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

[sancho panza]

5 hours ago, Cattle Prod said:

The have oil data! 

 

That July 2009 CPI deflationary downdraft caught my eye. The bottom also correlates with a 100%, $900 move in gold to Sep 2011! ( I divided it by 10 to get it on the dollar axis)

They've got copper too.....neat trick with dividing the gold price by 10...preempted my next question.Thanks for explaining in simple terms CP

 

 

1 hour ago, Harley said:

Anyone know of a stocks and shares ISA offering proper (primary) broad international market access for a reasonable price, better than Saxo or II, as most ISAs (and SIPPs) are IMO limiting people to the dog end of the markets.

We have some with HL and they're ok,but it's a buy and hold portfolio so haven't made any changes.I had a look at II but the charges were a little high iirc.

HSBC only offer US and UK via investdirect.And it's quite a poor interface all in all , given the size of HSBC.

39 minutes ago, DurhamBorn said:

Cost push inflation 

https://www.dailymail.co.uk/news/article-8988113/Families-face-council-tax-rise-100-fund-social-care-police-forces.html

5% tax increase,hammering ordinary workers to pay for people mostly sat at home for a year.Council tax is a disgusting tax,but the good thing about it is the suffering it causes people paying it makes them more and more resentful of councils.

I did a back of fag packet calculation for a basic care package,generally there are a number of care packages depending what you need doing.4 x 2 carers daily is normal for the really infirm/bed bound,probably paying average £15 an hour so in a 30 day month =>(30x4x2x15)/2=£1800.Obviously that bill goes up significantly if the patient needs more time.

Generally people receiving care packages will be on reduced council tax as well and could be on other benefits.

I know Leicester council paid all the bills for a friend of my Mum's who was well off and yet someone a few doors up(in a different Council,picked up the whole lot).COuncils apparently have discrettion to do this,so I suspect in Leicester we'll jsut end up with a smaller tax base paying for more people

The interesting thing is that the local authority pick up the whole tab if you're off limited means.If you've got more than £23k in savings then it's goodbye to them.

I genuinely do begin to wonder what the incentive to work is when having no money is such a good option.

https://www.ageuk.org.uk/information-advice/care/paying-for-care/paying-for-homecare/

 

[sancho panza]

6 minutes ago, leonardratso said:

since your on a daily mail trawl, theres a story in there about RMG being able to save a few million by going to 5 days a week delivery instead of 6. Another old idea from this thread i believe.

I was a postie 25 years ago.The sixth day never made any ssense.

[sancho panza]

21 minutes ago, DurhamBorn said:

Ok this is getting ridiculous,

are all these hacks suddenly reading this thread,even pinching the "roaring 20s"

https://www.telegraph.co.uk/business/2020/11/26/lockdown-savings-splurge-may-herald-new-roaring-twenties/

Second time I've used the word 'uncanny' today....

 

[Rave]

3 hours ago, Yadda yadda yadda said:

Some coal being burned too, is that not also Drax?

More likely to be Ratcliffe or West Burton, it's not particularly helpful for grid balancing to have all the power being produced in one place and when Drax's Biomass units are at full pelt they pump out 2.6GW.

https://en.wikipedia.org/wiki/List_of_active_coal-fired_power_stations_in_the_United_Kingdom

[Barnsey]

3 hours ago, DurhamBorn said:

Ok this is getting ridiculous,

are all these hacks suddenly reading this thread,even pinching the "roaring 20s"

https://www.telegraph.co.uk/business/2020/11/26/lockdown-savings-splurge-may-herald-new-roaring-twenties/

This narrative of the reflation trade seems a little too linear. I know the markets are forward looking but seeing this everywhere makes me think we should have one more shakeout as ultimately this is still a demand shock over supply but being masked by shut downs and inventory builds.

[Harley]

5 hours ago, DurhamBorn said:

i take it they forget that the wind farms might have to refinance at much higher rates unless they have 30 year repayment debt.

And the solar farms - I was surprised and still unclear why the likes of TRIG went down so much in Feb/Mar - investor margin calls or some other worry?

