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

[DurhamBorn]

1 hour ago, Bobthebuilder said:

I have spent this morning re reading the last few pages of the thread. It makes me think of a factory that me and a lot of my school friends started work at in the mid 1980s. It is now empty, has been for years, being used for storage at present, production was offshored years ago. Most of my old mates have spent the last 30 years in jobs connected in some way to property assets, builders etc, One even has a portfolio of BTLs.

I do wonder if that factory will re open one day.

We have a Tv manufacturing company now here in Durham

https://celloelectronics.com/contact/

We are also making washing machines again

https://ebac.com/product-category/washing-machines/?gclid=EAIaIQobChMIpvGSjJDg6AIVt4BQBh1djg07EAAYASAAEgJLzvD_BwE

Of course we are also large scale mining again once Anglo-American get the potash mine going.

I think we will also get a new steel works in Teesside ,and Arc furnace and mainly for scrap metal.

We might even see ship building return to many areas now we have learned how to produce modular.

[sancho panza]

10 hours ago, MvR said:

Sorry SP, I meant to reply earlier re: wide spreads and volatility, but have been distracted with prepping.. short answer is I think increased volatility, if anything, would tend to reduce the spreads in further-from-the-money options since they'd be more frequently traded and therefore more liquid, but that's just a guess. It could just be that the instruments you looked at were generally less liquid overall. Sometimes this just happens as options sellers prefer the more liquid instruments, so others fall out of favour for no apparent fundamental reason.

On your calls, what expirations did you buy?   Did you buy naked calls, or sell something else to create a combo of some sort?

 I'm tempted to do something with US steel myself now you point it out. I'll see what the market's doing on Tuesday ( or is it Monday they open? I'd better check!) and put on an X trade of some sort, and post it here, along with its performance and any adjustments I make as time progresses, reasoning etc.

I lvoe ti when you write about butterflies,collars etc.For me I jsut bought the call options.All Jan 21 expiry.Im not at my desk but from memory I went near the money on X,FCX and AA ,then also at the money on FCX.

I sold our holding of FCX in early Feb at cost.Now looking to redeploy that moeny in options across FCX but also a range of 'bring manufacturing home'/reflation type companies.

 

I was surprised by how liquid the US options market was but I think your logixc is bang on ref option sellers choosing the liquid strikes.

I was going to hoe some decent money at XOM $50(plus$55/$60) Jan 21 stirkes at $2.50 but they've moved up too cuh for my liking.I can see copper rocketing here but the only options exposure worth the risk is FCX as I see it.SCCO too high in it's range.

ALso looking to play some XOP/FCG/XES type oil/gas/services but the prices aren't good value imho.Too little reward but clearly shows where the traders see them going.Put/call ratios skewed.

I sued to trade Liffe options,as you previously said,the US is a different ball game.Much better.I can see us getting more involded with this over the next two years.

Consdiering trading Big goldies/tier 1/tier 2 goldies in order as the moenyh its but may need a lot of effort.

[DoINeedOne]

[Errol]

3 hours ago, Democorruptcy said:

US and others throw weight behind Opec and Russia’s production cuts

 

‘They will not let that happen’: OPEC cuts won’t close Russian oil wells which would be impossible to reopen, says Novak

Oil producers will not shut down any facilities where they would be unable to relaunch operations, Russian Energy Minister Alexander Novak said, as the OPEC and non-cartel oil producers continued talks on historic output cuts.

Speaking to the Russia-1 news channel on Saturday, the chief energy official said that he believes the oil companies themselves “will not let that happen.”

Novak was addressing earlier fears that, in order to comply with massive OPEC cuts to boost the tumbling oil market, Russia will have to stop operations at low-production oil wells. Some analysts earlier told TASS that many such facilities hail from the Soviet era and it would be impossible to relaunch them, meaning the country could bury some of its oil reserves there.

https://www.rt.com/business/485563-russia-oil-wells-closures/

[Loki]

could you all give me your thoughts on selling some of my holdings if we get a bounce up which sounds like it could be followed by the real 'big kahuna' as they say on this thread.

