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Credit deflation and the reflation cycle to come.


DurhamBorn

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Bricks & Mortar
1 hour ago, Majorpain said:

From what ive seen there are not too many specialist builders, the majority are just regular contractors who won that work.

That's what I've seen in Scotland too.  Regular contractors, with the client being either a university, or a private company.  And it's not too different from flats or a hotel.  If there's a dropoff in student numbers, they could be repurposed.  Get their mates in government to rustle up a bunch of asylum seekers if all else fails.

"i understands that a university in the North West and two on the South Coast are facing serious financial difficulties, with one already in talks with insolvency lawyers."
Read more at: https://inews.co.uk/news/education/university-bankruptcy-reliant-on-loans/

"...wherever failure falls, Cumbria or Solent..." https://www.theguardian.com/commentisfree/2018/nov/02/university-bankrupt-inevitable-market-forces

"Ucas acceptances data from January, the most recent to date, show 17 institutions suffered a 10 per cent decline in student numbers over the period. The figures reveal that the University of East London and Kingston University have both suffered a fall of 26 per cent since 2012, while Southampton Solent and Cumbria have declined by 24 per cent.Read more at   https://inews.co.uk/news/education/fearing-bankruptcy-turn-to-us-consultants/

I think Solent and Cumbria have questionmarks.  Not sure what other South coast institution though.
 

 

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2 hours ago, Majorpain said:

From what ive seen there are not too many specialist builders, the majority are just regular contractors who won that work.  A student accomodation block is not too different from a block of flats or new build hotels after all. Bedroom, bathroom pod, living room and your set!

Once its built your usual main contractors will have defects to cover and thats it, as lavelas mentioned it will be the clients like Unite who will have the blocks on their books and the liability in the future if they cant fill it. 

On a related note Swansea university had a youtube advert for me today for a chemistry course.... in December?  Id love to know which are the 3 universities on the brink of bankruptcy.

You're right,I suppose the ultimate laiability lies with Unite or whatever company or bank is on the other end.In three years they've transformed the centre of Coventry with about 8 or 9 massive blocks.It's incredible.Cov Uni is the old Lanchester Poly ......or whatever .

 

From what I understand,tehre's more than 3 Uni's in deep trouble.

https://www.theguardian.com/higher-education-network/2018/feb/05/struggling-universities-will-be-shut-down-not-saved-its-not-fair-for-students

https://www.theguardian.com/education/2018/jan/30/fears-university-closures-office-for-students

'Figures released by Ucas, the universities admissions service, last week reveal that the number of 18-year-olds enrolling at London Metropolitan University, the University of Cumbria, Kingston University and the University of Wolverhampton have shrunk every year, with major losses over the past five years.

Since the cap was removed on how many students each university could recruit, institutions have faced unprecedented competition, with popular universities, including Bristol, UCL, Exeter and Surrey expanding. Commentators say this has had a knock-on effect, with middle-ranking universities sucking up some students who before might have accepted places at “lower tariff” institutions.

According to the Ucas data, London Metropolitan University has lost the most, with acceptances from 18-year-old UK students down 15% last year compared with 2016, and 53% since 2012. 

The University of Cumbria has also lost more than a third of its young recruits – down 36% since 2012

Kingston University has had similar losses – down a further 7% on acceptances by 18-year-olds last year, and 30% in the last five years. The University of Wolverhampton was also down 7% in 2017, and 23% since 2012. 

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27 minutes ago, Bricks & Mortar said:

That's what I've seen in Scotland too.  Regular contractors, with the client being either a university, or a private company.  And it's not too different from flats or a hotel.  If there's a dropoff in student numbers, they could be repurposed.  Get their mates in government to rustle up a bunch of asylum seekers if all else fails.

"i understands that a university in the North West and two on the South Coast are facing serious financial difficulties, with one already in talks with insolvency lawyers."
Read more at: https://inews.co.uk/news/education/university-bankruptcy-reliant-on-loans/

"...wherever failure falls, Cumbria or Solent..." https://www.theguardian.com/commentisfree/2018/nov/02/university-bankrupt-inevitable-market-forces

"Ucas acceptances data from January, the most recent to date, show 17 institutions suffered a 10 per cent decline in student numbers over the period. The figures reveal that the University of East London and Kingston University have both suffered a fall of 26 per cent since 2012, while Southampton Solent and Cumbria have declined by 24 per cent.Read more at   https://inews.co.uk/news/education/fearing-bankruptcy-turn-to-us-consultants/

I think Solent and Cumbria have questionmarks.  Not sure what other South coast institution though.
 

