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


spunko

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4 hours ago, JMD said:

Harley, just found this, it is the BAM/Chris Vermeulen take on btc (starts 13.40) technicals. If you don't mind sharing, and of course 'only for fun', how does his analysis compare/differ to yours, or is it maybe similar? 

He also talks about the gold/silver prices.

Critical Turning Point For Gold | Chris Vermeulen - YouTube

 

I'll PM in case I bore.  Happy to post but it's a bit long.

But here's a classic example, one of those many stocks that have been good to me.  I missed APD at the time covid started but bagged Mitsubishi a little later, a company IMO with far better fundamentals and yield.  I bagged it off the April 20 retest of a prior buy signal (i.e. was going up before covid) and am (after c.80%) debating selling it (charts say I probably should).  Note I bought it during a month as soon as I got the signal, not at the end of the month after it had already well broken out.  That's what I mean about looking at the monthlies on a weekly basis.

Note the congestion around Oct 20 (red candle, etc) which marked it entering the overbought zone and a prior inflexion point (2013 and 2008).  It broke through that so stayed overbought and continued up (with a resounding 17% breakout in Nov 20).  MACD had only just go going in Oct 20 so a pull back would have been premature and sure enough it kept on the up until now where both momentum and MACD are weakening.

The question is whether I should sell now and (because it's a great value stock IMO) buy back later or ride it out.  It's still paying a 2.8% yield even after the run up.  I would probably sell a third and then maybe another if I had more but alas I never bought enough to worry that much!  Two separate thirds as for all I know it's just pulling back as part of an explosive cup and handle chart pattern!

Capture.thumb.PNG.acc889d5480176437c213c6c8e67a21d.PNG

This stock is a technical dream, note the prior head and shoulders as well among many other things!  I always look back at a chart to see how well behaved it's been. 

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It remains to be seen if there’s any truth to this. Bang on with times however and some people are verifying they are not edited screenshots etc.

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FD800A4B-1E35-421C-8E51-B8EC5E2F83DA.jpeg

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1 hour ago, nirvana said:

did you manage to get a thinkorswim account? IB?

cheers

IB, plus I got the permissions for a few others.  I love IB, at least the Android version, and am currently using it for hard to access markets.  TastyWorks has been recommended too.  Anyone got any recs?

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sancho panza

 

8 hours ago, Cattle Prod said:

China is in a worse demographic position with less resources. It'll take time. The West is far from irrelevant imo, as I said it's still guarding the ME resources. I think China is screwed tbh, unless they reveal huge gold reserves or something. The 'China rising West falling' narrative is very pervasive, and is probably sponsored by the CCP via captive academics, confucious istitutes etc etc. But I don't see it happening any time soon. Not when they have to import 11mbbl day (correction on earlier number which was total consumption so including their own oil), with no alliances or friends in the world. The days of 'Call me Dave' Cameron kissing arse to the Chinese are over.

When I was there, there was the xiao-panza (sp.) phenomenon. It means 'little fat emperor'. Basically, one child had two parents and four grandparents all to himself, thanks to the one child policy, and was spoilt rotten. Now these spoilt children have to support these same parents and grandparents, sometimes all 6 of them, from his salary, along with his own kids and his wifes Gucci handbag habit. Not going to end well, no wonder the CCP is instrigating social credit scores etc to try and keep a lid on it.

China has serious structural issues besides and on top of their commodity shrotage.

If you think the misallocation of resources is unnerving in the West then don't go to China -vast towns built with noone living in them,flats in Shanghai trading at price salary multiples that make London look sane.

Below is a sample.

There's more.Clearly,the banking system is FUBAR

https://www.smartshanghai.com/articles/shanghai-life/here-are-the-numbers-on-shanghais-crazy-house-prices

 

The formula looks like this:

Median Home Value ÷ Median Annual Rent = Price-to-Rent Ratio

It’s a useful tool for comparing house prices in different cities.

For example, in New York City as of March 2019, the ratio was 36.83, the fifth highest in the country. At the top of the list is San Francisco, where the average house (that would rent for 1,000usd) costs 601,000usd, giving it a price-to-rent ratio of 50.11. (Original data here.)

I ran the numbers for Shanghai overall and for Jing’an specifically, based on information I got from this Anjuke page which tracks average rents. I set the parameters to a two-bedroom apartment and then calculated the average house price for a 100 square meter apartment, which is about average for a two-bedroom.

For the city as a whole, the price-to-rent ratio based on this data, is... 81.

image.png.dc4b39e2bbd76dfb523165d494e57fe0.png

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5 minutes ago, sancho panza said:

If you think the misallocation of resources is unnerving in the West then don't go to China -vast towns built with noone living in them

I used to think this too but then realised they work on different timeframes to us in planning terms. Maybe they have built when commodity prices and labour are cheaper, something they know the population will definitely need at some point in the future when commodity prices and labour will be more expensive.

I have seen videos of the quality of those ghost towns though and I don't envy anyone being moved there!

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Bricormortis

Re BAN trading and Technical traders.com mentioned upthread, I have been in touch with them re a UK friendly version and they say they are considering launching Canadian and European versions of their service as they believe there is sufficient interest out there. 

edit to say they will post on their website when such a service becomes available.

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Fully Detached
1 hour ago, janch said:

I've just read Lyn Alden's latest:

https://www.lynalden.com/may-2021-newsletter/

She thinks what we're going through is more like the 1940s than 1970s and also seems to think financial repression is on the cards as it was in the 1940s.

