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

[DoINeedOne]

 

5 hours 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 read 

------

Bought within ISA over the last few days

1st ladder in Repsol yesterday

4th ladder in BP today

4th ladder in Shell today

 

 

 

[JMD]

1 hour ago, TheCountOfNowhere said:

The inflation proof assets are all in bubbles.

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

Do you mean that? Or are you mainly referring to the potential for another smackdown/big kahuna event? And even if that were to happen I thought the reflation stocks discussed here, if thread ethos is accurate, were set to benefit most over next 5+ years.    

Obviously there are no guarantees, but for example, as this stock has been discussed recently... is Mosaic in a bubble... or the oil/telecom reflation stocks discussed so often here?

[sancho panza]

1 hour ago, Cattle Prod said:

So for my fellow stat nerds, how is the bat flu daily confirmed new cases ex China bell curve doing? I haven't touched the scales or projections, (as people just love to do to make stuff fit, I'm looking at you, climate hockey stick people):

2nd April:

 

15th April:

So beahving itself, and filling out quite nicely. Still a chance of it having a longer flat top, the next few days will tell. If it does, it will be because more developing countries and emerging markets are being added. It's a bit spikier than I'd like, I think this is due to reporting methods. As I said you can only see a peak in the rear view, and another 5 days or so will be safer to see it. But if I was to take a financial position on this (as I did two weeks ago!) I'd say it has peaked (dyor please, I did this for my own purposes only!). There will be secondary peaks in individual countries like Singapore, but global data should smooth these out.

For those focused on financial centres, and thinking about when traders might start to feel a bit happier, courtesy of worldometers.info and GMI:

So peaked and dropping. GMI shows the he UK trailing behind using a 5 DMA:

But interestingly, worldometers without the 5DMA is much flatter. Again, statistics in the eye of the beholder, I wonder why they chose this interpretation of the data for the UK. I prefer the raw data myself:

Not all roses though, I've only been showing daily new confirmed cases, as a proxy for rate of infection, and yes the virus is following a natural cycle: but healing times are long. Which may embolden the govt to keep things locked down for longer in fear of hospitals being overwhelmed. Though I note that reports of half empty ICUs are now hitting the mainstream media, I will watch what the govt says in response to this with interest.

I posted this in the sceptics thread for my records CP.Spot the highest ranking country with no lock down........comes in 8th.The chart is deaths per million,which cuts out all the noise about testing but does obviously include some consistency issues with certification as to the cause of death by various nations.

The problem with the new cases data is that it's heavily influenced by governmental incompetence, and in the matter of the UK's,that creates multiple problems.

There's a body of evidence,mainly anecdotal but some evidentiary,that a substantial flu virus was doing the rounds in Dec/Jan-if not earlier-which might well change your starting point but not the shape of your curve.

I think the govt will have to continue the lock down as not doing so will be tantamount to admitting they were wrong to initiate it.

https://en.wikipedia.org/wiki/2020_coronavirus_pandemic_in_Europe

 

edit toadd:jsut found out they've extended lock down for 3 weeks.

[Sasquatch]

1 hour ago, DurhamBorn said:

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.

So Egon over at Gold Switzerland is perhaps a little sensationalist?

https://goldswitzerland.com/the-greatest-financial-crisis-hyperinflation/

I quite like his style but clearly he is a fully signed up goldbug. 

I'm not sure I want 'total collapse' option to be explained to me by anyone..... 

[TheCountOfNowhere]

1 hour ago, JMD said:

Do you mean that? Or are you mainly referring to the potential for another smackdown/big kahuna event? And even if that were to happen I thought the reflation stocks discussed here, if thread ethos is accurate, were set to benefit most over next 5+ years.    

Obviously there are no guarantees, but for example, as this stock has been discussed recently... is Mosaic in a bubble... or the oil/telecom reflation stocks discussed so often here?

Do I mean that....that is a good question.

Yes, I think I do.

Show me an asset class that doesn't look inflated due to the events of 2007 onwards, cars, houses, US stock market, even Gold, Bit coin, Silver look historically high, relative to UK wages ( that's the important bit ).  In the great depression the US ( land of the free ) tried to confiscate gold.

I think the best you can hope for it to maintain your position but I dont think there is any simple answers on how to do that other than to try and time your jump into various asset classes.

For that though we sure as hell better hope we are about to see some sort of asset deflation event.

