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

[sancho panza]

14 hours ago, Majorpain said:

IMO the crash needed three things to work for Powell/Trump, it needs to be a controlled burn (not an explosion), they needed someone else to blame and the UK needed to be severed from the EU.  The Coronavirus out of China is the first time that all those criteria are going to be met IMO.

I levered my exposure to silver with some of the little names from profits, its going to still sting if we are wrong but profits are less of an issue than capital!  Copper should be heading for a downturn, since the majority of silver comes from byproducts this is potentially very positive for it, im a big believer that silver has been malleted over the years due to copper being too valuable due to Chinese malinvestment demand.  

That's what weve done but recently I've been doing  a decent bit of work on using the gold/silver ratio for timing(weeklies/monthlies minimum) and there looks to be some interesting potnetial there.SIlver generally runs hard n late.I need to some more research but I;ll post it up.

Your point re copper could be bang on.I still think we'll have a rising copper price over next year as Chinese govt fights deflation then it'll drop as nature takes its course.

 

FWIW gold silver ratio says PM's have a long way to go North.

 

6 hours ago, DurhamBorn said:

Just place ladders as if oil hits $43 on the majors and sit back.It will be $80 within a year i think once the market sniffs shale has topped out.

That's the thing,it only takes a smallish drop in productionand prices move up.Shale is struggling.

6 hours ago, DoINeedOne said:

I plan on starting to buy oil stocks next week going spend the weekend reading etc... something i read the other day got me thinking about @DurhamBorn thoughts on oil

 

 

 

It's a sign.I;ve seen ahted sectors.We missed tobacco back then.What a return and great currency hedge.

I remember the late 90's when commodity stocks like Broken Hill Prop ,Billiton,Anglo Am, Gencor etc were on the floor.Look what happend next

I think to survive this downturn and crash you have to avoid broad market investment strategies.I'll declare my interests oil,gold/silver,utlities,potash,uranium in that order.

I think if you walk into this and you're exposed to Fang stocks,you'll be fubar.

2 hours ago, Loki said:

 What a difference perspective makes!

I don't think I've ever seen you make such a specific prediction! My BP is currently down, I bought a small amount recently - the great thing about what I've learned here is that rather than a momentary instinctive twinge, rather than panic I see a buying opportunity 

I had this discussionw ith my Mum during an epic 3 hour phone chat yesterday.We're buying throuhgn what we hope is the bottom over the next 6 months.

[sancho panza]

3 hours ago, DurhamBorn said:

Fantastic seeing that.His record is terrible.The lack of understanding about cycles is incredible.

The rid count is falling like a brick in US shale and production will fall soon.Schlumberger have closed half their rigs etc and are instead looking to deep water basins elsewhere.I think a year out crude should be around $80,$130 within a few years,$200 by 2025 and maybe $300 by 2027.

I still see $43 on the downside as max target but we might not hit because sentiment is so bad now its gone past the macro situation.

Iv ladders set and im happy to be buying the falls.Road map is pretty clear.

I very much doubt electric is the the future of cars,hydrogen is just as likely,and big oil will control that.Its great that CNBC are selling the narrative oil is finished.The public selling,insitutions selling.

 

 

Watching that videa hattip   @Bricks & Mortar jsut confirms I'm in the right place.Some of these oilies are being sold ahead of the underlying.

I remember his epic call on Bear Sterns.....I imagine some of the younger posters will be asking who the fuck Bear Sterns were????....quite

I'm not a fan of Jon Stewart but he sums up Cramer well

Decl.we've been buying XOM/BP/RDSB/REP/TOT today.ANd are long a host of others.

[DurhamBorn]

This is when i was buying BAT and Imperial

https://www.nytimes.com/1996/08/24/us/clinton-approves-a-series-of-curbs-on-cigarette-ads.html

This is when im buying oil stocks 

https://www.weforum.org/agenda/2019/02/climate-change-seen-as-top-threat-in-global-survey

Notice something in the above.

In 1996 according to the governments and MSM smoking was the biggest threat to people.Nobody wanted tobacco,nobody wanted to invest.BAT and Imperial went on and consolidated the industry,it was easy,as nobody wanted to fund new tobacco investment.It meant that while smoking was falling 3% a year the companies could up prices 6% a year and also cut costs.No need to invest much capital.I made massive profits on those stocks.In simple figures i made 12 years net wages with a rough £9k investment.I invested 6 months labour and got 12 years back.

