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

[Harley]

Hi one and all.  Been mostly off for the last 2 months or so (apart from posting stupid stuff elsewhere!) and just got back to my weekly portfolio review.  Have to be grown up and focused to hang out here in the basement!  Having a closer look here to get back up to speed but not much here either.  Markets seem to be a bit dull/predictable which is somewhat unusual for October.  Overall, my balanced index/PM/bond based portfolios are down (due mainly to PMs) but my FTSE based income portfolios are up (alas by a smaller amount).  Those shares going down have continued to do so (e.g. ULVR) .  Nice to see bonds finally weakening too as I may grab some linkers later.  The only thing I missed was IAG which I so nearly bought at the time of the strike when I had a buy signal.  Up nicely since then.  I've seen a few stocks to watch which either may bottom as some point or which have divergences between their technicals and prices.  Really should rebalance my income portfolios as several are over their allocations but maybe best to wait to the new year.  Topped up a few today which may have bottomed and opened one new position.  Nothing exciting on the index funds except I should have been braver with Japan.  Also should have traded cattle, not hogs!  Overall softs have done well and metals (including miners) may be beginning to bottom.  Got out of platinum at the right time!  Focus now is on Energy, commodity/resource plays, and international income.  Anything else worth a look?      

PS:  My other big focus is to mitigate any stupidity from any government which has a blank cheque for the next five years.  Top of my list is to go into (crystallise) drawdown, not to take any cash but in case they change the pension rules to make it harder (there's been talk about people taking out too much, etc), other than pushing up the age requirement.  Any other thoughts on what stupidities or nasties dumb or dumber might do?

PPS:  Everyone talking about pizzas ATM, from you lot, to the Clintons and other royalty!

PPPS:  Oh, and of course a major banking crisis with the collapse of Deutschebank, JP Morgan, etc (or is that BAU?)!

[Democorruptcy]

9 hours ago, MrXxxx said:

Just read this and thought I would bump it just in case some missed it. Its a really good read, and highlights the points DB (and others) has been making about the threats of drawdown, low return/interest rates, and capital erosion.

What's nice is that it uses real world values and figures to support it, and especially, shows how the traditional safety/default move upon retirement into gilts etc may no longer `work`, and may even be deleterious!

Amerman's latest article includes an explanation of the repo market etc

http://danielamerman.com/course/a/raEIGHTEENbv.html

[sancho panza]

On 21/11/2019 at 12:49, kibuc said:

Anyone holding Endeavour Silver here? They've just announced suspension of mining operations at El Cubo. Produced 2.6mil oz silver and 25k oz gold in 2018. Simply put, they ran out of ore that's worth digging up at current prices.

I got us out early sept  st a profit as part of my reorg of our PM exposure.

Can't claim any foresight.Just lucky I guess.Still sat in New Gold..............

Must say I'm tempted by current prices in a host of silver miners eg GPR,EDR(not down much really),Fortuna.

We hold Alexco and it's a super leverage play on the underlying if you look at the recent price action in both

22 hours ago, Bear Hug said:

https://seekingalpha.com/article/4307763-outlook-energy-income-meets-capital-gain-potential

This looks interesting.  Just parts of it below, it's a long article:

 

We bought first tranceh of the XES/OIH/XOP/FCG/XLE that scored 17 on the Sancho Coma Scale in August .Must say I'll be tempted to whack some on during the canadain tax loss selling season.

As I've said,we're building a very chunky position in big oil,using the oil services and and smaler companies for the more leveraged plays on doallr weakness.

[sancho panza]

8 hours ago, kibuc said:

It's all about Terronera for them, a massive deposit expected to fully replace El Cubo and then some. They are not done, not by a long shot, but need to complete Terronera and hope for prices to stay where they are at the very least - Terronera is projected to have 23.5% IRR against $17/oz silver and $1275/oz gold.

Things can go wrong during construction, grades might not turn out to be as expected and prices may go in whichever direction, so a bit risky-risky.

Most important thing to consdier when buying goldies is to get a spread of exposure.Some of the smaller companies are one mine plays.

2 hours ago, DurhamBorn said:

Anyone who invested in the PM miners and sold when i did back in the thread should of made between 60% and 200% on the different stocks.I made over 80% total i think (i didnt check exact figures).Main reason it was "only" 80% was because i had really big holdings in the likes of Harmony that i sold just below a double even though they ran another 20%+.I also had a much smaller amount of Sibanye because i had too much exposure to South Africa so limited them early on purpose.