[wherebee]

4 hours ago, sancho panza said:

I was a postie 25 years ago.The sixth day never made any ssense.

I thought you lot needed the sixth day to steal all the good stuff you had identified on days 1-5?

[DurhamBorn]

2 hours ago, Barnsey said:

This narrative of the reflation trade seems a little too linear. I know the markets are forward looking but seeing this everywhere makes me think we should have one more shakeout as ultimately this is still a demand shock over supply but being masked by shut downs and inventory builds.

I think thats probably right @Barnsey .Another sharp down leg would shake out the weak hands.I also think we will keep seeing sharp pull backs and more and more will bail.Its likely we will see parabolic increases in reflation assets late in the cycle as people panic that the CBs have lost control of inflation.

I think the key question for people reading this thread is how to get from here to there.Do we to slice a few on sharp run ups?,then re-invest on a correction?,let dividends build and use those on the pull backs? .Its a very difficult question.

[jamtomorrow]

1 hour ago, DurhamBorn said:

I think thats probably right @Barnsey .Another sharp down leg would shake out the weak hands.I also think we will keep seeing sharp pull backs and more and more will bail.Its likely we will see parabolic increases in reflation assets late in the cycle as people panic that the CBs have lost control of inflation.

I think the key question for people reading this thread is how to get from here to there.Do we to slice a few on sharp run ups?,then re-invest on a correction?,let dividends build and use those on the pull backs? .Its a very difficult question.

Agreed. If I remember correctly DB you said yourself you wished you'd let certain winners run a bit longer, previously?

I think risk appetite is one consideration, and therefore how unbalanced a portfolio you can tolerate before you start losing sleep. Me personally, the sleep test has served me well in life - if I'm losing sleep over something, just change it, no ifs, no buts.

On the other hand, I think I invest like I garden - very lazily, and just the occasional severe pruning when I can be arsed. So if my investments end up like my garden, I'll have a handful of massive winners that have survived the alternating periods of laissez-faire and frenzied snipping, and everything else will be dead. I hope I like the survivors.

I do think I'll want to approach the problem differently from the rather industrious types on here who tend their investment allotments daily, or more.

[Loki]

I logon daily and trade rarely.  I don't see it as any different from a daily check of the markets, but why would i care what facegoog is up 

[Yadda yadda yadda]

2 hours ago, DurhamBorn said:

I think thats probably right @Barnsey .Another sharp down leg would shake out the weak hands.I also think we will keep seeing sharp pull backs and more and more will bail.Its likely we will see parabolic increases in reflation assets late in the cycle as people panic that the CBs have lost control of inflation.

I think the key question for people reading this thread is how to get from here to there.Do we to slice a few on sharp run ups?,then re-invest on a correction?,let dividends build and use those on the pull backs? .Its a very difficult question.

It is the question now. We have all seen how you have top sliced to reallocate from big winners to areas that are comparatively undervalued. Looks to be the right general approach.

For me, with less capital to invest, it is more a case of allocating new money and dividends to the better value sectors. As I see them at the time. Only if something has really taken off am I likely to trim it. Similarly if the market as a whole looks to be on shaky ground then I may keep new funds in cash for a while.

I'm also a bit younger so I have an even longer time horizon and a bit more risk appetite. I won't be trying to time every last movement and gain every last percentage point on each rally or pull back. I'd make more mistakes and probably miss out overall.

[CVG]

18 minutes ago, Yadda yadda yadda said:

Similarly if the market as a whole looks to be on shaky ground then I may keep new funds in cash for a while.

This goes back to the portfolio asset class I mentioned earlier. One class is Cash. I always aim to have a minimum of 20% in ready cash to exploit opportunities.

See Harry Browne's Permanent Portfolio book

and https://portfoliocharts.com/

[jamtomorrow]

15 hours ago, leonardratso said:

yeah the to 200K pundits will now fuck off back under their rocks until the next rally.

 

same cycle plays out time after time - and also in mini cycles within cycles.

Volatility is one of the reasons it's still treated like a curio by the mainstream, and the macro aspects are almost completely overlooked (with some honorable exceptions).