Now climate change is killing us all.Until it isnt.What will happen now is nobody will fund E+P or smaller companies in the sector.Capital will leave,everyone will say its finished.The big boys will then have less comp,they will see much higher prices and will consolidate and cut costs.Free cash will explode and shareholders who stick the course buying the knocked down assets will clean up.

 

 

 

[Democorruptcy]

9 hours ago, DurhamBorn said:

This is when i was buying BAT and Imperial

https://www.nytimes.com/1996/08/24/us/clinton-approves-a-series-of-curbs-on-cigarette-ads.html

This is when im buying oil stocks 

https://www.weforum.org/agenda/2019/02/climate-change-seen-as-top-threat-in-global-survey

Notice something in the above.

In 1996 according to the governments and MSM smoking was the biggest threat to people.Nobody wanted tobacco,nobody wanted to invest.BAT and Imperial went on and consolidated the industry,it was easy,as nobody wanted to fund new tobacco investment.It meant that while smoking was falling 3% a year the companies could up prices 6% a year and also cut costs.No need to invest much capital.I made massive profits on those stocks.In simple figures i made 12 years net wages with a rough £9k investment.I invested 6 months labour and got 12 years back.

Now climate change is killing us all.Until it isnt.What will happen now is nobody will fund E+P or smaller companies in the sector.Capital will leave,everyone will say its finished.The big boys will then have less comp,they will see much higher prices and will consolidate and cut costs.Free cash will explode and shareholders who stick the course buying the knocked down assets will clean up.

The Transition Pathway Initiative:
 

Quote

 

The Transition Pathway Initiative (TPI) is a global initiative led by asset owners and supported by investors globally. Aimed at the investment community open access, it assesses companies’ preparedness for  transition to a low-carbon economy.

To date*, over 50 investors globally are on-board as supporters, representing over $16 trillion combined assets under management and advice. A full list can be found here.

 

What they think and approve may not matter but there's an interesting tool here that can be filtered by sector and company to see how this lot rate them. Does a 'good' firm mean more money is invested into it compared to 'bad' firms, or does being 'good' mean they have to spend more money to implement change?

[nirvana]

there's a rumour going around that coronavirus is a 'manmade bioweapon' created by Dr Zhou in his Wuhan lab....some scientists have discovered 'HIV insertions'.....

So if you get it and survive your immune system will be fked and you'll need a load of 'HIV drugs'...

Judging by the way the DOW shat itself yesterday the markets are starting to get worried....

I'm selling everything on monday and investing in drug companies that do HIV stuff....ie https://medicalxpress.com/news/2020-01-hiv-resistance-key-drugs.html

Now I'm off to stock up on pasta and stuff lol

Have fun before we all die!  

[Democorruptcy]

8 minutes ago, confused said:

there's a rumour going around that coronavirus is a 'manmade bioweapon' created by Dr Zhou in his Wuhan lab....some scientists have discovered 'HIV insertions'.....

So if you get it and survive your immune system will be fked and you'll need a load of 'HIV drugs'...

Judging by the way the DOW shat itself yesterday the markets are starting to get worried....

I'm selling everything on monday and investing in drug companies that do HIV stuff....ie https://medicalxpress.com/news/2020-01-hiv-resistance-key-drugs.html

Now I'm off to stock up on pasta and stuff lol

Have fun before we all die!  

This is a bit about HIV insertions from a report on a not for profit research place. The comments below question the findings. DYOR etc.

Quote

 

We are currently witnessing a major epidemic caused by the 2019 novel coronavirus (2019- nCoV). The evolution of 2019-nCoV remains elusive. We found 4 insertions in the spike glycoprotein (S) which are unique to the 2019-nCoV and are not present in other coronaviruses. Importantly, amino acid residues in all the 4 inserts have identity or similarity to those in the HIV-1 gp120 or HIV-1 Gag. Interestingly, despite the inserts being discontinuous on the primary amino acid sequence, 3D-modelling of the 2019-nCoV suggests that they converge to constitute the receptor binding site. The finding of 4 unique inserts in the 2019-nCoV, all of which have identity /similarity to amino acid residues in key structural proteins of HIV-1 is unlikely to be fortuitous in nature. This work provides yet unknown insights on 2019-nCoV and sheds light on the evolution and pathogenicity of this virus with important implications for diagnosis of this virus

https://www.biorxiv.org/content/10.1101/2020.01.30.927871v1

 

 

[JMD]

17 hours ago, Democorruptcy said:

Latest Hussman downdate:

https://www.hussmanfunds.com/comment/mc200130/

 

thanks Democorruptcy, I will read this with great interest!

