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


spunko

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Ellandback

HOC took a bit of hit this morning due to a few workers having a bout of the coroni in Peru, sp has recovered a little since.

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Chewing Grass
6 minutes ago, spygirl said:

https://mobile.twitter.com/bondvigilantes/status/1280154315513122817

Strongest UK Broad Money growth since 1528 (via Jefferies). Not sure what happened that year except Wikipedia talks of "The fourth major outbreak of the sweating sickness occurs in England. This time the disease also spreads to northern Europe." Also wars vs Holy Roman Empire.

I can only think of Henry VIII stripping the monasteries of their 'wealth' and spunking it on stuff to whoop the French.

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4 hours ago, spygirl said:

https://mobile.twitter.com/bondvigilantes/status/1280154315513122817

Strongest UK Broad Money growth since 1528 (via Jefferies). Not sure what happened that year except Wikipedia talks of "The fourth major outbreak of the sweating sickness occurs in England. This time the disease also spreads to northern Europe." Also wars vs Holy Roman Empire.

Consequences of the debasement of currency started in 1526.  (silver coins made smaller.  gold 'revalued').

[Leading to Thomas Gresham's statements about such matters (later, Gresham's law) to Elizabeth I about how her dad had mucked up the currency]

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Bricks & Mortar

It's like the bingo.  Ticking off things that come to pass after being predicted in the thread over last few years.

https://www.bbc.co.uk/news/business-53313640

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4 hours ago, Bricks & Mortar said:

It's like the bingo.  Ticking off things that come to pass after being predicted in the thread over last few years.

https://www.bbc.co.uk/news/business-53313640

Yes, and political economy as I mentioned in the sense that the money maybe goes to friends and family of "them" and/or those that front run.  This is the trouble with government rather than Mr Market.  Shame we no longer have a media to investigate what's coming.

And they immediately run to housing (stamp duty, maybe planning, etc) to stimulate the economy (shows the "economy" we really have).  Mates rates and hardly a step forward to a broader more resilient and prosperous economy.  Clueless or corrupt, neither is good.  But I guess I'll have to invest accordingly or suffer even more.

I bought a load of insulation a while back in anticipation of shortages!  Oh well.  And all the builders I know are maxed out so it's going to be interesting.  Time for the bodger brigade to step forward and create a load of damp boxes!  And at least this extra money will help the pay any Grenfell damages (ref Sky News).

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4 hours ago, Bricks & Mortar said:

It's like the bingo.  Ticking off things that come to pass after being predicted in the thread over last few years.

https://www.bbc.co.uk/news/business-53313640

 

8 minutes ago, Harley said:

Yes, and political economy as I mentioned in the sense that the money maybe goes to friends and family of "them" and/or those that front run.  This is the trouble with government rather than Mr Market.  Shame we no longer have a media to investigate what's coming.

And they immediately run to housing (stamp duty, maybe planning, etc) to stimulate the economy (shows the "economy" we really have).  Mates rates and hardly a step forward to a broader more resilient and prosperous economy.  Clueless or corrupt, neither is good.  But I guess I'll have to invest accordingly or suffer even more.

I bought a load of insulation a while back in anticipation of shortages!  Oh well.  And all the builders I know are maxed out so it's going to be interesting.  Time for the bodger brigade to step forward and a spate of damp boxes!  And at least this extra money will help the pay any Grenfell damages (ref Sky News).

Restart the economy by putting insulation between walls. Almost comical and as you say expected. I hope the have more of a coherent strategy? 

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2 hours ago, Ash4781b said:

Restart the economy by putting insulation between walls.

Only if on the approved list!  More graft.  Probably will have to buy a licence and attend costly CPE courses to ensure you still know to put it foil side up (in joke)! 

Or restrict it to new graduates who have just spunked say £50k and had their until then delusional dreams crashed. 

As I've said, expect to see more regulation everywhere going hand in hand with selective dollops of cash.  All papering over the cracks caused by "them" trying to replace the market for their own (political, etc) ends.

More financial regulation, allegedly to protect you, inbound.  More taxes for alleged noble endeavours (or people's pockets more like).  And a hunt for anyone left with any money.  Don't fight the Fed and here, don't fight the imprudent and spendthrifts.

The way I see things now is value investing is king, and that extends well beyond portfolios into all walks of life (e.g. The uni comment).  And also run and hide from the tsunami of regulation as best you can.  Cash is trash and assets are only for the arses.

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3 hours ago, reformed nice guy said:

Gold futures hit 1810.25 today (so far)

The 10 year chart looks a lot worse in pounds!

Screenshot from 2020-07-07 17-04-47.png

That's probably the best and easiest financial call I've ever made.  Of course I should have more but it's for a balanced portfolio to protect savings rather than a speculation and, as you point out, the Pound has failed to do that!

What satisfaction I have is really about reading the charts right.  I've long seen gold in GBP in an amazingly long cup and handle chart pattern so nice to see that play out.  It's also nice to see you can do just fine over the intermediate term by getting a few keys things right and being agnostic and patient.