 

 

 

[janch]

21 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.

Many thanks DB.  That makes perfect sense.

[TheCountOfNowhere]

Any thoughts on:

 

Tata Motors Limited Fully Paid Ord. Shrs

[Loki]

3 hours ago, TheCountOfNowhere said:

Silver

Isn't silver at a ridiculously low spot price and silver/gold ratio?

Physical and paper prices are worth bearing in mind

Just checked out of curiosity and silver Brits back below £20.  Bought more.

[PaulParanoia]

34 minutes ago, Loki said:

Isn't silver at a ridiculously low spot price and silver/gold ratio?

Silver lagging Gold

[Loki]

1 minute ago, PaulParanoia said:

Silver lagging Gold

I saw that price of £19.94 and couldn't resist.  This is what following this type of info has done to me 

 

My name is Loki, and I'm a silverholic.

[TheCountOfNowhere]

46 minutes ago, Loki said:

Isn't silver at a ridiculously low spot price and silver/gold ratio?

Physical and paper prices are worth bearing in mind

Just checked out of curiosity and silver Brits back below £20.  Bought more.

U tried buying any ?

[Loki]

4 minutes ago, TheCountOfNowhere said:

U tried buying any ?

Have, and did 

 

As an aside, I really don't like the way they can't get a handle on the DXY...back over 100.  (I'm not basing that on any sort of in-depth knowledge by the way, it just seems odd)

 

[Moominpapa]

For those of you buying shell what do you think of them obtaining credit to maintain their dividend, if you're going to be a long term share holder? If you're looking for decent management when stock picking how does this sit with you?

[PaulParanoia]

Just now, Moominpapa said:

For those of you buying shell what do you think of them obtaining credit to maintain their dividend, if you're going to be a long term share holder? If you're looking for decent management when stock picking how does this sit with you?

Where did you read that they are using the new credit facility to maintain the dividend?  I though they secured it as a precaution but didn't need to draw on it at this time.  They might have to cut the divi before drawing the loan down.  We don't know what the terms are.

[JMD]

3 hours ago, TheCountOfNowhere said:

Do I mean that....that is a good question.

Yes, I think I do.

Show me an asset class that doesn't look inflated due to the events of 2007 onwards, cars, houses, US stock market, even Gold, Bit coin, Silver look historically high, relative to UK wages ( that's the important bit ).  In the great depression the US ( land of the free ) tried to confiscate gold.

I think the best you can hope for it to maintain your position but I dont think there is any simple answers on how to do that other than to try and time your jump into various asset classes.

For that though we sure as hell better hope we are about to see some sort of asset deflation event.

Count, I was just wondering what your strategy was. You have on several occasions recently mentioned your own stock purchases, yet regularly state everything's in a massive bubble. (perhaps so where even cosmologists tell us we live in an inflationary universe, where stars are flying apart at 1000mph, so maybe absolutely everything exists within a bubble)   

Ok, only fair to at least briefly mention my own strategy. I do expect a crash later this/next year, so am waiting for that and hope to benefit from it. I have bought into the 'market bubble' in recent years because I wanted to begin positioning for the next cycle. Much of this 'investment game' is new to me and I have certainly made some mistakes, but knew in order to learn I had to start buying and reviewing my decisions. Hopefully I wont get punished further in the next big market correction, if/when it comes.    

[Loki]

1 minute ago, JMD said:

I have bought into the 'market bubble' in recent years because I wanted to begin positioning for the next cycle. Much of this 'investment game' is new to me and I have certainly made some mistakes, but knew in order to learn I had to start buying and reviewing my decisions. Hopefully I wont get punished further in the next big market correction, if/when it comes.

You are me AICMFP

[Bricks & Mortar]

1 hour ago, Loki said:

As an aside, I really don't like the way they can't get a handle on the DXY...back over 100.  (I'm not basing that on any sort of in-depth knowledge by the way, it just seems odd)

This chap (stumbled on this on Twitter - don't know the guy), reckons extra liquidity usually shows up in the DXY after 2-3 months.  So, maybe we're just waiting for it?
 

I'm interested in leads and lags, but don't know it well enough to comment on this.

