Credit deflation and the reflation cycle to come.

[Democorruptcy]

3 hours ago, Banned by HPC said:

MMR was meant to have sorted the housing market a few years ago, more HPC bollocks.

 What about grandparents taking care of the kids after school which is the norm these days?

MMR is toothless without a maximum mortgage term. Banks can keep lengthening the mortgage term until the computer says the monthly payments are affordable.

[Democorruptcy]

8 hours ago, sancho panza said:

The costs of the second working parent are huge.It surprises when people bother even though the maths says'no'

 

They do it to leverage up the second wage to be able to "afford" to buy their house.

[Band]

18 minutes ago, Democorruptcy said:

MMR is toothless without a maximum mortgage term. Banks can keep lengthening the mortgage term until the computer says the monthly payments are affordable.

This is the thing with HPCers is you only get the part of the argument that shows MMR, S24, Basel 3 will crash the market. Never get the part that when Basel 3 was agreed recently bank shares jumped several percent on the news as it was watered down.

[grumpygit]

5 minutes ago, Banned by HPC said:

This is the thing with HPCers is you only get the part of the argument that shows MMR, S24, Basel 3 will crash the market. Never get the part that when Basel 3 was agreed recently bank shares jumped several percent on the news as it was watered down.

I am just loving watching this car crash 

This guy defending all the reasons why the property market WILL not  crash while making out it is "what he really wants", hysterical 

[Band]

6 minutes ago, grumpygit said:

I am just loving watching this car crash 

This guy defending all the reasons why the property market WILL not  crash while making out it is "what he really wants", hysterical 

Its odd ball, hello odd ball how are you tonight? Now if you've nothing constructive to add how about toddling off?

[Berk]

I have another anecdotal that I think is worth adding. My folks run a guest house on the south coast and have done for a decade now. There was dip in business during/following the previous recession and things now seem even worse with average stay duration dropping by 30-40%.

I’ve always considered the UK tourism indurstry to be a reasonable bellwether of economic health as it requires a fair amount of disposable income so I thought it worthwhile posting.

[Band]

1 minute ago, Berk said:

I have another anecdotal that I think is worth adding. My folks run a guest house on the south coast and have done for a decade now. There was dip in business during/following the previous recession and things now seem even worse with average stay duration dropping by 30-40%.

I’ve always considered the UK tourism indurstry to be a reasonable bellwether of economic health as it requires a fair amount of disposable income so I thought it worthwhile posting.

Isnt it a case UK tourism does better when things are bad as people cant afford to go abroad?

[Berk]

2 minutes ago, Banned by HPC said:

Isnt it a case UK tourism does better when things are bad as people cant afford to go abroad?

I have heard this mentioned previously and it makes sense, so I wonder if this makes the apparent reduction in local tourism spend even more significant?

[grumpygit]

38 minutes ago, Banned by HPC said:

Its odd ball, hello odd ball how are you tonight? Now if you've nothing constructive to add how about toddling off?

I am saying nothing, just going to keep watching you dig a deeper hole 

[Bricks & Mortar]

1 hour ago, Berk said:

My folks run a guest house on the south coast

Earlier this evening, two Europeans pulled up outside my door, driving a vw with european plates.  I'd say German, Danish or Dutch.  They asked if I knew where a b&b was.  I thought hard, but couldn't come up with any in the village.  When I were a lad, there were one in t'every street.  Cottages for holiday letting quadrupled at least in last decade or two, while B&B/guest houses disappeared.  Seems like some sort of fundamental change in the market.
 

[SpectrumFX]

9 hours ago, Democorruptcy said:

MMR is toothless without a maximum mortgage term. Banks can keep lengthening the mortgage term until the computer says the monthly payments are affordable.

I was taking about about mortgages in work yesterday. One of the guys said that he had 34 years left on his mortgage.

There's a lot of pain coming when interest rates go up. 

