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

[Errol]

Someone mentioned woodside a few days ago. Down another 2.69% today so far.

[Harley]

6 hours ago, Harley said:

Bet he must still be reeling from that, like "what the feck just happened?"! 

Whoops, wrong post!!!! It was referring to the ex bond guy in the park!

Some times SPs posts are so long I get lost! 

[janch]

AJ Bell sent some interesting info on their ISA investors and their ISA millionaires.  This is the bit about shares.  My bold especially for @Mandalorian

Those with larger amounts in their ISA may be better placed to take the higher risks associated with investing in individual equities and have a big enough pool of assets to diversify appropriately.

Big blue-chip names like Shell, Lloyds and GSK are the most popular stocks with AJ Bell customers who are an ISA millionaire. US-listed tech giants including Nvidia, Microsoft and Apple also feature in portfolios but far more have large cap dividend-paying stocks from the UK market than overseas-listed stocks which pay little or no income to shareholders.

This trend could reflect how the average age of AJ Bell’s ISA millionaires is 72, so many customers may be in retirement and want their investments to generate an income. If a £1 million portfolio yielding 4% generates an income of £40,000 a year, this could be a comfy retirement, especially when you add in state and private pensions.

Five out of the top 10 most popular stocks with AJ Bell’s ISA millionaires offer a more generous dividend yield than the highest level of interest paid on the best-buy instant access cash savings account. As of 19 February 2024, Paragon Bank had the highest interest on instant savings at 5.16%. In comparison, certain stocks in AJ Bell ISA millionaire portfolios were offering significantly higher prospective yields including 9% from M&G, 8.5% from Legal & General and 7.9% from HSBC.

Cash interest rates have been trending down in recent months amid expectations for the Bank of England to cut rates. In contrast, many stocks on the market continue to pay a growing stream of dividends which reinforces the attraction of equities over cash for many investors.

You don’t have to pay any tax on the gains you make from savings or investments in an ISA or on any income you receive from these investments.

Dividend reinvestment has historically been a way to supercharge returns in an ISA portfolio thanks to compounding benefits. Using dividend money to buy more shares allows an investor to increase their ownership in a stock at no extra cost. They should receive even more dividends at the next round of distributions due to their increased ownership, and the company might have even grown its dividend as well. When you repeat this cycle over the space of decades, the compounding benefits can really shine through and boost the investor’s wealth.

AJ Bell ISA millionaires show a preference for solid, established businesses that have been doing the same thing for decades. There are no speculative, blue-sky companies in their portfolios that have a bright idea but do not generate revenue.

There also appears to be a buy and hold mentality given the number of spin-offs in the ISA millionaire portfolios. Shares in Haleon, Woodside Energy and Jackson Financial were distributed free of charge to shareholders of GSK, BHP and Prudential respectively as the parent companies restructured and demerged holdings. These gifted stocks look as if they’ve been left alone in investors’ portfolios rather than the usual temptation of cashing out of a demerged business.

[JMD]

8 hours ago, sleepwello'nights said:

I agree your analysis better explains the cause of the decline of our economy and the social impact it is causing. I'm still puzzled that we are criticising him for making an effort to bring attention to the part traders play. Maybe he's blaming the wrong party, is he. Aren't the bankers and money men the paymasters of our politicians?

I don't think Gary Stevenson is making any effort to describe our dire economic problem or providing any solutions. Despite having studied economics at the LSE and Oxford he appears very ignorant of the basics. And seems happy to mainly personalise his experiences of working on the City trading desks, or simplistically suggesting that the wealthy remain wealthy by 'buying assets'(?!). 

The stories he tells are merely massive distractions. Why doesn't he highlight that this country operates a highly financialised economy, and that as such it can't produce enough wealth/income to sustain a 70 million population, and so over time we get (slow) social decay and ultimately (a rapid?) collapse.

