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

[Barnsey]

 

[DoINeedOne]

4 minutes ago, geordie_lurch said:

 

The point I think I'm trying to make is that at the end of the day you have to do what's right for your and those closest to you using the best information you have and your gut instincts. Sometimes this might mean being even more contrarian than other contrarians even though you agree on the most likely end game

 

Been thinking alot along these lines more the past few weeks, we are all living different lives and have different wants and needs 

One of the things i should of done years back is buy a home, but i thought this can't continue prices are crazy and yet all these years later here we are...

[DurhamBorn]

If i was adding to BP the £2.77 area if reached is a superb technical point,not that i do technicals.Il sell them when they return me around £10 a share including divis as i expect them to at some point over the cycle.Only reason i dont like oilies going down here is it then gets me having to think on if to allocate divi cash to them or BAT.I was slowly building BAT back up to a substantial holding and dont want pulling two ways 

[Barnsey]

Dave's extending the timeline yet again, and he's gone from rates are heading higher from here to they're going back down FFS

Got a lot of respect for him, how his thought process works, but for god's sake be bloody careful. Remember this?

GDXJ rolled over the day after, and plummeted by 50% to $22, took 3 months to get back to where it was when he tweeted that out, and yet he sounds so sure doesn't he? Now why is a guy who is predicting a deflationary bust unable to predict something like that happening, even worse is it's almost perfect timing. His prediction of the end game will probably ultimately prove correct, but this could be a 2023 story given how many times his timeline has been extended.

[Harley]

51 minutes ago, DurhamBorn said:

If i was adding to BP the £2.77 area if reached is a superb technical point,not that i do technicals.Il sell them when they return me around £10 a share including divis as i expect them to at some point over the cycle.Only reason i dont like oilies going down here is it then gets me having to think on if to allocate divi cash to them or BAT.I was slowly building BAT back up to a substantial holding and dont want pulling two ways 

I don't get the £2.77 level unless you go back some 20 odd years?  BP and BATS are typical of the UK income equity sector - relatively poor financials in some areas.  But an income seeking investor stuck in an ISA/SIPP has limited choice.  Both are currently in technical upswings on the monthlies using my chosen technicals, although I trust (DYOR) the BP one more.  I recently topped up/out my BATS though given my requirements and the hopefully limited downside but am maxed on BP (at a loss) and there as good/better buys out there for me to make that less of a concern.

[geordie_lurch]

52 minutes ago, Barnsey said:

...GDXJ rolled over the day after, and plummeted by 50% to $22, took 3 months to get back to where it was when he tweeted that out, and yet he sounds so sure doesn't he? Now why is a guy who is predicting a deflationary bust unable to predict something like that happening, even worse is it's almost perfect timing. His prediction of the end game will probably ultimately prove correct, but this could be a 2023 story given how many times his timeline has been extended.

'Even a Broken Clock Is Right Twice a Day' and all that

Was this you @Barnsey

 

[Barnsey]

22 minutes ago, geordie_lurch said:

'Even a Broken Clock Is Right Twice a Day' and all that

Was this you @Barnsey

 

I'm saying nothing...

What I don't get is that his tweets are so definitive, so confident, especially on timing and targets (refering to melt up by end of this quarter etc), and then he says he's a macro strategist and isn't providing any specific time frame or trading advice  But it was the number of people religiously hanging onto this targets a year ago who were burned big time by his constant push back that the market was definitely going to turn around here, whilst it kept on going down, that made me think twice. Now he's got an exponentially higher number of followers clinging to his every tweet. Interestingly, as last year progressed, I noticed a clear divergence of expectations between Mr Hunter and @DurhamBorn

In other news, the great London emigration continues:

 

[Noallegiance]

And while some are distracted by short-term details and timing, the guy who follows this stuff, is by the measurement of my meagre savings loaded, retired at 39 and chooses to share his knowledge with us stays relatively quiet and doesn't change.

A descent rule: Ascertain who the smartest guy in the room is and imitate. Be blessed and humble if you are that guy.

