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


spunko

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1 hour ago, ThoughtCriminal said:

I never thought I’d see hubris developing here

How do you mean?  America or the general economic outlook?

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17 hours ago, JMD said:

Although it can happen in theory, I think the stark economics would prevent it. 

'Interestingly, the GDP of California is greater than the UK, Texas and New York are both greater than Russia. I hadn't seriously considered that any US states would secede, but economics is probably not the limiting factor for some. Its more political.

https://en.wikipedia.org/wiki/List_of_sovereign_states_in_Europe_by_GDP_(nominal)

https://www.statista.com/statistics/248023/us-gross-domestic-product-gdp-by-state/

 

 

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sleepwello'nights
12 hours ago, DurhamBorn said:

Its a shame they couldnt latch onto the share that cannot be named though to give us an exit on it xD

 

+20% on Friday

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2 hours ago, ThoughtCriminal said:

I never thought I’d see hubris developing here. Interesting. 

 

As for the US, if you don’t realise 1776 America is unravelling before our eyes then I have some magic beans to sell you. 

The US was defined by the civil war and continues to this day to cover up the huge fracture that war exposed.US is the civil war.Ironic that it was the democrats driving the south.

 

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sancho panza
On 25/07/2020 at 10:38, DurhamBorn said:

My dollar road map is showing 89/90 area for now,David has very similar macro tools to me as he was part of the team at Fidelity back in the late 80s who worked on them,though only a few of the guys from then were macro strategists and continued evolving the tools,most retired,stopped or died.David is an expert of liquidity flows and central bank action though his job would never of been about timing or buy/sell calls.He would put the road map in front of other strategists to do cross market work on the leads and lags,and then that would pass to equity teams to pick how to play the calls.

Im not sure on the structure of the falls ahead,im leaning a bit more towards we might see sector rotation in that while we might see some areas take a whack,it will be very short term,where other area see big falls,never to be re-gained.

Sector rotation is historically common in these phases .there are various sectors that nearly alway do well as $USD weakens.and if you've been following this thread for some time you'll be in them.

headline S&P figure hides a world of changes.

as I've poiinted out before,BHP Billiton and other commodity plays actually went up thru the 2000 bust as the US market dropped 50% and the nasdaq dropped 70%+.

On 25/07/2020 at 19:49, kibuc said:

I'm going to offer a contrary view that if you like a stock (or an entire sector), you should own it. Waiting for pullbacks and trying to nail a dip is best left to professionals (i.e. traders).

GDXJ and/or SILJ look like a solid choice for those who don't want to spend too much time picking individual stocks. There's a bit of overlap between the two (PAAS, Yamana, HMY) so you get some exposure to both metals either way, it's a matter of which one you're leaning to more.

Must say,much as I've learned a shedload working my way through PM miners since 2017.Having learned all that,I'd say you're advice on GDXJ/SIL takes away a fair chunk of the stress for a small cost.

This is a bull market,buy the dips imho.DYODD.

Froma single company point of view ,there are some stocks that might peak first,that looks like NWM/AU/GFI........................what to buy with the proceeds.Silver miners look expensive here.

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sancho panza
18 hours ago, JMD said:

SP, in regard to the Spectator article I think the 'political narrative' (if that's what it is) of singling out the US is wrong and dangerously short sighted. What I mean is that the social dislocation happening across America is more to do with hyper-liberalism (I think thats what philosopher John Gray calls it) which as an ideology is now pretty much spent, and now is mostly concerned with just lashing out at any who disagree with them, and cynically choosing to poison the political process along the way. I don't think it's about individual US states succeeding from the union. Although it can happen in theory, I think the stark economics would prevent it. I think it is more about the new culture wars and how individual states 'take back control' (!) from the federal government. There is a great groundswell of distrust of the federal authorities and issues like abortion forvexample are now also on the political agenda. Its not as simple as liberal states vs conservative ones, so think it incorrect to frame what's happening in terms of the break up of the US, as their political problems are also happening over here!                                                                                                                                       

I'd agree with that,The only US states with the automatic right to secede is Texas(as it won it's independence on it's own).I agree ,it's mroe likely a battle between the states and the federal govt.havign said that,that could be jsut as destabilisng as calexit.especaily as it could be more problonged.

the USA has a common language,culture(to a degree )and a vested interest in staying together which makes it's different to the EU in that the forces pulling it apart are weaker than those pulling it together.with that caveat,you may see more US resources being concetrated domestically rather than spending time being the world's policeman.I'm not sure they can afford to be any more.

 

going to be interesting seeing what happens when the US reduces forces around the world.

the rise of national interests is a totally different matter.you see this on a security level,how quickly doors get shut when countries are threatened.

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sancho panza
14 hours ago, jamtomorrow said:

That's exactly the food for thought I'm looking for, thanks @wherebee

I'm now wondering whether I missed a trick by not setting up my BV account via my shell company in the Cayman Islands :D

Related: we've discussed deglobalization and "decomplex" trades quite a bit here, but has anyone else been pondering how this applies to jurisdictional risk?

