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


spunko

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2 minutes ago, Hunty said:

A nice buy HOC on Monday ~ 1.92.

Buyers returning, market turning to rising Silver/Gold prices and as USD falls we will see additional benefits with this UK Company. I see the Dovish Fed and further USA Govt stimuli on rising jobless no's. Will help the SP further. A very good opportunity at this share price now. GBP Silver now up to 2.78% today alone.

Would hope to see it at 3 when silver hits 30.

Next six weeks maybe.

 

I take your points and tottaly agree on the outlook for PM's here..I was 15p from dipping back in and not gonna chase it.

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2 hours ago, sancho panza said:

From what I've seen there's a 15% holding looking for a new home.I sold HOC in aug/sept around the 2-30 level.It's underperformed FRES from bottom to top imho.

Having said that,when you have big family holdings like with BVN then they tend to have a good grip on the political/social issues that can constrain growth.One of teh more learned miner punters eg @Majorpain @kibuc might have something more elevating.I think I'd buy back around 175 level.

Yeah, its been a disappointing year, majority was Peru being badly hit by the virus.  Fresnillo was much better because for some reason the Mexican govt let their mines stay open, Hoc doesn't have that sort of sway!

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8 hours ago, Bricks & Mortar said:

 

Would it be possible to explain 'derivative debt event' and why the chance increases in the eurozone as dxy goes lower?

For a simpleton?

As the dollar weakens its because of liquidity flows etc.Dollars are being sold to buy other things with,mostly commods,oil etc.The more it goes down the more it means holders of other currency is getting stronger meaning they can buy more of things priced in dollars,so they do.That though forces up costs for areas with a rising currency,putting more and more risk into the system for defaults.

Most people cant understand it because the dont understand leads and lags.How can something being worth more like a currency bankrupt you?.Its because more decide to buy oil etc than production can be ramped up.

The reason the Eurozone needs the Fed to print more than them is because there is a shortage of dollars due to the structure of debt deflations,and that shortage followed by a huge upswing is what causes inflation.

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4 hours ago, DoINeedOne said:

That Grant Williams and Anthony Deden interview i have mentioned a few times had something similar around 53:00 mark 

 

 

My own work.  Nice if the young turks agree though!

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2 hours ago, sancho panza said:

Must say, I've sat on the sidelines and watched your DXY call develop nicely.Putting my neck on the line-for once-I defnitely see 85 and possible sub 80.

But I just exchanged a load of GBP for USD, and I have deep pockets for such OMOs!  I hope DXY is not cable! 

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2 hours ago, 5min OCD speculator said:

careful what you wish for, it'll all end in tears......

Royal Mail was the one, buy of the year at 125.......I cry everytime I look at the share price cos I skillfully sold on the way down and I didn't BTFD :PissedOff:.....nudging £3.50 they were yesterday......you don't need any divis with returns like that :P

edit: they hit 352 this am :CryBaby::CryBaby::CryBaby::Sick1:

Iv actually had to sell some more Royal Mail today,simply because i bought so many ladders the huge rebound meant i had a holding nearly as big as the Czech bloke who has bought a load xD

RM,DRAX,Playtech,Mosaic,Will Hill,doubles and trebles all around,or 5 baggers like Sibanye,that old dog Eldorado ,we have had a few miss steps ,but a DELICIOUS year for us all.More to come.

 

 

 

 

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2 hours ago, sancho panza said:

ago

Db can you comment on what I wrote- my understanding on the immediate risks to the system is that the weakening of the dollar and the strengthening of the euro are what could lead to the BK and significant debt deflation for the reasons I stated- is that how you see it- or am I missing something?

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1 minute ago, dnb24 said:

Db can you comment on what I wrote- my understanding on the immediate risks to the system is that the weakening of the dollar and the strengthening of the euro are what could lead to the BK and significant debt deflation for the reasons I stated- is that how you see it- or am I missing something?

Just have 13 mins ago,lots of moving parts,we cant know where the exact risk is only where pressure builds.

