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

[Yadda yadda yadda]

16 minutes ago, DurhamBorn said:

https://www.business-live.co.uk/enterprise/lithium-production-planned-north-east-19816045

Just around the corner from me.Lots of silver up there in the old lead mines as well.

Good to read about businesses trying to bring industry back to Britain.

[Loki]

41 minutes ago, Wheeler said:

Time for me to sell Drax and buy Gazprom I think

I am tempted to keep holding for now as they may get cash from the carbon zero/ESG loons for now.  Maybe?!

[Hardhat]

1 hour ago, JMD said:

I would love to buy sil/silj but those funds are not available here yet are they? So in the absence of having that ' investment device', surely some selection method must be considered?

Jupiter Gold & Silver Fund gets you pretty close to SIL / SILJ tbh.

[Sugarlips]

1 hour ago, kibuc said:

Which is completely irrelevant now as they have "silver" in their name so they go up and down with the metal

I wish this were the case with Silver Lake Resources (which confusingly is actually a gold play), I’m well down on them having been averaging in on the dips for months. If we do get a gold spike I’m getting out of this one (which probably means it’s a great time to buy).

 

@DurhamBorn do you have a currency preferences once 86 is hit? GBP & AUD both running hot recently, should we be moving some to SGP for example? Singapore is widely touted as the new HK as an eastern financial markets hub.

[ThoughtCriminal]

16 minutes ago, Sugarlips said:

I wish this were the case with Silver Lake Resources (which confusingly is actually a gold play), I’m well down on them having been averaging in on the dips for months. If we do get a gold spike I’m getting out of this one (which probably means it’s a great time to buy).

 

@DurhamBorn do you have a currency preferences once 86 is hit? GBP & AUD both running hot recently, should we be moving some to SGP for example? Singapore is widely touted as the new HK as an eastern financial markets hub.

I'm wondering this about the dollar as I keep seeing a lot of talk about the dollar going way down. 

 

Apparently druckenmiller is VERY short the dollar. 

[Loki]

Also re: drax at least they're not a one trick pony. I see the share price has dropped today but haven't sold.  Might set a stop loss though.

(Sharecast News) - The International Energy Agency said that without carbon capture, utilisation and storage programs it will be impossible for governments and large companies to meet targets for the reduction of greenhouse gases.

It called for global governments and major polluters to take urgent action to develop technologies to capture and store carbon emissions or it will be "virtually impossible" to reach climate goals .

The global energy watchdog added that CCUS projects should be central to the fight against climate change and the reduction of air pollution alongside the electrification of economies and the shift to renewable energy sources.

Fatih Birol, the IEA's executive director, said the process is "critical" in the transition from fossil fuels to cleaner energy alternatives. "Without it, our energy and climate goals will become virtually impossible to reach," he said.

The IEA also highlighted the "significant potential" of direct carbon capture schemes but said that they currently have very high costs.

There are only 20 projects in commercial use worldwide but more are gaining pace, said the IEA.

"Action from governments will be essential for establishing a sustainable and viable market for CCUS," Birol said. "But industry must also embrace the opportunity. No sector will be unaffected by clean energy transitions - and for some, including heavy industry, the value of CCUS is inescapable."

In the UK, energy companies such as National Grid, Drax and Equinor put forward last year plans for the first carbon neutral "industrial cluster" in the Humber that would be capable of capturing carbon.

 

[AWW]

1 hour ago, Noallegiance said:

This and Intrepid running hot is what makes me keep revisiting the possibility of beginning to take profits in the next 4-8 weeks with a view to being at least 30% cash before July. It depends how melty-uppy the melt up gets. I'd want to be in more cash before it gets ridiculous so I bank a chunk of the gains and let the rest ride it up to scrape off a bit more until it pops. 

I wouldn't care if I was 6 months early in beginning to take chips off the table.

The thing is, I keep getting in itchy sell finger when there are a few reasonably sized down days, only to take some brave pills, then a week later my SIPP and ISAs have made a higher high.

I've always thought that this is what a bull market looks like when it's only just getting going, i.e. plenty of pullbacks. It's just the speed that everything's moving at that worries me. But then, why wouldn't moves get bigger and faster when machines do most of the trading.

[reformed nice guy]

I havent really bought much since the big crash last year so I have just been adding cash. Its a bit of a strange feeling because most of my ladders require 50%+ drops before I would buy.

Drax at 200p, Bayer at 42, Vodafone at 95p etc.

