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

[Agent ZigZag]

1 hour ago, Barnsey said:

MUST READ! (a report from Vincent Deluard which fits this thread’s thesis almost perfectly, we’re starting to have company in the macro world)

https://www.dropbox.com/s/2g92gazyrpdwfyk/MGM_0420.pdf?dl=0

 

Good find Barnsey. . I enjoyed his conclusion especially the social impact the current financial path has had on the younger generation. Overall a positive read and a bright future.

[Harley]

9 hours ago, Bobthebuilder said:

Dont waste your money,buy a Festool TS55 rail saw, way better and has much more uses than a table type. Trust me, you will never look back. Got the t shirt and all that.

My neighbor was a convert too.  But £660?  I must be the poorest/tightest fart in the village!

[MvR]

9 hours ago, Bobthebuilder said:

Dont waste your money,buy a Festool TS55 rail saw, way better and has much more uses than a table type. Trust me, you will never look back. Got the t shirt and all that.

I'd thought about these after using one when re-lining my boat a couple of years ago. They're great for ripping big sheets but not ideal for me now given the space required, and things I'll need to do ( e.g. dados, plus lots of smaller, repeatably identical pieces etc ).

Like you say though.. a great tool.

[TheCountOfNowhere]

17 hours ago, DurhamBorn said:

This is not advice,do your own research etc,

Shell B £1500

Telefonica £1000

Mosaic Company £500

GDXJ £500

DRAX £500

Repsol £500

Vodafone £500

 

 

This'll make you laugh....

If you'd bought this lot 3 days ago you'd now be losing money.

If you'd bought centrica yesterday, you'd be up.

 

Nothing makes sense in this false economy.

[kibuc]

15 hours ago, Bricormortis said:

I think  the US jobless stats come out on Thursday. Hardly going to be happy reading. Mr Market might throw a wobbly.

 

I don't know, good news is good and bad news is even better these days, as it means more stimulus.

[JMD]

16 hours ago, DurhamBorn said:

Fed is near the curve now,problem is the ECB isnt.The EU is proving a disaster.Once they start to rightsize the $ should fall.Over 100 and i think there are still systemic risks somewhere and the Fed will need to keep pumping.Once things settle and the world wakes up to the fact the super powers are going to face off for a cycle there will be a dash for real assets.

Its so fascinating to hear that said, but i'm sure it's true and that most retail and institutional investors are still looking the wrong way.  

DurhamBorn do you think the reason why the EU is so slow in reacting is because they (Germany) want to nail down a new integrated EU tax deal for all members to sign up to (at least a draft agreement in principle) before agreeing more bailout money for Italy, Spain, etc? 

[TheCountOfNowhere]

• Latest: UK shopping basket prices jump 4.4% in a month

 

https://www.theguardian.com/business/live/2020/apr/16/markets-us-jobless-claims-covid-19-recession-imf-bank-of-england-business-live

 

Welcome to hyper inflation

[TheCountOfNowhere]

Prices rose by 1.8% in the last week alone -- or nearly the UK’s target for inflation over a whole year (2%).

[Craig]

3 minutes ago, TheCountOfNowhere said:

Prices rose by 1.8% in the last week alone -- or nearly the UK’s target for inflation over a whole year (2%).

That'll be fucking Tesco putting all of their prices up.

Edit - and removing all of their special offers. Arseholes.

[TheCountOfNowhere]

1 minute ago, Craig said:

That'll be fucking Tesco putting all of their prices up.

Edit - and removing all of their special offers. Arseholes.

93.6% annualised

[DurhamBorn]

 

21 minutes ago, JMD said:

Its so fascinating to hear that said, but i'm sure it's true and that most retail and institutional investors are still looking the wrong way.  

DurhamBorn do you think the reason why the EU is so slow in reacting is because they (Germany) want to nail down a new integrated EU tax deal for all members to sign up to (at least a draft agreement in principle) before agreeing more bailout money for Italy, Spain, etc? 

I just think the EU is a disaster.Far too slow due to its structure.

[TheCountOfNowhere]

Straight to inflation then.

 

Of course they'll say, it's only a blip, it'll go down again.

 

Like hell it will.

[JMD]

17 hours ago, Loki said:

I really hope you're onto something there

I cant predict future politics of course, but my thinking is that its better to make a strategic investment decision either way, and I do think its the less risky option. But who knows and I may underperform, especially if China 'mends its ways' (though that's not looking good; latest news is that the US is ramping up to blame China 100% for releasing CV from its Wuhan Corona research lab, I think the 'great game' is on!).  

