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


spunko

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This will be a bit of an update post from me, so thought I'd throw my two pence out there.

Pension: I have a DB, plus a DC partnership with L&G pension. I'm about 50% cash in the DC L&G with the other 40% averaging in monthly payments going into a L&G FTSE tracker which is quite decently weighted in reflation stocks and 10% into a fund weighted in treasuries and gold ETFs.

LISA: Monthly allocation into alternative reflation stocks from my ISA for diversification.

ISA: I sold off my HOC (luckily at the last high) due to funding some unforeseen expenses last year. I am now averaging down in both FRES and HOC with monthly allocations and will continue to do so to build my allocation back up. I also sold some Royal Mail post election high, if it goes back down I will reinvest what I've sold. It's now currently well weighted between energy, defence, infrastructure and transport. Oil is next on the list. Bought some Exxon (due to sterling gaining) and some BP (thanks to all for the oil input on here) and would like some more oil exposure after selling my Shell holding at the high back in 2015. Starting to look at potash too, and am keeping an eye on SOIL, MOSAIC and NTR whilst keeping tabs on sterling also.

Crypto: I now have around 1.5 BTC (up from 1 BTC last year) As I've stated before, I'm not concerned with the current price, I'm just interested in increasing my BTC holding. I've mainly been trading between Chainlink, ETH and BTC. I still think BTC will have a place as a safe haven in a financial downturn.

Physical: still collecting any cheap silver I see come up (pre-1920s) so getting quite a sizeable stash between myself and my daughter.

P.S (for DB and YRS) I made a killing in Coop tonight. Massive beef topside joint (with an already £4 per kg discount from xmas) £12 down to £4, making a pot roast with that. Lamb cops £1.30, 6 chicken breasts £2, steak £1.70, kievs £1 and an xmas ramekin pate with pot for 70p ( I'll re-use that for my own pate - after a superb home made effort with turkey liver at xmas). I did have to walk about in the shop however for around 20 mins with my basket in order to beat the other Coop stalkers for the bargains.

 

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15 minutes ago, Sideysid said:

P.S (for DB and YRS) I made a killing in Coop tonight. Massive beef topside joint (with an already £4 per kg discount from xmas) £12 down to £4, making a pot roast with that. Lamb cops £1.30, 6 chicken breasts £2, steak £1.70, kievs £1 and an xmas ramekin pate with pot for 70p. Although I did have to walk about for 20 mins though inside the shop with my basket to beat the other Coop stalkers

Pah, amateur!...I was in Waitrose the other day by the fish counter and they had some Sea Bream fillets reduced to £1 each, I asked the fella serving how much it would be for the eight he had left (expecting him to say £8), and he said 20p each!...needless to say my freezer compartment now has more fish than a penguins picnic! :-)

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22 minutes ago, Sideysid said:

Further to my earlier post I wanted to ask opinions on BOSCHLTD after reading another thread on here.

https://www.bbc.co.uk/news/science-environment-50873047

Obviously a massive company,  but the charts are looking interesting after bottoming in October and no debt apparently??

 

I think hydrogen will play a big role,its the reason i bought SSE and DRAX.SSE will have bags of spare green energy (needed to produce the hydrogen) and DRAX can convert some of their plant to hydrogen production.Likely they will get bought out though at some point for that reason.

Where i worked the top engineers were leaning towards hydrogen being the likely winner,not electric in cars.Doesnt matter really though as both need lots of electric.Big oil would much prefer hydrogen as well for obvious reasons,and its telling BP have just started to invest hard in Hydrogen in Holland.

BOSC are a superb company,where i worked they were pretty much the only things we bought in we didnt make ourselves (common rail systems) ,but the shares are probably too highly rated at the moment.

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Just now, DurhamBorn said:

I think hydrogen will play a big role,its the reason i bought SSE and DRAX.SSE will have bags of spare green energy (needed to produce the hydrogen) and DRAX can convert some of their plant to hydrogen production.Likely they will get bought out though at some point for that reason.

Where i worked the top engineers were leaning towards hydrogen being the likely winner,not electric in cars.Doesnt matter really though as both need lots of electric.Big oil would much prefer hydrogen as well for obvious reasons,and its telling BP have just started to invest hard in Hydrogen in Holland.