Ok, the university economics courses Gary attended might not have taught him all what he should really have learned about the discipline, but some extra reading on his part would easily have rectified that. For example the Richard Werner thesis (author of princess of the yen) is that having an industrial strategy is fundamental. Post war Germany pretty much perfected this joined up approach between government and industry (they basically tweaked their pre-war economic knowledge and experience!), along with directing their banks to loan locally and to productive enterprises. What's interesting is that Japan tried to copy them, but they took things to far and the economic bubbles they created blew up. I guess the sweet spot is somewhere between the German and Japanese models. I believe the model itself is called 'window box economics', or something like that?

Plus for us here in the UK we already had a long history of innovation, though curiously our 20th century inventions, jet engine, electronics, etc, were exploited by the US hegemon, funny that!? But even despite our WW11 debts, etc, i still think things could have turned out so much better for this country...  Then again, perhaps I'm being naive, because an economically/politically free country and an independently free media would surely not be wasting precious time and effort pointlessly showcasing 'Gary's Economics'?

 

 

Edited May 1 by JMD

[Noallegiance]

9 minutes ago, JMD said:

Because he Despite having studied economics at the LSE and Oxford he appears very ignorant of the basics.

FTFY

[sancho panza]

9 hours ago, M S E Refugee said:

 

He is beloved by some pretty rancid characters.

I put Gary Stevenson in the useful idiot category.

 

As soon as I saw Owen Jones,I thought that explaiend a lot.

3 hours ago, StrugglingMillennial said:

Small update on the housing situation in my area (south Leicestershire).

Chatting to a few landlords and they've admitted they couldn't sell their houses at the price they wanted so they're back on the rental market at a loss making price, allegedly. A few houses in the area are up for auction that have been on the market for over a year so they are either repossessions or landlords getting out fast.

was jsut posting in the property thread thata mate who is on a couple of Leicester and South Leics facebook groups was saying hes seeing properties getting offreed up on them.first time hes seen it he says-clarendon park/kibowrth

hes in the City,wise head on him.presumes transactionsare low in the area and that EAs are telling sellers to work their channels.

3 hours ago, AWW said:

Also a ton of supply for sale going nowhere, at least 3x what's normally available. Usually, desirable stuff goes very quickly. Now, all those nice detached and semi-detached houses in the £1-1.5m bracket in a nice bit of suburbia are just sitting.

jsut psoted up on tut property thread ref transactions plummeting,picture paints a 1000 etc

I think thins are about to get very real for natiownwide

worth noting that in this timeframe popn has grown from 64mn to 68mn..........

https://www.gov.uk/government/statistics/monthly-property-transactions-completed-in-the-uk-with-value-40000-or-above/uk-monthly-property-transactions-commentary--2

Edited May 1 by sancho panza

[Pip321]

48 minutes ago, JMD said:

I don't think Gary Stevenson is making any effort to describe our dire economic problem or providing any solutions. Despite having studied economics at the LSE and Oxford he appears very ignorant of the basics. And seems happy to mainly personalise his experiences of working on the City trading desks, or simplistically suggesting that the wealthy remain wealthy by 'buying assets'(?!). 

The stories he tells are merely massive distractions. Why doesn't he highlight that this country operates a highly financialised economy, and that as such it can't produce enough wealth/income to sustain a 70 million population, and so over time we get (slow) social decay and ultimately (a rapid?) collapse.

Ok, the university economics courses Gary attended might not have taught him all what he should really have learned about the discipline, but some extra reading on his part would easily have rectified that. For example the Richard Werner thesis (author of princess of the yen) is that having an industrial strategy is fundamental. Post war Germany pretty much perfected this joined up approach between government and industry (they basically tweaked their pre-war economic knowledge and experience!), along with directing their banks to loan locally and to productive enterprises. What's interesting is that Japan tried to copy them, but they took things to far and the economic bubbles they created blew up. I guess the sweet spot is somewhere between the German and Japanese models. I believe the model itself is called 'window box economics', or something like that?

