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

[Heart's Ease]

1 minute ago, Harley said:

OMG, I'm so sorry.  Not sure if I'm sexist for assuming a bloke doing finance or the opposite for assuming a bloke nursing a baby!

😁 It's a minefield! The young pup really is a spaniel also 😁.

[Harley]

7 minutes ago, Heart's Ease said:

😁 It's a minefield! The young pup really is a spaniel also 😁.

Best I shut up and head off to bed, to be woken yet again by our terrier at 4am whining to join us!

PS: Oh doubly feck with bells on, by "us" I meant my partner!  Is there an escape hatch here somewhere!

[UnconventionalWisdom]

Not sure if this has been posted before but some interestimg graphs looking at the economic/ political situation over the past few decades.

https://wtfhappenedin1971.com/

[sancho panza]

2 hours ago, Harley said:

Been re-listening and pouring over the recent David Hunter interview and concluded a lot of what we discuss here is trading and not macro investing.  At least in so far as aligning our actions to his roadmap.  Nothing wrong with that but it is what it is and it was the right thing to do in 2020.  For example, DH clearly warned against getting into the post 2021 reflation stocks too early (i.e. now).  He cautioned to navigate and survive the 2021 crash first and then buy at the lows

There was a macro call for a blow off top and some have traded that top.  There is a macro call for a melt down in 2021 and some may trade that too.  Then there's a macro call for the period 2022 to 2030ish.  Now that's something you can invest in, at the right time!

I think the key for me is that I design a rough roadmap in my mind of where I think we'regoing over 1/3/5/10 years and then place trades to fit that roadmap.Whether it's confirmation bias or jsut reading DB's work over the last few years but DH's roadmap to 2021 is ticking a lot of my boxes.It also concurs with the lack of sell triggers I'm currently seeing despite numerous peple I ahve a lot of respect calling a major selling point here.

We've recently been buying some telco's and we'll be holding them through the BK as they don't move inversely to DXY.Other things that the dollar moves are more likely to be sold ahead of teh BK if my sell triggers get hit.

I don't follow the macro calls unless they coincide with my own work.But like I said there's elements of confrimation bias with what I read/learn on here.

I'm happy tho,to hold what we've got now if I can't identify the June 2008 moment.

[Underwhelmed]

Has anyone viewed Paul Hodges latest presentation? 

https://www.icis.com/chemicals-and-the-economy/2020/09/the-state-of-the-global-economy-in-2020/

He sees deflation on the horizon too.

Quote

Last Wednesday, I gave the opening presentation for the ICIS PET Conference and looked at whether the global economy is seeing a Rebound or a full Recovery after the lockdowns? It covered a wide range of topics:

• Chemicals’ Capacity Utilisation is the best leading indicator for the global economy, and it continues to weaken
• Central banks have now provided $48tn of “support” since 2009
• Oil prices are reconnecting with historical levels around $25/bbl
• The Perennials will be 36% of the West’s population in 2030, up from 33% today: the Wealth Creator percentage will fall from 36% to 33%
• Deflation is nearing as the influence of the Perennials 55+ grows
• Ageing populations have lower demand levels, as older people already own most of what they need, and their earnings reduce in retirement
• The world divides into “rich but old”, “young and poor” and “poor and ageing”
• Globalisation provided “stuff” for babyboomers:Sustainability is service-led and provides “solutions”

 

[JMD]

4 hours ago, Transistor Man said:

Having said this reactor is a paper design right now, I’ve seen a few things today suggesting the government are very interested. Kicking off some major industrial spending. Perhaps for Wylfa site even. 

https://www.constructionenquirer.com/2020/09/17/mini-nuclear-power-lifeline-for-wylfa-site/

Thanks TM that's really interesting. I think an % portfolio allocation into future nuclear energy/tech is almost a no brainer. 

[sancho panza]

9 hours ago, kibuc said:

That's a very common way to look at things among regular folk, and it's something I cannot agree with. If your pot increases then your winnings is not "free money", it's a reward for the risk you took and by taking that risk you had earned it. 

