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

[JMD]

10 hours ago, sancho panza said:

Just looking at the last proper BK ie credit deflation.Some of the oilies price action is interesting.

RDSB started the June peak at £20, in Oct 08 got as low as £12.20,but never had a monthly close below £14.44.So roughly peak to trough of 30%.

I'm reappraising my intention to sell the oilies ahead of a BK if I can identify the wave(that's a big IF).They appear to have some defensive qualities.

BP similar story,drop from £6 to £4.40 using monthlies ie 26.6% June to Mar 09

Worth noting as well that you could have picked up BP at £5.10 in  March 08.

 

 

30% down you say? Reminds me of Dave Hunter in a podcast, with Jake Ducey I think, making similar pediction  for some stocks like commodities etc, whereas most sectors will crash by 80%.

[DurhamBorn]

I think i said about a year ago i expected inflation to hit 3.8% in June this year.

Thats the exact number average across 38 OECD nations,

https://www.telegraph.co.uk/business/2021/07/05/fastest-rise-inflation-since-2008-sets-alarm-bells-ringing/

Of course we know its higher than that,but official rates still matter to sentiment and CBs etc.

The interesting part now is they all know they need to stop,but they dont want a stronger currency so dont want to go first and governments have massive structural deficits.

 

[Sugarlips]

4 hours ago, DurhamBorn said:

I think i said about a year ago i expected inflation to hit 3.8% in June this year.

Thats the exact number average across 38 OECD nations,

https://www.telegraph.co.uk/business/2021/07/05/fastest-rise-inflation-since-2008-sets-alarm-bells-ringing/

Of course we know its higher than that,but official rates still matter to sentiment and CBs etc.

The interesting part now is they all know they need to stop,but they dont want a stronger currency so dont want to go first and governments have massive structural deficits.

 

Congratulations.

How often do you review the roadmap db?

is it possible to get a Mystic Meg simpletons broad birds eye overview for the nearer term  (1-2 years)? Like:

Oil up.

Cryptos down.

growth stocks down.

Value stocks up.

Fiat down.

PM’s up.

Interest rates down.

Bonds down.

T Bills up

And so forth..?

Might help thread newbies with general direction and spur some mid-cycle debate?

[RJT1979]

7 hours ago, reformed nice guy said:

Saw this today https://www.smmt.co.uk/vehicle-data/car-registrations/

2017 was the peak for car sales and population continues to increase by 600,000+ per year

 

What is your conclusion 

[Bricormortis]

11 hours ago, Barnsey said:

If we know about derivatives and leverage you can bet your bottom $ the central banks do too. China already clamping down, Fed doing stealth QT for a couple months now, might be too extreme to suggest an engineered crash of sorts but seems to be underway.

As in the reverse repo which is draining liquidity ? Thats the current risk factor coming in to play, to my mind.

[jamtomorrow]

27 minutes ago, Bricormortis said:

As in the reverse repo which is draining liquidity ? Thats the current risk factor coming in to play, to my mind.

I wonder whether the stealth-tapering effect of RRP is somewhat irrelevant anyway. As in, it's more the Fed mopping up the overspill because the system can't take any more, than actively sucking liquidity back out of the system.

It's like when you bleed your radiators - you want a certain amount of fluid to come through to know the system is full and all the bubbles are out.

[DurhamBorn]

4 hours ago, Sugarlips said:

Congratulations.

How often do you review the roadmap db?

is it possible to get a Mystic Meg simpletons broad birds eye overview for the nearer term  (1-2 years)? Like:

Oil up.

Cryptos down.

growth stocks down.

Value stocks up.

Fiat down.

PM’s up.

Interest rates down.

Bonds down.

T Bills up

And so forth..?

Might help thread newbies with general direction and spur some mid-cycle debate?

I do it monthly usually,but just the main cycle one based on liquidity and the business cycle.Cross market stuff i tend to do when i can be bothered,or if im interested.I did huge amounts a couple of years ago,but as i positioned in the falls last year i dont bother much now.I dont do anything really short term as the closer to now the harder to get right.Oil is going to $200+ i think minimum by the end of the decade for instance,but how it gets there is never linear and it can do it in its own time.

The broad sweep of the cycle is what matters.For instance at some point in the cycle i think most cryptos will go down 99.99999%.Growth stocks will be cut in half,value stocks likely double including divis,some treble,bonds down,interest rates up.

I would keep buying good quality value where you see it,not just UK,but emerging and other markets.Keep some cash in case of a BK.When some sectors over run higher quickly,re-position in others that lag.A prime example was potash trebling and more while telcos flat lined.

Nobody can know the future,but when sentiment gets to extremes and the macro points in the other direction to those extremes patience usually rewards you.

[DurhamBorn]

23 minutes ago, jamtomorrow said:

I wonder whether the stealth-tapering effect of RRP is somewhat irrelevant anyway. As in, it's more the Fed mopping up the overspill because the system can't take any more, than actively sucking liquidity back out of the system.

It's like when you bleed your radiators - you want a certain amount of fluid to come through to know the system is full and all the bubbles are out.

Yes,i think its the market saying the injections need to be fiscal not monetary.Fiscal injections tend to kick in investment with a lag.The Fed needs to monetise most of the fiscal injections,though of course they claim thats not what they are doing.