[Majorpain]

9 hours ago, Banned by HPC said:

This is the thing with HPCers is you only get the part of the argument that shows MMR, S24, Basel 3 will crash the market. Never get the part that when Basel 3 was agreed recently bank shares jumped several percent on the news as it was watered down.

The great unwashed know that central banks have their back and will never ever let them feel the pain of their actions, so its pretend and extend until the wheels fall off or they get a good enough scapegoat (italy, china imploding) that they can point at that and say "not us guv".

36 minutes ago, SpectrumFX said:

I was taking about about mortgages in work yesterday. One of the guys said that he had 34 years left on his mortgage.

There's a lot of pain coming when interest rates go up. 

Its insane isnt it, people have forgotten all about 2008.  If you lose your job or health your screwed.

[DurhamBorn]

16 hours ago, Lavalas said:

Some of my PMs are getting a little battered at the minute but perversely I’m really ok with it. My first two PM investments were/are very successful, up +40% each in a matter of months. A small amount of skill, maybe, a huge amount of luck, definitely. Now I’m being taught patience, and to not watch the tape, and to really think about how to pick, when to hold or sell etc. 

As ever, thanks everybody for their help.

The signals i use on this sector are probably in the best range iv ever seen to buy.Sometimes those calls fail of course,but im fine with that because probability is in my favour.Some of these stocks have 40 million oz in the ground and valued at $1billion probably 1/5th of their mid cycle price,1/10 or even 1/15+ of a top of cycle price.Those risk rewards suit me fine.Platinum has the lowest commercial net short EVER.Commercials are people who buy the metal and use it,they buy shorts to cover themselves from when they buy the metal until they sell it/use it and sell to end customer.When net shorts get this low it means commercials arent bothering to protect with shorts and that means the people in the business see little downside.That is running alongside numbers like 7% retail bulls on the PMs,some of the lowest ever.

The sector is hated and ignored,its long bear has frustrated all the weak hands.It could of course drift lower,but if im right on the dollar going down from the 96 area we could be off to the races soon.

 

[invalid]

10 hours ago, Banned by HPC said:

Isnt it a case UK tourism does better when things are bad as people cant afford to go abroad?

But often there isn't much difference in price between  UK holiday and a cheap trip to Spain from Southend airport.

[MrXxx]

1 hour ago, Majorpain said:

The great unwashed know that central banks have their back and will never ever let them feel the pain of their actions, so its pretend and extend until the wheels fall off or they get a good enough scapegoat (italy, china imploding) that they can point at that and say "not us guv".

Its insane isnt it, people have forgotten all about 2008.  If you lose your job or health your screwed.

I think people have got so used to the state `always being there` that they believe they will always be supported whatever the situation...this may be true at the moment but how true it will be in the future is another question, especially with the increased demand on the system with more people living to an older age I.e pension and healthcare  costs.

[Talking Monkey]

34 minutes ago, DurhamBorn said:

The signals i use on this sector are probably in the best range iv ever seen to buy.Sometimes those calls fail of course,but im fine with that because probability is in my favour.Some of these stocks have 40 million oz in the ground and valued at $1billion probably 1/5th of their mid cycle price,1/10 or even 1/15+ of a top of cycle price.Those risk rewards suit me fine.Platinum has the lowest commercial net short EVER.Commercials are people who buy the metal and use it,they buy shorts to cover themselves from when they buy the metal until they sell it/use it and sell to end customer.When net shorts get this low it means commercials arent bothering to protect with shorts and that means the people in the business see little downside.That is running alongside numbers like 7% retail bulls on the PMs,some of the lowest ever.

The sector is hated and ignored,its long bear has frustrated all the weak hands.It could of course drift lower,but if im right on the dollar going down from the 96 area we could be off to the races soon.

 

DB with the dollar going lower which currencies would this predominantly be against, could GBP get back to the 1.43 are it hit earlier in the year

[spygirl]

12 hours ago, Democorruptcy said:

MMR is toothless without a maximum mortgage term. Banks can keep lengthening the mortgage term until the computer says the monthly payments are affordable.

