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


spunko

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54 minutes ago, DurhamBorn said:

Governments mostly.They will invest or they will give better terms to companies to build.Take BT,they would allow them to make say 3% above inflation on fiber roll out instead of 1%.Remember this will be global,so all currency will be being inflated at the same time.That will feed into commod price increases and that will trigger a run in inflation.

Lots of good stuff in this article:

Stretched households could mean lengthy UK downturn, if it comes

https://uk.reuters.com/article/uk-britain-economy-recession-graphic-idUKKBN1W11FV

"LONDON (Reuters) - If Britain falls into recession soon, perhaps after a no-deal Brexit, it might prove to be a lengthy one because the country’s financially stretched households are unlikely to be able to lead a recovery."

"Households have also been net borrowers for 10 quarters in a row, an unprecedented stretch in records dating back to the 1960s."

"But the broader picture still suggests Britain will need to lean on spending by the government to drive any recovery from a future recession."

"It called for a pipeline of shovel-ready infrastructure projects which could be sped up in a crisis and it said direct payments could be made to households if necessary."

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24 minutes ago, Barnsey said:

"it said direct payments could be made to households if necessary."

Only to those who are guaranteed to spend it, I presume. Prudence doesn't pays in this environment, fecklessness all the way. 

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8 hours ago, A_P said:

I'm not trying to be right. I'm trying to be objective. 

You bought your first house using leverage at what's  probably the peak of the UK housing market this summer.You should try and be right more often.

And less disingenuous.

There's a lot more hope in your 'buy and hold' strategy than you let on at first glance AP..

https://dictionary.cambridge.org/dictionary/english/disingenuous

disingenuous
adjective
   formal
 
UK 
 
 /ˌdɪs.ɪnˈdʒen.ju.əs/ US 
 
 /ˌdɪs.ɪnˈdʒen.ju.əs/
 
 
(of a person or their behaviour) slightly dishonest, or not speaking the complete truth:
It was disingenuous of her to claim she had no financial interest in the case.
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4 minutes ago, sancho panza said:

You bought your first house using leverage at what's  probably the peak of the UK housing market this summer.You should try and be right more often.

And less disingenuous.

There's a lot more hope in your 'buy and hold' strategy than you let on at first glance AP..

https://dictionary.cambridge.org/dictionary/english/disingenuous

disingenuous
adjective
   formal
 
UK 
 
 /ˌdɪs.ɪnˈdʒen.ju.əs/ US 
 
 /ˌdɪs.ɪnˈdʒen.ju.əs/
 
 
(of a person or their behaviour) slightly dishonest, or not speaking the complete truth:
It was disingenuous of her to claim she had no financial interest in the case.

Now that is funny.

I think you'll find I've been one of the most open and detailed on this thread. You know that though don't you. But as your short the housing market....

Although for the record perhaps go back thread one from last year. I was quite open about our plan to relocate to NI, buy a modest home and use a fixed mortgage (although not required). It took a approximately a year from posting that. I've also not hidden the details around obtaining a mortgage (quite happily shared with you ) and how buying could well be the wrong decision, but not something I'm really concerned about. Especially given our ages and financial positions.

But yes I'm an over leveraged loon/troll xD Easier to play me though eh. Rather than actually discuss what was being said eh SP. Good one

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7 minutes ago, A_P said:

Now that is funny.

I think you'll find I've been one of the most open and detailed on this thread. You know that though don't you. But as your short the housing market....

Although for the record perhaps go back thread one from last year. I was quite open about our plan to relocate to NI, buy a modest home and use a fixed mortgage (although not required). It took a approximately a year from posting that. I've also not hidden the details around obtaining a mortgage (quite happily shared with you ) and how buying could well be the wrong decision, but not something I'm really concerned about. Especially given our ages and financial positions.

But yes I'm an over leveraged loon/troll xD Easier to play me though eh. Rather than actually discuss what was being said eh SP. Good one

The anger is strong in this one.

