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

[Barnsey]

 

[DurhamBorn]

34 minutes ago, Cattle Prod said:

Can anyone explain to me, like I'm 5 years old, what the implications of the reverse repo spike are? I get that it's a sign of exceess liquidity, but could it force the Fed to taper, like now?! They have to at least acknowledge it at their next meeting. Which will probably crash everything...

Banks have too much liquidity and are really struggling to find assets to get a positive return so are handing back the cash in exchange to the Fed for treasuries.

The banks are struggling to lend it.The reason is likely lack of collateral,ie not enough solvent entities to soak up all that liquidity in loans.The banks are swapping cash for treasuries.

Treasuries already on the Feds balance sheet.

Market is flooded with cash but not enough solvent entities to lend it to or invest it in.Governments need to increase spending and will.Private sector is saying we cant make a return big enough for the risk.

 

[nirvana]

41 minutes ago, Cattle Prod said:

the massive flows of liquidity that are now bouncing off the walls

ooh quelle surprise, we didn't see that one coming did we?  sounds like me when I've had too much dope....dopeheads r us anyone? 

This repo thing then, is it the sort of catalyst that could suddenly trigger a BK like next week??? 

add: remember what happened in 2008? a big bank got in trouble......look out for this again or some gamblers in a hedge fund going 'too deep' (that's balls deep) and not being able to cover...like maybe margin calls incoming 

[Loki]

1 minute ago, nirvana said:

This repo thing then, is it the sort of catalyst that could suddenly trigger a BK like next week?

On that note i can remember @DurhamBorn voicing some concern that that DXY was still around 90 some time ago and it's still there.  

Apologies if i mention it often but i keep an eye on it as it's one of the few indicators that i understand

[nirvana]

4 minutes ago, Loki said:

Apologies if i mention it often but i keep an eye on it as it's one of the few indicators that i understand

Lehman Bros dude, city of London, I was there! Tapping away on a computer that would later set the foundations for an event never to be forgotten in history! #hackersrus .......joking but it would make a good movie with me shagging some fit birds on a yacht, anyway soz what was I gonna say?

err I think the dollar moves will be a secondary reaction to any BK, yes there'll be a rush to safety, DXY will be spiking up, they'll dump the total shite that is sterling and yuro YMMV

[DoINeedOne]

I do like Australians 

 

[Loki]

6 minutes ago, DoINeedOne said:

I do like Australians 

 

Oh yes

[nirvana]

16 minutes ago, DoINeedOne said:

I do like Australians

I think you're all being unfair to her actually, she's been made into a pawn and monetized by her parents to the tune of millions....

from that interview 'you arrive in caravans of private cars that choke suburban roads'

'unprecendented quality of life' yeah by being a fat consumer rsole 

that's the parents fault, like it always is! Unless your own kids are totally perfect these cunts should probably kick the cheap jokes at the expense of an amazing planet! Don't forget you are amazing!  Actually you're not but the fookin planet is......or it was 

[Agent ZigZag]

10 hours ago, DurhamBorn said:

Shell is oily i will be selling when it runs up,il hold the rest for the cycle.

If I have read this correctly you intend to liquidate all of your Shell holdings? Is it because of the poor yield it returns. I was pondering this question a while back. Whilst growth is very nice I am more concerned in developing a portfolio that gives me a healthy yield. I get more divi returns from say BAT in which I hold less capital when measured against my Shell holding.

[nirvana]

soz I'm waffling a bit today, so I'll shut up after this one lol

BUT there are certain things in 'the market' that 'smell danger' or I'm sure it used to be like that

BTC or buttcoin if you like, is having a bit of a tantrum again...dunno if this indicative of a bit of trouble or just the 'big boys' playing games again......TWT

[Boglet]

7 minutes ago, nirvana said:

soz I'm waffling a bit today, so I'll shut up after this one lol

BUT there are certain things in 'the market' that 'smell danger' or I'm sure it used to be like that

BTC or buttcoin if you like, is having a bit of a tantrum again...dunno if this indicative of a bit of trouble or just the 'big boys' playing games again......TWT

Just shaking out the last bit of weak hand retail money.

