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

[BearyBear]

Huge moves and wide spreads on LSE open. I've bought some dividend paying shares as the gov started printing to infinity so the price will eventually go up...

(remember though when a bear is buying, you should be selling )  

[TheCountOfNowhere]

9 hours ago, Cattle Prod said:

https://themarketear.com/

Sounds familiar so far, market wise (faster now obviously, but no algos then just ticker tape and leisurely lunches to disseminate information), with very very different mortality rates and/or projected outcomes. No way the coronavirus is going to level 50m people. As I said, the old gits are shutting down the world to protect themselves.

 

7 months top to bottom.

 

Hold on folks....these things take time

1 hour ago, Democorruptcy said:

A UK wage back door bank rescue plan next.

People are poor because of the bankers, and they thing the bankers handing them "free" money is to help them. 

1 minute ago, BearyBear said:

Huge moves and wide spreads on LSE open. I've bought some dividend paying shares as the gov started printing to infinity so the price will eventually go up...

(remember though when a bear is buying, you should be selling )  

The prices my share account was showing on my main page where 10% less than the price I was quoted for the actual sale, weird.

[Majorpain]

13 minutes ago, Bricks & Mortar said:

We've always thought of money-printing as inflationary.  But, in this case, we're asking all wealth generation to cease, and only replace the economic activity with 75% of what was formerly there.

Is that still inflationary?

 

Inflation is more money chasing less goods.

Thats loads more money chasing much less goods.

[BearyBear]

6 minutes ago, TheCountOfNowhere said:

The prices my share account was showing on my main page where 10% less than the price I was quoted for the actual sale, weird.

Shares I've bought were instantly 5% down just to be 10% up a moment later.

[Cosmic]

The fear of missing out is currently great within me... hmm to splurge or not to splurge, that is the question.

[TheCountOfNowhere]

26 minutes ago, BearyBear said:

Shares I've bought were instantly 5% down just to be 10% up a moment later.

I'd have that 10% right now.

We could be at the bottom, but we'll still be at the bottom in a month :-) 

[Castlevania]

1 hour ago, kibuc said:

Argentina goes into full lockdown. A number of miners have exposure there, including Fortuna Silver with their Lindero project and Yamana with gold-silver Cerro Moro.

Lockdown is set to last until the 31st of March, so not too long but let's wait and see how situation evolves. They've only had 128 cases and 3 deaths so far, so those measures look a bit out of proportion.

Peru as well. Hochschild has it’s mines in Peru and Argentina. Bah.

[M S E Refugee]

14 minutes ago, Cosmic Apple said:

The fear of missing out is currently great within me... hmm to splurge or not to splurge, that is the question.

Look at the table posted by Fooked on the Pandemic page before you splurge,we are more or less moving lock step with Italy.

In 10 days time deaths in the UK will skyrocket unless our medical experts strategy makes a difference.

[PaulParanoia]

12 minutes ago, TheCountOfNowhere said:

I'd have that 10% right now.

We could be at the bottom, but we'll still be at the bottom in a month :-) 

I'm inclined to agree.  Recovered 0.5% of my losses with a couple of quick trades this morning.  Sitting at 80% cash.  Very hard to know when to start going all in though.  I suspect news will get worse before it gets better.

[Democorruptcy]

Heatmap so far.... has virus plays like UU and OCDO stalling and travel coming back EZJ and TUI.

 

[CVG]

12 minutes ago, PaulParanoia said:

I'm inclined to agree.  Recovered 0.5% of my losses with a couple of quick trades this morning.  Sitting at 80% cash.  Very hard to know when to start going all in though.  I suspect news will get worse before it gets better.

The news will get much worse (even though it will not be unexpected). A lot of falls will be driven by the sentiment that generates. DYOR but I would look to dripfeed a small allocation of cash to equities once a month for the next four months. No one can time the bottom.

[TheCountOfNowhere]

15 minutes ago, PaulParanoia said:

I'm inclined to agree.  Recovered 0.5% of my losses with a couple of quick trades this morning.  Sitting at 80% cash.  Very hard to know when to start going all in though.  I suspect news will get worse before it gets better.

The US has a massive storm coming, they has to come and go first

3 minutes ago, CVG said:

 No one can time the bottom.

I'll give it a good go :-) 

[Democorruptcy]

10 hours ago, sancho panza said:

The following article gives an insight into the discrepancies in mortality rates .Much as I would have thought-although we can't be sure without detailed data on mild/asymptomatic infections-the more pressing crisis here isn't necessarily the corona virus but it's effects on 70+ year olds with co morbidities.

The pressure on resus/ICU is immense anyway,especially given an increasing understanding and treatment of life threatening sepsis, but I can totally see why the UK govt is worried that the system can't cope.

https://www.telegraph.co.uk/global-health/science-and-disease/have-many-coronavirus-patients-died-italy/

 

Suggestion here that the virus is slowing and Italy is bad due to demographics. Only 3% of Wuhan became infected according to Chinese figures (unlikely they can be trusted)

https://www.jpost.com/HEALTH-SCIENCE/Israeli-nobel-laureate-Coronavirus-spread-is-slowing-621145

 

I wouldn't fancy being in the NHS front line this summer. I cannot believe we are sending lorries to hospitals today with masks etc. What the hell have top dogs been doing, just totting up the PFI payments?

Hospital turning virus victims away already.

https://www.telegraph.co.uk/news/2020/03/19/exclusive-london-hospital-trust-becomes-first-admit-turning/

 

 

[Bricks & Mortar]

1 hour ago, Majorpain said:

Inflation is more money chasing less goods.

Thats loads more money chasing much less goods.

Less goods, yes.  But its only 75% of the wages.  Nothing for the other 25%.  Or overheads.    To me, that's less money.

