get a lodger and go on universal credits and retire .options are good but ps I’m not actually lazy lol

Dont know who you are or what you do, but as DB has said before, if work is not incentivized (benefits are inflation protected vs wages not being) you will see people dropping out.

[MrXxxx]

Why has it taken them so long to see the bloody obvious?

https://www.msn.com/en-gb/money/other/rishi-sunak-is-told-to-cut-bill-for-benefits-and-encourage-more-brits-back-to-work-to-reduce-uk-s-debt-crisis-instead-of-relying-on-immigration/ar-BB1hX2Zu

..when I see things like this I can only think that a) 'our' political class are incompetent at what they do and so should be 'sacked', or b) [and more likely], they appear incompetent but are actually aware, have a vested interest/personal gain from such circumstances/scenarios, and so should not be trusted.

[DurhamBorn]

Looks like i was right and BAT are considering and trying to find a way to sell their ITC India stake (or some of it).Most ignored it,but its worth about a third of the debt total and would clean up the balance sheet in one go.They could then launch £2bill/£3bill a year share buybacks.Thats why the share are up so much today.The new products also turned a £400mill profit for the first time,thats a cracking performance,the new products business is likely worth £8billion already.Debt down to 2.6x means share buybacks will start at the half year results i think,small,but start.The days of making you rich are over for them,but looks like they are back on track chugging away.Looks like debt down 7% as well,thats the best they can do with the cashflow so 100% cash conversion of profits.

 

[Castlevania]

42 minutes ago, headrow said:

I can get 24 500ml cans of Tyskie 5.5% for £20.

 

I'm doing my bit to deprive HMRC of the tax on that . On that £27.92 I presume £5.50 would go to the treasury?

£21.01 per litre of alcohol; plus VAT. 

[Pip321]

15 minutes ago, DurhamBorn said:

Looks like i was right and BAT are considering and trying to find a way to sell their ITC India stake (or some of it).Most ignored it,but its worth about a third of the debt total and would clean up the balance sheet in one go.They could then launch £2bill/£3bill a year share buybacks.Thats why the share are up so much today.The new products also turned a £400mill profit for the first time,thats a cracking performance,the new products business is likely worth £8billion already.Debt down to 2.6x means share buybacks will start at the half year results i think,small,but start.The days of making you rich are over for them,but looks like they are back on track chugging away.Looks like debt down 7% as well,thats the best they can do with the cashflow so 100% cash conversion of profits.

 

Agree, BATs and many individual companies seemingly drop in and out of favour and it really does feel like market makers do it deliberately where ever they can. 

I have laddered in twice on BATs and still down a tad (ignoring divi’s) but happy holding and watch the ride. I ignore divi’s and see them as a return to compensate inflation (wrongly, I know) . Share growth is the bonus and a big lift in a cycle will become the opportunity to tweak, review and refresh

I understood the points but got lost on the materiality about whole dividend discussion …..some businesses are expanding and others are mature. I would rather invest in BATs and take a divi than have BATs keep its divi and have it try expand from a £50bn business to a £50,000bn company 😉. 

[DurhamBorn]

25 minutes ago, MrXxxx said:

Why has it taken them so long to see the bloody obvious?

https://www.msn.com/en-gb/money/other/rishi-sunak-is-told-to-cut-bill-for-benefits-and-encourage-more-brits-back-to-work-to-reduce-uk-s-debt-crisis-instead-of-relying-on-immigration/ar-BB1hX2Zu

..when I see things like this I can only think that a) 'our' political class are incompetent at what they do and so should be 'sacked', or b) [and more likely], they appear incompetent but are actually aware, have a vested interest/personal gain from such circumstances/scenarios, and so should not be trusted.

I though that when i met the BOE,until i met the BOE.They really are just shit.I think group think,and the fact they dont suffer at all from their choices,they even gain from RPI linked pensions like MPs.Its why DB pensions should be removed from all the public sector.I burst out laughing when the local BOE agent opened the meeting saying how diverse they were.I asked how many of their members went to a sink comp and left school at 16,and how many did not do classical economics at a top uni.Go look at their inflation model from around 19 when we were saying 12% inflation by the early to mid 20s.