I dont really know what to do so Im holding on to what Iv got and will keep building cash.

Copper going up, dollar index going down, FANGS getting fucked. @DurhamBornwas right about $50 by last Christmas and im hoping its $100 next Christmas!

[sancho panza]

5 hours ago, kibuc said:

I hope it doesn't come across as a knock on the terrific work you're doing, but I feel like we're in the latter part of "be right, sit tight" paradigm and details might not matter too much anymore.

I haven't had any useful input to this thread in quite a while, and I think I've only read two NRs this callendar year, out of pure curiosity. I believe it can be now stated with a lot of confidence that PMs are going much higher short to medium term and that wave will lift all the boats. I used to tinker with my portfolio on a weekly basis, but now I don't even remember when my last trade was. It's clear you guys were right about the roadmap, now it's time to sit tight. More PAAS or more Coeur? First Majestic or Impact Silver? Completely different companies which would probably exihib completely different performance in normal times, but these are not normal times. I'd even go as far as saying "but SILJ (if you can!) and go on a long holiday".

K old chap,doesn't come as a knock at all.Always appreciate your views,particualrly in the early build phase of our PM's portfolio 2018/2019 when alongside @DurhamBorn you steered more than a few of us into some multi baggers and shared your-let's be honest-very in depth sectoral knowledge freely.Thank you.

I think you're absolutely right  about ''be right,sit tight''.  I took the decison to take some profits in PM miners in August/September-GFI,Sibanye,Anglogold,Fresnillo,Hochschild and a few more. That was then dribbled into more oilies in Sept/Oct.Besides that,our share portfolio hasn't really changed much at all since June after the main Mar/April purchases had been completed.It'll all mainly be sold as one job lot some time this summer(although I may keep back the bottom ladders in oilies) I suspect with a move to cash/UST's following.

Our risk portfolio has had a reasonable year.I had a 'trade of the decade' type trade in Nov-Trump @2/1,then XOM $45 April calls at $1- which sadly fell apart somewhere between Atlanta and Philly.But the other options trades have held up and it's weird you wrote what you did today but we're very leveraged to XOM at the $47.5 level in April (roughly) and my dear old Mum was on the phone a week back saying we need take profits on the oilies options trades(we're in BP/Shell for March as well) and I jsut wish I'd had your phrase above to hand as it would have illustrated my point so much better than I did.We stayed in but the clock is ticking.I tinker with the risk portfolio more than the main one.

With reference to the Sancho Coma Scores.I'm doing them as a reference point for the BK which I'm expecting this year(was April now looks like Oct).So basically when we buy back in 'spraying n praying',I'm ready and have a rough approximation of where the value is at certain price points.

Having said that,I am getting interested in some PM miners here for a 3/6 month trade.Mainly NCM,KGC,Barrick pretty much following your thesis that there's a run up  is imminent,it's not a time for risk on trades in small miners-we have enough still-but I am thinking of tinkering .

Have you got a take on the likes of KGC/Barrick?Any other big miners that look value to you?No pressure,I realise this isn't your area so much.

[sancho panza]

36 minutes ago, AWW said:

The thing is, I keep getting in itchy sell finger when there are a few reasonably sized down days, only to take some brave pills, then a week later my SIPP and ISAs have made a higher high.

I've always thought that this is what a bull market looks like when it's only just getting going, i.e. plenty of pullbacks. It's just the speed that everything's moving at that worries me. But then, why wouldn't moves get bigger and faster when machines do most of the trading.

This market is relatively irrational.One day,for no partiuclar reason, the music will stop,the cab rank will suddenly have no queue and the kebab shop will be giving away free chips.

Aside from your average basement dweller,a lot of retail will be looking at each other going 'wtf'.......

I know exactly how you feel.

[Wheeler]

1 hour ago, Loki said:

I am tempted to keep holding for now as they may get cash from the carbon zero/ESG loons for now.  Maybe?!

I'm still holding for now (it's only a 1.5% position). The EcoNuts aren't happy with Drax as it isn't burning sunbeams and wind. I'm not sure what effect it will have on the NG/Equinor scheme you mention later - carbon capture is not usually part of a biomass burning strategy.

[sancho panza]

some copper shares since March 23 low.

[No One]

8 hours ago, Barnsey said:

Alan Wan, 38, who owns 13 residential properties in Britain, launched classes in Hong Kong two years ago – at the height of anti-government protests in Hong Kong – aimed at potential investors in properties in and around Manchester.

