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

[sancho panza]

5 hours ago, Cattle Prod said:

Can anyone explain to me why 10 year breakeven inflation rates have been dropping for the last month?!

Definition:

I guess it means that market participants currently expect inflation to have peaked, or is transitory? Strange, with the CPI numbers coming in the way they are, but markets are not rational I suppose. What could make them change their views...I suppose Powell's comments at FOMC.

 

Much along the lines of what @DurhamBorn was saying ref liquidity but with a picture.10 yr breakeven measures 10 yr contant maturity versus 10 yr TIPS(not insulting anyone ehre jsut establishing parameters.).Problem is that the bond market has become a poor measure of infaltion expectations,not becuase it can't but because it's being used for parking money.

See from last year 10 yr TIPS has been negative.......so plenty inflation expectations(the deeper it goes negative,the higher they expect infaltion going out ten yrs) but due to Fed interventions most likely,10 year constatn maturity not reflecting that.In a weird way the 10 yr break even is covering a stroy that 10 year tips is expecting inflation 10 yr constnat isn't.go figure but Alden was saying as much in that piece I put up yesterday.

It's worth noting that the 10 year tips yield peaked mar 18 2021 and the 10 yr constant May 12...they're not moving in sync.So recent downturn is more from tips yield dropping longer and harder than 10 yr constant.

 

 

on another matter CP,I was thinking about that Eric Nuttall psot I put up yesterday.He was reiterating a lot of the sutff you've taught us ref US shale/OPEC supply etc etc.He come across as a perma bull(which makes me one I guess).How realsitc do you think he is and do you have a view on his commentary-is it hyperbolic to talk about oilies returning to 7 times enterprise value?

No pressure if you'd rathyer not say.

1 hour ago, planit said:

This could fit in with a worry on the Delta variant.

UK cases are now higher than a lot of other countries and growing exponentially.

US now has 10% of cases as Delta variant and if you extrapolate forwards they could be like the UK in a few weeks. I am not completely sure but I think the vaccine uptake is lower in the US than here so it might affect them more.

 

I just now see a new risk that if this variant starts popping up as a problem in multiple countries including US and China there could be a pull back in markets everywhere. The quarantine procedures between countries have slowed down the progression so the markets have underestimated the risk (and it hasn't completely stopped the Delta variant moving countries)

 

Regarding the selling of oil shares earlier up thread, they are the main stocks I want to hold through the entire cycle so I won't be selling permanently as I want them to quadruple. I will trade in and out of some of my holding to not get too bored.

I suppose the question is: 

Over the next 8 years what shares will you hold? 

If you believe in a long cycle then the movements will be longer and larger. If you are selling out after a year or two then you will need to move into something else or wait for a crash. Just have a plan that looks past your next trade.

 

Lumber drop shows that supply can now come back on line to address demand. This should happen to motor vehicles, chips etc resulting in inflation dropping back.

 Oil price seems to be pricing in return to normal now which must be risky, there is no supply shortage so could have peaked for a while. It might be next year now before flying is back to normal.

 

 

We'll be holding for a decade with possibly a big sale ahead of a BK if I can see the wave coming in.

Otherwise,they look like a great way to protect yourself.

This new variant is a reason to keep us locked down.No more no less.The real NHS crisis is in cancer care,mental health,untreated heart disease etc as we're now witnessing record waiting lists form what I've read.

[janch]

15 hours ago, wherebee said:

Who thinks we're getting close to a point for a sale of some oilies?  The shootup in recent weeks has been notable.

I'm thinking of maybe selling all my BP as they seen most woke and fucked at the board level.

edit: up 48% inc divvies.

I've top-sliced BP and Repsol and I tend to do this with anything that seems to get ahead of itself so to speak.  I will keep an eye open and buy more if there are decent pullbacks.  Otherwise I'll sit on the cash and wait for the biggie.

Top-slicing as a strategy works for me as I have been known to sell a share completely and then annoyingly watch it continue to go up.  If the share I've top-sliced continues to rise then I still have skin in the game but if it falls I won't lose so much and I've already banked some profit.

[sancho panza]

14 hours ago, Bobthebuilder said:

I have  a similar feeling about Repsol, up 60% so far, what to do with it?

Talking my book here but have a check of the oilies chart I psoted Bob.I think there's some mileage in selling the odd runner and sticking it on one of the underperformers.Hence I sold EQNR and roebought shell and some telecoms.

