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

[nirvana]

Cable aka £ vs $ is at a crucial point 1.35......where it was 12 months ago.....

when it shat the bed in March it went down to 1.142

IF they get a good Brexit deal over the weekend it might 'break out' BUT that might already be priced in....

IF it decides to have another poo it'll probably drag the FTSE down with it.........

SO to take profit OR to sit tight? hmmmmmmm 

EDIT: 12 months ago the £ to € was 1.20, today it is 1.11 SO the $ rate is due to $ weakness NOT £ strength 

[Hardhat]

55 minutes ago, Cattle Prod said:

The real answer is that Denmark has nothing left to hunt. That's why DONG became Orsted years ago. What it has was relatively small and obvious to find. Doesn't stop them greenwashing it though.

This is production, will be shut down entirely in the next few years:

 

You'll notice that their consumption, though declining, is declining at a much lower rate than production. It actually increased in recent years. They became a net oil importer around 5 years ago, so add them to the list of former exporters now importers. Who is selling it to them? Just another drain on world supply, even in sclerotic Europe.

 

 

Thanks CP, I knew there must be more to it ...

[sancho panza]

15 hours ago, Cattle Prod said:

@sancho panza just another point on focussing on insiders as I think it's important. Steve gave the example of Matador, insiders were all buying because they knew they were hedged, Steve picked up on it and tagged along for handsome profits. Nice piece of business. But thats the level, in my experience, that insiders trade on. Company doing well, not the sector. Not cycles. I talk to my colleagues about good times ahead and they're well cyncial about it, they know its likely, but are more concerned about job preservation. The next cull for is in March, which will be my 4th this downcycle. If Steve noticed recent insider selling in Energy, its probably tax loss selling by those with uncertain futures.

So they are great signals, micro scale, but insiders are no cleverer about how cycles turn than anyone else really imo, and this info will not be present in their actions. Even the corporate economists: if they really believed in a new commodity cycle ahead, they wouldnt be killing potentially lucrative projects with crappy price decks and hurdle rates. But they are.

That's a really wise post if you don't mind me saying CP.Underneath the surface,I'm just asking myself why I disagree with kaplan,but couldn't reason it through aside from a lack of evidence.I think you've summed it up really well.He does focues heavily on insiders and smart traders using VIX-both can be wrong(and I think VIX is more reactive than proactive)

Over the years I've had some of my most interesting ideas from kaplan-particualrly researching oil prices pre recession and developing the coma scales as a way of sifting through all the ETF's he was tipping.He also has one hell of a nose for value.

12 hours ago, DurhamBorn said:

What should be remembered though is a hell of a lot of work went into portfolio rotation etc this last few years and into positioning.For myself i bought shares in March equal to 65% of my net worth.Buying into the teeth of the storm.I wobbled several times myself,its not easy losing a years salary a day at some points yet sticking to ladders etc.

Its no accident we have cleaned up this last month.We earned it.

I was saying as much to my Mum,the other day.I sit down at my desk on the days I have for our family pension investments and I've less to do now that the oilies have risen.

Not because my mind isn't racing but because we're in the sit and hold phase now.While the oilies were low,I was wracked with whether to buy into them even more heavily.Now they've risen, the maths is less attractive.

We've a few bob that will go back into gold miners if there's any cheap enough,more potash but they're pricier now.

Even the options trades are buy and hold now(well till near expiry).

There was a David Hunter video posted a while back.He nailed the themes imho.

[sancho panza]

40 minutes ago, reformed nice guy said:

I did some digging, but probably not as deep as Harley.

My watchlist at current ladder prices:

Baidu - chintech - 85 usd

Fanuc - Jap robots - 16000 yen

Gazprom - russia gas - 3.5 gbp

JD.com - chintech/chinese amazon - 50 usd

NTT DOCOMO - jap mobiles - 35 usd

Nippon Telegraph - jap comms - 20 usd

Tencent - chintech - 50 usd

TSMC - taiwan chips - 60 usd

A lot of those are near their lowest price this year so you can probably ignore but hopefully it seeds some ideas

I'd also add SingTel,Telstra and Japan Tobacco.

