Economy crash =/= stock market crash?

coastline

tranquility1 said:

Linton said:

Perhaps you would be less worried about the debts if you knew to whom the debts are owed:

Mostly the debts are owed to us in the form of our pension and insurance companies and our BoE who together buy the majority of issued gilts and us as investors in gilt funds or directly held gilts. Other than gilts a significant amount of debt is represented by money deposited by us in Premium Bonds and NS&I accounts.

I believe debts owed to foreigners are roughly covered by debts foreigners owe the UK though I cannot find full data.  For example at the year end 2020 UK debt was £1877Bn. 28% =£52bB of UK debt is owned abroad.  UK holdings of US debt alone were $368Bn=£266 Bn.

The UK's £2.2tn debt, albeit to itself, still needs to be serviced. 

I can't fund the current annual service figure.

But in 2018, when we were £1.78tn in debt, we were paying £48bn per year to service it.


That figure keeps going up with the debt. 


And I am also assuming that higher rates in the future will also increase the cost (someone will be along to correct me on that if it's not the case).

UK National Debt - Current, Recent, Historical 2017_2027Charts Tables (ukpublicspending.co.uk)

Public Spending Chart for United Kingdom 2012-2032 - Central Government Local Authorities (ukpublicspending.co.uk)

I doubt they'll attempt to pay any of it off considering how it's gone up since GFC in 2008. Imagine any party in power holding back £20-30bn a year to pay the bill. They'll spent it and probably more to win the next election. 
Hardly a year in the last 30 years where it has fallen.

Total Debt As Percent GDP for United Kingdom 1980-2022 - Central Government Local Authorities (ukpublicspending.co.uk)

tranquility1

coastline said:

tranquility1 said:

Linton said:

Perhaps you would be less worried about the debts if you knew to whom the debts are owed:

Mostly the debts are owed to us in the form of our pension and insurance companies and our BoE who together buy the majority of issued gilts and us as investors in gilt funds or directly held gilts. Other than gilts a significant amount of debt is represented by money deposited by us in Premium Bonds and NS&I accounts.

I believe debts owed to foreigners are roughly covered by debts foreigners owe the UK though I cannot find full data.  For example at the year end 2020 UK debt was £1877Bn. 28% =£52bB of UK debt is owned abroad.  UK holdings of US debt alone were $368Bn=£266 Bn.

The UK's £2.2tn debt, albeit to itself, still needs to be serviced. 

I can't fund the current annual service figure.

But in 2018, when we were £1.78tn in debt, we were paying £48bn per year to service it.


That figure keeps going up with the debt. 


And I am also assuming that higher rates in the future will also increase the cost (someone will be along to correct me on that if it's not the case).

I doubt they'll attempt to pay any of it off considering how it's gone up since GFC in 2008. Imagine any party in power holding back £20-30bn a year to pay the bill. They'll spent it and probably more to win the next election. 
Hardly a year in the last 30 years where it has fallen.

They will keep kicking an ever larger can down the road. Until they can't anymore. 

Growing the national debt, although in a low interest rate environment, is not sustainable. Does anyone actually think it won't end badly or need to be "reset" at some point?

kuratowski

tranquility1 said:

They will keep kicking an ever larger can down the road. Until they can't anymore. 

Growing the national debt, although in a low interest rate environment, is not sustainable. Does anyone actually think it won't end badly or need to be "reset" at some point?

Yes, there are plenty of people who think it won't end badly.
A nation will, it hopes, last forever.  It can call on its taxpayers to service national debt indefinitely.
I don't think the national debt will grow unsustainably over the long term.  There is a cycle that means some of the time the government increases borrowing, and at other times it reins in spending and/or increases taxes to keep borrowing in check.  If there is a period of increased borrowing there will follow a period of restraint.
Are there risks?  Yes.  Can those risks be contained?  Also yes.

coastline

coastline said:

Sell the FTSE 100 at 7040 . Right or wrong there's plenty more to go at.

Just a little update not that anybody will be really bothered . Never mind I was asked so I'll highlight my system. Looking at the link which is not the best package the Slow Stochastic curled upwards as I explained around 6850-6900 to buy. Today we sit on the top of overbought region at 7110. Sell at 7110. Not perfect and could still go higher but 7040 down to 6900 and up again to 7110 is around 350 points.

FTSE 100 Index, UK:UKX Advanced Chart - (FTSE UK) UK:UKX, FTSE 100 Index Stock Price - BigCharts.com (marketwatch.com)

You could set the same on here if anybody is interested. Good luck everyone whatever your allocations are.

