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


spunko

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9 hours ago, Rave said:

I'm sat here imagining myself reaching for the lasers. I really must do a proper week in Ibiza before I get too old and/or the clubs die off for lack of demand- I gather that Millennials and Gen Z aren't so into it 9_9 . Perhaps I'll have enough change left over after I swap my bitcoins for a house xD .

"Ohh you young people, all you are interested in is your pop music and `funny money` ideas!"

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2 hours ago, DurhamBorn said:

@Barnsey i think they taper once inflation hits 3%,though they could scale down a bit first.3% inflation is possible mid summer,my roadmap says August is possible,though the numbers are so skewered it might take 5% inflation before it shows up as 3%.

In the UK i think the BOE has room to print for around 12 months,but tapering as well back half of this year.Dishy will have a £150billion structural deficit minimum at that point.He could really do with a worldwide bust so they can inject another £800 billion.

 

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Democorruptcy
11 hours ago, Loki said:

@DurhamBorn I'm sure you've already said but buggered if I can find it - search comes back blank.  What are your favourite gas companies (if you don't mind)

Can I just say that there is one gas share that we temporarily don't mention by name. Therefore when looking at people's suggestion of favourites, it may not get a mention. However it could always be in there. Couldn't it? Gulp!

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38 minutes ago, MrXxxx said:

"Ohh you young people, all you are interested in is your pop music and `funny money` ideas!"

I did 2 weeks in 97,98,99,00. Dont think clubs are anything like they were then. 

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1 minute ago, Democorruptcy said:

Can I just say that there is one gas share that we temporarily don't mention by name. Therefore when looking at people's suggestion of favourites, it may not get a mention. However it could always be in there. Couldn't it? Gulp!

I never sold mine.  In fact, for the benefit of the grifting journalists who we think browse this thread, I loaded up on it at the lows. B|:Beer:

 

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10 hours ago, sancho panza said:

It's the mix that's selling or not selling that's key.LE2 shooitng higher with no and I mean NO volume at the bottom of the ladder.RM still not publishing spet figures.going to be an awful year for EA's with letting fees all but disappearing and transactions so low.This lack of flats/terraces selling isn't jsut a Leicester thing.

image.png.a3956a28d93767dace968afa643d4f2e.png

@sancho panza what website is this from?

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1 hour ago, Loki said:

I never sold mine.  In fact, for the benefit of the grifting journalists who we think browse this thread, I loaded up on it at the lows. B|:Beer:

 

I'm only down 65% myself. I'm going long!

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I sold the share that should not be named and bought more shares in Harmony. I then sold those additional shares a few months later for a 170% gain. Which recouped most of what I lost. 

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Saxo Bank mentioned recently. Reminded me that Saxo do a yearly outrageous predictions podcast/slides. Sound quality is bad, but worth watching because its interesting to see what the big boys 'think'... i.e. although Saxo would not divulge any 'secret knowledge', it can still be insightful to gauge how 'jokey', or not, they are about future trends, etc.

Outrageous Predictions 2021 | Saxo Markets (home.saxo)

 

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10 hours ago, sancho panza said:

Impressive dnb......haevn't got a clue what you're talking about.

And there was me thinking you were the resident healthcare expert...B|. You shoud let these posts flow more often. 

I agree. Its great to have the tech guys we have posting here.

I missed out completely on the hydrogen companies battery tech run up, my own fault for not committing 18 months ago. I see supercapacitor battery tech as potentially similar next big thing. However, for a more cautious long-term hold, agr/food tech (hydroponics/'artificial' lab meat, etc) is i think a better suited investment prospect. DurhamBorn commented on this sector yesterday, and i believe he views it as being a component part of the decomplex trade. Unfortunately i don't know enough about these areas so hope others will post more in future. 

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11 hours ago, sancho panza said:

you have to watch this video of the police in scotland ....simply can't beleive these are the same people who need a warrant to raid a crack hosue.

From what I'm hearing even the middle class corporate types are losing patience.Sorry for the derailment but begging the threads indulgence this one time for the sake of a wider audience.