If you then approach it like you would with a free bet at an online casino or just consider it a throwaway money, you're basically accepting that you're happy with your initial stake remaining your total wealth forever, and everything above it is a "bonus" or "play money".

I say: no matter how much you've stared with and how much you have now, as long as you're still chasing your goal you should be making optimal decisions based on your views of the market, investing goals and timeframes. Just like you shouldn't take unnecessary risk to "make up" when your pot is down, just also shouldn't become loose with your investment decisions if your pot multiplies, unless you've already reached a point where you have more than you wanted to get.

 

I think the broader issue is that people need to learn their risk/reward profile and designa buying/selling strategy that suits it.As you come across more experienced traders then you can watch and learn how they approach things.

I have some background in gambling and it's the same there.

[sancho panza]

2 hours ago, Harley said:

Yes, I heard DH but am buying initial stakes into the reflation stocks to be ready to scale up quickly and mitigate the risk of being wrong or having the cash stolen.  And yes, looking at CV in the context of the macro roadmap is fascinating.  Likely to create as many blind alleys and distractions as real changes.

PS:. If these are ladders now, what will we call them in 2021!  I already have long established holdings in the suggested sectors like materials (BHP, RIO, etc) and they are doing just fine.  But I'm sure they'll be hit hard in 2021.  If so, I wouldn't be buying much to invest right now.  Energy stocks may be OK given they largely haven't risen but even here DH forecasts a $10 bottom in oil in 2021 so maybe even more pain to come.

PPS: I'm just so grateful to @Heart's Ease for his link to the latest and probably clearest DH interview.  Really made my day.  Right or wrong, DH has provided an early, excellent and very reasonable detailed hypothesis against which to evaluate the mass of macro commentary out there.

I rarely make predictions but I think some big oil and some big Telecoms stocks will be higher than now both during and after the BK.

[JREWING]

Not been able to view the thread all day. 

Has the forum been down or is it my ISP...

Watching RDSB in freefall. My ladders were 10.3 and 10.17.

Nursing a sore head this evening. Never thought I'd see the big Oilies in such territory again. Even with Divs cut at 0.129p the yield is touching 4.8%. Just screams buy. 

Just wish I had more liquidity to dive in more.

4.8% on a share who's div has been cut by two thirds.

What a buy....

[Harley]

2 minutes ago, Panda said:

Has the forum been down or is it my ISP..

I was getting an error page but some links there enabled me to navigate to the logon page.

[Popuplights]

4 minutes ago, Panda said:

Not been able to view the thread all day. 

Has the forum been down or is it my ISP...

Watching RDSB in freefall. My ladders were 10.3 and 10.17.

Nursing a sore head this evening. Never thought I'd see the big Oilies in such territory again. Even with Divs cut at 0.129p the yield is touching 4.8%. Just screams buy. 

Just wish I had more liquidity to dive in more.

4.8% on a share who's div has been cut by two thirds.

What a buy....

I'm waiting for sub 10.00🤑🤑

[Harley]

13 minutes ago, Panda said:

Watching RDSB in freefall. My ladders were 10.3 and 10.17.

Could the technicals be starting to strengthen?

[Popuplights]

31 minutes ago, Panda said:

Even with Divs cut at 0.129p the yield is touching 4.8%. Just screams buy. 

Just wish I had more liquidity to dive in more.

4.8% on a share who's div has been cut by two thirds.

Well, when the banks are offering such attractive savings rates as this one I just spotted, it would be hard to refuse. Limited time offer too, don't all rush at once.....

[JMD]

56 minutes ago, UnconventionalWisdom said:

Not sure if this has been posted before but some interestimg graphs looking at the economic/ political situation over the past few decades.

https://wtfhappenedin1971.com/

Very interesting, but self-selecting data perhaps (is some graphs only begin in 1970?). But I'm a sucker for any good arguments for a return to sound money so not complaining. And the clincher for me was the lawyers/population explosion post-1971! I wonder how the figures break down - I bet half were corporate, tax, local/state/government lawyers!

