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

[geordie_lurch]

2 minutes ago, Hardhat said:

It's a "panic" day in the markets I see. 

Yes should I lock some profits in or not

[goldbug9999]

10 hours ago, MrXxxx said:

Inflation increases so interest rates are increased to control it.

No they wont be, they will just issue more stimulus so people can pay the higher prices.

[jamtomorrow]

4 minutes ago, geordie_lurch said:

Yes should I lock some profits in or not

Markets:

Meanwhile, in Jay's office:

[planit]

22 minutes ago, geordie_lurch said:

Yes should I lock some profits in or not

You are shorting then?

Good move, I didn't see it coming 

 

I will ignore this one and hope it goes away.

There is a problem at the moment with the transition back to normal. Loads of the companies who did well because of the lockdowns will need to be re-appraised with the new outlook. Loads of them might miss expectations.

At the same time there has not been much realisation of return to normal in the normal markets. Everyone is spooked but for the wrong reasons. VIX shot up.

I still think there is likely to be a huge rally in places when it becomes obvious that retailers such as TKMax will be able to make more money than before the crisis as people go crazy and spend their free money at high margins. All the retailers would have been cautious on their ordering. None of that has got going yet.

Look at the oilies, the share prices are half what they were but profits are currently more than they were preceding the crisis. This is without pricing in any boom recovery where everyone has to catch up on 2 years of holidays in one go.

It's hard waiting and I keep revisiting my hypothesis to look for holes but I always come back to the same conclusion that everything will have gone haywire by October.

Also, not saying it will definitely happen but when the dip in prices from last summer comes out of the inflation figures people will likely relax, just at the point they shouldn't. I haven't done any work on the figures but there should be at least 2 months in a row of declining inflation figures. The market crack up boom needs this relaxation.

After looking at the graph:

The next months figures will be the worst but the Jun/Jul figures (released Jul/Aug) should be flat to down. Then it gets interesting, if the supply chain problems are sorted by then we could get a couple of Goldilocks months but if the current trajectory stays then the figures in the autumn will stay high. This is what the FED and markets are really worried about.

https://fred.stlouisfed.org/series/CPIAUCSL

[Harley]

19 minutes ago, Hardhat said:

It's a "panic" day in the markets I see. 

So what's everyone doing?  Me: 35% equity allocation atm.  Will sell a third of each long term hold on a signal from the monthly data (which I watch weekly).  Will buy that back on a subsequent buy signal.

[leonardratso]

obviously those tesla cars run on electricty thats guaranteed to have been sourced from unicorn farts and windy millers turbine.

 

[geordie_lurch]

5 minutes ago, planit said:

You are shorting then?

Good move, I didn't see it coming 

Nope - I just meant selling a percentage of shares that I'm up over 50% on in my Stocks & Shares ISA if this goes on for another 24 hours or so but my instinct is that this isn't the BK yet...

[CVG]

2 minutes ago, Harley said:

So what's everyone doing?  Me: 35% equity allocation atm.  Will sell a third of each long term hold on a signal from the monthly data (which I watch weekly).  Will buy that back on a subsequent buy signal.

On my last monthly analysis, I was 32.8% equities (excluding PM miners) and shy of my 40% target. I'll sell more equities (around a third) if FTSE100 hits 7700 and we still expect a BK.

[Harley]

12 minutes ago, planit said:

......everything will have gone haywire by October.

What do you see happening between now and then and why?  TBC, do you see the October "haywire" as higher or lower than now?

[Harley]

5 minutes ago, geordie_lurch said:

Nope - I just meant selling a percentage of shares that I'm up over 50% on in my Stocks & Shares ISA if this goes on for another 24 hours or so but my instinct is that this isn't the BK yet...

IME, today has (so far) been more technically damaging than earlier this week.  However, that's on a daily basis and my life's too short to worry about that noise.  I'll look at the revised monthlies at the weekend and act accordingly next week, accepting any cost as the price of better clarity.

[Hardhat]

12 minutes ago, Harley said:

So what's everyone doing? 

Nothing atm.

Might sell a few of my more speculative plays, but my portfolio has dropped 10% in a week, that's not terrifying. Still positioned for the rumoured melt up, which, tbh, I think we will get after a bit of a shake out.

The markets are very nervous atm I think, which makes sense because we are in fairly irrational territory.