Infact, its great timing for me as, over recent months, I have begun thinking that 'going large' and buying into commodities (PM's, mining stocks, oil, soft commodities e.g potash) and defensives (utilities, tobacco/telecom/steel/chemical industries) - is the 'logical' thing to do.

I haven't read the full article yet but the quote below very much chimes with my current thinking. I think this means, for example, buying the type of stocks I list above(?) and then opportunistically selling as they rise and using profits to buy value stocks. 

“In our view it is also proper to consider as investment operations certain types of arbitrage and hedging commitments which involve the sale of one security against the purchase of another… This is an extension of the ordinary concept of investment, but one which appears to the writers to be entirely logical.”

Scanning through the article (could be wrong, will read properly later today), I don't think the article suggests any particular assets, methods, etc. Has anyone here formulated a strategy to do this? For example, SanchoPanza has described buying oil/then selling after gains, and using profits to buy-and-hold (market corrected) cheap stocks. And I posted recently that I intended buying silver to 'swop' for gold as gold/silver ration tightens.

For me - because i don't have trading skills - I want to plan for, then implement an investment strategy to take advantage of the next-cycle up-down moves (that most here see coming). If all assets/markets were to move in same direction together (unlikely), then that's fine as that is the risk am prepared to take, but I think this is where %allocations, etc, in order to mitigate those type of risks comes in.   

What are peoples thoughts? Surely some/all of a portfolio could be operated like this? Are there perhaps other sources where we can learn more about the 'arbitrage and hedging' investment concept introduced by Hussman above.   

[janch]

39 minutes ago, Democorruptcy said:

The finding of 4 unique inserts in the 2019-nCoV, all of which have identity /similarity to amino acid residues in key structural proteins of HIV-1 is unlikely to be fortuitous in nature.

https://www.zerohedge.com/geopolitical/coronavirus-contains-hiv-insertions-stoking-fears-over-artificially-created-bioweapon

.........a bit worrying if true but maybe not enough to make me sell everything as @confused is planning

[JMD]

17 hours ago, sancho panza said:

I steer clear of one company plays as I'm an awful stock picker.But neither particularly rings alarm bells based purely on th stats but I've only heard of the Siberian one before.You'd need someone with a keener eye on individual stocks within the broader market eg @Majorpain @kibuc @DurhamBorn to give a reasonable opinion.

Thanks SP, but for these miners - Australian silvie South32/gold jnr Trans Siberian Gold - yes, i did mean as part of a larger portfolio of PM mining stocks.

Are @Majorpain @kibuc @DurhamBorn able to add anything regarding the two miners?

 

Quote

Another $10 and Exxon is 50% off peak. We pciked up some more today. Along side some BP/RDSB/Total/Repsol. Reading the following article looks like a doomed trade for dip buyers according to the seeking alpha piece below.

https://seekingalpha.com/article/4320532-exxon-mobil-10-year-low-is-not-investment-signal

SP, I agree the SeekingAlpha piece is peculiarly negative. Presenting oil executives as dinosaurs is a particularly trite argument. For example - silly one perhaps - but they do seem fully signed up to the inclusivity agenda of mental illness. See this from the, unfortunately named (given the subject!), BP ceo Bernard Looney...   

 https://www.energyvoice.com/oilandgas/north-sea/206750/ending-the-stigma-over-issues-of-mental-health-close-to-heart-of-bp-chief/

[JMD]

17 hours ago, Noallegiance said:

I'm confused and warmed by the power of the universe to bring people like you into the lives of people like me.

It really is quite bizarre. But then, so is sitting on a rock speeding around a star at 76,000mph. So nothing should surprise me, really.

Absolutely, but don't forget the infinite universe, multiverses, quantum mechanics, and 'self creating' big bang theories!... Not to mention that we might only be a computer simulation!!!

[Castlevania]

13 hours ago, DurhamBorn said:

This is when i was buying BAT and Imperial

https://www.nytimes.com/1996/08/24/us/clinton-approves-a-series-of-curbs-on-cigarette-ads.html

This is when im buying oil stocks 

https://www.weforum.org/agenda/2019/02/climate-change-seen-as-top-threat-in-global-survey

Notice something in the above.