Id say, there is a bit ofa dodge - if the mortgagee is young enough.

AFAIK the BoE wont l;et the mortgage term go beyond retuirement age. So, a 30 YO might be able to get a 30 year mortgage but a 40 yo cant.

Again. current MMR should be seen as MMRv1.

Theres v2, v3, v4 etc to come.

 

 

[Castlevania]

16 minutes ago, spygirl said:

Id say, there is a bit ofa dodge - if the mortgagee is young enough.

AFAIK the BoE wont l;et the mortgage term go beyond retuirement age. So, a 30 YO might be able to get a 30 year mortgage but a 40 yo cant.

Again. current MMR should be seen as MMRv1.

Theres v2, v3, v4 etc to come.

 

 

They’ve been getting around this by increasing the age they’ll give you a mortgage to state retirement age or even above. A few years ago NatWest generally didn’t like mortgage terms ending at above the age of 60. Now they’ll happily lend to age 65+. I think the subprime end (Nationwide, Virgin, etc) will lend to 70.

[spygirl]

12 hours ago, Banned by HPC said:

Isnt it a case UK tourism does better when things are bad as people cant afford to go abroad?

 

12 hours ago, Berk said:

I have another anecdotal that I think is worth adding. My folks run a guest house on the south coast and have done for a decade now. There was dip in business during/following the previous recession and things now seem even worse with average stay duration dropping by 30-40%.

I’ve always considered the UK tourism indurstry to be a reasonable bellwether of economic health as it requires a fair amount of disposable income so I thought it worthwhile posting.

 

12 hours ago, Banned by HPC said:

Isnt it a case UK tourism does better when things are bad as people cant afford to go abroad?

A decade isnt enough - business atrted in 2008ish.

Thats the problem with BnB/guesthouses - they are still seen as glie into retirement, easy lifestyle business.

Sadly, nothing could be far from the truth.

years ago - well 40+ - you had pretty rigid summer seasons. Youd get a family book for 1 week solid. The season would run from Mayish to Sept ish. The place owuld be full pretty all that time and would be booked up, cash down by Easter. Struct rules- breakfast bewteen 8-9, fuck off til 5-6. Dire experiecne for the

That was an easy life.

Typically BnB were run by maiden autns or people who'd been laid off from work early - getting a but of payoff before hte compnay pension kicked in.

Ten everyone started fucking to Spain/hotter places from 1975 onwards. BnB lost their guaranteed business. They had to compete for scraps - weekedns, odd holidays, etc. Stretch out their opening times 12 months now. Then allow for more flexible - breakfast 6-10. No tea. No rules. The extra running around hours etc make a business that jsut used to take 8h - 4h mornging, 4h afternoon, now take 12h. Thoe extra 4h hour will kill you.

BnB require 2 people to be around pretty much 24h. No chance of hubby having a little jobs to bring extra cash.

So, any BnB has to geenrate 24k to make up for the pretty much guaranteed 12k/job that Mr + Mrs would easily get.

 

'UK holiday does better when UK slowdowns'

Nope. It does worse.

One, staying in the UK costs about 2-3x more than going somewhere cheap - Spain, Turkey, Portgual.

A BnB family I know were telling me they stayed in a all inc. in Spain, slightly out of season, for the same cost of a week in a BnB in Scarborough.

Now when you shove the extra food cost, the cost of indoor activity as the UK rains a lot, the acutal cost of the holiday was half the price of the UK one.

And they got 90% sunshine compared to 30% in the UK.

The only UK tourist business that make money are Centreparcs and London city breaks.

 

 

 

 

[spygirl]

2 minutes ago, Castlevania said:

They’ve been getting around this by increasing the age they’ll give you a mortgage to state retirement age or even above. A few years ago NatWest generally didn’t like mortgage terms ending at above the age of 60. Now they’ll happily lend to age 65+. I think the subprime end (Nationwide, Virgin, etc) will lend to 70.

Theres an issue/rope to hang them with.

