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

[Don Coglione]

1 hour ago, Panda said:

https://www.google.com/amp/s/amp.abc.net.au/article/12876638

Why is the Telstra share price $3.08 in Australia but $10.84 here in the HL portal?

The exchange rate is 1.81.

I ask as I think this is a strong buy.

Would I be better opening up a HSBC share trading account online a I have an Australian HSBC day to day account. Bunging some bucks in it and buying at $3.08.

Or buying here in HL portal at $10.84.

I can pay tax in Australia, so I think I might be okay opening a HSBC AU share account and buying shares.

But I do think its still a good price.

The boss brought $10k worth at 2.88 in her super so she's motoring.

16 cents divi a share. It's a monopoly over there..

Panda,

HL offers a US-listed ADS, the price is in USD.

I wanted to get into Telstra at AUD 2.80 a few years back, but couldn't find an easy way to buy the underlying, Australian-listed stock. The ADS put me off at the time (but I have bought others since).

https://www.investopedia.com/terms/a/ads.asp

[sancho panza]

4 hours ago, Yadda yadda yadda said:

Reading the definitions at that link am I correct to say the following.

M1 is actual cash in circulation.

M2 additionally includes easily accessible money held on deposit.

Therefore M2 is money that can be quickly spent. Potentially driving up velocity, especially if people fear losing value as you outline.

This is a ncie chart.M1 is cash equvialetns so includes deposits at CB as well.

Interesting @DurhamBorn how they mention MZM,(not often discussed even on geeky threads like this).When the inflation gets unleashed it could be brutal.

Is that darkenss I see at the end of the tunnel? ref various discussions on behaviorual economics led by @Harley

More in focus.Is this what will stop the printing and lead to the BK so ably predicted by David hunter and many on here??????

[JREWING]

16 minutes ago, Knickerless Turgid said:

Panda,

HL offers a US-listed ADS, the price is in USD.

I wanted to get into Telstra at AUD 2.80 a few years back, but couldn't find an easy way to buy the underlying, Australian-listed stock. The ADS put me off at the time (but I have bought others since).

https://www.investopedia.com/terms/a/ads.asp

Many thanks.

Looks like I'll go the HSBC AU share trading account route.

I'm mad at myself as I could have got in at 2.64 a few weeks back.

Can see this going higher...

[Don Coglione]

Just now, Panda said:

Many thanks.

Looks like I'll go the HSBC AU share trading account route.

I'm mad at myself as I could have got in at 2.64 a few weeks back.

Can see this going higher...

I like Telstra too (as a potential investor, not as a former customer!).

[sancho panza]

M1 seeing an uptick and M2 (much sharper)as well.So we've got rising supply as per DB's recent post and rising velocity.That's ahem...infaltionary

Could be Q1 2021 figures are wehn we find out there's much less printy printy.Negative rate tastic....

 

[Hardhat]

So essentially MZM is liquid cash sitting in savings accounts ready to be spent when demand calls on it?

[JREWING]

22 minutes ago, Knickerless Turgid said:

I like Telstra too (as a potential investor, not as a former customer!).

Agree. They've cancelled my overseas roaming on my pre paid sim.

Charlatan's. Customer service is awful...

[Don Coglione]

Just now, Panda said:

Agree. They've cancelled my overseas roaming on my pre paid sim.

Charlatan's. Customer service is awful...

Australian + effective monopoly = truly shocking service.

Nice yield though! So many oldies have holdings in Telstra, I can't see them ever being allowed to cut their dividend too hard.

[sancho panza]

1 hour ago, Cattle Prod said:

So the curve is basically flat, and the FT is reporting this. This simply reflects the current view that futures traders don't think oil is going to get more expensive for the next 6 years. Well done, lads. this is the consensus analyst view which feed these people. When that view changes, so will the curve. They way I've seen it working before is that the physical market sees changes first, and the futures catch up. The physical market is out there right now in god awful places buying and selling cargoes. Are the Chinese teapots bidding each other up? Is the Catcher field in the North Sea unloading this week? Where can I get heavy oil for my US refinery customer, and can Colombia supply me what Mexico no longer can? Will my boss notice if I get a tanker train from Kurdistan through Syria that I can buy for half nothing, and sell to the Italians? They are the market.

The futures market are sat in London, New York, Singapore and Chicago in front of screens trading on analyst reports (without the benefit of a macro road map these days, as DB tells us). So I think the futures curve is somewhat reactive. I watch for physical supply indicators first, and watch reducing contango and flip to backwardation second, to see when that reaction happens. 

CP,technical question on the backwardation charts you psoted.

Backwardation is when the futures price is below the expected future spot price.How do you get an approxiamtion for the expected future spot price?It confuses me a fair bit but I'd like to have a play and need to understand more.

