Credit deflation and the reflation cycle to come (part 3)

[geordie_lurch]

So it seems I should have sold my Petrofac shares when they were up 80% or more after the court stuff as my stop losses were triggered this morning on the offer ones I bought when I offloaded the others at 130 or so 

I'm going to add some more stop losses to a load of other shares to try and lock in some profits this week as I have a feeling there's no good news coming before March 2022

[jamtomorrow]

Sweet baby Jesus

[Harley]

1 hour ago, jamtomorrow said:

DXY crossing 96.5 this morning.

I wonder to what extent the ongoing collapse of the Turkish Lira is an unexpected factor? Turkish M2 is supposedly in the region of 450bn, so would any meaningful rate of replacement by USD work as extra taper (since it seems like the effect will be "pure" liquidity absorption by Turkish economy)?

Just 1.5% per month would put it right in the middle of current monthly taper rates, so a steady flow at that rate effectively bringing the entire taper program forward by a month. And 1.5% seems on the low side given the rate of collapse and what that must be doing to sentiment within the Turkish economy.

I parked money into Lira to buy stocks but they closed trading due to the volatility.  I wasn't paying attention and got well caned on the forex.  Lesson learned.

[Harley]

44 minutes ago, MrXxxx said:

Some considerations on where your miners of all commods may be located?

 

BoA downgrades Hochschild Mining to 'underperform' after Peru announces plans to close two mines

(Sharecast News) - Analysts at Bank of America downgraded their recommendation for shares of Hochschild Mining from 'buy' to 'underperform', marking down their target price from 280.0p to 90.0p in the process.
The latter, they said, valued the company at 0.5 times its net present value, which was at the trough end of its historical price-to-net present value valuation range.

They specifically cited the Peruvian government's announcement that it would close four mines for the move.

Two of those, Inmaculada and Pallancata, represented roughly three quarters of their net present value-to-discounted cash flow valuation for the company and approximately 70% of its earnings before interest, taxes, depreciation and amortisation.

Inmaculada alone was responsible for 60% of the miner´s EBITDA.

Hochschild's remaining mine, San Jose, was located in Argentina.

"While the company will likely dispute this decision we don't see equity outperforming until the dispute is resolved."

The analysts also weighed in on the possible implications for copper miners in the country.

Copper accounted for about 40% of Peru's exports and gold for 16%.

"No information suggests that the government will close other mines but we cannot rule out it will go after large(r) mines. Other companies with exposure to Peru: Southern Copper, Glencore, Anglo American (inter alia). We also note that Peru is one of the world's larger producers of copper (c. 11% of global output)."

I sold HOC a while back on weak technicals.  I never knew the government was so flushed with cash to close mines, or had a mining specialism.  Maybe they'll ask the Maoists to have a word with the Chinese.

[DoINeedOne]

Whilst I don’t hold it shows from what I assumed to be a reasonably decent business who are struggling with shipping costs, availability of products and costs etc… caused by all the shit that’s going on now

I was browsing there website last week as was thinking getting a new fridge half the products were out of stock  

seems a common thing with even a lot clothes websites hardly any stock

AO is down nearly 78% over the past year 

Today didn’t help

 

 

[MrXxxx]

46 minutes ago, geordie_lurch said:

So it seems I should have sold my Petrofac shares when they were up 80% or more after the court stuff as my stop losses were triggered this morning on the offer ones I bought when I offloaded the others at 130 or so 

I'm going to add some more stop losses to a load of other shares to try and lock in some profits this week as I have a feeling there's no good news coming before March 2022

My personal opinion on PFC is that at the moment the price is low due to the 'flushing out' of those investors who held at a loss and are now happy to get rid at break even. Looking forward they a) they have got all the bad news [SFO fine, share issue] out of the way, and b) as energy markets develop mid/long-term [i.e. oil up then down, green up] contracts will increase...so basically a hold. This same sentiment can apply to their competitors i.e. wg. who have just gone through a similar scenario.....but as always DYOR.

[Majorpain]

1 hour ago, jamtomorrow said:

DXY crossing 96.5 this morning.

I wonder to what extent the ongoing collapse of the Turkish Lira is an unexpected factor? Turkish M2 is supposedly in the region of 450bn, so would any meaningful rate of replacement by USD work as extra taper (since it seems like the effect will be "pure" liquidity absorption by Turkish economy)?

Just 1.5% per month would put it right in the middle of current monthly taper rates, so a steady flow at that rate effectively bringing the entire taper program forward by a month. And 1.5% seems on the low side given the rate of collapse and what that must be doing to sentiment within the Turkish economy.