The BoE allows a bank to run a mortgage into retirement - providing the mortgagee has funds to service the loan.

If a mortgage goes bad then the bank gets dragged over the coal and the cost of the mortgage becomes massive.

So, the BoE will a bank take that risk but itll fuck it over if that risk goes bad - Go ahead punk, make my day.

The wiser banks will refuse to allow a motgage to over retirement. The reason for this isthat bank is already holding a lot of risk - fugure income, harder to get a job as you get older (the stats on people working 55+ are pretty grim). The number of people with retuirenment income is low - the bulk of compnay pensioners fall a lot now, repalced with people with DC/perosnal pensions where theyve saved £50/m - fuck all pension.

Banks - NW, Vrgin - lendign to older mortgagees are running a very risk operation. And they dont quite grasp the risk.

I reckon both NW and Conventry BS will be 'resolved' within 5 years.

 

[Castlevania]

15 minutes ago, spygirl said:

Theres an issue/rope to hang them with.

The BoE allows a bank to run a mortgage into retirement - providing the mortgagee has funds to service the loan.

If a mortgage goes bad then the bank gets dragged over the coal and the cost of the mortgage becomes massive.

So, the BoE will a bank take that risk but itll fuck it over if that risk goes bad - Go ahead punk, make my day.

The wiser banks will refuse to allow a motgage to over retirement. The reason for this isthat bank is already holding a lot of risk - fugure income, harder to get a job as you get older (the stats on people working 55+ are pretty grim). The number of people with retuirenment income is low - the bulk of compnay pensioners fall a lot now, repalced with people with DC/perosnal pensions where theyve saved £50/m - fuck all pension.

Banks - NW, Vrgin - lendign to older mortgagees are running a very risk operation. And they dont quite grasp the risk.

I reckon both NW and Conventry BS will be 'resolved' within 5 years.

 

Yeah. I’ll be happy to see all the building societies that are balls deep in buy to let go under. So I think that’s all of them.

[spygirl]

11 hours ago, Bricks & Mortar said:

Earlier this evening, two Europeans pulled up outside my door, driving a vw with european plates.  I'd say German, Danish or Dutch.  They asked if I knew where a b&b was.  I thought hard, but couldn't come up with any in the village.  When I were a lad, there were one in t'every street.  Cottages for holiday letting quadrupled at least in last decade or two, while B&B/guest houses disappeared.  Seems like some sort of fundamental change in the market.
 

Near me Bnb are stablish. Some new ones, some old ones.

However the number of holiday lets are up 3/4x over the last 20 years. These are onyl in certain places - Cornwall, Lakes, Dales, around Whitby.

People  are still piling into them - me and @One percent have an ongoign PM on them.

There's a number of reasons for this.

One is AirBnb.

Two is they attract some tax relief and are seen as 'hands off' - no need to get up at 6am and make breakfast  . 'just needa cl;eaner - lets shove a single mum £50 to clean the place on Saturday.

Tthee its seen as the last remaining way to 'get into proprtdee' investment now the leverage has been removed from BTL.

Whats going to go wrong?

People are not takign out finance on holiday lets - banks know the risk from the 80s/90s - there are very few banks wholl lend much to a newby. and then theyll only lend little.

What they are doing is taking an inheritance, or a redunco payout, taking on a 2nd mortgage on the OOO and shoving that into a holiday let.

HMRC are lobbying to get hosliday lets classed as an investment. If that comes due then the most of the sector is fucked - all the allowances go, the holiday let owe n cannot claim small business rate relief.

The most likely change is a regulation, needing planning, and a special class sof rates 2x council tax, to be kept by the LA.

I shoudl state that holiday lets are a fucking curse for any poor bastard who jas to live next to one. And they are gorssly udner taxed/none taxed.

Ive no reall issuewith BnBs.

 

 

 

 

[spygirl]

1 minute ago, Castlevania said:

Yeah. I’ll be happy to see all the building societies that are balls deep in buy to let go under. So I think that’s all of them.

There are very few BSes left.