I have to say I find her pieces very interesting from a macro point of view with just the right amount of detail and not too overwhelming.  Her views also tie in with this thread.

i've been meaning to read that for days, thanks for the reminder. One of her summary paragraphs is:

Quote

However, I expect the 2020s to be a bumpy ride. Fluctuating periods of aggressive or nonexistent fiscal policy will likely play the leading role in inflationary spikes and inflationary cool-off periods. The Fed mostly has to keep rates low regardless of what inflation does, dismissing it as transitory and supply-chain related, but they could have periods of time where they briefly try to tighten and slow things down, before reverting course and turning dovish again when something breaks.

I've read DB posting on here that a BK might occur regardless of whether or not the Fed raise rates or taper, because what will do the damage is the 30 year treasury pushing up market lending rates- presumably because the market sees inflation so yields rise. Have I got that right? And if so, then presumably after a BK the fed can print/NIRP all they like and the markets will fly anyway because they're coming off valuations last seen in the jurassic period?

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4 minutes ago, Loki said:

I was browsing the twitter replies and saw this from 2014....hmmmmm

aye bro stick with my calls and not that useless poofter.....did you see me call the bottom on bitcoin earlier too? :P

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1 minute ago, nirvana said:

aye bro stick with my calls and not that useless poofter.....did you see me call the bottom on bitcoin earlier too? :P

On site mate, I have a quick scroll 'n' react but no in depth reading.  :(

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Castlevania
9 minutes ago, nirvana said:

aye bro stick with my calls and not that useless poofter.....did you see me call the bottom on bitcoin earlier too? :P

Did you buy the dip?

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6 minutes ago, Castlevania said:

Did you buy the dip?

yup caught a few.....can't get em all :S

whenever I post charts noone seems interested in this thread O.o

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leonardratso
27 minutes ago, nirvana said:

yup caught a few.....can't get em all :S

whenever I post charts noone seems interested in this thread O.o

looks like its blowing off again.

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DXY just shot back to 90.13

At the risk of sounding conspiratorial (Who am I kidding?) there is no way that happened organically xD

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Just now, leonardratso said:

looks like its blowing off again.

that bitcoin bounce was fecking amazing....some insiders on 4chan predicted it apparently.....I ain't been on 4chan for donkies years so I don't get how it works nowadays :S

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Just now, Loki said:

DXY just shot back to 90.13

I warned about that too, yah?.....it tested Jans lows and rejected any further falls.....too many charts too little time :ph34r:

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On 18/05/2021 at 19:23, nirvana said:

it's tagging the Jan lows.....if they don't hold lorra lorra space below....

this one.....so the Jan lows held :P

Cable was head butting 1.42 for most of yesterday....it was a clear short.....no I didn't take it, I was listening to a Yankee guy with stage 4 cancer on youtube, remarkable balls......

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ThoughtCriminal
4 hours ago, Talking Monkey said:

Exactly this there's literally a couple of billion Chinese and Indians who just want the poverty they live in slightly alleviated, they do not care for western woke virtue signalling. 

Yup. 

 

Highest IQ in the world, no time for being hamstrung by wokism or the climate cult. 

 

 

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Castlevania
1 hour ago, nirvana said:

yup caught a few.....can't get em all :S

whenever I post charts noone seems interested in this thread O.o

You trade off way too short a time frame for me

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12 minutes ago, ThoughtCriminal said:

Yup. 

 

Highest IQ in the world, no time for being hamstrung by wokism or the climate cult. 

 

 

Perfect description of Marvin the paranoid Android.

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I'm not being at all rude here, but if you're worried about a 2-3% daily loss on your equity portfolio, how on earth do you sleep at night?

This is just noise and the amount of worried people, even on here, tells me that there's a lot more upside than downside in the type of stocks espoused on here.

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sancho panza
9 hours ago, wherebee said:

I've said before how I've been talking about this problem with my builder neighbour.  He's been putting in a inflation cushion of 10% since start of year, but that means he loses some jobs.  He's forward bought a lot of materials (which of course affects cashflow), but apart from quotes being valid for 30 days only (so materials can be bought and stored immediately) not sure how you can handle this.
 

option A-hedge and put your prices up to pay for the hedge

option B-don't hedge,but put your prices up enough to cover likely eventualities.

7 hours ago, Cattle Prod said:

Cheers, they have a lot more than they are declaring, and are the largest producer in the world. Maybe Dominic is a lurker here :-) 

Used to post on ToS iirc.

4 hours ago, janch said:

I've just read Lyn Alden's latest:

https://www.lynalden.com/may-2021-newsletter/

She thinks what we're going through is more like the 1940s than 1970s and also seems to think financial repression is on the cards as it was in the 1940s.

I have to say I find her pieces very interesting from a macro point of view with just the right amount of detail and not too overwhelming.  Her views also tie in with this thread.

 really worth a full read.She's beginning to make some of the same predictions as @DurhamBorn 4 years ago about fiscal responses to recession.Nice to see her on board so to speak.

She also does a fine job explaining the difference between fiscally driven inflation and loand driven inflation.

 

'The alternative to this process is a deflationary economic collapse, which is a route that the public and policymakers around the world rarely if ever choose. In other words, when push comes to shove and the system is pushed to its limits, policymakers invariably print.

 

Monetary Base vs Bank Loans 2000s

Bank Leverage

image.png.b61383871807c195dd3be85461181d61.png

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