Credit deflation and the reflation cycle to come (part 9)

[Loki]

9 minutes ago, Errol said:

Indefinite stay in camps guarded by soldiers in black Hugo Boss uniforms is surely coming next.

Unlikely - we beat the Nazis in 1945, because we won WW2, and things have just got better and better ever since

[Jesus Wept]

1 hour ago, Majorpain said:

German govt is rather nuts at the minute.....

They’ll be banning smoking completely soon.

 

[Axeman123]

25 minutes ago, Jesus Wept said:

They’ll be banning smoking completely soon.

Wouldn't need to in 20 years or whatever, too little demand for a retailer to justify the licensing and approved non-display cabinet plus signage.

[Mandalorian]

5 hours ago, HousePriceMania said:

Are you recommending we do the same ?

Recommending you don't recommend anything?  Sure.

4 hours ago, Lightscribe said:

You don’t recommend dividends can we least get you to recommend that? 

They're irrelevant - as discussed previously.

[Mandalorian]

3 hours ago, Jesus Wept said:

I think a BK would be defined as anything greater than a 50% drop in the major equity markets S&P, Dow, ftse, euro stoxx, Asia et al.

In hindsight I think I will rue not moving to 100% cash the other day and waiting for all assets and equities to take a hit. (I opted to keep 20% in commodities / gold / silver / miners).

Problem is - as we saw with Covid - the margin call drop can be very short lived - a few days. 

My first ever purchase of silver was below 1000p in March 2020 - as people sold it off to cover their margins. It was sub £10 for a day. Virtually doubled within 5 months by August 2020 - whilst I sunbathed on a deserted Croatian beach ! 

 

 

Covid was a drop of about a third and that was end of the world stuff at the time.

I suspect 50% is unlikely

2 hours ago, DurhamBorn said:

You think you have problems iv lost 133 massages this week.Sorry 109 ,ITV went ex massage ,24 massages there when they send me the divi/my capital back 

You'll have to do your own happy finishes this month.

[Loki]

Just now, Mandalorian said:

 

I suspect 50% is unlikely

[wherebee]

7 hours ago, CannonFodder said:

Clown world continues.

Yanks seem to be ahead of HMT in preparing for the new normal.

 

https://www.newsweek.com/irs-asks-americans-report-income-illegal-activities-1871446

 

Been that way for a long time; it's designed to let the authorities get criminals on tax evasion charges, which have long jail times PLUS big financial fines, without all the trouble of a criminal trial about who sold what to whom.

Tax trial: you had 2 million dollars in the Banks and a house worth 5 million, and didn't work.  What was it from?  "er....."

Nice, you owe us 20 million and 12 years in jail.  NEXT!

[Long time lurking]

 

[montecristo]

On 15/04/2024 at 03:44, AWW said:

If you've no more room in this year's various tax shelters, low coupon Gilts issued prior to IR normalisation provide pretty much tax free returns as they are CGT free.

This post sparked my interest.  Doing some research I found this link below.  I don't understand the line "you only pay income tax on the coupon".  

Anyone have an idiot's guide to gilts?

 

"With a gilt, you only pay income tax on the coupon. Gilts issued shortly after the pandemic have extremely low coupon rates and so pay out very little interest. This means the largest chunk of overall returns is likely to come from capital gains as opposed to income.

As of 6 June, a UK gilt with an expiry date of 31 January 2024 had a coupon rate of 0.125% and traded at £97.14. For an additional-rate taxpayer (top rate in Scotland), this equates to a net annual yield to redemption of 4.59%. To achieve that same yield on taxable savings, the savings account would need to pay interest of 8.35% (or 8.65% for a Scottish top-rate taxpayer)."

https://www.brewin.co.uk/insights/why-have-bonds-been-spotlight

Edited April 17 by montecristo

[crashmonitor]

CPI comes in at 3.2%, Core 4.2%. Expected 3.1% and 4.1%. So . coming down more slowly than expected.

Going forward we have a 25% rise in oil prices working its way onto data, 6% wage rises, slightly more on bennies, the 8.5% triple lock. Any dip from domestic energy falls is going to be short lived even if we temporarily dip below 2% in the coming months.

