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

[Fully Detached]

4 minutes ago, Sasquatch said:

I tried to set up a coinbase account a month ago but I couldn't get my bank account validated (despite me seeing the £2 test sum be taken from my account). Crypto is way up since then so I think I've now missed out. I don't really understand any of it in any case (particular the hard wallet thing). Old dog here I think....

Yes I had the same problem but to be fair to Coinbase I got the bank account validated some time ago when I bought a small amount of another crypto. The dicking around was all my own stupidity thinking that I was suddenly limited to £1k total trading per week, when the problem was that I was trying to use my visa card instead of transferring from my bank into the CB account. So now I know that I'm ready to buy - I'm just hoping it isn't too late, but based on the historical price of BTC I reckon we'll see <7k again before we see >10k

As for the hard wallets if you're buying the major ones like BTC, ETH etc then it's really quite straightforward. For my sins, I bought some Iota a while back which are a total PITA with a hard wallet because you can't just plug in the wallet and see your balance, you have to use the third party software wallet to see the balance and buy or sell. I put mine on a hard wallet this week - when I found out that other Iota users had had their software wallets relieved of them back in February. I'm already sitting on a 35% loss, I could do without the rest of it evaporating 

[Democorruptcy]

1 hour ago, Vendetta said:

https://www.bloomberg.com/amp/news/articles/2020-04-30/shell-cuts-dividend-as-pandemic-hammers-energy-prices-demand
 

Only 7% down in early trade. 

Holding at its morning low of 1350p

I cannot see it going below 1200p anytime soon. 

BP down 2%

There must be some good assets going cheap. Maybe they need the money to do some spending?

[Don Coglione]

6 minutes ago, Democorruptcy said:

There must be some good assets going cheap. Maybe they need the money to do some spending?

C

N

A

?

[sancho panza]

Very interesting discussion  for those of us wondering about the world going further out than the next few years and whether going Japanese is a possibility.

 

I'm genuinely struggling to get a handle on it.Japan is the ongoing proof that concerted deflation can happen.But(isn't there always), it has been living in a world where domestic savers have increasingly saved as IR's have been driven down,it's people generally don't invest abroad as much as maybe here or the US,they have an export based economy,older population.......any which way,I find their lack of price infaltion hard to fathom.

Which brings me to this excellent macrovoices piece with David Rosenberg.He lays out superbly-imho- the logic for stagflation.Demand side drops due to increased savings ratios as households and companies deleverage post shock(as per Fisher's work paradox) mixed with supply side shocks that have a logic that's hard to argue with.

I written a precy as it made me concentrate on listening rather than trying to do other work.It's below.Compelling reading for those of us pondering japan.

https://www.macrovoices.com/834-macrovoices-216-david-rosenberg-stagflation-is-coming-but-not-yet

DR Fed may backstop equities because they backstopped high yield.

Govt created this recession hence it's feeling guilty because balance sheets were dilapidated going into this and they've stopped people working via lock downs.

Possibility of -10% GDP in USA for 2020

Stimulus is just trying keep things afloat but much of it might get saved

First two years will be a deflationary shock leading to double digit employment.

Beyond three years hard to read but then demand will stabilize,supply side is going to get crunched due to capital investment getting nailed,which will lead to productivity down/just in time inventories/more local supply chains

Trend toward populism/protectionism/socialism/isolationism which means supply side shocks likely.

DR predicts beyond three years stagflation....

ET all this printing has to devalue fiat currency.Is gold good?

DR-Own inflation hedges so PM's,commodities,farm land,impact on food supply chain,consumer staples,healthcare=would hedge inflation future.Last thing you want to be in is cash.

Gold is an effective hedge in a deflationary crisis.Fed is not going to be bailing everyone out there will be defaults,gold is also a hedge against instability.

Growing global instability coming out of this.Uncertain future.

Gold production function is 1% per annum unlike govt printing presses.

ET-what about bond yields?negative yields?

DR-negative ten year yields possible.also huge savings glut possible.

Municipal govts will be bailed.Corporate credit market-buy investment grade buy triple BBB+

ET What about EM's?

DR Don't be long EM oil producers.Otherwise Taiwan/Singapore could be ok-both fixed income/equity

Big question is what happens to global supply chains if they end up coming back to US.

ET Growing distrust of China?

DR-the world is is going be even more sceptical on China.World economy is going to grow further apart then together.

