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


spunko

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TheCountOfNowhere
12 minutes ago, Loki said:

Does anyone know what has driven stocks higher today? My reflation portfolio is up by 2.5% which is nice to see.  I'm not looking to trade this rise, I just want to know the reason for it, if there is a solid one.  Can't see much action on DXY or 10Y/30Y treasuries

Mine too funnily enough, down to just the £4K loss now :D

Think everything is mostly up.

Glencore is really digging me out of a hole

 

Market Summary > Glencore PLC
LON: GLEN
Follow
 

150.57 GBX +5.01 (3.44%)

 

We are probably in the....this isn't as bad as they told us...phase.

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Democorruptcy

I'm proud to report that my last ladder is currently temporarily savouring the fleeting moment, in profit.

(Rushes off screen to quickly check it still is..... yes.... I can press submit reply)

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Don Coglione
4 minutes ago, Democorruptcy said:

I'm proud to report that my last ladder is currently temporarily savouring the fleeting moment, in profit.

(Rushes off screen to quickly check it still is..... yes.... I can press submit reply)

Ssshhh!

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TheCountOfNowhere

Now's probably a good time to start your portfolio.....

NOTE TO SELF: Listen to your own advice :Old:

Stuff I've bought since the first collapse:

Anglo American: +4%

BP:  +2%

Glencore: +14%

Schlumberger: + 8%

Total: +5%

Shell: -10%

BASF: -3%

Repsol: -3%

Rolls Royce: -4%

Stuff I bought before:

BT: -30%

C******a: -42%

National Grid: -4%

Royal Mail: -25%

Stagecoach: -50%

Vodafone: -0.02%

Lloyds: -42%

New Gold: -32%

 

Sold:

Easy Jet: +£200

Shell: +£100

Vodafone: +£100

So  down approx 10% now all in so not as bad as it could be. if I'd held my nerve with easy jet and Shell I'd have been breaking even now.

 

 

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Democorruptcy
44 minutes ago, Loki said:

Does anyone know what has driven stocks higher today? My reflation portfolio is up by 2.5% which is nice to see.  I'm not looking to trade this rise, I just want to know the reason for it, if there is a solid one.  Can't see much action on DXY or 10Y/30Y treasuries

Boris and Carrie have had a baby boy, euphoria about it is sweeping the markets.

Oh and it's Fed day. I was reading yesterday that there were hopes of them announcing more help in the future such as buying stocks with their infinite supply of money.

https://www.barrons.com/articles/global-equities-mixed-on-a-busy-day-for-data-earnings-and-the-fed-51588155147

One here about a possible scheme for large corporations:

Quote

 

A Federal Reserve program expected to begin within weeks will provide hundreds of billions in emergency aid to large American corporations without requiring them to save jobs or limit payments to executives and shareholders.

Under the program, the central bank will buy up to $500 billion in bonds issued by large companies. The companies will use the influx of cash as a financial lifeline but are required to pay it back with interest.

Unlike other portions of the relief for American businesses, however, this aid will be exempt from rules passed by Congress requiring recipients to limit dividends, executive compensation and stock buybacks and does not direct the companies to maintain certain employment levels.

Critics say the program could allow large companies that take the federal help to reward shareholders and executives without saving any jobs. The program was set up jointly by the Federal Reserve and the Treasury Department.

https://www.washingtonpost.com/business/2020/04/28/federal-reserve-bond-corporations/

 

 

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sancho panza
1 hour ago, kibuc said:

No worries. Regarding Impact, it would be my primary pure silver play (as opposed to Fortuna, which will become a gold play with Lindero) if it wasn't for their very low volumes. Usually I can only get a quote for £1000, sometimes £2000 worth of shares, so if you're dealing with larger amounts then getting in and (more importantly) out of the market quickly might take some effort. 

Thanks for that detail.When we go into these thigns you have to accept that there's no way out if the sh1t hits the fan sometimes.Having said that,I presume msot Impact shareholders realise they're hostages to fortune in those times.It's chart shows a distinct lack of volatility over the last 6 weeks given the liquidity issues you mention.I suppose msot big holders have no chocie and are in for the long term.

I'm not in a rush for teh right trade.This 50% bump on GUY has given me some options as we reached full allocation(well 98%) in March in PM's and I was keeping the last bit left for that special trade you sometimes get which if you miss you'll kick yourserlf forever for.

