Credit deflation and the reflation cycle to come (part 2)

[Yadda yadda yadda]

What was the symbolic top of the 2000 tech bubble? I remember lastminute.com making the news with an IPO and vaguely recollect it all collapsing soon after. I think this is when the general public bought in. Is my memory correct?

Trying to identify a similar moment would involve watching the BBC. I really don't want to do that! So alternative ways of forecasting the BK welcome. Although it will hopefully be confined to tech.

[Hancock]

1 hour ago, Harley said:

So pleased I have no idea what that's all about!  The nearest I get to broadcast TV is owning ITV shares!  And I'll dump them as soon as they peak (I have principles after all!).  I'm with DB - decomplex and enjoy those downstream stocks benefit during the party and (importantly) later (without having to guess the sectors to benefit from the state largess).  But also trade any melt up of the upstream (e.g. consumer facing) stocks, until the party's over.  I'm thinking one part of such a pullback may be that while the upstream stocks fall, and the tide runs out, there may remain a new plateau of higher commodity prices.  Surely any party won't last long enough for any additional supply via new producer investments, should they be that brave, to take effect.  And with currently busted supply chains....Trade v long term value.

I'm following this path, as my mind can't do complex anything these days so need to keep things simple.

Sold RM for kids Junior ISA this week; and ITV from SIPP, along with a few goldies before the crash (at a profit) which in hindsight was a schoolboy error. So from here on in i'm just buy and leave kind of kid.

I can see consumer shares going if/when lockdown ends, but fucked if i know which ones so i'll keep away.

Anyway below is my holding plus got£3300 in cash with an additional £20,000 once invoices get paid/ and all work is complete.

I was 100% certain of there being an epic crash on the horizon this time last year, but anything can happen from here in IMHO. I don't really think anyone on here is sure either way. So don't know whether to just dump the £22330 in soon or wait for a year or so. 

Pissed i only put a grand in HZM, will let it run until the end though, could be my 50 bagger.

 

 

 

[SpectrumFX]

1 hour ago, Yadda yadda yadda said:

Ok, that is true but how many saved up enough in 30 years or less to retire at 50 with no state funding expected until 65? Semi-retirement maybe.

I started paying in at 22 but there was no expectation of retiring that early. None of my friends' dads did.

I know this place is exceptional as there are people who have retired very early. I also have a friend who 'sort of retired' at 40ish when made redundant. He had had a stress related illness and never wanted a proper job again. He has small sidelines that provide some income. It wasn't an intention from early 20s to retire early.

Only a very, very small percentage have ever retired at 50. Even fewer would have expected to do so.

It wasn't the norm, but didn't used to be out of the ordinary in the public sector. When I started work in the civil service late 90's it was a standard part of any redundancy exercise to top up pensions for people (those who were either very well liked, or utterly hated by management) so that they paid out immediately and in full at 50 or thereabouts.

I understand that it was also standard practice back in the days of big local government pension surpluses to give a load of people early retirement in order to shift the cost of the restructuring onto the pension funds. In fact local government pensions still have rules that force the employer to pay out the pension if they make somebody redundant within some arbitrary timescale before pension age.

[Hardhat]

31 minutes ago, Hancock said:

I'm following this path, as my mind can't do complex anything these days so need to keep things simple.

Sold RM for kids Junior ISA this week; and ITV from SIPP, along with a few goldies before the crash (at a profit) which in hindsight was a schoolboy error. So from here on in i'm just buy and leave kind of kid.

I can see consumer shares going if/when lockdown ends, but fucked if i know which ones so i'll keep away.

Anyway below is my holding plus got£3300 in cash with an additional £20,000 once invoices get paid/ and all work is complete.

I was 100% certain of there being an epic crash on the horizon this time last year, but anything can happen from here in IMHO. I don't really think anyone on here is sure either way. So don't know whether to just dump the £22330 in soon or wait for a year or so. 

Pissed i only put a grand in HZM, will let it run until the end though, could be my 50 bagger.

 

 

 

Looks like you got great entry points on a lot of those shares! Especially Siemens. It was a toss up for me between buying that and oilies in March. I didn't know we'd get another opportunity at that point! Siemens is still very much a target for any pullbacks.

I'm up a similar amount on my holding, around 25-28% generally, but that amount has been very stable across the last few months, which I actually prefer to wild up and downs. I guess most people following the investment advice on this thread would be in that range at the moment unless they got some amazing entry points?

[Noallegiance]

2 hours ago, Cattle Prod said:

I don't think we've discussed interest rates not going up, and the financial repression needed to do that. Theres a 14 page transcript on the macrovoices website, let me me know what you think.

I found that a really difficult read. Conversational style doesn't communicate to me well in written form.

It didn't seem to say anything different to what this thread has already covered, though.

