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


spunko

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Peak thread this last week.

First @Cattle Prod's magna opera.

Then this chart is a bobby-dazzler:

8 hours ago, sancho panza said:

a longer term perpsecive voer last few years

image.thumb.png.43d11c685ef129b57d29effe1afabb4e.png

And so is this one:

7 hours ago, Errol said:

Energy: The most hated asset class in the world -

 

Image

Interesting looking at that last one and contemplating how markets work, in terms of what they get right and wrong. Banks - yeah, fair enough. UK, Energy - mis-priced by a cuntry mile.

Top top work folks.

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4 hours ago, JMD said:

Just so I've understood Harley, Is the hyper-normalisation term you use from the Adam Curtis documentary?

Yes.  Not new but refined by the Russians.

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UnconventionalWisdom
6 hours ago, wherebee said:


I keep thinking we are missing some huge fail in our logic?  Is it planned depopulation?

A button has been pressed somewhere causing a swing towards a more sustainable future. The knee-jerk reaction is to move out of fossil fuels. A load of the pension providers are doing it as a statement of, "look at us, aren't we great, caring about the future". My work one was  with Nest and I was never happy with them- going to be pretty much a lifestyle 60/40 fund. When they got out of oil, i had to pull it, even if I would lose the employers comtribution (they agree to fund the SIPP in the end). How they didnt even look at the green plans of the likes of BP is beyond me- cleary they pulled it to make a statement.

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10 hours ago, Harley said:

The UK is spending tons but not on investment.  On pacifying groups, on revenue not capital.  I could be charitable and call it Keynesian, but this time it is different.  They cancelled the Budget FFS.  They have no financial plan in the traditional sense.  They know they don't need one.  They are working at another level.  I just hope they are letting speculation rip, like they always do, so the reality becomes a relief and now acceptable.

Doesnt matter Harley,all that matters is the liquidity goes in the system,the market then allocates that liquidity.Your right on the lack of any financial plan,they are simply printing and spending on the state,but thats exactly what we want.We want all that dis-inflation of 40 years printing back.The biggest boom in industrial assets is starting.Asia has started already,massive investment incoming for them.

Of course sterling could be toast.The goverment have been beyond useless so far.I still think the pain in the UK will be on housing and bonds (pensions in 40/60,20/80 type setups)

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AlfredTheLittle
11 hours ago, sancho panza said:

What's SPR stand for?

I never get tired of the education we're getting in oil,not clogging the thread up at all imho.

I was looking the otehr day quickly in between shifts and was surprised to see BP near £2 but WTI >$40.How do you explain that which at first appears a paradox?

There appears a real disconnect between the two of alte and I keep hearing about the demand side drop,but the evidence appears to be saying it's not there.If you're right CP,then the CHinese have been buying the dips below $40.SOmeone's been buying.

Chart is WTI overlaid by BP

image.thumb.png.0be7a36577db74da0671875fa92fd9ac.png

a longer term perpsecive voer last few years

image.thumb.png.43d11c685ef129b57d29effe1afabb4e.png

Dividend cut would explain those graphs - the share price will keep tracking the oil price, but it's going to be at a lower level to reflect the reduced dividend.

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8 hours ago, wherebee said:

It's incredible.  Whether you are left wing, right wing, pessimist, optimist, green, red, whatever - you HAVE to see that the world runs on cheap energy, and without energy failing a massive fall in population numbers, energy will continue to climb in demand.  You also have to acknowledge that renewables and the like cannot yet replace oil and coal in any meaningful way globally (yes for some countries, not for 7billion people).

I keep thinking we are missing some huge fail in our logic?  Is it planned depopulation?

Gas use will treble by 2050 on my numbers,oil fall 11%.Its sentiment driven now.Its the best contrarian trade iv seen in decades.Last one as good was tobacco when everyone said the US would fine them out of existence and everyone would stop smoking etc.

You have classic end of cycle stuff hitting the sector hard as expected.Thats simply the cycle,but the end of a dis-inflation is the maximum pain point for companies like oil companies (and telcos etc)

On top of that you have a woke left wing media and weak politicians playing to the crowd,as Thatcher used to say weak because they act on "feelings" instead of "thinking".

Its a classic contrarian situation.Cycle end means divi cuts and massive profit falls.The media translate that to  "down forever,industry finished" then funds etc dump as well,one due to down momentum and another to simply be woke.

Oil will go to $200 in the cycle.I hope the stocks in the area stay down a bit yet though,im directing every divi into them now from all of my portfolio.