 

I jsut checked MAI and it's near 40c.I got in at 20c and 23c so I could add a little here and then maybe move what's left into Impact.

On wider note,some tier one and tier two stocks eg GFI,AU,AUY etc really starting to move.Nemwont has jsut had an exponenetial phse which shows up nicely on the monthlies for historical context.

image.png.ed841942ce25e346a3aad38f64e44ed4.png

We've got big(for us) positions in FRES and HOCM which are up slightly and down.Silver's time hasn't come.But my research shows gold hsitorically runs first then silver later BUT much much harder.......Just thinking aloud.

 

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Markets arent linear.The Fed pumped into the capital markets,that then works into the equity markets and that works out into the real economy.Thats how it works.The only difference this time is governments are injecting direct into the economy as well,but at the moment thats simply to stop demand collapsing,not to grow the economy.

Best to ignore price movements and allow the cycle to play out.Lots of buys are up over 100% from bottom,and even the bigger companies 40% so pullbacks could be regular.News isnt driving markets outside of individual companies,its liquidity.

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Yellow_Reduced_Sticker

...well f**k me 'ol boots, even the stock that CAN'T be NAMED ...

is UP from a low of 29p last week to 38p today! :o

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sleepwello'nights
8 minutes ago, Yellow_Reduced_Sticker said:

...well f**k me 'ol boots, even the stock that CAN'T be NAMED ...

is UP from a low of 29p last week to 38p today! :o

I've just received their annual review today. Quite an impressive report, the printed booklet itself. I haven't read the content yet, just a quick skim read.

The printed report is the same as the one I got from HSBC recently. And I mean the printed booklet itself not the contents. 

Why are they spending so much on reports of this quality? 

 

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Noallegiance
1 hour ago, DurhamBorn said:

Markets arent linear.The Fed pumped into the capital markets,that then works into the equity markets and that works out into the real economy.Thats how it works.The only difference this time is governments are injecting direct into the economy as well,but at the moment thats simply to stop demand collapsing,not to grow the economy.

Best to ignore price movements and allow the cycle to play out.Lots of buys are up over 100% from bottom,and even the bigger companies 40% so pullbacks could be regular.News isnt driving markets outside of individual companies,its liquidity.

I must remember this.

I'm now pretty much fully allocated from my small private pension transfer to my SIPP. It was fun doing it!

Must.......resist......logging........on..........

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23 minutes ago, sleepwello'nights said:

Why are they spending so much on reports of this quality?

A chance to sooth investor concerns while print firms are practically buying work?

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TheCountOfNowhere
29 minutes ago, Yellow_Reduced_Sticker said:

...well f**k me 'ol boots, even the stock that CAN'T be NAMED ...

is UP from a low of 29p last week to 38p today! :o

Dont look !!!!!

I've just logged on to my share dealing account again just to see vodafone in the green, sad but true.

I think a FTSE tracker would have done more or less the same if I'd bought at the peak, so nothing to celebrate.

This might make some laugh tho, talk about randomly investing.

I shoved £500 into MOS.

Then I realized MOS was on the NYSE.

I bought the one from the LSE !!! DOH.

When I read the spiel I thought, bit of a gamble, let it roll till Wednesday this week, see if I can get my buying fees back, as there was some talk of an announcement today. I'll give it another week and see if I can lose it all.

 

 

image.png.7d395a0a0d29aa503b5b0abc018b5591.png

 

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4 hours ago, DoINeedOne said:

Whats people views on trimming especially in the miners its something i sometimes struggle with (Greed)

Sold most of my miners last year with profits only to watch them go higher but then drop I have gradually been buying back into them and feel i need to set a rule for trimming 

 

Yes.....I know what you mean.  I've seen shares rise nicely, I hang on for a bigger rise only to see them fall and I've missed the profit.  I seem to remember @DurhamBorn saying the hardest thing was knowing when to sell.

With the miners if one is expecting a possible x10 say would you top slice every so often or wait?  Some could be hard to sell when the run ends and everyone wants out at the same time............hmm....

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1 hour ago, TheCountOfNowhere said:

Dont look !!!!!

I've just logged on to my share dealing account again just to see vodafone in the green, sad but true.