BOSC are a superb company,where i worked they were pretty much the only things we bought in we didnt make ourselves (common rail systems) ,but the shares are probably too highly rated at the moment.

I love this thread

Where else could I learn that hydrogen is where the money is focusing its attention? 

The information must be public domain somewhere, I guess.  But I already have one full-time (And more) job, and there's only so many hours in a day.

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5 minutes ago, Loki said:

I love this thread

Where else could I learn that hydrogen is where the money is focusing its attention? 

The information must be public domain somewhere, I guess.  But I already have one full-time (And more) job, and there's only so many hours in a day.

https://www.power-eng.com/2019/09/10/cummins-takes-majority-stake-in-fuel-cell-hydrogen-tech-firm/#gref

https://www.greentechmedia.com/articles/read/oil-giant-bp-joins-nouryon-in-rotterdam-hydrogen-quest

;)

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sancho panza
9 hours ago, DurhamBorn said:

Im not buying the fund im buying a few of the companies in it like Mosaic Ltd and K+S .Iv just sold some SSAB steel,was going to hold them a bit longer but took a quick 22% profit and im buying more potash today.Iv got a couple of ladders left below on the sector,but decided to use some quick profits elsewhere to increase slightly the allocation.Iv also started a small holding in OCI NV.They are a bit tricky as they gain when gas prices are low,but they are at a decent level on the cost curve,so should be able to inflate faster than gas prices once the cycle gets going.

 

Funny this potash chat should come up.We had some historic potash sakwatchan from a few years back.Added first tranche SOIL components in August.Discussion made me check the charts because of late all Ive done is study gold/oil stocks.

Interesting to note,Mosiac,K+S,Yara at 15 year lows.........wow....

10 hours ago, Barnsey said:

All you keep hearing about is our productivity crisis at full employment, so i'm in complete agreement, business will be very quick to introduce tech next cycle, and the government are going to have to work incredibly hard to retrain those made unemployed during the bust with a reduced number of alternative occupations, alongside further erosion of workers rights I fear, going to be a heck of a balancing act.

The Fed has some downward room on rates, so once those poor GDP numbers come through next month, I think we'll see rate cuts, and then this repo QE become full on QE which won't end for the foreseeable. I think extensive QE rather than a dive into negative rates seems to be the narrative ahead.

As for future proofing the home etc, we've been up in the Midlands for a month now, and have moved from a poorly sealed and very damp 1960's flat to a 5 year old one (still renting for now), and the difference in energy efficiency is mind blowing. Only really had the heating on to dry clothes in the time we've been here despite freezing temps overnight sometimes. It's pretty obvious these aren't as solid as they used to be, i'm definitely hearing everything the neighbours are up to all around us, but the appeal of a detached freehold newish build which has already had most snagging seen to (yet retains some structural warranty) has suddenly become more appealing than previously anticipated, especially with future energy costs in mind. Although I do find the issue of the roads not being council around here pretty dodgy, and the potential costs that might have to be shared by owners for repairs etc, another form of leasehold.

 great to see you back psoting.Hope the move went well.

 decl.I'm overly postioned for a weak dollar phase but I see it like you.They're going to print.

 ref the hosue,it's incredible isn't it how warm the modern ones are.Our hosue has a privte lane falling apart.I'd never buy a house wiht a shared lane as when it goes wrong,it can cost big time.

9 hours ago, leonardratso said:

Also a lof of overpriced food producers the directors have been selling out of

8 hours ago, Tdog said:

Just bought my kid £500s worth for her Junior ISA. Got £1500 in cash in there to spend want £500 Mosaic also but have to wait on this form to get processed.

Anything to get her off my payroll aged 18!

Which others on the SOIL holdings are worth a look at .. the largest holding seems to be low

image.png.ab07287de81cd80c1e4cdece03e88170.png

https://www.google.com/search?q=QUIMICA+Y-SP+ADR&oq=QUIMICA+Y-SP+ADR&aqs=chrome..69i57&sourceid=chrome&ie=UTF-8

Coma scale scores on which I based our purchase from the SOIL ETF.dyor natch Tdog

Nutrien 18

yara 17

SQM 18

IPL 19

ICL 17

K+S 17

Just checked the charts and some of these are jsut downright neglected.