[Loki]

@Bricks & Mortar superb post for a novice like me, thanks

[TheCountOfNowhere]

1 hour ago, JMD said:

Count, I was just wondering what your strategy was. You have on several occasions recently mentioned your own stock purchases, yet regularly state everything's in a massive bubble. (perhaps so where even cosmologists tell us we live in an inflationary universe, where stars are flying apart at 1000mph, so maybe absolutely everything exists within a bubble)   

Ok, only fair to at least briefly mention my own strategy. I do expect a crash later this/next year, so am waiting for that and hope to benefit from it. I have bought into the 'market bubble' in recent years because I wanted to begin positioning for the next cycle. Much of this 'investment game' is new to me and I have certainly made some mistakes, but knew in order to learn I had to start buying and reviewing my decisions. Hopefully I wont get punished further in the next big market correction, if/when it comes.    

My strategy is based on better 30% of something than 100% of nothing.

Most of the stocks I've bought were/are down 50% from a peak, some like Centrica have gone about 50%+ past that, but at least 50% off already mitigates the losses.  I dont think it matters much what you buy now, so long as the company is solvent and has an actually place in a real economy.I got caught with the oil falling knife too but not far off even on those.

When we are coming out of lock down I'll pile a lot more into oil etc with a view to selling it when/if the 2nd wave starts hitting.  Stuff that should get back to normal quickly should be a good bet for a quick profit, EasyJet, Rolls Royce, Cineworld, Wetherspoons, but I'd buy and sell shortly after.

I expect losses for sure.  I should see any shares go into profit if DB's reflation takes off or I live long enough, or the economy doesn't imploded, so buying now is one of the few best options I see. 

I've not utilized a SIPP yet, as I did not want my money tied up in a stock market/pension that was going to fall at some point.  I'll move my £40K allocation in this year which will give me a healthy tax handout to mitigate my losses, I should use my wive's too when i think about it

I've got a lot of cash that's been coming out of 5 year fixed rated savings bonds for the last 2 years and I emptied peer 2 peer money in the nick of time.  Those rates were all very good and beat or kept up more or less with inflation ( that's the name of the game for me ).

For sure though, this cash is now earning below inflation rates but is easily accessible but it is beating housing for sure, probably up 10% on housing in 2 years ( down south ) with zero effort or risk, I'll plough a lot/most of that into land/housing here and abroad it collapses further, if not then I am left with a quandary of how best to try and protect it.  If house prices drop substantially I will take out a massive mortgage backed by my savings on the longest fixed I can get and pray that DB is right.  The savings would then go back into short term bonds, with get out clauses, maybe even some corporate bonds.  

I'm happy to buy into DBs long term view so will do what most on here are doing for now.  I've got some physical gold and silver, enough to live on for a year or two if need be.  I'm lucky to hold loads of index linked savings certs but even those are being hammered now as they are moving from RPI to CPI so will keep an eye on that.  

It's all about the timing now, when to get out of cash safe and with as few a losses as possible.

This is why I always go on about timing.

How does that sound ?

 

[Democorruptcy]

Greatest return on investment I've ever seen. A bloke on the news has made plenty.

I'm going to buy two

 

[Barnsey]

8 hours ago, DurhamBorn said:

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.

U.S. unemployment already at 13.3% going by today’s figures, and that’s taken just 4 weeks to reach! All the jobs created in the last decade since the recession erased in a month.

[Harley]

4 hours ago, Loki said:

Have, and did 

 

As an aside, I really don't like the way they can't get a handle on the DXY...back over 100.  (I'm not basing that on any sort of in-depth knowledge by the way, it just seems odd)

 

Back on the "margin scheme" so no VAT charged?

[Loki]

9 minutes ago, Harley said:

Back on the "margin scheme" so no VAT charged?

Looks like it mate.  Too late now if they change their minds anyway   I think there might have been a site glitch too, for a while silver Leaf coins were VAT free but not Brits

[spygirl]

3 hours ago, Bricks & Mortar said:

This chap (stumbled on this on Twitter - don't know the guy), reckons extra liquidity usually shows up in the DXY after 2-3 months.  So, maybe we're just waiting for it?
 

I'm interested in leads and lags, but don't know it well enough to comment on this.

They are extending credit to jaPs, Canada, Mexico, UK n Europe, to support liquidty.

This is trade finance, basically.

It's not debt to plebs, so far.

[Iamcynical]

20 minutes ago, Loki said:

Looks like it mate.  Too late now if they change their minds anyway   I think there might have been a site glitch too, for a while silver Leaf coins were VAT free but not Brits

Where are these from please ?