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

[Harley]

1 hour ago, nirvana said:

DXY is at 92....there's an IR rise coming?

I knew the £ was fecked at 1.42 BUT i listened to some cunts on the internet 

and now it's at 1.38 

PS and Silver got fecked and I keep saying that's a load o shite too and like a knob I hold loads o that cac too, not having a good week 

On the monthlies: Cable's bounced off long term resistance.  DXY looks like it could rise!  DYOR!

[Harley]

1 hour ago, Barnsey said:

......with many commodities turning downwards

Indeed.  The broad index is up but several components (e.g. the grains and industrial metals) look weak on the monthlies and the others often overbought.

[Majorpain]

10 hours ago, PrincessDrac said:

I'm underwater with Fres. I'll hold. Well got no choice.

My brother sank £150k in at £8.10 this afternoon. Ballsie or stupid. Guess at 4.30pm tomorrow we'll know.

Never thought I'd see Fres  in the low low 8's with silver where it is.

Volumes today were well up. II buying maybe?

It has been on a reasonable down trend for the while, if i was in his position i would rigidly put in place now some levels at which i would sell or not, there is nothing worse than watching it slide, panic selling, then it bounces up and starts a rising trend.  That sort of stuff depends on individual financial situation and other portfolio allocation, im PM heavy but have enough Oil and Telcos to comfortably survive if AU/AG go to zero.

[nirvana]

1 hour ago, Barnsey said:

Thoughts?

what the FED are doing has echoes of the Weimar Republic.......then all that inflation led to WW2

so in all probs WW3 incoming.....I think nato want to fuck with Belarus now

The world is truly fucked! Run away now before it's too late 

[DurhamBorn]

A lot of these people on Twitter etc are trying to guess where things are going in a few days or at longest months.Saying a reflation trade is over is ludicrous when the money supply is going up 50%.There will be severe pullbacks along the way,very severe maybe,but by 2028ish inflation trades will likely be the only areas to of delivered good returns.

Crypto will likely mostly be down 99%,bonds maybe 25% to 40% inflation adjusted,growth stocks,70% etc.

We are at the liquidity injection part of the cycle now.Soon we will enter the distribution part as incomes lose ground against prices and assets are slowly sold to consume.A long grind down in most assets prices.

 

[Harley]

59 minutes ago, jamtomorrow said:

Zoom out.

Markets are in a state of hair-trigger sensitivity where they'll sh*t the bed just because Jay Powell has his eggs different for breakfast that day. ......

Yep, too much yap a sign of nervousness.  I just look at the data, not listen to the noise.  This is a data business, not the effing X Factor!  I'm having a nice spring clean and just switching off the noise whether than be financial pundits, crooked media, polos, NLP type ads, etc.  I would say to listen to the birdsong but the effing pigeons have arrived!  It was the cows yesterday being entertained by the bullock!  The stock markets are not signalling a reversal to me just yet but have lost some momentum and I only found one thing (a Russian energy play) to buy this week.  Maybe some Hong Kong (even Japanese) stuff next week if they complete their corrections.  Longer term bonds (IBGL/IBTL, VGOV, GILS, etc) may be getting close to a bottom so I'm waiting for a clear buy signal (had one possible fake so far)!!!!   I'm more concerned with the loss of capital (by whatever means) at this point.  DYOR!

[nirvana]

5 minutes ago, DurhamBorn said:

Crypto will likely mostly be down 99%

nah the whole system is setting up for such a good feckin the only thing most plebs will be doing is using crypto on their mobiles to buy veg, chickens, moonshine and even the odd 'tramps leg' for sunday lunch......

black markets incoming on a massive scale! Tesco will be far too expensive.....watch this space! you have been warned!!! 

[Harley]

25 minutes ago, Majorpain said:

It has been on a reasonable down trend for the while, if i was in his position i would rigidly put in place now some levels at which i would sell or not, there is nothing worse than watching it slide, panic selling, then it bounces up and starts a rising trend.  That sort of stuff depends on individual financial situation and other portfolio allocation, im PM heavy but have enough Oil and Telcos to comfortably survive if AU/AG go to zero.

Still looks weak to me on the monthly although just about entered oversold (DYOR).  How long will it stay there (the longer the worse for price)?  Not a hard chart to read.  Only a 2.2% yield but a bit more weakness and it might get close to my 3% target which would make it hard to resist (st. my other checks)!  Just to make it macro - the PM miners are a bit bouncy atm but have the numbers on their side for the longer term.

