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

[wherebee]

On 16/05/2020 at 20:45, Knickerless Turgid said:

She's about 14! (And far too skinny).

jesus.  no she is not.  and no she is not.

 

your eyes have just been lard smeared by too long looking at the landscape in the UK.

[MrXxxx]

9 hours ago, 5min OCD speculator said:

@Yellow_Reduced_Sticker I need to raise you that skinny Japanese bird with a couple of 'mask suppliers' I've recently come into contact with 

 

Oh!, I'm feeling a bit `chesty`, it must be the Coronavirus.

[kibuc]

There's a bidding war going on for Guyana Goldfields, the latest offer from SilverCorp amounts to CAD 1.30 per share 

Guyana was trading at CAD 0.40 before the initial offer came in last month, and closed at CAD 0.94 on Friday.

[Loki]

Put a cheeky fill or kill in on Hochschild

Up 13% since the open (pre market)

[Dogtania]

20 hours ago, Bus Stop Boxer said:

Please any recommends on Potash and Silver ETFs.

Dont want to punt on individual companies in PMs. One watch of the gold miner shows on Discovery shows what a crap shoot it can be.

I see Pan American silver have risen nicely since the fella on Kitco blew smoke up them same with Agnico Eagle.

Already hold a pile of sovs so gold is covered. Very nicely.

Nutrien seem the obvious potash stock to hold but would like to spread out a bit.

 

Any tips thoughts appreciated.

Im currently planning on buying Shell BP Conoco and prob the Wisdom Tree Crude ETF (CRUD) also Fever Tree (quinine) Pioneer Natural Resources EOG Resources  and Astra Zeneca.

 

So some sort of catch all ETF recommendations in silver / potash and perhaps cobalt / lithium would be much appreciated.

I would just buy the Vanguard Energy ETF but its not ISA friendly in the UK. Same goes for the Global X Silver ETF.

Cheers.

curious about fever tree.  Haven't looked into them but I guess some consumer facing companies will fare OK throughout this...or maybe people will just move back to Schweppes if things get tough.   No other takes on quinine?  It's a bark wonder if it's possible to load up on the raw stuff for tea or taking as shots.  G&t more civilised though 

[kibuc]

26 minutes ago, Loki said:

Put a cheeky fill or kill in on Hochschild

Up 13% since the open (pre market)

Meanwhile, Canadian markets are closed for Victoria Day so not much joy here.

[nirvana]

12 minutes ago, Cattle Prod said:

Saudi are notoriously stupid money - see Softbank, dotcom etc.

Agree.....Softbank just announced massive losses

SoftBank Vision Fund records $18 billion operating loss, portfolio slides underwater

Jay Powell gave an interview yesterday, here's the transcript

https://www.cbsnews.com/news/full-transcript-fed-chair-jerome-powell-60-minutes-interview-economic-recovery-from-coronavirus-pandemic/

Can somebody give a summary? these money printers annoy me now 

In other news, ALL markets in take off mood due to vast supplies of newly printed FIAT 

[leonardratso]

yar, i see wti has caught a bid also, going greta guns to the fabled $40.

Mind you i have to check a few times, am i looking at the BTC chart or the WTI chart? their volatility and steepness are like a bradford town center topography map. (hilly and full of shit).

[Craig]

1 minute ago, leonardratso said:

yar, i see wti has caught a bid also, going greta guns to the fabled $40

Is that a Freudian slip? 

[leonardratso]

1 minute ago, Craig said:

Is that a Freudian slip? 

is my slip showing?

[nirvana]

The system is bunged up again

All this newly printed money is going nowhere except the stock market, the FED are creating a fuck up of EPIC proportions 

 

[nirvana]

20 minutes ago, Cattle Prod said:

And if it doesn't come out quick enough, they'll stuff more into the pipes to unblock the system. Like eating All Bran 

Indeed, interesting to watch...

 

 

[DurhamBorn]

If you look at the main risers today the market is moving past systemic risk (though it still remains in smaller amounts) and to where inflation goes in the end.At the end of dis-inflation,buy assets,not profits.

