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

[Loki]

Just now, Ponty Mython said:

Me too. Traded it a few tines, made a few grand, but am paying the price now. Stupidly started to believe the fundamentals.

I reckon it is dead, but not worth cashing in the loss.

My only hope is the infrastructure spending gets funnelled towards it.  The project must have some valueto have got this far.  I think we'll get SXX'd though

[Don Coglione]

Just now, Loki said:

My only hope is the infrastructure spending gets funnelled towards it.  The project must have some valueto have got this far.  I think we'll get SXX'd though

Yep, fucked below 0.30.

[Democorruptcy]

4 hours ago, sancho panza said:

I wasn't referring to you Loki,you've been around a long time and know how life works.There's beena few of these moneysavingexpert type posts lately by people who clearly havent read the thread or tehy'd know the answer.It's like coming in at page 348 and asking for a quick run through of the preceeding 847 pages.

Wasn't tlaking about that share which I won't name,we've probably burned more per centage wise than anyone.I'm overjoyed that YRS might have signalled the bottom as he's as bad a market timer as me,slightly worried by @Castlevania as he sounds like he knows what he's talkking about.We'll go through teh bankruptcy prcoeedings we're down that much.

I was going to say sell 'over my dead body' but perhaps it's a bit inappropriate under present circumstances?

[Don Coglione]

4 hours ago, sancho panza said:

I wasn't referring to you Loki,you've been around a long time and know how life works.There's beena few of these moneysavingexpert type posts lately by people who clearly havent read the thread or tehy'd know the answer.It's like coming in at page 348 and asking for a quick run through of the preceeding 847 pages.

Wasn't tlaking about that share which I won't name,we've probably burned more per centage wise than anyone.I'm overjoyed that YRS might have signalled the bottom as he's as bad a market timer as me,slightly worried by @Castlevania as he sounds like he knows what he's talkking about.We'll go through teh bankruptcy prcoeedings we're down that much.

 

 

I reckon I could challenge you on that one!

[NogintheNog]

9 hours ago, Democorruptcy said:

I've posted before that Troy's Sebastian Lyon talks a good talk in relation to the thread. 

Do you prefer that over their Troy Trojan fund?

 

They look pretty similar, but I've always preferred Trusts. Don't own any funds in my self managed accounts.

[Democorruptcy]

17 minutes ago, Ponty Mython said:

"Doing nothing" is a dangerous game...

I bought into HMY at an average of $1.60, saw it run up past $4.00, then watched it drop back below $2.00. It is recovering now. 

As I have posted before, I also bought into SBGL at an average of $2.60, sold at $4.00 after a wild ride, watched it run to $13.00 and then drop.

At least TGZ is covering my losses on CNA. Then I have to factor in INFA...

What to do. Another glass of wine, I think!

Good idea, pair a good and bad one to level the pain.

I've been pairing CNA with my other dog DTY (got what I deserved there for being so morbid).

I think the modern term for what I'd like to do with them both is "conscious uncoupling"? Trouble is when we part it looks like I won't get much out of the settlement.

[DurhamBorn]

 

1 hour ago, Democorruptcy said:

I was going to say sell 'over my dead body' but perhaps it's a bit inappropriate under present circumstances?

I feel like selling them and re-buying,it would be worth the £50 to not have to look at the £7k red on them  ,the gold miner trade made 10x that though,and id take that whack to be able to of got Shell at £9.30 and BP at £2.24 any day.

My dads not as charitable,he says he hopes Iain Cohn gets the bat flu and there is no way the government will let the chinks buy the nuclear power stations now.

[Heart's Ease]

4 hours ago, DurhamBorn said:

If Centrica got back to being down 25% never mind up id be like,

 

OT, but - *The* song of that summer. They did a 'live PA' at a warehouse all nighter I went to. Warrington? Legends DJs? Two slots, played 7" version, then something else (B side?), then 12" version. Place was bouncing.  They could have played it all night. 

[Alifelessbinary]

4 hours ago, DurhamBorn said:

Where people invest is up to their risk tolerance,age, etc etc.House prices are toast in the south.Government wont want a crash,but its low down their wish list.This is a cycle turning event,they happen about 3 times a century.Since 1982 everything was in house prices favour,from today forwards everything is against them.Everything.Inflation adjusted southern prices will go down 70%,in the north they might hold nominal and fall maybe 20%-30% inflation adjusted over the cycle.

My son is buying at the moment,he could pull out but iv told him not too.They have very secure jobs (Aldi and teacher) and got a fantastic 10 year fix mortgage.Il cover any falls if needed as i think the prices here will rise over the cycle,nominal at least.

