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

[UnconventionalWisdom]

On 17/03/2020 at 18:04, Majorpain said:

There is a lot of thought currently going into working from home, if using the car to get to work doubles in price then i can see a big incentive to a longer term change in behaviour.  Especially down south with their £6-8k rail season tickets.  Another boost to the telco's in the next cycle if it comes off and more people need bandwidth for video conferencing etc.

I see this happening. Even one of my bosses that is 65 has got his head around using hangouts after he needed to this week. Now arranging them.

Zoom share price up 20% last week

[Harley]

21 hours ago, DurhamBorn said:

Interesting reading.Im treading it like it will kill everyone in my home life to protect my family,but interesting read with lots of data.

https://medium.com/six-four-six-nine/evidence-over-hysteria-covid-19-1b767def5894

The censorship (temporary or not) of this article is the most worrying thing yet.  I've noticed a total lack of proper and detailed data.  The stuff pushed out is dribble.  Someone has a go to get it right and bang.  That, plus the general lack of proper data, tells me something's not quite right.  

[Harley]

15 hours ago, BadAlchemy said:

Here is a link to a cached version on Wayback Machine....

Nice one.  Many thanks.

[Harley]

1 hour ago, Cattle Prod said:

That's right, there are absolute numbers everywhere (.... 338 more than yesterday oh no!!) when all that matters is the rate of change. And apples are being compared to oranges everywhere.

And expressing them against a meaningless "cases' figure.  Need to know per capita, and a million other metrics, ideally all normalised.  They must have this data, else they are not trying to control it, or whatever.  So yes, they must have it but seem to keep it quiet!  Why is the key question? Or maybe the MSM are just dire at reporting things.  Or the govt thinks we are children as at least their advice about hand washing and isolation ties in with the article.  I beginning to get sceptical and conspiritorial.  Yes, it's real but so is influenza, etc.  I'm hunkering down but will be focussed on trying to detect and understand any parallel game being played out and react accordingly.

[Loki]

18 minutes ago, Harley said:

The censorship (temporary or not) of this article is the most worrying thing yet.  I've noticed a total lack of proper and detailed data.  The stuff pushed out is dribble.  Someone has a go to get it right and bang.  That, plus the general lack of proper data, tells me something's not quite right.  

The government response is schizophrenic. Social distancing (ever seen a bio lab? Negative pressure, filters etc.  If distancing worked why not just a shack in a field) yet flights still landing and I'm still travelling for work.  The distancing reminds me of ww2 scrap drive. Useless, but makes people feel empowered.

[sancho panza]

14 hours ago, MrXxxx said:

Thanks, and what do you think was the reason for this?...bad news and a sudden sentiment in the market or something more devious?

I think it's a sign of the size and scale of the ongoing dislocation in equity and bond markets.One moment PM miners are a risk off trade ,next they're  risk on.

I can't think of any other expalantion for the price action in one of the world's top ten PM miners by market cap-kinross.I generally don't tend toward all the conspriacy theories,but when the price of paper futures is $12 and we've got verfiable reports on here from logn term posters of physical silver being difficult to obtain at that price,then either the paper markets are being sold off to cover margin elsewhere or someone's suppressing the price.I think the latter is unlikely so more likely the former.

[Talking Monkey]

9 minutes ago, Harley said:

And expressing them against a meaningless "cases' figure.  Need to know per capita, and a million other metrics, ideally all normalised.  They must have this data, else they are not trying to control it, or whatever.  So yes, they must have it but seem to keep it quiet!  Why is the key question? Or maybe the MSM are just dire at reporting things.  Or the govt thinks we are children as at least their advice about hand washing and isolation ties in with the article.  I beginning to get sceptical and conspiritorial.  Yes, it's real but so is influenza, etc.  I'm hunkering down but will be focussed on trying to detect and understand any parallel game being played out and react accordingly.

Each day that goes by that gut feel that something else is also being played out in parallel increases. I don't know what but something does not feel right, the simultaneous power down of the western economies is just surreal

[sancho panza]

23 hours ago, spygirl said:

How does $ fall?

Euro is fucked. Yuan is fucked.

And that's it. Theres no upn coming currency block. Back in 80s the DM n Yen looked like a contender.

Fed can put dollars into economy, to tie stuff over. 

Only way would be a synthetic currency.

Dare I suggest it? gold?

[UnconventionalWisdom]

On 19/03/2020 at 14:01, Democorruptcy said:

Ocado is another virus play, up 40% since the initial big down.

I joked to someone they were the best to shop with to minimise covid-19 risk as their warehouses are automated. 

Also don't have to worry so much about staff getting ill when they are robots

[Loki]

This thread will be worth more than 20 history books in 100 years

[Majorpain]

3 minutes ago, sancho panza said:

Dare I suggest it? gold?

Back above $1500.....  

If the panic selling has stopped things could be about to get very interesting.