Plus for us here in the UK we already had a long history of innovation, though curiously our 20th century inventions, jet engine, electronics, etc, were exploited by the US hegemon, funny that!? But even despite our WW11 debts, etc, i still think things could have turned out so much better for this country...  Then again, perhaps I'm being naive, because an economically/politically free country and an independently free media would surely not be wasting precious time and effort pointlessly showcasing 'Gary's Economics'?

 

 

Agree, it does feel that in the narrative the depth is missing with too many generic populous type statements.....for example saying people will just blame the usual suspects i.e. immigration but without acknowledging the impact of immigration and also no mention on benefits Britain. Its one sided. (I only listened to one video though with that leftie wokey guy) 

Keeps talking about the working class....but needs to be more aggressive on that point i.e. it is the working man where the unfairness lies and not ''the poor''. 

I think this is where this thread has helped in its direction. Some banter, some politics, some nonsense but it feels bigger picture and where it isn't bigger picture it makes you research wider.  

I always felt before this financially I was great at surfing the waves...in fact better than most. But I didn't understand the tides or the seasons. That's fine but when a hard winter comes and the tide is out yet I am standing on the beach in my shorts....that's when it matters. 😉

[sancho panza]

been waiting a long time to see this sort of headline.will be interesting to see what ebcomes of UK high sts when people stop buying £4 frappacinnos

tranactions down 6% is a big tell imho

https://www.telegraph.co.uk/business/2024/05/01/ftse-100-markets-latest-news-federal-reserve-interest-rates/

Starbucks plunges £12bn as consumers cut back on costly coffee

More than $15.4bn (£12.3bn) was wiped off the value of Starbucks as trading began on Wall Street after it revealed sales fell for the first time since the beginning of the pandemic.

The coffee giant’s shares plunged by 15pc after the opening bell as its new lavender lattes and half-price deals were not enough to entice consumers.

It said net revenues fell by 2pc to $8.6bn (£6.9bn) in the first three months of 2023, as it cut its full-year revenue growth forecast to the low single digits.

https://finance.yahoo.com/news/starbucks-stock-plunges-14-after-badly-missing-its-q2-earnings-estimates-134851851.html

This is Starbucks' first quarterly sales decline since 2020, when COVID shutdowns roiled the industry.

Revenue for the second quarter dropped 2% year over year to $8.6 billion. Adjusted earnings per share also came in lower, down 8% to $0.68.

Global same-store sales declined 4% from a year ago as transactions dropped 6%, which was partially offset by a 2% increase in average ticket size.

 

[janch]

Shaun Richards on the yen and implications for ROW:

https://notayesmanseconomics.wordpress.com/2024/05/01/there-are-consequences-from-us-interest-rates-remaining-at-5-5-for-the-fiscal-deficit-and-the-japanese-yen

The BOJ is having to prop it up:

On Monday with Japan quiet due to Golden Week the Yen found itself pushed to 160 as what the Japanese authorities were hoping would happen in several months took instead several hours. It looks as though they spent around US $30 billion in a barrage of intervention to get it back to 155, although they are being tight-lipped on the matter.

[sancho panza]

I think this refers back to @reformed nice guy point ref it about being private captial and state capital.Here the state decides who gets the filthy lucre

Hard wroking taxpayers funding people sitting on their arse,it's like bennies for banks

 

https://www.telegraph.co.uk/business/2024/05/01/high-street-lenders-9bn-profit-bank-england-money-printing/

Major banks made a profit of more than £9bn from the Bank of England’s money-printing programme last year. 

Four large high street lenders were paid £9.3bn in interest on reserves parked at Threadneedle Street last year, more than double the £3.9bn they were handed in 2022. Losses suffered by the Bank of England are ultimately borne by the taxpayer.

Rising rates have driven up profits for the banks as a result. In correspondence with MPs on the Treasury Select Committee, NatWest revealed it was paid £2.9bn last year, Lloyds Banking Group £3.6bn, Santander £1.9bn and Barclays £1.9bn.