While I agree that a good quality 3 bed house in Durham will be shielded from the worst of the coming property bear, due to high affordability based against the local economy, there are still a lot of variables that support the North / South variance. London for now is still a global city and has a broad depth of professional clusters which are hard to replicate. While London’s recent boom is service led it still has a broad industrial base and is a key global logistics hub.

After university I swore blind I would never live and work in London, but after acknowledging it’s competitive advantage and the clear political bias decided to not fight against the market. In recent years I have alway recommended graduates to move North as the quality of life due to house prices is an easy decision. 20 years ago though the opportunities were huge. 

I can certainly see a nominal drop of 30% and would actually welcome it for the societal benefits, however 70% inflation adjusted would require double digit inflation and a global depression. Saying that you nailed oil, gold and several other indicators, so time will tell. 

There has already been a 20% drop in Central London house prices since 2014, but this was widely ignored by the mainstream media, as it mainly effected HNW individuals and internal buyers. 

This week I have been surprised at the amount of development activity and funding for large projects is holding up well considering the circumstances. The real challenges will become apparent in the next 6-12 months when a clearer view of the economic damage can be clearly assessed. 

The government are currently working on various residential infrastructure packages to ensure that development volumes don’t collapse. Any scheme seeking support will be done based on the government receiving a return on capital plus restrictions and profit shares on the developer. 

My team amazingly complete 2 land transaction on 9th March totalling £11.2m, much to my surprise. When I quizzed the purchasers they didn’t want to lose their deposits and the purchasers want to place money into assets rather than the bank even with the very real price risk. 
 

 

 

 

 

[Agent ZigZag]

3 hours ago, Bobthebuilder said:

I have been thinking about Harmony recently, never occured to me to sell dogs to buy a potential, great thinking CV.

Harmony and sibanye have been my two favourite performers and I will hold my allocation. In the recent sell off I took a short term gamble/trading position with gdxj. I am hoping wishing and praying this runs and there is a second sell off later this year but not before my sell target is hit. The proceeds from this I will add to the above miners.

[Bobthebuilder]

11 minutes ago, Agent ZigZag said:

Harmony and sibanye have been my two favourite performers and I will hold my allocation. In the recent sell off I took a short term gamble/trading position with gdxj. I am hoping wishing and praying this runs and there is a second sell off later this year but not before my sell target is hit. The proceeds from this I will add to the above miners.

Harmony was really good to me around a year ago. Looking a bit longer term for them now but those that shall not be named may be sold to add. Random thoughts and all that..

[DurhamBorn]

1 hour ago, Alifelessbinary said:

While I agree that a good quality 3 bed house in Durham will be shielded from the worst of the coming property bear, due to high affordability based against the local economy, there are still a lot of variables that support the North / South variance. London for now is still a global city and has a broad depth of professional clusters which are hard to replicate. While London’s recent boom is service led it still has a broad industrial base and is a key global logistics hub.

After university I swore blind I would never live and work in London, but after acknowledging it’s competitive advantage and the clear political bias decided to not fight against the market. In recent years I have alway recommended graduates to move North as the quality of life due to house prices is an easy decision. 20 years ago though the opportunities were huge. 

I can certainly see a nominal drop of 30% and would actually welcome it for the societal benefits, however 70% inflation adjusted would require double digit inflation and a global depression. Saying that you nailed oil, gold and several other indicators, so time will tell. 

There has already been a 20% drop in Central London house prices since 2014, but this was widely ignored by the mainstream media, as it mainly effected HNW individuals and internal buyers. 

This week I have been surprised at the amount of development activity and funding for large projects is holding up well considering the circumstances. The real challenges will become apparent in the next 6-12 months when a clearer view of the economic damage can be clearly assessed. 

The government are currently working on various residential infrastructure packages to ensure that development volumes don’t collapse. Any scheme seeking support will be done based on the government receiving a return on capital plus restrictions and profit shares on the developer. 

My team amazingly complete 2 land transaction on 9th March totalling £11.2m, much to my surprise. When I quizzed the purchasers they didn’t want to lose their deposits and the purchasers want to place money into assets rather than the bank even with the very real price risk. 
 

 

 

 

 

My roadmap shows around 90% inflation over the cycle with a 120% outlier.Rates at 10% a real risk,but 7% are locked in.I think 70% down inflation adjusted is almost certain in the south.They might get away with 60% inflation adjusted and there will be odd places that dont do quite as bad.