[ThoughtCriminal]

28 minutes ago, nirvana said:

soz I'm waffling a bit today, so I'll shut up after this one lol

BUT there are certain things in 'the market' that 'smell danger' or I'm sure it used to be like that

BTC or buttcoin if you like, is having a bit of a tantrum again...dunno if this indicative of a bit of trouble or just the 'big boys' playing games again......TWT

Almost halved in a month. 

[nirvana]

Just now, ThoughtCriminal said:

Almost halved in a month. 

 

[Loki]

Just now, ThoughtCriminal said:

Almost halved in a month. 

The halvening, it's bullish apparently

[JMD]

1 hour ago, DoINeedOne said:

I do like Australians 

 

I want that Aussie anchoring GBNews, perhaps the late-nignt/uncut version!! (anyone know when the channel is starting?).

[nirvana]

21 minutes ago, Loki said:

The halvening, it's bullish apparently

very good! the best money is made when you BTFD...then you scale in till your bollocks are about to explode 

scaling into a trade means that you enter with just a fraction of the intended amount that you wish to trade and then add to the position as the trade develops. scaling out means that you exit fractions of your position to lock in profit and leave in positions to take advantage of any further price runs

Actually I like to go 'full bollocks' at the dip then realise I've 'done my arse' as some folks say 

[Castlevania]

3 hours ago, ThoughtCriminal said:

So they're doing no exploration. At all? 

 

Not even outsourced it?

 

That seems like utter madness to my laymans brain. 

 

Do you think there's any chance that we see an oil shortage in a few years time that instead of being "Well this is a great way to make money" turns into "Well this is fucking catastrophic"?? 

Rosneft still are and BP have a 20% stake

[Starsend]

16 hours ago, Cattle Prod said:

Guys be careful with this stuff it will never go back to 2008 price because it decays. That's why it was 10 the last time we had $65 but 6 now. Designed for short term holds.

Can you elaborate a bit on this cp? So this product doesn't simply track the price of oil then?

I hold a couple of other ETFs from Wisdom Tree, copper, coffee etc. Do they not track the underlying asset properly either do you know?

Thanks for any light you can shed on the matter. Long term hold for me so if there's issues with these products better to find out sooner rather than later.

 

[nirvana]

options and derivatives decay....tis a bit complicated, you need to learn about 'the greeks' too

https://www.investopedia.com/terms/t/timedecay.asp

edit: don't forget what buffet said about derivatives, as a 'sole trader' I'd say yeah get into options by all means, derivatives, you're more of a fookin loony than me! 

“Derivatives,” Buffet wrote, “are financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal.” When Buffett wrote those words, the total value of all derivatives in existence was $142 trillion. ... Ten years on from the financial crisis, they are more popular than ever

[ThoughtCriminal]

1 hour ago, Castlevania said:

Rosneft still are and BP have a 20% stake

God bless mother Russia. 

 

Maybe taking a large position in them and the likes of Gazprom is the way to go. 

 

 

[DurhamBorn]

4 hours ago, Cattle Prod said:

Thanks DB. So do you think this means they are more or less likely to taper asset purchases? If the market is flooded with cash, but they not have to buy even more bonds to give to banks?! And that runs against your comment of fed having to taper soon because of inflation.

I suppose this is the definition of boxed in, just which way will they break...

The question is why,because this is where the Fed could make a massive policy mistake.If the banks are cashing in cash for treasuries,it is because they cant lend the money,or see a return in anything.HOWEVER,its not as simple as the MSM will say,oh too much cash.It could be entities wanting the cash dont have the collateral to get their hands on it.So it could be the economy needs the liquidity,BUT there arent enough solvent players to lend it too.The MSM can see this as too much liquidity,but it could be too much for the amount of solvent debtors.

