Credit deflation and the reflation cycle to come.

[ashestoashes]

15 minutes ago, The XYY Man said:

What the fuck...?

I preferred being spammed by them Chinese bastards from a few weeks back compared to this bunch of former hpc cunts.

Johnny-come-latelys the fucking lot of them....

 

 

XYY

when a loaf of bread costs  £10 you may think differently

[Green Devil]

9 hours ago, DurhamBorn said:

You are thinking of the overnight rate,thats all central banks set.Long rates are set by the market.The Fed has done massive amounts around the short end,but nothing around the long end.They can do funding for lending like in the UK of course,but in the scheme of things they are tiny.Rates are low because velocity is low and we are at the end of a deflation cycle.Once we move to an industrial cycle velocity will start to move,and inflation and rates will be following with a lag.I think rates will be minimum 6% by 2025,likely 9%,or maybe 15%.This is why gold and PMs should move higher after the Fed increase (if they do) in June.The Fed moving the short end means they are behind the curve,or too far ahead of it.

 

8 hours ago, sancho panza said:

This remains the key thing for me.I see inflation as a function mainaly of increasing velocity,driven either by people spending before it becomes worthless or spending more frequently because interest rates and incomes are moving higher.

 

Either way,there'll be minimal increases in velocity until the gubbermint stop allowing banks to lend to people who will never pay it back.That merely drives asset bubbles not real economic growth.

That would imply a) an industrial cycle and b) rises wages and c) worthless paper money.

The only one I can see is c) due to endless ZIRP and QE.

[ThoughtCriminal]

10 minutes ago, Banned by HPC said:

You identifying as male these days?

In these gender fluid days we are whatever we imagine......

[sancho panza]

[Yellow_Reduced_Sticker]

you need to have a 1000 fking posts at the former police state forum in order to upload an avatar pic

...here its INSTANT ! Whoever owns this site has a BRAIN!

[ThoughtCriminal]

4 minutes ago, sancho panza said:

I keep thinking Netflix and Amazon have to humble soon, yet on they go.....

 

[Green Devil]

13 hours ago, gibbon said:

This is something I regularly notice, shitty little 1.5 bedroom terraced slave boxes with no drive or garden can cost £300k round here, yet £400k will get you a large 5 bedroom Victorian detached. What the fuck is going on?

 

12 hours ago, Frank Hovis said:

The disconnect between house prices and local wages means that people are really struggling just to buy a house and anything affordable gets snapped up so this raises the price of the low end as they pretty much sell whatever the price.

People generally stretch their finances so much to do this that it may take them two decades before they can even consider moving up.

So house prices have ceased to be about either intrinsic or relative value and now just follow the level of mortgage availability and ability to service that mortgage would be my guess.

When you have near-broken yourself financially to get to £300k the additional £100k looks entirely unachievable.

I have noticed that prices of houses with large gardens have rocketed. I suspect this is due to the fact that you can get planning to build a rabbit hutch on you back garden easy peasy. Consequently any house with a garden that could poss achieve planning is 100k+ over any house with no garden.

Last viewing, kite flying asking price, large garden,  probate, 10 viewings i asked how many offers, 2 offers at asking but none proceedable. Agent, "vendor wont take a penny under asking", prolly sell but i think the mugs that are paying kite flying are finally running out.

[ThoughtCriminal]

1 minute ago, Yellow_Reduced_Sticker said:

you need to have a 1000 fking posts at the former police state forum in order to upload an avatar pic

...here its INSTANT ! Whoever owns this site has a BRAIN!

It's like night and day.......

[Thorn]

8 minutes ago, ThoughtCriminal said:

I keep thinking Netflix and Amazon have to humble soon, yet on they go.....

 

Modern day monopolies with raving fans.

[Thorn]

7 minutes ago, Thorn said:

Modern day monopolies with raving fans.

And monster share buybacks with Tax-break- induced repatriating capital flows.

[macca]

yay.. and not one person Blaming the UK's crap economy on Brexit.. I think I like this new forum..