A basic assumption of this thread is international mobility of capital. We buy shares in this US miner, that European telco, some other Russian oily, and we assume the mechanics of beneficial ownership will be the same 5 years from now as they are today. What if that changes?

Or maybe nobody's assuming that at all, and we've all got our capital-controls bug-out bags packed and ready to go?

What *can* we say about today's levels of capital mobility? Is it historically abberational that a Joe Schmo like me can flit my capital around the world at the touch of a button? If so, are we due a reversion?

to my mind,you have to be very careful picking your offshore jurisdiction of choice.I wouldn't really venture further than Jersey/Guernsey/Isle of Man and even then keep your brokerage accounts onshore in the US/UK.

I don't know the ins and outs but I'd be nervous holding much cash in Deutsche Bank in Jersey,let alone Caymen islands.The deposti insurance rules are different and when the haircuts come,they coud be brutal as these offshore banks may well be standalone vehicles that have no claim on the BoE/Fed etc..

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4 hours ago, ThoughtCriminal said:

I never thought I’d see hubris developing here. Interesting. 

 

As for the US, if you don’t realise 1776 America is unravelling before our eyes then I have some magic beans to sell you. 

I am no apologist for the American empire, but then again it was a pretty benign empire by historical standards. I was merely pointing out the limited set of options available (hopefully with leadership a path can be successfully steered), but of course I have no personal crystal ball, and the reason for offering up a view is to help underline my perspective that it's not all definite catastrophy ahead. Having ideas on how countries might change over the next 20 years simply helps me either confidently invest, or steer clear.                                                                                                              Btw I think I did actually suggest that parts of US society was unravelling, and will continue to do so... so will respectfully decline your unnecessary offer of 'magic beans'.

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2 hours ago, The_Doc said:

'Interestingly, the GDP of California is greater than the UK, Texas and New York are both greater than Russia. I hadn't seriously considered that any US states would secede, but economics is probably not the limiting factor for some. Its more political.

https://en.wikipedia.org/wiki/List_of_sovereign_states_in_Europe_by_GDP_(nominal)

https://www.statista.com/statistics/248023/us-gross-domestic-product-gdp-by-state/

 

 

I agree that political leadership is required. And yes it's not all about money and economics. However some states operate as near tax havens to attract investment and industry etc. This dislocation can't continue. So my main point was that a new constitutional settlement was needed. That big discussion is probably decades too late happening but we'll worth attempting i think.

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1 hour ago, DurhamBorn said:

The US was defined by the civil war and continues to this day to cover up the huge fracture that war exposed.US is the civil war.Ironic that it was the democrats driving the south.

 

DB, I don't follow why you say US is defined by the civil war. Many countries experience civil wars and my view would be that the US has actually made a good job of moving on from the high casualties of that relatively recent conflict. And civil wars are usually particularly fractious, pitting friends and families against each other and where the opposition are not just enemies, but  traitors. So Isn't it really more to do with politics since the war where more and more federal government interference has continually crept into individual states, increasing tax flows back to central government, and where many think the constitution has been trampled on. My point would be all this fly's in the face of American libertarian sentiment and their very high mistrust of all out of state authority, with many Americans thinking that even the FBI to be an illegitamate organisation.

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15 hours ago, jamtomorrow said:

That's exactly the food for thought I'm looking for, thanks @wherebee

I'm now wondering whether I missed a trick by not setting up my BV account via my shell company in the Cayman Islands :D

Related: we've discussed deglobalization and "decomplex" trades quite a bit here, but has anyone else been pondering how this applies to jurisdictional risk?

A basic assumption of this thread is international mobility of capital. We buy shares in this US miner, that European telco, some other Russian oily, and we assume the mechanics of beneficial ownership will be the same 5 years from now as they are today. What if that changes?

Or maybe nobody's assuming that at all, and we've all got our capital-controls bug-out bags packed and ready to go?

What *can* we say about today's levels of capital mobility? Is it historically abberational that a Joe Schmo like me can flit my capital around the world at the touch of a button? If so, are we due a reversion?

Nope, the Caymans is rolling over already re smaller customers.  They are under huge pressure from the EU and USA re transparency, and will be throwing smaller customers under the bus to keep going for the big money a bit longer.  I know this due to some stuff I was involved with 2-3 years ago.

In short, almost every offshore centre is untrustworthy now unless you are running with the big fish and can have someone inside the government running interference for information requests from overseas.  Even Singapore changed their tack 100% post 2015.  That doesn't mean that there are not good reasons for using them - for example, if you are in a LATAM country no way do you want all your wealth onshore.

We've seen 50+ years of offshore centres being more and more available to medium wealth holders - that has reversed dramatically in the past few years, in my view, and the chickens are going to come home to roost on those middle class greedos that stupidly evaded taxes, etc.