When rates were low, the returns the Bank of England made from its bond investments were higher than the interest payments it made to banks, generating a profit that was handed over to the Treasury following a decision by then-Chancellor George Osborne in 2012.

However, now interest rates have gone up, the institution is making a loss. The agreement struck by Mr Osborne means this is borne by the Treasury, with an expected £100bn cost to taxpayers.

[Funn3r]

20 minutes ago, sancho panza said:

been waiting a long time to see this sort of headline.will be interesting to see what ebcomes of UK high sts when people stop buying £4 frappacinnos

tranactions down 6% is a big tell imho

https://www.telegraph.co.uk/business/2024/05/01/ftse-100-markets-latest-news-federal-reserve-interest-rates/

Starbucks plunges £12bn as consumers cut back on costly coffee

More than $15.4bn (£12.3bn) was wiped off the value of Starbucks as trading began on Wall Street after it revealed sales fell for the first time since the beginning of the pandemic.

The coffee giant’s shares plunged by 15pc after the opening bell as its new lavender lattes and half-price deals were not enough to entice consumers.

It said net revenues fell by 2pc to $8.6bn (£6.9bn) in the first three months of 2023, as it cut its full-year revenue growth forecast to the low single digits.

https://finance.yahoo.com/news/starbucks-stock-plunges-14-after-badly-missing-its-q2-earnings-estimates-134851851.html

This is Starbucks' first quarterly sales decline since 2020, when COVID shutdowns roiled the industry.

Revenue for the second quarter dropped 2% year over year to $8.6 billion. Adjusted earnings per share also came in lower, down 8% to $0.68.

Global same-store sales declined 4% from a year ago as transactions dropped 6%, which was partially offset by a 2% increase in average ticket size.

 

Similar story in DM 

I wasn't aware but seems you can "subscribe" to Pret-a-Manger with a monthly payment to get prices of things down to a more realistic level. I mean come on how fucked is that. 

Paywalled so short extract. The rest is the same.

Pity as I like their sandwiches, but I'm not paying their prices.

 

Quote

Money Mail editor Rachel Rickard Strauss is leaving Pret A Manger behind after becoming fed up with their high prices 

Now, we must endure seeing two prices presented for each item: the reasonable-sounding subscriber price and the outrageous-by-comparison price that non-subscribers must stump up unless we hand over the equivalent of £360 a year.

I couldn’t bring myself to subscribe or pay the higher price. Handing over £4.50 for a glorified cheese sarnie feels rich enough — and a stark reminder that I should make my own at home. 

But paying that when Pret can clearly make a profit selling the same sandwich for £3.60 puts me off my lunch entirely.

And I’m not the only one to have been rankled by Pret. Its Trustpilot account is riddled with reviews from customers put out by high prices. 

It’s rated 1.9 out of five at the time of writing. Its page on X, formerly Twitter, is similarly strewn with comments about prices.

 

[AWW]

3 minutes ago, Funn3r said:

Similar story in DM 

I wasn't aware but seems you can "subscribe" to Pret-a-Manger with a monthly payment to get prices of things down to a more realistic level. I mean come on how fucked is that. 

You also get 5 (dreadful) coffees a day for your £30 a month, so it's not quite as bad as it seems. It's actually quite popular in my office, lots of people think it's value. I'm a bit of a coffee snob though so I make my own at work. Everyone thinks it's because I'm a skinflint.

[Cosmic]

3 minutes ago, AWW said:

You also get 5 (dreadful) coffees a day for your £30 a month, so it's not quite as bad as it seems. It's actually quite popular in my office, lots of people think it's value. I'm a bit of a coffee snob though so I make my own at work. Everyone thinks it's because I'm a skinflint.

Who has time to go out 5 times a day for coffee? Get on with some work... 

[Errol]

Starbucks lavender latte sounds absolutely disgusting.

Most decent offices have bean to cup coffee machines for free, so no need to go out and buy anything. 