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11 minutes ago, Barnsey said:

Yesterday I posted a link to a brilliant video, today a brilliant article from much respected Albert Edwards of SocGen. Your 3-6 month path to the BK set out by someone who isn't Dave Hunter.

https://www.advisorperspectives.com/articles/2020/12/16/albert-edwards-the-10-year-yield-is-heading-to-zero

Nice one Barnsey

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26 minutes ago, Barnsey said:

Yesterday I posted a link to a brilliant video, today a brilliant article from much respected Albert Edwards of SocGen. Your 3-6 month path to the BK set out by someone who isn't Dave Hunter.

https://www.advisorperspectives.com/articles/2020/12/16/albert-edwards-the-10-year-yield-is-heading-to-zero

I used to be signed up to AE's core deflation thesis but as per previous discussions on here,I feel he's not looking East.It's one thing to face credit deflation in the West(I think it's a baked in certainty)),it's another to assume that Western debt problems will necessairly restrict Chinese/Indian/Indonesian/SE Asian growth where govts have the ability to print and compete with depreciating USD for commodities.

After years of infaltion targetting it will be the monetary equivalent of'the worng sort of leaves on the line'.

 

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#debtdeflationcometh

https://wolfstreet.com/2020/12/17/as-immigration-short-term-renters-fizzle-and-people-move-out-to-work-from-somewhere-else-london-apartment-vacancies-soar-rents-drop/

As Short-Term Renters & Immigration Fizzle, and People Move Out to “Work from Somewhere Else,” London Apartment Vacancies Soar, Rents Drop

by Nick Corbishley

In this virus crisis, owning the wrong type of real estate can have dire consequences, especially when there’s a blanket ban on evictions. UK listed landlord Shaftesbury is hugely exposed to both, and its shares have dropped 47% from their peak in October 2017.

To weather the storm this far, Shaftesbury has raised £307 million of fresh capital in a deeply discounted rights issue. It has also increased debt by 10% and was given a string of waivers from its lenders when it was on the verge of breaking some of its debt covenants.

 

The blame for this write-down can be placed on its huge holdings of bars, restaurants, leisure and retail properties, many of which keep having to shutter during lockdowns, and the “exceptional increase” in vacant apartments, as many younger tenants have decided to work or study from family homes. By September, 137 of its 624 apartments were lying empty: a vacancy rate of 22%. There is, Shaftesbury says, “unprecedented space across the West End”:

For the first time in a very long time, net migration to the UK is falling sharply. And that could have a major impact on the rental market, particularly in London. Until this year, uninterrupted net migration to the UK — even after Brexit stymied migration from the EU — played a vital role in sustaining London’s growth.

For the residential property sector, uninterrupted net migration fueled higher demand, particularly in the prime rental market, which typically has a higher share of international and corporate tenants than the sales market. Nowhere is this truer than in central London. But now that the tide has turned and fewer high net worth tenants are arriving from abroad while many others are heading home, London’s prime rental market is feeling the heat.

Rents in prime central London fell by 10.5% in the year to November, pushed down by high levels of supply and lower levels of demand, according to real estate agency Knight Frank. In prime outer London, which is less built up than central London, median rents fell 9%. These were the largest drops since the global financial crisis although they are still only around half as steep as 2008/09.'

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5 minutes ago, sancho panza said:

I used to be signed up to AE's core deflation thesis but as per previous discussions on here,I feel he's not looking East.It's one thing to face credit deflation in the West(I think it's a baked in certainty)),it's another to assume that Western debt problems will necessairly restrict Chinese/Indian/Indonesian/SE Asian growth where govts have the ability to print and compete with depreciating USD for commodities.

After years of infaltion targetting it will be the monetary equivalent of'the worng sort of leaves on the line'.

 

Last paragraph of the article:

"Once the great melt is underway, the public will insist that policymakers continue MMT and similar monetization policies. Historically, when money supply growth outpaces economic growth, inflation happens. Inflation could happen next year, according to Edwards. He agrees with descriptive aspects of MMT but fears the political forces that will force it to continue indefinitely."

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38 minutes ago, Barnsey said:

SocGen

I used to have a bank account with them.....I love everything French except the bankers, cunts.......probably up to their arses in derivatives.....sorry pmsl I've used the c word far too much today, I'll be off soon, sorry ladies  

Interesting his template is Japan.....I used to say we're 'turning Japanese' a long time ago, it was partly a reference to believing most folk are wankers BUT I did believe the housing market would implode like the Japs but it didn't come to pass......I understand the Japanese government and BOJ own virtually everything now which is what I think will happen with the FED....'buyer of last resort'........

