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

[Lightscribe]

I think although the underlying movement and cycle drives the fundamentals forward and everything is already priced in going up the chain (as we all do), there is a lot of noise in between.

We know we’ve hit the bottom point A, oversupply, negative WTI etc (even with the BK, inflation, bottle neck demand they big oil companies can’t go much lower). We all know where it’s heading to point B with rubber band supply/demand, inflation and into green energy and beyond.

Different from other crashes/corrections, there is a lot of stimulus flooding into the stock markets from the average Joe that’s speculative (David Hunter may be right with his Tesla and FAANG melt up before the BK) online trading making things slightly more volatile, algos that react accordingly.

We know the media ignore any fundamentals and just apply the narrative. Oil and the big companies are bad (ignore any green energy transition, hydrogen etc). The president says he will do this/that for climate change. All that noise will have an intermittent effect on the bumpy road going  forward. I’ll admit I took profits last week, and I’m timing the market somewhat. I’ve re-bought some today though and will continue to follow the ups and downs. It’s one of the only safest sectors for me as I’m pretty much certain we’ve seen the bottom or there abouts.

[leonardratso]

very minor point but thought id put it here anyway, i like buying bourses since they make cash up and down.

Future Ticker Code Change.

Important Information & Other Key Dates:

On 19th January 2021, London Stock Exchange Group PLC (LSEG) announced that the Company intends to change its Ticker Code to 'LSE'. The Ticker Code change is expected to co-incide with LSEG's completion of the Acquisition of Refinitiv.

The Ticker Code change is expected to become effective on 29th January 2021. LSEG shares will continue to trade on the Main Market of the London Stock Exchange under the New Ticker Code from that date.

If your LSEG shares form part of a TradePlan, please note that this Ticker change will result in the TradePlan being deleted. You will need to log online or call us to set up a new TradePlan in your LSEG shares.

If you have a regular investment in place on your LSEG shares, please note that this Investment Plan will be automatically updated. The investment amount, frequency and investment dates will not change.

Should you wish to find more information about the Ticker Code change, please visit www.lseg.com.

[Democorruptcy]

1 hour ago, Lightscribe said:

I think although the underlying movement and cycle drives the fundamentals forward and everything is already priced in going up the chain (as we all do), there is a lot of noise in between.

We know we’ve hit the bottom point A, oversupply, negative WTI etc (even with the BK, inflation, bottle neck demand they big oil companies can’t go much lower). We all know where it’s heading to point B with rubber band supply/demand, inflation and into green energy and beyond.

Different from other crashes/corrections, there is a lot of stimulus flooding into the stock markets from the average Joe that’s speculative (David Hunter may be right with his Tesla and FAANG melt up before the BK) online trading making things slightly more volatile, algos that react accordingly.

We know the media ignore any fundamentals and just apply the narrative. Oil and the big companies are bad (ignore any green energy transition, hydrogen etc). The president says he will do this/that for climate change. All that noise will have an intermittent effect on the bumpy road going  forward. I’ll admit I took profits last week, and I’m timing the market somewhat. I’ve re-bought some today though and will continue to follow the ups and downs. It’s one of the only safest sectors for me as I’m pretty much certain we’ve seen the bottom or there abouts.

Do you gamble on other things, sport etc.?

I don't see anything wrong with banking profits. The thing that puzzles me is that people on here will squeeze every penny out of their cash celebrating a £1 off a joint of meat. Yet they might also expect the market to pullback but will hold through it. If they sell and buy back lower, they can buy back more units for more capital gain and more dividends. 

[Sugarlips]

Inflation is real in some sectors!

https://www.gumtree.com.au/s-ad/perth/dogs-puppies/miniature-schnauzer-male-puppy-only-1-left/1265767825

[geordie_lurch]

30 minutes ago, Democorruptcy said:

Do you gamble on other things, sport etc.?

I don't see anything wrong with banking profits. The thing that puzzles me is that people on here will squeeze every penny out of their cash celebrating a £1 off a joint of meat. Yet they might also expect the market to pullback but will hold through it. If they sell and buy back lower, they can buy back more units for more capital gain and more dividends. 

Yep I'm with you there as my only ISA fund in total is just under a single 20k limit so I'm prepared to set some automatic stop losses and buy back prices as limit orders in order to take out the emotion and to some extent the mentality of these being a 'one way bet' to maximise what I can this tax year

EDIT: It will be interesting to see what the oilies do at the UK close today

[Yadda yadda yadda]

47 minutes ago, Democorruptcy said:

Do you gamble on other things, sport etc.?

I don't see anything wrong with banking profits. The thing that puzzles me is that people on here will squeeze every penny out of their cash celebrating a £1 off a joint of meat. Yet they might also expect the market to pullback but will hold through it. If they sell and buy back lower, they can buy back more units for more capital gain and more dividends. 