 

Yopu offer a couple that the article I quoted doesn't flag.It could well be there are more than we''ve found with a quick google that are 25% down since 2012.These trends will only get worse i suspect.

13 hours ago, Lavalas said:

The Unite Group plc (UTG) is the largest one I know. Haven’t looked at their accounts but chart looks predictably toppy.

are they a listed company Lavalas.I'll have a pop at that chart.I'#ve goodled but can't find them.Can you link please?

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13 hours ago, Lavalas said:

The Unite Group plc (UTG) is the largest one I know. Haven’t looked at their accounts but chart looks predictably toppy.

Holy shit.I have a new 'Countrywide' style favourite........................................you can't go wrong with bricks and mortar lol

If anyone knows any more that are liasted I would be eternally grateful.

image.thumb.png.203cc57019d00d41d79a52ff7838b313.png

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35 minutes ago, sancho panza said:

 

are they a listed company Lavalas.I'll have a pop at that chart.I'#ve goodled but can't find them.Can you link please?

Yeah FTSE 250 I think...

https://www.bloomberg.com/quote/UTG:LN

Try UTG:LSE or UTG:LN

Oooops I now see you’ve found it already. Safe as houses init.

😀

Will have a think if there are any more. 

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43 minutes ago, Lavalas said:

These clowns have got themselves knee deep in the property bubble AND the higher education bubble.

They’re still chucking them up too...

http://www.unite-group.co.uk/our-accommodation/latest-developments

Some of them 25+ floors

Im not sure.

I had  a close look at unute a few years ago.

They dont shoulder all the risk. I think their business model is theres some risk sharing with the HE.

 

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16 minutes ago, spygirl said:

Im not sure.

I had  a close look at unute a few years ago.

They dont shoulder all the risk. I think their business model is theres some risk sharing with the HE. 

 

http://www.unite-group.co.uk/sites/default/files/2018-10/capital-markets-day-oct-18_0.pdf

Everything you ever wanted to know about Unite's universities portfolio.  There is a partnership programme with some unis for beds, but im not entirely sure if thats a simple student allocation, or a financial obligation on the part of the unis to provide people for beds.  It will be pretty stupid if it was the latter.

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6 hours ago, sancho panza said:

Holy shit.I have a new 'Countrywide' style favourite........................................you can't go wrong with bricks and mortar lol

If anyone knows any more that are liasted I would be eternally grateful.

image.thumb.png.203cc57019d00d41d79a52ff7838b313.png

From my experience of living in Edinburgh and seeing these new self-contained bedsit-style buildings being thrown up, a lot of the residents here are the sons and daughters of the nouveau-rich from China, India etc. When China et al crash, these sorts of accommodation providers will be screwed.

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37 minutes ago, azzuri82 said:

From my experience of living in Edinburgh and seeing these new self-contained bedsit-style buildings being thrown up, a lot of the residents here are the sons and daughters of the nouveau-rich from China, India etc. When China et al crash, these sorts of accommodation providers will be screwed.

Have to agree..the scale of building has been huge.It won't take much of a drop in demand to see these places suffer either foreign student numbers dropping off,UK students staying at home more etc

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10 hours ago, Majorpain said:

From what ive seen there are not too many specialist builders, the majority are just regular contractors who won that work.  A student accomodation block is not too different from a block of flats or new build hotels after all. Bedroom, bathroom pod, living room and your set!

There’s Watkin Jones who are listed on AIM

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8 hours ago, sancho panza said:

Have to agree..the scale of building has been huge.It won't take much of a drop in demand to see these places suffer either foreign student numbers dropping off,UK students staying at home more etc

Its not foreign, just the following:

- Change to EU student fiannces. At the mo they can turn up to the UK and dump the fees on the UK tax payer. Needs to go back to paying upfront.

- China pulling all its students.

EU + CHinese is over 3/4 of foreign students i n the UK. And bioth are most likely to use halls.

On my earlier Unite comment., I dont know who's on got their neck on theline. Its normally the biggest idiot in the contract, so the HE body rather than the builder.

 

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15 hours ago, Barnsey said:

Santa rally confirmed, things playing out nicely, just as expected. One last melt up to Jan then watch out below!

So is this the last chance to get out of index trackers and in to cash before the SHTF in early 2019, and then to buy (ladder) back in?

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On 01/12/2018 at 21:52, sancho panza said:

Appreciate your insight and clear explanation.

I've wondered about the companies building all the studetn blocks in places liek Coventry,they must be hugely exposed.Do you have a view MP and any favourites worth a mention.

I had a uni cfo recently explain to me why their accounts looked good but they were cash flow poor, seems that they have to put the current market value of the new residences they are building on to their balance sheet (in the profit column of course) but if they hadn't things didn't look so financially stable...couldn't help thinking how like a leveraged BTL this was!