The problem for house prices is where as over the last cycle they have had everything in their favour,unlike any other cycle,they are now entering a cycle where everything will be against them.

Inflation running ahead of wages by a lot.

Interest rates starting a cycle long run higher with no falls along the way to lock in lower levels.

Government moving housing support from welfare to social housing.

Demographics as more family homes come on the market and HTB estates falling hugely in price as people who cant sell rent and they slowly turn into sink estates

Cycle being industrial not consumer,so capital will move to areas offering higher gains.

Distribution cycle where pension pots fall as bonds lose over half their value inflation adjusted,so less bank of mum and dad.

I would think a mortgaged southern house would be one of the worst assets classes in the world for the cycle.Though of course for people who have bought a long time ago and paid most off it doesnt matter,its a home.Anyone who bought with high leverage though will suffer greatly.

As always nothing is certain,but the cycles are pretty clear now,its only the scale of the falls in question.

[Shamone]

32 minutes ago, DurhamBorn said:

My roadmap shows around 90% inflation over the cycle with a 120% outlier.Rates at 10% a real risk,but 7% are locked in.I think 70% down inflation adjusted is almost certain in the south.They might get away with 60% inflation adjusted and there will be odd places that dont do quite as bad.

The problem for house prices is where as over the last cycle they have had everything in their favour,unlike any other cycle,they are now entering a cycle where everything will be against them.

Inflation running ahead of wages by a lot.

Interest rates starting a cycle long run higher with no falls along the way to lock in lower levels.

Government moving housing support from welfare to social housing.

Demographics as more family homes come on the market and HTB estates falling hugely in price as people who cant sell rent and they slowly turn into sink estates

Cycle being industrial not consumer,so capital will move to areas offering higher gains.

Distribution cycle where pension pots fall as bonds lose over half their value inflation adjusted,so less bank of mum and dad.

I would think a mortgaged southern house would be one of the worst assets classes in the world for the cycle.Though of course for people who have bought a long time ago and paid most off it doesnt matter,its a home.Anyone who bought with high leverage though will suffer greatly.

As always nothing is certain,but the cycles are pretty clear now,its only the scale of the falls in question.

Excellent, as always. But what is the end game, you think? What happens in 2028? World War 3? How will the ungodly mess be sorted out?

[DurhamBorn]

7 minutes ago, Shamone said:

Excellent, as always. But what is the end game, you think? What happens in 2028? World War 3? How will the ungodly mess be sorted out?

I honestly try not to think about it as its a long way off and we have enough to contend with now and the next couple of years.A lot depends on the scale of the printing needed to right size things now.If we get around 3x the printing we have seen so far,thats a minimum i expect then we should see double digit inflation towards the end of the cycle.Sometime after that things will collapse,mainly governments as they wont be able to issue debt,and the CBs will be trapped because of the inflation.They simply wont be able to print,or buy government paper.Opposite to now,now they can print as much as needed as we are deflating.

The problem will be its likely we see currency collapse including the $ and no price discovery.Its a long way off though and things can change and it might just be a really terrible time that wipes away half of wealth,a bit like this turn now.

 

[Popuplights]

Might be a good time for my kids, all at the beginning big their careers to get a house on the cheap. With the bank of granddad helping. Well, after he has died of course.😟

[Democorruptcy]

8 hours ago, DurhamBorn said:

My roadmap shows around 90% inflation over the cycle with a 120% outlier.Rates at 10% a real risk,but 7% are locked in.I think 70% down inflation adjusted is almost certain in the south.They might get away with 60% inflation adjusted and there will be odd places that dont do quite as bad.

The problem for house prices is where as over the last cycle they have had everything in their favour,unlike any other cycle,they are now entering a cycle where everything will be against them.

Inflation running ahead of wages by a lot.

Interest rates starting a cycle long run higher with no falls along the way to lock in lower levels.

Government moving housing support from welfare to social housing.

Demographics as more family homes come on the market and HTB estates falling hugely in price as people who cant sell rent and they slowly turn into sink estates

Cycle being industrial not consumer,so capital will move to areas offering higher gains.

Distribution cycle where pension pots fall as bonds lose over half their value inflation adjusted,so less bank of mum and dad.

I would think a mortgaged southern house would be one of the worst assets classes in the world for the cycle.Though of course for people who have bought a long time ago and paid most off it doesnt matter,its a home.Anyone who bought with high leverage though will suffer greatly.

As always nothing is certain,but the cycles are pretty clear now,its only the scale of the falls in question.

Amerman has done a good piece The Secret History Of A 70% Market Loss .

