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

[HousePriceMania]

2 hours ago, Yellow_Reduced_Sticker said:

Just as predicted on here!

 

"State pension age changes keep thousands more in paid work"

 

Anyways...are YOU guys feeling chirpier today with the markets UP?

 

My tea leaves are telling me markets are down tomorrow, I'll even bet (YRS packet of pork chops ) it will happen, any takers? @MrXxxx

[belfastchild]

21 hours ago, Bricormortis said:

And so it begins, people getting massacared out there. Some guy complaining after he lost his house and wife because Jim Cramer recommended buy Peleton. Funny but not funny at the same time.

Edited to add could you be surprised if the sob stories are used as cover to ban us from trading individual stock really >

 

Anecdotal I know but I can believe it.
I was in Toronto just over 10 years ago. I booked myself on a minibus trip to Niagara Falls/wineries.
At Niagara Falls got back to the minibus early and saw the driver sitting in a cafe next to the bus. Went in and bought him a coffee and sat for a chat. Early 60s guy. Asked him what he was doing driving tourists round in a minibus at his age.
Said hed been a firefighter, planned to retire at 50, move to florida, all the usual stuff.
90% of his retirement fund was in Nortel shares. Couldnt go wrong he was told, kept going up and up he was told.
Would be doing this 4 days a week until he couldnt any more.

Almost 5 years ago was in Washington DC. Bought one of those 48 hour hop on hop off tour things. I was staying near one of the stops so would get the last tour of the night back. Last night I was the only one on the tram thing so went up and spoke to the driver and asked him about stuff Id seen that day. Quite a knowledgeable guy, turns out he was a high school history teacher. Similar age to above, early 60s, asked him why he was doing this (very hot day) and he said hed plan to retire in 2010, 401k and savings. Had lost huge amount of his 401k in the crash and had spread his savings over 4 properties, bank took the lot. Another one never going to pay off his debt and would work 2 jobs (as was his wife) until he died.

Absolutely devastating in personal terms for these people. I know we can slag them off but my dad never earned more than 20k in his life. Had been putting money in a personal pension and had hoped to retire at 60. In 2001 he got a letter from the pension company to say due to the crash he would have to work an extra 5 years if he wanted to retire on 10 grand a year. He never made it.

People believe the 'experts'.

[belfastchild]

12 minutes ago, sancho panza said:

I thought it was very interesting that yesrday when the market tanked,the telecoms had a fair amount of green on screen.

Have a letter in front of me this afternoon, my Virgin broadband price rise of 10.5% in March (in my case only 3.25 but still).

[sancho panza]

On 24/01/2022 at 12:37, HousePriceMania said:

I bought 4 of them last week...and some more BP/RDSB/REPSOL

Cant win them all 

I've taken up "shorting" companies I think are massively over priced  as a bit of a hobby, not risking much money.

It has the feeling on Summer 2020 when you could buy any old crap and make £££s

Bought these last Wed.

 

Look at these gains since the financial system collapsed, it's insanity!!!

 

They could of course shoot up, but right now I'd be surprised if they do

 

AShtead is a bellwether stock for this run up.Nice point well made.The monthlies is the tell.

But the big builders haven't rolled over for defintie yet

 

23 hours ago, DurhamBorn said:

I dont hold it and wouldnt that was the FTSE 100 leaders ,Terry will be getting smashed this week.

Lots of fear yet most on here should be just up today or level in a brutal market.Fags up loads,Telcos shooting up (including TEF and Orange),a healthy shakeout in oil stocks so they can ramp up buybacks and mostly bought on companies that trebled.It couldnt be better where some liquidity flowing out of bubble areas is going into ours as there was risk it wouldnt.

We will suffer pain along the way of course on rotation and there is risk our sectors turn down as everything else is smashed,but very very happy.Lets see how it develops.

Tobacco telcos and oil hated and finished was the narrative,lazy, like sheep and zero macro and sentiment understanding.

I expect we are about to see the profit warnings coming thick and fast now.