Edited April 17 by crashmonitor

[crashmonitor]

Usual desperation from the Media Commentariat..can we cut, can we cut?

Over the last 20 years CPI has averaged 3% and 5% over the last 4. Imagine you had a reverse of that scenario on the undershoot...20 years of 1% CPI and 4 years of 1% DEFLATION. Now if we were likely to suddenly get over target for a couple of months after 4 years of deflation would we now be saying  ffs raise rates. No we bloody well wouldn't. The bias to loose monetary policy knows no bounds.

No wonder we have no trust in fiat.

Edited April 17 by crashmonitor

[Pip321]

59 minutes ago, montecristo said:

This post sparked my interest.  Doing some research I found this link below.  I don't understand the line "you only pay income tax on the coupon".  

Anyone have an idiot's guide to gilts?

 

"With a gilt, you only pay income tax on the coupon. Gilts issued shortly after the pandemic have extremely low coupon rates and so pay out very little interest. This means the largest chunk of overall returns is likely to come from capital gains as opposed to income.

As of 6 June, a UK gilt with an expiry date of 31 January 2024 had a coupon rate of 0.125% and traded at £97.14. For an additional-rate taxpayer (top rate in Scotland), this equates to a net annual yield to redemption of 4.59%. To achieve that same yield on taxable savings, the savings account would need to pay interest of 8.35% (or 8.65% for a Scottish top-rate taxpayer)."

https://www.brewin.co.uk/insights/why-have-bonds-been-spotlight

Gilts pay a coupon rather than ‘interest’ and it is a fixed amount eg £5. And all gilts have a maturity date….some long some short  

So you buy a gilt for £100 and its coupon might be £5. Effectively it is paying 5% interest rate at that moment. But there is not real interest rate as such (rather it’s a yield)….ie it just pays £5 regardless. 

As interest rates / market demand changes then the £5 coupon remains the same ie £5. However the demand for the gilt alters so the price you would pay for it alters…..eg interest rates fall, so the coupon of £5 looks good so now I might pay £200 for the same gilt. So the coupon stays at £5, the price of the gilt is now £200 and the effective yield is 2.5%.

The increase in the value of the gilt (if you sold) is CGT free. The income tax is charged on the coupon ie the £5.

So short term gilts are interesting because there are some out there paying a low coupon because they were issued in the good old days of low rates. Ie maybe it was £1 coupon on a £100 gilt. But now rates are higher and let’s say the gilt matures in 1 year….the coupon looks crap so the value of the gilt is £96. You can buy it for £96 and in a years time you will get the original value of the gilt back ie the £100 (making £4 capital gain all tax free) and receive the £1 coupon. 

So you get £4 tax free and £1 taxable.

Hope that helps. 

https://www.hl.co.uk/news/what-you-need-to-know-about-buying-government-bonds-gilts

 

[Jesus Wept]

8 hours ago, Mandalorian said:

Covid was a drop of about a third and that was end of the world stuff at the time.

I suspect 50% is unlikely

You'll have to do your own happy finishes this month.

S&P reached an ATH of 5268 on March 28th 2024 - it will fall back to around the Covid low. 

The Covid low was 2304pts in March 2020.

S&P is currently 5051pts.

I reckon 2500 or thereabouts is fairly likely.

The crash started in March - you just don’t know it yet. 

Protect yourselves….

 

 

[crashmonitor]

2 year swap may hit 5% (for the first time this year) on disappointing CPI data. Markets definitely pricing in autumn for the first cut now.

 

https://uk.investing.com/rates-bonds/gbp-2-years-irs-interest-rate-swap-historical-data

Edited April 17 by crashmonitor

[HousePriceMania]

[Democorruptcy]

13 hours ago, HousePriceMania said:

 

Last weekend was the odds-on favourite, with Ramadan ending last Wednesday.

[DoINeedOne]

Random question for @Bobthebuilder or @Cattle Prod or anyone who knows as I can't find the post was the Guinness Global Energy Fund you where buying in 2020+ this one

Just building a list of funds to add to watchlist

https://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/w/ws-guinness-global-energy-class-i-accumulation

[Heart's Ease]

FRES top o the table this morning.

Please Telegraph journolurkers - can you put a good word in for VOD? Ta.