So far, his "UK Property Owner Association" class has attracted around 1,500 students. Enrolment spiked in the second half of last year after Beijing imposed the national security law.

One of Wan's students, 30-year old Isla Kwok, who moved to Manchester in late January waiting to start a degree, is using the rental income she receives from a terraced house bought in 2019 to finance the cost of renting a smaller flat and mortgage payments.

She plans to re-mortgage her first property to buy a second one this year after getting a residence permit, as mortgage interest rates will be much lower.

"Once you've started your first property, it's much easier to create more income to ease the financial pressure of living here," Kwok said.

EVERYONE expecting a taper tantrum now, so is it inevitable? Or is there another way?

Fuck, this is the fucking Tory's doing. So now we have to rent from foreigners who are driving up the prices of our housing market.

Boris Johnson needs to be booted next election.

[Calcutta]

14 minutes ago, No One said:

Fuck, this is the fucking Tory's doing. So now we have to rent from foreigners who are driving up the prices of our housing market.

Boris Johnson needs to be booted next election.

Nope. Handing HK over without a fight was a disgrace. A necessary disgrace but vile none the less. They're our people, they and their ancestors have contributed massively to this country and the least we can do is offer them an escape route from totalitarianism. 

[No One]

14 minutes ago, Cattle Prod said:

Topical...

 

but is it true though?

 

Since 2008 Ive been hearing all sorts of the end of the dollar, although it never materialised

[AWW]

1 minute ago, No One said:

Since 2008 Ive been hearing all sorts of the end of the dollar, although it never materialised

I tend to think that all the predictions made during and after the GFC were just one cycle too early.

[geordie_lurch]

20 minutes ago, Calcutta said:

Nope. Handing HK over without a fight was a disgrace. A necessary disgrace but vile none the less. They're our people, they and their ancestors have contributed massively to this country and the least we can do is offer them an escape route from alternative type of totalitarianism. 

Corrected that for you

[kibuc]

18 minutes ago, Cattle Prod said:

Topical...

 

It touches on what I'm currently thinking about. If the predicted rise in interest rates to, say, 3% comes as a reaction to inflation running 4-5%, then it's still a favourable scenarion for gold. Is 4-5% this Summer anything more than a pipe dream? I really don't know, in UK there seems to be a lot of people just waiting for the economy to reopen so they can start making up for a lost year, a real coiled spring, but there are also dead people walking who are unemployed in everything but name, they just don't know it yet. I imagine it must be similar across the pond.

[janch]

26 minutes ago, Cattle Prod said:

Topical...

 

Another "is this true?" comment from me as:

The US govt can't run out of money as they just print more so US govt solvency isn't an issue.

The more they print though the more the dollar is devalued so I would expect the price of PMs to increase.

(This could well be too simplistic on my part!)

 

[kibuc]

1 hour ago, sancho panza said:

Having said that,I am getting interested in some PM miners here for a 3/6 month trade.Mainly NCM,KGC,Barrick pretty much following your thesis that there's a run up  is imminent,it's not a time for risk on trades in small miners-we have enough still-but I am thinking of tinkering .

Have you got a take on the likes of KGC/Barrick?Any other big miners that look value to you?No pressure,I realise this isn't your area so much.

Too big. And too gold

If you're willing to drop down to mid-tier, I'd say Harmony is criminally undervalued. Then again, it's only relevant if we assume that value will ever matter again. Anyway, check out their latest report from the 23rd of Feb. 336% increase in net profit YoY, 58% reduction in net debt, declared divi. Must... Resist...
https://www.harmony.co.za/invest/company-announcements/2021/item/1206-harmony-reports-record-cash-flows-enhances-asset-base-through-its-growth-strategy-and-declares-an-interim-dividend

That's one of only a couple of NRs I could be bothered to read this year, the other one being about First Majestic and their $250mil lawsuit  It takes such a caliber of news to get my interest these days

[geordie_lurch]

From ZH here via The Telegraph - Bill Ackman is also worried about early inflation...

The Telegraph reports that the fund manager has identified a surprise rise in interest rates as the next big risk for markets.

"We will see a spike in inflation as early as the middle of the year," Ackman said.

"It is already starting to happen. At some point if rates move enough than it becomes a market risk event."

Ackman said he had bought "instruments that pay off in a large way in the event of a surprising move in rates".

"There is a finite amount of money we can lose which is not material to the fund and if we are right on rates then we make a lot of money," he added. "We want to protect ourselves against huge market-moving events. We look to buy insurance against disaster."

