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

[Long time lurking]

Doomed 

Their dependency on the west is almost over especially so when most of the deflation figure comprises of food which ironically a significant amount comes from the west but even that is now decreasing   

 

[HousePriceMania]

https://www.thisismoney.co.uk/money/markets/article-13071621/Recession-set-confirmed-inflation-double-blow-economy.html

 

Recession set to be confirmed and inflation up too in double blow to economy

• Figures set to show inflation rose to 4.2% in January, up from 4% in December 
  
  
  Need higher interest rates....

[DurhamBorn]

4 minutes ago, Long time lurking said:

Doomed 

Their dependency on the west is almost over especially so when most of the deflation figure comprises of food which ironically a significant amount comes from the west but even that is now decreasing   

 

I think i said when everyone in the MSM was writing China off they would see a big consumer lead recovery.Its all in the numbers if they knew where to look.These figures are just what i expected.China is getting richer,we are getting poorer in simple terms.The good thing is the Chinese consumer should suck in imports from the likes of Brazil etc as well,so we should see a broad based EM bull markey.Growth with very low inflation will mean falling bond yields,rising EM debt prices then booming equities.

[DurhamBorn]

1 minute ago, HousePriceMania said:

https://www.thisismoney.co.uk/money/markets/article-13071621/Recession-set-confirmed-inflation-double-blow-economy.html

 

Recession set to be confirmed and inflation up too in double blow to economy

• Figures set to show inflation rose to 4.2% in January, up from 4% in December 
  
  
  Need higher interest rates....

Rates wont do anything,its all down to bennies and freeloaders including the invaders.We need massive tax cuts on investment and work,big cuts in the state.

[Long time lurking]

1 hour ago, DurhamBorn said:

I think i said when everyone in the MSM was writing China off they would see a big consumer lead recovery.Its all in the numbers if they knew where to look.These figures are just what i expected.China is getting richer,we are getting poorer in simple terms.The good thing is the Chinese consumer should suck in imports from the likes of Brazil etc as well,so we should see a broad based EM bull markey.Growth with very low inflation will mean falling bond yields,rising EM debt prices then booming equities.

That has been pretty obvious for well over a decade now (probably longer ) ,for anyone that was prepared to look elsewhere rather than western financial media 

Until you understand their central banking and planning model you will never understand how China works ,to judge a event in China by what would happen if similar occurred in the west is crazy ,it`s apples and oranges 

It`s like Evergrande ,yes it is going to be wound up investors will lose their shirts ,but on the flip side i would bet 10`s1000`s if not 100`s 1000`s of Chines people will get to buy the assets for pennies on the pound,they have done it before with flats being sold to the people for as little as a few thousand $ hence the 80%+ ownership rate in china and 70% of that is owned without any debt 

Edited February 12 by Long time lurking

[Pip321]

2 hours ago, Democorruptcy said:

I've bought another one even worse than that. I feel like I need to go out and buy some dog food now.

My wife has a HL little SIPP, couple of years of non earning limit ie £2880 x 2 plus the tax credit ie £720 x 2. 

She doesn’t like shares 😆 so it’s in cash….well up until Friday. All into Glencore now, my idea  

We will take about a 6% climb and cash out. That (together with the interest) should beat inflation for the year. Basically it’s a bit of swing trading fun….

Of course if it falls I am blaming you lot on this thread. 😆

Hoping to turn £5760 net into £8000 gross in about 18 months. She can then take it out and spend it on me. Lather rinse repeat (well that’s what I am hoping she does to me❤️😆)

I’m doing the same with my little AJ Bell SIPP….let me just check those Polymetal shares, doh….🤦🏻‍♂️

[marceau]

18 minutes ago, DurhamBorn said:

Rates wont do anything,its all down to bennies and freeloaders including the invaders.We need massive tax cuts on investment and work,big cuts in the state.

We ain't gonna get it. Two/three more years of US credit expansion and then the flush gets pulled. The 'cuts' will come from inflation and tax, not reform. Nothing will penetrate the westminster bubble.

