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

[sancho panza]

On 12/12/2020 at 11:07, Harley said:

This is what I'm going for as one of only a few pre BK safe harbours unless anyone says different.  The issue is in its implementation as it would be via a collective instrument like an ETF and most lend out their holdings to (and you just can't make this up) banks, etc!  Vanguard say they don't lend but I have to look harder to find a UST ETF (or maybe a fund) as VGOV is a bit of everything.  Then there's the issue with any such collective instruments in a BK - access to sell - everything could get locked down, even then opening later at a discount.  UK gilts are easier to get in a collective or even outright, but Sterling?

Question for you H and @DurhamBorn, in terms of duration which flavours of UST are you going for ahead of BK if you get the chance,long dated or short dated?

ZROZ reinvests divi so goes up more than TLT I've heard.

[sancho panza]

On 11/12/2020 at 08:52, Cattle Prod said:

China vehicle sales up ~ 10% yoy, so much for the China hoarding oil to sell products narrative. They need all the extra oil they bought this year, CCP wouldn't want the people queueing at petrol stations. EVs growing strongly in fairness, shame they'll mostly be running on coal:

Interestingn CP,I remember someone on here think it was @DoINeedOne psoting a chart showing energy usage since 2000 and coal dipped a bit post 2008 but was back at previous demand a fe wyears later.

Ref China,I plucked a few figures from Fred but I have my doubts about how good they are,so will need an alternate soruce if you know one.M2 gets published here in USD and GDP in yuan so I've indexed them.

A few things leap out like the apparent death of CPI in China when you consider flats in big cities can retail for $250k ++.Also M2 crossing over GDP.Plus growth of Chinese reserves.

Ref

 

[sancho panza]

This chart sums up where are and where we've come from.

World went mad during the crossover between 200-2005.

We're now ina world where Federal debt has climbing above US pension fund assets leaving you wondering who the future buyers of 1.5% 30 year bonds will be?Especially given foreign buyers have been reducing holdings over last year or two-Wolf St ?

[reformed nice guy]

1 hour ago, sancho panza said:

#debtdeflationcometh

https://www.thetimes.co.uk/article/we-are-millionaire-mortgage-prisoners-znd3t0ttg

We are millionaire mortgage prisoners

So the bank, which has seen their income, outgoings and presumably their business accounts, will not lend to them and they are "millionaires"? It fails the sniff test. 

[DurhamBorn]

1 hour ago, sancho panza said:

Question for you H and @DurhamBorn, in terms of duration which flavours of UST are you going for ahead of BK if you get the chance,long dated or short dated?

ZROZ reinvests divi so goes up more than TLT I've heard.

10 year,its the most liquid, TLT,it would be 6 months probably so coupon wouldnt interest me really.

[Loki]

On 11/12/2020 at 16:23, geordie_lurch said:

If we get a hard Brexit confirmed over the weekend AND maybe if more develops on the Texas lawsuit over the election 'result' AND maybe we hear of the first few deaths from the vaccine in the UK or similar then I think we could get another Black Monday soon

So in the spirit of ToS where I seem to remember people making a call on them I'm going to stick my neck out and call it for this Monday 14h December 2020
 

Have a good weekend all

 

Seen a post elsewhere on the site, buggered if I can find it again as the search function is useless

But they said USA vaccine approval could mean markets soar at the open.  I am inclined to agree.  Vaccine and stimulus deal are the magic incantations for now. 

(More of a trading post than an investment post, sorry)

[DurhamBorn]

3 hours ago, sancho panza said:

#debtdeflationcometh

https://www.thetimes.co.uk/article/we-are-millionaire-mortgage-prisoners-znd3t0ttg

We are millionaire mortgage prisoners

 

So they had an interest rate of around 1.2% yet didnt bother making any capital repayments.Instead lived it up execting to always borrow at interest only and never repay.As my old mate used to say to the lasses in the taxi ranks,you just have to suck it and see.

[Paulie]

30 minutes ago, DurhamBorn said:

10 year,its the most liquid, TLT,it would be 6 months probably so coupon wouldnt interest me really.

If I'm not wrong TLT isn't saleable under EU rules without a KIID. Perhaps come Jan.....

I think IBTL is similar (don't worry, nothing to do with rentals...)

[DurhamBorn]

1 minute ago, Paulie said:

If I'm not wrong TLT isn't saleable under EU rules without a KIID. Perhaps come Jan.....

I think IBTL is similar (don't worry, nothing to do with rentals...)