[sancho panza]

On 03/12/2020 at 06:39, DurhamBorn said:

Yes,because everyone thought it was going up,,,,apart from us 

"money" is priced against assets.The extra liquidity,the money stock has increased and at the same time assets got cheaper.With a lag that liquidity moves from fiat into assets/commods/goods.Dollar being the reserve moves against assets really not other currency.

[sancho panza]

@Cattle Prod

Talking of LG,saw this post yesterday.

[UnconventionalWisdom]

7 hours ago, DurhamBorn said:

However my old friend would be saying to just let the cycle play out,go do something else etc.Very difficult.

Difficult balance. This stuff is interesting but life is far too short to waste. 

The good thing about this thread and having a macro position is that you can get in the position you are happy with and then do better things.

 

[AWW]

2 hours ago, 5min OCD speculator said:

Cable aka £ vs $ is at a crucial point 1.35......where it was 12 months ago.....

when it shat the bed in March it went down to 1.142

IF they get a good Brexit deal over the weekend it might 'break out' BUT that might already be priced in....

IF it decides to have another poo it'll probably drag the FTSE down with it.........

SO to take profit OR to sit tight? hmmmmmmm 

EDIT: 12 months ago the £ to € was 1.20, today it is 1.11 SO the $ rate is due to $ weakness NOT £ strength 

FWIW I had a target of 1.35 where I'd stick half my free GBP into a USD account. I did that yesterday at 1.3480, because I think there's quite a high risk that GBP shits itself into Christmas and the New Year and also think that DXY will bounce off 90.

The guys on the FX desks at ex-work expect mega volatility into Christmas and New Year. Hard to see GBP not being part of that.

[AWW]

6 minutes ago, UnconventionalWisdom said:

Difficult balance.

Indeed. I've had several urges to sell out of at least half of my inflation equities during the current run up. Every time I sit tight and then breathe a sigh of relief that I didn't sell up as they head higher.

It's a very nervous market. Only natural that it's difficult to keep your foot in when March is fresh in the memory.

[Democorruptcy]

14 minutes ago, AWW said:

FWIW I had a target of 1.35 where I'd stick half my free GBP into a USD account. I did that yesterday at 1.3480, because I think there's quite a high risk that GBP shits itself into Christmas and the New Year and also think that DXY will bounce off 90.

The guys on the FX desks at ex-work expect mega volatility into Christmas and New Year. Hard to see GBP not being part of that.

What do they see causing it and are there any key dates? US election fraud or not, Brexit deal or not, etc.?

[Errol]

I'm 231% up on my Freeport (FCX) position, purchased for $6.65.

Tempted to sell as the price is now ludicrous.

[planit]

33 minutes ago, AWW said:

Indeed. I've had several urges to sell out of at least half of my inflation equities during the current run up. Every time I sit tight and then breathe a sigh of relief that I didn't sell up as they head higher.

It's a very nervous market. Only natural that it's difficult to keep your foot in when March is fresh in the memory.

 

If they are an inflation play then we have only gone 1% into the cycle. Would be pretty early to cash out at 1%

Anyone wanting to play the volatility or reduce risk then selling is an option. The way DB was rebalancing his portfolio can be a good way of taking advantage of different shares making dashes forwards at different times without increasing overall risk at all (although there is a chance all the work produces no positive reward and could produce the opposite). 

 

I agree with the Vix being reactive, I always think of horses and stable doors after a big move down. It's more like a memory of bad events in the recent past and can seriously underestimate risk after a long run up in an index.

 

Edit to improve clarity

[AWW]

3 minutes ago, planit said:

If they are an inflation play then we have only gone 1% into the cycle. Would be pretty early to cash out at 1%

Yep, that's what I keep telling myself. First time I've really been properly balls deep in equities though, and the recent rise has been ferocious. Also  currently jobless.

[Loki]

I think everyone would do well to look at the price of TSLA now, and years ago, and remember what cycle we are starting 

Edit: I see @planit beat me to it 

[AWW]

9 minutes ago, Democorruptcy said:

What do they see causing it and are there any key dates? US election fraud or not, Brexit deal or not, etc.?

One on technicals, the other on interest rate expectations starting to shift.

