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

[Democorruptcy]

1 minute ago, Barnsey said:

How we all feeling about Jupiter? I'm down 31% but reluctant to buy any more even though its hard to see it heading much further south. I'd like it to form a bit of a base first, Chrysalis seems to be at the core of it's woes.

Has that -10% Crude yesterday altered things a bit? Does it help reduce future inflation expectations which in turn reduces rate rise expectations so helps assets and so asset managers? Today asset managers are up but banks, who profit from higher margins when rates rise, are down.

[BWW]

On 06/07/2022 at 12:31, sancho panza said:

Interesting Wicao.

I know in Oz BTLers are allowed to offset losses in cashflows on lets and this has been one of the factors pushing up capital prices in a virtuous circle.

To what extent will this dampen BTL demand do you think? The impact on banks balance sheets will be substantial if they allow asset prices to fall.This move effectively seems to guarantee that.

RBA taking a strong stance with that move as are CBA etc.

Anecdotally,are you hearing more people tchange tack on property as an invesment or do you think this will take some time to work through to that?

alos @wherebee

I thinkyour average basment dweller is already doing that via a few mechanisms aside from say CHF reserves.

I think it's a matter of time before the idea catches on but likely very few people will have the wherewithal to do it on a substantial basis.

Mrs P is a food scientist.Checks the ingredients on the Aldi stuff I bring home and says they're pretty similar.

More broadly she's been saying for years that the own brand stuff is catching up with premium brands in terms of taste/texture in a lot of areas as the big guys like Aldi hire more ex Unilever/Mondelaise staff.

What does she say about lidl?

Bit of a bug bear with me because they used to be where I did almost all my food shop since 3 decades and product by product they've trashed it. Pain because in my west country abode nearest Aldi is an hours drive whereas all three closest towns have lidl. In London I also have to drive to Aldi [or walk 30/40 mins which doesn't work well with my aldi wine and the dogs aldi kibble consumption].

One of the remaining lidl products I use is real mayo. Now also changed [last week?] althogh taste seems still OK. Nevertheless will see if aldi have a good alternative, seems they are more inclined to a stable and quality product.

Lidl mayo.

Old 434kj new 423 kj per 15g.

Old rapeseed oil/water 5.5% New 7.9%. Guess they want to sell more water.

Old free range egg yolk New Egg mix (pasteurised free range egg, pasteurised free range salted egg yolk [egg yolk, salt])

Old Mustard (Water, Mustard seeds, spirit vinegar, salt, spices) New mustard oil flavouring. WTAF. Allows them to remove mustard from the highlighted allergens.

Fat old 11.5g new 11.1g per 15g

Carbs old 0.3g new 0.6g per 15g

Fibre old < 0.5g new 1g per 15g

Well even though the taste seems OKish, it's a bit less creamy more watery, just why spoil something good Lidl?

[geordie_lurch]

Seems like the mainstream media are finally catching up with what myself and several others said back earlier this year (and sold stocks in May) i.e.  we have been in a recession for a while and it just needs to be 'officially' confirmed.

"H&T’s pawnbroking pledge book was worth £84m at the end of June, up by 74% on the £48m a year earlier and an increase of almost £20m since the end of December when it stood at £67m. The company said there was “growth across the group’s customer base and in all geographies”.

 

[sancho panza]

Holger has been super of late.

Who'd have thunk it?Sanctions have backfired,undermined USD hegemony,steered enemies to unite....etc etc.

ALden schools Krugman

@BWW she picks up on when Aldi change the recipes on stuff and even tells me what they've done with it without comparing the ingredients list.

Lidl she likes because they have a bakery,not many customers and little trollies for the kids.WHich tells me a lot about where she thinks the food is better value

[Metalheadz]

Apologies if this is the wrong thread - but can any macro guru explain to me why despite the UK being completely fucked (debt, energy, political, recession, you name it) the FTSE is only down about 7% from it's recent high?

I've been long commodities all year but am now 100% cash. Pretty much every sector and market is dead to me right now as this FED stuff plays out.

