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

[Agent ZigZag]

31 minutes ago, DurhamBorn said:

.My portfolio actually went into profit today and considering id taken a lot last year out of the goldies very pleased about that.Its highly likely things are going to get a lot worse in the US etc for deaths so could be very choppy.

 

SIPP down 15% overall very happy as this is my conservative dividend paying part of my investments

ISA down 23% as I have my Gold and Silver mining shares and higher risk plays allocated to this section.

The past few months really does show the marked difference between the economy and the market, something I had really just glossed over with not to much thought

[DurhamBorn]

Just now, Agent ZigZag said:

SIPP down 15% overall very happy as this is my conservative dividend paying part of my investments

ISA down 23% as I have my Gold and Silver mining shares and higher risk plays allocated to this section.

The past few months really does show the marked difference between the economy and the market, something I had really just glossed over with not to much thought

Nothing to lose sleep over then.Id expect that PM section to run hard over the cycle,so just leave it asleep.Once it runs likely 5 x+

[Agent ZigZag]

Just now, TheCountOfNowhere said:

That's always been my plan.

I said a couple of days back, there's a fortune to be made here for the brave.

There's a fortune to be lost too.

This is very true. I would go as far to say that it has the potential to be dynastic to pass on new earned wealth for a generation or two. Whilst a nice thought, rule number one for me is that my investments out perform inflation.

[DurhamBorn]

34 minutes ago, MrXxxx said:

By this do you mean that as the printing presses have been turned on (so inflation will increase) share prices have gone up to reflect this I.e there are now 10% more pounds in circulation so a pound is now worth 10% less, so a share has to go up by 10%?

There is quite a bit of cross market work,and lags ,but yes thats the basics of it.Once things settle there are more $ than there were.Thats why i use road maps so i can see the big picture.Still make mistakes of course as its not a science,but avoids hyperbole etc

[Boon]

Anyone agree this may be a bit of a sucker rally? The markets taking Trump at his word that people will be back to work by Easter?

I think there is worse news to come from the US, and a number of cases many multiples that of China would be quite embarrassing for Trump and he would need something to blame, especially if they end up topping the 'league table'. Plunging equity markets seems to be the way of asking for more money.

India seems to have the potential for a real humanitarian disaster. I can't buy the idea that hot weather mitigates the spread, Malaysia has seen a recent rise and the climate is similar.

[Don Coglione]

14 minutes ago, DurhamBorn said:

No,they are injecting liquidity into the system by expanding their reserves so they can buy government paper increasing the money supply so the government can stop a young family in Glasgow from starving.Its called their job.The amount of gumph youl be reading on the net about the evil CBs is just that,rubbish.They are trying to do their jobs.There are arguments about how they do it of course,and who gains most,but those are not arguments for times like this.The CBs are the fire brigade and the house is on fire.The market is simply reacting to the fact they are starting to right size policy.Open ended QE was the key like i said over and over as the market fell.

The economy doesnt turn first ,its not how macro works.First it is created,then it goes into the capital markets,then it feeds out into the economy

The first page of this thread years ago,i said how they would deal with the end of this cycle.I said they would pump direct into the economy,and thats exactly what they are doing.They arent doing it in the way i expected,instead they are injecting by paying wages etc.

99.9% of people dont understand macro strategy.They see something in front of them and think they know.Its pretty much like sitting on a park bench reading all yesterdays papers in the bin,of no use for telling the future.

People on this thread should of made a lot of money this last few weeks now,some stocks still down hard,but if they had started to buy in ladders across the spread of reflation stocks they should be well in front,on a market still down by a third.

Im not looking at that,im working on pulling together how much liquidity is being put in,how much is being destroyed from debt destruction and working on the roadmap so i know roughly where we are.

I wasnt buying BP at £2.24 (and £3.30 of course) because i thought oil was going up,i was buying because i knew the money supply was going to double,i did the numbers,put in the leg work,had confidence on my ability,and acted on it with discipline.

I nearly walked away from this thread because i saw people saying im down x% the world is ending,its going to nothing.Thats all hyperbole stuff id expect in a children's playground and why most people stay poor.

 

 

 

 

Post of the century. Thank you, DurhamBorn.