2 hours ago, MrXxxx said:

Anyone have experience of a HSBC Invest Direct share trading account?...I don't plan on a lot of trading (more buy and hold), so a HL account with low trading fees is not necessary, and the yearly cost of the HSBC account is only £42, plus £10.50 per trade.

I use them for soem ISA's.Mainly to spread institutional risk.Very reasonable and service good.

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7 hours ago, sancho panza said:

use them for soem ISA's.Mainly to spread institutional risk.Very reasonable and service good

SP, exactly what I will be doing...whats the range of stocks like, the software, and do you have to open a standard dealing account before you can transfer an isa in?

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10 hours ago, Bobthebuilder said:

You could do cheaper with a simple monthly stock builder account, no yearly fees and £2 a monthly trade. Many here dont like these accounts but could work for some.

 

Thans BtB, so how does this differ (apart from lower costs obviously), and why is it unpopular?...also, are you talking about a specific HSBC product or are there other/better providers?

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sancho panza
2 minutes ago, MrXxxx said:

SP, exactly what I will be doing...whats the range of stocks like, the software, and do you have to open a standard dealing account before you can transfer an isa in?

You have to set up an investing account, then an ISA.You then need to set up the mobile banking app which I had to get Mrs P to set up as she's a bit younger and more tech savvy.It's not really user friendly for older people in my opinion.My Mum who's 73 would be utterly lost.

Once on the software/functionality isn't asa good as Intereactive/Saxobank/HL but it does what it says on the tin.

You can only buy US/UK stocks.

Once on there,you're in the company of some of the world's biggest govt cronies/Colombian businesses I suspect.

7 hours ago, Loki said:

Just out of interest do you have any shares/plans to buy shares in Cummins?

Looks cheap:ph34r:

image.png.263f7e434d0f5440ab52ce19154282da.png

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sancho panza

Spamming Wolf.Follows on from a great debate on here 200 pages back re the dollar hegemony and how it would last one more cycle

With a hattip to @Errol I suspect one day we'll see gold in these charts.........

https://wolfstreet.com/2020/01/02/us-dollar-as-global-reserve-currency-chinese-renminbi/

The US economy and financial system – including being able to maintain and fund the gargantuan trade deficits and fiscal deficits – has become reliant on the dollar being the dominant global reserve currency. And the IMF just released its next installment on how this status has been changing.

Total foreign exchange reserves in all currencies combined declined 0.6% in the third quarter from the second quarter to $11.66 trillion, according to the IMF’s quarterly COFER data. US-dollar-denominated exchange reserves – such as Treasury securities, US corporate bonds, etc. held by foreign central banks – ticked down 0.4% to $6.51 trillion. But holdings denominated in other currencies fell faster, and the share of dollar-denominated reserves edged up to 61.8% of total exchange reserves. The dollar’s status has declined from a share of 66% in 2014 to a share of 61.8% in Q3 2019:

Global-Reserve-Currencies-USD-share-2014

This data does not include the Fed’s holdings of dollar-denominated assets, such as its pile of Treasuries or MBS, though it includes the Fed’s holdings of assets denominated in foreign currencies ($20.6 billion) — minuscule compared to its $4.16 trillion in total assets, and minuscule compared to China’s stash of foreign exchange reserves of $3.1 trillion. The data also does not include the assets other central banks hold in their domestic currency.

The US dollar’s share of total global reserve currencies declines when central banks other than the Fed proportionately reduce their dollar-denominated assets and add assets denominated in other foreign currencies.

Over the long term, the recent moves in the dollar’s share are relatively small. There have been huge moves from 1977 through 1991, when the dollar’s share plunged from 85% to 46%, and then huge moves as the share rose again to 70% by 2000:

Global-Reserve-Currencies-USD-share-annu

Euro fails to reach “parity” with the dollar.

The creation of the euro came with a lot of hopeful rhetoric that it would reach parity with the US dollar in every way, including as global trade currency, global financing currency, and global reserve currency. The euro has been replacing in phases the national currencies of EU member states, starting with five currencies, including the Deutsche mark, a major reserve currency at the time, but far below the dollar. During the initial phase of the conversion of European currencies to the euro, the euro’s share of global reserve currencies rose and the dollar’s share fell from 71.5% in 2001 to 66.5% in 2002.