Quick reminder as to why USD is demanded, since its used in vast majority of commodity trading (crude alone $4.6T majority dollars) people must have dollars to buy the goods.  That causes a problem if the US isn't creating more dollars, as pure demand/supply causes the price of the dollar to rise, but equally since the only real way to create dollars is Fed prints them and gives them to banks/govt to spend also has direct impacts on US economy.  That impact is becoming greater over time as US GDP shrinks in comparison to the rest of the world, and the US economies ability to absorb more dollars than its world % would otherwise require becomes more strained.

End result IMO is dollar continues to rise whilst Fed printing causes increasing problems for US economy, mainly inflation.  Its also another reason why the Fed cant raise rates, if they do and those dollars start to sit in banks in US they are not available for markets to use for trading.  Powell is balanced on a pinhead, and its only going to get worse.

[jamtomorrow]

19 minutes ago, Majorpain said:

Powell is balanced on a pinhead, and its only going to get worse.

Exactly what I was thinking, and with the markets already on a hair trigger over The Dreaded Taper, I imagine Powell needs a surprise amounting to "a few months ahead of schedule" (because of Turks sucking up USD liquidity) like a hole in the head

[Majorpain]

7 minutes ago, jamtomorrow said:

Exactly what I was thinking, and with the markets already on a hair trigger over The Dreaded Taper, I imagine Powell needs a surprise amounting to "a few months ahead of schedule" (because of Turks sucking up USD liquidity) like a hole in the head

Turkey is small fry, after a bit more thought high commodity prices are going to be doing much more damage.  I think you can see it in the DXY chart, it peaks and falls after Mar 20 as lockdowns slam commodity prices, with the slow and steady grind higher from Jun 21 as rising commodities (esp oil) start to bite. 

[DurhamBorn]

1 hour ago, DoINeedOne said:

Whilst I don’t hold it shows from what I assumed to be a reasonably decent business who are struggling with shipping costs, availability of products and costs etc… caused by all the shit that’s going on now

I was browsing there website last week as was thinking getting a new fridge half the products were out of stock  

seems a common thing with even a lot clothes websites hardly any stock

AO is down nearly 78% over the past year 

Today didn’t help

 

 

Kids used them and they were great.Very easy.Long supply chains as you say.When i was 17 my first proper job was with Electrolux in Spennymoor,cooker plant.It was huge and they had a washing machine plant and fridge/freezers.All closed during the Blair disaster and new build housing now.

However it wont be long before we are making all those things again over here.Ebac are already doing it in Newton Aycliffe,and CELLO are making TVs in Bishop Auckland.When i was importing from China  my contact over there used to say "you crazy in west,you pay to ship fresh air around world"

She meant bulky goods who had a lot of the volume empty space.

[Mapper]

52 minutes ago, Majorpain said:

the only real way to create dollars is Fed prints them and gives them to banks/govt to spend

This is not true.

Plenty of dollars created outside the US in the eurodollar market.

I don't know what the percentage of total "us dollars" it is, but it is a lot.

[DoINeedOne]

23 minutes ago, DurhamBorn said:

Kids used them and they were great.Very easy.Long supply chains as you say.When i was 17 my first proper job was with Electrolux in Spennymoor,cooker plant.It was huge and they had a washing machine plant and fridge/freezers.All closed during the Blair disaster and new build housing now.

However it wont be long before we are making all those things again over here.Ebac are already doing it in Newton Aycliffe,and CELLO are making TVs in Bishop Auckland.When i was importing from China  my contact over there used to say "you crazy in west,you pay to ship fresh air around world"

She meant bulky goods who had a lot of the volume empty space.

Yeah i have used them a few times nothing but great service

But since around march last year it certainly had a good run  to me just shows how fucked everything is

[HousePriceMania]

if I had known I could pay £35K and spend half an hour with Sunak and a cricket bat I'd have been up for that.

 

 

[leonardratso]

1 hour ago, DurhamBorn said:

Kids used them and they were great.Very easy.Long supply chains as you say.When i was 17 my first proper job was with Electrolux in Spennymoor,cooker plant.It was huge and they had a washing machine plant and fridge/freezers.All closed during the Blair disaster and new build housing now.

However it wont be long before we are making all those things again over here.Ebac are already doing it in Newton Aycliffe,and CELLO are making TVs in Bishop Auckland.When i was importing from China  my contact over there used to say "you crazy in west,you pay to ship fresh air around world"

She meant bulky goods who had a lot of the volume empty space.

clazy flesh air

[jamtomorrow]

1 hour ago, Majorpain said:

Turkey is small fry, after a bit more thought high commodity prices are going to be doing much more damage.

That makes a lot of sense up to this point.

But I do wonder if the speed of this Turkey collapse might change things. USDTRY now 12.45, which means it's fallen another 10% in the last 24h alone.