If I was certain that a share would trade lower on Monday then I'd sell and buy back then. I'm not certain so I won't. It could be higher. I don't know when the price will reverse course.

If I see a steak with a yellow sticker on it I know that the price is likely lower than I'd pay for a similar steak the next day.

[Barnsey]

5 hours ago, geordie_lurch said:

This was what I was on about the other day when I mentioned an anecdotal about the same factories shutting down again over there due to Covid via my contact who has a lot of stuff manufactured there. It's also been in the news recently VW and other car manufacturers are having to shut down production lines again due to chip shortages.

Such delays are certainly going to push up the price of things in 2021 not reduce them so maybe we will get our inflation quicker than expected?

This is where we have to be careful. Original thesis on here was that we'll have a melt up, central banks will tighten, derivative crisis, BK.

Now we have a lingering virus which has been the perfect accelerant of quite unprecedented stimulus which we were expecting to see AFTER the BK. PLUS, as you rightly point out, the virus has caused global supply chain chaos, AND there's the expense and chaos of customs charges hitting UK consumers now. This will naturally be resolved in time but it's inflationary influence will be lasting.

Logistical and insolvency problems with the supply chain, an artificial suspension of spending with an impressive savings rate building up thanks to 'free' money. What happens when we're allowed to do whatever we want again? They know they can't pull back otherwise we'll just get another GFC if not worse. Very few authorities are warning not to spend spend spend. Austerity is dead.

Fascinating times.

 

[Harley]

4 hours ago, geordie_lurch said:

Yeah I'm the same overall BUT as others have said there might be an opportunity to buy a few extra % in each of them during a BK or a SK if you don't have spare cash lying around via having some stop-losses set alongside some buy back prices in ladders but like everything in life there's a risk in trying be too clever 

Yep, not clever so I just bought a bit of this and that where they had good technicals.  Alas, fully allocated in some.  Finally sold my last Hills though at 89% profit.  Was held as an income stock but who knows going forward.  Still below my overall target equity allocation though in the hope of lower prices.  Hopefully today's buying will flush out that BK on Monday!

PS: SK = Small Kahuna?

 

[geordie_lurch]

32 minutes ago, Harley said:

PS: SK = Small Kahuna?

I am just an amateur at all this but was thinking more a Slow Kahuna as I'd seen other's mention the possibility of a slow grinding pull back in these strange times but I am totally on board that inflation is coming and my stocks and shares ISA is positioned for this via oilies and other decent dividend payers. How much and how we pull back again from here I'm not sure about but I'm happy setting stop losses alongside limit orders in case we have a wild down day that no one sees coming followed by a quick reversal even if I lose a few % upside but reduce the downsides to single digits

There could still be a melt up like some have suggested or with Biden in this could be the start of another sector rotation back out of metals and oilies as the risk is seen as 'off' again? There's also the possibility the can is going to be able to be kicked for many more month or years by all the Western Government's Japan style. None of us know for sure otherwise we wouldn't be on here so much

For example, I bought physical silver over 10 years ago as I was 'clever' and could see the system was on it's knees etc but also hedged my bets with the cheapest house for my family in the best area I could get into around 2013 when everyone on the other site said the real crash was just around the corner etc etc. Sitting here in 2021 the silver price hasn't changed in £ terms and is looking like it's probably going to drop back down a decent bit here IMHO to £16 or less so I will be 'down' on that again yet that house has added over £100,000 in the same time frame not even taking into account the 7 years of mortgage payments on a tracker rate I was also told was mad to get at the time.

The point I think I'm trying to make is that at the end of the day you have to do what's right for your and those closest to you using the best information you have and your gut instincts. Sometimes this might mean being even more contrarian than other contrarians even though you agree on the most likely end game

 

[Barnsey]

 

[DoINeedOne]

4 minutes ago, geordie_lurch said:

 

The point I think I'm trying to make is that at the end of the day you have to do what's right for your and those closest to you using the best information you have and your gut instincts. Sometimes this might mean being even more contrarian than other contrarians even though you agree on the most likely end game

 

Been thinking alot along these lines more the past few weeks, we are all living different lives and have different wants and needs 

One of the things i should of done years back is buy a home, but i thought this can't continue prices are crazy and yet all these years later here we are...

[DurhamBorn]

If i was adding to BP the £2.77 area if reached is a superb technical point,not that i do technicals.Il sell them when they return me around £10 a share including divis as i expect them to at some point over the cycle.Only reason i dont like oilies going down here is it then gets me having to think on if to allocate divi cash to them or BAT.I was slowly building BAT back up to a substantial holding and dont want pulling two ways 

[Barnsey]

Dave's extending the timeline yet again, and he's gone from rates are heading higher from here to they're going back down FFS

Got a lot of respect for him, how his thought process works, but for god's sake be bloody careful. Remember this?