I still own several silver miners and i fully expected they would be all over the place.Even those are still up though on average.For instance im up 64% still on Alexco Resources,+5% on the Endeavour holding but have been in ,out and back in and took a 40% profit on them earlier.The only silver miners im down on is Great Panther at 19% down and Fortuna at 13% down.My entire silver miner portfolio cost around 60% of the profits i made on the gold miners.I intend to buy back the gold miners and more silver miners if they pull back as i expect them too.The reason im holding £40k in the silver miners though is in case im wrong and the sector starts its bull run and doesnt come back.I fully expect some silver miners to 50 bag in the next cycle.Some might go bust before we get there,hence having a good spread.

The other stocks iv been buying are a mixed bag as expected.Some are up over 60% including dividends (Go Ahead),some down 20% and a couple more.However there are now a lot of bottom ladders that are up over 20% including Vod,SSE,and others.The portfolio is actually up when including dividends and im expecting that i might end up 20% down on it in a sell off.I dont focus on those numbers though.The main aim is to point my families assets to areas that should be able to front run,gain from,or at worst stand still against inflation (and survive a debt deflation).The election has shown just how much the parties are wanting to spend and inflation will turn investment on its head.Funding growth on negative cash flow goes out of the window when inflation and rates move higher.

My main focus now is the oil sector,but im waiting mostly because i see $40 oil a big threat,then a big spike down.Im also waiting on the insurance companies.Not life,motor,household insurance.They will get smashed in a sell off,but will be big winners in a reflation as rates increase.

Its a very difficult period.If Labour won the election sterling could go into a fall few imagine.After the election we then enter a period where we could see some currencies start to crack down.

The main takes are the road map is still for very high inflation as we move into the mid 2020s and financial dislocation as wealth evaporates as debt is liquidated and/or inflated away.

 

As I said to Kibuc,recent weakness is making me think of buying more.We added to Alexco last week,considering buying Fortuna back,looked at GPR chart but will likely wait till Q4 figures released.

COuldbn't agree more on oil,some really exciting blue chip opportunities

 

Must add though,am being carefull to add slowly,as a decent downdraft could cccur and give us an even better opportunity.

[sancho panza]

https://www.mysanantonio.com/business/article/Personal-loans-are-growing-like-a-weed-a-14852251.php

 

Personal loans are up more than 10% from a year ago, according to data from Equifax, a rapid pace of growth that has not been seen on a sustained basis since shortly before the Great Recession. All three of the major consumer credit agencies -- Equifax, Experian and TransUnion -- report double-digit growth in this market in recent months.

Experts are surprised to see millions of Americans taking on so much personal loan debt at a time when the economy looks healthy and paychecks are growing for many workers, raising questions about why so many people are seeking an extra infusion of cash.

Personal loan balances over $30,000 have jumped 15% in the past five years, Experian found. The trend comes as U.S. consumer debt has reached record levels, according to the Federal Reserve Bank of New York.

Over 20 million Americans now have these unsecured loans, TransUnion found, double the number of people that had this type of debt in 2012.

[Thorn]

4 hours ago, Craig said:

I just use basic ones with holes in them. Seem to work fine. Found it easier to make the bases and put them onto these, rather than trying to get them off a peel or the like, as invariably they'd stick:

https://www.sainsburys.co.uk/webapp/wcs/stores/servlet/gb/groceries/sainsburys-home-non-stick-pizza-tray-131471486-p?gclid=Cj0KCQiAq97uBRCwARIsADTziya0JE1WVVxW7VUc8Nx163vZN3h0YOdt_bt-4VsbVdfOjd_7YY-xJTgaAtuVEALw_wcB&storeId=10151&langId=44&krypto=dVURDvC0GRoB9tPCSanEBNX%2FwahCs%2FosuzdeF378JGkhX544r%2Bsc2URyNJ%2BSnPHRNwdJMoLNiz0F9lJPob4cVZ7j36lhXZsCAi2GFarmdqswoLCbbncRZHprwn8JSb%2B2GcfwwuclMDgLLn1kOPZOcst1BTa%2F%2BwWb9zvp2ZVERuXj2LUmyV2qsgJFxlITMl8vvg3BHnxgQr1LGVodFcXopNfLq58AX6UOJEIv8dhVOOE7PrDZXzK%2FQGZ6Xg139tJ2JB8%2B6sVjnw1EhQI8A%2FW1fwVof3EARf9YbwICd%2BdRDQE4dX2rIf1dVn%2FOs4sg9bQVXDQXapk0mBs33c50NbfnT4miLuZPGBi1xY8d7LF2XwI%3D&ddkey=https%3Agb%2Fgroceries%2Fsainsburys-home-non-stick-pizza-tray-131471486-p

Brilliant thanks a million Craig will give them a go.