Huge mistake in my view - crypto could conceivably be one of the sources of difference compared to the previous macro cycle. Yes, still a non-trivial chance Bitcoin goes to zero before any effects are felt at the macro level. But you don't need a very big fag packet to work out the "doesn't go to zero" scenario can't be ignored, based on expected impact (small probability x big consequences).

Yesterday was ostensibly a huge setback for crypto, given the regulatory change that might be coming on self-custody, and yet BTC found support at 80% of ATH (and that's with the GBTC buying vortex shut down for Thanksgiving).

I'm taking it very seriously indeed, not because I'm certain it will be "a thing", but because the probabilities and the consequences seem self-evident.

[geordie_lurch]

3 minutes ago, jamtomorrow said:

Yesterday was ostensibly a huge setback for crypto, given the regulatory change that might be coming on self-custody, and yet BTC found support at 80% of ATH (and that's with the GBTC buying vortex shut down for Thanksgiving).

What are the possible regulatory changes on self-custody?

[jamtomorrow]

3 minutes ago, geordie_lurch said:

What are the possible regulatory changes on self-custody?

Basically a ratcheting up of KYC when you move crypto off-exchange:

 

[Underwhelmed]

16 minutes ago, jamtomorrow said:

Basically a ratcheting up of KYC when you move crypto off-exchange:

 

Basically the governbankment mafia want their cut in the form of taxes. Also don't dispel notion that Armstrong CEO of Coinbase is a known FUD agent, he has a track record of making pronouncements that have an impact on the market, he was probably told to say something like this.

[jamtomorrow]

5 minutes ago, Underwhelmed said:

Basically the governbankment mafia want their cut in the form of taxes. Also don't dispel notion that Armstrong CEO of Coinbase is a known FUD agent, he has a track record of making pronouncements that have an impact on the market, he was probably told to say something like this.

Other possibility is it helps with exchange liquidity (which has dropped relentlessly since halving). 

[Democorruptcy]

12 hours ago, DurhamBorn said:

Cost push inflation 

https://www.dailymail.co.uk/news/article-8988113/Families-face-council-tax-rise-100-fund-social-care-police-forces.html

5% tax increase,hammering ordinary workers to pay for people mostly sat at home for a year.Council tax is a disgusting tax,but the good thing about it is the suffering it causes people paying it makes them more and more resentful of councils.

Can only be a matter of time before they introduce a local income tax to cover council troughing. Start it at a penny and then once it's in they can keep upping it. Suggested Nov last year well before the extra covid expenses, which must have increased their funding gap, even though the governbankment have given them more money.

Quote

 

New council income tax is best way to plug multi-billion pound gap in social care, says IFS

New analysis by the economic think-tank warned that if council tax continues to rise with inflation - currently at 2 per cent a year - there will be a countrywide shortfall of £4 billion by the end of the next parliament. 

And the growing elderly population means the deficit will rise to £18 billion a year by the 2030s, the IFS warns. 

A new report published today (MON) suggests that councils should be allowed to raise additional funding through a local income tax of 1p on the £1, as an addition to national income tax. The move would raise £6 billion a year for councils, the IFS calculates.

Councils would then have a choice on whether to raise taxes or cut services, the think tank said.

Report author David Phillips, Associate Director at the IFS said: “Councils will rely on council tax and business rates for more of their funding going forwards. 

“And those revenues just don’t look like they will keep pace with the rising costs of services like adult social care – even with council tax bills going up at 4 per cert a year, which is double the rate of inflation. 

“That means finding billions more in funding to top up existing local tax revenues, even before thinking about new initiatives like free personal care.”

https://www.hl.co.uk/news/2019/11/11/new-council-income-tax-is-best-way-to-plug-multi-billion-pound-gap-in-social-care-says-ifs?

 

 

[Bricormortis]

 Perhaps this would be a good a time as any to provide a tale from  a bubble gone bad.