What i think people are missing is that the CBs are simply lifting up the money base of the economy so governments dont go bust.They say the inflation is short term.Maybe increases will slow,but from  30% higher base.

[Loki]

2 minutes ago, DurhamBorn said:

.They say the inflation is short term.Maybe increases will slow,but from  30% higher base

Parallels with deficit spending there

[DurhamBorn]

https://www.telegraph.co.uk/business/2021/07/06/vauxhall-owner-build-new-electric-vans-ellesmere-port/

The interesting comment,that we have been saying for years will drive this cycle,extended supply chains in an inflation cycle dont work because each stage inflates and that does away with any wage arbitrage.

He said: “Alison made a very important point about cost inflation. We need to secure the supply chain and have it close by.

“The UK Government has to support production of batteries here at a macro level

[Barnsey]

2 hours ago, Bricormortis said:

As in the reverse repo which is draining liquidity ? Thats the current risk factor coming in to play, to my mind.

Correct!

https://corporate.nordea.com/article/66562/fx-weekly-whisperin-joe-and-his-regime-shift

Cc @Cattle Prod

[janch]

Is this the FED policy mistake ie giving some interest on the RRPs?  I can't say I fully understand this article but it seems liquidity is being drained out of the system because it can earn whilst parked in RRP.  The article doesn't mantion this but my first thought was if it's parked it won't be pushed out into the wider economy.

https://www.zerohedge.com/markets/zoltan-sees-reverse-repo-hitting-2-trillion-weeks-what-happens-then

......banks will lose deposits and reserves "which is what happens when rates on collateral-providing facilities are set above rates that are available in the bill market." Ominously, Pozar notes that "we saw this  before when the foreign repo pool was priced too generously relative to bills in 2019." Everyone remembers how catastrophically that particular episode in repo mispricing ended.

[Barnsey]

Long dated gilts coming off the boil too...

 

[janch]

3 hours ago, DurhamBorn said:

A prime example was potash trebling and more while telcos flat lined.

The only potash share I bought was K&S AG which was lagging behind doing nothing while the US companies were soaring but it's been doing well recently and looks to be catching up now

[Hancock]

Anyone managed to but TIMB with AJ Bell?

Search "TIM" and all i get are whats below.

Edit - Just called it cant be bought online, or to go into a SIPP.

[Heart's Ease]

 

 

Mr Hunter's thoughts on oil.

[Topped up Vodafone today under 120p (just checked for fun and it got to 93p trade low on 16 March last year). Weighted average over the last three years of accumulation - 145p.  Happy to hold and hold.]

 

[Hardhat]

Maybe it's a good time to take some profits on oilies.

Can't really figure out why oil is down today when no new OPEC agreement.

[Barnsey]

1 hour ago, Barnsey said:

Long dated gilts coming off the boil too...

 

And there goes the U.S. 10 yr...

 

[HousePriceMania]

Should we be buying TIPS ?

 

 

 

 

[HousePriceMania]

[Hancock]

On 18/06/2021 at 19:18, No One said:

Yup, Trading 212 has 0.15% FX fee, and free ISA
         Freetrade has 0.45% FX fee and their ISA costs £3 pm, their G.I.A is completely free however (except FX).

Both have no commission trading. Freetrade has also recently opened a SIPP too for £10 a month, no trading fees and no charges for custody either however I don't have a SIPP with the yet, I'm with AJ and Bell for now and need to continue with them for a least a year or else I get stung with £250 for leaving too early.

The only issue with 212 is that the Wallstreetbet yolo crowd all tried to rush in Jan and make accounts, and they had to put in a waitlist for newcomers.

There are also other providers like eToro. However, whomever you choose you'll save more than what you have now.

My referal links are:

www.trading212.com/invite/FMXckZm
and
https://magic.freetrade.io/join/mark/78fa17e0
respectively.

 

Full disclosure, I get a free share when someone uses these referals. DYOR yada yada

Where did you get the £250 from.

Ive been with AJ Bell for 3 ears and ive just looked at transferring my SIPP from AJ Bell, and its £9.95 per share, thus £450!

 

[ThoughtCriminal]

I feel as though this may not end well.......... 

[Democorruptcy]

1 hour ago, Heart's Ease said:

 

 

Mr Hunter's thoughts on oil.

[Topped up Vodafone today under 120p (just checked for fun and it got to 93p trade low on 16 March last year). Weighted average over the last three years of accumulation - 145p.  Happy to hold and hold.]

 

I've not been following stuff recently, have I missed something?

" in next year's global bust. "

Is that his global bust delayed a year? I thought he was a 2021 Autumn bust man?

[Barnsey]

8 minutes ago, Democorruptcy said:

I've not been following stuff recently, have I missed something?

" in next year's global bust. "

Is that his global bust delayed a year? I thought he was a 2021 Autumn bust man?

I think it's been moved forward 2 years already?

On oil...

 

[No One]

57 minutes ago, Hancock said:

Where did you get the £250 from.

Ive been with AJ Bell for 3 ears and ive just looked at transferring my SIPP from AJ Bell, and its £9.95 per share, thus £450!

 

Yes it's 9.95 per holding but if you close account before 1 year fro opening there's an extra £250 charge.