In 1996 according to the governments and MSM smoking was the biggest threat to people.Nobody wanted tobacco,nobody wanted to invest.BAT and Imperial went on and consolidated the industry,it was easy,as nobody wanted to fund new tobacco investment.It meant that while smoking was falling 3% a year the companies could up prices 6% a year and also cut costs.No need to invest much capital.I made massive profits on those stocks.In simple figures i made 12 years net wages with a rough £9k investment.I invested 6 months labour and got 12 years back.

Now climate change is killing us all.Until it isnt.What will happen now is nobody will fund E+P or smaller companies in the sector.Capital will leave,everyone will say its finished.The big boys will then have less comp,they will see much higher prices and will consolidate and cut costs.Free cash will explode and shareholders who stick the course buying the knocked down assets will clean up.

 

 

 

Yeah. I remember looking at the share prices in the newspaper during the late 90’s and specifically looking at the stocks with the lowest PEs and asking my Dad why he didn’t buy tobacco stocks. They seemed cheap to my untrained eye. His rationale was similar to the above. That tobacco was finished. He was wrong. On the flip side he bought heavily into Anglo American and what were then Billiton and Rio Tinto Zinc around that time.

[Majorpain]

17 minutes ago, JMD said:

Thanks SP, but for these miners - Australian silvie South32/gold jnr Trans Siberian Gold - yes, i did mean as part of a larger portfolio of PM mining stocks.

Are @Majorpain @kibuc @DurhamBorn able to add anything regarding the two miners?

Only thing i would say is they are both pretty hard to value.

South 32 because its massive and produces so many different things, so your not just getting silver but Coal/manganese/Alumina etc. as well.

TSG because its a small mine with only 0.6m AU oz of resources listed on the AIM market.

Neither are my cup of tea to be honest.

[JMD]

16 hours ago, sancho panza said:

That's what weve done but recently I've been doing  a decent bit of work on using the gold/silver ratio for timing(weeklies/monthlies minimum) and there looks to be some interesting potnetial there. SIlver generally runs hard n late.I need to some more research but I;ll post it up.

 

I think to survive this downturn and crash you have to avoid broad market investment strategies.I'll declare my interests oil,gold/silver,utlities,potash,uranium in that order.

SP, very interesting comments - especially the silver/gold ratio.

I would really like to take advantage (arbitrage?) the s/g ratio as it tightens, and so your further posts on this topic would be very welcome. I was initially only looking to do this maybe once and move say half my silver over to gold when it falls to say 1/40 ratio - but if I could gain more understanding about this ratio, I would definitely change tack and use the swings in the next cycle more. However, I do know my limitations and 'trading' these swings monthly/weekly would be beyond me - both in terms of skill and temperament.     

[JMD]

16 minutes ago, Majorpain said:

Only thing i would say is they are both pretty hard to value.

South 32 because its massive and produces so many different things, so your not just getting silver but Coal/manganese/Alumina etc. as well.

TSG because its a small mine with only 0.6m AU oz of resources listed on the AIM market.

Neither are my cup of tea to be honest.

thank you MP, i'm still learning but as you describe they do look outlier type operations (my phrase, not yours), even if their fundamentals appeared ok. But if nothing else, I think they serve as good comparators for go finding better prospects. 

 

[Shamone]

17 hours ago, Noallegiance said:

I'm confused and warmed by the power of the universe to bring people like you into the lives of people like me.

It really is quite bizarre. But then, so is sitting on a rock speeding around a star at 76,000mph. So nothing should surprise me, really.

He’s a bit of a legend, isn’t he?I’ve got fuck all money (can live very frugally though with paid- off mortgage in small house and rabid desire to pay as little tax as possible so little in the way of spending) but thanks to this thread   there are a couple of silver coins buried innawoods that few know about!

[nirvana]

2 drug companies I'm investing in

Gilead Sciences and Abbvie Inc

BT can suck my d!ck on monday......should have sold the useless fkers at 175p 

I know this laddering thing works for @DurhamBorn but I'm not convinced by it myself......I think the golden rule should be to protect your capital at all costs and I can't get that Tudor Jones quote about 'losers average losers' quote out of my head......

I think we're in the 'everything bubble' and 'everything BS' phase in the history of mankind.......corona could be a 'Black Swan event'....although I came to the conclusion Taleb was a bit of a BSer as well lol

BINGO, link from the 'looney thread' https://www.bloomberg.com/news/articles/2020-02-01/coronavirus-case-treated-with-gilead-drug-may-spur-wider-tests

 

[Barnsey]

On 30/01/2020 at 20:41, Errol said:

Watching it. I've got my eye on Freeport McMoran and will be buying once Copper is at a low.