 

[Bobthebuilder]

23 minutes ago, DoINeedOne said:

Random question for @Bobthebuilder or @Cattle Prod or anyone who knows as I can't find the post was the Guinness Global Energy Fund you where buying in 2020+ this one

Just building a list of funds to add to watchlist

https://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/w/ws-guinness-global-energy-class-i-accumulation

I had this one.

Guinness Global Energy Fund (Class Y GBP) Accumulation Fund Price & Information (hl.co.uk)

 

[Castlevania]

15 minutes ago, Heart's Ease said:

FRES top o the table this morning.

Please Telegraph journolurkers - can you put a good word in for VOD? Ta.

 

JPMorgan upgraded it

[Democorruptcy]

I was just wondering how True Contrarian was getting on with all his shorts, so looked for an update. Did we have his April 2nd? Unusually for him he was also negative PMs.

https://truecontrarian-sjk.blogspot.com/

[wherebee]

18 minutes ago, Castlevania said:

JPMorgan upgraded it

shit, i do NOT want JP morgan talking up the PMs.  That means they are going to zero.

[Plan-b]

FFS 

On 14/04/2024 at 21:44, AWW said:

If you've no more room in this year's various tax shelters, low coupon Gilts issued prior to IR normalisation provide pretty much tax free returns as they are CGT free.

Buy Some PMs.

3 hours ago, montecristo said:

This post sparked my interest.  Doing some research I found this link below.  I don't understand the line "you only pay income tax on the coupon".  

Anyone have an idiot's guide to gilts?

Yeah, Don't buy them.

2 hours ago, Pip321 said:

Gilts pay a coupon rather than ‘interest’ and it is a fixed amount eg £5. And all gilts have a maturity date….some long some short  

Buying Gilts, UK government bonds - Giving your own currency to finance the ever worsening UKgov shit-show. Wars, ULEZ, Woke, Public Pensions, Bennies, Tax, immigration, on and on.

After all thats been said on this thread over many years. DB's on here most days telling you how your being totally shafted left right and centre and you wanna talk about financing that? Disingenuous to his efforts is what it is.

Don't gimme the 'Its a way of getting something back' either, shove your coupons.

[JMD]

13 hours ago, Harley said:

I had a social session with some ok and learned Germans the other week.  We got round to Brexit and I suggested it all could have been avoided with a bit of flexibility from Merkel.  Oh no, it was all our fault (it's always someone's elses fault).  Unfortunately, they have a long road to travel.

I wonder how 'transformative' that road journey for Germany might be? I have said before that Germany is a very (ahem) 'fluid and adaptable' nation.

 

(Hope am not taking thread too 'off-piste', as I believe these type of power dynamics will shape the ultimate future of Europe/Russia relations)

I couldn't find the Peter Hitchens article on 'The EU is the Continuation of Germany by Other Means', however I think the following makes a similar(?) alarming point(?!)...     (Btw, am not attempting to merely smeer the Germans, if such events can happen there, they can happen anywhere)

However the below (it's the second entry) is a reply by Peter Hitchens to a history professor who'd criticized an article Hitchens had written regarding the true nature of Nazism, it is very long but does have many fascinating historical insights - plus more importantly I think it contains a very sobering modern day lesson concerning the scarily close parralels between so-called 'far left/right' authoritarian power politics.

https://hitchensblog.mailonsunday.co.uk/first-world-war/

 

 

Edited April 17 by JMD

[sancho panza]

14 hours ago, Axeman123 said:

And "worse" every time they try physical metal goes east.

Soemthings going on @Errol @Lightscribe paritucalrly.

Seems paradoxaical that Gold ETFs are seeing outflows as US/EU instos flee but then the price goes up.10 months of outlfows ffs?

Is this some sort of China coordinated short squeeze that the yanks are trying to end or is the sign of a huge change in dmeand patterns?

what's going to happen when US instos start buying if we're already at $2400?

 

https://www.gold.org/goldhub/research/gold-etfs-holdings-and-flows/2024/04?utm_medium=email&utm_source=newsletter&utm_campaign=GOLDHUB%3A+Your+Weekly+Gold+Market+Round-up%2C+April+12%2C+2024

 

Edited April 17 by sancho panza