[Noallegiance]

52 minutes ago, Yadda yadda yadda said:

What was the symbolic top of the 2000 tech bubble? I remember lastminute.com making the news with an IPO and vaguely recollect it all collapsing soon after. I think this is when the general public bought in. Is my memory correct?

Trying to identify a similar moment would involve watching the BBC. I really don't want to do that! So alternative ways of forecasting the BK welcome. Although it will hopefully be confined to tech.

I seem to remember Pets.com being a poster-child.

[Loki]

1 hour ago, Noallegiance said:

I'm reading a book about macro investing right now.

David Dreman?

[dnb24]

6 hours ago, sancho panza said:

Genuinely interested in whetehr you think housing costs play a part or not in the demogrpahic changes

 

I am sure they do @sancho panza.  Even immigrant population demographics have changed- I’ve been in a few awkward conversations between elders and young ones regarding why they don’t have kids, or why they are still living at home.
Probably the best contrarian indicator  happened to me last December- we took my mother in law and father in law out for a Christmas meal for Christmas in Islington. These guys are boomers. They bought a house at 25, mortgage paid at 40, £1mill pension. The MIL looked around the restaurant and in an envious manner said how life is so good for the gen z youngsters who can come here and enjoy a great meal, and how back in their day they couldn’t afford this. What I wanted to say was that these guys can’t afford a place around here, and therefore they go out like this to get some feeling that they have control over their life- even though the meal won’t last more than 2 hours and they’ve probably paid with a credit card! In that one moment I could see the 2 ends of the economic spectrum and the 2 ends of the 38 years of the cycle.

 

*I do not mean to be condescending using the word boomer. 

[JMD]

7 hours ago, ThoughtCriminal said:

I'm going to channel the spirit of David Hunter and be a contrarian. 

 

What if there is no great orgy of spending, whoring, drinking and holidaying etc after this "ends"? 

 

Anecdotally I've seen a lot of changes in people's behaviour: taking up long forgotten hobbies, losing weight and getting fit, unbridled joy at how much money they've saved not going to the pub. 

 

Everyone is baking in the fact that everything goes back to normal and we hit the roaring 20s.

 

Im not so sure that the propaganda and a year of a new routine won't have caused profound and permanent changes to how people live. 

 

I used to be a prison officer before I hid asbestos for a living and I know full well the power routine has to institutionalise people and entrench behaviours. 

 

The effect this would hadve economically can't be overstated. 

 

Just something worth considering. 

 

 

 

Precisely what I think. And i believe it would fit with the macro thesis here, ie its not about short term spending sprees, its more about long term change in behaviours.

[ThoughtCriminal]

3 hours ago, Yadda yadda yadda said:

Yes, all that is true. I've also seen people go back to smoking after just one cigarette. Some people will stop going to pubs or change their lifestyle permanently. Lots more won't and will be desperate to go out and spend. Whether that be in pubs and restaurants or on clothes and accessories. The people spending will more than make up for those that don't.

There could be substitutions. Friends round the house rather than go to the pub. Save on beer costs. It isn't the same experience though and you have to tidy up afterwards.

There have also been people who have taken less healthy life choices because of lockdown. I've seen it reported that smoking is up. Some people have become even more sedentary. Others are drinking more out of boredom.

The lockdown will affect behaviour, in at least a proportion of the population. There will be a spending boom as the money accumulating in bank accounts won't stay there. I expect holidays will be very expensive, although that might not really take effect until next year.

Lockdown led to demand and price surges in home exercise equipment. Dogs. A massive expansion of home food delivery. What will benefit from unlocking?

I think you're massively underestimating what this is. 

 

I see it as a paradigm shift. 'We're not going back to "normal". Pub takings were massively down before lockdown 2 started. 

 

Every poll sees around 75% of people asking to be fucked harder: more lockdown, wear three masks, no touching or hugging. 

 

We're not a nation of hedonists, we're a nation of masochists. 

 

Of course I could be wrong. 

 

In which case I'll gladly come on here and eat humble pie. 😆

[DurhamBorn]

3 hours ago, Cattle Prod said:

I don't think we've discussed interest rates not going up, and the financial repression needed to do that. Theres a 14 page transcript on the macrovoices website, let me me know what you think.

I think its maybe the slightly more likely outcome now and very interesting.They want an industrial recovery,and holding down bank credit would help with that in many ways if they also add fiscal liquidity ongoing,however i think that it wouldnt work to kill inflation because its going to be cost push inflation coming through.Could it be we get both?,rates increasing maybe to say 2.5% and credit kept down.My roadmap says they need to run inflation around 3% above rates to avoid collapse,maybe they know that themselves and are aiming for it?.The key point is they need liquidity moving from bonds to production.The financial repression is needed and certain.Its a distribution cycle ahead.If they do go for holding down credit i still think we get the same result,but maybe inflation tops out at 7+% instead of 12+% and reflation/de complex areas dont go parabolic,just a very good run higher over the cycle.