[Barnsey]

Sorry about the source but this news isn’t supportive of house prices, especially as we’re about to see unprecedented unemployment numbers despite what Sunak may lead you to believe (think he’s doing a good job btw)

https://www.dailymail.co.uk/news/article-8150357/amp/Chaos-housing-market-banks-stop-mortgage-lending.html

[Castlevania]

54 minutes ago, DurhamBorn said:

I sold a few bottom ladders today,most of them were up 50% from their lows.My portfolio actually went into profit today and considering id taken a lot last year out of the goldies very pleased about that.Its highly likely things are going to get a lot worse in the US etc for deaths so could be very choppy.

As always  ignoring hyperbole and watching the liquidity was key.Even if things stay stable though the market will likely start getting some shocks from companies going under.The damage to a huge number of companies will be very large indeed.

US unemployment claims tomorrow might give the market a reality check. I thankfully bought a fair amount of stuff last week but I’d like a little pullback. 

[Yellow_Reduced_Sticker]

30 minutes ago, DurhamBorn said:

No,they are injecting liquidity into the system by expanding their reserves so they can buy government paper increasing the money supply so the government can stop a young family in Glasgow from starving.Its called their job.The amount of gumph youl be reading on the net about the evil CBs is just that,rubbish.They are trying to do their jobs.There are arguments about how they do it of course,and who gains most,but those are not arguments for times like this.The CBs are the fire brigade and the house is on fire.The market is simply reacting to the fact they are starting to right size policy.Open ended QE was the key like i said over and over as the market fell.

The economy doesnt turn first ,its not how macro works.First it is created,then it goes into the capital markets,then it feeds out into the economy

The first page of this thread years ago,i said how they would deal with the end of this cycle.I said they would pump direct into the economy,and thats exactly what they are doing.They arent doing it in the way i expected,instead they are injecting by paying wages etc.

99.9% of people dont understand macro strategy.They see something in front of them and think they know.Its pretty much like sitting on a park bench reading all yesterdays papers in the bin,of no use for telling the future.

People on this thread should of made a lot of money this last few weeks now,some stocks still down hard,but if they had started to buy in ladders across the spread of reflation stocks they should be well in front,on a market still down by a third.

Im not looking at that,im working on pulling together how much liquidity is being put in,how much is being destroyed from debt destruction and working on the roadmap so i know roughly where we are.

I wasnt buying BP at £2.24 (and £3.30 of course) because i thought oil was going up,i was buying because i knew the money supply was going to double,i did the numbers,put in the leg work,had confidence on my ability,and acted on it with discipline.

I nearly walked away from this thread because i saw people saying im down x% the world is ending,its going to nothing.Thats all hyperbole stuff id expect in a children's playground and why most people stay poor.

 

GREAT POST DB!

100% Agree, thats why i ALWAYS make my posts entertaining with my buying prices, i havn't even checked my HL acc, but for SURE its up, last week down by 26% which is F*** All, look at Go Ahead Group today UP by 14% to £8.60 ....does NOT look like it will hit my 2nd TIGHT-WAD buy order at £ 2.69p!

I aint NEVER selling 'em....well maybe in 2029 when they are 69 quid!

How many here bought shell at around £9.30 BP £3.30 IN THE Market PANIC? ...I did AND I don't think we will see those LOW prices again...though i could be wrong

FFS...national express  i saw at 69p! AND i forgot to buy 'em!!!

[Castlevania]

19 minutes ago, DurhamBorn said:

There is quite a bit of cross market work,and lags ,but yes thats the basics of it.Once things settle there are more $ than there were.Thats why i use road maps so i can see the big picture.Still make mistakes of course as its not a science,but avoids hyperbole etc

Just a thought. If the global economy gets flooded with US dollars, that should feed into commodity and energy inflation. So would looking to buy into energy and commodity exporting countries such as those found in Latin America be a good strategy? 

[DurhamBorn]

3 minutes ago, Castlevania said:

Just a thought. If the global economy gets flooded with US dollars, that should feed into commodity and energy inflation. So would looking to buy into energy and commodity exporting countries such as those found in Latin America be a good strategy? 

Yes,likely CAD and AUS will do well over the next cycle,Brazil etc are simply too big.They have big commod sectors,but not per capita and i doubt they will like inflation much.

[TheCountOfNowhere]

23 minutes ago, Boon said:

Anyone agree this may be a bit of a sucker rally? The markets taking Trump at his word that people will be back to work by Easter?