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9 hours ago, Majorpain said:

Depends on how fast the ETF can sell I suppose, forced selling into a falling market has potential to become self sustaining as more people notice the drop and demand their money back from the ETF.  If the ETF runs out of money for redemptions and cant or wont sell at the current market prices its lock in time.  UK isn't so bad I don't think, and the regulators got a bite of the S**t sandwich with Woodford, so should be going through the rest of them making sure they don't have a load of shares listed in illiquid Guernsey.

Ultimately if the market is fairly valued and liquid it wouldn't be a problem, the US epic QE bubble markets are the opposite IMO and it will be great until one day it isn't.

Yes, but you can't compare Woodford with a FTSE100 tracker...the latter by its very nature is very liquid, is open ended, and don't forget such ETFs can be split into their component parts and sold off likewise.

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51 minutes ago, A_P said:

Now that is funny.

I think you'll find I've been one of the most open and detailed on this thread. You know that though don't you. But as your short the housing market....

Although for the record perhaps go back thread one from last year. I was quite open about our plan to relocate to NI, buy a modest home and use a fixed mortgage (although not required). It took a approximately a year from posting that. I've also not hidden the details around obtaining a mortgage (quite happily shared with you ) and how buying could well be the wrong decision, but not something I'm really concerned about. Especially given our ages and financial positions.

But yes I'm an over leveraged loon/troll xD Easier to play me though eh. Rather than actually discuss what was being said eh SP. Good one

Can we all avoid these personal attacks, its why I left the other site to come over to this one...so far it has been pretty good here, with everyone happy to have opinions/thoughts challenged for the benefit of developing the community...lets keep this special place special eh? :-)

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So, looking back ages (spring) we've got DB's roadmap pointing to:

The road map says $1350,$1253,$1500+,$900,$10,000      [for gold]

Presumably we're now on the path to $900 (with the potential for one last hurrah).

Do we see this now being the dollar-squeeze zone, in which case we'll get to 100.5 (or so -- I can't remember).   Presumably with gold doing its massive correction (along with everything else?) at the same time.

I just can't believe that it'll happen in October again.

[what made me recall this: https://www.zerohedge.com/markets/something-just-snapped-chaos-hits-repo-market-dollar-funding-storm-makes-thunderous -- I don't think this is it, but rather this is the fore-shock that tells of what's to come]

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5 minutes ago, dgul said:

Presumably we're now on the path to $900 (with the potential for one last hurrah).

Quite possibly. Dave H seems to think GDX and GDXJ both up 80-90% from here before a pullback, but who knows. 

I'm happy with the PMs as a long term hold so would look to buy the dip. 

What I really need to start doing is identifying and picking up more reflation stocks. I own some telcos and energy, no transports yet.

What do people think about air travel in a deflationary scenario? Prices would rise with fuel and the end of cheap flights?

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10 minutes ago, Hardhat said:

Quite possibly. Dave H seems to think GDX and GDXJ both up 80-90% from here before a pullback, but who knows. 

I'm happy with the PMs as a long term hold so would look to buy the dip. 

What I really need to start doing is identifying and picking up more reflation stocks. I own some telcos and energy, no transports yet.

What do people think about air travel in a deflationary scenario? Prices would rise with fuel and the end of cheap flights?

It is interesting, though.  I'm seduced by the idea that no-one yet believes the whole 'world economy collapses' hypothesis, and all they're seeing is interest rates down, which means buy gold.  So, I can see one last hurrah, but I'm usually wrong when it comes to investing and I've learnt to not be too enthusiastic with my own theories.

[well, I'm often right, but have absolutely terrible timing...]

[re air travel.  I can see the double whammy of a nasty long recession and green politics]

Who is Dave H?

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1 hour ago, MrXxxx said:

Yes, but you can't compare Woodford with a FTSE100 tracker...the latter by its very nature is very liquid, is open ended, and don't forget such ETFs can be split into their component parts and sold off likewise.

Your right, my point was it depends what the ETF is tracking and it would be wrong to label them all as suspect.  Some will however be more liquid than others!

Its a big problem in the US markets, Michael Burry of big short fame has started writing extensively on how they make the market much more fragile:

https://www.bloomberg.com/news/articles/2019-09-04/michael-burry-explains-why-index-funds-are-like-subprime-cdos

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1 hour ago, MrXxxx said:

Can we all avoid these personal attacks, its why I left the other site to come over to this one...

