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

[Hancock]

17 minutes ago, Harley said:

Ta.  I really fecked up not doing that at the time but then I had other priorities, most of which are really only now coming to a head so maybe I got the sequence back to front.  But the amount of other stuff I did back in Mar20+ was heroically epic.

What it shows me is the need to generate strategies more proactively (agile ) and/or more broadly in advance than only have those that fight the last war or next skirmish.  Mr Market is a devious sod and I'll be better off not standing so close to better see where he might leap to next.

Obviously i lack the ability of yourself and several others on here to research companies beyond looking at how much debt they have.  With the housing market i've known every single reason for the last 2 decades why the crash is imminent,  yet its been proven i know fuck all. So maybe my relative naivety in the stock market was some form of assistance.

But i was 100% certain a crash was incoming in 2020 so stayed mainly in cash, though i was hoping it was going to be later on that year as i had a load of work and money coming in so would have been far better prepared!

SIPP now has £20k in cash and its currently worth £150k, only other share i will sell is INFA if it gets the contracts which it claims are on the horizon (perpetually), spent over 7k on that between my ISA, SIPP and kids Junior ISA and down about 50%! (its my other live and learn share)

 

 

 

[Hancock]

12 minutes ago, Harley said:

30%?  So really 25% and we'll all be happy! 

Many will be if it causes the housing market to crash, by being one of the reasons to force the BoE into raising rates.

Wonder if those dying from not putting the heating on this winter will get labelled as such or added to the covid stats.

[Majorpain]

Market thinks 7% RPI next April, but remember, RPI is a "flawed" measure of inflation.....

It understates it!  

[Yadda yadda yadda]

30 minutes ago, Harley said:

I started a while back to typically sell down rather than sell out of stocks, that is those I have a continued interest in for macro, dividend, etc reasons.  It can make my remaining holdings and overall performance look poor but then I add back the locked in gains.....!  But then I worry about not doing a full sale as after all a loss is a loss.  But then having some skin in the game means you don't forget to look at the stock on the rebound.

I've decided to look at it a bit like those bankers that state a share is buy, hold or sell. The equivalent for me is full allocation, half allocation or sell/no interest. Could also be love, like and hate. In fact I prefer that. Yadda loves goldies because they're cheap. Upgrade from like.

[sancho panza]

22 hours ago, invalid said:

New Zealand raises interest rates for first time in seven years

Interesting to see Ardern warning the people she's giving up on zero covid.

 

22 hours ago, Cattle Prod said:

Just wait till OPEC has no more to add, you can see the tone of the article there is an assumption that OPEC have infinite supply. They still just dont get it. It'll be "OPEC chokes the market for rampant profiteering" while they'll be on the phone to Biden saying "Look, ask your own intelligence agencies. That's all we have, old man".

I've listened to a lot of your teachings here CP and this was one of the biggies.A lot of political players are sat there assuming OPEC has more in the tank,oblivious to the fact that a 2% perceived supply deficit helped run the oil price to $140 in 2008.

I think the political class have set themselves up for dissappointment here

[Harley]

12 minutes ago, Hancock said:

Obviously i lack the ability of yourself and several others on here to research companies beyond looking at how much debt they have.  With the housing market i've known every single reason for the last 2 decades why the crash is imminent,  yet its been proven i know fuck all. So maybe my relative naivety in the stock market was some form of assistance.

But i was 100% certain a crash was incoming in 2020 so stayed mainly in cash, though i was hoping it was going to be later on that year as i had a load of work and money coming in so would have been far better prepared!

SIPP now has £20k in cash and its currently worth £150k, only other share i will sell is INFA if it gets the contracts which it claims are on the horizon (perpetually), spent over 7k on that between my ISA, SIPP and kids Junior ISA and down about 50%! (its my other live and learn share)

Ability is proven by your P&L.  The rest is noise. On that basis, you seem to have plenty more ability than me despite my occasional fine words!

