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

[Democorruptcy]

19 minutes ago, Harley said:

How do you make a heatmap like that (not the blues, down to me, just the structure!)?

I make it by clicking my bookmark

https://www.hl.co.uk/shares/stock-market-summary/ftse-100/heat-map

[Democorruptcy]

40 minutes ago, JMD said:

To be fair (to me!!) I was doing no such thing (not my style at all). Moreover, i'm not disappointed - in fact i'm still buying. And that, to be clear, was the reason behind my question because i wanted to check the risk/reward element of oil and find DB's 5x, 10/20x guestimates useful (I know dyor), but couldn't find his earlier post where he spoke about this.

DB has from early-doors, and regularly since, warned that the crash and its market after-effects would be brutal. I appreciate the broad sweep of this blog and that its not for trading advice and that most people here comment from the long-term perspective.

     

However, I would be genuinely interested to know how my original post was misinterpreted. Was it perhaps my reference to 'indentured slavery' (correction - should have said 'servitude', my bad)? But still, I did add whether I was merely catastrophizing, so thought the implied joke part was clear.     

 

Must admit I read your post 3 times and couldn't see why SP had suggested you were having a dig at DB.

Times are fraught... temporarily of course 

[TheCountOfNowhere]

23 minutes ago, Yellow_Reduced_Sticker said:

...AND in other NEWS:

"Coronavirus: Rightmove warns UK property market facing Sharp Slowdown!"

https://uk.finance.yahoo.com/news/uk-property-coronavirus-house-prices-what-impact-buy-sell-home-101132215.html

Folks, when I said that i bought at the TOP ....I TRULY meant it!

At LONG last i've been PROVEN Right for a... CHANGE!

Dont make us laugh YRS.

We feel for you.  Buying a housing shouldn't be a gamble

[TheCountOfNowhere]

2 minutes ago, Democorruptcy said:

Must admit I read your post 3 times and couldn't see why SP had suggested you were having a dig at DB.

Times are fraught... temporarily of course 

Some of my posts could be misconstrued as having a pop at DB, but i'm not.  He's been right all along. Fair play to DB.

Only thing I can say that he missed was what I was saying....Why the f**k are people piling in knowing there will be a crash.

How much have you lost DB?

I bought some shares myself with the money rescued from Funding Circle.  I woulda lost that anyway if I'd not got it out and I'd rather have 50% of something that will pay dividends in the end than 100% of nothing.

There's fortunes to be made on the stock market for many right now but you need to have balls of steel

 

[Cosmic]

Just now, TheCountOfNowhere said:

Some of my posts could be misconstrued as having a pop at DB, but i'm not.  He's been right all along. Fair play to DB.

Only thing I can say that he missed was what I was saying....Why the f**k are people piling in knowing there will be a crash.

How much have you lost DB?

I bought some shares myself with the money rescued from Funding Circle.  I woulda lost that anyway if I'd not got it out and I'd rather have 50% of something that will pay dividends in the end than 100% of nothing.

There's fortunes to be made on the stock market for many right now but you need to have balls of steel

 

He said all along we could skip this stage and go straight to the inflationary period... thus as a hedge you'd be prudent to build a position with some held back to deploy. 

[TheCountOfNowhere]

2 minutes ago, Cosmic Apple said:

He said all along we could skip this stage and go straight to the inflationary period... thus as a hedge you'd be prudent to build a position with some held back to deploy. 

I asked that very question.

I've never  been convinced that we'd not had the deflationary bust, 2008-2012 and the hyper inflation has long since been with us, i.e. the housing bubble and the US stock market

 

DB, that is it now, period of deflation then the madness or straight to the madness ?

[Harley]

1 hour ago, CVG said:

The news will get much worse (even though it will not be unexpected). A lot of falls will be driven by the sentiment that generates. DYOR but I would look to dripfeed a small allocation of cash to equities once a month for the next four months. No one can time the bottom.

That's my defined approach.

I currently have two total return accounts to fill and have decided to allocate units across the 25% equity allocation of both accounts as:

. shares across sectors at 3 units per share and 1 unit per ladder (c.70% share allocation)

. funds (collective instruments) at 6 units per share and 2 units per ladder (c.30% fund allocation)

And will be buying the first ladder mostly asap and the remaining as the technicals direct.