 

[darkmarket]

6 hours ago, DurhamBorn said:

I dont know if you have seen this site,but i would really advise reading Steven's articles going back two years.He isnt a macro strategist,but he is a superb contrarian who does a lot of work on flows,insider buying/selling etc.For instance gold mining companies have seen big insider buying,house building companies have seen big insider selling.Im sure youl enjoy his articles.

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

Just finished reading Klarman, that looks ideal.

[ThoughtCriminal]

Question for DB

 

Given that Netflix has huge debt and continues to pile it on like there's no tomorrow, if you're correct about the debt deflation then a company like that is going to be in serious trouble if and when things turn is it not?

[DoINeedOne]

Thanks to Sancho for letting me know the topic will continue here

Department store chain House of Fraser is to close 31 of its 59 shops, affecting 6,000 jobs, as part of a rescue deal

House of Fraser has set the stage for a battle with its landlords and creditors after confirming that it has filed proposals for a company voluntary arrangement that will see 31 stores close and put 6,000 jobs at risk.

The UK group said that its portfolio of 59 leased stores was “unsustainable in its current form” and that it would also relocate its offices in London and Glasgow to save money

 

 

 

[DoINeedOne]

Also Vodafone has dropped below £1.90

Vodafone Group Plc

LONDON: VOD.L (GBp)

 189.84p6.78 (3.45%)

[DurhamBorn]

52 minutes ago, ThoughtCriminal said:

Question for DB

 

Given that Netflix has huge debt and continues to pile it on like there's no tomorrow, if you're correct about the debt deflation then a company like that is going to be in serious trouble if and when things turn is it not?

Netflix is banking on the fact they can get to scale then increase prices by a lot.They seem to have an interest expense of 20% of operating income and are burning cash still at a very high rate.Netflix would be in trouble if it lost access to the bond market as it seems to need to for many more years yet.

[DurhamBorn]

24 minutes ago, DoINeedOne said:

Also Vodafone has dropped below £1.90

Vodafone Group Plc

LONDON: VOD.L (GBp)

 189.84p6.78 (3.45%)

They went ex dividend today by 9p a share,the final dividend.

[gibbon]

20 hours ago, sancho panza said:

Whereabout are you?

 

I've noticed that in Leicestershire.Lot of higher end stuff hitting the market lately

Bristol. Suffering the scourge of incomer lefty tossers from London after they turned it into a shit hole, pushing up rents and house prices because I guess £300k seems cheap to pay for a tiny house compared to a £300k zone 4 London studio. Lots of Bristolians can no longer afford to buy here and are being pushed out.

[sancho panza]

10 hours ago, DurhamBorn said:

I think so Pepe yes,but im not 100% sure on the fall in between.Our main work the last 18 months was on currency and im pleased to say our calls were the best in the market.We have been doing a lot of work on the PM complex the last month,mainly due to the fact we expected $1200 to $1450 by now and we only got to $1370.Still a great call,but not enough to kick the miners up.The action after the Fed meeting  will be crucial.For myself iv been buying the complex and moved into platinum and its miners today as well.

What are you looking at DB-Impala/Amplats/?Sibanye....?

Any others that might be worth considering.

10 hours ago, Green Devil said:

 

That would imply a) an industrial cycle and b) rises wages and c) worthless paper money.

The only one I can see is c) due to endless ZIRP and QE.

I was saying if you want wage inflation,then you need higher velocity.I think we're agreeing.

 

1 hour ago, ThoughtCriminal said:

Question for DB

 

Given that Netflix has huge debt and continues to pile it on like there's no tomorrow, if you're correct about the debt deflation then a company like that is going to be in serious trouble if and when things turn is it not?

With any of these things you have to be careful calling the turn or you'll lose your shirt.I've admitted having small shorts on two UK builders and looking to add more as my chart/fundamental work says so.

Facebook and Boeing for instance have both had snap back rallies and when you get one of those the short squeeze can actually reinforce the price action

1 hour ago, DoINeedOne said:

Thanks to Sancho for letting me know the topic will continue here

Department store chain House of Fraser is to close 31 of its 59 shops, affecting 6,000 jobs, as part of a rescue deal

House of Fraser has set the stage for a battle with its landlords and creditors after confirming that it has filed proposals for a company voluntary arrangement that will see 31 stores close and put 6,000 jobs at risk.