[DurhamBorn]

https://www.telegraph.co.uk/money/consumer-affairs/millions-households-hit-above-inflation-bill-hikes/

Moving nicely along now.Lovely.

[M S E Refugee]

16 minutes ago, ThoughtCriminal said:

I think you're massively underestimating what this is. 

 

I see it as a paradigm shift. 'We're not going back to "normal". Pub takings were massively down before lockdown 2 started. 

 

Every poll sees around 75% of people asking to be fucked harder: more lockdown, wear three masks, no touching or hugging. 

 

We're not a nation of hedonists, we're a nation of masochists. 

 

Of course I could be wrong. 

 

In which case I'll gladly come on here and eat humble pie. 😆

It depends if you believe the rigged polls from the pollsters.

I don't believe for one minute that the majority of the public are in favour of 10 year Prison sentences for not quarantining.

This Poll below must be made up.

https://yougov.co.uk/topics/health/survey-results/daily/2021/02/10/1ff44/1

[janch]

The above talk about command economy and financial repression is very interesting and possibly a lot more likely now we have governments who love controlling things and populations who lap it up.  Those in government who remember the 70s would probably say that the main takeaway from tehn is not to let inflation runaway and then let loose a wage-price spiral which was very hard to get out of.  So it would mean a more controlled approach to inflation control generally.

I wonder what this does to property prices as maybe there will be control here too in that commercial banks won't be allowed to lend more than a ertain amount as the bulk of the money creation is being done centrally.  However the narrative is still that property prices go up and this is what everyone expects.  They've just extended the stamp duty holiday and help to buy too.  People are happy when they see their house rising in value but I do wonder about those who are priced out.

TPTB will have to be careful though as already we're seeing more of a two-tier split even amonsgt the poorest and also the middle class  (as well as between the higher echelons and the rest).  Many businesses allowed to fail and many people not being eligible for furlough when others are coining it in.

[Hancock]

2 minutes ago, M S E Refugee said:

It depends if you believe the rigged polls from the pollsters.

I don't believe for one minute that the majority of the public are in favour of 10 year Prison sentences for not quarantining.

This Poll below must be made up.

https://yougov.co.uk/topics/health/survey-results/daily/2021/02/10/1ff44/1

Yougov is the Tories in house polling company, and just like the Tories they're always wrong.

[janch]

8 hours ago, ThoughtCriminal said:

before I hid asbestos for a living

You've mentioned this a couple of times and I'm curious as to where one would hide it!   Maybe I shouldn't ask especially on learning what you previous occupation was.

[JMD]

7 hours ago, sancho panza said:

I think there's been a lot written about the UK falling below replacement birth rate of 2.1 babies per woman,particualrly by Paul Hodges.

ALso worth noting that the current trends to aging are reinforced by hosuing prices.People like some security of tenure before having kids if they can-me and Mrs P rent and are having another little one in March so not judging anyone jsut saying I know what goes through her head-which means that places like Londinium are depopulating anyway given you've got 40 year olds living in shared accomodation becuase flats are so expensive or people paying £500k for a two bed flat.

Anotehr unintended consequence of our immigration and scoial hosuing policies.

Genuinely interested in whetehr you think housing costs play a part or not in the demogrpahic changes

 

 

this is similar to that great quote from you a few moments back that 'if it wasn't BTC it would besomething else'.....

I agree,if we didn't have nuclear weapons on all sides,there'd have been a proxy war or two by now.interested in @AWW point on his friends saying this was manufactured...which would explain why our govts panicked so much if intelligenece agencies were warning them of that fact.

Interesting that I've seen your roaring 20's meme cropping up across the media spectrum of late.

ALos,Luke Gromen interview I posted about teh other day was very much in line with a lot of your predictions,particualrly with regard to inflation.He predicts higher inflation than your good self but not by a lot.Number of bright minds heading in the same direction normally means 1 thing...(and I've still yet to study Napier's most recent round of interviews.

Lipstick indicator?

SP, not having a go at you, but I think demographics is mostly a kinda displacement theory (sponsored by gov.?) which mostly just says the bleeding obvious (...but conveniently let's gov. off the hook!). After all the problems it seeks to illuminate, have developed over decades and those problems wouldn't be problems if politicians had enacted proper policies, or never made stupid promises in the first place (eg pensions). Perhaps I am just making a circular argument? Or just showing my despair at modern 'experts'?!? However, demographics just mostly states the bleeding obvious does it not? ...Worth little more than a chapter in a good economics book maybe.                                                                                                                                                              So with my rant over(!), back to your housing point if I may. Extra population demand produces a squeeze, but think most price increases come from easy lending (yes, I'm back to beating on the experts). Any asset that can be borrowed against goes up, and up. This happens anywhere and everywhere, just look to the derivatives and hedge funds. Debt has its place of course, but If I were religious (I'm not) I might even be tempted to say debt was immoral, I think there is a lot to unpack there but I know that discussion is not for this thread.                                                                                                                                                  You mention Napier. I do like him but I note that his recent podcasts have been more informative (for investment plebs like me). You say you haven't watched yet, be interested if you have similar thoughts after viewing. I don't think this is a coincidence as he is now touting his new retail investor subscription service. I say this not to criticise Napier but to show the value of information, andi bet his long running commercial subscription service has been of great benefit to his institutional investors for many years.