And there's a material chance Erdogan actively refuses IMF help this time - current chair is Bulgarian 

[Yadda yadda yadda]

1 hour ago, HousePriceMania said:

if I had known I could pay £35K and spend half an hour with Sunak and a cricket bat I'd have been up for that.

 

 

Do they mention who gets half an hour with the chancellor for £35k? They surely want a good return on that investment. They're spending time, sanity and testing their self-restraint as well as the money.

[MrXxxx]

1 hour ago, HousePriceMania said:

if I had known I could pay £35K and spend half an hour with Sunak and a cricket bat I'd have been up for that.

 

 

It always amazes me that they can do things like this to get campaign fees and promote 'good news' stories, but whenever they are asked to be accountable they are never 'available for comment'!

[ThoughtCriminal]

Smell that fear and desperation 😂🤦

 

So they've demonised oil for years and now suddenly they want lower prices and higher supply.

 

Clown world doesn't even begin to describe where we live.

 

 

[Majorpain]

1 hour ago, Mapper said:

This is not true.

Plenty of dollars created outside the US in the eurodollar market.

I don't know what the percentage of total "us dollars" it is, but it is a lot.

Whilst I am happy to be corrected, I'm fairly sure that the "dollars" in Eurodollar market are US origin.  It would be a strange system if "foreigners" could print your currency at will.  Even if im wrong it doesn't change anything with regards to the rest, the US share of world GDP is not big enough for the amount of currency needed to circulate, if anything it would make it worse as Dollars would be "printed" by every bank that could.

38 minutes ago, jamtomorrow said:

That makes a lot of sense up to this point.

But I do wonder if the speed of this Turkey collapse might change things. USDTRY now 12.45, which means it's fallen another 10% in the last 24h alone.

And there's a material chance Erdogan actively refuses IMF help this time - current chair is Bulgarian 

Total Dollars in worldwide circulation is about $40T, Turkey GDP (PPP) is 11th in world is currently about $720bn.  External USD denominated debt is about $453.2bn, so whilst it will put a dent in total assets its only a small fraction in reality.

The fear is it derivative chain reacts the banks, BBVA, Unicredit, BNP and ING are exposed, so all the EU favorites bar the Germans.  ECB will be in a position to bail them out if worst comes to worst i suspect.

[Majorpain]

6 minutes ago, ThoughtCriminal said:

Smell that fear and desperation 😂🤦

Market agrees with you, price spiked up! 

[DurhamBorn]

2 minutes ago, ThoughtCriminal said:

Smell that fear and desperation 😂🤦

Hugely bullish for the oil price.They say in the statement its ok because the market and they think oil prices will be much lower in the future  .They will be inflation adjusted around 2050,but the next decade not really a chance apart from the usual quick swings to shake out holders.They expect here that higher prices will spur production,but they have been telling the big oilies no point investing in new supply we are going green.My worry is that they blame the oil companies though and tax them more.

The UKs reserve?,where is that ,a lock up in Hull?

[Axeman123]

1 hour ago, HousePriceMania said:

if I had known I could pay £35K and spend half an hour with Sunak and a cricket bat I'd have been up for that.

 

 

Someone should email and ask "how much for *n*l with Priti?", since this is basically the same thing...

[ThoughtCriminal]

1 minute ago, DurhamBorn said:

Hugely bullish for the oil price.They say in the statement its ok because the market and they think oil prices will be much lower in the future  .They will be inflation adjusted around 2050,but the next decade not really a chance apart from the usual quick swings to shake out holders.They expect here that higher prices will spur production,but they have been telling the big oilies no point investing in new supply we are going green.My worry is that they blame the oil companies though and tax them more.

The UKs reserve?,where is that ,a lock up in Hull?

Yeah, there are hundreds on twitter saying "after reading this I'm buying July 22 oil calls like my life depends on it" 😂

[Harley]

3 hours ago, DoINeedOne said:

Whilst I don’t hold it shows from what I assumed to be a reasonably decent business who are struggling with shipping costs, availability of products and costs etc… caused by all the shit that’s going on now

I was browsing there website last week as was thinking getting a new fridge half the products were out of stock  

seems a common thing with even a lot clothes websites hardly any stock

AO is down nearly 78% over the past year 

Today didn’t help

 

 

We were heavy users in our prepping in Feb20.  Even then stock was an issue.  It defo has got worse.  They have been great for us.  Our first point of call.

[Castlevania]

9 minutes ago, DurhamBorn said:

My worry is that they blame the oil companies though and tax them more.

How would that work? You the big bad big oil company are undersupplying the market, so let’s tax you more so that you’re even less likely to invest to increase supply?