 

Was just about to ask the same thing.

Dead cat bounce of the start of hyper inflation stock market increases ?

[sancho panza]

On 24/03/2020 at 08:57, Castlevania said:

Is this a bear market rally? I think we’re over the worst for most stocks. A number now up 30%+ from last week’s lows.

I saw a bit of Sky News last night as Mrs P likes to watch Corona updates.I lifted my head out of what I was doing when they mentioned that the rally yesterday was the second highest ever,and that numbers 1,3,4,5 were all from Oct/Nov 2008.

Gotta be careful here for us.We've reached full allocation in goldies,due to cable being sub $1.20,looking to deploy US oil money into BP/Shell which are up again today.Got some at £2.25 and £9.15 less than a week back.Now looking at £3.40 and £14.

I agree the bottom is in on a lot of the stocks floated in this thread.I think the issue here is whether we pull back to the bottom of a higher low.Looking at the power of this rebound,we're up 35% in 2 days in Shell and we haven't even levelled off for a day.

On 24/03/2020 at 09:16, Talking Monkey said:

I held of from XOM for the same reason SP, what factors would you need to see to deploy further into Shell/BP

We've got ladders down to £6 but last got bought at £9-15(I cheated on the £9 ladder).Powerfull rally would see us deploying our all in money.Even at the £14 today,it yields 10%+ change.

23 hours ago, DurhamBorn said:

As expected the markets can now start to look ahead as the wave of fear selling at any price has stopped for a while.It could come back of course and quickly.

People are waking up to inflation.The huge jumps in the likes of Shell,BP,BHP etc show this.

However id of rather the markets had kept falling for now because the Fed havent done anywhere near enough given the systemic risks.Im really struggling to find out just how much liquidity they have pumped in,but its looking to me like only around half of whats needed.It could be they monetize another $2 trillion once the democrats stop their nut job ways in the Senate.

 

I think the capitulation selling is done for this phase.As I was saying to CV,it's whether we get a pull back to the lower high from here or whether we just rocket back.I'll likely hedge ,pick some up today and then again Friday.

I'm getting a gut feeling we might bounce hard from here.Especially with the slightest sliver of good news on La Coruna.

People are definitely waking up to the threat of inflation.

Also on another angle,spoke to an old mate yesterday from my days in the TA.Good lad,medic,had a bad tour of afghan,rarely texts me,deals with hsi issues etc.I never ever hear from him unless he's worried or in trouble and last night we ended up having a chat.He's bright lad and can see the dislocation coming now.Was worreid about whats going to happen to debts of people/work/unemployment etc etc.I provide the context to give you an idea of how the public are beginning to realise this sh1t is getting real.He works for the University but was saying he'd been on to a contact at Rolls Royce and apparently things there are going to get worse before they get better.His pal works there and says they're having loads of orders cancelled ,lines getting shut.

It's not so much the corona virus but rather various govts reaction to it-much covered on this thread already

 

[Yellow_Reduced_Sticker]

9 minutes ago, TheCountOfNowhere said:

Was just about to ask the same thing.

Dead cat bounce of the start of hyper inflation stock market increases ?

I reckon this could be it, (bottom in ) WHY ?

How many on here are waiting for 6 April AND the £20,000 ISA allowance?

I'm waiting...AND knowning my luck  ...all stocks will be way of their BOTTOM prices!

[Castlevania]

12 minutes ago, TheCountOfNowhere said:

Was just about to ask the same thing.

Dead cat bounce of the start of hyper inflation stock market increases ?

I think there’s an element of short covering. I’d expect a pull back. However for a lot of the stuff that we’ve discussed on here I think they’ve bottomed.

[sancho panza]

 

21 hours ago, DurhamBorn said:

The difference is i dont think the debt will be paid.The CBs are creating new reserves and are pretty much just monetizing what governments are borrowing.In affect they are taking off everyone in the country to hand it back to some places.Its pretty much pure inflation.

 

I remember in 08 when people were watching CDS spreads like hawks.WHat the CB's do now ie rolling maturity should be considered an effective default imho.Just goes to show they can change the rules and we as,retail,have to be aware of that

[DurhamBorn]

7 minutes ago, sancho panza said:

 

I remember in 08 when people were watching CDS spreads like hawks.WHat the CB's do now ie rolling maturity should be considered an effective default imho.Just goes to show they can change the rules and we as,retail,have to be aware of that

Agree,i think thats exactly what they will do,no choice.Plus they are trapped.They need loose policy once we are out of this to get people back to work,but the inflation position needs tightening quickly.They will hope to turn inflation lower once it hits 4% i expect,but it will be too late.