The chart doesn't really sell trackers does it and definitely leans towards the importance of individual stock selection? Obviously the ones that do better during inflation and outperform the market as a whole!

 

 

[Barnsey]

BOOM!

https://www.theguardian.com/business/2020/apr/09/bank-of-england-to-finance-uk-government-covid-19-crisis-spending
 

Both the chancellor, Rishi Sunak, and the Bank’s governor, Andrew Bailey, are keen to quash speculation that the cost of the lockdown will eventually force the government into monetary financing, also known as “helicopter money”.

Thinktanks such as the Institute of Fiscal Studies say it is hard to estimate the financial price the government will pay as a result of mothballing large chunks of the economy, but even a relatively short lockdown will send public borrowing to at least £200bn this year.

“Temporary” 

[Bricks & Mortar]

I feel there could be some play on words, like maybe changing "pump & dump" to "pump & buy", or something...

https://www.wsj.com/articles/saudis-take-big-stakes-european-oil-companies-11586382353

[CVG]

I wanted to start looking for new value to invest in and was interested to see which stocks (UK £50M+) had fallen most in the last year. It's quite the rogue's gallery! Does anyone see any here that have been overcooked in the present climate?

# Ticker Name  Mkt Cap m GBP  Price vs 52w High %  Price vs 52w Low %  1 INTU Intu Properties                        65 -95                               54 2 AMGO Amigo Holdings                        75 -95                               51 3 TED Ted Baker                        62 -91                               55 4 TLW Tullow Oil                      342 -90                             238 5 MTRO Metro Bank                      156 -90                               31 6 BWNG N Brown                        54 -88                               90 7 SHI Sig                      119 -87                               15 8 DLAR De La Rue                        68 -86                               47 9 FCH Funding Circle Holdings                      192 -84                             151 10 ACSO Accesso Technology                        63 -83                             176 11 ASAI Asa International                        78 -83                               -   12 RSE Riverstone Energy                      139 -82                               61 13 CPI Capita                      551 -82                               66 14 RPS Rps                        82 -82                               21 15 LOOK Lookers                        74 -81                               79 16 MCRO Micro Focus International                   1,405 -81                               44 17 AA. Aa                      102 -81                               24 18 HYVE Hyve                      177 -80                               45 19 CINE Cineworld                      832 -80                             231 20 HUR Hurricane Energy                      262 -80                               84 21 AML Aston Martin Lagonda Global Holdings                   1,114 -79                             108 22 CCL Carnival                   6,050 -79                               52 23 KIE Kier                      136 -78                               44 24 BUR Burford Capital                      892 -78                               63 25 HMSO Hammerson                      595 -78                               45 26 CARD Card Factory                      155 -78                             106 27 MNZS John Menzies                        96 -77                               70 28 HSW Hostelworld                        56 -77                               63 29 TILS Tiziana Life Sciences                        57 -77                               60 30 PHAR Pharos Energy                        73 -76                               85 31 PMO Premier Oil                      243 -76                             189 32 IPF International Personal Finance                      111 -76                               -   33 SENS Sensyne Health                        57 -76                               26 34 PURP Purplebricks                      115 -75                               69 35 SDRY Superdry                      111 -75                             125 36 NRR Newriver Reit                      190 -75                               26 37 SCPA Scapa                      163 -74                               16 38 SAGA Saga                      181 -74                               29 39 PDG Pendragon                      101 -73                               80 40 SYME Abal                        98 -73                               20 41 ELM Elementis                      299 -72                             185 42 JOUL Joules                        89 -72                             150 43 OKEY O'key Sa                      129 -71                               19 44 SNR Senior                      289 -71                               53 45 CRS Crystal Amber Fund                        61 -71                               30 46 GKP Gulf Keystone Petroleum                      161 -71                               62 47 SQN Sqn Asset Finance Income Fund                      139 -70                               76 48 ATMA Atlas Mara                        73 -70                                 6 49 CNA Centrica                   1,961 -70                               11 50 CAL Capital & Regional                        96 -70                               39

[TheCountOfNowhere]

Dont laugh folks.....

 

Centrica PLC

LON: CNA

Follow

 

36.22 GBX +2.54 (7.54%)

22 minutes ago, Barnsey said:

BOOM!

https://www.theguardian.com/business/2020/apr/09/bank-of-england-to-finance-uk-government-covid-19-crisis-spending
 

Both the chancellor, Rishi Sunak, and the Bank’s governor, Andrew Bailey, are keen to quash speculation that the cost of the lockdown will eventually force the government into monetary financing, also known as “helicopter money”.