The aim is to mitigate risks between funds and shares with a bias to shares as I think this is more a stock pickers market that index market going forward.

Funds will be by region (to play regional macro shifts) with shares by sector industry (a selection from the list I published earlier).

Shares will be the two best selected shares in each industry (drawn from all the shares available to invest for both accounts).

I may use ETFs for some shares (e.g. maybe GDX rather than the miner shares).

I think that's right!

 

 

[TheCountOfNowhere]

I might have said this before, but people might want to start considering if there will be a double pandemic.

I think it's nailed on with the way the governments are acting.

[Straingone]

17 hours ago, Straingone said:

Regarding the disclaimer of locking in prices for future delivery, does anyone know how watertight this is? What is there to stop bbp not honouring the 'locked in' sale price, couldn't find anything on the website?

I would like to buy some coins but the long lead time is putting me off.

Apologies for self quoting. This appeared today on the BBP website.

Cancellations

As normal there is no statutory right to cancel an order once placed under the Financial Services (Distance Marketing) Regulations 2004. This is because the goods we supply are dependent on fluctuations in financial markets. Any cancellations will incur a £25 termination fee plus any adverse movement in the underlying metal prices.

[DurhamBorn]

34 minutes ago, JMD said:

DB, thanks for reply. I notice that SP thought I was having 'a go' with some confusion over my original question to you. I hope you didn't think same (then again, perhaps I have made a rod for my own back in declining to use them-there darn emojis!, makes obvious then when attempting joke. etc) 

Not at all,i had been talking in private to SP about a few things as the thread was drifting to what i would expect on the Moneysavingexpert forum a bit and i was a bit annoyed (not with you) that just as everything the thread predicted would happen was happening that people would be more concerned that something was down from entry points,the world was ending,and everything going to zero.

The aim of this thread isnt to make people a profit.Its not trading advice etc.Its really a thread about the macro position of the cycle.Macro strategy is about trying to work out where we are,what where we are will make happen,and how what is made to happen affects things in the future.

If you go back to 1982,it was obvious they were going to kill inflation whatever the cost.That meant falling rates for decades,and that meant houses,bonds and deflation (actually dis-inflation) assets would prosper.Thats exactly what happened.

Today its obvious the world is screaming for liquidity and inflation.Its nearly as obvious (not certain,but very very likely) that governments will do anything needed to get it,just like they did everything needed to stop it in 82.That means whatever happens today,next week,6 months,its highly likely we are entering a reflation cycle,and that certain sectors and assets will gain,likely,not certain.That macro work can not predict where Shell bottoms,but it can predict the likely affect on oil over the cycle.If Shell doesnt go bust it should be £35 to £60 a share by 2028.That is likely even if Shell goes to £2 now or has bottomed.

In most times tomorrow is much easier to predict than 8 years time.At key inflection points like this tomorrow becomes impossible to predict,but 8 years much easier.

The caveat though is if they dont print enough now (and they are still way behind the curve) then we have systemic collapse.That means almost every large financial company goes down,followed by 80% of private sector companies,99% of people end up very very poor.We are facing into the highest risk of total collapse since probably the viking invasions of Saxon kingdoms.

The problem with the above is that there is nowhere to hide from that,apart from probably being debt free.Even owning land etc wouldnt help as the people would take it,or tax it to oblivion.

My main worry right now is the Fed,they seem clueless to what they face and the action is nowhere near large enough.The ECB is the same.BOE is better.

The $ is screaming at them to print massive amounts.If they dont,every 1% uptick in the dollar will cost them an extra $1.5 trillion when they do.They are going to print it,the question is $3 to $4 trillion now,or up to $30 trillion if they dont.

 

[Shamone]

On 19/03/2020 at 09:02, Yellow_Reduced_Sticker said:

SERIOUS question @DurhamBorn, do you think that, Go Ahead Group, Stagecoach, national express could really go BUST?