Possible economic cold war between rest of the world and China.

[Heart's Ease]

9 hours ago, Harley said:

I'm going in.  Lots still to learn though.  Can anyone recommend a very practical guide (broker to use, where to buy a hardware wallet, etc)?

I bought 0.5 BTC over a few transactions in 2014/5? (certainly bought a bit after MtGox because of the price drop).  Total spend £179.  Bought via Bittylicious and stored it in Blockchain.com wallet. Let it lie.

In the beginning was mainly influenced/intrigued/lured in by Max Keiser and - reading around - interested in the libertarian take around personal responsibility.  I liked the idea of spreading around different asset classes, taking £ out of 'the system' (like PM physical), the fact it cut out the skimming middle men i.e. the banks, the proposal it was the 'hardest' money ever invented in that time of QE - its scarcity as an asset when the world was awash with $$$ would give it its value etc etc. I was watching the Mike Maloney History of Money? series at the same time so that was also clearly a driver.  I didn't think it would be a get rich quick scheme - I'm just not that lucky a person!

(More recently, the Bitcoin to the Moon series by Stacy Herbert and Max Keiser is an interesting look back at the first ten years and the characters and events).

The ride from iirc August 2017 to the end that year was wild. I'd read a Frizzers article reminding about the importance of being able to liquidate, so I sold a little at the beginning of December, intending to put into silver, but bought a new greenhouse 😉.  I then watched it slide and slide in 2018.

I'm holding the rest and still add a tiny amount to it very occasionally.  If it went to $1200 (did I see that prediction on here the other day?) I'd certainly buy a little more. 

Apols for the dear diary nature of the post but I wanted to give a bit of context.  I always remember DB saying he didn't hold crypto because he didn't understand it. I bought back then because I was wanting to understand it, as part of that wider exploration into - well - what *is* money, and tbh, because I'd buy in at £25 at a time so it didn't matter if it went to $0 - all part of my education and horizon expansion.  

I know @leonardratso has done very well trading BTC and ?eth? over past couple of years but I'm no trader. I'm still surprised I ended up selling at such a good price. Thank you Frizzers. For me it's a long term hodl until we get out the other side.  It's the scarcity that I'm most interested in now, in a world awash with $$$.

Tl:dr Harley, dyor but I'd keep an eye on the daily price and whack a few £ in when it comes into a reasonable - to you - range.  Others will/have been along to give hardware suggestions (trezor, of course).  And enjoy your research 😁.

 

[TheCountOfNowhere]

1 hour ago, TheCountOfNowhere said:

Best investment i've ever made.

 

Mobile Streams Plc

LON: MOS

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0.34 GBX +0.075 (28.30%)

30 Apr, 08:58 BST · Disclaimer

 

I have to thank DB for suggesting MOS, tho he did get the continent wrong.

It's my lucky week...

 

Market Summary > Mobile Streams Plc

LON: MOS

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0.28 GBX +0.015 (5.66%)

 

[Jesus Wept]

1 minute ago, Democorruptcy said:

There must be some good assets going cheap. Maybe they need the money to do some spending?

Be interesting to see how Schlumberger open up this afternoon. 

Changing the subject.....

I have been looking at adding some of the  other big global miners. Already hold FCX (in $).
Any of you holding any of these?

Not sure whether to spread it around a bit both company and country wise.  I must admit my knowledge in this area is pretty shallow. Pharmaceuticals is my area however that sector has had a good run. 

I am inclined to agree that Oil, energy, metals, potash, telecoms and infrastructure sectors are where I want to be leaning towards. 

Anyway .....here are a few of the big miners I’ve been researching.

Any thoughts will be considered (but not taken as investment advice - especially given the MOS anecdote @TheCountOfNowhere   - fucking funny that one!). 

 

[Loki]

43 minutes ago, PaulParanoia said:

I'm wondering if the old saying 'Sell in May and Go Away' will be particularly true this year. 

It may just have to be metaphorical this year though, unless places have started opening up again!

[sancho panza]

49 minutes ago, NogintheNog said:

I'll take the plaudits later

However despite the dividend cut I'm surprised just how elevated some of these oil majors have remained!

BA/IAG  effectively confirming  yesterday they are gonna use a lot less JetA1!

There's going to be a lot less of it around in 6 months.

22 minutes ago, Cattle Prod said:

Further down that chain I qualified my flippant 'nothing' remark!