[leonardratso]

8 minutes ago, Noallegiance said:

And while some are distracted by short-term details and timing, the guy who follows this stuff, is by the measurement of my meagre savings loaded, retired at 39 and chooses to share his knowledge with us stays relatively quiet and doesn't change.

A descent rule: Ascertain who the smartest guy in the room is and imitate. Be blessed and humble if you are that guy.

who's that then?

[Loki]

I have a lot of time for David Hunter but the only thing is he doesn't help himself by using words like poised, then saying it's just a forecast etc.

@DurhamBorn also used a phrase I like which was "tweeting to the gallery".  

13 minutes ago, Noallegiance said:

the guy who follows this stuff, is by the measurement of my meagre savings loaded, retired at 39 and chooses to share his knowledge with us stays relatively quiet and doesn't change.

Indeed 

[Democorruptcy]

1 hour ago, Barnsey said:

Dave's extending the timeline yet again, and he's gone from rates are heading higher from here to they're going back down FFS

Got a lot of respect for him, how his thought process works, but for god's sake be bloody careful. Remember this?

GDXJ rolled over the day after, and plummeted by 50% to $22, took 3 months to get back to where it was when he tweeted that out, and yet he sounds so sure doesn't he? Now why is a guy who is predicting a deflationary bust unable to predict something like that happening, even worse is it's almost perfect timing. His prediction of the end game will probably ultimately prove correct, but this could be a 2023 story given how many times his timeline has been extended.

I'm just glad I didn't short the S&P based on the initial blow off top figures quoted when this thread started on ToS, how many years ago? I'd be down the food bank now.

[sancho panza]

19 hours ago, Castlevania said:

Timing is impeccable. Joe Biden saves the world

 

 

@Cattle Prod

I'm not sure if you've seen this from CV.Game changer potentially for covid crisis in that it could possibly reduce psotive tests over night by a fair to huge chunk depending how many cycles they limit it to.

So,positives down-> less hospital staff isolating/more elederly returned to care homes instead of waiting in hospital for a -ve PCR test(sometimes takes 90 days to show -ve)->hospitals back in business and then we cna all get on with our lives and pretend the lockdown/Joe Biden's win stopped covid.

22 hours ago, DurhamBorn said:

Im a bit worried that in looking for a BK we are perhaps missing the fact that it might be a slow kahuna in bonds and growth stocks.There is massive systemic risk in the system still though but that article does chime more and more with a few maybe's from the macro.

One of the key parts of the roadmap was jobs/manufacture coming back,and id like to see supply chains starting to buckle as lockdowns end.That should give us enough velocity to get M2 moving into the economy.

I think its likely we will see 35% real terms losses in bonds minimum,and thats my roadmap number,so il be using that as the baseline for the liquidity transfer.

Remember,if bonds lose 35%,government loses nothing.If a telcos profits go up 100% due to the inflation government gets a lot more tax.

I think that Gromen interview has really made me rethink our postion.I was looking to sell weak dollar trades eg oil/gold ahead of BK and trade into UST's.
but if he's right,we could see price inflation coming on us pretty quickly even if we enter a credit deflation at the same time.

As @spygirl said t'other day,BoE is a price taker not a market maker.

The above is still my Plan A but I am pondering a Plan B which could well include dealing with a Slow Kahuna in the bond markets.Plan B would involve msot likely holding the weak dollar trades and running options trades off the side or maybe jsut sitting in them.It's definitely crossing my mind that a quick trip into UST's may end being a slow death instead.

[sancho panza]

December 2020 update.UK govt has borrowed £270bn to Dec.Seen an increase in BoE balance sheet of £250bn to Nov 20.

