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


spunko

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On 10/01/2020 at 21:57, Democorruptcy said:

Are improvements in technology important? Thinking about Card Factory, Royal Mail, Telcos etc. Why buy a card and pay exorbitant postage charges to send it, when you can do a videocall over WhatsApp for free using what might be free wifi? 

On the same technology theme.... Argos have had a few mentions recently.... if it's so good why did Home Retail Group sell it? Could it be because going collecting things seems old hat when online are now doing next if not same day delivery? Time, parking charges, etc etc. 

On a side note... the last time I ordered from Argos I did the pick up from Sainsburys, I never got billed!

I think with a few old shcool retailers there'll be enough custom to keep them ticking over.For a lot of old ladies like my mum,Card Factory is a destiantion shop,I jest not,while there she'll pop into M&S and buy a coup;e of their ready meals.Tells me a lot about M&S's future.

Quite when the card market finally bites the bullet I'm not sure.

 

On 11/01/2020 at 17:54, JMD said:

SP, the above post reminded me... did you post your Utility Company Sancho-coma-scores? Excuse me for asking - because I believe i'm going back several months to when we initially discussed them - but If you have them to hand i'd be very grateful to see them.     

ps, sorry for being a real pest, but did you get round to transcribing your gold/silver scs into 'digital form'? I recall you saying at the time they were in the original notebooks still, and the paper was in danger of being recycled by your children! 

From which pool of shares are we talking.I've havent really run a full set of SCS scores on utilities yet as I'm not buying any more for a couple of years.

Problem you have is the debt levels in that sector is much higher than msot,hence you need to run a full comparison across a raft of them to get an idea of where the averages lie.

Ref the GDX stuff,I'll run a new full set after the full year data comes out for those ocmpanies that run Jan to Dec.The scores I have are from May or so and a lot of those hcarts haev seen some real change.

I'll put the next set on computer.

Also worth noting that I've learned a lot since first running them.But they've done a decent job thsu far.

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PatronizingGit

Irony is card shops is another thing I could see coming back at an 'independent' 'bespoke' level for wealthy hipster types....in a few areas, at least...handmade cards etc, costing 7 or 8 quid a go. 

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On 09/01/2020 at 11:10, Harley said:

They say snipers make good traders.  I remember my basic training and getting really beasted for wiping sweat off my face during PT.  Thought it a bit daft at the time.  Later on I was being trained in some camo stuff and doing that then would have been fatal.

what were you in?

On 09/01/2020 at 17:18, Harley said:

What watch grow?  Your money?  Or re-invest (i.e. are you expecting a run up and then fall and then another run up)?

Phase 1

a la millneium.I foresee a drop in the headline S&P as techies pull back but major internal disurption covered by rise in oils/commodities.Fed weakening dollar via QE/other monetary policies.

Pahse 2

Peaks in commodities=>move to cash.

Phase 3

Dollar strenthgens,=>commodities drop.

Pahse 4

big kahuna arrrives=>Gold runs, dollar firm for a while.

Phase 5

Gold positons start to run,other commodities follow off the bottom.

 

I'm seeking the big 360 degree trade-Freeport McMoran nice example.10-60-10-60.You've got to dream....

image.png.d7dab519c5b365504a508d6ec1c65863.png

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3 hours ago, Cattle Prod said:

Marcellus and the natural gas bear market, excellent blog post here: 

http://blog.gorozen.com/blog/modeling-the-haynesville-and-marcellus-recoverable-natural-gas-reserves

His models look ok, I don't think he's allowing for rig number declines, but they predicted the older plays pretty well. If the Marcellus tops out in a year or so time, that will certainly mark the end of the US bear market in gas.

Disc: I have a small position now. I'll be watching this closely and will steadily buy f it looks to be playing out. This whole sector is "rubber band" - the commodity itself has spiked 7x from here in recent years. Dyodd - this is the widowmaker trade

Screenshot_20200112-104920_Chrome.jpg

Very interesting.Might be owrth a nudge on the options possibly.High risk spec play?I'd go long ods for that,deep out of the moeny

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11 hours ago, Ash4781b said:

Total thread derail but does anyone follow  retail ‘fads’?  The milkshake ‘shop’ in my town has closed and is now a vape shop (they much to my surprise they are everywhere - might be big margins , easy market entry I’ve not really looked?). Next inflection I’d go for is vegan eateries (like the Mexican, burger, desert restaurant fads).

Anyway when is the point to ride the fad and get out? That sounds awful kind of Ratner like. Oh slightly on topic - SuperDry, Ted Baker they look like a fads - expansion and the brand value turns out not to exist? (To generate super profits)

Was in Alid today and for the first time,there were virtually no parking spaces(it's a big Aldi car park by their standards.Must be killing Tesco locally.