One beautiful side will be the 11th Nov when a big fat divi lands from BAT Tobacco and goes into the oilies.

The market is selling off all the very inflation hedges at the start of an industrial cycle.Incredible,but my children will be very grateful down the road.

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11 hours ago, sancho panza said:

KGC now rumoured to ebaheading to Londinium lsiting as well.

ANy one know why theyre heading thsi way?

 

Whats annoying is AUY (Yamana) is listed on London as of the 13th but HL and most others don't show it so looking around i saw a few people comment on this, probably be the same for above and wheaton metals on the 1st November

 

A very weak first opening day. No interest from the big boys at all. Volume pitiful !

----------------------------

If it’s listed they will deal in it. Having said that, AUY Isn’t showing on HL . I believe HL currently have technical issue with website which may be more extensive than they’re currently admitting to.

----------------------------

Yamana is also not listed on Lloyds/HBOS.
AJ Bell show it but as a NYSE stock, not on the LSE.
No wonder there have been so few trades, it is near impossible to buy them.

----------------------------

I rang HL this morning (I have an account with them). They said they don't automatically allow trades in every available listing, but if here are quite a few requests for a particular share, they will allow trades,. SO get ringing folks.

----------------------------

IG's advised that Yamana Gold will be set up for leveraged and non leveraged accounts. I've been asked to check back for updates. The London listing has been somewhat underwhelming to say the least.

----------------------------

Reply from HL this morning, lazy....
I am writing further to our previous telephone call.

As discussed, I previously requested for our stock file team to see if we can add Yamana (AUY) to the HL Platform.

Unfortunately, as Yamana Gold Inc. is a Canadian incorporated company and trades with far greater volume on the Toronto listing than the new LSE listing we will continue to trade the Toronto exchange under the ticker YRI and will therefore not be adding the LSE listing to the platform.

I apologise for any inconvenience caused.

I hope this has been of assistance. If you have any other questions, please get back to me.

----------------------------

Reply from AJ Bell.
"Yamana gold appears to be most liquid on the NYSE and as such we would direct our customers to trade on this listing."

I replied saying that the reason that AUY is thinly traded on the LSE is that just about every broker has failed to list it as an LSE stock, and that you cannot buy what is not offered for sale. I also said I regarded this response as lazy and greedy on AJ Bell's behalf.

AJ Bell acted promptly and set up a temporary code for AUY.
If you have an AJ Bell account - 
Do not enter AUY, or you will get NYSE: AUY.
Enter 3388349 and you will get a quote in £ sterling, not US dollars.
Another plus is that there is no purchase tax charged.
I have bought some shares today, and it works - just a £9.95 buying charge.

 

 

 

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9 hours ago, wherebee said:

I keep thinking we are missing some huge fail in our logic?  Is it planned depopulation?

I have thought the same, and you described it better than I did in my own head with "missing some huge fail in our logic".  The pieces don't seem to fit the puzzle anymore, recently.  

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42 minutes ago, DurhamBorn said:

The goverment have been beyond useless so far.

Talking of Government needing to get its act together ... anyone else notice this kite being flown this week?

https://www.bloomberg.com/news/articles/2020-10-13/u-k-plans-new-law-to-unpick-foreign-deals-on-security-grounds

I hope there's something in it. There isn't going to be an industrial-led reflation if Government doesn't provide a bit of muscle.

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1 hour ago, DoINeedOne said:

Reply from AJ Bell.
"Yamana gold appears to be most liquid on the NYSE and as such we would direct our customers to trade on this listing."

A bit odd as they say you can't buy US stocks direct but CDIs in them.

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Clueless Imbecile
2 hours ago, DurhamBorn said:

Oil will go to $200 in the cycle.I hope the stocks in the area stay down a bit yet though,im directing every divi into them now from all of my portfolio.

One beautiful side will be the 11th Nov when a big fat divi lands from BAT Tobacco and goes into the oilies.

The market is selling off all the very inflation hedges at the start of an industrial cycle.Incredible,but my children will be very grateful down the road.

Hi DurhamBorn. Just wondering what your opinion of XOM (Exxon Mobil Corp) is?

I'm a complete newbie to macro strategy and stock picking, having been a believer in passive investing & equity index-tracker funds for many years (at least until I started reading your thread about 3 or 4 years ago).

My thoughts about Exxon are:

1) It's one of the biggest publicly traded oil companies.

2) It is perceived to be American, and therefore I could imagine the US government being more sympathetic towards it than they might be towards other oil companies. US government is a very powerful ally to have. This is just pure guesswork by me though.