 

Perhaps some might think it a crass thing to say - but for me, i lost huge trust in the police when they changed their blue uniforms to black. Words still fail me over that decision... where was the public debate? - i know, there wasn't - but that's just it, why wasn't there one? Maybe its me just being 'super-sensitive' about this, however symbols matter a lot - and for me black uniforms conjure up unfortunate images from last century? Fast forward to today, and i don't at all like the trend.

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Chewing Grass
1 minute ago, Democorruptcy said:

My sell finger is incredibly twitchy today.

Russia is where its at, they have Gas and other shit.

1567868297_Screenshotfrom2021-01-1112-46-28.png.33b83c6348d69ef2e77948beab137072.png

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Regarding health investments - For anyone interested in the health sector - VNV Global AB have a significant holding in Babylon Health. 
Babylon are shaking up the health sector- in both the USA and UK. I believe they are looking at an IPO next year, but when they do- they have the potential to really fly. 
It’s kind of a Decomplex play- as with Babylon no need to register with Gp, you just ring up, they send for investigations, review you with results or send on for management. It significantly simplifies the pathway and will disturb every geographic health area of UK- the only issue would be whether it will be allowed to- GPs and CCGs have shown some resistance but I believe Babylon have significant governmental support.

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Raul Pal from 8/1/2021 .

Macro thoughts..this is not his best interview but I thought I would flag up the first 10 minutes or so....Includes warnings of extreme risk in equity markets with  bond yield markers and rationale... talking about crypto a lot in the middle portion then back on track at  circa 26.00 mins, inc emerging markets.

That Cue ball is still in the same place.

 

 

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On 08/01/2021 at 17:52, Cattle Prod said:

Yes, I've been waiting for this one. 

I got very excited last night when I saw Art had revised his model to where I am on his slides, I think I mentioned I challenged him on some of his assumptions, like extrapolating tight decline to conventional. I wondered would he reference the exchange on the podcast, but actually Erik did. Full credit to him, he didn't hide, admitted he was wrong and revised his model. That's how science works: challenge -> revision, ad nauseum. I emailed Erik this morning about one or two other weaknesses in the analysis to ask him to bring it up with Art next time. He agreed with my point.

Anyway, my view hasn't changed, though the continuation of lockdows is clearly delaying inventory clearing. I thought end Q4, but I'll go along with what Art suggests of another 6 weeks. So mid Feb. The key point is that it's not going to magically stop there. Yes, OPEC will start releasing oil, but when Saudi unilaterally cuts, it tells you they want much higher oil. Saudi exports to the US last week were zero, for the first time in decades. Saudi are no longer afraid of US shale, they know they can't respond to a price spike like Saudi can: Art's work on the leads and lags for this is very good, and reflects the experience of someone who actually drills wells. I had to shut down my last well because of inexperience crew (either that or lose an arm) too, and it's no joke trying to staff these things up after a downturn. Many of them are making a fortune driving trucks right now.

So the fun to watch will be as inventory levels go toward around minus 40m bbl. As you can see on his plot, when that happens prices spike (ignore his green line, he'll be deleting that in a few months time). We could be there by early summer. Art sees 65 WTI, so 70 Brent. I see a case for 80 Brent, I think Erik is more bullish. @DurhamBorn will calm us down I'm sure by laying liquidity over that and telling us it's lower. But it's sure lining up neatly for an oil run up into a BK!

 

image.thumb.png.089e8da26660b4194a4c195e19ef223b.png

 

Curve is clearly backwardated as I thought it would, and it's steepening. I was doing some work on this yesterday, and it seems to be coming to a pivot point around the end of March. This is also when The UK and USA at least will start to be freed up by the vaccines, who said markets were discounting mechanisms?!

Two days later and I'm still trying to understand all the nuances here.Thanks for the time you put into that psot.I'll be lsitneing to that Art Macrovoices today.looking foreard to it.

On 09/01/2021 at 12:20, DurhamBorn said:

@Cattle Prod its a very difficult call.I expected the Fed to print hard after a crash,and also that they would be late.However due to the nature of the spark they were able to inject quickly.The other side of that is they havent printed anywhere near enough to stave off financial dislocation.It could be we see sector rotation though.David etc talks about 70% falls,but they are all looking at the US bubble stocks.BT already fell 75%.Vod fell 60%,BAT fell 57%,Bp 65%,Repsol 70% etc etc.

