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

[Barnsey]

No more lockdowns

But the job is far from done

 

[Agent ZigZag]

The new Covid strain in Europe discussed in the media of late is looking very likely that a further lockdown in the West will be implemented Autumn 2021. If this is the case then this will be the deflationary bust talked about so much by many. 

The markets over the last year have been fascinating for me to watch as a student novice in investing as money rotated in and out of bonds, gold, stocks, oil, housing etc. I am glad I took profits on my oil recently (as discussed by others) . It looks like the precious metals market is now starting another run and any major profits I make I will take the cash, and wait things out with the comfort of having cash in reserve. 

The problem I have is I hate having to keep watching the market and being on guard. I just want to blank out all the noise, and leave my investments alone and come back in 5 years time when I need them to provide me with an income, or is it my greed, I cant keep away?.

 

[Noallegiance]

24 minutes ago, Agent ZigZag said:

The problem I have is I hate having to keep watching the market and being on guard. I just want to blank out all the noise, and leave my investments alone and come back in 5 years time when I need them to provide me with an income, or is it my greed, I cant keep away?.

 

It frustrates me too.

I feel like scraping off profit in the melt up which, as you state, takes monitoring. Then post bust reorganising my portfolio then just reviewing once per quarter.

It's been said that getting through this bit will be the hard part. It's certainly taking energy from me, among everything else.

[planit]

13 minutes ago, Agent ZigZag said:

The new Covid strain in Europe discussed in the media of late is looking very likely that a further lockdown in the West will be implemented Autumn 2021. If this is the case then this will be the deflationary bust talked about so much by many. 

 

In Europe the main strain is still the one identified in Kent in September (South African strain is 5%-10% 'in some European nations').

 

I was surprised that Boris said it was inevitable that the Europe third wave would wash up on our shores. On reading your post it prompted me to  look things up and I can't find any evidence that would lead Boris to come to his conclusion since we have already had the Kent wave. The reason this wave happened was [the Kent strain] was particularly effective at bypassing our efforts with social distancing.

Also I can't find any current information that would point to a lock-down in Autumn (apart from the permanent risk that another variant proves problematic). The problem strain at the moment is the South Africa one B.1.531. I found 2 studies regarding this strain, Novavax showed 49% efficacy and the AstraZeneca was 10% but both of the studies showed the vaccine was effective against severe illness and death which is what is important. 

The vaccines are already being tweaked for the new strains, I think I read this takes 6 weeks so they must already be starting clinical trials. I guess new variant to improved vaccine will be about 6 months.

So there is the constant risk that there will be another lock-down but nothing is visible to me on the horizon yet.

Important point:

With the amount of monitoring going on and the huge number of cases to monitor there is the best statistical data ever for this virus. If the Kent variant didn't give protection against the Brazilian variant we would know very quickly as examples would be instantly flagged up. But no one is willing to stand up and say things like this in public as it goes against the 'scare everyone' rhetoric so we have to draw our own conclusions.

If a variant does come about that is immune to the current antibodies then we could be back to square one but I think this risk is small. It would require a very large mutation whilst at the same time retaining the incredible contagiousness of Covid-19. 

 

End game:

The ability for the virus to form new mutations is proportional to the number of cases worldwide. Within 6 months this will be a fraction of what it currently is. From that point it will be a case of an international effort to monitor, identify and allocate resources to outbreaks and suppress them wherever they occur. I feel that this will be seen as the new normal in 18 months.

 

ps - None of this really impacts the risks of the huge BK event and the incredible mess we are in that the roadmap addresses. In fact perhaps the trigger will be pulled when the distraction that is Covid dissipates (everyone is looking in the wrong direction).

pps - Thinking about it this could all happen VERY quickly, one minute we are fighting Covid then 2 weeks later everyone is over it and we are staring at the markets exploding because of a 20% blowoff top.