Longest EVER losing streak for copper!

[leonardratso]

whats a low for copper? zero? it never seems to recover.

Mind you, you could have said that about gold for quite a few years.

[DurhamBorn]

2 hours ago, confused said:

2 drug companies I'm investing in

Gilead Sciences and Abbvie Inc

BT can suck my d!ck on monday......should have sold the useless fkers at 175p 

I know this laddering thing works for @DurhamBorn but I'm not convinced by it myself......I think the golden rule should be to protect your capital at all costs and I can't get that Tudor Jones quote about 'losers average losers' quote out of my head......

I think we're in the 'everything bubble' and 'everything BS' phase in the history of mankind.......corona could be a 'Black Swan event'....although I came to the conclusion Taleb was a bit of a BSer as well lol

BINGO, link from the 'looney thread' https://www.bloomberg.com/news/articles/2020-02-01/coronavirus-case-treated-with-gilead-drug-may-spur-wider-tests

 

I was a lead technician at Glaxosmithkline for 10 years.They would find a drug for publicity on this virus,but not for profit.You make nothing out of drugs like that.They make their money out of drugs that dont cure anything.They dont look for drugs that cure disease,they look for drugs that control it that you need to take every day forever.

BT will outperform Abbvie by around 250% including dividends over the next cycle.The next year who knows.

[Green Devil]

Bear in mind this nCov is only just beginning. A Chinese slowdown isn't priced in. Markets could go. A lot lower. 

Xom has broken trend. Where will it settle. Maybe in the 50s.

Isn't this a deflation event that DB is looking for? I may of missed stuff as I don't read all the thread. 

[Noallegiance]

11 hours ago, JMD said:

Absolutely, but don't forget the infinite universe, multiverses, quantum mechanics, and 'self creating' big bang theories!... Not to mention that we might only be a computer simulation!!!

Don't get started on The Matrix!

[Lightscribe]

12 hours ago, JMD said:

Absolutely, but don't forget the infinite universe, multiverses, quantum mechanics, and 'self creating' big bang theories!... Not to mention that we might only be a computer simulation!!!

Sorry guys this is *my* computer simulation and everyone else is just along for the ride as NPCs. I didn’t mean for it to get this out of hand though, as the whole thing has gone a bit topsy-turvy. I mean a extinction level event like a killer virus was hardly original but I am a bit of anarchist at heart.

In all seriousness I believe the knock on effect from China means we could be facing the big Kahuna in the stock markets within the month. Hold on tight guys this is what we’ve been preparing for.

[Majorpain]

6 hours ago, Green Devil said:

Bear in mind this nCov is only just beginning. A Chinese slowdown isn't priced in. Markets could go. A lot lower. 

Xom has broken trend. Where will it settle. Maybe in the 50s.

Isn't this a deflation event that DB is looking for? I may of missed stuff as I don't read all the thread. 

Potentially, but its the effect down chain that are the hardest to predict.

Wuhan produces a lot of goods, modern Just in Time factories hold little inventory, so factories in other parts of china/the world may be open, but can they source the quarantined components from elsewhere?  Likewise if China gets completely locked down to halt the spread things will get very interesting very fast on many levels.

[Barnsey]

7 hours ago, Green Devil said:

Bear in mind this nCov is only just beginning. A Chinese slowdown isn't priced in. Markets could go. A lot lower. 

Xom has broken trend. Where will it settle. Maybe in the 50s.

Isn't this a deflation event that DB is looking for? I may of missed stuff as I don't read all the thread. 

I’d like EVERYONE on this thread to give this serious thought, this isn’t just another Flu, this is big, with lots of distorted lags and cover ups in data. I know we’ve seen plenty of potential triggers and have become completely numb to them, but this really is a different realm of risk.

Looks like the Chinese are getting ready for HUGE stimulus very soon, so our deflationary shock could already be here (I’ll say it again, look at Oil, Dr Copper and Baltic Dry Index), and our reflation may kick off sooner than expected too if China go really big.

Might just be the right time to really sharpen up your focus and manage risk.

 

[MrXxxx]

9 hours ago, DurhamBorn said:

that.They make their money out of drugs that dont cure anything.They dont look for drugs that cure disease,they look for drugs that control it that you need to take every day forever.

Interesting, I had the same thought on Friday whilst doing a First Aid refresher. The instructor was talking about asthma pumps and how the same drug had been used for fifty years...I then thought, "What actions have we taken in the last fifty years to resolve the issue of asthma?"