Agree completely. We need to ensure that the thread isn't sidetracked into feuding and pointless arguments.

It's far too good a thread to allow this to happen.

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So... back to the roadmap and not pretending to know anything really just here to learn myself...

But...

armed with my new Technical Analysis books I decided to hunt for some oilies and gasies there last week and I came across this wee beauty which looked ready to pop up even before the Saudi thing happened... so I got some and Holy Crap did very nicely with it today. 

https://www.google.fr/search?q=wll+stock+chart&ie=UTF-8&oe=UTF-8&hl=en-fr&client=safari

Again market cap a bit wee and a bit risky maybe for some on here but check out the long term chart and sure see what you all reckon. 

DYOR etc because I am only learning. 

Can anybody explain what Short- covering means... if people have taken out shorts on a stock... expecting it to go down... I get that bit. But if it then starts to go up against what they expected- then what does it mean if you read that they are Covering Their Shorts exactly..?

Says he, genuinely baffled.

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24 minutes ago, Thorn said:

...

Can anybody explain what Short- covering means... if people have taken out shorts on a stock... expecting it to go down... I get that bit. But if it then starts to go up against what they expected- then what does it mean if you read that they are Covering Their Shorts exactly..?

Says he, genuinely baffled.

In the old fashioned sense, 'shorting' means borrowing stock from someone and then selling it.  Then, at some point in the future you have to buy the shares and give them back to the entity you borrowed them from.  The 'buying back' part is called covering.

[you don't actually see the 'borrowing' part any more, but it is still there in the background.  Most people see the process as 'cancelling' the short (or pressing the 'cross' on the screen, or whatever).  But what is actually happening is 'buying']

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6 hours ago, dgul said:

In the old fashioned sense, 'shorting' means borrowing stock from someone and then selling it.  Then, at some point in the future you have to buy the shares and give them back to the entity you borrowed them from.  The 'buying back' part is called covering.

[you don't actually see the 'borrowing' part any more, but it is still there in the background.  Most people see the process as 'cancelling' the short (or pressing the 'cross' on the screen, or whatever).  But what is actually happening is 'buying']

Most large funds will enhance their yield by lending out the stock. That way they collect the dividends (the borrower/shorter pays this) and get a fee for lending out the stock.

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6 hours ago, Tdog said:

My brother is one of the bigwigs for a hotel corporation in Asia, he see's travel booming for the rest of his working life ... as quite simply Asians make up such a vast proportion of the worlds population and they're getting richer and travelling more. 

Maybe a dip but the trajectory is up.

I’ve noticed this. If you want to see any sights get up early, because the Chinese tour buses don’t turn up until at least mid day. The Chinese are everywhere. However, it’s not that different to Japanese tourists being everywhere in the 1980’s and most of the 1990’s. They mostly disappeared once their economy blew up.

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9 hours ago, Majorpain said:

Your right, my point was it depends what the ETF is tracking and it would be wrong to label them all as suspect.  Some will however be more liquid than others!

Its a big problem in the US markets, Michael Burry of big short fame has started writing extensively on how they make the market much more fragile:

https://www.bloomberg.com/news/articles/2019-09-04/michael-burry-explains-why-index-funds-are-like-subprime-cdos

Thanks for the link MP, I have been looking for this counter argument explanation for ages.

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Government panicking!

Summary


Help to Buy was originally intended as a short-lived scheme but will now last for 10 years and consume over 8 times its original budget, yet the value achieved from its extension is uncertain. Around three-fifths of buyers who took part in the scheme did not need its support to buy a property, and the large sums of money tied up could have been spent in different ways to address a wider set of housing priorities and focus more on those most in need. The early scheme achieved its own aims to support people into home ownership, and boost the housing market. The scheme does not address issues with the wider planning system, or other problems in housing, such as the provision of affordable housing to buy or to rent and rising levels of homelessness, nor was it designed to do so.The Department has other programmes to address these issues, but Help to Buy remains its largest initiative by value. The Department acknowledges that the scheme has, however, only benefitted one section of society—those that are in a position to buy their own home in the first place.

