Member Info for Savage_KeyboardR

Stepping away from the wildfires situation for a moment - I spotted an article forecasting a 5.75% peak in UK rates. What does everyone else think? Has the recent 0.5% hike cooled inflation enough? - I am still thinking 6-6.5% feel more likely but... naturally curious what others reckon since rates are bound to have a sizable impact on disposable income for many through 2024.

Good news to read some of the Gatwick strike action is simmering down. Not so sure about the situation in Rhodes though, more hot weather on the way plus flare ups elsewhere around the Med may well cause similar problems. Probably going to weigh sp down for a few weeks until things calm down.

OSG - What analogy might you prefer? - Just for record, I am counting on UK inflation running hot. Seeing little evidence they have UK economy under control + the surge in incoming revenues seems likely to continue outpacing size of debts +debt interest. Should mean shares will outperform cash in a savings account.

OSG - Yesterday you said "The tiny drop isn't a tiny drop though is it. - It's 8.7% reduced to 7.9%, in a month."

That scale of inflation rate drop is equivalent to: starting off cruising at 70mph on a motorway, then dropping the speed down to 63.5mph...

Yes, Sunak's departure from No.10 this Friday will indeed be prem. Some turbulent weeks ahead I think. Those cracking out the bubbly to celebrate the tiny drop in these inflation figs today may well be nursing costly hangovers...

My wife just dropped her entire (albeit small fry) Tui holding.

Bold move Stupmy and best of luck in your endevours! Gotta say I reckon you've made the right call (I've held so far though... have been hovering over that sale button!)

Imo markets have got far too excited about the small dip on the inflation-ometer - not that I'm against inflation running hot, in fact I'm counting on it being so ;-)

Odd to watch 7.9% inflation rate championed... Almost 4x target rate and more than twice the US rate for June (3%)... i'll hold judgement until the revised data over the months ahead. Scale of the Aug BoE rate rise will be a critical one!

Cash flow tends to be much less of an issue in an environment with hot inflation and rapidly growing revenues being generated as a direct result.

Strikes to kick start the bumper summer get away:

https://news.sky.com/story/gatwick-airport-staff-to-strike-at-start-of-summer-holidays-12920822

Spotted your trade there Stupmy - 15:10:56... seems a fair call to have made. Upward momentum in the SP seems to have petered out for the time being.

Possibly... although in my opinion rather unlikely. If SP were to reach that level I'd say a second, albeit probably smaller, RI could be triggered. Dual purposes of another RI being:

1. Further dilution of Russian shareholder (was ~30% prior to April 2023 RI, post RI it's currently ~10% - Tui board may well aim to have this further reduced).

2. Elimination of more debt, though equally an opportunity to raise investment capital (perhaps a little of both).

Another dip for Tui feels likely in the weeks ahead. 0.1% contraction in May with persistent + high inflation... Breaching of 100% debt to GDP ratio, shrinking construction sector with warnings from manufacturers like the UK car industry and mortgage rates already fast heading towards 7%... Good economic news is in short supply.

If we see a 0.25% Aug rate rise that could be a boost to the markets, though only possible if inflation dips by more than expected...

Cerunched some numbers, opted to Top up with some more, albeit a smaller Top up than I had planned on making.

Good to read your thoughts here Mike. Certainly agree people +families will always want holidays and to travel - absolutely the case!

Many have read the room these last 6 months and have started pre-planning for a world with higher rates (making overpayments on mortgages, personal +business debts too). Your point about unemployment is the most interesting and I wonder to what extent the general public consider they could be made redundant or see friends/family made redundant over these next 18 or so months?..

Yes, agree we're a long way from Feb 24...lots can and will change. A good reminder to take all this with a pinch of salt.

Just spotted this news, it's held me back from further topping up today...

Reconsidering my strategy, as previously I'd not thought rates could get quite that high. With 2yr+5yr Gilts trading today at nearly 5.5% and 4.9% respectively things are now looking far worse than my worst case forecasts. I'd based my strategy on BoE rate topping out at 6%....

Stupmy - Do you reckon the downside 525 gap you identified will close in the near future? Or are we now looking at a period of time well above with a delayed close of that 525 gap much down the line?

Cheers Stille and although the middle have been squeezed a fair bit over the years the recent events appear more akin to a light squish. Financial Conduct Authority just altered rules:

Lenders now able to offer mortgage borrowers, without an affordability check:

1. Switch to interest-only payments for 6 months.

2. Extension of mortgage term, to reduce their monthly payments, and option to switch back within 6 months.

Yes, many will face higher payments but full impact is to be dampened a fair bit by converse 'propping up' actions. Could well draw out the pain over many yrs?

Hi Stupmy, I am resolute revenue growth will be far stronger + longer lasting than anyone anticipates. Several reasons:

1. Monster volumes of Quantitative Easing. QT will take yrs/decade, or three to unwind.

2. Yes, interest rates have risen but not enough to bring inflation below 2% (at least in next few yrs). Rises impact those most indebted but... do not impact much on non-mortgage holders , or those with low debts (no real strategy/policy in place to curtail their spending). Gov doesn't have bottle to crank rates to 7-9% (required to get inflation down to less than 2%), it's bound to run hot for next 3yrs, esp if Ukraine war comes to an end... could well turbo charge inflation.

3. Savings cash is currently flowing out of accounts and into circulation > not the other way around (banks holding rates low to buffer for some mortgage defaults). Probably too little an incentive to save currently, when banks meaningfully raise savings rates things could change there.

4. Proportion of people have already cut back > doom news dampened things a little and encouraged some to make their 10% overpayments ahead of re-mortgaging. I think many may have lots more cash, which they didn't anticipate having, later on this year (Aug-Jan).

5. Much less summer inflation due to big drops in Energy/Fuel/Transport - yep, it'll crank back up over winter and these wild swings are clearly throwing forecasting tools way out but it'll lead to lots more cash for discretionary spending than currently anticipated over next 2-7 months.

Tui board was prudent to undertake the RI when they did, definitely no harm getting debts down ahead of rate rises > another reason I reckon profits will be monstrous for Tui this next year, lower repayments further help them squash debts. Did they need to do it though? I don't think they did > I reckon we'll see sp overshoot the terp and some! I am glad of the RI though, diluting the Russians and a good buy in opportunity for me!

As I had mentioned before donalb... revenues are set to absolutely soar, with the RI having significantly cut the net debt figure down (ahead of bank rates being cranked up) these next few years ahead are set to be full throttle boom years imo.