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Democorruptcy
10 hours ago, sancho panza said:

Have to agree..the scale of building has been huge.It won't take much of a drop in demand to see these places suffer either foreign student numbers dropping off,UK students staying at home more etc

Maybe a downer on playing it for a downer is change of use?

Education education education..... homeless homeless homeless?

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1 minute ago, leonardratso said:

stobart cuts divi, not much though.

Watching this closely as they're after my beloved Flybe, could perhaps be cutting divi to fund takeover as RNS showed pretty strong growth throughout.

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1 hour ago, MrXxx said:

So is this the last chance to get out of index trackers and in to cash before the SHTF in early 2019, and then to buy (ladder) back in?

Nothing can be certain of course, but the contrarian consensus seems to be that this rally will be quite a sizeable one, and really suck the final speculators in before throwing up in the new year. Have seen guesstimates for SPX anywhere between 2900 and 3500 by Jan/Feb, maybe a little further out than that.

You just never know how things will turn out in the end but I have to say that it's been fascinating watching technicals show direction of markets well before Trump tweets, makes you ponder bigger questions about how everything works in the financial world.

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35 minutes ago, Barnsey said:

Nothing can be certain of course, but the contrarian consensus seems to be that this rally will be quite a sizeable one, and really suck the final speculators in before throwing up in the new year. Have seen guesstimates for SPX anywhere between 2900 and 3500 by Jan/Feb, maybe a little further out than that.

You just never know how things will turn out in the end but I have to say that it's been fascinating watching technicals show direction of markets well before Trump tweets, makes you ponder bigger questions about how everything works in the financial world.

My stab is 3300 on the SPX or even maybe 3500.Last run should be the miners and industrials and maybe some stunning individual moves.Gold to $1500 and silver $24,dollar down to 87.GDX to $38.Then TLT should run to $160 as the 10 year drops to 1/2% as the debt deflation shows itself in all its glory.

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35 minutes ago, DurhamBorn said:

My stab is 3300 on the SPX or even maybe 3500.Last run should be the miners and industrials and maybe some stunning individual moves.Gold to $1500 and silver $24,dollar down to 87.GDX to $38.Then TLT should run to $160 as the 10 year drops to 1/2% as the debt deflation shows itself in all its glory.

Summed up very nicely @DurhamBorn, I'm staying out of this relief rally as only trust my view on a macro long term perspective, using this window to grab some more IBTL as see it as the only safe haven once the debt deflation hits, could potentially be most of what I hold for a few months and will then look at other safe havens (metals and miners) as Fed commences significant policy reversal, possibly around summer next year. Just the partial risk of a bounce late 19/early 20 in equities, before a lower low in the depths of a recession in 2020/21, depends on the perversity of Central banks. We know what they should do but don't know how far they're willing to stretch wild ideas. Next crisis thereafter will be defined contribution/benefit pensions, along with many others no doubt.

Interesting bit 20:24 onwards but a good insightful video throughout, his book is on my Xmas list.

Realvision itself a great channel, bit steep at $180 per year but lots of free content on their YouTube channel.

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Democorruptcy
3 hours ago, DurhamBorn said:

My stab is 3300 on the SPX or even maybe 3500.Last run should be the miners and industrials and maybe some stunning individual moves.Gold to $1500 and silver $24,dollar down to 87.GDX to $38.Then TLT should run to $160 as the 10 year drops to 1/2% as the debt deflation shows itself in all its glory.

You seem to be doing a trend of higher final highs on the S&P since starting this May 17 (on ToS)? Must admit I was tempted to short it at about 2,400 at what seems a long time ago now, certainly glad I didn't.

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chart of doom for teh credit bubble in the UK

https://www.investing.com/equities/restaurant-group-company-profile

The Company's principal trading brands include Frankie & Benny's, Chiquito and Coast to Coast. The Company's Frankie & Benny's brand offers classic American and Italian style food and drinks.

image.png.3d4aac569c57cd35c8a353e0c05f1e28.png

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54 minutes ago, Democorruptcy said:

You seem to be doing a trend of higher final highs on the S&P since starting this May 17 (on ToS)? Must admit I was tempted to short it at about 2,400 at what seems a long time ago now, certainly glad I didn't.

I think a lot depends where the markets are once they hear the Fed start to back off from rate increases.Its that short time where people buy due to easier policy before its obvious the easier policy is far too late.The final high doesnt matter to anyone outside of trackers of course.From investing i have no interest in where the S+P goes,up or down,the dollar will drive most of my present investments.

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