Also,have you any idea for how often the futures curve inverts and we see lower futures prices futher out?Is that something we'd see as a precursor to a little bull run.

[sancho panza]

More broadly,we clearly have rising velocity in USD, we have rising wage/price inflation in US,we have arising oil price(albeit low level at the minute)....to me we're ticking a lot of boxes that may well reduce the fed's rooom for manouvre

 

[sancho panza]

24 minutes ago, Cattle Prod said:

Seems they need to get more money printed quick, before they can't. Could explain this made up lockdown in Europe and kite flying of same in US. However this assumes some competence as to understanding what is going on, and in the US at least, they haven't been listening to Powell telling them he hes hot lots more money, lately. If they don't agree a stimulus package soon, I think BK is much higher probability. And then larger stimulus after more carnage, for worse inflation 12 months later.

My current working timeline -I won't lie (it follows Hunter's thesis by accident rather than design but I'm malleable on timings and happy to have Hunter for comapny),sees crack up boom in economy & oil to April 21/july 21,then we get market peaks,possible dollar bottom, and bottom in UST's at which point I'll be selling up everything except the bottom ladders in oilies and looking to 360 trade them back 6 months later.

I make no assumptions as to understanding on teh CB's part.In Europe,tehy've walked blindly into a lockdown,blown a load of stimulus getting people out to eat and then back in again,such that when the time comes,they may not bein a position to deliver much more until inflation expectations are back on their arse which will be psot BK.

The US is in a different postion but we're entering a period where sterling could get mullered.

 

[janch]

From google:

Contango and backwardation are terms used to define the structure of the forward curve. When a market is in contango, the forward price of a futures contract is higher than the spot price. Conversely, when a market is in backwardation, the forward price of the futures contract is lower than the spot price.

Posted as it's all a bit complicated for lesser mortals like me

 

39 minutes ago, sancho panza said:

expected future spot price

I think it relates to the current spot price (but I expect @Cattle Prod to bring his much greater expertise)

[DoINeedOne]

Just checked Degiro for Telstra these would be your options

 

I use HL mostly just bought a few companies on Degiro that hl don't offer  etc....

[arrow]

59 minutes ago, sancho panza said:

My current working timeline -I won't lie (it follows Hunter's thesis by accident rather than design but I'm malleable on timings and happy to have Hunter for comapny),sees crack up boom in economy & oil to April 21/july 21,then we get market peaks,possible dollar bottom, and bottom in UST's at which point I'll be selling up everything except the bottom ladders in oilies and looking to 360 trade them back 6 months later.

I make no assumptions as to understanding on teh CB's part.In Europe,tehy've walked blindly into a lockdown,blown a load of stimulus getting people out to eat and then back in again,such that when the time comes,they may not bein a position to deliver much more until inflation expectations are back on their arse which will be psot BK.

The US is in a different postion but we're entering a period where sterling could get mullered.

 

I admire your thinking SP. I'm trying to find a signal at which the market will peak before the drop.

Oil peaking to as you said 80 will be a useful signal, as will Hunter's pm targets like silver to 35.

I do worry that I'll miss the drop. The march one was quick and Hunter has said that the turn could happen very quickly.

But then I have second thoughts and think that it might be a rotation with a medium drop but not the 80 percent drop.

 

[TMM]

1 hour ago, sancho panza said:

My current working timeline -I won't lie (it follows Hunter's thesis by accident rather than design but I'm malleable on timings and happy to have Hunter for comapny),sees crack up boom in economy & oil to April 21/july 21,then we get market peaks,possible dollar bottom, and bottom in UST's at which point I'll be selling up everything except the bottom ladders in oilies and looking to 360 trade them back 6 months later.

I make no assumptions as to understanding on teh CB's part.In Europe,tehy've walked blindly into a lockdown,blown a load of stimulus getting people out to eat and then back in again,such that when the time comes,they may not bein a position to deliver much more until inflation expectations are back on their arse which will be psot BK.

The US is in a different postion but we're entering a period where sterling could get mullered.

 

Do you think it's the same timeline for property/interest rates?

[DurhamBorn]

8 hours ago, planit said:

FT have a negative outlook on oil, they are basically saying they don't think demand is going to go up much (fine - it's an opinion) but they say the futures market for oil has not moved higher. 

Any comments on that from the more knowledgeable people on here?

 

Sorry, I know it's pay-walled but perhaps you can grab it via google.

Oil producers have more than a pandemic to worry about

https://www.ft.com/content/e1b7bab4-b962-4fab-ae7f-10da597b1cf6

It will hit $200 maybe $300 in the cycle we have entered.Gas will go up 300% to 700% as well late in the cycle.It will be one of the best performing assets of the decade.Everything else is noise.