Fed and Boe should try to control the long end of the curve as well soon like they did in the 40s,in affect any time yields rise above a set level at the long end the Fed will buy as many bonds as it needs to to force the yield down.They then control the whole curve.It means expanding the printing by big amounts,and will force people into shorter dated debt.Thats what will kick in the real reflation.Silver starting to move would indicate the Fed is already getting active,or ready.

The safe haven market then isnt,because its where governments are going to fund the massive costs of reflation.Expect the Fed and Boe to control the long end,then governments to issue very long term debt at the then very low rates.Only when the CBs have monetized all the disinflation of the past 40 years will rates increase,then they will run and run.The key is the CBs and governments are going to force rates down at the long end,then once down push through massive borrowing at long terms,30 maybe 50 years at very low rates and only then once governments have recovery locked in will CBs stop buying the curve.

Reflation is locking in now ,the irony is we are about to see the lowest rates ever at the long end,the end and a beginning.

[Starsend]

24 minutes ago, DurhamBorn said:

If you look at the main risers today the market is moving past systemic risk (though it still remains in smaller amounts) and to where inflation goes in the end.At the end of dis-inflation,buy assets,not profits.

Fed and Boe should try to control the long end of the curve as well soon like they did in the 40s,in affect any time yields rise above a set level at the long end the Fed will buy as many bonds as it needs to to force the yield down.They then control the whole curve.It means expanding the printing by big amounts,and will force people into shorter dated debt.Thats what will kick in the real reflation.Silver starting to move would indicate the Fed is already getting active,or ready.

The safe haven market then isnt,because its where governments are going to fund the massive costs of reflation.Expect the Fed and Boe to control the long end,then governments to issue very long term debt at the then very low rates.Only when the CBs have monetized all the disinflation of the past 40 years will rates increase,then they will run and run.The key is the CBs and governments are going to force rates down at the long end,then once down push through massive borrowing at long terms,30 maybe 50 years at very low rates and only then once governments have recovery locked in will CBs stop buying the curve.

Reflation is locking in now ,the irony is we are about to see the lowest rates ever at the long end,the end and a beginning.

Probably not quite time to sell the rest of my IBTL yet then, might be one last leg up.

[DurhamBorn]

If anyone is interested in how the Fed manipulated the curve at the long end in the 40s (as i think they are about to do again) its below from the Fed themselves.Roadmaps would say the Fed would expect to maybe end up with 50% to 70% of all bonds by the time the stop.Its why i expect the Fed to get to $10 to $15 trillion in printing minimum.

https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr913.pdf

 

[DurhamBorn]

4 minutes ago, Cattle Prod said:

Sorry DB, I don't understand the bit in bold. I feel this is an important statement and I want to make sure I understand it. Do you mean the safe haven market is then not longer safe? And do you mean TLT and the like?

Yes,because its on borrowed time.The Fed will control the rates along the curve forcing them down,so in affect your capital is safe,but they will continue to do so as inflation increases and that means real terms losses.They will then allow rates to increase and pull back from controlling the curve and that is when nominal values of longer term debt will fall.How and when they stop the control we cant know yet,its only a when.In affect they are saying your capital is safe,but for that we are going to take a charge through inflation and give it to the people in government spending.Plus we will monetize as much as we need to until we dont need to.The pumps are being filled,controlling the long end will then start to force it out,first through government,then through people deciding they dont like certain real terms losses.

 

[Hardhat]

I'm eyeing up Siemens as a potential buy - it's recovering from a covid slump but still at multi year lows, and I would have thought would do well in reflation scenario. Anyone hold / got an opinion on it?

[DurhamBorn]

10 minutes ago, Cattle Prod said:

Veolocity! I must find out what gold and silver did in the 40s, thanks DB.

Exactly.Silver trebled between 40 and 47,gold was controlled then.

[DurhamBorn]

Just now, Hardhat said:

I'm eyeing up Siemens as a potential buy - it's recovering groom a covid slump but still at multi year lows, and I would have thought would do well in reflation scenario. Anyone hold / got an opinion on it?

Big winner from cycle,but already huge so upside will be lower than many other areas.As a core holding in a more conservative reflation portfolio though a fine holding.