[S Brule]

1 hour ago, Errol said:

Excellent contrarian indicator

 Hopefully so, here's some more!

[wherebee]

3 hours ago, Harley said:

Yes, I heard DH but am buying initial stakes into the reflation stocks to be ready to scale up quickly and mitigate the risk of being wrong or having the cash stolen.  And yes, looking at CV in the context of the macro roadmap is fascinating.  Likely to create as many blind alleys and distractions as real changes.

 

This is my biggest worry.  If you sit on the sidelines with 200k cash, waiting for the crash, I'm pretty sure in some countries that will be bailed in at some point, with slicing of 10-20-30% to go to the government.  We saw that in Cyprus already, and this time every single government has fucked their balance sheet due to COVID.

If you have shares in companies, then I think it will be much harder to topslice, and if they do they will hit the rich and the lawmakers, so that will be the last option.

So whilst I have 50kish sitting on the sidelines, ready to invest, I would not want more than than free for fear of a seizure.  I could be wrong, and thus overpaying now, but my rule of thumb with government is think of the worst thing they can do, and prepare accordingly.

[Sugarlips]

1 hour ago, sancho panza said:

I rarely make predictions but I think some big oil and some big Telecoms stocks will be higher than now both during and after the BK.

This is very reassuring for the risk adverse SP thanks, it green lights laddering in here and continuing to going forward (personal circumstances aside).

The Dave H podcast was very clear, he doesn’t like the look of the 2030’s at all, “worse than anything he’s seen in his lifetime” and at a guess I’d say he’s pushing 70 but we’ve got 1-2 cycles to get through first so pointless trying to prep for that, too many variables and surprises along the way.

[JMD]

1 hour ago, sancho panza said:

 

I think the broader issue is that people need to learn their risk/reward profile and designa buying/selling strategy that suits it.As you come across more experienced traders then you can watch and learn how they approach things.

I have some background in gambling and it's the same there.

SP, exactly right. You may have noticed I regularly bang on about my own risk/reward! This is because I am still developing it but it is important because it allows you decide what type of investor you are. There are many practical aspects to the subject, for example the recent discussion about whether to buy/hold onto gains, or to rotate out of big gains into other stocks to reduce concentration - I think both are legitimate strategy for the macro investor - but again, should decide on a personally acceptable plan.  Sleeping well and not being alarmed by market downs probably means you have cracked it.                                                                                              However I am also interested in quantifying my risk/reward and did post a few days back a question framed in terms of @DurhamBorns predictions for 69% cycle inflation compared to possible 400% (5x) oil stock gains. Ok I did cherry pick the figures (and I wouldn't expect entire portfolio to do same), but it was done to understand what a 5x stock return would practically mean when set against 69% inflation over the cycle. Was it an unfair/stupid question to ask?... as I didn't get any responces.

[jamtomorrow]

7 hours ago, Errol said:

“Within the next five years you could see a situation in which foreigners who have been lending money to the United States won’t want to, and the dollar would not be as readily accepted for making purchases in the world as it is now.”

- Ray Dalio

Interesting thesis here on China either positioning or actively seeking to precipitate just such a dollar crisis: https://www.goldmoney.com/research/goldmoney-insights/china-is-killing-the-dollar

(And thus explain their apparent commodity stockpiling)

Makes sense geopolitically - their mountain of UST and USD must be starting to look like a liability when considered in the context of what we here expect Fed and USG to do over next decade, and with Don Trumpio rattling the sabres it might be the most effective form of warfare available to the Chinese.

Long article, so I'll just paste the summary ...