I was hoepful of rearranging my oilie options but not gonna happen at the prices.AS yuo say,your average basement dweller should be looking good.

I don't know if this has been psoted on the next five pages Im catching up on but it's a great piece by WOlf.Reaffirms for me that we're in the turn to value that genereally presages the rare BK sell offs.DYOR natch but our set up oilies/goldies/comms/potash/copper stays long here.I think we're setting up for a summer peak in value stocks and an October sell off potnetially.Tiem will tell but that would history repeating too clsoely.

Oil barely pulling back and telecoms getting bids on bad days isn't the stuff of a market sell off imho.

MSFT looks to have turned on the monthleis,these sorts of turns are ones I heed but I wouldn't say it's confirmed yet,as the downside has only really tocuhed the monthlies trendlines not broken them.

There's more but the psoter boys from last year are gone.That's for sure.When the FAANG stocks have definivtively brokedn down,things will get interesting indeed in our dimly lit part of the web.

https://wolfstreet.com/2022/01/21/the-mayhem-below-the-surface-of-the-stock-market-seeps-to-the-surface-now-its-the-giants-that-topple/

The Mayhem Below the Surface of the Stock Market Seeps to the Surface: Now it’s the Giants that Topple

by Wolf Richter • Jan 21, 2022 • 450 Comments

The market finally gets it: The Fed is going to tighten to get a handle on its massive inflation problem.

By Wolf Richter for WOLF STREET.

Since February last year, the hottest most hyped stocks, many of them recent IPOs and SPACS, have been taken out the back and brutalized, either one by one or jointly. The stocks that have by now crashed 60%, 70%, 80%, or even 90% from their highs include luminaries such as Zoom, Redfin, Zillow, Compass, Virgin Galactic, Palantir, Moderna, BioNTech, Peloton, Carvana, Vroom, Chewy, the EV SPAC & IPO gaggle Lordstown Motors, Nikola, Lucid, and Rivian, plus dozens of others. Some of these superheroes are tracked by the ARK Innovation Fund, which has crashed by 55% from its high last February.

This mayhem has been raging beneath the surface of the market since February last year, and in March, I mused, The Most Hyped Corners of the Stock Market Come Unglued. They have since then come unglued a whole lot more. But the surface itself remained relatively calm and the S&P 500 Index set a new high on January 3 this year because the biggest stocks kept gaining or at least didn’t lose their footing.

But now even the giants too are going over the cliff. Combined by market cap, the seven giants, Apple [AAPL], Amazon [AMZN], Meta [FB], Alphabet [GOOG], Microsoft [MSFT], Nvidia [NVDA], and Tesla [TSLA] peaked on January 3, and in the 13 trading days since then have plunged 13.4%. $1.6 trillion in paper wealth vanished (stock data via YCharts):

This is obviously still no big deal, a 13.4% decline, after this huge gigantic run-up. During the March 2020 crash, these giants plunged 28%. But it’s the first time since then that this unappetizing event has occurred.

And it has occurred because markets finally get it: Inflation is a massive four-decade problem for the Fed, and the Fed is about to lose, or has already lost, four decades of credibility as inflation fighter that Volcker was able to build. And so it is going to tighten to get this under some sort of control.

This tightening will consist of raising interest rates moderately, and by firing up Quantitative Tightening (QT), as the Fed governors explain at every chance they get. QT does the opposite of QE, and QE was responsible for driving up asset prices to these ridiculous highs.

And this notion of QT finally sank in – even among the biggest names.

The Nasdaq managed to make this four-day work week its worst week since March 2020, dropping 7.5% in those four days, to 13,768, the fourth week in a row of declines. It has now dropped 14.3% from its closing high in November.

The S&P 500 also booked the worst week since March 2020, dropping 5.7% for the week, to 4,398, the third week in a row of declines. It’s down 8.3% from its closing high on January 3.

The Dow Industrial Average dropped 4.6% during the four-day week, to 34,265, and by 6.9% from its January 3 closing high.

But this is really no big deal. On a long-term chart, these little dips can barely be seen. It’s just that markets have been spoiled by the relentless climb.