[Long time lurking]

Where`s Stuey 

It`s the worst case scenario a recession with rising inflation,rock and a hard place  print and you get more of the latter which leads to more of the former ,raise interest rates and you get much more of the former and maybe less of the latter 

Choices choices which way to turn,IMO the bond markets will make the choice    

[DurhamBorn]

6 minutes ago, marceau said:

We ain't gonna get it. Two/three more years of US credit expansion and then the flush gets pulled. The 'cuts' will come from inflation and tax, not reform. Nothing will penetrate the westminster bubble.

Yep,frozen allowances and inflation mostly.

[JMD]

Interesting figures...    Though I did think that new cars would show as being higher?

 

[sancho panza]

6 hours ago, Pip321 said:

Where’s your commods? Surely a cheeky bit of Rio, Glencore or BHP into the mix?

Or would you wait for a big tumble first….because I do see in the past they really can tumble. 😉

Don't mean to be cheeky but here's my vierw on the above,there's jsut better value with less downside elsewhere.

BHP is one of my big regrests,we got some circa £1.50 back ni the late 90's.I was a happy seller all the way up to 2007,thought I'd done brilliantly.Now paying more in divi than my purcahse price.

@DurhamBorn has said some of his hardest essons have been from selling great rades way too early.I'd buy these shares but not at these prices.better valeu elesehwere imho

Edited February 12 by sancho panza

[marceau]

11 minutes ago, DurhamBorn said:

Yep,frozen allowances and inflation mostly.

How far out does your roadmap go these days?

I did a refresh on my fag packet UK models and came up with 30-35% annualised inflation print in 30/31, MoM spikes would be even higher. 'The world's most successful multicultural democracy' indeed.

It's obvious that uk gov will have to do a deal as the decade turns. But who with? And what do we have to offer? What is there that's left to sell?

[Lightly Toasted]

33 minutes ago, Long time lurking said:

Where`s Stuey 

It`s the worst case scenario a recession with rising inflation,rock and a hard place  print and you get more of the latter which leads to more of the former ,raise interest rates and you get much more of the former and maybe less of the latter 

Choices choices which way to turn,IMO the bond markets will make the choice    

https://www.investopedia.com/ask/answers/040615/what-actions-or-policies-can-government-agency-take-counteract-and-end-stagflation-economy.asp

... Economists still have not found the best way to control stagflation without putting a massive strain on the population, but there have been a variety of proposed theories...

 

Slashing benefits and re-arranging incentives (and cutting consumption overall) would be a "massive strain", which is why politicians won't willingly do it.

[ThoughtCriminal]

That's a hell of a chart.

Inflection point in the early 90s. Any thoughts on the cause?

 

[Long time lurking]

1 minute ago, Lightly Toasted said:

https://www.investopedia.com/ask/answers/040615/what-actions-or-policies-can-government-agency-take-counteract-and-end-stagflation-economy.asp

... Economists still have not found the best way to control stagflation without putting a massive strain on the population, but there have been a variety of proposed theories...

 

Slashing benefits and re-arranging incentives (and cutting consumption overall) would be a "massive strain", which is why politicians won't willingly do it.

I think the BOE is out of the loop now they are merely a passenger for what comes next

Whats happing in the rest of the financial world could throw an even bigger spanner in the works 

It`s going to be an interesting couple of years,Russia have officially announced their SPFS messaging system is ready to go 20 countries already signed up ,connected and trained with another 159 which are being consulted   

[Long time lurking]

4 minutes ago, ThoughtCriminal said:

That's a hell of a chart.

Inflection point in the early 90s. Any thoughts on the cause?