[Democorruptcy]

33 minutes ago, DurhamBorn said:

Looks like i was right and BAT are considering and trying to find a way to sell their ITC India stake (or some of it).Most ignored it,but its worth about a third of the debt total and would clean up the balance sheet in one go.They could then launch £2bill/£3bill a year share buybacks.Thats why the share are up so much today.The new products also turned a £400mill profit for the first time,thats a cracking performance,the new products business is likely worth £8billion already.Debt down to 2.6x means share buybacks will start at the half year results i think,small,but start.The days of making you rich are over for them,but looks like they are back on track chugging away.Looks like debt down 7% as well,thats the best they can do with the cashflow so 100% cash conversion of profits.

 

New products turning profitable now is 2 years ahead of schedule. The £27.6bn impairment charge seems higher than reported though, I thought they had said £25bn. That's an extra 6+ years of that new product profit. No doubt @Harleywill be running his eye over their 'intangibles' for the year.

[DurhamBorn]

6 minutes ago, Pip321 said:

Agree, BATs and many individual companies seemingly drop in and out of favour and it really does feel like market makers do it deliberately where ever they can. 

I have laddered in twice on BATs and still down a tad (ignoring divi’s) but happy holding and watch the ride. I ignore divi’s and see them as a return to compensate inflation (wrongly, I know) . Share growth is the bonus and a big lift in a cycle will become the opportunity to tweak, review and refresh

I understood the points but got lost on the materiality about whole dividend discussion …..some businesses are expanding and others are mature. I would rather invest in BATs and take a divi than have BATs keep its divi and have it try expand from a £50bn business to a £50,000bn company 😉. 

Longer term i think they should manage 3% to 4% divi increases and a similar share price performance.Not setting the world on fire,but might compound still at 12% to 13%.I was glad to see the debt down by the maximum amount they could from free cash,so a cash conversion of 100% and all after the divi going on debt paydown.It would take 13 years of spare cash to pay the debt off,but only 8 if they sell the ITC stake.They might look to lower it slowly.I think once debt is at 2,5x they will go £1bill buybacks,£2bill off debt and as the debt falls slowly go to £2bill buybacks,£1bill debt.I dont think they will grow cash profits much from here for a good while,so share buybacks will matter.

[DurhamBorn]

1 minute ago, Democorruptcy said:

New products turning profitable now is 2 years ahead of schedule. The £27.6bn impairment charge seems higher than reported though, I thought they had said £25bn. That's an extra 6+ years of that new product profit. No doubt @Harleywill be running his eye over their 'intangibles' for the year.

Those impairment charges mean nothing on a business like BAT its just none cash accounting,Baccie has always been a very low plant and capital business.They were right to buy Reynolds,and once the FDA outlaw most smaller companies Vapes etc their US profit pool will grow.They are not making anyone rich going forward,but il be happy with 3% to 4% divi growth over the longer term.I think £25 to £30 is fair value until the debt comes down.

It does not get mentioned much,but their modern oral product Velo seems to be doing fantastic and they are slowly entering new markets with it.If they could ever get it into India and/or China it would be a massive profit maker.They can also use the same delivery for cannabis etc in future.The new products profit will be volatile for a good few years yet,but £400mill is a very good performance.

[Castlevania]

35 minutes ago, DurhamBorn said:

Those impairment charges mean nothing on a business like BAT its just none cash accounting,Baccie has always been a very low plant and capital business.They were right to buy Reynolds,and once the FDA outlaw most smaller companies Vapes etc their US profit pool will grow.They are not making anyone rich going forward,but il be happy with 3% to 4% divi growth over the longer term.I think £25 to £30 is fair value until the debt comes down.

It does not get mentioned much,but their modern oral product Velo seems to be doing fantastic and they are slowly entering new markets with it.If they could ever get it into India and/or China it would be a massive profit maker.They can also use the same delivery for cannabis etc in future.The new products profit will be volatile for a good few years yet,but £400mill is a very good performance.

Velo is tobacco free pouches like Philip Morris’s Zyn which some US politicians are wanting to ban.

[Harley]

1 hour ago, DurhamBorn said:

Looks like i was right and BAT are considering and trying to find a way to sell their ITC India stake (or some of it).Most ignored it,but its worth about a third of the debt total and would clean up the balance sheet in one go.They could then launch £2bill/£3bill a year share buybacks.Thats why the share are up so much today.The new products also turned a £400mill profit for the first time,thats a cracking performance,the new products business is likely worth £8billion already.Debt down to 2.6x means share buybacks will start at the half year results i think,small,but start.The days of making you rich are over for them,but looks like they are back on track chugging away.Looks like debt down 7% as well,thats the best they can do with the cashflow so 100% cash conversion of profits.