On these fads,it always amazes me how many of these shops sustain for a year or more when the cashflows must be dire.

 

Can totally see vegan eateries coming but even in the rich/lefty areas of Leicester I can't see them taking enough to last a year.

Was in the city taking Junior Panza for his commodities lesson to the market saturday,the amount of boarded up shops is growing.Big second hand phone shop gone, nearby big Weterhspoons has shut.Seriously,even the spoons are closing.

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10 hours ago, sancho panza said:

Was in Alid today and for the first time,there were virtually no parking spaces

If I don't go first thing Sunday morning, good luck getting a space unless it's within an hour of closing. There's two Lidls and Two Aldis in my town of 250k.

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Democorruptcy
9 hours ago, Harley said:

Joking aside, that's a shock.  Think I need to stop posting shite and get some focus going!

I think it was 2015 that was the first year that Wetherspoons closed more pubs than they opened. They blame higher staffing costs on reducing margins too much in some of their less profitable pubs.

https://www.thisismoney.co.uk/money/markets/article-3312223/Is-Wetherspoons-near-sale-reveal-34-pubs-market.html

This next link carries a warning ***** don't waste too much time on it that could be better used studying shares etc. ******

https://wetherspoonappreciationsociety.wordpress.com/permanently-closed-pubs/

 

By the way I know it's probably not PC to say this but in my experience of one town where I used to live,  pubs, betting shops and even M&S closed, I thought due to the Asian population growing. The traditional boozing, betting and M&S clothes wearers were being replaced. It's all about enough sales to generate the margins? Fabric shops for make your own clothes were doing well.

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Was driving to a customer this morning and was shocked to hear "Redundancy Help Scotland" ad on a local radio (Forth 1, for those who live in the area)... haven't heard that ad since the GFC! Is something bad going on I'm not aware of..? 

 

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25 minutes ago, BearyBear said:

Was driving to a customer this morning and was shocked to hear "Redundancy Help Scotland" ad on a local radio (Forth 1, for those who live in the area)... haven't heard that ad since the GFC! Is something bad going on I'm not aware of..? 

 

https://www.independent.co.uk/travel/news-and-advice/flybe-collapse-trouble-administration-flight-bankrupt-update-today-a9280916.html

Just the crash that occurs at the end of every credit fuelled boom, nothing new or exciting....

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It’s happening folks, it’s arrived...

FC8A943A-9A39-4DE1-855A-606B075C2071.png.f2b013c3e20d00ab3d464ffeb64abac9.png

If they cut on the 30th it’s an admission we’re entering a downturn, not sure how they spin this with CEO sentiment bouncing to an 11 year high post election (bo*****s IMO)

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6 minutes ago, Tdog said:

2016 cut?

Its an admission the south of England housing bubble needs more air pumped into it.

2016 was a mid cycle overreaction, we’re now as late cycle as it gets. If a genuine Boris bounce emerges it’s going to suck a lot of gullible folks in at the last minute, our own mini melt up.

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PatronizingGit
55 minutes ago, Barnsey said:

It’s happening folks, it’s arrived...

FC8A943A-9A39-4DE1-855A-606B075C2071.png.f2b013c3e20d00ab3d464ffeb64abac9.png

If they cut on the 30th it’s an admission we’re entering a downturn, not sure how they spin this with CEO sentiment bouncing to an 11 year high post election (bo*****s IMO)

BoE asset holdings seem to be on a downward drift last few months...contrary to recent US purchases...attempting different tacks?

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14 hours ago, sancho panza said:

From which pool of shares are we talking. I havent really run a full set of SCS scores on utilities yet as I'm not buying any more for a couple of years.

Problem you have is the debt levels in that sector is much higher than msot,hence you need to run a full comparison across a raft of them to get an idea of where the averages lie.

Ref the GDX stuff,I'll run a new full set after the full year data comes out for those ocmpanies that run Jan to Dec.The scores I have are from May or so and a lot of those hcarts haev seen some real change.

I'll put the next set on computer.

Also worth noting that I've learned a lot since first running them.But they've done a decent job thsu far.

I was thinking the energy generators/distributers and renewables, e.g. drax or engie or sun power, in Europe and US. And perhaps the chemical industry (you have done your steel scores previously), e.g. basf or solvay.

I'm convinced (like all dosboders) that commodities will do well, and the bonus with them is that they are mostly already cheap. But I also think companies that use the commodities as their raw material - above sector types - will be highly sought, particularly when factoring in paying decent dividends (attractive alternative to the bond market). The key I guess is identifying the 'healthy' co's and then wait to get cheap, after market correction/recession.