I'm looking at some inverse FTSE ETFs and thinking why shouldn't 100% of my ISA be short FTSE for the next few months while I go outside in the sun. The 3x levered ones are particularly tempting to my degenerate gambling side.

The chart is rolling over, we're still 30% above the COVID lows, everything is fucked - what am I missing? How is this thing going up in the next few months?

 

[ThoughtCriminal]

13 minutes ago, Metalheadz said:

Apologies if this is the wrong thread - but can any macro guru explain to me why despite the UK being completely fucked (debt, energy, political, recession, you name it) the FTSE is only down about 7% from it's recent high?

I've been long commodities all year but am now 100% cash. Pretty much every sector and market is dead to me right now as this FED stuff plays out.

I'm looking at some inverse FTSE ETFs and thinking why shouldn't 100% of my ISA be short FTSE for the next few months while I go outside in the sun. The 3x levered ones are particularly tempting to my degenerate gambling side.

The chart is rolling over, we're still 30% above the COVID lows, everything is fucked - what am I missing? How is this thing going up in the next few months?

 

You sound like a man hoping someone is going to talk him off a ledge 😉

 

It is tempting though, I agree. Problem is, how many times have we thought "this is is it. No more rabbits left to pull out of the hat" and then the bastards present bugs bunny?

 

It's all going to implode, but when?

[Calcutta]

23 minutes ago, Metalheadz said:

Apologies if this is the wrong thread - but can any macro guru explain to me why despite the UK being completely fucked (debt, energy, political, recession, you name it) the FTSE is only down about 7% from it's recent high?

I've been long commodities all year but am now 100% cash. Pretty much every sector and market is dead to me right now as this FED stuff plays out.

I'm looking at some inverse FTSE ETFs and thinking why shouldn't 100% of my ISA be short FTSE for the next few months while I go outside in the sun. The 3x levered ones are particularly tempting to my degenerate gambling side.

The chart is rolling over, we're still 30% above the COVID lows, everything is fucked - what am I missing? How is this thing going up in the next few months?

 

If you think it's going to happen the cash is as good a bet as any for now. Target price for the ftse is around 5200-5400. Hit that and fair enough, I'm going long a tracker, probably deleting my dosbods account and never looking at a fucking chart again. 

[Lightly Toasted]

27 minutes ago, Metalheadz said:

Apologies if this is the wrong thread - but can any macro guru explain to me why despite the UK being completely fucked (debt, energy, political, recession, you name it) the FTSE is only down about 7% from it's recent high?

I've been long commodities all year but am now 100% cash. Pretty much every sector and market is dead to me right now as this FED stuff plays out.

I'm looking at some inverse FTSE ETFs and thinking why shouldn't 100% of my ISA be short FTSE for the next few months while I go outside in the sun. The 3x levered ones are particularly tempting to my degenerate gambling side.

The chart is rolling over, we're still 30% above the COVID lows, everything is fucked - what am I missing? How is this thing going up in the next few months?

 

I'm not a macro guru but FTSE-100 companies collectively have a lot of non-UK revenue.

I remember on occasions when sterling has fallen, (non-corporeal, radio) talking heads would explain that the FTSE had risen because of the flattering effect on profits earned in other currencies. Typically dollars, I guess.

[M S E Refugee]

This should be good!

[BWW]

On 06/07/2022 at 13:46, ThoughtCriminal said:

You sound like a man hoping someone is going to talk him off a ledge 😉

 

It is tempting though, I agree. Problem is, how many times have we thought "this is is it. No more rabbits left to pull out of the hat" and then the bastards present bugs bunny?

 

It's all going to implode, but when?

My analogy is taking the advice of HPC about 2004. The almost anonymous voices said it was impossible for anything to happen other than HPs down to 3x single salary and stay there. Apparently gov were powerless to stop it. Then gov did stuff.