 

The withdrawal of the married tax allowance ,or whatever it was called would be my bet  

[sancho panza]

17 hours ago, Democorruptcy said:

Hunt's tax:

 

I don't know whats more worrying.....the fact that someone in such an influential economic position pays such a high elvel of income tax or the fact that he's generating such meagre returns on a £14mn portfolio

Something really doesnt add up

https://www.independent.co.uk/news/uk/politics/jeremy-hunt-chancellor-net-worth-b2452218.html

In 1991, aged 25, he co-founded Hotcourses, an educational listings publisher, with childhood friend Mike Elms.

The business provided a database of opportunities in higher education in the UK for prospective overseas students and was sold to Australian student placement company IDP Education in 2017 for £30.1m.

Mr Hunt had stepped down as a director in 2009 prior to his first shadow cabinet appointment but retained, according to Companies House records, a 48 per cent stake in the business, netting him a reported £14.1m, making him one of the UK’s richest politicians.

16 hours ago, wherebee said:

That's obscene.  Almost 50% of his income on tax, even with (presumably) good accountant advice.

Add on top of that council tax, VAT, etc, and he's deffo hitting 65% taxation, if not more.

Extrememly worrying that hes paying 65% and thinks more of the same is a good thing

[No One]

Following my previous comment on the topic:

I was right

 

[Long time lurking]

12 hours ago, RJT1979 said:

Only thing holding house prices up is belief in wage increases and huge inflation to devalue remaining mortgages. Take this belief away and its over.

35 40 years mortgages say hold my beer (i really do hope i`m wrong )

It`s just anecdotal but i know of one that have bought with 30 and one with a 35 ,the former should never have been allowed, he had to work a 60-70 hour week for weeks to meet the "criteria" ,the lender i kid you not, was the mortgage company that his landlord used ,yes he bought the house he was renting from the mortgage company not his former landlord ! 

[marceau]

22 minutes ago, ThoughtCriminal said:

That's a hell of a chart.

Inflection point in the early 90s. Any thoughts on the cause?

 

My take:

Financial big bang bedded in. Rise of CDS and other derivatives, combined with transnational banking agreements start to allow for cross border risk-spreading (in reality just lower standards of regulation and scrutiny). Housing act '88 allows for BTL. Mortgage market projections start their drift into fantasy land. As credit loosens, equity and ownership start to concentrate in the hands of those with the most capital in the market, our beloved boomers.

Then Broon, Blair, EU FOM, Bennies, Financial Crisis, ZIRP. 30 years of absolute goatfuck.

[sancho panza]

15 hours ago, sleepwello'nights said:

The reality could be that his yield is much higher than the yield you've calculated on the current estimated market price. 

as you say it's about opportunioty cost at current prices.

we rent on a notional 2.1% gross yield as you say thats norional.

my attitudfe is would I rather hedge oil/food prices or hosue rpices.for me at current rates/.prices,I'd rather own oil/gold/potash/comms.

our hosue also has a significant cost of carry in terms of repairs and maiantenance which I havent factored in.

even on a 5% gross yield,I wouldnt buy it.at 10% gross yield,I';d consdier it but then the asking price  would be 25% of what our LL paid in 2020

trading hsoues is expensive and illiquid from what I can see,.

5 hours ago, Cattle Prod said:

 In my business, the best brains are in industry and the academics and professors I have to interact with are second rate (with honourable exceptions) because the industry pays more, and screens out the charlatans at first interview. I suspect the same goes for mose industries, though as Marceau points out, accountants should be perhaps in a class all of their own. I always wondered what kind of person could possibly be attracted to that work. 

Gerenally the people teaching paramedic Science at Uni are the ones who couldnt hack it on the road(some notable exceptions too).Great at writing essays and monitoring students giving CPR to plastic dummies but crap at running an actual arrest upstairs in a 3 storey terraced house in a tiny bathroom.

There's an accountant at our work who became a paramedic.

 

4 hours ago, Democorruptcy said:

Yes that's what I meant by it's what he doesn't declare where the big money will be. What's he done with all his dosh? It's not gone into ISA's at only £20k a year.

I suspect he's invested his equity is a tax effiecnt business that will pay him no income until he retires from politics and he can change domicile to a more tax effeicnt country.

