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

[nirvana]

11 minutes ago, DurhamBorn said:

 

So good for telco stock owners then ? 

I've another confession, I sold BT too early 

Hi. my name is 'cunty bollocks dipshit' and I keep selling my reflation stocks too early 

I think I'll have a word with God over the weekend.....

[jamtomorrow]

52 minutes ago, Cattle Prod said:

Nothing has changed at the Fed action wise, they've bought more assets this week than ever, and said clearly they will continue to do so.

I'd take issue with "nothing has changed". The recent moves in reverse repo are the Fed having to respond to their feet getting wet because they're injecting liquidity faster than the financial plumbing can take it.

Edit to add: found a nice chart showing how reverse repo is now working as a sneaky taper

 

[Harley]

9 minutes ago, nirvana said:

I've another confession, I sold BT too early 

Oh well, you've still got your Royal Mail!!!!!

[nirvana]

23 minutes ago, Harley said:

Oh well, you've still got your Royal Mail!!!!!

bollocks, I'm not coming back here anymore......... 

[Long-game]

On 13/06/2021 at 20:32, M S E Refugee said:

 

Nearly bought a few oz gold yesterday ? Opinions falls , steadying on the up? Thanks

[No One]

2 hours ago, DurhamBorn said:

A lot of these people on Twitter etc are trying to guess where things are going in a few days or at longest months.Saying a reflation trade is over is ludicrous when the money supply is going up 50%.There will be severe pullbacks along the way,very severe maybe,but by 2028ish inflation trades will likely be the only areas to of delivered good returns.

Crypto will likely mostly be down 99%,bonds maybe 25% to 40% inflation adjusted,growth stocks,70% etc.

We are at the liquidity injection part of the cycle now.Soon we will enter the distribution part as incomes lose ground against prices and assets are slowly sold to consume.A long grind down in most assets prices.

 

So what sectors do you think will do well in your model?

[Hancock]

So if this is what happens when they talk of raising interest rates in 2 years as opposed to 3 ... it'll be carnage if the actually do within the next 12 months as is being predicted by Hunter and friends.

[JMD]

1 hour ago, Harley said:

But nothing in a straight line.  I see bonds, etc having one more pop as a safe heaven trade and crypto (in its various forms) has value in terms of the financial flexibility it can offer in an age of regulatory repression (despite what they may try, a risk worth taking part of IMO).  The adoption in Asia is an eye opener.  The West is massively behind.  If goes crypto, honestly why not PMs?  Time to zero base all thoughts and opinions in case this time it's different (and it seems more so than ever after the countless false starts I've witnessed).  Inflation assets, defo, but I like to look far and wide too and then there's the transition from the current overall buoyant market to a bifurcated one we have to survive.  Inflation causing the time decay of money, a looming BK, etc - it's like we're all in the options market now!  

I agree Harley (wild crypto market swings aside, a different topic i know) - but yes the Asian adoption of crypto is truly eye opening. Though i am reminded that they do like to gamble over there, however Japan, etc, do love their tech, so crypto has found a natural home in Asia i think. Plus across Africa where lack of infrastructure will always be a problem, so crypto banking/currency is a real pull factor, also especially with the endemic corruption there. 

Trading the vol and skimming some profit is where the clever money is i think (opposed to buy and hold); and across Asia they already have many money managers doing that for their clients. I don't have those skills, but if lived there i would implement some of that into my investments.

Talk on this thread sometimes from posters considering 'escaping abroad' to keep their wealth; i think in terms of safeguarding wealth and even for wealth generation, Asia must be the place. Its very cheap too. I guess the key is having access to those Singapore money managers and markets, so residence should have no capital controls. There are other practical considerations of course, re. family, security, health service provision even, but in terms of a 'Wild-East'!! mentality, surely that's the place to be?   

...In fact i think some posters on here made the relocation move very early (sorry, can't recall names), and are already living in Vietnam or  Thailand?