The 'disaster' he sees coming is due to Biden's huge $1.9 trillion stimulus package sowing the seeds of a surge in inflationary pressures.

“That is happening at a time when rates are zero, coupled with the psychological effects of being locked up for a year. That combination will lead to a lot of demand in the economy. Supply won't be able to meet that demand," he said.

Specifically, Ackman warns that a continued rise in inflation would spell more pain for investors in tech and high-growth companies.

“In order to justify the high price of high-flying tech companies you need to have enormous continued growth and eventually have them generate profits," he said.

"The current level of interest rates mean that investors are willing to wait a long time for companies to generate lots of money. A move [higher] in interest rates is a big threat to growth companies."

Ackman remains long stocks albeit in what he calls "more predictable" businesses - so not ultra-growth momo darlings - just as he did through his last massive (and successful) hedging program and we suspect, unlike last time when he claimed "I hope we lose money on this latest hedge", this time, given his penchant for less-hyper-growth stocks and his comments on the asymmetric nature of the hedge payoff if the future doesn't turn out in the panglossian manner it is priced for, he may be looking to profit both ways.

[ThoughtCriminal]

40 minutes ago, Cattle Prod said:

Topical...

 

I thought government insolvency was marked by flight TO gold not from it? 

[kibuc]

4 minutes ago, geordie_lurch said:

From ZH here via The Telegraph - Bill Ackman is also worried...

The Telegraph reports that the fund manager has identified a surprise rise in interest rates as the next big risk for markets.

"We will see a spike in inflation as early as the middle of the year," Ackman said.

"It is already starting to happen. At some point if rates move enough than it becomes a market risk event."

Ackman said he had bought "instruments that pay off in a large way in the event of a surprising move in rates".

"There is a finite amount of money we can lose which is not material to the fund and if we are right on rates then we make a lot of money," he added. "We want to protect ourselves against huge market-moving events. We look to buy insurance against disaster."

The 'disaster' he sees coming is due to Biden's huge $1.9 trillion stimulus package sowing the seeds of a surge in inflationary pressures.

“That is happening at a time when rates are zero, coupled with the psychological effects of being locked up for a year. That combination will lead to a lot of demand in the economy. Supply won't be able to meet that demand," he said.

Specifically, Ackman warns that a continued rise in inflation would spell more pain for investors in tech and high-growth companies.

“In order to justify the high price of high-flying tech companies you need to have enormous continued growth and eventually have them generate profits," he said.

"The current level of interest rates mean that investors are willing to wait a long time for companies to generate lots of money. A move [higher] in interest rates is a big threat to growth companies."

Ackman remains long stocks albeit in what he calls "more predictable" businesses - so not ultra-growth momo darlings - just as he did through his last massive (and successful) hedging program and we suspect, unlike last time when he claimed "I hope we lose money on this latest hedge", this time, given his penchant for less-hyper-growth stocks and his comments on the asymmetric nature of the hedge payoff if the future doesn't turn out in the panglossian manner it is priced for, he may be looking to profit both ways.

Articles like that make me thing that either everything I learned as was told as a young man was incorrect, or there's fundamentally wrong with the market. It really must be an upside-down world if re-opening of the economy can bring a market crash. Incredible how excessive debt flips the entire logic around.

[janch]

3 minutes ago, geordie_lurch said:

bought "instruments that pay off in a large way in the event of a surprising move in rates".

I wonder what these instruments are?  Pity he didn't tell us so we can also partake.

[geordie_lurch]

4 minutes ago, janch said:

I wonder what these instruments are?  Pity he didn't tell us so we can also partake.

Lol Bitcoin
Seriously though, it says at the following at top of the ZH link so I suspect it might be something similar?

Quote

Having made many headlines earlier in the year with his rightly apocalyptic perspective on the pandemic, billionaire hedge fund manager Bill Ackman pocketed a tidy $2.6 billion in profits on a massive (credit) hedge he placed amid stock market complacency ahead of its March collapse.

On March 23rd, we completed the exit of our hedges generating proceeds of $2.6 billion for the Pershing Square funds ($2.1 billion for PSH), compared with premiums paid and commissions totalling $27 million, which offset the mark-to-market losses in our equity portfolio. Our hedges were in the form of purchases of credit protection on various global investment grade and high yield credit indices. Because we were able to purchase these instruments at near-all-time tight levels of credit spreads, the risk of loss from this investment was minimal at the time of purchase.