3) My interest in Exxon is as a diversifier so that I could get more exposure to oil shares than just RDSB, BP. and REP.

4) One worry I have is that the XOM that is listed on my ISA platform is a CDI, listed as:

Exxon Mobil Corp (XOM) Comm Stk NPV (CDI)

I'm not entirely sure about the pros & cons of stuff like CDI and ADR. I have a slight worry that they might be higher risk than owning shares directly, if multiple bank failures happened (in the "bust", for example). This gives me a dilemma about whether to invest now, or to wait until the BK/bust (next year?). The downside of waiting could be that maybe the oil stocks might already be bottoming out and could even rise whilst the rest of the market crashes (who knows?!!).
 

Cheers,
Clueless Imbecile

Disclaimer: I am not an expert. Anything I post here is just my opinions, which may not be factually correct. My posts are intended purely for the purpose of debate and are not to be taken as advice. If you act on any of the above then you do so entirely at your own risk. I do not accept any liability.
 

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13 hours ago, Harley said:

Just a shame I won't be so young and able this time.  It's going to get shitey, bit by bit, and then chunk by chunk.  Who would have thought we would be here nine months ago.  Boiled frogs.

Agree, this is my concern and why I am looking for my ex-UK exit strategy now so that I am there (wherever `there` is) when I am old and lack the strength to fight.

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Nicolas Turgeon
On 24/06/2020 at 00:27, JMD said:

Interesting Harley, as I am about to do a personal review of etfs/funds/trusts to hold, for my own self identified next-cycle themes/sectors/regions. I'm doing this because I haven't the skills to select a suitable number of individual stocks, so want to use funds to add more diversification. As you have amply shown in previous postings, there are so few 'good' funds out there, and the ones worth owning are in a small minority.

Hi JMD, sorry to bring your post back from the past!

How have you been gettingon with identifying some ETFs and funds to buy in the next cycle? I've been wanting to do something similar for the inflation sectors next cycle I.E. the 'OPTIMISM' sectors, rather than buying individual company shares becasue ETFs and funds sound 'lower maintenance'  than having to keep an eye on dozens of companies for years on end to check they're still being run well etc. I just assume (probably wrongly!) that ETF managers and Fund managers are doing this for you and ditch rubbish companies from their funds. That is a massive and potentially costly assumption so please someone correct me!

From this great thread (many thanks as always to all the regular contributors) the following have come up in the past:

Telecoms:
XSKR - Xtrackers Stoxx Europe 600 Telecommunications UCITS ETF
EXV2 - iShares (BlackRock Asset Management Deutschland) STOXX Europe 600 Telecommunications

Energy:
Schroder ISF Global Energy Class Z - Income (GBP) - Fund

Resources:
Ninety One Enhanced Natural Resources Class I - Accumulation (GBP) - Fund
 

What others have a I missed or have people uncovered? I remember stumbilng on an oil companies ETF we could access in the UK containng loads of the big oilies but failed to take a note of it :( [EDIT: It might have been XSER for the oilies. Also see SPOG for Oil and Gas producers ]

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13 hours ago, leonardratso said:

hmm, thought that as well, is it brexit? does that bring any advantages for them? we can buy them already if we want to.

But if we buy as a London listed we dont pay witholding tax.

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1 minute ago, MrXxxx said:

But if we buy as a London listed we dont pay witholding tax.

That’s not correct. Withholding taxes are levied based on where the company is incorporated.

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5 hours ago, UnconventionalWisdom said:

A button has been pressed somewhere causing a swing towards a more sustainable future. The knee-jerk reaction is to move out of fossil fuels. A load of the pension providers are doing it as a statement of, "look at us, aren't we great, caring about the future". My work one was  with Nest and I was never happy with them- going to be pretty much a lifestyle 60/40 fund. When they got out of oil, i had to pull it, even if I would lose the employers comtribution (they agree to fund the SIPP in the end). How they didnt even look at the green plans of the likes of BP is beyond me- cleary they pulled it to make a statement.

Even better is the USS (Universities scheme) where the National Union of Students lobbied the Unis and pension provider to withdraw from some non-ethical investments I.e fossil fuels...student (`customer`) power dictating your future pension returns?

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On 17/10/2020 at 11:19, MrXxxx said:

I found this a really worthwhile listen with many 'wise words' (although this could be confirmation bias!)., especially around minute 32 and 35. What I would like to know is the three main Uranium miners he mentions at minute 38 so i can investigate further; he doesn't mention them by name...any ideas folks?