Having said that,markets can be irrational and that trade might not work out but for me EQNR has run ahead of the pack to the point where selling it for rdsb made sense-to me at least.(it was way above pre covid price).

2 hours ago, planit said:

Lumber drop shows that supply can now come back on line to address demand. This should happen to motor vehicles, chips etc resulting in inflation dropping back.

 Oil price seems to be pricing in return to normal now which must be risky, there is no supply shortage so could have peaked for a while. It might be next year now before flying is back to normal.

 

 

Lumber looked like a short squeeze in type.I'd love to see one in oil when perception of supply stops matching demand.

[geordie_lurch]

1 hour ago, Hancock said:

Pretty crappy virus to release, in that it doesn't kill anyone who wasn't on deaths door anyway.

Not if the intention was to put enough fear into your enemies so they rush out an experimental 'vaccine' to 'protect' against what the Chinese said was the genetic make up of the virus? I hope myself and a lot of very clever and brave true scientists are wrong on all this but the inventor of mRNA 'vaccine' technology (some 30 years ago and NEVER trialled in humans as all the animals in trials died) certainly thinks it should never have been used for generating a spike protein to "lessen serious symptoms" for Covid. There's also a great deal of evidence being published weekly that it's the spike proteins themselves and which in those who have had the jab the 'vaccines' are generating that will actually cause many more deaths than the original Covid. I won't clog up this thread with more as there are several great threads on here about all this but at the end of the day if people are serious at trying to keep ahead of things via macro economics but haven't seen this clear and present danger to humanity then our ISAs and investments won't be much use to any of us

 

[Hancock]

44 minutes ago, geordie_lurch said:

Not if the intention was to put enough fear into your enemies so they rush out an experimental 'vaccine' to 'protect

There is no way, that the Chinese or anyone could have predicted the reaction from western govts, even if SAGE were bought and paid for by the Chinese as opposed to Gates!

 

[geordie_lurch]

51 minutes ago, Hancock said:

There is no way, that the Chinese or anyone could have predicted the reaction from western govts, even if SAGE were bought and paid for by the Chinese as opposed to Gates!

Go look how quickly these new 'vaccines' were developed...

"Moderna designed its vaccine in just two days in January, before some people had even heard of the coronavirus."

And from this link

"You may be surprised to learn that of the trio of long-awaited coronavirus vaccines, the most promising, Moderna’s mRNA-1273, which reported a 94.5 percent efficacy rate on November 16, had been designed by January 13. This was just two days after the genetic sequence had been made public in an act of scientific and humanitarian generosity that resulted in China’s Yong-Zhen Zhang’s being temporarily forced out of his lab. In Massachusetts, the Moderna vaccine design took all of one weekend. It was completed before China had even acknowledged that the disease could be transmitted from human to human, more than a week before the first confirmed coronavirus case in the United States. By the time the first American death was announced a month later, the vaccine had already been manufactured and shipped to the National Institutes of Health for the beginning of its Phase I clinical trial."

However as I say there are lots of other threads on here such as here and here for anyone that is at least slightly suspicious of what the Governments around the world have been telling us in a co-ordinated 'Great Reset' style

 

[Lightscribe]

https://www.bloomberg.com/news/articles/2021-06-11/china-s-buying-so-much-corn-that-its-ports-are-getting-clogged
 

Looks like China’s preparing for supply line disruptions later this year, good timing too just as inflation hits and possible food shortages next year.

I have a feeling that the ‘just in time’ distribution chain is going to be ripped a new one. Britain could easily be made an example of, as we’re a sitting target. We hardly make anything ourselves anymore, and what we do we rely on other labour for.

If we do start to suffer logistically in this country, the Tax credit Tracy’s are hardly going to jump into their local factories to ‘Dig For Victory’. 

[wherebee]

Well, I took profits on BP and sold all but a small lump.  Up over 50% on the original price.

I'd rather have money in the bank than see a further 10% rise and then a 35% fall.  That's my BK prep done!

[CVG]

8 hours ago, wherebee said:

Well, I took profits on BP and sold all but a small lump.  Up over 50% on the original price.

I'd rather have money in the bank than see a further 10% rise and then a 35% fall.  That's my BK prep done!

I'm looking to take a similar approach as some others here, i.e. take some money off the table in advance of the potential BK.