Yes IBTL is exactly the same and used unless we get shot of the KIID rubbish once we are out of the Reich.

[Harley]

3 hours ago, sancho panza said:

For me H,it's going to be like March when the quality stuff got sold off to pay margin calls and to rasie cash.Only place I'll be hiding is UST's and cash as well as bottom rungs in oilies/goldies/telecoms/UST's.

Cheers, me too.  Bottom rungs mostly in and I've started to add to my small amount of USTs. That still leaves counterparty risk for cash and collectives (e.g. ETFs) for USTs.  PM's as well as they may bounce back after that initial dash for liquidity sell off.  GBP versus USD looks potentially range bound with strong resistance at the 1.4+ range on the monthly, although the talking heads negative on the DXY (but DXY<>GBP).  Indeed DXY could be bottoming!

[Harley]

3 hours ago, sancho panza said:

Question for you H and @DurhamBorn, in terms of duration which flavours of UST are you going for ahead of BK if you get the chance,long dated or short dated?

ZROZ reinvests divi so goes up more than TLT I've heard.

I go long and short duration.  Short (1 to 5 year) for cash (e.g. TSY3) and long (20+ year) for bonds allocation (e.g. IBTL).  Both are iShares who lend out the holdings so I'm not happy.  Any recs (these aren't, DYOR) gratefully received.  I also hold UK and Euro government bonds. 

[Democorruptcy]

4 hours ago, sancho panza said:

Shows that Interest Only was still available after the financial crash. On ToS some wouldn't have it when I suggested that.

[Harley]

B*gger, looks like I had old data - Reading the KIDs for the Vanguard UST funds/ETFs, they say "The Fund may engage in short term secured lending of its investments to certain eligible third parties".

 

 

[Harley]

2 hours ago, Harley said:

I go long and short duration.  Short (1 to 5 year) for cash (e.g. TSY3) and long (20+ year) for bonds allocation (e.g. IBTL).  Both are iShares who lend out the holdings so I'm not happy.  Any recs (these aren't, DYOR) gratefully received.  I also hold UK and Euro government bonds. 

Wrong, TSY3 is SSGA not iShares.

A good source for UST, etc ETFs:

http://justetf.com/uk/find-etf.html?assetClass=class-bonds&groupField=index&country=US&bondType=Government

[Yadda yadda yadda]

5 hours ago, DurhamBorn said:

So they had an interest rate of around 1.2% yet didnt bother making any capital repayments.Instead lived it up execting to always borrow at interest only and never repay.As my old mate used to say to the lasses in the taxi ranks,you just have to suck it and see.

Worse than that. Base rate is currently 0.1%. So they're paying 0.83%. I make that a £1.22m loan. £844×12/0.0083. 30% of £1.75m is £525k deposit so it adds up, roughly.

They're idiots for spending all their income. They could go for a ten year repayment loan but they'd be looking at £10k per month plus interest. If they can't afford that or the bank doesn't think they can then they'll have to sell.

Sell up and move to Durham. Obvious answer. Nice big house paid for out of the original deposit. Retirement sorted too if they're in a high HPI area.

[Viceroy]

On 10/12/2020 at 12:40, Viceroy said:

If of any help to anyone, I follow Gold Ventures @TheLastDegree  -he's followed by the likes of Luke Groman +others and mainly trades/invests in Silver. He follows DaveHunter

He helpfully lists his portfolio- https://www.goldventures.org/blog/silver-sitfolio

Current top 10 for smaller portfolios

1   Abraplata Rescources       2   Defiance Silver       3   Aftermath Silver       4   Aurcana Corp       5   Kuya Silver       6   Impact Silver OR Aya Gold & Silver       7   Golden Tag Resources       8   Southern Silver Exploration       9   SantaCruz Silver      10   Strikepoint

GV's Silver Producers Only List     

- this is a more conservative list with majors and producers. This list is ranked by 2 criteria: risk and upside potential combined. Some picks are not included which i think have less upside than these. 

1   Fortuna Silver       2   Hecla Mining       3   First Majestic Silver        4   Coeur Mining       5   Pan American Silver      

6   Avino Silver        7   Endeavour Silver       8   Impact Silver       9   GoGold Resources       10   Aya Gold &Silver       11 SantaCruz Silver

 

Using cycles/EW/fib etc he points to 2021 Q1/2 being a stock market correction, Q2 a sell off in precious metals, wait til the end of 2021 and then get back in.  

fyi -Patrick Karim @badcharts1 has done a 2hr technical analysis vid of many of those Gold Ventures-chosen silver miners.