This 'theme' is really just an attempt at a deployment of the idea introduced by Harley and DB last year of investing 'close to the sources'.   

 

Thank you SP - I'll definitely eagerly await your gdx scores. 

 

 

        

 

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20 hours ago, Cattle Prod said:

Marcellus and the natural gas bear market, excellent blog post here: 

http://blog.gorozen.com/blog/modeling-the-haynesville-and-marcellus-recoverable-natural-gas-reserves

His models look ok, I don't think he's allowing for rig number declines, but they predicted the older plays pretty well. If the Marcellus tops out in a year or so time, that will certainly mark the end of the US bear market in gas.

Disc: I have a small position now. I'll be watching this closely and will steadily buy f it looks to be playing out. This whole sector is "rubber band" - the commodity itself has spiked 7x from here in recent years. Dyodd - this is the widowmaker trade

Screenshot_20200112-104920_Chrome.jpg

They are interesting commodity guys, and mostly seem in agreement with this thread. However, they have an interesting take - perhaps just to differentiate themselves(what me cynical?) - on global warming. They think past warming has been driven mostly by sun spot activity (similar to Piers Corbyn, Jeremys brother) and as this solar cycle is now coming to an end, world temperatures will begin to fall... This means load up on fertilisers, potash, etc, as agri. yields will now decline. I know buying such commodities is already a theme of this blog, but thought it interesting because this potentially gives us another reason to buy/hedge.  

 

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3 minutes ago, JMD said:

They are interesting commodity guys, and mostly seem in agreement with this thread. However, they have an interesting take - perhaps just to differentiate themselves(what me cynical?) - on global warming. They think past warming has been driven mostly by sun spot activity and as this solar cycle is now coming to an end, world temperatures will fall... So this means load up on fertilisers, potash, etc, as agri. yields will decline. I know buying those commodities is already a theme of this blog but thought it interesting because it gives us another reason to buy/hedge.  

 

Clearly fake science to think that the activity of the colossal star we orbit could have anything to do with Earth's temperature. ;)  It's just a big light bulb in the sky.

I completely agree with what they say based on what you posted - USA lost a huge amount of crops last year - either due to damage to planted crops, #noplant19, or unable to dry grains because of unavailable propane.

1578857835978.png

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21 hours ago, Cattle Prod said:

Marcellus and the natural gas bear market, excellent blog post here: 

http://blog.gorozen.com/blog/modeling-the-haynesville-and-marcellus-recoverable-natural-gas-reserves

His models look ok, I don't think he's allowing for rig number declines, but they predicted the older plays pretty well. If the Marcellus tops out in a year or so time, that will certainly mark the end of the US bear market in gas.

Disc: I have a small position now. I'll be watching this closely and will steadily buy f it looks to be playing out. This whole sector is "rubber band" - the commodity itself has spiked 7x from here in recent years. Dyodd - this is the widowmaker trade

Screenshot_20200112-104920_Chrome.jpg

 

I have a keen interest in the oil and gas markets as I believe energy is so fundamental to everything else, although I don't understand it very well so read your posts with great interest. Thank you for taking the time to share your knowledge.

I noticed the other day that UK gas futures are at another 2 year low, less than half what they were in Oct 2018. What is driving the low prices, is it simply over supply? And is that over supply real, or just preception of it? I read so much about US gas being on the edge of going into decline, yet everyone else seems to think its going to carry on, do they know something we don't?

Surely the further they fall, the more that rubber band gets stretched? 12 months of low energy prices feeding into inflation figures, all good until prices shoot up like that rubber band being released. Could make for some interesting times.

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21 hours ago, Harley said:

Joking aside, that's a shock.  Think I need to stop posting shite and get some focus going!

https://www.leicestermercury.co.uk/news/leicester-news/new-owners-take-licence-operate-3500320

The High St in Leicester is ahead of many places in the region except maybe some former mining towns like Nuneaton,where you count the pubs and shops that aren't boarded up.

Says a lot when the Spoons pull out.They still have a couple of places in the city,but this had been there the longest.,

Walking in from that pub into the centre,it's beathtaking the changes since I was a kid.That street used to be one of the most desirable in Leicester.Lots of shops been empty for a few years.

When the estate agents start going bust,it'll be brutal.

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5 hours ago, null; said:

 

I have a keen interest in the oil and gas markets as I believe energy is so fundamental to everything else, although I don't understand it very well so read your posts with great interest. Thank you for taking the time to share your knowledge.

I noticed the other day that UK gas futures are at another 2 year low, less than half what they were in Oct 2018. What is driving the low prices, is it simply over supply? And is that over supply real, or just preception of it? I read so much about US gas being on the edge of going into decline, yet everyone else seems to think its going to carry on, do they know something we don't?