Now, the Eurozone, with its 19 member states, would be the largest economy in the world if it were counted as a country. And it was assumed by euro boosters that given the size of the Eurozone, its currency would reach parity with the dollar and end the dollar hegemony. These hopes were trashed by the sovereign debt crisis in the Eurozone, and the euro’s share has since been hovering in the range of 19% to 21%. In the third quarter, the euro’s share of global foreign exchange reserves ticked down to 20.1%.

Where is the Chinese renminbi?

In October 2016, the IMF included the Chinese renminbi in the currency basket of the Special Drawing Rights (SDR), and the renminbi became officially a global reserve currency. But since then, progress of the currency has been exceedingly slow, and there are no signs the RMB would dethrone the US dollar anytime soon. But it has surpassed the Swiss franc, the Australian dollar, and the Canadian dollar, as its share in the third quarter grew to 2.0% (short red line near the very bottom):

Global-Reserve-Currencies-share-all_2014

To see what is going on beneath the dollar-euro battle, it’s useful to look at the currencies without the dollar and the euro. The chart below shows that the yen’s share, having surged to 5.6%, has pulled away from the other currencies, including the RMB; and that the pound sterling’s share, despite the Brexit turmoil, has held roughly steady. The share of “other currencies” plunged when the RMB was pulled out of that category in 2016. Since that time, the RMB has increased its share from 1% to 2%, surpassing the Australian dollar in 2018 and the Canadian dollar in 2019:

Global-Reserve-Currencies-share-time-ex-

“Allocated” foreign exchange reserves.

This data is based on data that central banks submit to the IMF. The IMF does not disclose the detailed holdings by individual central banks. It only discloses it in aggregate, as you see here. But not all central banks participate in disclosing to the IMF how their foreign exchange reserves are “allocated” by currency. But participation has been rising. In 2014, 59% of the foreign exchange reserves were “allocated” to specific currencies. By Q3 2019, allocated reserves reached nearly 94% of total reserves.

The relationship between trade deficits and reserve currency status.

The US dollar is the dominant reserve currency, and the US has the largest trade deficit in the world. This gave rise to the theory that the US, in order to maintain the dollar as dominant global reserve currency, “must have” a large trade deficit. But this “must have” relationship is disproven by the euro and the yen, the second and third-largest reserve currencies: their economies have substantial trade surpluses with the rest of the world.

But there is a relationship: The US dollar’s status as the largest reserve currency and the largest international funding currency permits the US to easily fund its trade and fiscal deficits. This enabled policies by the US government, by governments of other countries, and actions by Corporate America that have led to the gargantuan dual deficits.

 

 

 

 

 

https://wolfstreet.com/2020/01/03/manufacturing-employment-new-orders-production-fall-fastest-since-apr-aug-2009/

US manufacturing took a turn from lousy to worse in December, according to the Manufacturing ISM Report On Business, released today, with employment, new orders and new export orders, production, backlog of orders, and inventories all contracting.

The overall Purchasing Managers Index (PMI) dropped 0.9 percentage points from November to 47.2% in December 2019, the fifth month in a row of contraction, and the fastest contraction since June 2009. Values below the 50% mark signify contraction, values above it signify growth (data via YCharts):

US-PMI-ISM-manufacturing-2019-12.png

 

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8 hours ago, DurhamBorn said:

I sometimes feel that some of you on this site are my own PAs, finding essential reading/articles on a whole variety of subjects from trends in future energy, the finer points of the oil industry, and the `science` of finance...I just wish there wasn't so much to learn, and this just to maintain the level of a financial novice!...thanks all for your contributions in 2019.

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11 hours ago, Sideysid said:

P.S (for DB and YRS) I made a killing in Coop tonight. Massive beef topside joint (with an already £4 per kg discount from xmas) £12 down to £4, making a pot roast with that. Lamb cops £1.30, 6 chicken breasts £2, steak £1.70, kievs £1 and an xmas ramekin pate with pot for 70p ( I'll re-use that for my own pate - after a superb home made effort with turkey liver at xmas). I did have to walk about in the shop however for around 20 mins with my basket in order to beat the other Coop stalkers for the bargains.

Hopefully you used your NUS card and got a further 10% off?

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30 minutes ago, Castlevania said:

Hopefully you used your NUS card and got a further 10% off?

My understanding was that the discount doesn’t work on reduced items (same as the Coop membership card points), but if it does I shall be re-applying (seen the posts on hotukdeals).