[Harley]

3 minutes ago, Yadda yadda yadda said:

I've decided to look at it a bit like those bankers that state a share is buy, hold or sell. The equivalent for me is full allocation, half allocation or sell/no interest. Could also be love, like and hate. In fact I prefer that. Yadda loves goldies because they're cheap. Upgrade from like.

Yep, I do red, amber, green.  Not on the roads though or I'll cause a fender bender on red!

[Hancock]

2 minutes ago, Harley said:

Ability is proven by your P&L.  The rest is noise. On that basis, you seem to have plenty more ability than me despite my occasional fine words!

My ability seems merely down to the fact i was patient. I'm hoping, finding that ability again pays off .... as it really does suck watching house prices jump by 20% and seeing my physically hard earned money being stolen to pay for this.

 

[Harley]

10 minutes ago, sancho panza said:

Interesting to see Ardern warning the people she's giving up on zero covid.

 

I've listened to a lot of your teachings here CP and this was one of the biggies.A lot of political players are sat there assuming OPEC has more in the tank,oblivious to the fact that a 2% perceived supply deficit helped run the oil price to $140 in 2008.

I think the political class have set themselves up for dissappointment here

I've actually forgotten why higher rates allegedly curb inflation, other than a revised thesis that all the indebted then have less money to chase goods!  Anyway not a cats chance the US and the like (er, UK?) will materially alter "The Street" rates so some interesting currency plays inbound?

PS:  Oh and taper?  I just listened to a good podcast which exposed the potential game - taper on one hand and negate its effects on the other (reverse repos, etc).

[nirvana]

1 hour ago, Harley said:

Right, I'm now giving nirvana a "lol" and hope I haven't offended anyone.

Peace to you all

Nobody cares except the babies  did you see me call the bottom in a 500 point rally in the Nasdaq?

have fun out there!

 

 

[HousePriceMania]

Can anyone explain what this means ?

 

 

[sancho panza]

10 hours ago, Hancock said:

I stuck £1700 in and its now just under £6000, but this an HZM are my big winners and i can't but help feel it'd be good time to cash out. Not that ive anywhere lined up to put the profit for the time being. Might leave £500 in to remind me to jump back in if there is a BK.

 

Ladder in ladder out possibly.

18 hours ago, Majorpain said:

 

Which is interesting, because the Fed is looking increasingly like its in a stagflationary trap.  Print more dollars and inflation gets worse at home, don't print more dollars and the rest of the world gets hammered with high energy prices.  King Dollar about to be dethroned?  We are getting to the about the time that the world reserve currency cycles.

 

 

Really does feel like we're approaching some sort of end game for the dollar over the next decade or less.Fed has to keep pritning as without it the UST market dries up as foreign buyers have been increasingly ducking out .Also as DB has said,they can stimulate striaght into their own infrastructure.As far as I can see they can't switch the tap off which means hgiher energy prices(although I am still trying to game through the consequences of DB's entirely logical argument that higher energy prices are forcign dollar higher).In a way that higher dollar gives the Fed more room to print non?purel;y because they're the reserve currency.

Dread to think what happens when China pops up with a gold backed yuan and the US is left looking at a stratospheric M2 chart.

16 hours ago, DurhamBorn said:

Its something hardly anyone understands,but is one of the main drivers of liquidity flows.The amount of dollars,the amount of energy used and the price.Of course those dollars arent destroyed,they just move.The energy producer gets more dollars,but the energy consumer starts to run out of them.At this point you will start to see treasury yields going up,thats due to selling to raise dollars from foreign holders.That means the Fed has to fund the deficit more by printing etc.The energy countries will start to buy machinery etc and capital goods while the consumer nations consume less consumer goods.Its why you get a more industrial cycle when energy prices increase,the dollars are moved from consumers to producers with different buying wants and needs.

I don't understand it which is why I'm here.Still learning.

So as we sit here,dollar goes up as commoditiy buyers need mroe dollars.As dollar has gone up Fed prints more because it can and it needs to.Energy buyers buy those dolars because commodity price has gone up and they have no choice allowing Fed to print more.