What David is seeing is massive financial dislocation.In other words key parts of the economy going under.Banks,insurers etc etc followed by derivatives blowing up catching out lots of other companies.Anyone can go bust if they cant re-finance debt and whatever happens its likely only the big boys will have access to capital.Vod yes,Talktalk no sort of thing.

I think massive damage will be done if the BK hits,but mostly outside of our sectors.We do need to remember though most companies go bust in the recovery,not the smackdown.

For me there's a few issues getting raised here that pertain to the banking system.We know that in the UK -for sure-the banks are in worse shape than 2006,with problems looming that are much worse,in my opinion,then the ones that came in 2008.

I agree fundamentally,there's not enough been printed to stop what's coming in the debt deflation.The problem the CB';s have is that the nromal transfer mechanism ie money to banks-> credit to consumers->consumer spending are fundamanetally broken because, 1) if they give money to banks some may jsut keep it because their mnargins are crap at these rates and their capital cosntrained 2) consumers have shown severe signs of distress/credit fatigue and that's been shown in the way they've used stimulus cheques/furloiugh to clear credit cards 3) zombie companies are still sucking in credit but with the banks knowing that increasingly they're unlikely to get their money back..........

In summation,and getting back to Fisher's paradox type issues,the reality is that the solution used for 2008 was to get consumers/companies to borrow moeny and spend.Unfortunately,the consumers/companies that were/are solvent didn't o the bulk of the borrowing.That was done by those least likely to be able to pay it back.That contradiction is still not being dealt with and ultimately gurantees the industrial cycle you've has been tlaking about since 2018(took me a long time to understand the thesis,sometime this year I reckon)

Think you're absolutely right on sector rotation.Worht noting that during previous recessions/stock bear markets,oil often peaked after the recession/bear market had started .

A key point in the general invesment thesis of this thread is something  @Cattle Prod mentioned a while back about leverage in that during the bad times a lot of commodity companies couldn't borrow for love nor money and hence have quite low equity/debt ratios.Have coma scored various sectors,that is true.

 

 

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geordie_lurch

Think it's only fair to point out Bitcoin hit a low of £22,000 today from it's high of just over £30,000 less than 72 hours ago and not sure it's going to bottom there o.O

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On 09/01/2021 at 21:07, harp said:

Is it me? But every time I see this graph over the last couple of months I just think that's a lovely cup and handle. When the handle was just about forming I was thinking how I could play this. :S

Britain records more than 1,000 Covid for FOURTH day in row

The covid chart is bollocks without context.All cause mortality is within normal parameters.Covid deaths up means heart disease/cancer/flu deaths down for simplicty's sake,if all cause is flattish.Mar/April saw Covid excess deaths.

 

On 10/01/2021 at 11:30, AWW said:

That's what I'm wondering V.

I currently have some money sitting in a Ltd Co that I'm not going to be using anymore. I'd also like to buy a house this summer.

Question is, do I pile half the cash into my SIPP using the 3 year rule, making a huge tax saving but reducing the amount left over for a house deposit, or do I take the hit and have cash available for deposit and refurb?

The SIPP is by far the best option in the long term, but the kids are young right now and our current flat doesn't really suit family life.

I've never had a problem delaying gratification, but I feel my hand being forced by circumstances. I really hate paying tax when I see what it gets spent on.

Sorry, not hugely relevant to the thread, just thinking aloud...

Have you looked at renting a 4/5 bed detached.....2%-2.5% gross yield round my way.

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9 hours ago, wherebee said:

Just a FYI - 

 

I did some digging around today re my interactive broker account.  The Australian business is seperate and keeps client money in a seperate account with australian institutions in line with Australian regulatory requirements.  It's not clear whether equities and other assets are kept all in the same buckets.  I've relatively happy as the Oz gvt guarantee is still 250k.

The reason I raise this is that some of the european IB clients in forums are claiming - no idea if true - that they are only covered for 50k max if IB goes down, and others claiming that IB uses a hungarian operation for some accounts (?).

All sounds far fetched to me, esp the hungarian thing, but you might want to specifically ask your broker i) where are client account monies (cash and other assets) held (country and jurisdiction) and what is the investor guarantee cover applied - UK or other?