I said I'd be shocked if they cut the divi, and I am. I watched the stock being dumped this morning, presumably by 'angry from Tunbridge Wells', I wouldn't be surprised to see it up on the day. I need to think about this, because there is nothing fundamentally wrong with the company. Maybe the next quarter is going to be absolutely horrendous. Maybe they are just using the virus as an excuse to skip a divi payment (much like people are using it as an excuse to skip a mortgage payment), but that is a dangerous game. Hopefully, they are eyeing up an acquistion, and looking at the recent bounce in the Centrica share price, who knows?

Either way, I was wrong, and if Shell is going to cut their divi at a time like this, which I still think is a storm in a teacup and temproary, I need to re-think my whole income portfolio. Maybe I should lean more towards a permanant portfolio as Harley/Raoul Pal outline. If you are getting penalised for having 100k in cash in the bank, that is going to put an effective yield into gold and bitcoin.

I'll wait for XOM, they have always been the strongest financially.

BP kept their divi yesterday i believe.

Our RDSB divi is still 3-4%.I've posted separately on the Macro voices Rosenberg interview which has some compelling reasons to buy commodities longer term.As per previous psots of mine,there will be some shares that actually go up through this recession and for me,extractive decomplex plays will possibly be amongst them.

You said ages back CP-I remember it-that the bear market would only be in when the fang stocks were on the floor.I'd agree with that measure.

There are a lot of stocks on 20+ PE ratios in the US( the whole semiconductor sector will take a bath at some point) that I won't be touching with a barge pole.Big oil is going nowhere over the next few years.Especially if the smallies go pop could be some amazing opportunities.

My dear old Mum was saying the other day,she'd rather have her money in Shell than the bank these days. given Deutsche are now pushing negative rates over E100k,she might not be too far off with that assessment.

 

 

[nirvana]

@sancho panza I've always been fascinated by the Japanese as well! I thought we would be 'turning Japanese' well over 10 years ago 

Wasn't it the Japanese housewives who started a 'carry trade' revolution 20 years ago? Their interest rates were so low they borrowed Yen and used it to buy other currencies...

ie making 15%+ on Icelandic bank accounts before it all blew up again in 2008

There's a documentary kicking about that tells how the Japanese housing market blew up cos the Bank of Japan refused to pump liquidity into the markets....

Apparently this was due to the fact that they'd been 'infiltrated' by US banks that conned them into doing this but in reality knew it would crash the Japanese economy to the benefit of dem cunning Yankees 

[TheCountOfNowhere]

2 minutes ago, Vendetta said:

Be interesting to see how Schlumberger open up this afternoon. 

Any thoughts will be considered (but not taken as investment advice - especially given the MOS anecdote @TheCountOfNowhere   - fucking funny that one!). 

 

 

 

Schlumberger's a funny one, the share price was back at 1980s levels. I'm up about 20% on it now. Unless the company collapses then this could be a bargain.  The oil wells etc will still need maintained regardless of the oil price.  The question is, long term, will it go bust ?  If you buy into DB's thesis them buying and holding this one is a no-brainer.  The trouble is, nothing makes sense.

The MOS one is pretty funny, I was only on the hook for £500 but I was happy to get it all back + free shares.  You could see on the LSE forums that some people were trying to ramp it based on the AGM/EGM today, some good news coming apparently.  The share price shot up this morning, then when the AGM announcements were made it shot back down after.  Pure stupidity buying it but made the best of it as I could.  it's back down to 0% on the day and might well fall now.  It's made me chuckle.  It's up there with being the only man to profit from Sirius :-)   

 

[Loki]

40 minutes ago, confused said:

you want a roller coaster ride just see above! 

Without the roller coaster ride though, you get silver.  Just another manipulated market.  It is wild, but the volatility is where the opportunity is (Not that I would put my life savings into BTC, but I have come from a fully sceptic "Shitcoinner" to being a bit interested in crypto)

[TheCountOfNowhere]

46 minutes ago, confused said:

the markets have never been so unstable 

 

[Eventually Right]

11 hours ago, DurhamBorn said:

Harley what do you think about Bitcoin?.Im actually quite tempted to buy some.Iv been looking at it a bit like silver lately.Tiny amount compared to world liquidity.That means "if" people chose to it has the chance to be a Tulip bubble asset,as silver has.

After considering it for years, I finally bought some just before Christmas, and have bought more in the last month.