It's anear perfect match so bascially,the taxpayer has stepped up and covered UK govt borrowing for 2020

Debt to GDP 99.4%(if you exclude imputed rents or use a decent deflator which measures some form of home ownership costs such as RPI then it's well over the 100% mark)

Banana republic stuff.

https://www.ons.gov.uk/economy/governmentpublicsectorandtaxes/publicsectorfinance/bulletins/publicsectorfinances/december2020

 

https://www.bankofengland.co.uk/monetary-policy/quantitative-easing

[Loki]

I think this is the official WHO page

https://www.who.int/news/item/20-01-2021-who-information-notice-for-ivd-users-2020-05

[Hardhat]

1 hour ago, Barnsey said:

In other news, the great London emigration continues:

 

If real rents and property prices in London / SE fall it would suit me down to the ground. I've lived here all my life, and I have a fairly decent deposit saved now. A 30% fall and I would be looking to buy immediately. I reckon it's coming as BTL and AirBnB spivs start to realise they're going to have to sell up. Won't be quick though, I don't think, there will be people better off than me waiting to buy at higher prices. But the next 5 years will be very interesting in London property. Already anecdotally know that there are way more rental properties on the market and people are getting rent reductions.

Can't come soon enough imo, London property is ridiculously overvalued and it's fucking up an entire SE generation's chances as all the jobs are here.

The other problem is that so many nice houses have been converted badly into HMOs by cowboy landlords... there's a lot of work to be done to make them into decent family homes again if the exodus is really happening and sustained. Might be a good ten years for builders / fitout. Could be a good business model to start buying old wrecked HMOs at knock down prices and converting them back to family homes for when they come into middle-class couples' price ranges.

Who knows. Would love to see some of the Foreign speculators, BTLers and AirBnB spivs who are ruining London lose their shirts though.

[Yadda yadda yadda]

1 hour ago, Barnsey said:

I'm saying nothing...

What I don't get is that his tweets are so definitive, so confident, especially on timing and targets (refering to melt up by end of this quarter etc), and then he says he's a macro strategist and isn't providing any specific time frame or trading advice  But it was the number of people religiously hanging onto this targets a year ago who were burned big time by his constant push back that the market was definitely going to turn around here, whilst it kept on going down, that made me think twice. Now he's got an exponentially higher number of followers clinging to his every tweet. Interestingly, as last year progressed, I noticed a clear divergence of expectations between Mr Hunter and @DurhamBorn

In other news, the great London emigration continues:

 

The FT article eventually mentions the outflow of British workers to other parts of the UK. I see this as having more impact than foreign bartenders leaving London. The latter might open up job opportunities and even spark wages increases for UK workers.

People moving to other parts of the UK will include some fairly well paid office-type workers. Might add a bit of cash to local economies. It will certainly affect house prices.

[feed]

Wouldn’t be so sure we'll get long term rental falls.  Those 700k and more could come right back if the economic situation is better here than their home countries post lockdown.  It’s an incredibly mobile workforce and wage arbitrage could be even more of a thing, if we do get they care more about unemployment than inflation.

[Bobthebuilder]

3 minutes ago, Hardhat said:

But the next 5 years will be very interesting in London property. Already anecdotally know that there are way more rental properties on the market and people are getting rent reductions.

I live in London. In the surrounding streets I am starting to notice a few empty rentals (2 bed terraces). Never seen it before.

[DoINeedOne]

New Grant Williams End Game Podcast - Paul Singer

Bill and Grant welcome Paul Singer, Founder, President, Co-Chief Executive Officer, and Co-Chief Investment Officer of Elliott Investment Management L.P.

Among the topics covered in this extremely rare and endlessly fascinating conversation are Paul’s thoughts on the importance of understanding markets are little more than mass experiments in psychology, the fallacy of ‘sitting passively’, the creation of value for clients and the corner into which the Fed and other central banks have painted themselves.

https://www.grant-williams.com/gw_podcast/the-end-game-ep-14-paul-singer/

[DurhamBorn]

@sancho panza i think the worst thing about it is every penny of printing is simply theft of saved labour.Its how our system works of course and the CBs simply have to deal with whats in front of them.In the UK the big worry now is that over half the population rely on handouts,benefits and state wages.That means cutting the free stuff is really difficult.Once other countries stop printing the UKs structural deficit will be exposed.They will need to fund £150 billion a year with the CBs disengaged.That should see rates following inflation higher.

I see a lot of economists saying CBs will simply control the curve,but i dont think they can once inflation moves.Forcing down the short end will simply encourage even more velocity.