Actually he did mention I think 8 specific uranium miners in another podcast he did a few month back, 4 low risk, 4 high risk if I remember correctly. I was surprised he did mention actual stock at the time. I can't now find the podcast, but if you have time and search for Rick Rule and uranium you might be able to yourself... It's the one with him sitting in a very very very white room. Sorry can't be more help.... Also, some YouTubers analyse 'expert' stock choices, so you might find something there if they did one at the time for Rick Rule.

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3 hours ago, DoINeedOne said:

Whats annoying is AUY (Yamana) is listed on London as of the 13th but HL and most others don't show it so looking around i saw a few people comment on this, probably be the same for above and wheaton metals on the 1st November

 

A very weak first opening day. No interest from the big boys at all. Volume pitiful !

----------------------------

If it’s listed they will deal in it. Having said that, AUY Isn’t showing on HL . I believe HL currently have technical issue with website which may be more extensive than they’re currently admitting to.

----------------------------

Yamana is also not listed on Lloyds/HBOS.
AJ Bell show it but as a NYSE stock, not on the LSE.
No wonder there have been so few trades, it is near impossible to buy them.

----------------------------

I rang HL this morning (I have an account with them). They said they don't automatically allow trades in every available listing, but if here are quite a few requests for a particular share, they will allow trades,. SO get ringing folks.

----------------------------

IG's advised that Yamana Gold will be set up for leveraged and non leveraged accounts. I've been asked to check back for updates. The London listing has been somewhat underwhelming to say the least.

----------------------------

Reply from HL this morning, lazy....
I am writing further to our previous telephone call.

As discussed, I previously requested for our stock file team to see if we can add Yamana (AUY) to the HL Platform.

Unfortunately, as Yamana Gold Inc. is a Canadian incorporated company and trades with far greater volume on the Toronto listing than the new LSE listing we will continue to trade the Toronto exchange under the ticker YRI and will therefore not be adding the LSE listing to the platform.

I apologise for any inconvenience caused.

I hope this has been of assistance. If you have any other questions, please get back to me.

----------------------------

Reply from AJ Bell.
"Yamana gold appears to be most liquid on the NYSE and as such we would direct our customers to trade on this listing."

I replied saying that the reason that AUY is thinly traded on the LSE is that just about every broker has failed to list it as an LSE stock, and that you cannot buy what is not offered for sale. I also said I regarded this response as lazy and greedy on AJ Bell's behalf.

AJ Bell acted promptly and set up a temporary code for AUY.
If you have an AJ Bell account - 
Do not enter AUY, or you will get NYSE: AUY.
Enter 3388349 and you will get a quote in £ sterling, not US dollars.
Another plus is that there is no purchase tax charged.
I have bought some shares today, and it works - just a £9.95 buying charge.

 

 

 

And no currency charge either...no wonder the brokers aren't interested in listing the LSE option if they can pocket an extra 1.5% every time you buy/sell!

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1 hour ago, Clueless Imbecile said:

Hi DurhamBorn. Just wondering what your opinion of XOM (Exxon Mobil Corp) is?

I'm a complete newbie to macro strategy and stock picking, having been a believer in passive investing & equity index-tracker funds for many years (at least until I started reading your thread about 3 or 4 years ago).

My thoughts about Exxon are:

1) It's one of the biggest publicly traded oil companies.

2) It is perceived to be American, and therefore I could imagine the US government being more sympathetic towards it than they might be towards other oil companies. US government is a very powerful ally to have. This is just pure guesswork by me though.

3) My interest in Exxon is as a diversifier so that I could get more exposure to oil shares than just RDSB, BP. and REP.

4) One worry I have is that the XOM that is listed on my ISA platform is a CDI, listed as:

Exxon Mobil Corp (XOM) Comm Stk NPV (CDI)

I'm not entirely sure about the pros & cons of stuff like CDI and ADR. I have a slight worry that they might be higher risk than owning shares directly, if multiple bank failures happened (in the "bust", for example). This gives me a dilemma about whether to invest now, or to wait until the BK/bust (next year?). The downside of waiting could be that maybe the oil stocks might already be bottoming out and could even rise whilst the rest of the market crashes (who knows?!!).
 

Cheers,
Clueless Imbecile

Disclaimer: I am not an expert. Anything I post here is just my opinions, which may not be factually correct. My posts are intended purely for the purpose of debate and are not to be taken as advice. If you act on any of the above then you do so entirely at your own risk. I do not accept any liability.
 

Hi Clueless,

I posted a FT link about a month ago on this thread that may be useful, it comparese all the big oilies, what they are invested in, and what their future plans are.