[Yadda yadda yadda]

39 minutes ago, ThoughtCriminal said:

I think you're massively underestimating what this is. 

 

I see it as a paradigm shift. 'We're not going back to "normal". Pub takings were massively down before lockdown 2 started. 

 

Every poll sees around 75% of people asking to be fucked harder: more lockdown, wear three masks, no touching or hugging. 

 

We're not a nation of hedonists, we're a nation of masochists. 

 

Of course I could be wrong. 

 

In which case I'll gladly come on here and eat humble pie. 😆

Time will tell and I could well be wrong. There will be changes, that is inevitable. In your prison scenario you saw people who were still in prison and not after they were released. Although I expect a lot returned because they resumed their old behaviour patterns at some point after release. The whole country will be metaphorically released from prison. Although it seems like we will be going into open prison of varying harshness for an unquantified period first.

When pubs are open people will want to go even if they intend to only go once for 'old times sake'.

It may be some time before it all really kicks off as the old especially will be wary for a long while. Pubs might have to cater more for younger people again. Eventually older people will think they're missing out on what life they have left.

If people can predict which areas do well on reopening they could make a lot of money. More even than purely following the advice of this thread. Unfortunately I can't think what will do best and certainly not when.

[Yadda yadda yadda]

11 minutes ago, Cattle Prod said:

Thanks, I need to have a good think about how this works. I mean we've all heard our parents banging on about double digit interest rates (usually not mentioning the high inflation that went with that). But in my case anyway, there were no credit cards or bank loans, no cars on finance and mortgages were very hard to get, cap in hand to the bank manager stuff. I don't know if bank credit was restricted then, or just wasn't available, but you had all three things in the late 70s early eighties: no bank credit, high interest rates and high inflation.

Pretty sure our TV was rented into the late 80s. Of course these days a lot of people rent their phones.

[JMD]

6 hours ago, Cattle Prod said:

I have to relisten to his recent one on macrovoices. He had an alternative outcome to rising interest rates to cintrol inflation, by controlling bank credit growth  Keen to hear what you @DurhamBorn and the thread thought of it:

Would have considerable implications for the macro thesis discussed here

@MvR

Yes, that is a good point to raise. I heard other economic commentators say similar last year (Marisa Katusa?) re credit controls and for example favoured lending for the green sector. So our ollies sector suffers because hated by government. I asked DB about it and if I recall correctly he didn't think it presented big risk or concern.

[Don Coglione]

I wonder how many green wokies have turned off their fossil fuel-fired heating this week...

[feed]

Just now, Knickerless Turgid said:

I wonder how many green wokies have turned off their fossil fuel-fired heating this week...

Their heating was power by renewals, it was your heating that was fossil fuel powered, you terrible person. 

But seriously, "oilies" will just rebrand as energy companies.  It's clearly what shell have started to do with their recent press release and purchases.  

[JMD]

4 hours ago, Hancock said:

Once the shops, pubs and restaurants open, the only thing that will stop Brits spending is job losses or a tightening of credit.

This is a nation who on a Saturday night watches a dancing sausage to guess who is inside.

Isn't that program called Primed Minister's Questions?   (It's on Wednesday afternoons btw!!)

[Don Coglione]

5 minutes ago, feed said:

Their heating was power by renewals, it was your heating that was fossil fuel powered, you terrible person. 

But seriously, "oilies" will just rebrand as energy companies.  It's clearly what shell have started to do with their recent press release and purchases.  

Oh yes, that renewable gas that comes through the pipes - magic.

There is no way that human nature will allow the bounty that is low-cost fossil fuel energy to be squandered. Once the green wokies start to feel cold and are unable to heat up their vegan burgers and chai lattes, the hypocrisy will be revealed.

[JMD]

4 hours ago, feed said:

Risk taking.

Nothing quite like locking down an entire generation of youth for a year for a virus that has almost no averse effect on them to stimulate risk taking once let out again.  I imagine the roads will be carnage for a while.  

Roads will be carnage you say?  ...don't forget the new sport of London 'street knife crime', coming to an area near you soon!                                                                                                                                                             (NB i don't say this lightly, I am sick of the institutional failings - and leadership failures - that have led up to this)