Surely the further they fall, the more that rubber band gets stretched? 12 months of low energy prices feeding into inflation figures, all good until prices shoot up like that rubber band being released. Could make for some interesting times.

This Winter has been wet and mild. I’ve had the heating on for all of one evening.

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9 hours ago, Barnsey said:

It’s happening folks, it’s arrived...

FC8A943A-9A39-4DE1-855A-606B075C2071.png.f2b013c3e20d00ab3d464ffeb64abac9.png

If they cut on the 30th it’s an admission we’re entering a downturn, not sure how they spin this with CEO sentiment bouncing to an 11 year high post election (bo*****s IMO)

They are following the Fed,or will be soon.They want to try to keep sterling down,they are trying to move the economy to more production over consumption.The government is getting ready to go into the bond markets for £100 billion to "invest".There is still a very real chance we see outright price deflation for a short period.That £100 billion will be followed by £500 billion more i expect along with the trillions from the Fed.

Im really hoping my oil road map at $43 is right as id really expand my holdings at that level.I still think sterling has $1.38 in site even if they cut.

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12 hours ago, Noallegiance said:

If I don't go first thing Sunday morning, good luck getting a space unless it's within an hour of closing. There's two Lidls and Two Aldis in my town of 250k.

We have Aldi,Lidl,Iceland,Morrisons,Tesco extra,Sainsbury,Asda,Herons Foods and Home Bargains in a town of 20k .We must have more food shopping space per capita than anywhere in the UK.Suits me though for the bargains.I go to Aldi at 8am,lots of 50% off first thing,but you have to be in as it opens.

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1 hour ago, sancho panza said:

https://www.leicestermercury.co.uk/news/leicester-news/new-owners-take-licence-operate-3500320

The High St in Leicester is ahead of many places in the region except maybe some former mining towns like Nuneaton,where you count the pubs and shops that aren't boarded up.

Says a lot when the Spoons pull out.They still have a couple of places in the city,but this had been there the longest.,

Walking in from that pub into the centre,it's beathtaking the changes since I was a kid.That street used to be one of the most desirable in Leicester.Lots of shops been empty for a few years.

When the estate agents start going bust,it'll be brutal.

Here in London the estate agents have been retrenching from the high street for the last 2 years to a single shop front unit or to a central hub.

A number of high street Arab supermarkets I know in west London are considering throwing the towel in as the cost of rent, rates staff and general overheads make it no longer worth their while. 

Whilst it is only January and general gloom is about this time of year, there is a certain uncertainty about the place

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Im really hoping my oil road map at $43 is right as id really expand my holdings at that level.I still think sterling has $1.38 in site even if they cut.

I really hope so as whilst I have been adding on a monthly basis into the oil and gas sector I am still very lightly invested. I would like to have my SIPP and ISA have the largest percentage of capital in this area. So far I only have about 10% that I would at least like to double.
 
Lets hope the Gods will be kind to us
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Sorry to keep banging on about housing, but do you think I’d be mad for offering 2010 price (when current owners bought in the dip) + RPI on a house I’ve seen which has probably had an extra £20k at least spent on it? Thankfully there’s tons of new builds around at a similar price to what their asking, which I hope I can use as a bargaining chip, even though in reality they’re pretty crap, but are the mid 90s built homes much better?

Everyone has an idea of what they’re willing to pay for a house, and I still feel like a bit of a numpty for already looking before recession, but if I can get 10-15% off a house in an area that’s “only” risen just above RPI in the past decade (which seems to be the standard measure of HPI) then maybe not a disaster providing I get a long mortgage fix below 3%. VERY conflicted right now but my patience is wearing incredibly thin. On the other hand could I live with myself if I committed now and then house prices even in a non bubbly area like this dropped 25%+

Current thought process:

Really do need to be getting on with buying a house after having waited for about 3 years now, mortgage and housing market choice might seriously dwindle in recession, and by the time things stabilise and more of both come onto the market again we might already see inflation and rates ticking up? Last time around the market was flat on its arse for about 3 years with very little coming into the market? Although I don’t doubt they’ll be a little more proactive this time with all the Ponzi schemes.

Keep staring at this and thinking things aren’t as bad as before -

3E4B5B95-E199-406E-A4FD-B00D5402015F.png.62c13c6ad0c21feb49edd696814e8897.png

Lending criteria tightens considerably in a recession and we’re probably at 80% LTV right now, not the 75% and below they lend to in such times of crisis. Other half is Finnish but with settled status, could there be complications at end of transition period if we waited until next year? Also high risk of her losing her job and struggling to find alternative employment in recession (sales job), not that I’m stupid enough to overborrow of course on my single income, definitely playing it safe.

All thoughts and perspectives greatly appreciated as always!

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