I understand the system enough to know this is not technically a part of it, but i am not interested in short term trading calls as such, rather simply maximising the amount i can invest in the reflation stocks going forward. So simply selling RDSB at peak to buy more RDSB when it drops again.  Or would top slicing still be the preferred strategy, accepting the lesser potential gains?

At least i should get one round of divis in before the next fall! 

[Loki]

Also with regard to infrastructure - it just hit me that the internet is barely fit for purpose when it comes to real time communications.

9/10 of recorded interview type podcasts/videos I listen or watch has lags, audio drops, distortion, etc.

There's no way this is a computer problem, your phone has enough power to run a real time video call FFS.

Intermittent web browsing and buffered netflix type viewing are fine, but real-time comms seem utterly dire, to me anyway

Just something I noticed after the third media file of the day started to be uncomfortable to listen to. 

 

[CVG]

2 hours ago, Loki said:

could you all give me your thoughts on selling some of my holdings if we get a bounce up which sounds like it could be followed by the real 'big kahuna' as they say on this thread.

I understand the system enough to know this is not technically a part of it, but i am not interested in short term trading calls as such, rather simply maximising the amount i can invest in the reflation stocks going forward. So simply selling RDSB at peak to buy more RDSB when it drops again.  Or would top slicing still be the preferred strategy, accepting the lesser potential gains?

At least i should get one round of divis in before the next fall! 

My approach is via asset allocation in a balanced portfolio. At present I allow for 40% of my portfolio to be invested in basic stocks (other allocations go to cash and commodities including PM's). Periodically (not every day - in order to preserve sanity!) I'll look at the the value of my stocks as a percentage of my portfolio. If they have risen by more than 5% (to 45%+) then I'll sell enough to bring it back down to 40% and allocate the proceeds to the other assets. If they have fallen by more than 5% (35%-) then I'll use cash to buy more stocks to bring it back up to 40%. This mechanical approach removes emotion from dealings and ensures that I sell high and buy low. Market timing is for the birds.

 

[Loki]

@CVG Thanks mate. Is a 5% rise not prohibitive to top slice with a trading fee for each sell and re-purchase?

Your approach is sensible though.  I really think emotion lead 'trading' will be the downfall for a lot of people as this goes on.  I am extremely lucky to have seen this thread before I ever traded a single share.  (although it does mean I've had a lot of catching up to do with the terms etc )

 

[SillyBilly]

3 hours ago, Loki said:

could you all give me your thoughts on selling some of my holdings if we get a bounce up which sounds like it could be followed by the real 'big kahuna' as they say on this thread.

I understand the system enough to know this is not technically a part of it, but i am not interested in short term trading calls as such, rather simply maximising the amount i can invest in the reflation stocks going forward. So simply selling RDSB at peak to buy more RDSB when it drops again.  Or would top slicing still be the preferred strategy, accepting the lesser potential gains?

At least i should get one round of divis in before the next fall! 

I don't really understand why 99% of people would trade companies like RDSB. Or a lot of other good companies for that matter if you've bought recently. You will just end up losing money if you don't know what you are doing. Which most don't. They are buy and hold stocks. My view would be the only thing you should be doing if you bought recently is congratulating yourself on a good entry and go grab a beer. Enjoy the dividends over the next few years.

Personally my strategy is buy more if things go lower. Not buy more, sell, wait, buy more, sell...been there done it and you never pick the bottom nor the top. And 9 times out of 10 you'd have more money, more time and less stress if you'd just bought something at a good price and forgot about it.

[Loki]

@SillyBilly good advice, and that was always my plan!  The possibility of a second drop mentioned a few pages back just got me thinking about maximising my potential returns, as newcomer and far from rich man 

[CVG]

2 minutes ago, Loki said:

@CVG Thanks mate. Is a 5% rise not prohibitive to top slice with a trading fee for each sell and re-purchase?

 

That's a good question. If you are investing via FTSE Market ETF's then the cost will be low. If you are investing in individual shares then you would want to select a few of the highest gainers to top slice in order to lower costs, i.e. don't slice 5% off every individual stock.

Costs can also be reduced by rebalancing only once a year. That's why the 5% minimum trigger is there. In normal circumstances (pre-COVID-19) it's unusual for the allocations to vary wildly frequently.