Side issue is that foreign buyers of UST's are holding back/selling UST's to buy commodities?

So literally,Fed has no choice but to print?In whcih case will the dollar only weaken when the process is exhausted or some sort of black swan BK event occurs?

[Harley]

5 minutes ago, sancho panza said:

Ladder in ladder out possibly.

Really does feel like we're approaching some sort of end game for the dollar over the next decade or less.Fed has to keep pritning as without it the UST market dries up as foreign buyers have been increasingly ducking out .Also as DB has said,they can stimulate striaght into their own infrastructure.As far as I can see they can't switch the tap off which means hgiher energy prices(although I am still trying to game through the consequences of DB's entirely logical argument that higher energy prices are forcign dollar higher).In a way that higher dollar gives the Fed more room to print non?purel;y because they're the reserve currency.

Dread to think what happens when China pops up with a gold backed yuan and the US is left looking at a stratospheric M2 chart.

I don't understand it which is why I'm here.Still learning.

So as we sit here,dollar goes up as commoditiy buyers need mroe dollars.As dollar has gone up Fed prints more because it can and it needs to.Energy buyers buy those dolars because commodity price has gone up and they have no choice allowing Fed to print more.

Side issue is that foreign buyers of UST's are holding back/selling UST's to buy commodities?

So literally,Fed has no choice but to print?In whcih case will the dollar only weaken when the process is exhausted or some sort of black swan BK event occurs?

Pencil in a global currency and pegs (aka a new form of Special Drawing Rights).

[HousePriceMania]

Who things the BoE will raise IRs ?

 

 

Who still thinks they will ?

[nirvana]

23 minutes ago, sancho panza said:

China pops up with a gold backed yuan

that ain't gonna happen, all the CBs will be introducing CBDCs, they're talking about it already, listen to the fat cunt at the BIS, they want to control and monitor every aspect of your life.....fits in with the convid narrative too

[sancho panza]

5 hours ago, Harley said:

 But velocity is the key to inflation and no more so I don't fully understand the hypothesis.  Burry also assumes employers are the only arbiters of increased wages and behave the same.  They are not and do not. 

The velocity trigger unlocking inflation, especially after all these years, will likely result in quite a complex firefight.  Guaranteed almost all pundits will be wrong due to overurn and having zero experience and knowledge of such things.  Economists have been historically crap at inflation.  These days they seem more in on the scam (to relieve debt).  People would be better off talking to Doris and her spivy husband!

PS:  Conventional economics, at least in my time, usually assumed a constant velocity which was a daft cop out and not much work was done on playing with this assumption, ie. behavioural economics. Most economists at least back then didn't like psychology, asduming it away with the so called convenient "rational man" assumption, whatever that was.

I remember 3000 pages back to when DB first set up on here and we had a discussion regarding velocity and you intorduced me to the concept of behavioural economics.My thanks.

Separetly,I do agree on the three bits in bold.The powers that be have always treated velocity as a constant and have shown their contempt for it's power by printing into exponential run ups in M1/M2 all over the western world.

Velocity is a function of psychology.The moment people start to fear their spending power will diminish by sitting in cash,they will spend more quickly and then the wage/price spiral will kick in.

Your average basement dweller is welll used to buying things beofer they cost more,but when joe public catches on,all hell could break loose.

Martin Lewis 1.2 million followers on twitter

 

[DurhamBorn]

4 hours ago, Barnsey said:

WOW 

 

If they had let Centrica,SSE etc make an extra £3 a week margin this wouldnt of happened but the government decided to squeeze that few quid to hand to councils and police precepts instead for their pensions.An utter disaster made by politicians who only know dis-inflation.Now we have massive taxes and the turn in prices of everything else they are caught in a massice pincer movement.

They will face pressure next year as tax increases.Firms cant hire without massive wage increases at the same time as input costs are going through the roof.The economy will see huge changes and dis-location.