 

Reminds me, Lance Roberts at RIA mentioned today that without buy backs the S&P would be closer to 3,000.  See what they did there!

[King Penda]

2 hours ago, No One said:

Dont know who you are or what you do, but as DB has said before, if work is not incentivized (benefits are inflation protected vs wages not being) you will see people dropping out.

I’ve recently had 32 months on benifits and avaraged over 600 saved every month .that’s before last aprils 10% uplift and the 9% they are getting in a few weeks.I had holidays and was drunk 6 nights a week the big downside was putting 13 plus kg on in weight

[Democorruptcy]

22 minutes ago, DurhamBorn said:

Those impairment charges mean nothing on a business like BAT its just none cash accounting,Baccie has always been a very low plant and capital business.They were right to buy Reynolds,and once the FDA outlaw most smaller companies Vapes etc their US profit pool will grow.They are not making anyone rich going forward,but il be happy with 3% to 4% divi growth over the longer term.I think £25 to £30 is fair value until the debt comes down.

It does not get mentioned much,but their modern oral product Velo seems to be doing fantastic and they are slowly entering new markets with it.If they could ever get it into India and/or China it would be a massive profit maker.They can also use the same delivery for cannabis etc in future.The new products profit will be volatile for a good few years yet,but £400mill is a very good performance.

Those impairment charges might have meant something to shareholders when their account balances dropped by about 9% on the day they were announced!

To a Yorkshireman paying £40bn for Reynolds and then having a £25bn (or £27.6bn) writedown, seems too expensive.

Quote

 

Brands affected by the writedown are those acquired by BAT as part of its £40bn takeover of Reynolds in 2017. They include the Camel, Newport, Natural American Spirit and Pall Mall brands.

https://archive.ph/MMiwI#selection-2245.0-2245.189

This time next year batters....

[ashestoashes]

6 minutes ago, Jesus Wept said:

Thanks for the advice yesterday  @Mandalorian - and boom up 7% today ! 

Great to have so many experts on here…😉

vodafone needs to bring out a handset that's a combined phone/vaping device

[DurhamBorn]

52 minutes ago, Harley said:

Reminds me, Lance Roberts at RIA mentioned today that without buy backs the S&P would be closer to 3,000.  See what they did there!

I dont like buybacks,but in a few sectors i do.Baccie for certain,and comms should be doing buybacks but cannot due to debt loads.

[Royston]

2 hours ago, MrXxxx said:

Why has it taken them so long to see the bloody obvious?

https://www.msn.com/en-gb/money/other/rishi-sunak-is-told-to-cut-bill-for-benefits-and-encourage-more-brits-back-to-work-to-reduce-uk-s-debt-crisis-instead-of-relying-on-immigration/ar-BB1hX2Zu

..when I see things like this I can only think that a) 'our' political class are incompetent at what they do and so should be 'sacked', or b) [and more likely], they appear incompetent but are actually aware, have a vested interest/personal gain from such circumstances/scenarios, and so should not be trusted.

Definitely option b.

They're quite happy for everyone to think they're incompetent whilst they continue enriching themselves, their mates and their paymasters with policies that are so socio-economically detrimental for everyone else.

[DurhamBorn]

Big increases today in some of my biggest holdings,Ashmore flying,and looks like a bid for DS Smith.Im not very happy about them being bought out as i like them long term so if it fails i wouldnt care,but a bidding war would be nice il load it all into comms.

My masseuse saw BAT ,Ashmore and DS Smith and she said "meet me at new place i on way".

 

Edited February 8 by DurhamBorn

[Democorruptcy]

31 minutes ago, ashestoashes said:

vodafone needs to bring out a handset that's a combined phone/vaping device

I'm patenting that, ready for Dragon's Den.

[Long time lurking]

 

[Harley]

1 hour ago, ashestoashes said:

vodafone needs to bring out a handset that's a combined phone/vaping device

Just buy a phone with a dodgy battery!

[Harley]

5 minutes ago, Long time lurking said:

 

The interesting stuff about these snippets is the "security" that goes on behind it.  Great for freelancers!

[headrow]

56 minutes ago, Democorruptcy said:

I'm patenting that, ready for Dragon's Den.

When you are on I'll give you 2 shares in VOD if you chin that cunt Gary Neville