 

 

[Hancock]

23 minutes ago, JMD said:

Talk on this thread sometimes from posters considering 'escaping abroad' to keep their wealth; i think in terms of safeguarding wealth and even for wealth generation, Asia must be the place. Its very cheap too. I guess the key is having access to those Singapore money managers and markets, so residence should have no capital controls. There are other practical considerations of course, re. family, security, health service provision even, but in terms of a 'Wild-East'!! mentality, surely that's the place to be?   

 

I see it that way, as for the next 50 years younger Brits are going to be paying those final salary pensions, and there will be an epic fight by the public sector and quasi public sector to keep the millions of non jobs.

Asians have families to do what big govt does over here in relation to caring for the elderly and bailing each other out when times are hard., so their tax rate is kept down ... hence govt interferes in ones life far less ... even more so if you're a foreigner whose income comes from overseas.

Take the comment about Singapore onboard, is this where you leave your money in shares, bank accounts etc...?

Oh and where are you currently based?

 

[DurhamBorn]

53 minutes ago, No One said:

So what sectors do you think will do well in your model?

Anything where no new entrants can build scale over the cycle and where they can put prices up with inflation or inflation+.

Key is that you have lots of assets already,even if lots of debt,but fixed depreciation and your not relying on bulky spending from consumers.

Telecoms look prime for this for me,and although recession will hit them being able to increase prices at inflation is a huge benefit.4% inflation should increase VODs costs by about £400mill,but income by £1.4bill for instance.

I think telcos are in a structural undervaluation across the whole sector outside of the US. @sancho panza coma scores back in the thread are a great way to spray and pray the sector.

Energy is another.I think oil and gas are the best contrarian and macro chance to make good capital in a long time.

Im cheering when BP stay down because i want the company to buy and cancel as many shares as they can before the big run higher.The lower they stay now,the more shares get bought back the more i make later.

Potash were nother great sector for the above,but iv sold most now with massive profits,but hold Nutrien still.

Delivery firms were another area who can leverage inflation,but again the market woke up in the end and although Royal Mail is worth £9 the huge profits are gone.

PMs are also undervalued,but exit and entry on them takes a lot of work really.

Tobacco is undervalued as it usually is.BAT has lots of debt,but is a cash machine and its really gaining traction in new products.The glory days are over,but a slowly growing divi is still good reward.

Imperial Brands is lacking in new products,but its nearly at the point on debt where it can buy back 6% of its stock a year and can likely flatline free cash,so keep earnings growing.It will fall to Japan Tobacco as well i think at some point,or the big Chinese tobacco players.

Market is overbought and shake outs are very healthy

 

I also like insurance etc and companies like M+G,but there is more risk there on  BK or systemic risk.

[DurhamBorn]

2 hours ago, Harley said:

But nothing in a straight line.  I see bonds, etc having one more pop as a safe heaven trade and crypto (in its various forms) has value in terms of the financial flexibility it can offer in an age of regulatory repression (despite what they may try, a risk worth taking part of IMO).  The adoption in Asia is an eye opener.  The West is massively behind.  If goes crypto, honestly why not PMs?  Time to zero base all thoughts and opinions in case this time it's different (and it seems more so than ever after the countless false starts I've witnessed).  Inflation assets, defo, but I like to look far and wide too and then there's the transition from the current overall buoyant market to a bifurcated one we have to survive.  Inflation causing the time decay of money, a looming BK, etc - it's like we're all in the options market now!  

Agree on bonds,i think one last pop as you say.I think with inflation i look at it as what can i own to swap for other things later.I think crypto has a great future,but 99.9% of capital in there now will be lost.I could be wrong on that,but i see owning assets that keep ahead of liquidity as crucial so that i can swap out later.

Of course you nail there the real question,the roadmap to a bifurcated market,because that is almost certain to be what we will soon have.

[JMD]

17 hours ago, Heart's Ease said:

Speaking of DH - forgot I hadn't posted this. Have not listened.