I'd suspect that when he pops his clogs,40% wont be going to pay for dinghy arrivals in hotels but it'll find it's way to his kids.Allegedly.

[goldbug9999]

2 hours ago, No One said:

 

Yeah yeah every pundit on earth has been harping about how its all "unsustainable", I've follow a bunch of the high profile traders on twitter for some time now and they have all been consistently wrong with their macro/TA/whatever bullshit sometimes hilariously so - I think 2 weeks ago northmantrader declared a bearish setup or some such, and yet here we are .. up what 5% again.  Theres always someone trotting out some yield curve inversion, this or that moving average,  look how this correlates to the big crash of 1929  blah blah blah. So why have they all been wrong well none of them seem capable of figuring in the many trillions of $ of newly printed money into the equation. Its just swathes of money looking for a home, that it, no big mystery.

Edited February 12 by goldbug9999

[marceau]

5 minutes ago, goldbug9999 said:

Yeah yeah every pundit on earth has been harping about how its all "unsustainable", I've follow a bunch of the high profile traders on twitter for some time now and they have all been consistently wrong with their macro/TA/whatever bullshit sometimes hilariously so - I think 2 weeks ago northmantrader declared a bearish setup or some such, and yet here we are .. up what 5% again.  Theres always someone trotting out some yield curve inversion, this or that moving average,  look how this correlates to the big crash of 1929  blah blah blah. So why have they all been wrong well none of them seem capable of figuring in the many trillions of $ of newly printed money into the equation. Its just swathes of money looking for a home, that it, no big mystery.

US credit has only barely started expanding. The biggest moves come as the cycle peaks and liquidity starts absolutely flooding into sectors chasing a return. That's still 2/3 years away imo. These pundits are retards, they're off trend (the most basic shit there is), they're off on macro, they're off on sentiment. Just dumbass doom-mongering shit.

Most indices have run too hot, so it's quite likely they'll cool off to digest their moves for a while. Wouldn't suprise me if they came down to test the bottom of their ranges. That would be a big correction, but not a crash. We'll know it's time to buy when all these pundits start wailing it's 2008 all over again, as they surely will.

[Pip321]

54 minutes ago, sancho panza said:

Don't mean to be cheeky but here's my vierw on the above,there's jsut better value with less downside elsewhere.

BHP is one of my big regrests,we got some circa £1.50 back ni the late 90's.I was a happy seller all the way up to 2007,thought I'd done brilliantly.Now paying more in divi than my purcahse price.

@DurhamBorn has said some of his hardest essons have been from selling great rades way too early.I'd buy these shares but not at these prices.better valeu elesehwere imho

Never cheeky....thanks for the reply. I like the VOD chart...buy, buy more...and more...and more 😂. I have laddered twice and tbf although down not a bad average

I would bow to your more detailed analysis.....I am more of a gun slinger when it comes to buying stuff. I think the GLEN I bought is probably a swing trade rather than a long term investment.....infact I think most of my purchases at the moment are that. With one eye on long term prospects though but really I am trading to keep my cash up with inflation but am trying to protect the bulk of wealth because I can't afford to lose that. 

I will buy commods as an investment but as you say....its all about price and DB did say they can get battered....and looking at March 2020 I can see that. Probably commods will be an investment and be one of my post BK purchases. 

In the meantime...he who dares Rodney, my wife's cash SIPP is up 2.4% over the weekend...she will be delighted if she knew or cared. 😂

[AWW]

On 11/02/2024 at 12:35, Plan-b said:

A lesson I learned many years ago at great financial cost - Never ever take financial advice from an accountant.

Same here. I had been contracting for a year or so, taking salary up to the 40% tax band and a bit more as divis on the recommendation of my accountant, when I found out that everyone else on my team was paying themselves £8k a year and taking £100k in divis. I asked my accountant why I wasn't doing that. "Because HMRC don't like it." Right, they don't like it - but it it legal? "Yes".

I sacked him but really should have sued him.