2 hours ago, DurhamBorn said:

Anyone who invested in the PM miners and sold when i did back in the thread should of made between 60% and 200% on the different stocks.I made over 80% total i think (i didnt check exact figures).Main reason it was "only" 80% was because i had really big holdings in the likes of Harmony that i sold just below a double even though they ran another 20%+.I also had a much smaller amount of Sibanye because i had too much exposure to South Africa so limited them early on purpose.

I still own several silver miners and i fully expected they would be all over the place.Even those are still up though on average.For instance im up 64% still on Alexco Resources,+5% on the Endeavour holding but have been in ,out and back in and took a 40% profit on them earlier.The only silver miners im down on is Great Panther at 19% down and Fortuna at 13% down.My entire silver miner portfolio cost around 60% of the profits i made on the gold miners.I intend to buy back the gold miners and more silver miners if they pull back as i expect them too.The reason im holding £40k in the silver miners though is in case im wrong and the sector starts its bull run and doesnt come back.I fully expect some silver miners to 50 bag in the next cycle.Some might go bust before we get there,hence having a good spread.

The other stocks iv been buying are a mixed bag as expected.Some are up over 60% including dividends (Go Ahead),some down 20% and a couple more.However there are now a lot of bottom ladders that are up over 20% including Vod,SSE,and others.The portfolio is actually up when including dividends and im expecting that i might end up 20% down on it in a sell off.I dont focus on those numbers though.The main aim is to point my families assets to areas that should be able to front run,gain from,or at worst stand still against inflation (and survive a debt deflation).The election has shown just how much the parties are wanting to spend and inflation will turn investment on its head.Funding growth on negative cash flow goes out of the window when inflation and rates move higher.

My main focus now is the oil sector,but im waiting mostly because i see $40 oil a big threat,then a big spike down.Im also waiting on the insurance companies.Not life,motor,household insurance.They will get smashed in a sell off,but will be big winners in a reflation as rates increase.

Its a very difficult period.If Labour won the election sterling could go into a fall few imagine.After the election we then enter a period where we could see some currencies start to crack down.

The main takes are the road map is still for very high inflation as we move into the mid 2020s and financial dislocation as wealth evaporates as debt is liquidated and/or inflated away.

 

Is BPGDM useful as a predictor in your opinion DB?

[DurhamBorn]

3 hours ago, Thorn said:

Brilliant thanks a million Craig will give them a go.

Is BPGDM useful as a predictor in your opinion DB?

Its probably decent,but like a lot of these everyone looks at them so negates their use somewhat.I like to cross market liquidity profiles from the Fed on top of the other indicators.Iv done zero work though on the sector lately.Im looking at big oil and telcos mostly at the moment.Oil im dipping my toe,but would love to see oil hit my $40 target to go big.I love Exxon and BP most.

[Talking Monkey]

19 hours ago, DurhamBorn said:

Anyone who invested in the PM miners and sold when i did back in the thread should of made between 60% and 200% on the different stocks.I made over 80% total i think (i didnt check exact figures).Main reason it was "only" 80% was because i had really big holdings in the likes of Harmony that i sold just below a double even though they ran another 20%+.I also had a much smaller amount of Sibanye because i had too much exposure to South Africa so limited them early on purpose.

I still own several silver miners and i fully expected they would be all over the place.Even those are still up though on average.For instance im up 64% still on Alexco Resources,+5% on the Endeavour holding but have been in ,out and back in and took a 40% profit on them earlier.The only silver miners im down on is Great Panther at 19% down and Fortuna at 13% down.My entire silver miner portfolio cost around 60% of the profits i made on the gold miners.I intend to buy back the gold miners and more silver miners if they pull back as i expect them too.The reason im holding £40k in the silver miners though is in case im wrong and the sector starts its bull run and doesnt come back.I fully expect some silver miners to 50 bag in the next cycle.Some might go bust before we get there,hence having a good spread.

The other stocks iv been buying are a mixed bag as expected.Some are up over 60% including dividends (Go Ahead),some down 20% and a couple more.However there are now a lot of bottom ladders that are up over 20% including Vod,SSE,and others.The portfolio is actually up when including dividends and im expecting that i might end up 20% down on it in a sell off.I dont focus on those numbers though.The main aim is to point my families assets to areas that should be able to front run,gain from,or at worst stand still against inflation (and survive a debt deflation).The election has shown just how much the parties are wanting to spend and inflation will turn investment on its head.Funding growth on negative cash flow goes out of the window when inflation and rates move higher.