Thinktanks such as the Institute of Fiscal Studies say it is hard to estimate the financial price the government will pay as a result of mothballing large chunks of the economy, but even a relatively short lockdown will send public borrowing to at least £200bn this year.

“Temporary” 

Pishi Bawsac is a disaster area.

[sancho panza]

30 minutes ago, Bricks & Mortar said:

I feel there could be some play on words, like maybe changing "pump & dump" to "pump & buy", or something...

https://www.wsj.com/articles/saudis-take-big-stakes-european-oil-companies-11586382353

Very interesting B&M.thanks for psoting.I was saying to my dear old MUm the other day -as I put her into some mroe repsol-that they're a tempting target.Nivce to see it confirmed.

Would be interesting to hear if @Cattle Prod thinks we'll see the saudi's move on Euro oilies while they have some cash?

25 minutes ago, Vendetta said:

Apologies as I have not read all 350+ pages (plus Pt. 1&2!) - if this discussed before.

Has anyone had any success or opinion on leveraged shares (x2 and x3) - are they only meant for day traders, and are they ‘adjusted’ so if held for any longer the holder gets ‘screwed over’ ??

I am a ‘long term holder’ and ‘dividend’ investor - however buying 3LLL LLoyds x3 would have been my preferred route and I would have planned to hold ‘long term’. (I did not buy as wary). 

They have risen +30% in last 3 days. See below.

I have also added a list of other leveraged shares. 

 

Of course I am fully aware that if they rise it is X3 BUT ALSO IF THEY FALL it is x3 and I am happy with that - but I think if you hold for a few days you get ‘killed’ by so callled ‘adjustments’ and charges etc....

There's a tracking issue ie they don't perfom as you might expect.I'm also unsure how they would cope with a volatile market as they use options(I believe) and given spreads can widen sharply in wild markets,when you really need them,they may not be there. @Harley is probably the person to get some advice from

42 minutes ago, Democorruptcy said:

Amerman has done a good piece The Secret History Of A 70% Market Loss .

The chart doesn't really sell trackers does it and definitely leans towards the importance of individual stock selection? Obviously the ones that do better during inflation and outperform the market as a whole!

 

 

 

I clicked on the link DM and it went to DB's piece.Reread more the energy guy last night.Gets better with second reading.back later.

http://danielamerman.com/articles/2012/Dow36A.html

10 minutes ago, Vendetta said:

What are the fundamentals like? I take it a few people on here got burnt by CNA? ☹️

Time to invest? Has it hit the bottom? 

Don't start sayin the nam,e............hypertension will increase the covid risk

[TheCountOfNowhere]

10 minutes ago, Vendetta said:

What are the fundamentals like? I take it a few people on here got burnt by CNA? ☹️

Time to invest? Has it hit the bottom? 
 

What I mean is ‘if you had never bought in before’ would you purchase now? 
 

I think we've all been burnt :-)

I'm happy to hold it because it's hedge against inflation at any price.  

However, I've been thinking it's the bottom for about 3 years now.

 

[sancho panza]

@DurhamBorn you mentioned yesterday teh importance of this cycle ending against the background of disinflation whereas GD1 occurred after period of inflation.

As i said,ia hadnt thought of it much but it is a relaeanvt poitn.

is the main issue that disinlfation aloows printing policy response?or is it more subtle?

[Long-game]

25 minutes ago, TheCountOfNowhere said:

Dont laugh folks.....

 

Centrica PLC

LON: CNA

Follow

 

36.22 GBX +2.54 (7.54%)

Pishi Bawsac is a disaster area.

Pishi bawsac😂😂 

 

Bought quite a bit of bp shares over the piece, thanks to this thread, Vodafone next up, thanks to DB and others, this thread has kept the spirits up 👍💯

[Ellandback]

10 hours ago, Agent ZigZag said:

In the recent sell off I took a short term gamble/trading position with gdxj. I am hoping wishing and praying this runs and there is a second sell off later this year but not before my sell target is hit. The proceeds from this I will add to the above miners.

I'm down 20% on my PM miner allocation, I bought last autumn planning to hold for a 100% gain then exit and await the deflationary bust - serves me right for being cocky! I get the impression that most of FinTwit expects another run up in PM stocks to start soon (@henrikzeberg is a notable PM bear for the short term but is widely ridiculed for his views) so maybe all is not lost. I'm aiming to increase my exposure soon but as a novice I'm a little hesitant as it's been brutal this year and I can't discount the possibly they just drift lower along with the general market.