[DurhamBorn]

 

4 minutes ago, nirvana said:

nah the whole system is setting up for such a good feckin the only thing most plebs will be doing is using crypto on their mobiles to buy veg, chickens, moonshine and even the odd 'tramps leg' for sunday lunch......

black markets incoming on a massive scale! Tesco will be far too expensive.....watch this space! you have been warned!!! 

So good for telco stock owners then ? 

[DurhamBorn]

10 minutes ago, Cattle Prod said:

The reaction is unbelieveable, people are way too zoomed in. Nothing has changed at the Fed action wise, they've bought more assets this week than ever, and said clearly they will continue to do so. Just words. Some committee members think there will be two rate rises in 2023, so what? Have people learned nothing about forecasts in the last year?! First big stock market correction, that is all off the table again. Fed has also acknowledged that inflation is not transitory after all, i.e. buy inflation stocks. But the reaction is to dump them because acknowledging this means the Fed is preparing to taper or raise rates. It's like Prof Ferguson and his crystal ball. For me, I watch what they do not what they say. When they taper purchases I will sit up and take notice. For now, they are still boxed in and the rest is noise. I bought a ton of GDXJ calls yesterday, thanks Jerome.

All that reverse repo liquidity will he handed to inflation ,thats what people are missing.There is no liquidity sloshing when oil goes over $120 as it will etc.Fed is re-setting fiat against real assets here so tax increase faster than spending.

[Harley]

13 minutes ago, DurhamBorn said:

Crypto will likely mostly be down 99%,bonds maybe 25% to 40% inflation adjusted,growth stocks,70% etc.

But nothing in a straight line.  I see bonds, etc having one more pop as a safe heaven trade and crypto (in its various forms) has value in terms of the financial flexibility it can offer in an age of regulatory repression (despite what they may try, a risk worth taking part of IMO).  The adoption in Asia is an eye opener.  The West is massively behind.  If goes crypto, honestly why not PMs?  Time to zero base all thoughts and opinions in case this time it's different (and it seems more so than ever after the countless false starts I've witnessed).  Inflation assets, defo, but I like to look far and wide too and then there's the transition from the current overall buoyant market to a bifurcated one we have to survive.  Inflation causing the time decay of money, a looming BK, etc - it's like we're all in the options market now!  

[nirvana]

11 minutes ago, DurhamBorn said:

 

So good for telco stock owners then ? 

I've another confession, I sold BT too early 

Hi. my name is 'cunty bollocks dipshit' and I keep selling my reflation stocks too early 

I think I'll have a word with God over the weekend.....

[jamtomorrow]

52 minutes ago, Cattle Prod said:

Nothing has changed at the Fed action wise, they've bought more assets this week than ever, and said clearly they will continue to do so.

I'd take issue with "nothing has changed". The recent moves in reverse repo are the Fed having to respond to their feet getting wet because they're injecting liquidity faster than the financial plumbing can take it.

Edit to add: found a nice chart showing how reverse repo is now working as a sneaky taper

 

[Harley]

9 minutes ago, nirvana said:

I've another confession, I sold BT too early 

Oh well, you've still got your Royal Mail!!!!!

[nirvana]

23 minutes ago, Harley said:

Oh well, you've still got your Royal Mail!!!!!

bollocks, I'm not coming back here anymore......... 

[Long-game]

On 13/06/2021 at 20:32, M S E Refugee said:

 

Nearly bought a few oz gold yesterday ? Opinions falls , steadying on the up? Thanks

[No One]

2 hours ago, DurhamBorn said:

A lot of these people on Twitter etc are trying to guess where things are going in a few days or at longest months.Saying a reflation trade is over is ludicrous when the money supply is going up 50%.There will be severe pullbacks along the way,very severe maybe,but by 2028ish inflation trades will likely be the only areas to of delivered good returns.

Crypto will likely mostly be down 99%,bonds maybe 25% to 40% inflation adjusted,growth stocks,70% etc.

We are at the liquidity injection part of the cycle now.Soon we will enter the distribution part as incomes lose ground against prices and assets are slowly sold to consume.A long grind down in most assets prices.

 

So what sectors do you think will do well in your model?