Anyway, for what its worth, and based in part from discussions had here, I have decided - in terms of emerging countries - to give wide berth to China/India/South America/Africa and use instead Russia/E. Europe, inc. the former Soviet states/S. Korea(surely only matter of time before it rejoins with N. Korea)/Vietnam/Cambodia/Singapore. These countries represent a relatively small part of the global economy but I think will be better bet in terms of future trade/governance issues compared to China/India, etc.

[Majorpain]

3 minutes ago, TheCountOfNowhere said:

Straight to inflation then.

 

Of course they'll say, it's only a blip, it'll go down again.

 

Like hell it will.

Its inflation or we go down the deflationary black hole as all that debt goes to zero and the world gets very fair, very fast.

Buy inflation proofed assets, buckle up and cross your fingers.

[TheCountOfNowhere]

1 minute ago, Majorpain said:

Its inflation or we go down the deflationary black hole as all that debt goes to zero and the world gets very fair, very fast.

Buy inflation proofed assets, buckle up and cross your fingers.

The inflation proof assets are all in bubbles.

Take your pick on what way you want to lose your money

[JMD]

17 hours ago, Sasquatch said:

Eric Bloodaxe. Now that's a hammered silver penny I'd like to find in a field one day!

Just so long as he's not the next BoE governor!!

[TheCountOfNowhere]

13 minutes ago, Cattle Prod said:

It's not a trading portfolio count, come back and check in 10 years!

I know, it's the centrica thing, find it hilarious.  I hold quite a lot of their shares, I just never learned.

20 minutes ago, Majorpain said:

Its inflation or we go down the deflationary black hole

Could you narrow it down a bit !!!

[Harley]

11 minutes ago, JMD said:

Just so long as he's not the next BoE governor!!

A fantastic name.  I have name envy!  Hope one of his descendants will be our new Volker!  "My name is Eric Bloodaxe, but you can call me.........'Axe'"!

[spygirl]

Opinion: Big US banks should raise $200bn in capital now Neel Kashkari Large banks are eager to be part of the solution to the coronavirus crisis. The most patriotic thing they could do today would be to stop paying dividends and raise equity capital, to ensure that they can endure a deep economic downturn. Unlike the rest of us, banks have the ability to essentially vaccinate themselves against this crisis. They should do so now. In 2008, US taxpayers injected about $200bn of capital to strengthen banks. Raising that amount from private investors today, as a strong, preventive measure would ensure that large banks could support the economy over a broad range of virus scenarios. The writer, president and chief executive of the Federal Reserve Bank of Minneapolis, oversaw the Troubled Asset Relief Program in 2008-09.

https://www.ft.com/content/0b944cd4-7f01-11ea-b0fb-13524ae1056b

Banks will start raising capital, pushing up yields and hold back on lending.

Higher IRs and less lending.

[TheCountOfNowhere]

3 minutes ago, spygirl said:

Opinion: Big US banks should raise $200bn in capital now Neel Kashkari Large banks are eager to be part of the solution to the coronavirus crisis. The most patriotic thing they could do today would be to stop paying dividends and raise equity capital, to ensure that they can endure a deep economic downturn. Unlike the rest of us, banks have the ability to essentially vaccinate themselves against this crisis. They should do so now. In 2008, US taxpayers injected about $200bn of capital to strengthen banks. Raising that amount from private investors today, as a strong, preventive measure would ensure that large banks could support the economy over a broad range of virus scenarios. The writer, president and chief executive of the Federal Reserve Bank of Minneapolis, oversaw the Troubled Asset Relief Program in 2008-09.

https://www.ft.com/content/0b944cd4-7f01-11ea-b0fb-13524ae1056b

Banks will start raising capital, pushing up yields and hold back on lending.

Higher IRs and less lending.

Unless they dont of course.  Lower IRs and lend magicked up cash.

Give the unelected Bank of England immediately brought in a new Term Funding scheme...which do you think they're going for in the UK? 

[DurhamBorn]

There is no inflation in the system,its a few odd items in high demand.The risk is systemic deflation.

The CBs can print as much as they want when facing deflation,and they will.As iv said before they have all the disinflation since 1982 to print if they want.So the Fed can gets its balance sheet well over $12 trillion,probably towards $20 trillion before they start to tighten later.