[DurhamBorn]

2 hours ago, Hardhat said:

So essentially MZM is liquid cash sitting in savings accounts ready to be spent when demand calls on it?

Also money market accounts and for kicking in inflation institutional accounts.Raw liquidty sat waiting to buy assets.Its increased above trend since the early 90s,mostly as the dis-inflation really kicked in.It has jumped a huge amount along with M2 this year.Once inflation ticks higher it will unleash an inflation wave across the world as people dash for assets and pull forward that demand.MZM turning down should signal the start of a bond market sell off as people access liquidity by selling bonds.

[arrow]

37 minutes ago, Cattle Prod said:

Right now WTI is taking a little dump because of a headline 4 mbpd build in crude inventories, while ignoring that most of this has come from the EIA 'adjustment factor' (hurricanes, unexpected demand etc), and that product demand is almost normal, over 20 mmbpd, or within 1 mbpd of this time last year. About 95% recovered. Who predicted that in April? It's quite astonishing, given the actions of governments. Diesel is back to normal, and jet fuel is finally ticking up. If this trend holds up, the refineries will have to keep drawing stock out of inventory to keep making these products, out of season, which our friends the futures traders will eventually notice in the coming weeks and months.

Now wti and brent up again. They be starting to see what you're seeing

[CVG]

We don't cover Water in this topic. So I use the Global Water ETF (IH2O) to get exposure. I have been pretty happy with it's performance so far. Might be one to watch and pick up in any BK. DYOR naturally.

[CVG]

6 hours ago, Hardhat said:

BAT divi landed today 

IMB report results on 17th Nov. It'll be interesting to see how they set the first of the two large quarterly dividends scheduled for 31 Dec. Will they be scaled back in the same proportion as the earlier two small quarterly dividends?

[DurhamBorn]

1 hour ago, CVG said:

IMB report results on 17th Nov. It'll be interesting to see how they set the first of the two large quarterly dividends scheduled for 31 Dec. Will they be scaled back in the same proportion as the earlier two small quarterly dividends?

Yes they will.The question is what next.I expect they will pay down debt with the extra free cash for two years,then probably invest in new areas or maybe buy up something.They might fancy taking over Auxly Cannabis whose shares are well down and IB are involved with.Their next generation portfolio has way under performed and it will be interesting to see what they do with it.I own some Imperial and over the years did fantastic for me.Im down around 20% on the ones i bought back before dividends , but wont sell them now,probably ever.Massive cash flow,but they do need to start to build up new areas.

[Noallegiance]

Anyone got any decent divi gas players?

[CVG]

Where would you buy into a long UK gilt? I was doing a few calculations today (please check them if you know more than me). Current price of the 2049 4.25% gilt is 189.42. If you buy it today then you'll get an annual return of 2.24% but only around half your money back at the end - a Yield to Maturity of 0.49%.

I previously joked that I wouldn't start buying until the YTM was 5%. By my calcs that would require the price to drop from 189 to c. 60. That will be an horrific hit to current bond holders. Is it likely?

[Noallegiance]

Just now, Cattle Prod said:

Gazprom, Repsol, Shell

Cool already got 2 out of those 3.

General markets down today but my long term portfolio is well up on the day. Sign of a sector rotation, I presume?

[Democorruptcy]

34 minutes ago, Cattle Prod said:

Just been thinking about @sancho panza M2 graphs. M2 added this year is c. 4.5 Tn or $13700 for every man, woman and child in the US. MZM is similar. $35,000 an average household??? Did they really hand out that much money?! I suppose some of it has been saved by folks sitting at home, but either way, there is going to be a tsunami of spending unleashed chasing goods and services ince they are allowed out. I guess this is what Dave H means by huge money on the sidelines, and DB by liquidity in the pipes. As this money has been distributed across everyone in the states this time, they're not all going to put in the financial system this time...

Well, they did say over and over that they wanted inflation. And that Ronald Storfele video (a very good watch) reminded me that the Fed quietly switched to average rather than absolute inflation targets over the summer.

Sorry if I'm stating the obvious to some of you, I'm kind of just working through it in my head. Do they really need another couple of trillion on top? If DB says so, I believe him. But it really is an astonishing amount of money. I quite fancy a roaring 20s, a last party before I have to build a compound on a remote hill! 

Savings..

Quote

 

Bank of England figures published earlier this year showed households saved £54.6 billion in three months between April and June, compared to an average of £5.1 billion a month before the coronavirus.

https://www.thisismoney.co.uk/money/mortgageshome/article-8917663/Missed-loan-payment-Two-million-miss-mortgage-loan-repayments-mortgage.html