[Hancock]

So if this is what happens when they talk of raising interest rates in 2 years as opposed to 3 ... it'll be carnage if the actually do within the next 12 months as is being predicted by Hunter and friends.

[JMD]

1 hour ago, Harley said:

But nothing in a straight line.  I see bonds, etc having one more pop as a safe heaven trade and crypto (in its various forms) has value in terms of the financial flexibility it can offer in an age of regulatory repression (despite what they may try, a risk worth taking part of IMO).  The adoption in Asia is an eye opener.  The West is massively behind.  If goes crypto, honestly why not PMs?  Time to zero base all thoughts and opinions in case this time it's different (and it seems more so than ever after the countless false starts I've witnessed).  Inflation assets, defo, but I like to look far and wide too and then there's the transition from the current overall buoyant market to a bifurcated one we have to survive.  Inflation causing the time decay of money, a looming BK, etc - it's like we're all in the options market now!  

I agree Harley (wild crypto market swings aside, a different topic i know) - but yes the Asian adoption of crypto is truly eye opening. Though i am reminded that they do like to gamble over there, however Japan, etc, do love their tech, so crypto has found a natural home in Asia i think. Plus across Africa where lack of infrastructure will always be a problem, so crypto banking/currency is a real pull factor, also especially with the endemic corruption there. 

Trading the vol and skimming some profit is where the clever money is i think (opposed to buy and hold); and across Asia they already have many money managers doing that for their clients. I don't have those skills, but if lived there i would implement some of that into my investments.

Talk on this thread sometimes from posters considering 'escaping abroad' to keep their wealth; i think in terms of safeguarding wealth and even for wealth generation, Asia must be the place. Its very cheap too. I guess the key is having access to those Singapore money managers and markets, so residence should have no capital controls. There are other practical considerations of course, re. family, security, health service provision even, but in terms of a 'Wild-East'!! mentality, surely that's the place to be?   

...In fact i think some posters on here made the relocation move very early (sorry, can't recall names), and are already living in Vietnam or  Thailand?

 

 

[Hancock]

23 minutes ago, JMD said:

Talk on this thread sometimes from posters considering 'escaping abroad' to keep their wealth; i think in terms of safeguarding wealth and even for wealth generation, Asia must be the place. Its very cheap too. I guess the key is having access to those Singapore money managers and markets, so residence should have no capital controls. There are other practical considerations of course, re. family, security, health service provision even, but in terms of a 'Wild-East'!! mentality, surely that's the place to be?   

 

I see it that way, as for the next 50 years younger Brits are going to be paying those final salary pensions, and there will be an epic fight by the public sector and quasi public sector to keep the millions of non jobs.

Asians have families to do what big govt does over here in relation to caring for the elderly and bailing each other out when times are hard., so their tax rate is kept down ... hence govt interferes in ones life far less ... even more so if you're a foreigner whose income comes from overseas.

Take the comment about Singapore onboard, is this where you leave your money in shares, bank accounts etc...?

Oh and where are you currently based?

 

[DurhamBorn]

53 minutes ago, No One said:

So what sectors do you think will do well in your model?

Anything where no new entrants can build scale over the cycle and where they can put prices up with inflation or inflation+.

Key is that you have lots of assets already,even if lots of debt,but fixed depreciation and your not relying on bulky spending from consumers.

Telecoms look prime for this for me,and although recession will hit them being able to increase prices at inflation is a huge benefit.4% inflation should increase VODs costs by about £400mill,but income by £1.4bill for instance.

I think telcos are in a structural undervaluation across the whole sector outside of the US. @sancho panza coma scores back in the thread are a great way to spray and pray the sector.

Energy is another.I think oil and gas are the best contrarian and macro chance to make good capital in a long time.

Im cheering when BP stay down because i want the company to buy and cancel as many shares as they can before the big run higher.The lower they stay now,the more shares get bought back the more i make later.

Potash were nother great sector for the above,but iv sold most now with massive profits,but hold Nutrien still.

Delivery firms were another area who can leverage inflation,but again the market woke up in the end and although Royal Mail is worth £9 the huge profits are gone.

PMs are also undervalued,but exit and entry on them takes a lot of work really.

Tobacco is undervalued as it usually is.BAT has lots of debt,but is a cash machine and its really gaining traction in new products.The glory days are over,but a slowly growing divi is still good reward.