 

 

 

[Bobthebuilder]

1 hour ago, Fully Detached said:

Ah thanks - maybe it was a typo on the post here then - cheers!

https://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/g/guinness-global-energy-fund-class-x-gbp-income

 

[Fully Detached]

20 minutes ago, Bobthebuilder said:

https://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/g/guinness-global-energy-fund-class-x-gbp-income

 

Ah, thanks bob - so it does exist after all  

[DurhamBorn]

A BK is more likely to happen with good news,not bad.Its likely to come from claims on money coming due as the CBs tighten,and by tighten i mean be less loose.

It could be a case of the economy opening up,booming,people putting invoices in,,,,,then nothing.People arent paid.

The biggest risk i see is the fact the west is running a huge structural deficit.That is mainly welfare and over employing in the state sector.

If the economy and tax base doesnt grow much faster than it is and catch up then any increase i rates will cause lots of pain.

Looking at the size of the printing and spending it looks to me like they need to run rates about 2.85% below inflation for the cycle.This number moves slightly over time.Thats to get the public finances into range.

It also means public wages,welfare,pensions etc need to increase slower than inflation and/or private sector wages.

One of the quick gains on this is invest heavily in the north because of the lower costs.

Im really worried that we are going to do really well up here and suck in lots of outsiders and then see prices increase for my grandchildren.Id prefer we stayed a bit poor.Hopefully we have a few really bad winters in a row,that should send people back south.

 

 

[reformed nice guy]

 

[Hancock]

22 minutes ago, DurhamBorn said:

Im really worried that we are going to do really well up here and suck in lots of outsiders and then see prices increase for my grandchildren.Id prefer we stayed a bit poor. Hopefully we have a few really bad winters in a row,that should send people back south.

As you've a lot of time is it worth looking into buying a plot of land on the cheap and claim to live on it for many years thus getting planning permission, then handing it to the grandkids.

The weathers shite in southern England also, they just like to tell themselves its tropical in comparison. Besides it's Jocks moving in is what you've to be afraid of, wouldn't want one of those wife beating cunts marrying into your civilised family!

[Loki]

45 minutes ago, DurhamBorn said:

Id prefer we stayed a bit poor.Hopefully we have a few really bad winters in a row,that should send people back south.

I wouldn't worry mate, i think we'll all be "equally" "rich" by the time they're grown up 

24 minutes ago, Hancock said:

The weathers shite in southern England also, they just like to tell themselves its tropical in comparison.

Not really, just a case of being grateful for what decent weather we do get 

[ThoughtCriminal]

26 minutes ago, Hancock said:

The weathers shite in southern England also, they just like to tell themselves its tropical in comparison. Besides it's Jocks moving in is what you've to be afraid of, wouldn't want one of those wife beating cunts marrying into your civilised family!

That's what I said when I mentioned on here I was looking at houses in northern Sweden and the weather was mentioned. I thought "Where the fuck do you think we live? It's a cold, damp island 10 months of the year. 

 

Being cold is like being late: it's binary. 

[Agent ZigZag]

I dont mind the UK weather overall its the bloody wind that we get loads of that I hate.

[leonardratso]

sprouts

[ThoughtCriminal]

15 minutes ago, Agent ZigZag said:

I dont mind the UK weather overall its the bloody wind that we get loads of that I hate.

Yup. I really hate the constant wet, like living in a muddy puddle. 

[Agent ZigZag]

42 minutes ago, leonardratso said:

sprouts

Beans......the more you eat the more you.......

[sleepwello'nights]

7 hours ago, Castlevania said:

One should have been on the parcel. 

There wasn't. 

Just had a closer look at the invoice. In the small print in the footer it says in bold: "This delivery is free of VAT according to Art. 146 of EU directive 2006/112/EG. 

I'll look it up later to see what it says. 

[dnb24]

18 minutes ago, sleepwello'nights said:

 

[Jesus Wept]

Anyone still buying stuff? Telecoms ? Utilities?

I have been looking at UU and some Telefonica. 
 

5 year view on UU....

or are you all holding on for the BK...? 