 

(NOT asking for trading advice just ya view point, THANKS mate)

 

I've followed the above companies for 25 years, it would be a SAD day if they did, I'm in my mid-fifties and have NEVER seen these sort of share price COLLAPSE's... anyway the only 1 I'm heavy in at the mo is Stagecoach...CHEERS!

 

AND now for some some YRS dry humor...as we enter another ROLLER-COASTER Trading day!

 

 

 

Don't be daft, I bought last October which for some odd reason (for me ) turns out to be the TOP...in house prices!

 

 

Yeah...Also a Convicted CRIMINAL!

Really WONDERFUL people in power...Yes you really could NOT make it up!

https://www.independent.co.uk/news/world/europe/christine-lagarde-convicted-imf-head-found-guilty-of-negligence-in-fraud-trial-a7484586.html

 

Sounds like you moved to a lovely part of the world though so hopefully will only ever be a paper loss. Good on you.

[Harley]

18 minutes ago, Straingone said:

Apologies for self quoting. This appeared today on the BBP website.

Cancellations

As normal there is no statutory right to cancel an order once placed under the Financial Services (Distance Marketing) Regulations 2004. This is because the goods we supply are dependent on fluctuations in financial markets. Any cancellations will incur a £25 termination fee plus any adverse movement in the underlying metal prices.

Seen that on the sites I visited.  Loaded in their favour as it seems they can cancel but you can't unless you pay and compensate.  That said I know of cases where you can still call and cancel OK .

[DurhamBorn]

Something else to watch is China.People are ignoring it now,but its coming out of this virus first and so will likely respond to the massive hit.Its highly likely they will unleash a massive spending cycle to get growth back up.Others will then follow until the whole world does.So,as well as the Fed we need to watch to see how big China goes.

[Harley]

14 minutes ago, DurhamBorn said:

The aim of this thread isnt to make people a profit.Its not trading advice etc.Its really a thread about the macro position of the cycle.Macro strategy is about trying to work out where we are,what where we are will make happen,and how what is made to happen affects things in the future.

Going back to basics, and apologies for being blunt, but anyone who bet solely on something they read on the internet is an idiot!

[sleepwello'nights]

2 hours ago, DurhamBorn said:

 

What is certain is whats going on means the end of the bond bull is coming up.Probably 70%+ losses over the cycle in bonds.

The fund almost all IFAs put their clients pensions in as it slowly grows 6% a year and the mix ensures safety is the Vanguard 40/60 fund.At least thats what they think.

 

I persist with my view on UK index linked gilts. My holding of them with Vanguard showed a dramatic drop in value yesterday contrary to my logic.  

Provided they are held to maturity how can they lose? The reduction in interest rates to almost Zero seems to me to support the yield. They will now give a higher return than other cash deposits, yet the price fell.  

I posed the question to Vanguard yesterday and their reply was that everything was being sold off because institutions needed to cover the falls in equity values. Much like Gold and Silver I presume. 

Unless a revolution in the UK is imminent and the government won't redeem them what's wrong with my logic.

[DurhamBorn]

22 minutes ago, sleepwello'nights said:

I persist with my view on UK index linked gilts. My holding of them with Vanguard showed a dramatic drop in value yesterday contrary to my logic.  

Provided they are held to maturity how can they lose? The reduction in interest rates to almost Zero seems to me to support the yield. They will now give a higher return than other cash deposits, yet the price fell.  

I posed the question to Vanguard yesterday and their reply was that everything was being sold off because institutions needed to cover the falls in equity values. Much like Gold and Silver I presume. 

Unless a revolution in the UK is imminent and the government won't redeem them what's wrong with my logic.

Nothing,linkers are a great hedge.

[Hardhat]

Agreed there has been a lot of panic and noise on this thread as well as posters just blantantly asking for trading advice / crystal ball. Let's keep it cool and macro. Buy for 2027.

[Barnsey]

U.S. helicopter money proposal:

 

[TheCountOfNowhere]

Great Railway mania graph for everyone

 

 

Look familiar ?

 

[DurhamBorn]

23 minutes ago, Barnsey said:

U.S. helicopter money proposal:

 

I hope so BAT will be rubbing their hands 

[kibuc]

NewGold suspends operations at Rainy River for 2 weeks due to a big part of its staff having made a trip across the border recently and now needing to self-quarantine.