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6 hours ago, wherebee said:

We've seen 50+ years of offshore centres being more and more available to medium wealth holders - that has reversed dramatically in the past few years, in my view, and the chickens are going to come home to roost on those middle class greedos that stupidly evaded taxes, etc.

companieshouse.png.43a70935eb83fe70873a4f59c2e62042.png

From a competitors accounts last year, that's pretty much all the cash in the company gone if they lose the challenge for a 30-40 person sized operation.  Funny thing is the original directors sold the company last year so its the new owners who get the bill!

Its only going to get worse when analytical AI starts to point investigators to companies/people that should really be paying more based on size/expenditure.

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4 minutes ago, 5min OCD speculator said:

this will be the most frequently checked chart today xD

 

Ed5tKNgWoAEPtiS.jpeg

shoeshine moment?  Barclays released a report yesterday showing strong inverse correlation between RH investors and share price profitability for investors.

 

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19 minutes ago, wherebee said:

shoeshine moment?  Barclays released a report yesterday showing strong inverse correlation between RH investors and share price profitability for investors.

 

dunno if it's part of the general decline in the US$ or short squeezing.....must admit I've been surprised at the speed of the $ decline.....

EuroDollar has been really well bid again overnight.....

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jamtomorrow
3 minutes ago, 5min OCD speculator said:

dunno if it's part of the general decline in the US$ or short squeezing.....must admit I've been surprised at the speed of the $ decline.....

EuroDollar has been really well bid again overnight.....

Screenshot_20200727-073528_Chrome.thumb.jpg.78b710675a1a63d03b1bf4e345b06193.jpg

That is quite the move

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Interesting video on how Central banks are able to control social, political and financial aspects of different countries. Be interesting to know others thoughts on this after viewing...

https://www.google.com/url?sa=t&source=web&rct=j&url=https://m.youtube.com/watch%3Fv%3Dp5Ac7ap_MAY&ved=2ahUKEwifjq3s6uzqAhWCs3EKHduKBwQQtwIwAHoECAYQAQ&usg=AOvVaw2VgrtJDzohC-KGN0Q6Om2B

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the 'shitty €' has moved up 5% against the dollar in the past month, just as everyone is saying the eurozone is fooked (again)......moral of the story, trade with charts not with emotions or opinions :P

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9 hours ago, JMD said:

DB, I don't follow why you say US is defined by the civil war. Many countries experience civil wars and my view would be that the US has actually made a good job of moving on from the high casualties of that relatively recent conflict. And civil wars are usually particularly fractious, pitting friends and families against each other and where the opposition are not just enemies, but  traitors. So Isn't it really more to do with politics since the war where more and more federal government interference has continually crept into individual states, increasing tax flows back to central government, and where many think the constitution has been trampled on. My point would be all this fly's in the face of American libertarian sentiment and their very high mistrust of all out of state authority, with many Americans thinking that even the FBI to be an illegitamate organisation.

It defined modern America and what it was.The aftermath of the war more than the war itself.The southern way of life was destroyed.Its not for this thread really,but a fascinating subject.

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41 minutes ago, DurhamBorn said:

It defined modern America and what it was.The aftermath of the war more than the war itself.The southern way of life was destroyed.Its not for this thread really,but a fascinating subject.

Just imagine a USA without slavery.  It would have, I suspect, been a much more successful country once industrialisation kicked in (1870's+), and the civil war would probably not have happened....

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3 hours ago, MrXxxx said:

Interesting video on how Central banks are able to control social, political and financial aspects of different countries. Be interesting to know others thoughts on this after viewing...

https://www.google.com/url?sa=t&source=web&rct=j&url=https://m.youtube.com/watch%3Fv%3Dp5Ac7ap_MAY&ved=2ahUKEwifjq3s6uzqAhWCs3EKHduKBwQQtwIwAHoECAYQAQ&usg=AOvVaw2VgrtJDzohC-KGN0Q6Om2B

Yes, Princes of the Yen is a classic. I saw it many years ago and at that time i would have commented that Japan had been allowed to extend and blend its war economy right through into the 1990's. Today, such atypical state command of national economies is becoming the new normal. Oh, and we all now have a Covid-Conflict (contrived war?) to contend with!   

(i add that Richard Werner himself is highly dubious of the whole Covid panic thing)

 

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The dollar action is classic macro liquidity lag stuff.The road map priced the dollar to come down hard from the 100 level and silver to run up in tandem.In a way the way this thread played that dollar decline that nobody expected was in the silver miners,again classic macro cross market work.These cycle turns are nasty beasts and bite you in many areas,but getting the broad road map right means profits from the winners are multiple times the losers.

Im not doing much more work on currency now,as once the dollar decline ends i think we will be into an industrial cycle,and other forces will be driving markets,not so much currency movements.The US is about to import inflation,instead of deflation,something it hasnt really done since 1982.

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