China is killing the dollar

In the wake of the Fed’s promise of 23 March to print money without limit in order to rescue the covid-stricken US economy, China changed its policy of importing industrial materials to a more aggressive stance. In examining the rationale behind this move, this article concludes that while there are sound geopolitical reasons behind it the monetary effect will be to drive down the dollar’s purchasing power, and that this is already happening. More recently, a veiled threat has emerged that China could dump all her US Treasury and agency bonds if the relationship with America deteriorates further. This appears to be a cover for China to reduce her dollar exposure more aggressively. The consequences are a primal threat to the Fed’s policy of escalating monetary policy while maintaining the dollar’s status in the foreign exchanges.

[CVG]

7 hours ago, Panda said:

Just wish I had more liquidity to dive in more.

Good reminder to always hold a healthy cash allocation in order to exploit new opportunities as they arise.

[CVG]

Thinking a bit more about self sufficiency and diversification of assets in the run up to 2030, do folks have any advice on the best ways of locating woodland for sale?

I occassionally check on land on Rightmove but I don't know how many advertise on that platform. I have also come across https://www.woodlands.co.uk/ who are a company that buys large woods and sells them off in smaller parcels. Obviously they're out to profit / fund themselves and that's fine. They seem to charge around 10-12K and acre. Is this reasonable?

 

[Bricormortis]

7 hours ago, wherebee said:

This is my biggest worry.  If you sit on the sidelines with 200k cash, waiting for the crash, I'm pretty sure in some countries that will be bailed in at some point, with slicing of 10-20-30% to go to the government.  We saw that in Cyprus already, and this time every single government has fucked their balance sheet due to COVID.

If you have shares in companies, then I think it will be much harder to topslice, and if they do they will hit the rich and the lawmakers, so that will be the last option.

So whilst I have 50kish sitting on the sidelines, ready to invest, I would not want more than than free for fear of a seizure.  I could be wrong, and thus overpaying now, but my rule of thumb with government is think of the worst thing they can do, and prepare accordingly.

Open online bookies accounts and deposit 2.5 k in each for instance Deposit some with brokers also. Over pay on monthly utilities. Get some britannias. Can't really see them going for premium bonds either. Also spend on insulation if you have your own gaff. My loft insulation is 300 mm now. New boiler fitted yesterday also. Spread your cash around. Sorted.

[DoINeedOne]

8 hours ago, Popuplights said:

Well, when the banks are offering such attractive savings rates as this one I just spotted, it would be hard to refuse. Limited time offer too, don't all rush at once.....

Halifax savings account offer me 0.01% all i keep in Halifax now is bill money for direct debits whilst years ago it had a healthy balance, i do wonder sometimes if they tracked out going transfers to build a idea as to where people are sending money what companies etc... would be interesting 

Like for me they would see most funds get sent to HL, Monzo, Some to Bitstamp, BullionVault

 

On 17/09/2020 at 04:28, Heart's Ease said:

 

Thanks enjoyed that actually a great little Youtube channel his interview with Rick Rule is good to where he talks about owning a bar and being a bouncer becoming a millionaire and losing it too bit more of a relaxed interview style

Jake also talks about having a kid recently in a few interviews and like here thinking about the future and wanting to move to somewhere with bit land etc.... 

 

Oh one other thing about Rick Rule a interview i saw with him few weeks back can't remember which one but he talked about he has been buying farmland in respect to leasing it out in the future

[Harley]

7 hours ago, Sugarlips said:

The Dave H podcast was very clear, he doesn’t like the look of the 2030’s at all, “worse than anything he’s seen in his lifetime” and at a guess I’d say he’s pushing 70 but we’ve got 1-2 cycles to get through first so pointless trying to prep for that, too many variables and surprises along the way.

It really was clear wasn't it.  One of the many bits I liked was the idea we had one more cycle to go before the likes of Peter Schiff were right.  A kind of unifying theory of everything!

[Harley]

8 hours ago, Popuplights said:

Well, when the banks are offering such attractive savings rates as this one I just spotted, it would be hard to refuse. Limited time offer too, don't all rush at once.....

Not bad.  Exposure to the French banking system for only 0.20%pa!