But the Japs are a strange bunch.......Jap housewives used to be responsible for the 'carry trade' o.O

 

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buyer of last resort https://seekingalpha.com/article/4338083-fed-is-now-buyer-of-last-resort-and-implications-are-huge

quote:

I think the Fed is failing here and well outside of their bounds. The Fed is acting like it's going to stop every recession from happening, which is an idea not based in reality. The Fed is supposed to make recessions less harsh and be a lender of last resort to provide liquidity when everything dries up, avoiding anything resembling a depression. With its recent purchase of HYG, the Fed is effectively purchasing equities, given the risk profile of high-yield bonds. And the only reason they may not be buying equities outright now is that Congress has not allowed it (yet). For me, that's a step too far for the Fed. Not allowing risky company debt to default, and stepping into the public markets to buy an exchange-traded fund, is well outside the bounds of their responsibility. The Fed turned the risk-off environment into risk-on but taking on risk it never should have, which is why I was hammering in The Lead-Lag Report that a major up move was coming despite economic numbers looking like the end of the world. Capitalism breaks down when the Fed starts to provide liquidity to an Altice France S.A. bond yielding 7.38% on issue (largest holding in HYG), or a Sprint 7.88% bond. Companies issued this debt because they had terrible balance sheets that wouldn’t survive a recessionary period. Now that one has come, the Fed turns into a buyer of last resort for them, bailing out bad companies yet again.'

 

 

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1 hour ago, Barnsey said:

Yesterday I posted a link to a brilliant video, today a brilliant article from much respected Albert Edwards of SocGen. Your 3-6 month path to the BK set out by someone who isn't Dave Hunter.

https://www.advisorperspectives.com/articles/2020/12/16/albert-edwards-the-10-year-yield-is-heading-to-zero

quote 'Longer term, he thinks there will be greater monetary and fiscal cooperation, and the U.S. will embrace modern monetary theory (MMT) and the monetization of its debt'

This is baloney, the FED has been monetizing the debt for donkies years...this is why I try not to read too mnay of these articles anymore, you end up disappearing up your own arse or some so called 'experts' :P

How the Fed Monetizes the U.S. Debt

https://www.thebalance.com/how-is-the-fed-monetizing-debt-3306126

edit: that looks like a noddy website xD BUT in effect debt monetization is the art of 'printing money'

Debt monetization

From Wikipedia, the free encyclopedia

Debt monetization or monetary finance is the practice of a government borrowing money from the central bank, which, in the process of buying the debt, creates new money. It is one of the practices often informally called printing money.

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Democorruptcy

<Insert Name> faces strikes early in the new year after one of the unions that represents more than 9,000 of its 20,000-strong UK workforce voted in favour of industrial action over the company asking all employees to sign new contracts.

Strike Action

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I am seriously gonna stop reading all this shit BUT as an example of how fucked it all is, look at Apple owning US treasurys

what the fuck is that all about???

https://www.cnbc.com/2017/08/03/apple-owns-more-us-treasuries-than-many-major-countries.html

also the debt that was bought last september, top 10 'knob heads' yes London no 1 followed by dumbass paddies BUT that could well be Apple again :P

https://wolfstreet.com/2020/11/19/who-bought-the-monstrous-4-2-trillion-of-incredibly-spiking-u-s-national-debt-added-over-the-past-12-months-everyone-but-china/

Next 10 largest foreign holders in September. This list is top-heavy with tax havens and financial centers, including those where US corporations have legal entities that hold US Treasuries, such as Apple in Ireland. In others words, some of these “foreign” holders are US entities, such as Apple, that are holding Treasuries registered in their foreign mailbox entities (the amounts in parenthesis indicate their holdings a year earlier):

  1. UK (“City of London” financial center): $425 billion ($413 billion)
  2. Ireland: $315 billion ($274 billion)
  3. Brazil: $265 billion ($303 billion)
  4. Luxembourg: $262 billion ($252 billion)
  5. Switzerland: $255 billion ($231 billion)
  6. Hong Kong: $246 billion ($242 billion)
  7. Cayman Islands: $232 billion ($250 billion)
  8. Belgium: $218 billion ($215 billion)
  9. Taiwan: $213 billion ($189 billion)
  10. India: $213 billion ($161 billion)

Germany and Mexico, among the countries with which the US has the biggest trade deficits, are much further down the list: Germany in 20th place, and Mexico in 24th place.

 

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46 minutes ago, Democorruptcy said:

<Insert Name> faces strikes early in the new year after one of the unions that represents more than 9,000 of its 20,000-strong UK workforce voted in favour of industrial action over the company asking all employees to sign new contracts.

Strike Action

The beast that shall not be named lost my pension data.  I wouldn't trust them with a dead cat.

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