If there is a BK, I strongly suspect in some markets some banks and others will go to the wall.

I think it's just a fear of the loss of passporting rules post brexit.  They presumably want to deal with EU clients using their (FCA regulated) IB UK entity.  It seems they have set up Hungarian and Luxembourgian entities to which EU customers can transfer (and then be ruled by the regulators in those two countries).  The £50k limit is the UK limit for brokerage accounts, although it seems some business gets put through IB US where the cover is higher.  Sounds quite proactive as I thought passporting, bar temporary arrangements, has yet to be negotiated so possibly their worst case.  This is/will presumably also happen in reverse for those EU brokers with UK clients (or they could just kick them out!).  Degiro?

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18 hours ago, Cattle Prod said:

I'll be cognisant of a liquidity/BK smash, but I don't think it'll be worse than March for this sector, how could it?! Oil was zero! The temptation is there to slice and rebuy at a discount, but I think I'll just hold. Dyodd of course.

I always love looking back at Billiton charts back in 99/00/01.Went up msot of teh way through a huge bear.I suspect-and our moeny's positioned accordingly,that oil/gas won't touch those march lows again.

We'll only be offloading if there's a significant 360 degree trade on ie sell now,buy back more later.I wouldn't want us going through the 20's without a decent core holding of big oil&gas.

Loads of flags to look for,but if I don't see them,we'll likely take our chances holding through.

One last point-coal.With the COal ETF closing,that's my buy signal.Currently weighing Anglo pacific which has a decent coking coal stream.

9 hours ago, Barnsey said:

I wonder if we're much closer than many expect? If markets are forward looking, and since things are as frothy as they are, with treasury yields rising starting to show up in $ strength, you can see where I'm going with this. There's a creeping in of forward guidance on the tightening front, suggestion of tapering bond purchases by Fed later this year, and the following suggesting prudence from Sunak (seems he's also an avid reader of this thread ;)):

The vaccine and suggested withdrawal of support from governments and central banks may actually be the virus for this bubble. How soon do markets want to recognise this?

at some point,they'll have to wirht draw furlough at which point all hell could break loose .

Furlough means fiscal deficits->fiscal deficits means weaker currency->weaker currency means higher inflation expectations-> less room for fiscal deficits/QE/zirp

@DurhamBorn talking 3% by summer,wouldn't surprise me and that would take a lot of room for manouvre off the table for CBs

5 hours ago, DoINeedOne said:

@sancho panza what website is this from?

Rightmove market trends

RM seem to struggle with the updates during times of market stress .At the mo we';re looking at Aug data.Most registrations are filed in months 1&2 post completion.A few straggle in in motnh 3 and a tiny amount month 4.....so why haven't we got Sept data.

Is suspect-no prixes here- that Oct/Nov/Dec will be beyond awful volume wise but could surprise price wise as the equity swapping of semis/detached carries on regardless of conditions.

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41 minutes ago, Noallegiance said:

Whatever ones position regarding crypto, the propaganda has begun:

https://www.bbc.co.uk/news/business-55615514

The FCA warns cryptoasset investors they will not have access to the Financial Services Compensation Scheme or the Financial Ombudsman Service as they would if they invested in standard products, such as shares.

I didnt know that, it sort of implies that i can get compensation for all those dogs i bought that lost money.

 

Wassat? i cant? fucking lying bbc bastards

 

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geordie_lurch

Wow missed this story from over the weekend regarding HSBC stopping payments to and from Bitcoin exchanges and with Tesla taking a decent dive currently maybe it's going to be a 'busy' week :ph34r:

Quote

UK investors have been faced with a dilemma after HSBC announced it would no longer support the transfer of funds from crypto exchanges

The Sunday Times reported on Saturday that HSBC had blocked all transactions involving crypto exchanges. Crypto customers will now be unable to transfer their profits to their bank account.

It appears that the multinational bank is taking a heavy-handed approach in dealing with money laundering. HSBC is now the latest bank to impose restrictions on crypto customers. The bank was recently involved in global money-laundering activities, so it has faced some criticism for the move.

https://coinjournal.net/news/hsbc-blocks-incoming-funds-from-cryptocurrency-exchanges/

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