I read a booked called the bitcoin standard that was recommended by several of the sensible bitcoin proponents on fintwit (Raoul Pal, Preston Pish, Lawrence Lepard etc).  Chapters 8 and 9 were the most interesting to me. My main takeaways were that:

• It perhaps wouldn't necessarily need to scale to mass retail use (ie buying your groceries with it) to become part of the accepted financial plumbing, although there are technologies being worked on that would support that.
• If (big if) the dollar ever becomes such a problem for the world financial systems as the reserve currency, that it forces the rest of the world to do something about it, then there is a possibility that bitcoin is used as part of a bundle of currencies to form a new Bancor/SDR.  I'd imagine a digital/crypto currency might well be part of such a "brave new world".  If so, I suspect bitcoin would be the front runner to fulfil that role, because it already has the biggest market cap; and I can't see the rest of the world accepting a "Fedcoin"/"PBCcoin"/Libra.

I think there's still a higher than 50% chance that in 5-10 years time it ends up being worth <£100 and is only used for people trying to buy drugs discreetly online...but if it doesn't, I can now see how some people get to the lofty predictions of $1m+

There might be an issue with quantum computers being able to crack the cryptography in the future, but I don't know nearly enough about that to venture an opinion on how likely it might be.

Aside from anything else-like you say, it could end up being the tulip bulbs of the 2020s!  It spiked to $20k in 2017, is it really so crazy to think it could go to $200k in a few years?

 

https://www.amazon.co.uk/Bitcoin-Standard-Decentralized-Alternative-Central/dp/1119473861/ref=sr_1_1?crid=2GTWQ5V06OP4D&dchild=1&keywords=the+bitcoin+standard&qid=1588238901&sprefix=the+bitcoin%2Caps%2C192&sr=8-1

 

[nirvana]

7 minutes ago, Loki said:

I have come from a fully sceptic "Shitcoinner" to being a bit interested in crypto

I'm just bitter about shitcoins cos I thought about mining when buttcoin was about 1p but was worried the ex (married at the time) would give me earache about having more IT hardware in the study/playroom...

It's defo a load o shite now 

PS I felt the same as @Heart's Ease at the time, Max Keiser fan, bankers are wankers, give me my liberty you tw@ts but yeah, just another manipulated market now......there was a small $14million USD transaction with Tron yesterday for example 

https://whale-alert.io/transaction/tron/223a6834b8c6191b14f3b68763b3d9c70be4236d15827c84a513ed94787af338

[DoINeedOne]

Bought 10 BTC when it was $100

Sold it at $130 because it was annoying me for some reason

 

Boom

[Craig]

4 minutes ago, Eventually Right said:

After considering it for years, I finally bought some just before Christmas, and have bought more in the last month.

I read a booked called the bitcoin standard that was recommended by several of the sensible bitcoin proponents on fintwit (Raoul Pal, Preston Pish, Lawrence Lepard etc).  Chapters 8 and 9 were the most interesting to me. My main takeaways were that:

• It perhaps wouldn't necessarily need to scale to mass retail use (ie buying your groceries with it) to become part of the accepted financial plumbing, although there are technologies being worked on that would support that.
• If (big if) the dollar ever becomes such a problem for the world financial systems as the reserve currency, that it forces the rest of the world to do something about it, then there is a possibility that bitcoin is used as part of a bundle of currencies to form a new Bancor/SDR.  I'd imagine a digital/crypto currency might well be part of such a "brave new world".  If so, I suspect bitcoin would be the front runner to fulfil that role, because it already has the biggest market cap; and I can't see the rest of the world accepting a "Fedcoin"/"PBCcoin"/Libra.

I think there's still a higher than 50% chance that in 5-10 years time it ends up being worth <£100 and is only used for people trying to buy drugs discreetly online...but if it doesn't, I can now see how some people get to the lofty predictions of $1m+

There might be an issue with quantum computers being able to crack the cryptography in the future, but I don't know nearly enough about that to venture an opinion on how likely it might be.

Aside from anything else-like you say, it could end up being the tulip bulbs of the 2020s!  It spiked to $20k in 2017, is it really so crazy to think it could go to $200k in a few years?

