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

[Barnsey]

Wage inflation back on the cards?

Has Sunak frozen the income tax threshold for 5 years because he knows this is on the way?

[reformed nice guy]

Last summer I bought a stake in Ocean Wilsons which is listed in London.

Its a conglomerate but is the biggest player in Brazilian shipping I think. I bought it as a friend in the oil industry that works in Brazil said they are making a lot from contracts.

Im no expert but their balance sheet seemed good at the time and had a low P/E.

[planit]

1 hour ago, DurhamBorn said:

I still own a lot of oilies,they are still 20% of my portfolio,Repsol,my largest holding in the sector though had reached 8% of my net worth due to almost doubling and needed trimming down,thats far too much in one stock.I still think they will double from here,and maybe 3x or even 4x.

Luckily so far we have had a big rotation,without a BK.Though the areas we have been buying had already had huge falls and the worst sentiment iv ever seen.

 

 

 

Sorry, I didn't mean to say anyone had sold out completely and I don't intend to either. I will try to top-slice on highs and buy back in lower.

[Barnsey]

Great article from Frances Coppola:

https://www.coindesk.com/money-scarcity-means-someone-hungry?

Now we are in another recession, and this time it is being played differently. Both the Fed and the U.S. government have turned on the money taps. Those who want to hold money as a store of value are screaming about negative interest rates and the possibility of inflation from all this money creation. But the purpose of all this money creation is to ensure that, unlike previous contractions, we don’t mistake too little money for too much goods and end up with people going hungry.  

I believe that ensuring no one goes hungry is much more important than preserving the wealth of people who have money.  After all, people don’t have to keep their wealth in the form of money, there are a variety of assets that they can use as hedges against inflation, including – now – bitcoin.  But people who are unable to obtain money because there is insufficient in circulation have no other options. Unless more money is created, they will starve. 

So I’d rather money wasn’t deliberately kept scarce to placate savers. Let the supply of money respond to demand for it. When everyone wants to save in the form of money, you need to produce more of it so those who need to spend money don’t starve. Obviously, we don’t want to create so much money that it becomes worthless. But it is better to risk waking the demon of inflation than to deny people the means to live.

[leonardratso]

best to double down;

ill ride it a bit longer i suppose, with a few GBP (pence that is)

 

[Loki]

1 minute ago, leonardratso said:

best to double down;

ill ride it a bit longer i suppose, with a few GBP (pence that is)

 

I just had a thought.

I wonder if he uses Twitter as either a contrarian barometer or a 'hidden' learning experience for his audience?

His tweets are generally accurate but mis-timed.  Now I think there's more to it than just "Strategist not trader".  He's obviously not a stupid man.

[Loki]

@Cattle Prod Suffering from rep deflation at the moment but thank you as always for your posts.

[Barnsey]

This clip appears to have gone viral in recent days, no doubt in my mind that everyone is so much more switched on compared to the GFC with what this all means and what they want. This time really will be different, but maybe it'll take a bust first for the powers that be to shift.

 

[ThoughtCriminal]

1 hour ago, leonardratso said:

best to double down;

ill ride it a bit longer i suppose, with a few GBP (pence that is)

 

There's apparently a huge semiconductor shortage that's going to bite soon. 

 

[leonardratso]

1 hour ago, Loki said:

I just had a thought.

I wonder if he uses Twitter as either a contrarian barometer or a 'hidden' learning experience for his audience?

His tweets are generally accurate but mis-timed.  Now I think there's more to it than just "Strategist not trader".  He's obviously not a stupid man.

hmm, interesting. Id adjust my tin foil hat but i cant afford to make a double tin foil hat anymore due to the price of tin and aluminium, mind hzm shows me nickel has dived recently so maybe ill try and fashion a nickel hat if its not too irritating to skin (which i think it is).

Have you noticed designer face masks, walked passed a batty shop the other night on my nightly scavenge of the empty locked down streets looking for coins and anything i could pick up and use, and they had a double meshed washable medical grade 'designer' mask in the window on a polystyrene head for sale for £20, it really burned excellently i can tell you, but that might have been the polystyrene head.

[leonardratso]

16 minutes ago, ThoughtCriminal said:

There's apparently a huge semiconductor shortage that's going to bite soon. 

 

hmm, my TMSC and AMSL have been tanking lately, might have to top em up.