I think a FTSE tracker would have done more or less the same if I'd bought at the peak, so nothing to celebrate.

This might make some laugh tho, talk about randomly investing.

I shoved £500 into MOS.

Then I realized MOS was on the NYSE.

I bought the one from the LSE !!! DOH.

When I read the spiel I thought, bit of a gamble, let it roll till Wednesday this week, see if I can get my buying fees back, as there was some talk of an announcement today. I'll give it another week and see if I can lose it all.

 

 

image.png.7d395a0a0d29aa503b5b0abc018b5591.png

 

easily done.....xD

I've just had a read of their company info on HL and I believe they are involved in the important business sector of bibbly bollocks (to quote Mrs S). I might buy £250 worth to make you feel better....

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TheCountOfNowhere
27 minutes ago, Sasquatch said:

easily done.....xD

I've just had a read of their company info on HL and I believe they are involved in the important business sector of bibbly bollocks (to quote Mrs S). I might buy £250 worth to make you feel better....

A profit's a profit. I will wait to see my profit disappear tho.

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From the first post of the thread.

"They will panic and print direct into the economy by passing money/debt to governments at 0.1% or zero coupons.This is what will kick in the first reflation cycle since the 70s."

https://www.marketwatch.com/investing/bond/tmbmkgb-50y?countrycode=bx

We have seen 0.4% on the 50 year gilt so road map has got around 80% of the way correct.Past the area of margin error,so iv now got rates as target hit.

https://www.marketwatch.com/investing/bond/tmbmkgb-15y?countrycode=bx

Same on the 15 year.

15 year matters as its the one they use for pensions mostly.I would guess we are now at maximum underfunded level on pensions,and that will improve a lot over the next 8 years as rates increase.

I think if 1/3 of capital leaves the bond markets into other areas commods will go up 500%+

 6% yield on 15 year bonds.Thats the point when they become a 50/50 bet.Though i expect 8% is almost certain and 12% possible.Anything below will see capital destruction.

I think the SVR on mortgages will be between 7% and 11% by 2028 with fixed rates HIGHER.

A few glamour stocks will still do well for a period,but re-allocation will continue with pullbacks along the way into reflation areas.

The CBs havent right sized yet,i expect we will see more into the plumbing,but bigger amounts monetizing government issues.

Japan didnt see inflation because they were already a massive manufacturing economy and outsourced a lot to China etc.Different when everyone is re-tooling.

The government has just had a massive shock just because they cant produce gowns and visors.Imagine if they cant produce ships in a war.

Likely another big sell off at some point to secure the extra massive printing.It could be whole market,or mostly over valued sectors.

Just some thoughts.

 

 

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Thanks as always durhamborn for putting such a complex issue so understandably and for your update as to where you see things.

16 minutes ago, DurhamBorn said:

Likely another big sell off at some point to secure the extra massive printing.It could be whole market,or mostly over valued sectors.

Do you think this will be the summer sell-off David Hunter mentions?

Sounds like this is the year where your theory stops being theory, for me  (I know you've seen it all before anyway xD)

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23 minutes ago, Loki said:

Thanks as always durhamborn for putting such a complex issue so understandably and for your update as to where you see things.

Do you think this will be the summer sell-off David Hunter mentions?

Sounds like this is the year where your theory stops being theory, for me  (I know you've seen it all before anyway xD)

Very hard to tell,David will be basing it on the systemic risks once the printing slows.Its likely we get a massive financial affect,but not certain yet how that plays out.Predicting what has just happened was easy from a macro position,very easy actually,longer term is pretty easy to,macro is clear,the next 18 months is very very difficult and its crucial to keep balanced,and maybe even slice a few profits in some areas and allow dividends to remain in cash as well etc.

Rolling over debts will likely prove a big problem once the CBs slow injecting to government debt only.

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On 23/04/2020 at 11:04, sancho panza said:

Are ETF's like GDX a problem in your opinion?

Back after what feels like ages and so far only on page 386!  Boy, things do move quickly!  But I miss the excitement of the crash.  I really thought we'd see another leg down and my technicals are still all over the place.  However, the weeklies look good so I'll see next week when the monthlies move on whether to buy.  I really (I mean REALLY) should have traded this on the dailies (not weeklies, too slow) rather than look to buy and hold but been elsewhere.  Could have easily covered my (much reduced) losses on my income portfolio.  Trouble is, I've kinda gone off money!  I've been trying to convert and/or get rid of it!