Crucial to keep to the de-complex side of things.Lots of supply chains etc will be coming back,this next cycle will be industria,not consumer,im 99% sure of that.

[TheCountOfNowhere]

30 minutes ago, Yellow_Reduced_Sticker said:

I reckon this could be it, (bottom in ) WHY ?

How many on here are waiting for 6 April AND the £20,000 ISA allowance?

I'm waiting...AND knowning my luck  ...all stocks will be way of their BOTTOM prices!

Give the Banksters of England are handing out £4Bn a day and the US is promising $2 trillion then Im not surprised the market has bounced.

The reality is tho, the world is in a mess and it's getting worse.

If the markets are no longer link to any sort of realistic productive factors then we have a purely financialised pyramid/investment scam.

The madness of which I doubt is lost on anyone here.

It's not the market that worries me, it's the end game.

[DoINeedOne]

Happy with losses as stupid as that sounds it was the same with learning to run advertising its all part of your education to spend money and learn your own little ways

So @DurhamBorn I for one am glad that you will stick around as i have learned so much not from just you but many posters here,  But this thread that you started had me hooked and made me pull the trigger to not just sit with cash in the bank hoping for a interest rate rise one day

One thing i was thinking about yesterday whilst in the garden is there anything programming, data scrapping etc... that may help as it may be something I or someone with better programming skills than me may be able to create then just let me know here or via PM

 

 

 

[sancho panza]

12 hours ago, StrugglingMillennial said:

Well im not surprised but trump is planning on getting people back to work by the 12th of April.

Good for the short term economy but i get the feeling if it goes ahead it will be a disaster.

Trump is beginning to realise that the cure for this pandemic is possibly worse than dealing with the pandemic front on.

Reality is that whilst a fair number of people are dying,in many cases,Corona Virus is exacerbating existing conditions and -I mean this with the greatest respect-bringing forward their deaths by months/years rather than decades.There are statistical outliers-there always will be- but in general that's what this is.It's tragic and sad but from a societal point of view it's how life goes.

Empty shelves,people unemployed,mental health issues particularly male suicide/depression which rises with economic inactivity, isolation of the elderly,-these are the things economic depressions are made of and there's a chance they will affect a lot more people than suffer from the virus itself .

Just yesterday,I saw a pal who runs a small manufacturing firm as he went by and he said that on Friday,the phones just stopped ringing and he doesn't know how he's going to pay his lads as the govt website isn't functioning yet.

It may sound rather callous,but people were dying in the weeks/months/years before corona virus came and they will be dying in the weeks/months/years that follow.

I always say that the worst sound you ever,ever hear is a parent crying for their child that's been lost.It's a sound that will stay with you forever when you've heard it once.It could be cot death/suicide/RTC-anything.Me and my Mum are realistic,she doesn't want to bury me if you get my drift.I feel as a society we have to be very careful here and make sure that the cure doesn't cause more problems than the disease

2 hours ago, Bricks & Mortar said:

I'm thinking there's nothing else for it.  The virus seems extremely contagious.  So much so, that I suspect the end game is herd immunity, through mass infection.   If we all stay in our homes for the next year, we'll just get picked off in clusters by coughing delivery drivers or health professionals.  Instead, I think it'll be shutdown - resume - shutdown - resume, and repeat to herd immunity.

30% of infections are possibly asymptomatic,meaning herd immunity may be a lot nearer than we think.I read somethign like 20% of Cruise ship infections were asymptomatic in a population more susceptible given it was drawn from higher age deciles.

https://www.dw.com/en/up-to-30-of-coronavirus-cases-asymptomatic/a-52900988

1 hour ago, M S E Refugee said:

Anyone think Schlumberger is worth a punt?

Funnily enough,was talking with my Mum yesterday and saying even with cable sub $1.20 I'm tempted by SLB,Baker Hughes and Halliburton.Sticking with the big guns as some of the smaller ones may not make it.