Likewise, I'm excited about the themes in this thread.  Increasing numbers of macro guys saying similar but the retail and some professional money is just not there yet.  Listened to someone diss the energy sector last week - energy is like gold was/is in a way.

These are really exciting times, taxes and regulation fears aside, as those who put the effort in will hopefully be rewarded while the index and bond cruisers will finally meet the end of the road.  Just need to keep the rest of things together.

Right, that done, next question, what's going to go wrong?!  I have a long list but few answers. 

PS:  Just finished rebuilding a lime stone wall originally built in the 1700's.  To think any gold the last waller had may still be worth similar today!  Shocking build quality though!

PPS:  Got a nice bit of dry stone walling to do after this job.  Another historic bodge! Stones laid long side on, no batter, and all the rest.  Splashed out on a new walling hammer which looks the doggybits so very excited!

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Well you may have noticed (for those that are interested)  LINK in the cryptocurrency world (I’ve referred to it a few times in this thread) big breakaway now.

I’ve traded myself out now taking profit in BTC, as the rise has not had a fallback for me to get back in.  I did the same with ETH, we’ll see. BTC is still my hold in crypto for the forthcoming shitstorm.

In other news FRES now looks like it’s breaking out (haven’t looked at the news or these threads at recent understand a new mine may be gold focused)  happy to have that in the families portfolios. I think the turn in silver looking by the charts is finally in. 

Just waiting for the second bottom now in the markets as result of the economic shitstorm later in the year to put all remaining cash ‘all in’ in the pension.

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8 hours ago, Sideysid said:

Just waiting for the second bottom now in the markets as result of the economic shitstorm later in the year to put all remaining cash ‘all in’ in the pension.

Metoo although a lot of printed money is backing the current rallies and a hell of a lot more may come, especially in the run up to the Presidential election in November this year.

I hope we get a "W" as, tbh, I suffered a mix of wimping out and being focussed elsewhere back in March.  I also think it could be healthy.  However, in a way I hope the equity rallies continue for now and they hit bonds as I think negative rates could be inbound so one last pop, especially if there's a later temporary flight to safety.  Not a long term hold for me though.

There's got to be an insolvency crisis inbound so the question is how will the market and our "flash the cash" administration deal with it.  I suppose a more severe scenario would be a bank, broker or other financial institution folding, destroying people's capital.  European banks are long due some heat. 

And government asset grabs could have unintended consequences.  May start to know the latter later today, or maybe in the small print ("consultations") for now.  The dollops of cash have to be backed up by coercion as the tendency so far seems to be to save and pay down debt, rather than consume.  The stick is cheaper than the carrot and they now seem to enjoy waving it around.  Makes them feel the same way as being effective does!

Note the authorities have alledgedly been speaking to a couple of wealth managers about wealth taxes and some pro press articles have been planted and there's been talk about those with the "broadest shoulders".  The problem with such taxes is they start with "them" and end up with "us".  And just having a job may constitute broad shoulders!

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2 hours ago, Harley said:

The problem with such taxes is they start with "them" and end up with "us".

...and `them` usually have the option to leave (and often do) to go somewhere more favourable, whereas `us` don't...although I am seriously considering my options post-Brexit, its just a shame that has reduced some of my options.

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sleepwello'nights
14 hours ago, reformed nice guy said:

Gold futures hit 1810.25 today (so far)

The 10 year chart looks a lot worse in pounds!

Screenshot from 2020-07-07 17-04-47.png

Yes it really is astonishing watching the price fluctuate in US $ on kitco, the value in GBP seems to just keep going up even when it falls in USD.

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jamtomorrow
2 hours ago, Harley said:

Note the authorities have alledgedly been speaking to a couple of wealth managers about wealth taxes and some pro press articles have been planted and there's been talk about those with the "broadest shoulders".  The problem with such taxes is they start with "them" and end up with "us".  And just having a job may constitute broad shoulders!

I think unless you've accumulated enough wealth to get an invite to Club Offshore, best to assume they'll come for all of it.

The richlist types will doubtless take some kind of symbolic hit, but it'll be like the decoy safe oft-discussed here - "oh no, not Aunty's wedding ring!" when there's 10kg of bullion in a fake joist behind a false wall behind the stairs cupboard.

Edit to add: THAT'S NOT WHERE I KEEP IT 

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What’s the consensus on here for Rolls Royce. Obviously suffering a triple whammy now and in the near future with air travel, luxury cars and the auto market. (Which is why the current share price is appealing to me)

My thinking is military contracts and other transportation with government monopoly money may make it a buy at this price or am I missing something?

 

458D0EE6-995D-446E-BBD8-01FA73E508A1.jpeg

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2 hours ago, Harley said:

Metoo although a lot of printed money is backing the current rallies and a hell of a lot more may come, especially in the run up to the Presidential election in November this year.

I hope we get a "W" as, tbh, I suffered a mix of wimping out and being focussed elsewhere back in March.  I also think it could be healthy.  However, in a way I hope the equity rallies continue for now and they hit bonds as I think negative rates could be inbound so one last pop, especially if there's a later temporary flight to safety.  Not a long term hold for me though.