Imperial Brands is lacking in new products,but its nearly at the point on debt where it can buy back 6% of its stock a year and can likely flatline free cash,so keep earnings growing.It will fall to Japan Tobacco as well i think at some point,or the big Chinese tobacco players.

Market is overbought and shake outs are very healthy

 

I also like insurance etc and companies like M+G,but there is more risk there on  BK or systemic risk.

[DurhamBorn]

2 hours ago, Harley said:

But nothing in a straight line.  I see bonds, etc having one more pop as a safe heaven trade and crypto (in its various forms) has value in terms of the financial flexibility it can offer in an age of regulatory repression (despite what they may try, a risk worth taking part of IMO).  The adoption in Asia is an eye opener.  The West is massively behind.  If goes crypto, honestly why not PMs?  Time to zero base all thoughts and opinions in case this time it's different (and it seems more so than ever after the countless false starts I've witnessed).  Inflation assets, defo, but I like to look far and wide too and then there's the transition from the current overall buoyant market to a bifurcated one we have to survive.  Inflation causing the time decay of money, a looming BK, etc - it's like we're all in the options market now!  

Agree on bonds,i think one last pop as you say.I think with inflation i look at it as what can i own to swap for other things later.I think crypto has a great future,but 99.9% of capital in there now will be lost.I could be wrong on that,but i see owning assets that keep ahead of liquidity as crucial so that i can swap out later.

Of course you nail there the real question,the roadmap to a bifurcated market,because that is almost certain to be what we will soon have.

[JMD]

17 hours ago, Heart's Ease said:

Speaking of DH - forgot I hadn't posted this. Have not listened.

Thanks HeartsEase. Just listened to this latest Dave Hunter podcast. Basically says recent months have seen consolidation, now markets will continue up. Actually, not much new info. to add to my own 'DH notes', which i have included below. Please dyor, as these are merely my generic interpretation/very sketchy, also includes pre-melt-up prices that DH has previously indicated may happen in other recent podcasts. (excuse formatting if looks wonky!)

DH - 16/06/2021

Q3/4 2021 - meltup, sp500 4700-5000+

Q4 2021? bust - 80% fall, but maybe 30% in pm’s/commods/certain sectors; meltup prices: Silver$45, Gold$2500, gdx$60, gdxj$100, sil%75, silj%30. Bust will impact all assets except for the dollar and treasuries.

2022 secular bull (ups/downs, but industrial/commodities will run) to 2026 (sp500 to 4000?), due to printing and inflation. But prices will not recover for decades

2026 sell miners, buy physical

2030+ monetary collapse

[DurhamBorn]

https://www.uswitch.com/broadband/guides/talktalk-price-increase/

The above is what needs to be understood.This is a whole sector increasing prices at inflation + 3.8%.The regulator is allowing BT this,and they set the base prices.

There are 3 main fag sellers in the UK,for some reason they all increase their prices each year by about the same amount.Once there are only a few players the market becomes sensible,and very unlikely there can be another player come along.

[JMD]

7 hours ago, Lightscribe said:

https://www.bloomberg.com/opinion/articles/2021-06-17/america-should-become-a-nation-of-renters

‘You will own nothing’ not even being subtle now. 
 

https://www.moneysavingexpert.com/news/2021/06/mortgage-rates-low-remortgage-check-save/

This is where IFA’s and Martin Lewis gets it so wrong. They advise on the here and now with no thought to the wider economic circumstances. He did the same when Iceland imploded and people were left trying to claw they’re money back. 

By advising people to fix for two years will land then smack bang into inflation territory in 2022/3 on SVR. The Fed have already signalled what they are going do FFS.

https://www.forexlive.com/news/!/us-dollar-jumps-after-fed-pulls-forward-forecasts-for-rate-hikes-20210616

He’s even got a small disclaimer for the ‘mortgage prisoner’ IO idiots, plenty more to add to that in a few years. We did try to help, but we’ve been a bit busy...

You mean Martin Lewis might have ulterior motives, other than helping the common man? After all, he must surely be very aware of the real risk of mortgage rate increases? And he usually prides himself with being quiet autistic-like/driven and delving into the minute details, does he not?     

I note that Martin sold his Moneysavingexpert back in 2012 for £60 million, plus 20 million shares in Moneysupermarket, today those shares are worth approx. £60million. Too be very nosy, I wonder what Martin's investment portfolio looks like?