[Castlevania]

7 minutes ago, leonardratso said:

hmm, interesting. Id adjust my tin foil hat but i cant afford to make a double tin foil hat anymore due to the price of tin and aluminium, mind hzm shows me nickel has dived recently so maybe ill try and fashion a nickel hat if its not too irritating to skin (which i think it is).

Have you noticed designer face masks, walked passed a batty shop the other night on my nightly scavenge of the empty locked down streets looking for coins and anything i could pick up and use, and they had a double meshed washable medical grade 'designer' mask in the window on a polystyrene head for sale for £20, it really burned excellently i can tell you, but that might have been the polystyrene head.

What’s a “batty” shop?

[Loki]

24 minutes ago, Castlevania said:

What’s a “batty” shop?

I can tell you that in the south it doesn't mean the same thing 

[Hancock]

2 hours ago, Barnsey said:

Great article from Frances Coppola:

https://www.coindesk.com/money-scarcity-means-someone-hungry?

I once had a twitter account and debated with her about the housing bubble, she truly is as thick as mince.

A left wing extremist who sees the govt/BoE as the solution for everything

[leonardratso]

44 minutes ago, Castlevania said:

What’s a “batty” shop?

batty places like M&S or boutique designer shops selling shite at way over normal prices, batty arsed shops.

not related, but another colloquialism 'jing bang' food - when you live off shit like biscuits or crisps or snacks n shit cos you cant be arsed to make proper food. Has dire long term consequences....

https://www.irishtimes.com/news/health/teenager-goes-blind-after-years-of-no-fruit-or-vegetables-1.4006165

[sancho panza]

6 hours ago, Castlevania said:

This sentence caught my eye. Why does he regard the U.K. average earnings figures as being not fit for purpose?

Shaun is a very technical read at times ie way above my head.He understands all the subtle nuances of the methodolgy used in calcualting inflation/GDP etc etc.

I would suspect it will relate to one of the following

1 the data being based on full time PAYE workers

2 using mean as opposed to median

3 some of the assumptions used in guesstimating those they couldn't count

If you ask him questions in the comments of the msot recent article,he'll virtually always respond.Even if it's off topic.A proper gentleman.

[JMD]

15 hours ago, sancho panza said:

JMD,I do place facts highly when investing,hence I was specifically unspecific about the electricity usage issue.From your psot it was clealy an issue two years ago.

I'm all for getting out of fiat but sometimes you have to accept that you're getting channelled into an ambush.It's going up,it's getting more popular but the evidence of it's success reveals the roots of it's downfall.

From your article talking of 70 Terrawat hours,we go toa BBC(I know,I know) piece based on Cambridge Uni research saying currently it's :

'Cambridge researchers say it consumes around 121.36 terawatt-hours (TWh) a year - and is unlikely to fall unless the value of the currency slumps.'

So since 2019 the leccy usage has gone up 70%.......

In an era when energy is going to get expensvie,you're telling me that govts will jsut blindly ignore the social costs of having significant crypto mining pushing up the price of leccy for people wanting to cook dinner for their kids...? I just don't see it.I would presume that the leccy usage doesn't fall evenly across countries either

I'm sure there's big bucks to be made in crypto,it jsut won't be made by me or people like me.

 

https://www.bbc.co.uk/news/technology-56012952

Thanks for reply SP, interesting figures you've found there. After all I own some BTC so the debate is important to me. Whether BTC is investment or speculation I haven't yet decided. So to be clear I am not dogmatic about BTC, but my personal base case is that sovereign crypto (for increasing social control?) and private crypto (mainly for the rich?) will in the near future co-exist.                                                                                                           I absolutely get your point about government seeking to limit electricity usage in tomorrow's increasingly finite ('locked down'!!, my term/concern) world. However, power generation and the uses it is put to is also fundamental to our modern standard of living (something the green political agenda totally overlooks). So there is a balance to be struck, and as they say, context is everything. The report I linked last time grabbed my attention because it compared gaming to crypto. I think this is useful as both use similar graphics tech.                                                                                                                                                                              I can attempt to answer the energy mix question that I think you were asking about. Most crypto mining companies set up their operations where energy is cheapest. So paces like hydro schemes in China, or geothermal in Iceland, or solar in USA. So renewable, and sometimes evan off-grid generation. The below link shows pc gaming (excluding consoles) in the US alone uses 75 terrawatts annually. Ok that report is 2 years old, but global gaming (pc and console) exceeds crypto in terms of energy use. Plus the crypto energy use is increasingly green and off-grid so not real comparing like for like.                                            As I said previously 'energy'is only one - 'false argument' in my opinion - used against crypto, I don't expect people to rush to BTC because they accept the framework I'm presenting here. But i do think it is an example of competing counter narratives (our present world is full of them unfortunately, including 'speaking your truth', which i find totally creepy!) that at the very least cancel each other out.                                                                                                                                                                                    https://grist.org/article/video-games-consume-more-electricity-than-25-power-plants-can-produce/

[MrXxxx]

Anyone use IG as a broker?....thoughts?