There's got to be an insolvency crisis inbound so the question is how will the market and our "flash the cash" administration deal with it.  I suppose a more severe scenario would be a bank, broker or other financial institution folding, destroying people's capital.  European banks are long due some heat. 

And government asset grabs could have unintended consequences.  May start to know the latter later today, or maybe in the small print ("consultations") for now.  The dollops of cash have to be backed up by coercion as the tendency so far seems to be to save and pay down debt, rather than consume.  The stick is cheaper than the carrot and they now seem to enjoy waving it around.  Makes them feel the same way as being effective does!

Note the authorities have alledgedly been speaking to a couple of wealth managers about wealth taxes and some pro press articles have been planted and there's been talk about those with the "broadest shoulders".  The problem with such taxes is they start with "them" and end up with "us".  And just having a job may constitute broad shoulders!

I think the second leg down is inevitable if not by the end of the year early into next. The ‘V’ shaped recovery is based on unicorns and rainbows thinking that forthcoming government stimulus will blow the asset bubbles to infinity and beyond. Also bear in mind the FAANGs dominating most pension funds, have pretty much been lockdown loving assets (online ordering and streaming etc).

Reality check incoming. Wait until government COVID support fizzles out by the end of the year and businesses are folding left right and centre and people work/home/habits have changed. Also it maybe worth noting politically the US elections and if Trump gets re-elected, they may just let the dominos fall.

In regards to taxes, there lies the big question on our shores. When that man was ostracised on Question Time for claiming not being a well off high earner on £80k pa. The elites and rich will pay the clever accountants that make the rules just like they always have done. It will be the ‘visible’ middle PAYE professionals with actual jobs that will be strung up. The tax credit masses (some even on a similar equivalent salary with multiple kids before the two children deadline) will only focus on what’s directly in front of them. 

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1 hour ago, jamtomorrow said:

The richlist types will doubtless take some kind of symbolic hit, but it'll be like the decoy safe oft-discussed here - "oh no, not Aunty's wedding ring!" when there's 10kg of bullion in a fake joist behind a false wall behind the stairs cupboard.

You'll need to use steels for that mate!

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1 hour ago, Sideysid said:

What’s the consensus on here for Rolls Royce. Obviously suffering a triple whammy now and in the near future with air travel, luxury cars and the auto market. (Which is why the current share price is appealing to me)

My thinking is military contracts and other transportation with government monopoly money may make it a buy at this price or am I missing something?

 

458D0EE6-995D-446E-BBD8-01FA73E508A1.jpeg

Hard to imagine they'll let it go bust or anything given their importance (but then again negative shareholder equity!) but not sure as an investment.  I worked for them once and enjoyed it.  They got up to lots of interesting stuff.  But more importantly, are you happy to say where your image came from please?  That's great detail for a key area.  Never seen anything like that (lots of historic debt/equity ratio) before.

 

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1 hour ago, jamtomorrow said:

I think unless you've accumulated enough wealth to get an invite to Club Offshore, best to assume they'll come for all of it.

Agreed, starting today or later. 

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2 hours ago, MrXxxx said:

...and `them` usually have the option to leave (and often do) to go somewhere more favourable, whereas `us` don't...although I am seriously considering my options post-Brexit, its just a shame that has reduced some of my options.

Agreed.  I've been looking hard.  Not got huge sums but thin edge of a big wedge well beyond just finance.  Currently thinking international van life or a boat.

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4 hours ago, Harley said:

And government asset grabs could have unintended consequences.  May start to know the latter later today, or maybe in the small print ("consultations") for now.  The dollops of cash have to be backed up by coercion as the tendency so far seems to be to save and pay down debt, rather than consume.  The stick is cheaper than the carrot and they now seem to enjoy waving it around.  Makes them feel the same way as being effective does!

Note the authorities have alledgedly been speaking to a couple of wealth managers about wealth taxes and some pro press articles have been planted and there's been talk about those with the "broadest shoulders".  The problem with such taxes is they start with "them" and end up with "us".  And just having a job may constitute broad shoulders!

Yes, i agree scary stuff.

But those pension-grab 'consultations' have already started. The scheme below is not compulsory - for now... but already they are talking about 20% of a pension fund being directed into so called ethical investments, plus look who's already involved, Mark Carney! The 'moral position' made within the article is quiet astounding. 

Link below.

Selected quote showing backers...

'The campaign’s partners include the WWF, the Green Finance Institute and Business in the Community, and another high-profile advocate is Mark Carney, former governor of the Bank of England and the UN special envoy for climate and finance. Carney said the campaign was ‘exactly the catalyst that the financial sector needs’ to move more decisively towards greener and more ethical pension investment, so that money can get to the places where it can do the most good.'

https://www.unbiased.co.uk/news/financial-adviser/pensions-actually-richard-curtis-launches-drive-for-ethical-fund-investment

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Probably a stupid question but are there any methods other countries could use on a sustained basis to keep DXY high? Are there any countries that would prefer it like that?

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