There’s some big gammons (not the ones on this forum 😉) still in the fridges from xmas I’ve got my eye on, so an extra discount will always help.

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On 01/01/2020 at 21:27, MrXxxx said:

This would be a perfect time (if you or another didn't mind) to use this figure to explain a few basics of charting, nothing in depth, perhaps just what each of the three below are and what they can tell us :-)

OK, a little less mental for now so a quick extensions to my interim post but just for discussion purposes.

Loads of technical indicators out there.  Loads.  I mainly use the Stochastic and MACD and a bit of chart patterning.  These two indicators are momentum indicators.  I added the RSI to make it look more impressive but it seems as bit lame to me (sorry RSI)!  Only one bit of information to take into account though (the others being fundamentals, etc).  I look for times where the Stochastic is low (20 to 25) and the MACD turns up (crosses) and avoid times where the Stochastic is above 80 and the MACD is turning down.  Plus some other important things to "ensure" any upward ticks in these less likely to be false breakouts.  Such turns can (but far from always) be the start of a price uptrend.  I also look for a divergence between the direction of the price trend and the direction of the trend of these indicators as this usually resolves in a noticeable push up or down.

PS:  That "big screen TV" was only 49 inches and £300.  A bit naughty but no, I have not gone to the other side!

 

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10 hours ago, Loki said:

Just out of interest do you have any shares/plans to buy shares in Cummins?

No,iv just left and the cycle is in a big downturn,i bought after 2008 at $25 though and sold at $96 a couple of years later.They are lead indicators on the cycle.If i bought again it would be in around 12 to 18 months probably assuming share price falls.Its not certain they will be winners from the move away from diesel,but they are investing in the right areas.Next cycle should favour them in a big way though.

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26 minutes ago, Sideysid said:

My understanding was that the discount doesn’t work on reduced items (same as the Coop membership card points), but if it does I shall be re-applying (seen the posts on hotukdeals).

There’s some big gammons (not the ones on this forum 😉) still in the fridges from xmas I’ve got my eye on, so an extra discount will always help.

Unless it’s changed in the past year you get the discount on reduced items (it’s 10% of the reduced price not the original price if that makes sense).

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10 Best Silver Mining Stocks For 2020

Summary: My favourite risk/reward silver mining stocks for 2020;  Low valuations versus their upside potential;  Quality properties with long-life mines;  Exceptional leverage to higher silver prices.

https://seekingalpha.com/article/4315151-10-best-silver-mining-stocks-for-2020

A Seeking Alpha post that's worth the 5 min read IMO - DYOR

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Just having an idle browse on HL and happened to find that (GS) GOLDMAN SACHS INTERNATIONAL are involved with NOSTRUM OIL & GAS PLC

Quote

 

FORM 8.5 (EPT/RI)

PUBLIC DEALING DISCLOSURE BY AN EXEMPT PRINCIPAL TRADER WITH RECOGNISED INTERMEDIARY STATUS DEALING IN A CLIENT-SERVING CAPACITY

 

Year high: 140.60p

Market capitalisation: £30.01 million

Previous close: 16.48p

Trade low: 16.20p

Year low: 5.28p

P/E ratio: n/a

Volume: 125,133

Dividend yield: n/a

EMS: 15,000

 

Just wondered if this would interest anyone else as I know a few of you know how to 'run the numbers'. I don't, I was just intrigued by the vampire squid being involved.  Apologies if it's a big nothing.

Capture.PNG

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Bobthebuilder
9 hours ago, MrXxxx said:

Thans BtB, so how does this differ (apart from lower costs obviously), and why is it unpopular?...also, are you talking about a specific HSBC product or are there other/better providers?

They are stock building accounts outside of a SIPP or ISA, they buy monthly on a set date (by them) £2 per trade. It means you cant choose the investment date and are liable to any taxes owed but a cheap way to build from starting out, no yearly fees just the £2.

Many companies do them, i like the Halifax one, i was transfered to that from another provider a while back. I will just add after reading this thread for a while the ladder system is much better if you know what your doing, but i cant pretend i do.

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35 minutes ago, Tdog said:

How do you get a NUS card? If not a spotty arsed student?

Ahem....they are called spotty arse customers these days, and you will probably find it a little bit harder to get a NUS card than an Undergraduate degree! :-)

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