My main focus now is the oil sector,but im waiting mostly because i see $40 oil a big threat,then a big spike down.Im also waiting on the insurance companies.Not life,motor,household insurance.They will get smashed in a sell off,but will be big winners in a reflation as rates increase.

Its a very difficult period.If Labour won the election sterling could go into a fall few imagine.After the election we then enter a period where we could see some currencies start to crack down.

The main takes are the road map is still for very high inflation as we move into the mid 2020s and financial dislocation as wealth evaporates as debt is liquidated and/or inflated away.

 

Great post DB. On the silver miners and the risk of them going bust is that risk greatest if there is a large general stock market sell off. Equally does that risk of going bust diminish once silver gets above a certain price say $20-25 and we have been through the stock market sell off.

[Burly]

Long time lurker here - Im also looking at closely at more telcos but dont really have loads of time available to analyse individual shares. I hold VOD but thinking of a Telco etf to gain more exposure. Would welcome any thoughts on going down this ETF route rather than shares, apologies if this has already been discussed. Great thread by the way. 

Xtrackers Europe 600 Telcos

Ishares Europe 600 Telcos

Also looking at infrastruce ideas in the shape of Automation and Emerging Infrastructure. Ideas or thoughts welcome, these are only links not reccomendations!

 

[Errol]

Some technical analysis for silver:

https://www.midastouch-consulting.com/silver-chartbook-21112019-sentiment-silence-and-lies

[DurhamBorn]

1 hour ago, Talking Monkey said:

Great post DB. On the silver miners and the risk of them going bust is that risk greatest if there is a large general stock market sell off. Equally does that risk of going bust diminish once silver gets above a certain price say $20-25 and we have been through the stock market sell off.

I doubt any would go bust at $20+ as capital will be entering the sector.The biggest risk is companies being taken over at much lower prices than paid.I dont have a lot in the smaller plays that have the big multi bag potential,i prefer the smaller mid cap ones.They might 10 bag though in a bull.

[DurhamBorn]

15 minutes ago, Burly said:

Long time lurker here - Im also looking at closely at more telcos but dont really have loads of time available to analyse individual shares. I hold VOD but thinking of a Telco etf to gain more exposure. Would welcome any thoughts on going down this ETF route rather than shares, apologies if this has already been discussed. Great thread by the way. 

Xtrackers Europe 600 Telcos

Ishares Europe 600 Telcos

Also looking at infrastruce ideas in the shape of Automation and Emerging Infrastructure. Ideas or thoughts welcome, these are only links not reccomendations!

 

Those would be fine,but i prefer to buy the stocks myself.80% of the fund is in the top 10 anyway.I like Vodafone,BT,Telefonica,Telenor and Telia out of the top 10.Telenor has some great exposure to Asia.I own all of those,though only half so far in the last three.

[Harley]

22 minutes ago, Errol said:

Some technical analysis for silver:

https://www.midastouch-consulting.com/silver-chartbook-21112019-sentiment-silence-and-lies

When we talk silver, we need to talk JP Morgan.  Know what they're up to and things should become clearer.

Max Keiser apparently doesn't like them and thinks they may not be doing too well ATM!

[Talking Monkey]

4 hours ago, DurhamBorn said:

I doubt any would go bust at $20+ as capital will be entering the sector.The biggest risk is companies being taken over at much lower prices than paid.I dont have a lot in the smaller plays that have the big multi bag potential,i prefer the smaller mid cap ones.They might 10 bag though in a bull.

Cheers DB makes sense and helps formulate for me when to start getting into the miners, I am happy to miss getting in on the ground floor but also avoid a large part of the going bust risk. as protection of capital is very important whereas a 25 year old could take a much more cavalier approach

[JMD]

4 hours ago, Burly said:

Long time lurker here - Im also looking at closely at more telcos but dont really have loads of time available to analyse individual shares. I hold VOD but thinking of a Telco etf to gain more exposure. Would welcome any thoughts on going down this ETF route rather than shares, apologies if this has already been discussed. Great thread by the way. 

Xtrackers Europe 600 Telcos

Ishares Europe 600 Telcos

Also looking at infrastruce ideas in the shape of Automation and Emerging Infrastructure. Ideas or thoughts welcome, these are only links not reccomendations!