Thanks HeartsEase. Just listened to this latest Dave Hunter podcast. Basically says recent months have seen consolidation, now markets will continue up. Actually, not much new info. to add to my own 'DH notes', which i have included below. Please dyor, as these are merely my generic interpretation/very sketchy, also includes pre-melt-up prices that DH has previously indicated may happen in other recent podcasts. (excuse formatting if looks wonky!)

DH - 16/06/2021

Q3/4 2021 - meltup, sp500 4700-5000+

Q4 2021? bust - 80% fall, but maybe 30% in pm’s/commods/certain sectors; meltup prices: Silver$45, Gold$2500, gdx$60, gdxj$100, sil%75, silj%30. Bust will impact all assets except for the dollar and treasuries.

2022 secular bull (ups/downs, but industrial/commodities will run) to 2026 (sp500 to 4000?), due to printing and inflation. But prices will not recover for decades

2026 sell miners, buy physical

2030+ monetary collapse

[DurhamBorn]

https://www.uswitch.com/broadband/guides/talktalk-price-increase/

The above is what needs to be understood.This is a whole sector increasing prices at inflation + 3.8%.The regulator is allowing BT this,and they set the base prices.

There are 3 main fag sellers in the UK,for some reason they all increase their prices each year by about the same amount.Once there are only a few players the market becomes sensible,and very unlikely there can be another player come along.

[JMD]

7 hours ago, Lightscribe said:

https://www.bloomberg.com/opinion/articles/2021-06-17/america-should-become-a-nation-of-renters

‘You will own nothing’ not even being subtle now. 
 

https://www.moneysavingexpert.com/news/2021/06/mortgage-rates-low-remortgage-check-save/

This is where IFA’s and Martin Lewis gets it so wrong. They advise on the here and now with no thought to the wider economic circumstances. He did the same when Iceland imploded and people were left trying to claw they’re money back. 

By advising people to fix for two years will land then smack bang into inflation territory in 2022/3 on SVR. The Fed have already signalled what they are going do FFS.

https://www.forexlive.com/news/!/us-dollar-jumps-after-fed-pulls-forward-forecasts-for-rate-hikes-20210616

He’s even got a small disclaimer for the ‘mortgage prisoner’ IO idiots, plenty more to add to that in a few years. We did try to help, but we’ve been a bit busy...

You mean Martin Lewis might have ulterior motives, other than helping the common man? After all, he must surely be very aware of the real risk of mortgage rate increases? And he usually prides himself with being quiet autistic-like/driven and delving into the minute details, does he not?     

I note that Martin sold his Moneysavingexpert back in 2012 for £60 million, plus 20 million shares in Moneysupermarket, today those shares are worth approx. £60million. Too be very nosy, I wonder what Martin's investment portfolio looks like? 

[No One]

54 minutes ago, DurhamBorn said:

Anything where no new entrants can build scale over the cycle and where they can put prices up with inflation or inflation+.

Key is that you have lots of assets already,even if lots of debt,but fixed depreciation and your not relying on bulky spending from consumers.

Telecoms look prime for this for me,and although recession will hit them being able to increase prices at inflation is a huge benefit.4% inflation should increase VODs costs by about £400mill,but income by £1.4bill for instance.

I think telcos are in a structural undervaluation across the whole sector outside of the US. @sancho panza coma scores back in the thread are a great way to spray and pray the sector.

Energy is another.I think oil and gas are the best contrarian and macro chance to make good capital in a long time.

Im cheering when BP stay down because i want the company to buy and cancel as many shares as they can before the big run higher.The lower they stay now,the more shares get bought back the more i make later.

Potash were nother great sector for the above,but iv sold most now with massive profits,but hold Nutrien still.

Delivery firms were another area who can leverage inflation,but again the market woke up in the end and although Royal Mail is worth £9 the huge profits are gone.

PMs are also undervalued,but exit and entry on them takes a lot of work really.