[DurhamBorn]

@Cattle Prod propane use probably for increased fork lift truck use in distribution centres.

[Popuplights]

59 minutes ago, Hardhat said:

If real rents and property prices in London / SE fall it would suit me down to the ground. I've lived here all my life, and I have a fairly decent deposit saved now. A 30% fall and I would be looking to buy immediately. I reckon it's coming as BTL and AirBnB spivs start to realise they're going to have to sell up. Won't be quick though, I don't think, there will be people better off than me waiting to buy at higher prices. But the next 5 years will be very interesting in London property. Already anecdotally know that there are way more rental properties on the market and people are getting rent reductions.

Can't come soon enough imo, London property is ridiculously overvalued and it's fucking up an entire SE generation's chances as all the jobs are here.

The other problem is that so many nice houses have been converted badly into HMOs by cowboy landlords... there's a lot of work to be done to make them into decent family homes again if the exodus is really happening and sustained. Might be a good ten years for builders / fitout. Could be a good business model to start buying old wrecked HMOs at knock down prices and converting them back to family homes for when they come into middle-class couples' price ranges.

Who knows. Would love to see some of the Foreign speculators, BTLers and AirBnB spivs who are ruining London lose their shirts though.

My daughter had accepted her first midwife job at a London hospital, starting in May, so this is fantastic news. Cheers. 

[JMD]

4 hours ago, geordie_lurch said:

I am just an amateur at all this but was thinking more a Slow Kahuna as I'd seen other's mention the possibility of a slow grinding pull back in these strange times but I am totally on board that inflation is coming and my stocks and shares ISA is positioned for this via oilies and other decent dividend payers. How much and how we pull back again from here I'm not sure about but I'm happy setting stop losses alongside limit orders in case we have a wild down day that no one sees coming followed by a quick reversal even if I lose a few % upside but reduce the downsides to single digits

There could still be a melt up like some have suggested or with Biden in this could be the start of another sector rotation back out of metals and oilies as the risk is seen as 'off' again? There's also the possibility the can is going to be able to be kicked for many more month or years by all the Western Government's Japan style. None of us know for sure otherwise we wouldn't be on here so much

For example, I bought physical silver over 10 years ago as I was 'clever' and could see the system was on it's knees etc but also hedged my bets with the cheapest house for my family in the best area I could get into around 2013 when everyone on the other site said the real crash was just around the corner etc etc. Sitting here in 2021 the silver price hasn't changed in £ terms and is looking like it's probably going to drop back down a decent bit here IMHO to £16 or less so I will be 'down' on that again yet that house has added over £100,000 in the same time frame not even taking into account the 7 years of mortgage payments on a tracker rate I was also told was mad to get at the time.

The point I think I'm trying to make is that at the end of the day you have to do what's right for your and those closest to you using the best information you have and your gut instincts. Sometimes this might mean being even more contrarian than other contrarians even though you agree on the most likely end game

 

If we don't get a BK... how about a Simmering (or even sector rotation) Kahuna? Damn, its so frustrating!! But then again, as DurhamBorn sort-off said - the market likes to 'tease' the most people!?

[Democorruptcy]

52 minutes ago, DurhamBorn said:

@sancho panza i think the worst thing about it is every penny of printing is simply theft of saved labour.Its how our system works of course and the CBs simply have to deal with whats in front of them.In the UK the big worry now is that over half the population rely on handouts,benefits and state wages.That means cutting the free stuff is really difficult.Once other countries stop printing the UKs structural deficit will be exposed.They will need to fund £150 billion a year with the CBs disengaged.That should see rates following inflation higher.

I see a lot of economists saying CBs will simply control the curve,but i dont think they can once inflation moves.Forcing down the short end will simply encourage even more velocity.

Their own previous policies couldn't possibly be blamed for what's in front of them now?

e.g. buying their debt has enabled governbankments to fund the handouts, benefits etc? The more CB's enable, the more shit they have to deal with? I call it a "governbankment" because I don't see the line between Central Banks and Governments that you see is still there.

[TNS]

Waiting for miras, be a few quid saved. That will almost certainly happen before any major falls but who knows.