Still, iv made my energy bills for the rest of my life and more from whats happened.Maybe someone should forward the thread to Sunak seeing as he has moved the treasury to Darlo id be willing to do one day a week.

 

 

 

[Harley]

40 minutes ago, sancho panza said:

Velocity is a function of psychology.The moment people start to fear their spending power will diminish by sitting in cash,they will spend more quickly and then the wage/price spiral will kick in.

And what kicks off the velocity vortex?  A bit of cost push or supply constraint type dislocations.  Often energy related (1970s?).

I've been buying a lot of stuff since Mar20.  Almost a delivery a day at one point.  Been at it again this week in a major way.  A witches brew of supply constraints and high prices coming and staying for quite a while?  And talk of base effects is BS however you look at it.  Crap talk like that is what they do.  Use the BS as cover to get sorted?

[TNS]

10 minutes ago, DurhamBorn said:

If they had let Centrica,SSE etc make an extra £3 a week margin this wouldnt of happened but the government decided to squeeze that few quid to hand to councils and police precepts instead for their pensions.An utter disaster made by politicians who only know dis-inflation.Now we have massive taxes and the turn in prices of everything else they are caught in a massice pincer movement.

They will face pressure next year as tax increases.Firms cant hire without massive wage increases at the same time as input costs are going through the roof.The economy will see huge changes and dis-location.

Still, iv made my energy bills for the rest of my life and more from whats happened.Maybe someone should forward the thread to Sunak seeing as he has moved the treasury to Darlo id be willing to do one day a week.

 

 

 

As much as I hate the likes of Philip Green, I remember him doing a report on Government finances years back and worked out they could save 10s of billions if they just centralised everything rather than multiple contracts across multiple entities. There were examples like some paying £50 for a printer cartridge and others paying £400 for the same thing. It was mental.

If the government were a independent company, it would be in administration long ago. 

Naturally, it was buried quickly after.

[HousePriceMania]

Friend of a friend's son lost his job last week, from a further education college.

it seems only about 50% of the people they expected to enroll turned up so they had to let people go.

Make of that what you will.

Could be EU nationals heading home, could be people taking jobs as lorry drivers, maybe they all took out 20 bounce back loans and are enjoying that "free" cash, who knows.

Interesting I thought tho.

[DurhamBorn]

2 minutes ago, HousePriceMania said:

Friend of a friend's son lost his job last week, from a further education college.

it seems only about 50% of the people they expected to enroll turned up so they had to let people go.

Make of that what you will.

Could be EU nationals heading home, could be people taking jobs as lorry drivers, maybe they all took our 20 bounce back loans and are enjoying that, who knows.

Interesting I thought tho.

Playing Fifa and/or working at Amazon.Iv had two job offers this morning,still coming thick and fast,told both to ring me when they increased the wages 70%,not that id take them,but that would be the area id think about it then say no.

[HousePriceMania]

2 minutes ago, DurhamBorn said:

Playing Fifa and/or working at Amazon.Iv had two job offers this morning,still coming thick and fast,told both to ring me when they increased the wages 70%,not that id take them,but that would be the area id think about it then say no.

He applied for a job at a Uni but it seems it was filled before they interviewed.

Jobs for the boys.

[janch]

Well it had to happen:

https://www.zerohedge.com/commodities/us-desperate-coal-miners-meet-soaring-global-demand

I suppose our mines have been mothballed for too long to be worth opening again.

[janch]

I don't know about anyone else but I'm more concerned about the probable annual rise in council tax (I've heard 5% mentioned) than fuel and that's with the single person's reduction.  It's my largest bill already.

I live in quite a warm flat and on a sunny day I get a lot of "passive solar" ie the sun shines through the windows and it's lovely and warm.  Unless we get another Beast from the East I will hardly use much fuel.

[Hancock]

Just now, janch said:

I don't know about anyone else but I'm more concerned about the probable annual rise in council tax

It'll just be transitory.