Tobacco is undervalued as it usually is.BAT has lots of debt,but is a cash machine and its really gaining traction in new products.The glory days are over,but a slowly growing divi is still good reward.

Imperial Brands is lacking in new products,but its nearly at the point on debt where it can buy back 6% of its stock a year and can likely flatline free cash,so keep earnings growing.It will fall to Japan Tobacco as well i think at some point,or the big Chinese tobacco players.

Market is overbought and shake outs are very healthy

 

I also like insurance etc and companies like M+G,but there is more risk there on  BK or systemic risk.

Great post, it confirms some of my own thoughts actually.

 

Here are some of my recent plays:

I sold my BP after I made 20% (I got in late). I'm thinking off selling Shell B because of woke crap and then maybe buying Repsol.
I have a lot of Telefonica and I'm was planning on buying BT with the next paycheque.

I sold all my POTASH as I think they are about to peak.

I have some TPI composites for the green investment drive, and I was thinking buying some Li-on miners or battery makers. 

What do you think about videogame stocks?

[reformed nice guy]

UK Core Retail Sales (MoM) (May): forecast was 1.5%  but figure was actually -2.1%

UK retail sales MoM May forecast 1.6%, actual -1.4%

German Producer Price Index forecast 0.7%, actual was 1.5%, highest since 2008 (pre bust)

 

[nirvana]

32 minutes ago, reformed nice guy said:

UK Core Retail Sales (MoM) (May): forecast was 1.5%  but figure was actually -2.1%

UK retail sales MoM May forecast 1.6%, actual -1.4%

German Producer Price Index forecast 0.7%, actual was 1.5%, highest since 2008 (pre bust)

 

ah so that's another reason they sold the crap out of the shitty £

I'm buying the dip, nothing British, they couldn't organise a piss up a brewery

Kraut and Yankee indexes 

[JMD]

47 minutes ago, Hancock said:

I see it that way, as for the next 50 years younger Brits are going to be paying those final salary pensions, and there will be an epic fight by the public sector and quasi public sector to keep the millions of non jobs.

Asians have families to do what big govt does over here in relation to caring for the elderly and bailing each other out when times are hard., so their tax rate is kept down ... hence govt interferes in ones life far less ... even more so if you're a foreigner whose income comes from overseas.

Take the comment about Singapore onboard, is this where you leave your money in shares, bank accounts etc...?

Oh and where are you currently based?

 

Where am i based? I am in 'Blighty'... both me and my investments.

Actually, i'm no longer sure - given the awful train-wreck of events since the panic/plan-demic - that this country deserves me calling it Blighty any longer. Still proud to be British, but rather tragically my country (its standards, culture, etc) has gone missing, presumed dead.  

[Hancock]

14 minutes ago, JMD said:

Where am i based? I am in 'Blighty'... both me and my investments.

Actually, i'm no longer sure - given the awful train-wreck of events since the panic/plan-demic - that this country deserves me calling it Blighty any longer. Still proud to be British, but rather tragically my country (its standards, culture, etc) has gone missing, presumed dead.  

Take it you're off to Thailand, Cambodia or Vietnam soon then.

[sancho panza]

5 hours ago, Cattle Prod said:

The reaction is unbelieveable, people are way too zoomed in. Nothing has changed at the Fed action wise, they've bought more assets this week than ever, and said clearly they will continue to do so. Just words. Some committee members think there will be two rate rises in 2023, so what? Have people learned nothing about forecasts in the last year?! First big stock market correction, that is all off the table again. Fed has also acknowledged that inflation is not transitory after all, i.e. buy inflation stocks. But the reaction is to dump them because acknowledging this means the Fed is preparing to taper or raise rates. It's like Prof Ferguson and his crystal ball. For me, I watch what they do not what they say. When they taper purchases I will sit up and take notice. For now, they are still boxed in and the rest is noise. I bought a ton of GDXJ calls yesterday, thanks Jerome.