Imagine however at the end of an inflation cycle.A real one.If my road map is close and inflation is around 15% there is no way they can print to stem falls.That is when the free falling markets cant be stopped.

If the US sees 20% unemployment we can expect massive fiscal injections as the Fed keeps expanding its balance sheet.

Markets arent linear and cycles take time to play out.If the CBs stopped printing now you would see the biggest financial and social disaster in history.A dislocation so large almost every company would go under.

The 70s  great inflation was given fuel because governments feared the costs of unemployment over the costs of some inflation.We are about to see the same triggers.

The CBs are doing the right thing by printing so much,their mistakes were not printing enough and being too tight going into this.

Total collapse or high inflation (not hyper inflation) those are the two options,there is no middle ground now.The likely macro road ahead cant tell anyone how to time an investment,you can though avoid a big chunk of the falls.

Massive changes ahead in the world economy.

[Majorpain]

39 minutes ago, TheCountOfNowhere said:

The inflation proof assets are all in bubbles.

Take your pick on what way you want to lose your money

That's the negative way of saying that the economy cannot support the demands placed on it, and assets are starting to reprice to a level which it can.  Hat tip DB!

All the money printing is doing is increasing the money supply (and hopefully velocity which was dying) and that debt/liabilities becomes more manageable.

If i have to choose between losing more money and losing less money, ill take less money thanks.  

[DurhamBorn]

7 minutes ago, spygirl said:

Opinion: Big US banks should raise $200bn in capital now Neel Kashkari Large banks are eager to be part of the solution to the coronavirus crisis. The most patriotic thing they could do today would be to stop paying dividends and raise equity capital, to ensure that they can endure a deep economic downturn. Unlike the rest of us, banks have the ability to essentially vaccinate themselves against this crisis. They should do so now. In 2008, US taxpayers injected about $200bn of capital to strengthen banks. Raising that amount from private investors today, as a strong, preventive measure would ensure that large banks could support the economy over a broad range of virus scenarios. The writer, president and chief executive of the Federal Reserve Bank of Minneapolis, oversaw the Troubled Asset Relief Program in 2008-09.

https://www.ft.com/content/0b944cd4-7f01-11ea-b0fb-13524ae1056b

Banks will start raising capital, pushing up yields and hold back on lending.

Higher IRs and less lending.

Agreed spy,the money in the system wont be going through the banks,the government think it will at the moment though.It will end up the BOE expanding the balance sheet to buy gilts the government then spends.Once things settle they wont spend all of it though,they will use it to oil the cogs.New arc furnace on Teesside,government funds the rail links etc.

[TheCountOfNowhere]

4 minutes ago, Majorpain said:

That's the negative way of saying that the economy cannot support the demands placed on it, and assets are starting to reprice to a level which it can.  Hat tip DB!

All the money printing is doing is increasing the money supply (and hopefully velocity which was dying) and that debt becomes more manageable.

If i have to choose between losing more money and losing less money, ill take less money thanks.  

I agree 100% with this, the path to losing less money is not clear :-) 

Thankfully I've worked out how to regain my losses....I'm moving everything into a SIPP when I think the time is right. Hopefully that will turn good by retirement time.

[JMD]

12 hours ago, sancho panza said:

Divi's are what it all about for me.Growth is great but I would always sell it to buy yield.

WHen you're buying in the section of the chart that you are,I wouldnt worry about trying to get the bottom.MY Grandad used ot say to me,'leave the bottom 10% and the top 10% for the gamblers'

Sage advice.We've been beaten handsomely by some of the traders on here.If we're sub £15 on RDSB,I'd be delighted.I can't work it out because it's all certificated and I'd have to get my calculator out.

I think if you're buying FCX below $7 then you're getting a lot of bang for your buck.Maybe consider a second ladder at $6 or $5.50.

Vendetta, I agree with SP's comments above, and wasn't it Einstein who said (well, sort of?) that compounding divis was the most powerful force in the universe. Anyway just to add that I think - particularly with where we are at now - i.e at the turn of new economic cycle - potential risks regarding 'catching a falling knife' are not so crucial... its more about positioning my portfolio in cheap stocks that will do well (explode even) in the next cycle. Also, buying into trends (if they happen as expected) such as the US favouring its own producers (at the expense of China) means companies like Mosaic should do very well.