What's telling is that the BTC crash seems to have spooked the equity markets also. The two are far more intertwined than most people think. I wouldn't be surprised if 90% of everyone who invests in equities also has some money in crypto.

[Don Coglione]

4 minutes ago, Hardhat said:

What's telling is that the BTC crash seems to have spooked the equity markets also. The two are far more intertwined than most people think. I wouldn't be surprised if 90% of everyone who invests in equities also has some money in crypto.

I would be extremely surprised if 90% of equity investors held crypto!

I would be slightly less surprised if 90% of crypto holders (I am not calling them investors) were also invested in equities.

[Hardhat]

3 minutes ago, Don Coglione said:

I would be extremely surprised if 90% of equity investors held crypto!

I would be slightly less surprised if 90% of crypto holders (I am not calling them investors) were also invested in equities.

You might have it the right way round there!

[Loki]

Who's buying the lows then

[goldbug9999]

2 minutes ago, Loki said:

Who's buying the lows then

Definitely looking for a nice NASDAQ dip buying opportunity.

[planit]

31 minutes ago, Harley said:

What do you see happening between now and then and why?  TBC, do you see the October "haywire" as higher or lower than now?

Yes

[reformed nice guy]

32 minutes ago, Loki said:

Who's buying the lows then

Its all still high above the last ladders that were activated last year. Im not really sure what to do

Im tempted to go back up to my last "rung" rather than wait for lows below what was reached last year

[Hancock]

43 minutes ago, Loki said:

Who's buying the lows then

Or who is waiting for the BK lows instead.

[Harley]

39 minutes ago, planit said:

Yes

Disappointing.  I was just asking for clarification on your "haywire" comment.  You were not clear on what you were saying.  No need to take it out on me.  Forget it.

[Lightscribe]

1 hour ago, Hardhat said:

Nothing atm.

Might sell a few of my more speculative plays, but my portfolio has dropped 10% in a week, that's not terrifying. Still positioned for the rumoured melt up, which, tbh, I think we will get after a bit of a shake out.

The markets are very nervous atm I think, which makes sense because we are in fairly irrational territory.

What's telling is that the BTC crash seems to have spooked the equity markets also. The two are far more intertwined than most people think. I wouldn't be surprised if 90% of everyone who invests in equities also has some money in crypto.

It’s what I’ve always said on here. The speculation driving the FANNGs has driven ever higher into crypto as the money increasingly spirals into more and more speculative assets like NFT, DOGE shitcoins etc etc. Hence when the Nasdaq/SP500 drops, BTC does too, which takes down the rest of crypto.

You may have noticed the other week I sold LINK on here at $50 and was waiting waiting to see what BTC did (i.e massive drop or pump) as all the MA lines all narrowed which you can see in the 1 day chart below. Now it’s fallen and finished below the 99 day line it’ll will freefall as long as the SP500 does.

[planit]

6 minutes ago, Harley said:

Disappointing.  I was just asking for clarification on your "haywire" comment.  You were not clear on what you were saying.  No need to take it out on me.  Forget it.

I was only joking, don't take it too personally. I will do a reply when I have time to think properly, I am meant to be revising as decided to qualify as an accountant for a laugh. After 13 exams plus other requirements in 15 months I have had enough so I spend all my time on here. 

[wherebee]

Just now, planit said:

I was only joking, don't take it too personally. I will do a reply when I have time to think properly, I am meant to be revising as decided to qualify as an accountant for a laugh. After 13 exams plus other requirements in 15 months I have had enough so I spend all my time on here. 

2+2=5

 

you can thank me after the exam.

[nirvana]

1 hour ago, leonardratso said:

obviously those tesla cars run on electricty thats guaranteed to have been sourced from unicorn farts and windy millers turbine.

 

Solar panels and powerwalls 

[nirvana]

1 hour ago, Hardhat said:

What's telling is that the BTC crash seems to have spooked the equity markets also

that's not right, the markets were going down and BTC joined in....I've been selling all week 

And ahem, I warned about WTI at the 66 level 

 

[Hardhat]

2 minutes ago, nirvana said:

that's not right, the markets were going down and BTC joined in....I've been selling all week 

Yeah, as @Don Coglione said, it might well be the other way round. I guess the point is that I find it hard to see crypto as "separate" from the equities market, in a similar way to how PMs are linked to the equities market. The exact nature of that relationship, however, is harder to grasp.