This is an opportunity I agree.We're rotating into PM producers away from royalty co.s and looking at the below,I can't say that I think this is crash territory.WTI/Brent satying where they are.

As you say the taper is what matters and I would argue the stimulus package.Two quarter points in 2023 is neither here nor there.

[DurhamBorn]

59 minutes ago, No One said:

Great post, it confirms some of my own thoughts actually.

 

Here are some of my recent plays:

I sold my BP after I made 20% (I got in late). I'm thinking off selling Shell B because of woke crap and then maybe buying Repsol.
I have a lot of Telefonica and I'm was planning on buying BT with the next paycheque.

I sold all my POTASH as I think they are about to peak.

I have some TPI composites for the green investment drive, and I was thinking buying some Li-on miners or battery makers. 

What do you think about videogame stocks?

I prefer gambling stocks like Playtech,more niche ,but huge.

[sancho panza]

2 hours ago, DurhamBorn said:

Anything where no new entrants can build scale over the cycle and where they can put prices up with inflation or inflation+.

Key is that you have lots of assets already,even if lots of debt,but fixed depreciation and your not relying on bulky spending from consumers.

Telecoms look prime for this for me,and although recession will hit them being able to increase prices at inflation is a huge benefit.4% inflation should increase VODs costs by about £400mill,but income by £1.4bill for instance.

I think telcos are in a structural undervaluation across the whole sector outside of the US. @sancho panza coma scores back in the thread are a great way to spray and pray the sector.

Energy is another.I think oil and gas are the best contrarian and macro chance to make good capital in a long time.

Im cheering when BP stay down because i want the company to buy and cancel as many shares as they can before the big run higher.The lower they stay now,the more shares get bought back the more i make later.

Potash were nother great sector for the above,but iv sold most now with massive profits,but hold Nutrien still.

Delivery firms were another area who can leverage inflation,but again the market woke up in the end and although Royal Mail is worth £9 the huge profits are gone.

PMs are also undervalued,but exit and entry on them takes a lot of work really.

Tobacco is undervalued as it usually is.BAT has lots of debt,but is a cash machine and its really gaining traction in new products.The glory days are over,but a slowly growing divi is still good reward.

Imperial Brands is lacking in new products,but its nearly at the point on debt where it can buy back 6% of its stock a year and can likely flatline free cash,so keep earnings growing.It will fall to Japan Tobacco as well i think at some point,or the big Chinese tobacco players.

Market is overbought and shake outs are very healthy

 

I also like insurance etc and companies like M+G,but there is more risk there on  BK or systemic risk.

Must say we've been heavily buying(for us anyway) telco's theirs last week(particualrly Vod then singteland).The discovery of those coma scores for the two brazil one s and Telefonica Deutsch gives committed spray n prayers  7-9 shares to aim at fi they wish.

We also bought first ladder in Japan tobacco too.I'll psot the tobacco coma scores later if I get the chance.

[Hancock]

4 minutes ago, sancho panza said:

 Telefonica Deutsch gives committed spray n prayers  e.

Cheers just bought 3 grands worth .. getting an itchy finger!

£30 to change my pounds to Euros the robbing bastards. 

[Hancock]

I'm only 35% in Energy stocks and 32% in Base Materials .. looks like they'll need to be topped up soon, to unbalance it out a bit more.

[Lightscribe]

I can’t even begin to literate how fucked London is. I work in London anyway but was on a conference this week centrally. Whilst it was sunny, tubes/trains mildly busy as peak rush hours. Today raining and dead as a dodo. After furlough will reveal all, but London will not be able to function on anything close to this. It’s just as though most of the population has disappeared. 

Say goodbye to large swathes of businesses and the forever bail out by the tax payer of TFL until driverless trains or re-nationalisation. 

Another anecdotal, some banks (Santander confirmed) are refusing mortgages even with a fire safety certificate and sales are falling through left right and centre in my partners block of flats.

Question is, if London nose dives, does the rest of the country still have a functioning economy?