 

https://www.amazon.co.uk/Bitcoin-Standard-Decentralized-Alternative-Central/dp/1119473861/ref=sr_1_1?crid=2GTWQ5V06OP4D&dchild=1&keywords=the+bitcoin+standard&qid=1588238901&sprefix=the+bitcoin%2Caps%2C192&sr=8-1

 

I think there's no doubt that blockchain/crypto is going to have a major part in the future of many industries (and indeed in many portfolios), however the big question is whether it'll be Bitcoin or some of the thousands of other coins which actually make it. Bitcoin has the name, obviously, but faces several massive technological challenges which a good number of the other coins have addressed. Ethereum is already well used in a number of use cases, the much-loathed XRP appears to be making progress with financial partners, as do the likes of Tezos and VeChain.

Only time will tell...

[Eventually Right]

9 hours ago, JMD said:

Harley, it got me thinking when I saw R Pal's (brave?) 25% liquid wealth allocation to bitcoin (thanks for responding to my initial post query about that btw). He thinks btc may go to 1Million!  ...So perhaps DB is accurate in suggesting it could be a modern day 'tulip bulb'. Would be very interested to know if you do buy, though I guess it won't be 25% all in for you!; assuming it's for buy and hold and so will count towards some of those real assets you are accumulating?

It is ballsy-but I guess his non-liquid wealth (property in Cayman islands/shares in Realvision/Macro Insiders etc) will be pretty substantial, so less crazy than one of us doing it!

[TheCountOfNowhere]

[NogintheNog]

1 hour ago, Cattle Prod said:

1 hour ago, NogintheNog said:

I'll take the plaudits later

However despite the dividend cut I'm surprised just how elevated some of these oil majors have remained!

BA/IAG  effectively confirming  yesterday they are gonna use a lot less JetA1!

Further down that chain I qualified my flippant 'nothing' remark!

I said I'd be shocked if they cut the divi, and I am. I watched the stock being dumped this morning, presumably by 'angry from Tunbridge Wells', I wouldn't be surprised to see it up on the day. I need to think about this, because there is nothing fundamentally wrong with the company. Maybe the next quarter is going to be absolutely horrendous. Maybe they are just using the virus as an excuse to skip a divi payment (much like people are using it as an excuse to skip a mortgage payment), but that is a dangerous game. Hopefully, they are eyeing up an acquistion, and looking at the recent bounce in the Centrica share price, who knows?

Either way, I was wrong, and if Shell is going to cut their divi at a time like this, which I still think is a storm in a teacup and temproary, I need to re-think my whole income portfolio. Maybe I should lean more towards a permanant portfolio as Harley/Raoul Pal outline. If you are getting penalised for having 100k in cash in the bank, that is going to put an effective yield into gold and bitcoin.

I'll wait for XOM, they have always been the strongest financially.

Apologies if that post sounded a bit big headed! I'm surprised by the depth and speed and the fact they have cut too. Over a month ago this thing looked a lot more short term than it does now and looking further out it's hard to see where the demand kicks in again. Where does supply/demand rebalance and what damage will have been inflicted on the supply side?

 

26 minutes ago, sancho panza said:

There's going to be a lot less of it around in 6 months.

That's the key. A lot less demand, but growing. Less supply but not growing, probably for years!

 

[Harley]

1 hour ago, Cattle Prod said:

The difference between that graph, and now, is money printing. They tightened into the recession then and caused a depressing. Evidence over the last ten years says they will do anything to avoid that again by printing huge amounts of money, per @DurhamBorn thesis. So I don't see it playing out like that graph now. As I say, the main flaw I see in Raoul's thinking is that he's not allowing for 20 tn+ QE.

Edit: I recommend "Lords of Finance" for central banking in the 30s.

Yes, that was my point.  A bit like when you were looking at the oil price in real terms.  The graph may look different in nominal terms but not in real terms.

[TheCountOfNowhere]

If you want a laugh, tune into the MOS rampers on lse

 

https://www.lse.co.uk/ShareChat.asp?ShareTicker=MOS&share=Mobile-Streams

[Harley]

2 hours ago, Cattle Prod said:

I bought my first bitcoin (less than one) earlier this week. Of course I wish I'd bought more now, though I think it'll pull back before consolidating. 

Oh yummy, am I seeing another cup and handle?

2 hours ago, Cattle Prod said:

......except fully rural

I was being gentle!

[sancho panza]

hattip kaplan

 

 

[nirvana]

Just now, Harley said:

Oh, am I seeing another cup and handle?

could be or is it pareidolia? Apparently there's a bloke living on Mars