Also, just checking my understanding on SIPPs if I leave company DC pension:

1. You just inform provider and they transfer the DC pension across.

2. The provider charges you a fee to hold SIPP (about £200 pa)...do they also charge a %?

3. Other fees I.e buy/sell equities are as normal.

Correct?

...just looking at all my options as currently company a) covers running costs even after you leave, and b) you can still choose/change the limited offerings after you have left...

....thinking it may be good to stay saving annual fees and keep it in one of their options whilst getting breadth via buying through my isa/dealing accounts.

 

[sancho panza]

6 hours ago, planit said:

But the oilies etc have risen so the S&P500 has gone nowhere over the last month. 

Ironically ,this is exactly as per Steve Kaplan's trading roadmap drawn out two years ago.The energy sector is the last to rise before the recession begins.It's ironic because he pulled out of XOM at about $45 is waiting to rebuy at $33.....

I think thsi energy/commodities run may have a fair bit more life in it yet.

6 hours ago, planit said:

 

This is the graph of the % fall from previous week and you can see the line is still moving down. The last data point is a 46% drop from last week.

 

 

So the reason I think this is important is I don't think Boris allowed for it in his opening plan. In April there might well be almost zero deaths (even on their crazy measuring criteria) but we will still be almost completely locked down. By then all vulnerable people would have been vaccinated.

Even positive cases would have fallen off a cliff as the vaccinations reduce transmission substantially.

 

 

amazing that drop off but running like most winter respriatory seasons I've seen charts for.That chart also doesn't show how mnay people haven't died of lu this winter

[sancho panza]

4 hours ago, DurhamBorn said:

Luckily so far we have had a big rotation,without a BK.Though the areas we have been buying had already had huge falls and the worst sentiment iv ever seen.

 

 

 

The big rotation into oil is one of the signs of looming BK imho hattip Kaplan.I'm watching those prices intently.Copper has fallen into place,natural gas could be due another run,PM's too,UST yields could yet lurch higher etc etc.
 

For me,there aren't enough of the flags in place to say it's imminent,but there are more than there were three months ago

[sancho panza]

3 hours ago, Cattle Prod said:

I agree with this, I said pretty much the same thing here last night:

I said Brent could go to 80 when it was 35. If it goes another 11 dollars or more I suspect it's going to be more volatile, and harder to make money on.

 

I still think there's some comparative value in some of the oilies,but I agree,the bargains have been had.

I'll psot some charts later to show what I meean.

18 minutes ago, JMD said:

Thanks for reply SP, interesting figures you've found there. After all I own some BTC so the debate is important to me. Whether BTC is investment or speculation I haven't yet decided. So to be clear I am not dogmatic about BTC, but my personal base case is that sovereign crypto (for increasing social control?) and private crypto (mainly for the rich?) will in the near future co-exist.                                                                                                           I absolutely get your point about government seeking to limit electricity usage in tomorrow's increasingly finite ('locked down'!!, my term/concern) world. However, power generation and the uses it is put to is also fundamental to our modern standard of living (something the green political agenda totally overlooks). So there is a balance to be struck, and as they say, context is everything. The report I linked last time grabbed my attention because it compared gaming to crypto. I think this is useful as both use similar graphics tech.                                                                                                                                                                              I can attempt to answer the energy mix question that I think you were asking about. Most crypto mining companies set up their operations where energy is cheapest. So paces like hydro schemes in China, or geothermal in Iceland, or solar in USA. So renewable, and sometimes evan off-grid generation. The below link shows pc gaming (excluding consoles) in the US alone uses 75 terrawatts annually. Ok that report is 2 years old, but global gaming (pc and console) exceeds crypto in terms of energy use. Plus the crypto energy use is increasingly green and off-grid so not real comparing like for like.                                            As I said previously 'energy'is only one - 'false argument' in my opinion - used against crypto, I don't expect people to rush to BTC because they accept the framework I'm presenting here. But i do think it is an example of competing counter narratives (our present world is full of them unfortunately, including 'speaking your truth', which i find totally creepy!) that at the very least cancel each other out.                                                                                                                                                                                    https://grist.org/article/video-games-consume-more-electricity-than-25-power-plants-can-produce/