Or banks.

2008 saw ~80% of baks/BS either go bust or owned by UKGOV.

Til 2008, mortgage were not regualted - fucking insane isnt it.

1986 big bang was barely finished - it deregualtion should have been followed by clearer capital rules and the removal of the state back stop.

The ony BS of note left are NW and Conventry. And its only just sunk in how much shit they are in.

NW in particular rushed to pick up a lot ofthe junk business the other banks went bust on.

Til 2008 NW were very picky and les leveraged than oterh BS.

 

 

 

[One percent]

44 minutes ago, spygirl said:

Near me Bnb are stablish. Some new ones, some old ones.

However the number of holiday lets are up 3/4x over the last 20 years. These are onyl in certain places - Cornwall, Lakes, Dales, around Whitby.

People  are still piling into them - me and @One percent have an ongoign PM on them.

There's a number of reasons for this.

One is AirBnb.

Two is they attract some tax relief and are seen as 'hands off' - no need to get up at 6am and make breakfast  . 'just needa cl;eaner - lets shove a single mum £50 to clean the place on Saturday.

Tthee its seen as the last remaining way to 'get into proprtdee' investment now the leverage has been removed from BTL.

Whats going to go wrong?

People are not takign out finance on holiday lets - banks know the risk from the 80s/90s - there are very few banks wholl lend much to a newby. and then theyll only lend little.

What they are doing is taking an inheritance, or a redunco payout, taking on a 2nd mortgage on the OOO and shoving that into a holiday let.

HMRC are lobbying to get hosliday lets classed as an investment. If that comes due then the most of the sector is fucked - all the allowances go, the holiday let owe n cannot claim small business rate relief.

The most likely change is a regulation, needing planning, and a special class sof rates 2x council tax, to be kept by the LA.

I shoudl state that holiday lets are a fucking curse for any poor bastard who jas to live next to one. And they are gorssly udner taxed/none taxed.

Ive no reall issuewith BnBs.

 

 

 

 

To add an example. There is a newish detached family home in the middle of love lane. A group of family members have bought it together as a holiday home. £365 k. That’s yet another property that locals have been priced out of. This, alongside those bought as a ‘business ‘ have had a serious negative impact on locals who cannot afford to buy. 

It has also made renting very difficult. Even the local authority is complicit in this. I was talking to a young couple who had been trying to rent a council house. They were told that “they were not local enough to qualify”. 

These are people who have lived all their lives in the town and who were born at the local hospital. I’m not sure what you need to be to be classed as local so as to secure a council house. 

[Lavalas]

3 hours ago, DurhamBorn said:

The signals i use on this sector are probably in the best range iv ever seen to buy.Sometimes those calls fail of course,but im fine with that because probability is in my favour.Some of these stocks have 40 million oz in the ground and valued at $1billion probably 1/5th of their mid cycle price,1/10 or even 1/15+ of a top of cycle price.Those risk rewards suit me fine.Platinum has the lowest commercial net short EVER.Commercials are people who buy the metal and use it,they buy shorts to cover themselves from when they buy the metal until they sell it/use it and sell to end customer.When net shorts get this low it means commercials arent bothering to protect with shorts and that means the people in the business see little downside.That is running alongside numbers like 7% retail bulls on the PMs,some of the lowest ever.

The sector is hated and ignored,its long bear has frustrated all the weak hands.It could of course drift lower,but if im right on the dollar going down from the 96 area we could be off to the races soon.

 

Thanks DB, that’s a really clear explanation of commercials and shorting. Also, I always love that retail positioning is such a contrarian indicator. I guess this thread is us trying not to be the dumb money.

Here’s an interesting article on some signs that China not comex are controlling gold price and the possible circumstances for a breakout. I understand some of it and need to digest the rest.

https://www.sprottmoney.com/Blog/china-takes-control-of-gold.html

The guy who wrote it, David Brady, is worth a look on twitter or on his website. Lots of commodity trading chat around sentiment and fundamentals with a macro slant.