GDXJ rolled over the day after, and plummeted by 50% to $22, took 3 months to get back to where it was when he tweeted that out, and yet he sounds so sure doesn't he? Now why is a guy who is predicting a deflationary bust unable to predict something like that happening, even worse is it's almost perfect timing. His prediction of the end game will probably ultimately prove correct, but this could be a 2023 story given how many times his timeline has been extended.

[Harley]

51 minutes ago, DurhamBorn said:

If i was adding to BP the £2.77 area if reached is a superb technical point,not that i do technicals.Il sell them when they return me around £10 a share including divis as i expect them to at some point over the cycle.Only reason i dont like oilies going down here is it then gets me having to think on if to allocate divi cash to them or BAT.I was slowly building BAT back up to a substantial holding and dont want pulling two ways 

I don't get the £2.77 level unless you go back some 20 odd years?  BP and BATS are typical of the UK income equity sector - relatively poor financials in some areas.  But an income seeking investor stuck in an ISA/SIPP has limited choice.  Both are currently in technical upswings on the monthlies using my chosen technicals, although I trust (DYOR) the BP one more.  I recently topped up/out my BATS though given my requirements and the hopefully limited downside but am maxed on BP (at a loss) and there as good/better buys out there for me to make that less of a concern.

[geordie_lurch]

52 minutes ago, Barnsey said:

...GDXJ rolled over the day after, and plummeted by 50% to $22, took 3 months to get back to where it was when he tweeted that out, and yet he sounds so sure doesn't he? Now why is a guy who is predicting a deflationary bust unable to predict something like that happening, even worse is it's almost perfect timing. His prediction of the end game will probably ultimately prove correct, but this could be a 2023 story given how many times his timeline has been extended.

'Even a Broken Clock Is Right Twice a Day' and all that

Was this you @Barnsey

 

[Barnsey]

22 minutes ago, geordie_lurch said:

'Even a Broken Clock Is Right Twice a Day' and all that

Was this you @Barnsey

 

I'm saying nothing...

What I don't get is that his tweets are so definitive, so confident, especially on timing and targets (refering to melt up by end of this quarter etc), and then he says he's a macro strategist and isn't providing any specific time frame or trading advice  But it was the number of people religiously hanging onto this targets a year ago who were burned big time by his constant push back that the market was definitely going to turn around here, whilst it kept on going down, that made me think twice. Now he's got an exponentially higher number of followers clinging to his every tweet. Interestingly, as last year progressed, I noticed a clear divergence of expectations between Mr Hunter and @DurhamBorn

In other news, the great London emigration continues:

 

[Noallegiance]

And while some are distracted by short-term details and timing, the guy who follows this stuff, is by the measurement of my meagre savings loaded, retired at 39 and chooses to share his knowledge with us stays relatively quiet and doesn't change.

A descent rule: Ascertain who the smartest guy in the room is and imitate. Be blessed and humble if you are that guy.

[leonardratso]

8 minutes ago, Noallegiance said:

And while some are distracted by short-term details and timing, the guy who follows this stuff, is by the measurement of my meagre savings loaded, retired at 39 and chooses to share his knowledge with us stays relatively quiet and doesn't change.

A descent rule: Ascertain who the smartest guy in the room is and imitate. Be blessed and humble if you are that guy.

who's that then?

[Loki]

I have a lot of time for David Hunter but the only thing is he doesn't help himself by using words like poised, then saying it's just a forecast etc.

@DurhamBorn also used a phrase I like which was "tweeting to the gallery".  

13 minutes ago, Noallegiance said:

the guy who follows this stuff, is by the measurement of my meagre savings loaded, retired at 39 and chooses to share his knowledge with us stays relatively quiet and doesn't change.

Indeed 

[Democorruptcy]

1 hour ago, Barnsey said:

Dave's extending the timeline yet again, and he's gone from rates are heading higher from here to they're going back down FFS

Got a lot of respect for him, how his thought process works, but for god's sake be bloody careful. Remember this?

GDXJ rolled over the day after, and plummeted by 50% to $22, took 3 months to get back to where it was when he tweeted that out, and yet he sounds so sure doesn't he? Now why is a guy who is predicting a deflationary bust unable to predict something like that happening, even worse is it's almost perfect timing. His prediction of the end game will probably ultimately prove correct, but this could be a 2023 story given how many times his timeline has been extended.

I'm just glad I didn't short the S&P based on the initial blow off top figures quoted when this thread started on ToS, how many years ago? I'd be down the food bank now.