It's also a good reason to avoid brokers with high transaction costs. Why pay £11.95 when you could pay £5.00 (or less).

[Errol]

 

[Bricks & Mortar]

3 hours ago, Loki said:

could you all give me your thoughts on selling some of my holdings if we get a bounce up which sounds like it could be followed by the real 'big kahuna' as they say on this thread.

I understand the system enough to know this is not technically a part of it, but i am not interested in short term trading calls as such, rather simply maximising the amount i can invest in the reflation stocks going forward. So simply selling RDSB at peak to buy more RDSB when it drops again.  Or would top slicing still be the preferred strategy, accepting the lesser potential gains?

At least i should get one round of divis in before the next fall! 

I think there's a lot of uncertainty about things now.  I'd envisaged everything to be more linear.  Stock collapse - debt deflation - money printing - recovery.
Coronavirus has provided cover for the central banks to print before the debt deflation really took hold.  But oil stocks had their own 'event' at the same time.
I do think there's a good chance of a 2nd, later crash.  Timing though?  Not my thing.  Just a page or so back, there was a video noting we've had nearly 50% retracement of the losses, and talking about speculation that the 2nd leg down might come imminently.  My own thought is that it might come when we try to get back to work, and companies have burned all their working capital, workers want wage rises, government pulls the wage subsidy, and the oil price is higher.  But nobody really knows.  And the example I just gave, with high oil prices contributing, might not see RDSB fall that much, if at all.

One thing in my plans though, is to continue using stop losses.   I wasn't expecting the crash we just had, but I did have stop losses on half my stocks, set about 10% down from current.  They kicked in.  I pulled the cash out and used it tide my business over though, so only managed to re-enter in a reduced way.

[Loki]

18 minutes ago, CVG said:

That's a good question. If you are investing via FTSE Market ETF's then the cost will be low. If you are investing in individual shares then you would want to select a few of the highest gainers to top slice in order to lower costs, i.e. don't slice 5% off every individual stock.

Costs can also be reduced by rebalancing only once a year. That's why the 5% minimum trigger is there. In normal circumstances (pre-COVID-19) it's unusual for the allocations to vary wildly frequently.

It's also a good reason to avoid brokers with high transaction costs. Why pay £11.95 when you could pay £5.00 (or less).

Good point, this isn't business as normal.  Also true about the funds having much reduced trading fees.  I haven't even started researching funds!  Who do you hold your ISA with?

[Loki]

9 minutes ago, Bricks & Mortar said:

I think there's a lot of uncertainty about things now.  I'd envisaged everything to be more linear.  Stock collapse - debt deflation - money printing - recovery.
Coronavirus has provided cover for the central banks to print before the debt deflation really took hold.  But oil stocks had their own 'event' at the same time.
I do think there's a good chance of a 2nd, later crash.  Timing though?  Not my thing.  Just a page or so back, there was a video noting we've had nearly 50% retracement of the losses, and talking about speculation that the 2nd leg down might come imminently.  My own thought is that it might come when we try to get back to work, and companies have burned all their working capital, workers want wage rises, government pulls the wage subsidy, and the oil price is higher.  But nobody really knows.  And the example I just gave, with high oil prices contributing, might not see RDSB fall that much, if at all.

One thing in my plans though, is to continue using stop losses.   I wasn't expecting the crash we just had, but I did have stop losses on half my stocks, set about 10% down from current.  They kicked in.  I pulled the cash out and used it tide my business over though, so only managed to re-enter in a reduced way.

Thanks for this post - if anything I just like knowing what all the regulars here are thinking.  I had also thought things would be linear - but not realising it's a 'roadmap' not a Tube line map! Detours always possible.

I haven't had much luck with stop losses, BUT only used them on more volatile stocks, thinking they would be more use there.  What happens is, they get triggered, and the stock then rises   I'll reverse my approach and set some on a few of my 'big' shares.

 

[CVG]

15 minutes ago, Loki said:

Good point, this isn't business as normal.  Also true about the funds having much reduced trading fees.  I haven't even started researching funds!  Who do you hold your ISA with?