[planit]

 

A word of warning for us all. We are not stock-picking geniuses because we made money in the last month *.

We are definitely NOT going to remortgage the house to buy shares because we have doubled our money on £1000 worth of shares bought in October.

 

 

*past performance is no predictor of returns in the future yadda, yadda, yadda

[Democorruptcy]

24 minutes ago, AWW said:

Yep, that's what I keep telling myself. First time I've really been properly balls deep in equities though, and the recent rise has been ferocious. Also  currently jobless.

When everything is blue (well apart from....) that's real money that could be cashed in. When it's red it doesn't matter, it's just figures on the screen to ignore for a while.

It's all about units? Will a sell and subsequent buy at a lower price realise more units or not? Each extra unit can make it's own trading profit and receive an income. I think that's what's lost with laddering. Looking at it as even if the price drops, the dividends offset part of the loss, by buying at too high a price, it reduces the units you could have had and so lowers profits/dividends. I suppose I'm just a gambler at heart, money is just a tool!

[DurhamBorn]

3 hours ago, 5min OCD speculator said:

Cable aka £ vs $ is at a crucial point 1.35......where it was 12 months ago.....

when it shat the bed in March it went down to 1.142

IF they get a good Brexit deal over the weekend it might 'break out' BUT that might already be priced in....

IF it decides to have another poo it'll probably drag the FTSE down with it.........

SO to take profit OR to sit tight? hmmmmmmm 

EDIT: 12 months ago the £ to € was 1.20, today it is 1.11 SO the $ rate is due to $ weakness NOT £ strength 

$1.40 for cable,luckily my CAD stocks will be ok as CAD will outperform both,

[geordie_lurch]

In my defence for top slicing some of mine... I didn't ever really like National Express as it had been in the red so long I'd almost given up hope it would ever come back so jumped at the chance to get a little back to put into others

[Castlevania]

On 02/12/2020 at 17:29, sancho panza said:

 

This is the whole thing with collateral though.Stating the obvious here, that's it's only as good as the assets within it.

Deutsche Bank is big in derivatives.Need I say more?

It's often claimed that all derivatives net off,which I understand the logic of, however,when the collapse came in 08,turns out the collateral wasn't as good as they thought because of either fraud,incomeptence by ratings agencies or collapsing liquidity in bond markets.

I'm not overly familair with these issues so happy to get some education.

 

It’s one of the areas which has come under a huge amount of regulatory focus, due to many of the issues seen in 2008. I just think the market and regulators are looking the wrong way. It’s the lending books that I’m concerned about.

[Castlevania]

I’ve not touched anything since the middle of October. There’s a lot less value out there whilst at the same time I don’t see many of my holdings as being particularly over valued. Asset allocation % looks ok. Time to sit patiently.

[Loki]

2 hours ago, planit said:

 

A word of warning for us all. We are not stock-picking geniuses because we made money in the last month *.

We are definitely NOT going to remortgage the house to buy shares because we have doubled our money on £1000 worth of shares bought in October.

 

 

*past performance is no predictor of returns in the future yadda, yadda, yadda

Go big or go home 

(This is not financial advice)

[UnconventionalWisdom]

Shiller CAPE ratio above great depression peak

[Erewhon888]

Fred Hickey informs Williams and Fleckenstein the details of his gold mining companies.

Starts at around the 56 minutes mark.

Which of these are also favourites of the Dosbods gold miner investors?

https://ttmygh.podbean.com/

[Harley]

9 hours ago, reformed nice guy said:

I did some digging, but probably not as deep as Harley.

My watchlist at current ladder prices:

Baidu - chintech - 85 usd

Fanuc - Jap robots - 16000 yen

Gazprom - russia gas - 3.5 gbp

JD.com - chintech/chinese amazon - 50 usd

NTT DOCOMO - jap mobiles - 35 usd

Nippon Telegraph - jap comms - 20 usd

Tencent - chintech - 50 usd

TSMC - taiwan chips - 60 usd

A lot of those are near their lowest price this year so you can probably ignore but hopefully it seeds some ideas

A few familiar names there but my bias is towards the source (materials, telco, etc) companies mostly due to the nature of my selection criteria, but TSMC did come up and is tempting, if China promises not to invade!