The UK group said that its portfolio of 59 leased stores was “unsustainable in its current form” and that it would also relocate its offices in London and Glasgow to save money

 

 

 

I thought this was fascinating when the wife told me this morning.Readers of this thread would be under no ilusions about what's coming,nor was my wife,but then she hears me bang on all the time.For msot of her friends,the penny will start dropping soon.

 

The real issues with HoF are

1) the banks that are exposed

2) the CRE companies with empty properties

3) banks with loans to 2)

 

8 minutes ago, gibbon said:

Bristol. Suffering the scourge of incomer lefty tossers from London after they turned it into a shit hole, pushing up rents and house prices because I guess £300k seems cheap to pay for a tiny house compared to a £300k zone 4 London studio. Lots of Bristolians can no longer afford to buy here and are being pushed out.

Same happened here.

Londinium has a lot to answer for.

[sancho panza]

in the 'what bubble?' series

[Dogtania]

1 hour ago, DurhamBorn said:

Netflix is banking on the fact they can get to scale then increase prices by a lot.

Interesting, I never thought of it like that.  I guess that's the gameplan for lots of these upstart behemoths.  For a longtime I have noted how in a way I'm/we're shooting ourselves in the foot supporting Amazon, which over the years I use and like as lot.  Probably already they have made the move to jacking up prices now they can take for granted their customer base and the moat is built.

When I started using Netflix it was one price of £6, now slightly more but also a range in prices up to I think £10.  Still good value IMO especially for somebody who just joins periodically say 1 month and watches whatever rather than a never ending rolling contract which I guess they bank on.

[Lavalas]

I think Netflix has a fair bit of scope to increase prices. I don’t think they’ve ever increased my bill and I’ve had it about 4 years now. To be honest they could probably add 25% on now and I’d barely grumble.

^severely anecdotal post^

[DoINeedOne]

59 minutes ago, Dogtania said:

Interesting, I never thought of it like that.  I guess that's the gameplan for lots of these upstart behemoths.  For a longtime I have noted how in a way I'm/we're shooting ourselves in the foot supporting Amazon, which over the years I use and like as lot.  Probably already they have made the move to jacking up prices now they can take for granted their customer base and the moat is built.

When I started using Netflix it was one price of £6, now slightly more but also a range in prices up to I think £10.  Still good value IMO especially for somebody who just joins periodically say 1 month and watches whatever rather than a never ending rolling contract which I guess they bank on.

Same as Uber once they have put all/most cab firms out of business they will slowly jack up prices problem is the likes of Amazon and Uber is they make my life easier and simpler for now

[spygirl]

13 hours ago, Funn3r said:

Go to a petrol station. I filled up yesterday and nearly didn't believe it. Low interest rate means fall in the value of the pound against the dollar. Oil has to be paid for in dollars. If petrol was 2 or 3 quid a litre there would be riots, as they actually do have now in Brazil the country has almost collapsed because truckers can no longer pay the price for diesel and are on strike. I think BOE would raise rates before that.

Its useless cunt Carney an the BoE.

Again, as I keep station on ToS - the Boe cannot set the BoE rate lower than the FED - the FED sets the risk free price of money.

The BoE only has freedom to set the BoE rate higher than the FED.

The first hit from Carneys fucked up policy is dollar priced commodities - mainly oil.

 

[spygirl]

13 hours ago, Inoperational Bumblebee said:

Good Lord, it's all the best people here now! Welcome in particular to @DurhamBorn; your thread was the only one worth going back there for. Can't understand what possible reason they might have for putting you (and others who've mentioned it) on moderation, but I'm pleased you have chosen to continue sharing your thoughts and analyses here.

I am in agreement that inflation is the only realistic way out of the massive levels of debt that have been amassed, but since it has become the new normal, a change in circumstances won't be expected and that is what I suspect is what will precipitate a deflationary event. I'm not knowledgable enough to be confident in that, so have hedges for as many events as I can imagine, allocated accordingly.

No.

Massive wage inflation is the only fix.