[jamtomorrow]

50 minutes ago, Cattle Prod said:

Per my comment on onshoring from China, the drum is beating:

 

Massive incentive and opportunity for automation to affect how this plays out.

As in: if you were about to embark on repatriating production capacity, why wouldn't you take the opportunity to automate it up the ass as you build out (relative to the automation level in, say, a Chinese equivalent)?

Cost of labour is one factor. Advances in automation another. And of course (and back, again, to the main point of this thread), ten years down the line, would you rather have your production costs governed by an inflated-away debt facility or the inflated-up wages of your workforce?

Smart capital could do well out of this, but can't see it doing much for jobs.

[jamtomorrow]

8 minutes ago, Cattle Prod said:

Let's hope the UK goes for that kind of investment. The government could easily encourage it by no longer subsidising companies by paying people to be inefficient via tax credits and working 16hrs a week for top ups etc. Just subsidise the people and be honest about it, and let the bad companies collapse, and the good companies thrive.

A thought experiment:

People are currently being conditioned to get paid for sitting at home, not much of a stretch now to citizen income. So everyone gets an income, while companies have to innovate and automate like hell as you suggest. Everyone is happy! That is until inflation means the government can't print citizen income any more, oops. And per this thread, inflation loving companies such as those we own will have done very well. So the holders of real assets will have done well, while most people will have done not anything except improve their artwork/gardening/protesting/drinking etc. Then the taps turn off, with inflation out of control. The asset holders run for the hills (in my case, that will literally happen), while the indolent mass will erupt. When hard work gives you purpose in life, the opposite gives you...Mad Max?!

My tongue is only slightly in cheek. I give the above scenario a lot higher chance of happening than I did three months ago.

Absolutely this. Automation could prove to be one hell of a cherry on top of the end-of-decade Big Kahuna.

Thinking about this within the inflation thesis (and asking the important question: what will make this rhyme rather than repeat?) ... does automation have implications for how velocity will work out this time? If an ever greater fraction of the production surplus is captured by capital (because automation), at what point does velocity fail to get airborne?

I fully realise the "victory" of capital over labour has been oft predicted ever since before the luddites, but the degree to which automation is looking capable of eating what were previously considered "uniquely human" skillsets is astounding.

[Bricks & Mortar]

1 hour ago, DurhamBorn said:

Exactly.Silver trebled between 40 and 47,gold was controlled then.

Where are you getting that silver trebled between 40 and 47?  In what currency?
I may be using different sources.  But as far as I can see, it barely doubled.
https://www.chards.co.uk/silver-price/all-time-price-usa-dollar

[nirvana]

1 hour ago, Cattle Prod said:

People are currently being conditioned to get paid for sitting at home, not much of a stretch now to citizen income. So everyone gets an income, while companies have to innovate and automate like hell as you suggest. Everyone is happy! That is until inflation means the government can't print citizen income any more, oops. And per this thread, inflation loving companies such as those we own will have done very well. So the holders of real assets will have done well, while most people will have done not anything except improve their artwork/gardening/protesting/drinking etc. Then the taps turn off, with inflation out of control. The asset holders run for the hills (in my case, that will literally happen), while the indolent mass will erupt. When hard work gives you purpose in life, the opposite gives you...Mad Max?!

I concur.......<currently out in the hills waiting for the shit to hit the fan> 

 

28 minutes ago, Bricks & Mortar said:

Where are you getting that silver trebled between 40 and 47?  In what currency?

There was a sizeable war going on then...do we really think this is a good comparison!!?? 

[nirvana]

WE'RE ALL RICH!

THE MARKETS ARE GOING BATSHIT CRAZY AGAIN! 

Right I'm off to run around the house 20 times to control my OCD 

[DurhamBorn]

1 hour ago, Bricks & Mortar said:

Where are you getting that silver trebled between 40 and 47?  In what currency?
I may be using different sources.  But as far as I can see, it barely doubled.
https://www.chards.co.uk/silver-price/all-time-price-usa-dollar

https://sdbullion.com/silver-price-by-year