Probably semantics but it isn't the fund that has reduced trading fees. Rather, if you have a FTSE350 ETF fund then with one (£5) transaction you are effectively top slicing 350 different stocks in one fell stroke.

My buy and hold S&S ISA is with iWeb (£5 transactions, no annual fee, one time £25 set up). My exotic assets ISA is with HL (£11.95 transactions reducing for people who over-transact!, an annual percentage fee, no set up charge). Obviously other possibly better providers exist. As much as I rail against HL charges I should add that I am an HL shareholder!

[sleepwello'nights]

15 minutes ago, Loki said:

 

I haven't had much luck with stop losses, BUT only used them on more volatile stocks, thinking they would be more use there.  What happens is, they get triggered, and the stock then rises   I'll reverse my approach and set some on a few of my 'big' shares.

 

Well I'm going to top up some of my investments with this year ISA allowance next week.

I fully expect a further drop next week just after I've made my choices. 

 

[Loki]

5 minutes ago, CVG said:

I am an HL shareholder!

You're welcome! 

[Democorruptcy]

1 hour ago, SillyBilly said:

I don't really understand why 99% of people would trade companies like RDSB. Or a lot of other good companies for that matter if you've bought recently. You will just end up losing money if you don't know what you are doing. Which most don't. They are buy and hold stocks. My view would be the only thing you should be doing if you bought recently is congratulating yourself on a good entry and go grab a beer. Enjoy the dividends over the next few years.

Personally my strategy is buy more if things go lower. Not buy more, sell, wait, buy more, sell...been there done it and you never pick the bottom nor the top. And 9 times out of 10 you'd have more money, more time and less stress if you'd just bought something at a good price and forgot about it.

Even a company like RDSB isn't a straight line up, so gives chances to trade it.

 

[SillyBilly]

Just now, Democorruptcy said:

Even a company like RDSB isn't a straight line up, so gives chances to trade it.

 

I must have forgot that RDSB didn't go up or down in straight lines...thanks for the chart, now convinced to start trading again... 

[Gin]

Where am I able to go back to part one of this thread ta!

[sancho panza]

Yowzer!!!!!!!!!!!!!!!!!!!!

via daily shot

 

 

Infrastructure spending ramping in Chinois.

[DoINeedOne]

5 minutes ago, Gin said:

Where am I able to go back to part one of this thread ta!

 

[Loki]

6 minutes ago, sancho panza said:

Infrastructure spending ramping in Chinois.

I really, really hope that the roadmap system accounts for quality over quantity

Nothing personal, Chinese 

[sancho panza]

Makes you glad to bein the UK with a better social security framework.

Some of the comments on the Mish site are quite though provoking.

https://moneymaven.io/mishtalk/economics/thousands-of-desperate-people-flood-food-bank-lines--N6NZ4KZqk2WQmczYXKhQA

https://www.expressnews.com/news/local/article/Thousands-hit-hard-by-coronavirus-pandemic-s-15189948.php

 

April 9, 2020

In perhaps the most sobering reminder yet of the economic fallout caused by the coronavirus pandemic, the San Antonio Food Bank aided about 10,000 households Thursday in a record-setting giveaway at a South Side flea market.

 

“It was a rough one today,” said Food Bank president and CEO Eric Cooper after the largest single-day distribution in the nonprofit’s 40-year history. “We have never executed on as large of a demand as we are now.”

Thursday’s drive-thru at Traders Village was the fourth such event for the Food Bank since March 31.

Thousands of people in cars gather at Traders Village to get food from the San Antonio Food Bank on Thursday, Apr. 9, 2020. This was the Food Banks largest distribution to date.

(Kin Man Hui, Staff Photographer | Express News)

Over that desperation-filled 10-day span, the agency has fed about 15,500 households, with each distribution drawing more than the first. Cooper said the Food Bank is planning two more giveaways for next week, possibly on Tuesday and Friday, but he’s not sure it can get them done without help from “the National Guard or somebody.”

“Our staff and our volunteers, I don’t know if we can keep up the pace that the demand is requiring,” he said. “We’ve got to debrief and figure things out, but we just can’t feed this many people at one time without probably the Guard or somebody helping us.”