This means the Fed needs to be very careful here.The market is saying we cant lend the cash,thats certain,so its cant lend to solvent not cant lend at all.This doesnt mean the economy doesnt need it,you could argue it shows the economy needs even more.Its also saying the route to market at this stage is fiscal through government.If the banks are using cash for treasuries,then the government needs to keep issuing them and spending into the economy.

Id expect the Fed to try to force people out of the short end here and push them along the curve,but they will do this by lowering the short end right down and lower the longer end much less.They need to signal that the curve says steady growth,that will encourage solvent entities to invest.

I also think they need the consumer to start taking on loans here,there might be some loan guarantees incoming from government soon,both on consumer loans for certain buys,and also for investment for companies.

The irony is the macro here says the banks are going to be big winners as the Fed tries to keep this liquidity in the system.I wont buy myself because of the risk of  BK,but outside of that the big US banks are likely to see earnings explode higher.

[ThoughtCriminal]

23 minutes ago, Cattle Prod said:

I have most of mine in the Guinness Global enegry fund, I put the holdings up here before, gives you a nice spread and pretty much covers everything.

Cheers CP, I'll definitely give that a gander then! 👍

 

I like the cut of their jib. 

 

Their reasoning regarding oil demand and supply and the reality of green energy reads like someone on here wrote it. 

 

Your Surname isn't Guinness is it CP? 🤔

 

 

[Castlevania]

1 hour ago, Starsend said:

Can you elaborate a bit on this cp? So this product doesn't simply track the price of oil then?

I hold a couple of other ETFs from Wisdom Tree, copper, coffee etc. Do they not track the underlying asset properly either do you know?

Thanks for any light you can shed on the matter. Long term hold for me so if there's issues with these products better to find out sooner rather than later.

 

As far as I’m aware none of the oil ETF’s hold the underlying commodity. The problem is one of storage. Instead they buy futures, but that isn’t the same as spot. Generally speaking (in normal circumstances but not always) the future price is higher than spot. So, you pay a premium over spot for the future and as time goes by you bleed theta. So only really worthwhile as a short term speculative vehicle.

[nirvana]

20 minutes ago, DurhamBorn said:

I also think they need the consumer to start taking on loans here

that is really blooming dangerous man! the loons are already bombed out with loons......I don't agree with this 'more drugs' analogy.....we can nay handle it captain 

[Loki]

23 minutes ago, DurhamBorn said:

The question is why,because this is where the Fed could make a massive policy mistake.If the banks are cashing in cash for treasuries,it is because they cant lend the money,or see a return in anything.HOWEVER,its not as simple as the MSM will say,oh too much cash.It could be entities wanting the cash dont have the collateral to get their hands on it.So it could be the economy needs the liquidity,BUT there arent enough solvent players to lend it too.The MSM can see this as too much liquidity,but it could be too much for the amount of solvent debtors.

This means the Fed needs to be very careful here.The market is saying we cant lend the cash,thats certain,so its cant lend to solvent not cant lend at all.This doesnt mean the economy doesnt need it,you could argue it shows the economy needs even more.Its also saying the route to market at this stage is fiscal through government.If the banks are using cash for treasuries,then the government needs to keep issuing them and spending into the economy.

Id expect the Fed to try to force people out of the short end here and push them along the curve,but they will do this by lowering the short end right down and lower the longer end much less.They need to signal that the curve says steady growth,that will encourage solvent entities to invest.

I also think they need the consumer to start taking on loans here,there might be some loan guarantees incoming from government soon,both on consumer loans for certain buys,and also for investment for companies.

The irony is the macro here says the banks are going to be big winners as the Fed tries to keep this liquidity in the system.I wont buy myself because of the risk of  BK,but outside of that the big US banks are likely to see earnings explode higher.

Absolute gold