[UnconventionalWisdom]

On 19/03/2020 at 15:59, Loki said:

Just had a thought.  If they manage to jolt the economy back to life (for now) what are the odds of this virus suddenly going away as quickly as it appeared?

 

Release of the vaccine would do that. 

They could be seizing the opportunity to print.

[Loki]

3 minutes ago, UnconventionalWisdom said:

Release of the vaccine would do that. 

They could be seizing the opportunity to print.

 What a wonderful coincidence that would be!

[leonardratso]

must eat brains.

ahem, excuse me.

S&P down again on futures, oil to 21 dorrar a barrel, i hope my pension changes take affect on monday, im 99.97% cash there now, 0.03 split to mutual world tracker and some other shite.

[DurhamBorn]

It will be interesting to see if the Fed get up to speed soon with the virus numbers expanding in the US and New York really suffering from it.The irony is the longer they wait the higher the inflation coming down the line.Massive systemic risk now.Trump thinks rates at zero are fine,but the system is crying for $s.

Primark and McDonalds even shut now.Whats certain going forward is sterling will be toast.Im trying to work through how much value loss,but its so fluid its tough.I think 80% loss of value is pretty certain though.Against oil inflation adjusted i think this is the lowest price ever.In 8 years (or before) it will be the highest price ever.

Its incredible to think China has knocked over the west by slaughtering endangered animals and eating them after they have shit and pissed on each other for weeks in a smell animal market.Incredible.

[leonardratso]

who the chinese or the animals?

[Loki]

@DurhamBorn thanks for continuing to work the numbers when you could by rights have said "well my work here is done"!

[UnconventionalWisdom]

On 20/03/2020 at 08:07, Majorpain said:

ECB?  Hands are tied by the Germans, they have been way too slow and are going to pay the price.

They are talking about getting rid of their 1/3 limit of purchasing a country's debt. They will be making big promises soon enough

[sancho panza]

22 hours ago, DurhamBorn said:

Interesting reading.Im treading it like it will kill everyone in my home life to protect my family,but interesting read with lots of data.

https://medium.com/six-four-six-nine/evidence-over-hysteria-covid-19-1b767def5894

That article wasn't available for me(apparently taken down by the website)but Zero Hedge have posted it

https://www.zerohedge.com/health/covid-19-evidence-over-hysteria

[sancho panza]

14 hours ago, Castlevania said:

The market was incredibly volatile .Everything was getting dumped. Added to this there was a big liquidation of the 3 times leveraged version of the GDXJ. I just don’t think the ETF issuer had the time to rebalance to match the outflows. 

@MrXxx

Please ignore my previosu reply and defer to this more thoughtful reply that reflects the nuances in the market at the time.I'd forgotten about teh ETF going under.

[sancho panza]

5 hours ago, JMD said:

B&M, that's an interesting idea and I notice some others including SP have similar view point, i.e. that there is a possibility that the big kahuna/debt-deflation crash is yet to happen, that it may happen as a separate distinct event later this year/early next year.

I like this theory very much...but perhaps for obvious reasons! I have learned so much from this thread that if I could just have a second bite at the investment cherry i'm sure I would become very rich! I guess so would everyone else here, but of course life is never that simple.

 

As an addendum, can I try a thought experiment?... Personally if we were to get that fabled melt-up, say later this year, I would sell approx. half (on a total value basis) of my portfolio. Reasoning would be that the expected subsequent crash would allow me opportunity to buy back the best stocks at low prices. 

My question is not the obvious: would you take the risk of selling, given that a '2nd crash' event might never happen. But instead - what are the 'pre-conditions' that might lead you to think that a 2nd crash was a real possibility? Could it be scenario like the corona virus diminishes sooner than expected in say 4 weeks and the market then partially recovers due to misplaced relief/optimism; or if only relatively small doses of gov. spending begun to lift the markets/economy, say US injected only $2trn and not $20trn, but then after a short period came the awful realisation that all those expensive gov. 'support for business' schemes had no exit point; or perhaps a mixture of these, or perhaps other scenarios?

 

Premature perhaps to be thinking in this way?... but discussion like this might be useful for some here that have written of holding back funds for such an event happening, especially if we are looking at a 2nd/3rd wave/18 months of corona infections. 

 

you can always hedge and sell your top ladders of oilies.Persoanlly,we'll be selling goldies and oilies if we can identify the june 08 moment.Having said that,I've changed our plan to a degree now we've loaded up on some sub£4 BP and sub £12 Shell,we might never get rid of these because I never anticipated picking them up this cheap.

there's a certain logic to the 'sub prime' dsiclocation occuring this year featuring some decent humdinging bankruptcies in CRE or US shale,then next year we get the full blwon Deutsche Bank/Junk bond melt down..........................................

Once you're in profit then it makes sense to take you stake off the table if you can,I didn't recently with sibanye at $13 ,now $4..................

 

[Noallegiance]

Anyone care to have a guess at wtf just happened to the US 1mth bond?!

https://uk.investing.com/rates-bonds/usa-government-bonds

Up 611% from 0.025 to 0.178.