I reckon Wesdome could be in a similar position soon.

 

[sleepwello'nights]

2 hours ago, Yellow_Reduced_Sticker said:

...AND in other NEWS:

"Coronavirus: Rightmove warns UK property market facing Sharp Slowdown!"

https://uk.finance.yahoo.com/news/uk-property-coronavirus-house-prices-what-impact-buy-sell-home-101132215.html

Folks, when I said that i bought at the TOP ....I TRULY meant it!

At LONG last i've been PROVEN Right for a... CHANGE!

Your timing was probably a bit early, but where I live the top was in 2016. So pleasantly for you you didn't quite manage to get the top.

[BearyBear]

https://www.bbc.co.uk/news/business-51969708

Chancellor Rishi Sunak is to announce an employment and wage subsidy package to try to protect millions of jobs.

Talks went on into the night with business groups and union leaders, who urged the government to help pay wages amid the coronavirus pandemic.

Many firms are warning of collapse, wiping out thousands of jobs, as life in the UK is largely put on hold.

News of more help for companies pushed stock markets higher, with the FTSE 100 and FTSE 250 up 5% at one point.

The pound rose 3.3% from a 35-year low to $1.18.

The chancellor's wage package, due to be unveiled later on Friday, is the latest in a string of big fiscal attempts to ease the burden on businesses and their employees.

[headrow]

19 minutes ago, DurhamBorn said:

I hope so BAT will be rubbing their hands 

I've loaded up on BAT for the past year on any dips under 2800p , one of my largest holdings. I notice that they have announced their dividends for the rest of the year already , do they always do this?

 

[Talking Monkey]

1 hour ago, DurhamBorn said:

Not at all,i had been talking in private to SP about a few things as the thread was drifting to what i would expect on the Moneysavingexpert forum a bit and i was a bit annoyed (not with you) that just as everything the thread predicted would happen was happening that people would be more concerned that something was down from entry points,the world was ending,and everything going to zero.

The aim of this thread isnt to make people a profit.Its not trading advice etc.Its really a thread about the macro position of the cycle.Macro strategy is about trying to work out where we are,what where we are will make happen,and how what is made to happen affects things in the future.

If you go back to 1982,it was obvious they were going to kill inflation whatever the cost.That meant falling rates for decades,and that meant houses,bonds and deflation (actually dis-inflation) assets would prosper.Thats exactly what happened.

Today its obvious the world is screaming for liquidity and inflation.Its nearly as obvious (not certain,but very very likely) that governments will do anything needed to get it,just like they did everything needed to stop it in 82.That means whatever happens today,next week,6 months,its highly likely we are entering a reflation cycle,and that certain sectors and assets will gain,likely,not certain.That macro work can not predict where Shell bottoms,but it can predict the likely affect on oil over the cycle.If Shell doesnt go bust it should be £35 to £60 a share by 2028.That is likely even if Shell goes to £2 now or has bottomed.

In most times tomorrow is much easier to predict than 8 years time.At key inflection points like this tomorrow becomes impossible to predict,but 8 years much easier.

The caveat though is if they dont print enough now (and they are still way behind the curve) then we have systemic collapse.That means almost every large financial company goes down,followed by 80% of private sector companies,99% of people end up very very poor.We are facing into the highest risk of total collapse since probably the viking invasions of Saxon kingdoms.

The problem with the above is that there is nowhere to hide from that,apart from probably being debt free.Even owning land etc wouldnt help as the people would take it,or tax it to oblivion.

My main worry right now is the Fed,they seem clueless to what they face and the action is nowhere near large enough.The ECB is the same.BOE is better.

The $ is screaming at them to print massive amounts.If they dont,every 1% uptick in the dollar will cost them an extra $1.5 trillion when they do.They are going to print it,the question is $3 to $4 trillion now,or up to $30 trillion if they dont.

 

There probably is a tipping point that when reached would crystallize everything for Powell and he would take the decision to get in front of the curve, apart from the $ index he must be looking at other metrics which when reached would cause him to capitulate and print huge.