But what is your strategy in the event that we go 3/6/9 mo's with no BK? I'm thinking that I'll leave it in cash for 6mo and then just start drip-feeding back in month by month.

[jamtomorrow]

15 minutes ago, CVG said:

I'm looking to take a similar approach as some others here, i.e. take some money off the table in advance of the potential BK.

But what is your strategy in the event that we go 3/6/9 mo's with no BK? I'm thinking that I'll leave it in cash for 6mo and then just start drip-feeding back in month by month.

My approach in all this: what metrics or indicators can we look at to understand the *stability* of the monetary system?

Price action seems weak in this respect - I don't doubt it will swing around wildly if/when instability surfaces, but it's a lagging indicator at best.

I'm yet to find a convincing stability proxy, so my equity pot is still sat 50/50 allocated vs cash.

[wherebee]

55 minutes ago, CVG said:

I'm looking to take a similar approach as some others here, i.e. take some money off the table in advance of the potential BK.

But what is your strategy in the event that we go 3/6/9 mo's with no BK? I'm thinking that I'll leave it in cash for 6mo and then just start drip-feeding back in month by month.

I have a need for free cash in the next 6 months, hence the extra drive to take profits.  I probably won't feed in unless there is a nice dip.

 

[Barnsey]

 

[DurhamBorn]

44 minutes ago, Barnsey said:

 

Telcos getting deals from regulators to increase prices at inflation+ will start to kick in nicely,fixed depreciation,fixed debt and rising prices should see return on capital employed start to increase and then free cash will follow,the markets have not expected that.

Its been incredible to see the lack of understanding on inflation.

[Harley]

16 minutes ago, DurhamBorn said:

Its been incredible to see the lack of understanding on inflation.

A lot of money has been spent teaching people to understand nothing.

[sancho panza]

https://mishtalk.com/economics/charts-that-should-scare-the-pants-off-the-fed-and-probably-do

Charts That Should Scare the Pants Off the Fed (And Probably Do)

[sancho panza]

https://mishtalk.com/economics/real-interest-rates-suggest-its-a-good-time-to-buy-and-hold-gold

Real Interest Rates Suggest It's a Good Time to Buy and Hold Gold

 

Timing vs Magnitude

Real interest rates suggest nothing about magnitude of the move. Rather, it's a directional indicator. 

It goes along with what I have stated previously about faith in central banks. 

 

[23rdian]

21 hours ago, Harley said:

A mixed bag atm.  I've been buying the good div payers despite no very clear technical picture but good enough and plenty of vol(atility).  Like *** (DYOR, not a rec, etc) gapping down 4.52% today having risen 14% last month.  I'm probably a bit early but these companies with their cash flows, divs, and balance sheets are hard to ignore.

Aww what was ***?

[HousePriceMania]

 

 

[leonardratso]

36 minutes ago, 23rdian said:

Aww what was ***?

must be everyones favourite, hahahah,

no that doesnt fit the pattern.

[Boon]

40 minutes ago, 23rdian said:

Aww what was ***?

Guessing this was C*ntrica

A shit performer of a share, basically gone nowhere while most others have gone up massively

[leonardratso]

13 minutes ago, Boon said:

Guessing this was C*ntrica

A shit performer of a share, basically gone nowhere while most others have gone up massively

price caps arseholed it, if they get raised maybe theyll have the opposite affect. Nothing much seems to shift it.

[HousePriceMania]

https://www.ft.com/content/3e617ad0-b5c9-4288-846f-c81dca041262

 

UK Treasury to extend ban on commercial evictions until March 2022

[Harley]

2 hours ago, 23rdian said:

Aww what was ***?

If I endeavour to tell you will you promise to DYOR?

[Hancock]

4 hours ago, HousePriceMania said:

https://www.ft.com/content/3e617ad0-b5c9-4288-846f-c81dca041262

 

UK Treasury to extend ban on commercial evictions until March 2022

I just saw some MP going on about taxpayer handouts for companies with rent arrears ... obviously it was a Tory MP.

 

[Agent ZigZag]

Just renewed my electricity and gas for a 12 month contract. An increase of 3% on the previous year. I view this as very fair and reasonable. Lets see where we are a year from now or is inflation now baked in. As someone once said inflation is like a tube of toothpaste. Once its out you cant put it back in.