ETFs/ETCs, IMO, are on a sliding scale of risk, with the obscure synthetics, etc being at the top.  GDX seems one of the more reasonable ones but still has counterparty and potential liquidity risks.  I also compared it once to its main holdings (indeed just the two top ones) and they seemed to have performed better so I'm not sure it's worth all the fuss over some straight equity holdings, other than sector diversification.  But I need to review.  GDX was my biggest cost of my recent "looking the other way".  But at least I haven't been idle.

Plenty left to do though before the coming government money grab to pay for it all.  Especially as I see Wales has hired Gordon Brown to advise on the CV recovery there!  It's going to be financial clown world everywhere soon as the bills come due.

PS: Anyone see much upside the the rest of the year?  Sell in May?  Not that the fekers will be going to Henley, etc.  Or will they?  After all, funny if they relaxed things for the "summer season", just like they delayed lockdown until after Cheltenham, etc.  October doldrums/crash?  People realise it's all going to be a slog?  The only seeds planted so far are going to germinate some nasties.  Anyways, I always avoid the start of a new tax year!

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8 minutes ago, DurhamBorn said:

,the next 18 months is very very difficult and its crucial to keep balanced,and maybe even slice a few profits in some areas and allow dividends to remain in cash as well etc.

 

I know you're not re-working your PM figures but does your intuition still see a rise for silver and/or gold?  

Did you have any thoughts on the Martin Armstrong blog post a page or two back?

I am happy to sit in cash for a bit (As work allows, anyway) but don't want to get analysis paralysis!

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On 22/04/2020 at 20:24, S Brule said:

Does anyone else follow that Raoul Pal fella of RealVision on Twitter? He's made some good calls in the past. He's posted a link where you can get his April report for free, here is the link to the pdf in googledrive that is in the email (in case you don't want give your email address to sign up).

TBH, I've not read it yet, it's 120 pages so I'll save it for the weekend. But skimming through it does mention debt deflation a few times so I thought I'd share it here (he does say share with friends and family haha).

Yes and he p*sses me off for living in lovely Little Cayman knocking back cocktails!  A lot to like about him.

Just started reading but this says it all to me and always has:

Capture.JPG.c40b4d6cb8d128ee55ee4f365baa7f09.JPG

We now have interventionist authorities prepared to destroy (finish the destruction of) money, so who knows, but back then more money was lost after the initial fall and the sucker of all rallies.  A long slow grind down with repeatedly dashed fleeting moments of hope.  Can destroying the monetary base prevent this or just hide it?  Look at historical GBP if you want a taste of how that works.  Pulling the rug from under you.  Time to step out of the monetary box and more broadly define value and assets.  This is one big private equity scam, with the assets being sucked out and a skeleton and pile of shite left behind.  Follow the money out.

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41 minutes ago, Harley said:

Trouble is, I've kinda gone off money!  I've been trying to convert and/or get rid of it!

Same O.o, was watching a interview with Grant Williams and Anthony Deden and he mentioned they hold all cash in gold, and sell some when they want money to buy investments which i thought was a interesting idea

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Talking Monkey
23 minutes ago, Harley said:

Yes and he p*sses me off for living in lovely Little Cayman knocking back cocktails!  A lot to like about him.

Just started reading but this says it all to me and always has:

Capture.JPG.c40b4d6cb8d128ee55ee4f365baa7f09.JPG

We now have interventionist authorities prepared to destroy (finish the destruction of) money, so who knows, but back then more money was lost after the initial fall and the sucker of all rallies.  A long slow grind down with repeatedly dashed fleeting moments of hope.  Can destroying the monetary base prevent this or just hide it?  Look at historical GBP if you want a taste of how that works.  Pulling the rug from under you.  Time to step out of the monetary box and more broadly define value and assets.  This is one big private equity scam, with the assets being sucked out and a skeleton and pile of shite left behind.  Follow the money out.

If we do get anything resembling that graph then the wealth destruction will be immense, especially if we get a sustained rally from here sucking in a lot of FOMO money, a lot of regular type folks are going to get destroyed. When you say look at historical GBP  is that the GBPUSD graph

When you refer to the assets being sucked out could you elaborate Harley I don't quite understand that part

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