In the intro it's astonishing to see how Kirkland Lake Gold went from a penny stock in 2015 then shot up 22,000% in 5+ years.  

https://www.goldventures.org/20200915 "if you want to win the lotto you have to buy a lot of tickets" 

It taught me a lot about charting and tech analysis - https://www.youtube.com/watch?v=kxAtWeJDLuo

(Norzinc (6:43) Sterling Metals (9:03) Nubian Resources (11:20) Orex (13:27) Alianza (15:33) Silver Sands (18:17) Vangold (19:57) Brigadier (24:00) Stroud Resources (26:45) Outcrop Gold (28:52) Max Resources (32:06) Dolly Varden (33:15) Monarca (36:13) Argent Minerals (38:16) GR Silver (40:56) CMC Metals (43:28) Mountain Boy Minerals (45:48) Klondike Silver (47:19) Avino Silver & Gold (50:00) Gogold (52:14) Reyna Silver (54:31) Sable Resources (56:17) El Oro (59:08) Kuya Silver (1:01:14) Southern Silver (1:03:26) Silver Dollar (1:07:37) Equity Metals (1:09:28) SantaCruz Silver (1:12:12) Aya Gold & Silver (1:15:08) Impact Silver (1:18:21) Strikepoint (1:22:25) Canada Cobalt Silver Works (1:24:56) Golden Tag (1:27:51) Aftermath (1:31:47) Aurcana Silver (1:35:51) Defiance Silver (1:41:11) Abraplata Resource (1:46:48)

 

[DoINeedOne]

To be honest i thought he was joking, checked calendar nope not April 1st

https://www.veganetf.com

 

 

[Democorruptcy]

The number of days that bloody share is the only one in the red. Don't forget to tell everyone the governbankment advice, that people meeting at Christmas, should open all the windows and turn the heating up.

[JMD]

1 hour ago, Democorruptcy said:

The number of days that bloody share is the only one in the red. Don't forget to tell everyone the governbankment advice, that people meeting at Christmas, should open all the windows and turn the heating up.

I know this wasn't your point Democorruptcy, but I don't mind stating that the '...open windows...' advice/mantra/'eye of newt' spell(take your pick) from government triggers me. Are we here on dosbods, the last few sane ones noticing how crazy all this stuff sounds? Or is it that Witty and Valance are reasonable, well grounded chaps, and it is my own mental health that is at fault and failing? 

(I won't witter(Witty?) on about it more; but are all these dissonant policies - from the micro(fresh air good/cold air bad) to the macro(save the nhs/but refuse treatment to most) - a form of Stockholm Syndrome? Giving, then taking away, eventually we will accept and love our abusers?)

[Chewing Grass]

2 minutes ago, JMD said:

Witty and Valance are reasonable, well grounded chaps

No they are Civil Servants and work in a cosy government bubble of committees.

[JMD]

3 hours ago, DoINeedOne said:

To be honest i thought he was joking, checked calendar nope not April 1st

https://www.veganetf.com

 

I can only comment Wow!! On the other hand(!?), I think Rod Liddle (the political commentator) might say we were now very much at 'peak w**k'!! 

[JMD]

4 minutes ago, Chewing Grass said:

No they are Civil Servants and work in a cosy government bubble of committees.

Is that code for 'incompetent and untrustworthy'? Just asking. 

[Majorpain]

41 minutes ago, JMD said:

Is that code for 'incompetent and untrustworthy'? Just asking. 

Its translates as they have F*cked literally everything up this year and will be lucky not to join the decorations hanging from the lampost's.

I'm long rope.

[Democorruptcy]

3 hours ago, JMD said:

I know this wasn't your point Democorruptcy, but I don't mind stating that the '...open windows...' advice/mantra/'eye of newt' spell(take your pick) from government triggers me. Are we here on dosbods, the last few sane ones noticing how crazy all this stuff sounds? Or is it that Witty and Valance are reasonable, well grounded chaps, and it is my own mental health that is at fault and failing? 

(I won't witter(Witty?) on about it more; but are all these dissonant policies - from the micro(fresh air good/cold air bad) to the macro(save the nhs/but refuse treatment to most) - a form of Stockholm Syndrome? Giving, then taking away, eventually we will accept and love our abusers?)

I just thought that for once, they had said something that might help me financially.

[CVG]

As folks were asking earlier .....

My XOM dividend hit my HL ISA today. Niiice!