ISF.L | SharpChart | StockCharts.com

DATE       BUY/SELL   FTSE   POINTS

JULY 15      SELL        7040         0
JULY 20      BUY         6900         140
AUG  5        SELL        7110         350

stephenadarglas

beavere38 said:

Type_45 said:

beavere38 said:

I don't own any stocks and I would not buy any at the moment based on my observations. This could be a smallish correction or just the start of something much bigger (Or I could be completely wrong of course). I've sold one property I owned and another is SSTC now so hoping to complete on that quickly. That just leaves me my own home. I believe cash is best right now. I can buy properties / stock at a discount later if I am correct. I can't short bitcoin but am shorting Tesla and the indicies.

Each to their own, but I'd have thought that property is the safest bet right now. 

Why do you think Lloyds and BlackRock are buying up residential homes en masse right now? 

I don't think property is the right vessel for capital preservation right now. A major stock market crash is going to cause house prices to drop on its own. The free stimulus money (furlough etc) is coming to a halt. Many businesses are going to the wall and more will do so over the coming months. Rising unemployment coupled with rising interest rates for mortgages will mean house prices have to drop. If you look at the psychology of a market top, the last pop higher before the crash is often fuelled by private investors using leverage and I am seeing just that now with people who have limited funds desperately trying to jump onto the property gravy train using all manner of crazy schemes. Lloyds and BlackRock are closest to the money source so benefit the most, borrow at maybe 1% and get 5 to 7% rental return from the property portfolio, they are happy to cream off 4 to 6% profit.

Rising unemployment???? not what I'm reading

Thrugelmir

stephenadarglas said:

beavere38 said:

Type_45 said:

beavere38 said:

I don't own any stocks and I would not buy any at the moment based on my observations. This could be a smallish correction or just the start of something much bigger (Or I could be completely wrong of course). I've sold one property I owned and another is SSTC now so hoping to complete on that quickly. That just leaves me my own home. I believe cash is best right now. I can buy properties / stock at a discount later if I am correct. I can't short bitcoin but am shorting Tesla and the indicies.

Each to their own, but I'd have thought that property is the safest bet right now. 

Why do you think Lloyds and BlackRock are buying up residential homes en masse right now? 

I don't think property is the right vessel for capital preservation right now. A major stock market crash is going to cause house prices to drop on its own. The free stimulus money (furlough etc) is coming to a halt. Many businesses are going to the wall and more will do so over the coming months. Rising unemployment coupled with rising interest rates for mortgages will mean house prices have to drop. If you look at the psychology of a market top, the last pop higher before the crash is often fuelled by private investors using leverage and I am seeing just that now with people who have limited funds desperately trying to jump onto the property gravy train using all manner of crazy schemes. Lloyds and BlackRock are closest to the money source so benefit the most, borrow at maybe 1% and get 5 to 7% rental return from the property portfolio, they are happy to cream off 4 to 6% profit.

Rising unemployment???? not what I'm reading

The furlough scheme is yet to be unwound. 

sevenhills

More than two-thirds of investors are anticipating a stock market pullback before the end of the year, research suggests, amid concerns over growth prospects and the Covid-19 Delta variant.

According to a poll of over 550 global investors by Deutsche Bank, an equity correction sometime before the end of the year is “an overwhelming consensus now”, with 58% forecasting a drop of 5% to 10%.

One in 10 expect a steeper tumble, while just less than a third predict market will avoid stumbling in the next few months.

https://www.theguardian.com/business/2021/sep/13/stock-market-correction-deutsche-bank-covid-19

tranquility1

sevenhills said:

More than two-thirds of investors are anticipating a stock market pullback before the end of the year, research suggests, amid concerns over growth prospects and the Covid-19 Delta variant.

According to a poll of over 550 global investors by Deutsche Bank, an equity correction sometime before the end of the year is “an overwhelming consensus now”, with 58% forecasting a drop of 5% to 10%.

One in 10 expect a steeper tumble, while just less than a third predict market will avoid stumbling in the next few months.

https://www.theguardian.com/business/2021/sep/13/stock-market-correction-deutsche-bank-covid-19

Just catching on now, are they?

And as for their projections...  I'll give you some more accurate numbers:

There is a 100% chance of a market correction before the end of the year. It will be anything up to, and perhaps beyond a 50% drop. And it could happen this week (google 'Evergrande').

Bobziz

100% chance ? Is your time machine for hire ?

sevenhills

I understand we are in a very strange place, roughly a 15% rise this year, but still below the FTSE value in June 2018. If the FTSEs PE rating is usually high, there could be a small crash?

But all that QE pumped into the FTSE must have some benefit.