1 hour ago, DurhamBorn said:

No,they are injecting liquidity into the system by expanding their reserves so they can buy government paper increasing the money supply so the government can stop a young family in Glasgow from starving.Its called their job.The amount of gumph youl be reading on the net about the evil CBs is just that,rubbish.They are trying to do their jobs.There are arguments about how they do it of course,and who gains most,but those are not arguments for times like this.The CBs are the fire brigade and the house is on fire.The market is simply reacting to the fact they are starting to right size policy.Open ended QE was the key like i said over and over as the market fell.

 

The first page of this thread years ago,i said how they would deal with the end of this cycle.I said they would pump direct into the economy,and thats exactly what they are doing.They arent doing it in the way i expected,instead they are injecting by paying wages etc.

 

Im not looking at that,im working on pulling together how much liquidity is being put in,how much is being destroyed from debt destruction and working on the roadmap so i know roughly where we are.

I wasnt buying BP at £2.24 (and £3.30 of course) because i thought oil was going up,i was buying because i knew the money supply was going to double,i did the numbers,put in the leg work,had confidence on my ability,and acted on it with discipline.

 

To be fair though whilst the CB's are fighting the fire, they did spend the last ten years drying the wood,cutting the kindling etc by creating the mother of all bond market/residential/CRE/stock market bubbles.It was only ever going to end in tears.

Interesting looking back at the various discussions on this thread and how our intial predictions of how this would end haven't been too wide.Noone could have foreseen La Coruna but the other themes have been discussed in detail.

As per discussion with @Bricks & Mortar @JMD a few days back,there's a school of thought that the Big Kahuna is yet to happen.Looking at the various policy responses and the price action in the markets/news on the virus,I'm beginning to side with B&M and think the big deflationary event is a while away.

It's also intriguing to see how your initial prediction of printing direct into the economy has been bang on.Fair play.I hadn't thought that far ahead-I jsut saw debt deflation>price inflation possibly both together.The mechanism is irrelevant to a degree,ireflation is reflation.

[DurhamBorn]

 

 

1 hour ago, Boon said:

Anyone agree this may be a bit of a sucker rally? The markets taking Trump at his word that people will be back to work by Easter?

I think there is worse news to come from the US, and a number of cases many multiples that of China would be quite embarrassing for Trump and he would need something to blame, especially if they end up topping the 'league table'. Plunging equity markets seems to be the way of asking for more money.

India seems to have the potential for a real humanitarian disaster. I can't buy the idea that hot weather mitigates the spread, Malaysia has seen a recent rise and the climate is similar.

Probably,and it will be very choppy with swings both ways.It doesnt matter though,the key is to focus on the future.Worse it gets the more the Fed prints the more inflation later.Today ones that held up like tobacco are hit.I used some of the top slicing i did in others to add a few.Im not churning a portfolio now,but will keep making small adjustments.

[sancho panza]

1 hour ago, Boon said:

 

I think there is worse news to come from the US, and a number of cases many multiples that of China would be quite embarrassing for Trump and he would need something to blame, especially if they end up topping the 'league table'. Plunging equity markets seems to be the way of asking for more money.

India seems to have the potential for a real humanitarian disaster. I can't buy the idea that hot weather mitigates the spread, Malaysia has seen a recent rise and the climate is similar.

Given the poverty of the testing data,they are unsure of the asymptomatic infection rate which could be a game changer if it's it's larger than expected.

Worth considering ref India that they are generally a much younger country demographically and quite likely that the average Indian has a pretty well functioning immune system.Outliers aside,that's possibly why Western countries are suffering more due to age and cleaner living.The testing will tell.

[TheCountOfNowhere]

The FTSE dropped to 0 gains, then 

 

5,489.22 +43.21 (0.79%)

 

The BoE bloke must have gone to the bog.

[StrugglingMillennial]

46 minutes ago, TheCountOfNowhere said:

The FTSE dropped to 0 gains, then 

 

5,489.22 +43.21 (0.79%)

 

The BoE bloke must have gone to the bog.

They are on here all the time, didn't you know 😂

[Castlevania]

3 hours ago, Castlevania said:

US unemployment claims tomorrow might give the market a reality check. I thankfully bought a fair amount of stuff last week but I’d like a little pullback. 

To add to this, it may already be priced in. Last week’s initial jobless claims was 281,000. The record is 700,000 set in 1982. Barclays are predicting 2 million; Bank of America 3 million and Citibank 4 million.