I  don't know if it's a valid calculation to call macro but if they print 100% of GBP in existence won't all prices double except some will more than double and some will just drift up a bit? In this case cash with 1% savings rates is worst place to be of course. End of day we minion investors are powerless to know what will happen because it can all be rigged at the whim of those with power. The solution to that IMO and the general advice from all sensible financial advisors is to make sure you diversify. 100% anything is not good.

[JMD]

2 hours ago, reformed nice guy said:

I think I have seen another thread prediction coming true.

I signed up years ago to a thing called PrimaryBid. It allows you to buy into IPOs.

For the last few years it has been mainly smaller speculative companies but also some smaller miners or oil companies. Petro Matad, Haydale Graphene Industries, Greatland Gold, Zinnwald Lithium, First Tin, Melody VR etc.

There have been the odd familiar names - Begbies Traynor in March 2021, Jet2 in February 2021, Yellowcake February 2021.

The last two have been AO World and Ocado group. Rather than bond issuance they are raising money with equity.

Interesting info. But specifically regarding the retail investment case, Is the risk/reward element worth it, or do you view it as diversification from pure stock investing?                                                                                                                                                 Btw - are you able to search on IPO director names? As per my recent post, I'd personally be very interested in anything (Nadhim) 'Zahawi related'!!

[Metalheadz]

27 minutes ago, ThoughtCriminal said:

It is tempting though, I agree. Problem is, how many times have we thought "this is is it. No more rabbits left to pull out of the hat" and then the bastards present bugs bunny?

I think the rabbit will be pulled out of the hat - I think the FED will pull it out, but it won't be for another 2 or 3 months. In the mean time I think the only way is down.

If you look at the German chart that's where I think we're going. They're just a few months ahead.

[HousePriceMania]

9 minutes ago, BWW said:

My analogy is taking the advice of HPC about 2004. The almost anonymous voices said it was impossible for anything to happen other than HPs down to 3x single salary and stay there. Apparently gov were powerless to stop it. Then gov did stuff.

I  don't know if it's a valid calculation to call macro but if they print 100% of GBP in existence won't all prices double except some will more than double and some will just drift up a bit? In this case cash with 1% savings rates is worst place to be of course. End of day we minion investors are powerless to know what will happen because it can all be rigged at the whim of those with power. The solution to that IMO and the general advice from all sensible financial advisors is to make sure you diversify. 100% anything is not good.

It's not over yet.

 

[CannonFodder]

1 hour ago, sancho panza said:

Holger has been super of late.

Who'd have thunk it?Sanctions have backfired,undermined USD hegemony,steered enemies to unite....etc etc.

ALden schools Krugman

@BWW 

Some talk that EU is buying oil from India. They dont know where India is getting it....

[Metalheadz]

19 minutes ago, Lightly Toasted said:

I'm not a macro guru but FTSE-100 companies collectively have a lot of non-UK revenue.

This is true, and also more energy in there I guess.

I happen to think the energy/inflation trade has burst and we are now in the "recession" trade.

S&P is down 20%, DAX down 22%, Euro Stoxx down 22%, ASX down 13%, Japan down 15%

I guess my thought is, why is the whole world not kicking the shit out of us right now? I would/will!

[Axeman123]

4 minutes ago, Metalheadz said:

I think the rabbit will be pulled out of the hat - I think the FED will pull it out, but it won't be for another 2 or 3 months.

The fed may pull a rabbit out of the hat, for the US, but I am not sure that necessarily does the same for the rest of the world. A lower dollar will obviously provide tremendous relief for some very stretched developing countries, but I think bond markets will force the EU and BoE to keep raising rates for a while yet. Exports vs the cost of govt borrowing looks like a very nasty tightrope for both to walk going forward.

[JMD]

2 hours ago, Axeman123 said:

ITS HAMMER TIME!

Good film that. The character also enjoyed his food... in this instance it was live octopus!! (Warning not CGI)                                                        https://m.youtube.com/watch?v=JH0cV8FcfV4

[Metalheadz]

29 minutes ago, Calcutta said:

If you think it's going to happen the cash is as good a bet as any for now. Target price for the ftse is around 5200-5400. Hit that and fair enough, I'm going long a tracker, probably deleting my dosbods account and never looking at a fucking chart again. 