 

 

[DurhamBorn]

6 minutes ago, Vendetta said:

Anyone still buying stuff? Telecoms ? Utilities?

I have been looking at UU and some Telefonica. 
 

5 year view on UU....

or are you all holding on for the BK...? 

 

 

Iv been buying Brazlian telecoms,iv set ladders in them and hope to be able to build some positions as the fall.Hat tip to Kaplan for the nod on Brazil.They seem to be following the NASDAQ 100 ,strange,but there you go.Iv also been adding a few BAE last week,but im mainly looking at Brazil at the moment and setting ladders.

[ThoughtCriminal]

7 minutes ago, Cattle Prod said:

I've spent a fair amount of time in the Arctic, and you really don't feel as cold as you do here mainly becsuse the air is dry, and there is less wind. I'd take a sunny -20C in northern Sweden over a wet and windy plus 5 here any day.

That was my experience in Northern Sweden too. I wasn't as far up as the arctic, but my first thought whilst out walking at night well below freezing was "I've been far colder than this on a blustery rainy autumn night back in the northeast". 

 

 

[Jesus Wept]

5 minutes ago, DurhamBorn said:

Iv been buying Brazlian telecoms,iv set ladders in them and hope to be able to build some positions as the fall.Hat tip to Kaplan for the nod on Brazil.They seem to be following the NASDAQ 100 ,strange,but there you go.Iv also been adding a few BAE last week,but im mainly looking at Brazil at the moment and setting ladders.

I have been researching Kaplan and Brazil since you mentioned it. 

I am still struggling to get my head around the ‘different Telefonicas’

 

[Jesus Wept]

9 minutes ago, DurhamBorn said:

Iv been buying Brazlian telecoms,iv set ladders in them and hope to be able to build some positions as the fall.Hat tip to Kaplan for the nod on Brazil.They seem to be following the NASDAQ 100 ,strange,but there you go.Iv also been adding a few BAE last week,but im mainly looking at Brazil at the moment and setting ladders.

I have been looking at these too. Not dipped the toe yet. New Financial year coming up. Might go then....

 

@DurhamBorn think you timed it well.

VIV flew after you bought I recollect? Caught the bottom? 

 

 

[Harley]

4 hours ago, DurhamBorn said:

It could be a case of the economy opening up,booming,people putting invoices in,,,,,then nothing.People arent paid.

I heard a great phrase from Rick Rule today: Don't confuse liquidity with solvency.

[Harley]

6 hours ago, Agent ZigZag said:

The problem I have is I hate having to keep watching the market and being on guard. I just want to blank out all the noise, and leave my investments alone and come back in 5 years time when I need them to provide me with an income, or is it my greed, I cant keep away?.

I hear you!  I took time out as I needed to crack on with other things which I have and have found them immensely satisfying.  I need to get back into the finance stuff but with a lighter touch.  The trouble with triming, etc is where do you stop: daily, weekly, monthly?  I have other competing priorities so no time for short term trading.  The balance for me is the monthlies and ensuring the correct portfolio allocations.  I also cannot be a hostage to the fears of a potential BK.  I just need to be prudent and balanced.

[Harley]

53 minutes ago, Vendetta said:

Anyone still buying stuff? Telecoms ? Utilities?

I have been looking at UU and some Telefonica. 
 

5 year view on UU....

or are you all holding on for the BK...? 

 

 

I'm trying and will update.  Suggestions please!  Bought some CEY today and will be looking for some more precious metal miners.  I own the likes of UU but may increase my allocations at the right time.  Im going to copy DB if he tells us, plus get a larger allocation to AsiaPac.  Ive been buying by still hold a small allocation.  China has pulled back so worth a look.  Sold Crest Nicholson today at break even.  Not a sector I want any more and I want divs.  A BK may be a concern but I'm far more concerned about having too much cash (inflation or bail ins).

PS:  Topped up BAE too.

PPS:  There are some stocks (energy or miners, not sure) who are monthly overbought so I'd normally avoid but their past price action suggests they could go higher.  I may add.