 

“We tried to qualify people on site,” Cooper said. “There were a few folks who showed up that didn’t qualify…but then there were those who showed up and said, ‘I heard this was happening. I didn’t know I had to register, but I need food. I am a hotel worker and I was laid off.’ Those are the stories we heard from a lot of people who showed up.”

Thursday began with 1 million pounds of food on hand at Traders Village delivered by 25 tractor-trailer rigs. But with so many unexpected thousands and food running out, Cooper made the call to the Food Bank warehouse to send in more trucks loaded with food.

“The fishes and loaves went from 5,000 to 10,000, and there really wasn’t much left over,” Cooper said.

“It was a bit of a miracle that we were able to get done what we got done.”

With the Food Bank requiring preregistration and the distributions held in different parts of town, officials believe there were few repeat recipients.

“It fosters accountability,” Food Bank spokesman Michael Guerra said of the registration process. “We have $1.5 million worth of food here today, so we have to be good stewards of that.”

People wait at Traders Village for the San Antonio Food Bank to begin food distribution.

(William Luther, Staff | Express News)

The majority of vehicles began lining up to enter the parking lot at Traders Village well before dawn for the 10 a.m. kick off, although at least one person arrived at 6 p.m. Wednesday and camped out overnight near the security guard station.

By 6 a.m. Thursday, the parking lot was full, with vehicles neatly lined up to make their way to stations where volunteers packed trunks with bags of beans, canned goods, fresh produce, milk and other supplies.

• 

  The Labor Department said Thursday 6.6 million people applied for first time unemployment benefits.

  (William Luther | Express News)
• 

  People wait Thursday, April 9, 2020, at Traders Village for the San Antonio Food Bank to begin food distribution.

  (William Luther | Express News)

“It looked like prairie dogs out there, with all the people standing on top of their trucks, trying to get an eagle-eye view of the line to see how much longer they had to wait,” said Brian Billeck, marketing manager at Traders Village.

 

Billeck became emotional when talking about some of the people he saw in line.

“I saw some of our employees and vendors, and it brought me to tears,” Billeck said.

“It just breaks your heart. It’s not what you want to see.”

Yolanda Benavides, 63, described the aid from the Food Bank as being delivered by “angels from heaven” but admitted she had mixed feelings about receiving aid.

READ MORE: COVID-19 pandemic feels a lot like the Great Depression

“This hurts because I’ve always given and now we are on the other side,” said Benavides, who is disabled and cares for four grandchildren ages 6 through 17 with her husband, a recently laid off charter-bus driver.

“It would be rice and beans without this,” Benavides said.

The distributions are much-needed, officials say, but are seriously straining the Food Bank’s resources, so much so that Cooper has said he fears its warehouse could be empty in three weeks.

With thousands out of work due to the coronavirus pandemic restrictions, demand at the Food Bank is off the charts.

 

• 
• 
• 
• 

On the supply side, it has been more difficult for it to gather food because grocery stores have less surplus to donate due to panic buying depleting the shelves day after day. Restaurants who regularly donated food are now closed, shutting off yet another usually reliable Food Bank source.

To bridge the gap, the Food Bank is seeking $12 million worth of help from the state, filing a State of Texas Assistance Request with the Department of Emergency Management last week.

 

Still, Cooper said, the goal is to give families “the biggest grocery basket possible by way of their trunk” at the drive-thru distributions.

“We are now at a level where we are having to buy food, and dollars are going very quickly,” Cooper said. “The $12 million from the state will help us stock our shelves with peanut butter and soups and chili and stew and rice and beans and corn and green beans and all of those staple items families need in their pantry to nourish their family.”

About 400 volunteers, aided by traffic control performed by San Antonio police, helped distribute the food Thursday.

“The good Lord says help they neighbor,” said C.J. Littlefield, an 80-year-old senior citizens coordinator at the Ella Austin Community Center, in explaining what motivated him to volunteer.

https://www.expressnews.com/news/local/article/Thousands-hit-hard-by-coronavirus-pandemic-s-15189948.php