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42 minutes ago, Castlevania said:

That’s not correct. Withholding taxes are levied based on where the company is incorporated.

Thanks for the correction, I will go and refresh my understanding...so say for example Wheaton (a Canadian registered co) sells its shares on LSE from 1 Nov they will take tax at source and you will still need to claim a partial refund under the appropriate double-taxation agreement...isI this correct?

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12 hours ago, wherebee said:

It's incredible.  Whether you are left wing, right wing, pessimist, optimist, green, red, whatever - you HAVE to see that the world runs on cheap energy, and without energy failing a massive fall in population numbers, energy will continue to climb in demand.  You also have to acknowledge that renewables and the like cannot yet replace oil and coal in any meaningful way globally (yes for some countries, not for 7billion people).

I keep thinking we are missing some huge fail in our logic?  Is it planned depopulation?

'...Missing huge fail in Logic' ...don't know if you've seen Adam Curtis's/Hypernormalisation, its bit long but worth the watch. It explains how mad fanciful ideas, ones that go beyond simple propaganda, are propagated by governments to pacify the populace. The big conceit is that significant numbers of people don't actually believe any of the fake news but it benefits them financially or philosophically to just go along with things. When I first saw the documentary several years ago I thought this could only happen in Russia etc, but the contrived Corona crises has changed my mind.

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14 minutes ago, MrXxxx said:

Hi Clueless,

I posted a FT link about a month ago on this thread that may be useful, it comparese all the big oilies, what they are invested in, and what their future plans are.

That would be interesting to see, but FT is behind paywall, is there a way of posting the article content?

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26 minutes ago, JMD said:

That would be interesting to see, but FT is behind paywall, is there a way of posting the article content?

Yes, a couple of posts after mine @OCD pasted a work around link.

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2 hours ago, Clueless Imbecile said:

Hi DurhamBorn. Just wondering what your opinion of XOM (Exxon Mobil Corp) is?

I'm a complete newbie to macro strategy and stock picking, having been a believer in passive investing & equity index-tracker funds for many years (at least until I started reading your thread about 3 or 4 years ago).

My thoughts about Exxon are:

1) It's one of the biggest publicly traded oil companies.

2) It is perceived to be American, and therefore I could imagine the US government being more sympathetic towards it than they might be towards other oil companies. US government is a very powerful ally to have. This is just pure guesswork by me though.

3) My interest in Exxon is as a diversifier so that I could get more exposure to oil shares than just RDSB, BP. and REP.

4) One worry I have is that the XOM that is listed on my ISA platform is a CDI, listed as:

Exxon Mobil Corp (XOM) Comm Stk NPV (CDI)

I'm not entirely sure about the pros & cons of stuff like CDI and ADR. I have a slight worry that they might be higher risk than owning shares directly, if multiple bank failures happened (in the "bust", for example). This gives me a dilemma about whether to invest now, or to wait until the BK/bust (next year?). The downside of waiting could be that maybe the oil stocks might already be bottoming out and could even rise whilst the rest of the market crashes (who knows?!!).
 

Cheers,
Clueless Imbecile

Disclaimer: I am not an expert. Anything I post here is just my opinions, which may not be factually correct. My posts are intended purely for the purpose of debate and are not to be taken as advice. If you act on any of the above then you do so entirely at your own risk. I do not accept any liability.
 

Exxon is simple,buy it.They have amazing projects coming online.At $65 oil i reckon they are on a free cash yield of 20%.At $100 maybe 37%.If we take $100 oil as the cycle average (it might be slightly lower or higher)  then Exxon should provide 300% gains + dividends minimum over the cycle.

Wouldnt worry about CDIs they are held under crest.I have around 12% of my portfolio in them.Like anything i wouldnt go over 15%,but under that across different stocks im fine.

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55 minutes ago, JMD said:

Actually he did mention I think 8 specific uranium miners in another podcast he did a few month back, 4 low risk, 4 high risk if I remember correctly. I was surprised he did mention actual stock at the time. I can't now find the podcast, but if you have time and search for Rick Rule and uranium you might be able to yourself... It's the one with him sitting in a very very very white room. Sorry can't be more help.... Also, some YouTubers analyse 'expert' stock choices, so you might find something there if they did one at the time for Rick Rule.

Best Uranium winner for me is Harmony Gold.They have massive amounts on their tailings and in their mines.They have 5 bagged of course already.I used to love the ETF URA and have made good money a few times on it,but we cant use that anymore due to the idiotic KIDD rules.

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