Edited May 1 by Errol

[Loki]

46 minutes ago, sancho panza said:

been waiting a long time to see this sort of headline.will be interesting to see what ebcomes of UK high sts when people stop buying £4 frappacinnos

tranactions down 6% is a big tell imho

https://www.telegraph.co.uk/business/2024/05/01/ftse-100-markets-latest-news-federal-reserve-interest-rates/

Starbucks plunges £12bn as consumers cut back on costly coffee

More than $15.4bn (£12.3bn) was wiped off the value of Starbucks as trading began on Wall Street after it revealed sales fell for the first time since the beginning of the pandemic.

The coffee giant’s shares plunged by 15pc after the opening bell as its new lavender lattes and half-price deals were not enough to entice consumers.

It said net revenues fell by 2pc to $8.6bn (£6.9bn) in the first three months of 2023, as it cut its full-year revenue growth forecast to the low single digits.

https://finance.yahoo.com/news/starbucks-stock-plunges-14-after-badly-missing-its-q2-earnings-estimates-134851851.html

This is Starbucks' first quarterly sales decline since 2020, when COVID shutdowns roiled the industry.

Revenue for the second quarter dropped 2% year over year to $8.6 billion. Adjusted earnings per share also came in lower, down 8% to $0.68.

Global same-store sales declined 4% from a year ago as transactions dropped 6%, which was partially offset by a 2% increase in average ticket size.

 

Just change the name to Fivebucks coffee and people will think it's a bargain at 4

[MrXxxx]

For PFC holders:

https://www.rigzone.com/news/petrofac_announces_temporary_share_suspension-30-apr-2024-176581-article/

https://www.fitchratings.com/research/corporate-finance/fitch-downgrades-petrofac-to-cc-removes-rwn-16-04-2024

...that is if you haven't thrown yourself off the nearest bridge yet!  :-)))

Edited May 1 by MrXxxx

[Errol]

Like Nixon 'temporarily' suspending the gold window.

[ashestoashes]

8 hours ago, AWW said:

You will find plenty of Oxbridge grads working in the quant teams.

first priority of the day photocopy the times crossword and give to all the quants

[Harley]

46 minutes ago, Errol said:

Starbucks lavender latte sounds absolutely disgusting.

Most decent offices have bean to cup coffee machines for free, so no need to go out and buy anything. 

We call it the "warm milk company" due to the lack of coffee.  Someone tried to tell me last week that it's got better.  I doubt it.  I always liked Pret coffee but as with Greggs, only window shopping now.

[Long time lurking]

Is this not what the BOE done after the Truss min budget ?

Basically buying back hold to maturity bonds that are now well underwater from pension companies etc ?

 

[Errol]

11 minutes ago, Long time lurking said:

Is this not what the BOE done after the Truss min budget ?

Basically buying back hold to maturity bonds that are now well underwater from pension companies etc ?

 

Just more of the same nonsense. Buy gold.

[Axeman123]

Its going to see if the Fed continues slowly tapering QT while Treasury injects liquidity to cancel it out. Its practically a civil war between the two at this point.

[ashestoashes]

7 hours ago, Funn3r said:

So if you're nothing special in terms of ability but are well-connected then you can get one of these jobs - so what is the real story of this bloke everyone is suddenly talking about? Surely being brought up in poverty in cockneyland he didn't get a valuable black book of contacts?

he's doesn't need contacts, his skill was like playing poker

[Jay]

19 minutes ago, Axeman123 said:

Its going to see if the Fed continues slowly tapering QT while Treasury injects liquidity to cancel it out. Its practically a civil war between the two at this point.

They are at 35 billion per month starting June..interesting that statement changed to acknowledge growth and slightly stubborn inflation..U.S. economy is still in Goldilocks mood..could be that now the melt up starts..

 

[dnb24]

1 hour ago, Long time lurking said:

Is this not what the BOE done after the Truss min budget ?

Basically buying back hold to maturity bonds that are now well underwater from pension companies etc ?

 

Similar to what we he Japanese MOF and BOJ did back in late 80s/early 90s- back and forth just giving with one hand and taking away with the other