A Dutch guy hosts a dinner and amongst the guests 3 ladies attend all of whom have lost their husbands to the plague which killed around one in eight people in Dutch Harlem. One of the ladies Geertruyt Schoudt was persuaded to buy some Switzer tulip bulbs, that is, not the best of bulbs but never the less having a value of about 2 houses or 2 fully fitted ships per lb weight. What could possibly go wrong eh ? Not having enough cash for her purchase one of the hosts agreed to under write the sale until Geertruyt could borrow enough cash. And so the sale completed. Having bought them she was offered a deal to  sell them, more or less on the spot which would have given her a 100 guilder instant profit. She declined. A few days later her bulbs were worthless.

Buying and selling was usually conducted in taverns, a few days after her purchase someone else tried to auction off a pound of bulbs down the pub, but there were no takers, the price was adjusted down but stilll no takers, word spread, panic set in and in a week or so the price was down a hundred fold and on down and down.

Moral of the story.....you cant loose with tulip bulbs...until you can...or summink.

[wherebee]

16 minutes ago, Cattle Prod said:

Nice colour, classic FOMO. "I'll buy it because it's going up. What do you mean, it's not going up? Get rid of it all". Tulips are just an avatar for hoarding/resource grabbing behaviour long coded in our limbic brain. It's exactly the same a kid wanting sweets because his brother has them (so they must be really good). The trick is to recognise it: it was classic in Bitcoin in recent weeks. Price was shooting up so more and more people wanted in, despite a simple look at the last parabolic run tells you 30% corrections happened every time the weekly RSI hit about 85 (is basically a measure of FOMO). Now the new entrants are in the red, panicking, and seasoned holders will pick up their coins around 13/14,000. 

Our brains are poorly understood, and peoples self awareness of what their brain screams at them is even worse. A powerful tool in the kit is learning how to overrule that part of your brain, though even the greatest investors struggle with it (Druckenmiller in the dotcom bubble).

I knew I was an alien.

 

When I see a rush up, I actively feel a dislike for the 'thing', whether that be tattoos, apple stock, or bitcoin.  

[Democorruptcy]

26 minutes ago, Bricormortis said:

 Perhaps this would be a good a time as any to provide a tale from  a bubble gone bad.

After reading the first line I honestly thought that was going to be about people catching covid.

[Loki]

5 minutes ago, wherebee said:

I knew I was an alien.

 

When I see a rush up, I actively feel a dislike for the 'thing', whether that be tattoos, apple stock, or bitcoin.  

I am the same

[Yellow_Reduced_Sticker]

13 hours ago, DurhamBorn said:

Ok this is getting ridiculous,

are all these hacks suddenly reading this thread,even pinching the "roaring 20s"

https://www.telegraph.co.uk/business/2020/11/26/lockdown-savings-splurge-may-herald-new-roaring-twenties/

 

My offer still stands to be your intermediary / consultant to get ya royalty payments!

 

Can YOU afford my FAIR 10% commission FEE?

[Loki]

13 hours ago, DurhamBorn said:

Ok this is getting ridiculous,

are all these hacks suddenly reading this thread,even pinching the "roaring 20s"

https://www.telegraph.co.uk/business/2020/11/26/lockdown-savings-splurge-may-herald-new-roaring-twenties/

Very poor form to pass your thoughts off as their own if true. Sadly it was only a matter of time.

 

[StrugglingMillennial]

1 hour ago, Cattle Prod said:

Nice colour, classic FOMO. "I'll buy it because it's going up. What do you mean, it's not going up? Get rid of it all". Tulips are just an avatar for hoarding/resource grabbing behaviour long coded in our limbic brain. It's exactly the same a kid wanting sweets because his brother has them (so they must be really good). The trick is to recognise it: it was classic in Bitcoin in recent weeks. Price was shooting up so more and more people wanted in, despite a simple look at the last parabolic run tells you 30% corrections happened every time the weekly RSI hit about 85 (is basically a measure of FOMO). Now the new entrants are in the red, panicking, and seasoned holders will pick up their coins around 13/14,000. 

Our brains are poorly understood, and peoples self awareness of what their brain screams at them is even worse. A powerful tool in the kit is learning how to overrule that part of your brain, though even the greatest investors struggle with it (Druckenmiller in the dotcom bubble).

Is there any where to view RSI charts of bitcoin and other stocks, i wouldn't mind adding this string to my bow.

Thanks