The point is,that BTC trading isn't prevalent amongst much of the population whereas gaming is.Of all the resaons I would stay out of BTC msot are related to my age and my lack of technical understandign of how it works.The only one that is fundamental is the energy usage issue given what's comign.If we had a billion people using BTC as currency,the world would have a massive energy problem.Ergo,it will likely never gain the traction it needs to become common currency and I struggle to see how that isn't jsut plain common sense and not a false argument?

Could a milion people use gold/paper/electric dollars as currency?easily.They already do.

Like I said,there's lot of moeny to be made in crypto.I don't doubt it.But there are logistical limits to what it can achieve as currency but maybe not as a store of value.The two are differnet themes.

[Popuplights]

3 hours ago, leonardratso said:

best to double down;

ill ride it a bit longer i suppose, with a few GBP (pence that is)

 

To the moon 🌙🌙🌙🌙🚀!

[leonardratso]

8 minutes ago, Popuplights said:

To the moon 🌙🌙🌙🌙🚀!

🍆🍆🍆🍆 and beyond.

[JMD]

16 hours ago, DurhamBorn said:

I top sliced BP,Repsol and a lot of Shell on friday.I still see much bigger gains over the cycle,but the profit i sliced would pay half my  sons mortgage off that he bought last June.Its 7 years expenses for me,and the sector had got to 27% of my equity portfolio,far too high.Its now just below 20% .I also sold some Royal Mail that were up 150%,some more Drax up similar,some Playtech  up 170%.

I kept most in cash,but iv opened small positions in Asian value shares.Im starting to see on my roadmap a chance Asian currencies take over from Western in the cycle.Its very foggy at the moment,but im opening positions until i do more work on it.

I dont like how sentiment has changed to mega bullish and even the hopeless MSM is saying to the moon on commods when a a massive deflation could strike at any minute if the CBs disengage at all.Massive structural deficits are still at hand.

Im also going through some Brazilian stocks and thinking of opening positions.Hat tip to Steve Kaplan on highlighting the contrarian position opening up.

Very likely il keep my oilies now for the cycle,though if they put on another 20% quickly now id trim another 20% off them.

I think gas is about to enter a massive, decade long bull market ,but their recent huge outperformance means they needed a little trim,just like a privet hedge does.

 

DB, that's a good reminder that portfolio diversification across this thread's favourite 'next cycle' sectors, along with rebalancing between/within those sectors actually improves overall portfolio returns, if capitol is redeployed into the 'other cheaper' sectors. Actually some experts say - for the non professional investors at least - that such rebalancing is more important than asset allocation. Of course when to do the rebalance is key, though again many of those financial experts say annually is sufficient (ie stick to a system), but personally I think(hope!) that using market knowlege/skill should improve outcomes even more.                                                                                                     I have a question about selling stocks. I have bought BP stocks at different prices (ladders). When selling these stocks, how does my platform provider(eg HL) decide which of my stocks to sell? Does it sell my 'lowest priced' ladders first, or my 'highest prices' ladders? ...Or given that we are talking about the finance industry, does it do something far more complex, and more opaque?!?

[leonardratso]

1 minute ago, JMD said:

Portfolio diversification across this thread favourite 'next cycle' sectors, along with rebalancing between/within those sectors actually improves overall portfolio returns, if capitol is redeployed into the 'other cheaper' sectors. Actually some experts say - for the non professional investors at least - that such rebalancing is more important than asset allocation. Of course when to do the rebalance is key, though again many financial experts say annually is sufficient (is stick to a system), but using market knowlege/skill I'm sure improves outcomes even more.                                                                                              I have a question about selling stocks. I have bought BP stocks at different prices (ladders). When selling these stocks, how does my platform provider(eg HL) decide which of my stocks to sell? Does it sell my 'lowest priced' ladders first, or my 'highest prices' ladders? ...Or given that we are talking about the finance industry, does it do something far more complex, and more opaque?!?

does it matter? each share is a homogeneous piece of the whole lot for that stock, doenst matter if you spend the 10 pound you took out of the atm today or the 10 pound you took out yesterday, youve still taken 20 out of the atm and will still have your change plus what you bought which if nothings changed should all add up to £20.