 

All are good ones I think, but I'd favour the iShares telecoms one because its a physical etf (i.e. the xtrackers one uses swaps) and its charges are still relatively low.

Perhaps also check out the following, it has 240 holdings, but as its North American focused probably best to buy after the anticipated US stock market correction. 

https://www.hl.co.uk/shares/shares-search-results/i/ishares-ii-plc-ftsemacquarie-gbl-infra-100

 

[reformed nice guy]

4 hours ago, Burly said:

Also looking at infrastruce ideas in the shape of Automation

 

I had a good dive into automation a while ago with a focus on industrial automation rather than trendy "blue sky" companies that want to bring a paradigm shift. I settled for the following to hold for long term:

Kuka - originally German, now owned by Chinese, maker of industrial robotics

Honda

Fanuc - factory automation, CNC machines etc

Rockwell - a big American automation company

Stagecoach - Yup, they are currently trialling driverless buses in at least 2 locations in Scotland

[Yellow_Reduced_Sticker]

On 22/11/2019 at 15:53, DurhamBorn said:

The election has shown just how much the parties are wanting to spend and inflation will turn investment on its head.Funding growth on negative cash flow goes out of the window when inflation and rates move higher.

 

...AND yet i've seen a few articles pop up about zero/negative rates. heres one from money week:

"Navigating the weird world of negative interest rates"

I only skimed read it, however REALLY LIKED this bit...

"Finally, as was the case in the tech bubble, people are dreaming up all sorts of “new normal” explanations to justify negative yields.

Yeah... JUST before IR's ROCKET!

[Bobthebuilder]

1 hour ago, reformed nice guy said:

I had a good dive into automation a while ago with a focus on industrial automation rather than trendy "blue sky" companies that want to bring a paradigm shift. I settled for the following to hold for long term:

Kuka - originally German, now owned by Chinese, maker of industrial robotics

Honda

Fanuc - factory automation, CNC machines etc

Rockwell - a big American automation company

Stagecoach - Yup, they are currently trialling driverless buses in at least 2 locations in Scotland

Good post, i like Honda great company and products, deffo a long term hold i reckon.

I have really enjoyed this thread, Im mostly looking for long term holds for my SIPP at present.

DYOR and all that, but i like the thinking.

[Thorn]

David Rosenberg. What an interview.

I am now a fan of this lad. He might be a friend of yours DB from the insight he has.

BBB corporate debt and ETF- based Bust and Contagion anyone?

https://youtu.be/V2u6rlVdDgY

 

[Innkeeper]

20 hours ago, reformed nice guy said:

 

Stagecoach - Yup, they are currently trialling driverless buses in at least 2 locations in Scotland

Never quite sure where any savings with driverless are meant to be made - would still need a fully qualified employee on the bus/taxi etc.  I think the rewards will be to green tech ahead of driverless - govt incentives etc.

Agree with Stagecoach generally though.

[Errol]

Agree. There would always need to be a human employee on the bus. This need only goes when they have proper human-style robots.

[Calcutta]

Does anyone know of a decent resource for finding out company debt levels without having to Google every individual company and getting multiple results? Alas I have confused myself again. I'm assuming the most important stat regarding debt is debt/equity?

[DoINeedOne]

Was a feature in the Investors Chronicle about a energy revolution thought i would share as mentions a few companies spoke about here

 

 

 

 

 

[Thorn]

Ok. 

I am going to actually start a David Rosenberg Fan Club. 

And I think we need to start Top Tips like in Viz.

If you want to learn about macro just watch this amazing talk he gave to some realtors last year and freeze the video and if your eyesight will allow it just scribble down the names each of the charts he watches like a hawk.

I have and so tomorrow I am going to go out and buy a fresh A4 jotter to list everything and get watching. Learning as I go here... but the last one now looks like a dogs breakfast. 

 

 

[DurhamBorn]

3 hours ago, Innkeeper said:

Never quite sure where any savings with driverless are meant to be made - would still need a fully qualified employee on the bus/taxi etc.  I think the rewards will be to green tech ahead of driverless - govt incentives etc.

Agree with Stagecoach generally though.

Agree,the savings will mostly come from on demand transport and the increase in use.The easier it is to use,the more it will be used.The big thing in a reflation though is the fact fuel prices will go through the roof,but transport companies will be hedged 3 to 4 years out.That will give them a sweet spot over car use.Government will help as well.They arent going to multi bag like some resource companies might,but i think they make a nice investment for a part of a reflation portfolio.Im looking for around 8% to 10% in the area,though at the moment im only in place in the bus companies and need to work out a few more plays in the sector.