I'm not Michael Burry in the big short - I'd be happy with a 10-15% win over the next few months... I don't think that's unreasonable considering the other markets. In a few months I'd hope some commodity/value charts have based enough for me to come back in.

[Metalheadz]

12 minutes ago, Axeman123 said:

The fed may pull a rabbit out of the hat, for the US, but I am not sure that necessarily does the same for the rest of the world

This I why I'm thinking of shorting the FTSE with my life savings and not the S&P 

There is no good news for us coming any time soon.

EDIT: The FTSE was 5% lower in March!

[Yadda yadda yadda]

25 minutes ago, Metalheadz said:

This I why I'm thinking of shorting the FTSE with my life savings and not the S&P 

There is no good news for us coming any time soon.

EDIT: The FTSE was 5% lower in March!

The S&P was 5% lower on June 17.

The FTSE has been priced for low growth for years. Remove growth expectations and you don't cut the price so much as with other markets. Look at the 5 year chart and the FTSE is lower than  July 2017.

It should fall but not as much as other indexes.

[JMD]

2 hours ago, Barnsey said:

How we all feeling about Jupiter? I'm down 31% but reluctant to buy any more even though its hard to see it heading much further south. I'd like it to form a bit of a base first, Chrysalis seems to be at the core of it's woes.

Similar result for me, plus my M&G looks to be about to do the same chart trajectory. I still want to buy more across the sector but looks too early at present to go deeper into any of them.                                                                                                            And on that note of when to buy, and also in terms of general buying strategies...    I know laddering-down is often mentioned on the thread, but does anyone here ladder-up? I'm thinking the momentum in the market - bear or bull - should crucially instruct which 'directional ladder' method you employ?

[sancho panza]

Shaun Richards May saw 2nd largest contraction in real disposable income since 1964

https://notayesmanseconomics.wordpress.com/2022/07/06/the-bank-of-england-is-trying-to-rewrite-history/

Switching to the economy they pointed out the present problem which is this.

Inflation is expected to reach slightly over 11% towards the end of the year, weighing on real household income.

Combined with this.

 In May, the MPC projected aggregate UK real disposable household income would experience its second largest annual contraction since records began in 1964, largely reflecting increases in the costs of energy and, to a lesser degree, food.

This has caught them on the hop because they failed to act against inflation last year in the hope of protecting economic growth and now find that it is that inflation that has put the skids under economic growth.

Comment

As you can see the Bank of England had existing policy problems as it struggles to come to terms with economic reality as well as its own policy errors. This morning something new has been added to the mix.

The official added: “For the next stage, we need a plan for growth and not just balancing the books. He represents the government’s values and commitment.”
Another ally of Johnson said the prime minister and new chancellor were united on the economy. “Nadhim was very quick to recognise what the PM has grown increasingly frustrated at, which is a credible, easy, convincing plan for driving the economy and making Britain the best place in the northern hemisphere to start a business.” ( Financial Times)

Much can change but it feels like tax cuts are back on the agenda as opposed to the National Insurance rise of Rishi Sunak.

[reformed nice guy]

1 hour ago, JMD said:

Interesting info. But specifically regarding the retail investment case, Is the risk/reward element worth it, or do you view it as diversification from pure stock investing?                                                                                                                                                 Btw - are you able to search on IPO director names? As per my recent post, I'd personally be very interested in anything (Nadhim) 'Zahawi related'!!

I never used it, I just signed up a few years ago and got an email for every offer.

I dont think you can search director names on that website, but I think director dealings have to be publicly disclosed

currency_devaluation.png

[Sidd]

14 minutes ago, reformed nice guy said:

I never used it, I just signed up a few years ago and got an email for every offer.

I dont think you can search director names on that website, but I think director dealings have to be publicly disclosed

currency_devaluation.png

Spot was held well against GBP decline but im pretty sure my spread of miners are still down 70% from highs.

[ThoughtCriminal]

Well if it's not the consequences of my actions - Germany 😂