[sancho panza]

2 hours ago, Cattle Prod said:

Post has been censored. What does that tell you guys...

Edit: sorry, I see it's been caught by many of my fellow posters already.

It is very curious though. Even if it is wrong...how much of the bloody internet is wrong!! Why censor this one?

I've had my own debates with my scientist chums, and we generally agree that the Ferguson models are flawed, mainly on assumptions of transmissibility. His is a typical smooth model with assumes we interact with each other vigorously and randomly, thus increasing the R0. It doesn't capture all the little heterogeneities that make up our daily lives. In the real world, we interact with the same 20 odd people a day, most of whom will become immune without noticing. Public transport increases R0, sure, but the majority of people don't take public transport. Ferguson also predicted up to 200m bird flu deaths in 2005, by multiplying the Spanish flu fallout up for present population (is general hygiene better or worse now than in 1918? Poverty levels? Housing standards. A statement of total nonsense). I think it's no harm to warn about hospitals getting overwhelmed, but his scenarios are out by orders of magnitude IMO. And as governments are taking policy from his paper, it will cause many deaths of economic despair.

I also had a look at Italy. There is evidence that Italy reports that a patient with coronavirus who dies, dies of coronavirus. This is a logical fallacy and ignores that they may have flu or other nasties at the same time. And it turns out that Northern Italy gets absoultely savaged by the flu this time of year, with deaths in the 1000s per week on average.

My statements may turn out be wrong (I've source checked the Italy flu date back to peer reviewed papers, but the reporting statement is from the Telegraph citing 2 or 3 local medical sources which look ok, but need to be checked further. It's a very important question). but I'm just doing what a scientist should do: challenge the consensus. There shouldn't even be a consensus yet, if ever. Listen to the guy who says 'I don't know' because they are telling the truth. It has happened very very quickly based on a small number of researchers and I am very uncomfortable about it.

It's all so convenient for governments.

Had to laugh today,when Sky news were reporting that Chinese health officials had been over to Italy to advise them how to lock down the locals.You couldn't make this up.

There are lots of issues with this Corona Virus and I've been through a few already.The main one is the lack of testing.It is beyond pointless both economcially and from an epedemiological point of view,to ban people who have antibodies to the virus, from leaving their homes/working in hosptials or paying taxes.As I've said before,the govts response has ,mainly been based on guesswork and nothing seems to be changing much,not least the poverty of the PPE they issue to NHS staff.

I link to a link to the Isreali Defence Minsiter with the most sensible policy solution to the probelms created by the virus that I've seen ie keep the oldies separate and develop herd immunity.Whatever your personal view of the Israelis',they have long history of having to be practical about life.

https://order-order.com/2020/03/22/israels-social-isolation-herd-immunity-strategy/

At the moment,in the UK,I'm watching civil liberties that took a hundreds of years to gain,getting washed away by a flu outbreak(whether that flu turns into pneumonia in elderly o rthe  immunosuppressed is a moot point it's still a flu outbreak) and noone seems to care.(and nornal flu kills a lot of people,far more than corona virus has so far)

Most importantly,there seems a total lack of understanding that economic problems resulting from the govt repsonse to the outbreak will take their toll.Yes,a decent size chunk of the elderly infected with heh virus will die, but there seems little concern for the fact that many people may suffer poor health as a result of having their local pub/cafe/market shut or from being laid off and made economcially inactive.

The political class would have you belive this crisis is all about averting the deaths of elderly patients with cardiovascular and respiratory problems,but actually its also about creating a whole host of mental & physical health problems that stem from unemployment,isolation and poverty.

[sancho panza]

2 hours ago, Cattle Prod said:

That's right, there are absolute numbers everywhere (.... 338 more than yesterday oh no!!) when all that matters is the rate of change. And apples are being compared to oranges everywhere.

My favourite yesterday was "x% (I think it was about 20%) of 20-59 year olds need hospitalisation!!". Oh no! Young people are going to die!!!

Look at the ridiculous bin size on that . The only reason they have lumped in everyone from 20-59 together is that the numbers between 20 and ~50 are so small to be statistical noise, so were lumped in for convenience. Almost all the hospitalisations are in the 50-59 bin. But of course average Joe will hear that and think "20% of 20 year olds need hospitalsation."

Lies, damn lies and statistics. I've never seen anything like this.

There appears to me a concerted effort to try and portray this as a disease for all age deciles when  the reality is that the fatalities are 90% in the over 70's..Tonight SKy was reporting that an 18 year old had died,adding that the patient had had underlying health conditions.Large media focus on maontianing that with reports circualting about a 36 yo nurse in Walsall on critical care unit due to the virus.

 

Interesting that the cardiaovascular diesease makes you more likely ot be a fatality than repsiratory.

[AQUAMAN]

If interest rates go up before my mortgage renewal I’m gonna go fucking postal