Inherent uncertainty in the housing market means there are still risks to the Department achieving a positive return on its investment in homes. The new scheme from 2021 provides an opportunity to target the money more effectively, but the Department has not yet fully thought out how it will do this. Unless the Department plans alternative housing initiatives, the end of the scheme in 2023 may lead to a fall in supply, adding to the challenge it already faces in achieving its ambition of 300,000 homes a year from the mid-2020s.

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26 minutes ago, Barnsey said:

Government panicking!

Summary


Help to Buy was originally intended as a short-lived scheme but will now last for 10 years and consume over 8 times its original budget, yet the value achieved from its extension is uncertain. Around three-fifths of buyers who took part in the scheme did not need its support to buy a property, and the large sums of money tied up could have been spent in different ways to address a wider set of housing priorities and focus more on those most in need. The early scheme achieved its own aims to support people into home ownership, and boost the housing market. The scheme does not address issues with the wider planning system, or other problems in housing, such as the provision of affordable housing to buy or to rent and rising levels of homelessness, nor was it designed to do so.The Department has other programmes to address these issues, but Help to Buy remains its largest initiative by value. The Department acknowledges that the scheme has, however, only benefitted one section of society—those that are in a position to buy their own home in the first place.

Inherent uncertainty in the housing market means there are still risks to the Department achieving a positive return on its investment in homes. The new scheme from 2021 provides an opportunity to target the money more effectively, but the Department has not yet fully thought out how it will do this. Unless the Department plans alternative housing initiatives, the end of the scheme in 2023 may lead to a fall in supply, adding to the challenge it already faces in achieving its ambition of 300,000 homes a year from the mid-2020s.

So in a nutshell, `we` had an ill throughout scheme that we let run for far too long before admitting it, and are now going to replace it with another ill throughout scheme!...Jesus!...why do we continually vote in these career politicians that are not even competent for their supposed career?...I really believe that you could pick up anybody `from the street` and they would achieve better results!

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49 minutes ago, MrXxxx said:

So in a nutshell, `we` had an ill throughout scheme that we let run for far too long before admitting it, and are now going to replace it with another ill throughout scheme!...Jesus!...why do we continually vote in these career politicians that are not even competent for their supposed career?...I really believe that you could pick up anybody `from the street` and they would achieve better results!

Or,we know we might lose a shed load of taxpayers money now,sorry low paid worker whos tax we have lost.Utter bonkers policy.Real desperate stuff.Most of the houses and estates built with it are shit holes as well.

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11 hours ago, dgul said:

So, looking back ages (spring) we've got DB's roadmap pointing to:

The road map says $1350,$1253,$1500+,$900,$10,000      [for gold]

Presumably we're now on the path to $900 (with the potential for one last hurrah).

Do we see this now being the dollar-squeeze zone, in which case we'll get to 100.5 (or so -- I can't remember).   Presumably with gold doing its massive correction (along with everything else?) at the same time.

I just can't believe that it'll happen in October again.

[what made me recall this: https://www.zerohedge.com/markets/something-just-snapped-chaos-hits-repo-market-dollar-funding-storm-makes-thunderous -- I don't think this is it, but rather this is the fore-shock that tells of what's to come]

It could run higher yet before the falls due to the dollar not getting down below 90 yet.However i have sold most of my gold miners now as the profits were over 100%,some nearly 200%.That capital has already been re-deployed (a lot of it),the re-flation stocks i listed a few pages back that got some of the capital are now up on average over 10%.I wont be buying back into the gold miners until/unless gold hits around $1100,that is my downside buy target now,with the $900 lows been adjusted to about $1030.I still hold several silver miners and after top slicing some a bit im holding those.

I still think the dollar goes to about 88 before it turns back up during a deflation.

I havent dont hardly any work on gold targets since i sold simply as im building out my re-flation portfolio and time has been spent on those instead.

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31 minutes ago, DurhamBorn said:

I havent dont hardly any work on gold targets since i sold simply as im building out my re-flation portfolio and time has been spent on those instead.

No need as the economic illiterati on the news yesterday and today mentioning gold up, indeed 400% in the last 20 years!  When the media pick up something the smart money often sees that as a signal to dump!

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