[sancho panza]

19 hours ago, Castlevania said:

Timing is impeccable. Joe Biden saves the world

 

 

@Cattle Prod

I'm not sure if you've seen this from CV.Game changer potentially for covid crisis in that it could possibly reduce psotive tests over night by a fair to huge chunk depending how many cycles they limit it to.

So,positives down-> less hospital staff isolating/more elederly returned to care homes instead of waiting in hospital for a -ve PCR test(sometimes takes 90 days to show -ve)->hospitals back in business and then we cna all get on with our lives and pretend the lockdown/Joe Biden's win stopped covid.

22 hours ago, DurhamBorn said:

Im a bit worried that in looking for a BK we are perhaps missing the fact that it might be a slow kahuna in bonds and growth stocks.There is massive systemic risk in the system still though but that article does chime more and more with a few maybe's from the macro.

One of the key parts of the roadmap was jobs/manufacture coming back,and id like to see supply chains starting to buckle as lockdowns end.That should give us enough velocity to get M2 moving into the economy.

I think its likely we will see 35% real terms losses in bonds minimum,and thats my roadmap number,so il be using that as the baseline for the liquidity transfer.

Remember,if bonds lose 35%,government loses nothing.If a telcos profits go up 100% due to the inflation government gets a lot more tax.

I think that Gromen interview has really made me rethink our postion.I was looking to sell weak dollar trades eg oil/gold ahead of BK and trade into UST's.
but if he's right,we could see price inflation coming on us pretty quickly even if we enter a credit deflation at the same time.

As @spygirl said t'other day,BoE is a price taker not a market maker.

The above is still my Plan A but I am pondering a Plan B which could well include dealing with a Slow Kahuna in the bond markets.Plan B would involve msot likely holding the weak dollar trades and running options trades off the side or maybe jsut sitting in them.It's definitely crossing my mind that a quick trip into UST's may end being a slow death instead.

[sancho panza]

December 2020 update.UK govt has borrowed £270bn to Dec.Seen an increase in BoE balance sheet of £250bn to Nov 20.

It's anear perfect match so bascially,the taxpayer has stepped up and covered UK govt borrowing for 2020

Debt to GDP 99.4%(if you exclude imputed rents or use a decent deflator which measures some form of home ownership costs such as RPI then it's well over the 100% mark)

Banana republic stuff.

https://www.ons.gov.uk/economy/governmentpublicsectorandtaxes/publicsectorfinance/bulletins/publicsectorfinances/december2020

 

https://www.bankofengland.co.uk/monetary-policy/quantitative-easing

[Loki]

I think this is the official WHO page

https://www.who.int/news/item/20-01-2021-who-information-notice-for-ivd-users-2020-05

[Hardhat]

1 hour ago, Barnsey said:

In other news, the great London emigration continues:

 

If real rents and property prices in London / SE fall it would suit me down to the ground. I've lived here all my life, and I have a fairly decent deposit saved now. A 30% fall and I would be looking to buy immediately. I reckon it's coming as BTL and AirBnB spivs start to realise they're going to have to sell up. Won't be quick though, I don't think, there will be people better off than me waiting to buy at higher prices. But the next 5 years will be very interesting in London property. Already anecdotally know that there are way more rental properties on the market and people are getting rent reductions.

Can't come soon enough imo, London property is ridiculously overvalued and it's fucking up an entire SE generation's chances as all the jobs are here.

The other problem is that so many nice houses have been converted badly into HMOs by cowboy landlords... there's a lot of work to be done to make them into decent family homes again if the exodus is really happening and sustained. Might be a good ten years for builders / fitout. Could be a good business model to start buying old wrecked HMOs at knock down prices and converting them back to family homes for when they come into middle-class couples' price ranges.

Who knows. Would love to see some of the Foreign speculators, BTLers and AirBnB spivs who are ruining London lose their shirts though.

[Yadda yadda yadda]

1 hour ago, Barnsey said:

I'm saying nothing...

What I don't get is that his tweets are so definitive, so confident, especially on timing and targets (refering to melt up by end of this quarter etc), and then he says he's a macro strategist and isn't providing any specific time frame or trading advice  But it was the number of people religiously hanging onto this targets a year ago who were burned big time by his constant push back that the market was definitely going to turn around here, whilst it kept on going down, that made me think twice. Now he's got an exponentially higher number of followers clinging to his every tweet. Interestingly, as last year progressed, I noticed a clear divergence of expectations between Mr Hunter and @DurhamBorn

In other news, the great London emigration continues:

 

The FT article eventually mentions the outflow of British workers to other parts of the UK. I see this as having more impact than foreign bartenders leaving London. The latter might open up job opportunities and even spark wages increases for UK workers.

People moving to other parts of the UK will include some fairly well paid office-type workers. Might add a bit of cash to local economies. It will certainly affect house prices.