[DurhamBorn]

The main thing to remember is markets arent linear.They price in as best they can with that they see.That process becomes very hard to off the scale at times like this.

People need to stop worrying about if things will get worse or get better tomorrow,next week,next month etc.Nobody can know.An old anti-viral drug could stop this virus in its tracks,or it might take a year,you cant price that.However we can price how much liquidity is flooding into the system.The money supply might double or treble before this ends.That means underlying assets that survive and have a defence against inflation will increase in value over the cycle.It could be from a lower base yet,or it might not.

Everything is going exactly as we wanted.Assets have collapsed in price due to a debt deflation and a worry people cant pay coupons without cash flow.

The CBs have had to inject massive liquidity,but the $ is screaming at the Fed much more is needed.

On top we have massive fiscal intervention from governments.Sooner or later people will price that increase into assets.

Its crucial to stick to the sectors that will gain from inflation.Holiday companies might survive,so might the airlines,but we dont know if they might just limp along for a cycle.

Its almost certain some holdings will go to nothing,some will go very low and stay there.However one years dividends will make up for those i expect once things settle down.

What is certain is whats going on means the end of the bond bull is coming up.Probably 70%+ losses over the cycle in bonds.

The fund almost all IFAs put their clients pensions in as it slowly grows 6% a year and the mix ensures safety is the Vanguard 40/60 fund.At least thats what they think.

https://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/v/vanguard-lifestrategy-40-equity-accumulation/charts

If you take off 2% fees that are the usual with an IFA its down to early 2016 levels.So 4 years.If drawing down its 20% down from 2016,and thats with bonds at pretty much 0% rates now.

[Majorpain]

13 minutes ago, Bricks & Mortar said:

Less goods, yes.  But its only 75% of the wages.  Nothing for the other 25%.  Or overheads.    To me, that's less money.

75% government 25% company is the intention i believe.  Dont forget that the Govt is pumping cash in elsewhere, £350bn of other support measures alone is 16% of GDP and then there is (rightly) the blank check for the NHS for the virus.

UBI should also be coming along the pipe with the next month to keep things ticking over which will be another big inflationary push.

BOE has already said it will print as required.......

[CVG]

1 minute ago, Majorpain said:

75% government 25% company is the intention i believe.  Dont forget that the Govt is pumping cash in elsewhere, £350bn of other support measures alone is 16% of GDP and then there is (rightly) the blank check for the NHS for the virus.

UBI should also be coming along the pipe with the next month to keep things ticking over which will be another big inflationary push.

BOE has already said it will print as required.......

That had better be capped as well. No one wants to pay 75% of the CEO's salary!

[JMD]

16 hours ago, sancho panza said:

You need to give DB a break.Being honest,shares can go up as well as down.It's part of the risk/reward of it all.Like the rest of us who share our opinions,it's always DYOR and you shoudl only risk what you can afford to lose.

Sorry if that sounds patronizing but loading up on him your dissapointment isn't particualrly fair.

To be fair (to me!!) I was doing no such thing (not my style at all). Moreover, i'm not disappointed - in fact i'm still buying. And that, to be clear, was the reason behind my question because i wanted to check the risk/reward element of oil and find DB's 5x, 10/20x guestimates useful (I know dyor), but couldn't find his earlier post where he spoke about this.

DB has from early-doors, and regularly since, warned that the crash and its market after-effects would be brutal. I appreciate the broad sweep of this blog and that its not for trading advice and that most people here comment from the long-term perspective.

     

However, I would be genuinely interested to know how my original post was misinterpreted. Was it perhaps my reference to 'indentured slavery' (correction - should have said 'servitude', my bad)? But still, I did add whether I was merely catastrophizing, so thought the implied joke part was clear.     

 

[BoSon]

2 minutes ago, CVG said:

That had better be capped as well. No one wants to pay 75% of the CEO's salary!

Whatever they do it's not sustainable. They're trying to support a dead economy. Better off using the pause to reset and come out of it with a new future that draws a line under the debt riddled zombie economy.

[JMD]

17 hours ago, DurhamBorn said:

I expect 500% in the big ones including dividends,best to let the cycle play out.

DB, thanks for reply. I notice that SP thought I was having 'a go' with some confusion over my original question to you. I hope you didn't think same (then again, perhaps I have made a rod for my own back in declining to use them-there darn emojis!, makes obvious then when attempting joke. etc) 

[Harley]

1 hour ago, Cosmic Apple said:

The fear of missing out is currently great within me... hmm to splurge or not to splurge, that is the question.

I'm on the back foot this morning having not got my watch list finished and taken a leisurely breakfast.

Maybe I'll just go and buy what you lot are!

[JMD]

11 hours ago, Harley said:

Yup.  Have delivery of my precious.  My first and probably last the way things are!  Been meaning to do it for yonks so happy, even with a loss!

I guess you cant even comfort yourself by calling it a 'paper' loss!

[Yellow_Reduced_Sticker]

...AND in other NEWS:

"Coronavirus: Rightmove warns UK property market facing Sharp Slowdown!"

https://uk.finance.yahoo.com/news/uk-property-coronavirus-house-prices-what-impact-buy-sell-home-101132215.html

Folks, when I said that i bought at the TOP ....I TRULY meant it!

At LONG last i've been PROVEN Right for a... CHANGE!

[Harley]

1 hour ago, Democorruptcy said:

Heatmap so far.... has virus plays like UU and OCDO stalling and travel coming back EZJ and TUI.

 

How do you make a heatmap like that (not the blues, down to me, just the structure!)?

[JMD]

Just thought i'd mention AK steel has merged with Cleveland Cliffs (clf). Both these have been mentioned here positively some time back. CLF is the new company, so this operation might be a good prospect as the iron ore miner now has its own steel works?