And folks are now re-familiarizing themselves with two essential concepts:

• Stocks can lose money, and they can lose all your money.
• Cash is trash, until it isn’t.

It is, however, a big deal for folks with a portfolio full of the most hyped stocks, IPO stocks, and SPACs that crashed 60% to 90%. If there was any margin involved, it may now be time to update the LinkedIn profile and look for a job again. Maybe some of the 11 million unfilled job openings can find some takers. And that would be a good thing.

Given the repeated ugly action at the end of the trading day this week, where dip buyers were taken out on stretchers, the meme is now starting to circulate that the market has shifted from “Buy the F&%#ing Dip” (BTFD) – the rallying cry since March 2020 – to a new rallying cry, “Sell the F&%#ing Rip” (STFR).

Which is of course nonsense since every sale must have a buyer on the other side, and every buy must have a seller on the other side, and lots of people must have jumped in to buy the dip at the end of those trading days – it’s just that the dip kept dipping.

Dip buyers have long been brutalized by their most hyped stocks and by their IPO and SPAC stocks. Month after month, BTFD was lethal for them with these stocks. But since January 3, dip buyers have also been brutalized by dip-buying the giant stocks as they kept on dipping. And now, there is big money involved.

 

 

[HousePriceMania]

6 minutes ago, sancho panza said:

 

 

 

 

In all seriousness....we should be shorting the shit out of all this.

[MrXxxx]

59 minutes ago, Cattle Prod said:

I'm all over him like a rash on maths, which he doesn't much like, but will thank me for later

I assume you are talking about your son?...if so, why not incentivize him by offering £1 [or $1] per points for success/right answers, and then at the end of a fixed period allow him to trade this in for a stock. That way he will a) be motivated [all kids like money!], and b) will become interested in stocks/investment?...just a thought.

[MrXxxx]

45 minutes ago, Harley said:

No, I consider cleaning out your pond for the frogs to be productive work! 

Is when it attracts them all and they spend the rest of the year eating the slugs that would devour you home produce!

[HousePriceMania]

3 minutes ago, MrXxxx said:

I assume you are talking about your son?...if so, why not incentivize him by offering 1 BITCOIN [or $1] per points for success/right answers, and then at the end of a fixed period allow him to trade this in for a stock. That way he will a) be motivated [all kids like money!], and b) will become interested in stocks/investment?...just a thought.

 

[sancho panza]

22 hours ago, Democorruptcy said:

There definitely seems to be the expected rotation going on. I've been considering JDW once things started opening up again. I know you've already stepped in. Just looking now and losses for 2 years could be expected but debt's also gone up a lot. Have they been buying distressed assets or covering losses? About -50% from peak should be tempting enough.

I'd agree,value starting to get bid sets the BK timetable runnign in my eyes.Oils/Comms.Interesting tosee the crypto sell off seems to be firming the trend although all eyes ned to be on BTC really for the trend defining moment.On the monhtlies that double top could break either way.If it breaks down then I think we are looking at a Q3 BK possibly.

21 hours ago, Castlevania said:

Watch and learn

Indeed.BTFD CV that's the spirit....

well I didn't quite buy it but I didn't sell it.

Time will tell

19 hours ago, CannonFodder said:

Jim cramer recommended Netflix too i think a few weeks ago

JIm Cramer stillliving off his epic buy Bear Stearns call from March 08 was it?

 

[MrXxxx]

22 minutes ago, sancho panza said:

But the big builders haven't rolled over for defintie yet

They have only just started!

[MrXxxx]

18 minutes ago, Cattle Prod said:

Something ideological or union driven

Or government interference....look what they did in the UK in the late 80s/early 90s i.e. National Curriculum...you had government ministers and academic experts [who between them had never done a days practical teaching] telling experience, time served teachers 'how its done'...no wonder so many left and they had [and still have] trouble recruiting teachers.

[HousePriceMania]

I might join you in the JDW

 

 

What other "rotation" stocks ?

Low cost airlines must be on the list, what else ?

 

[sancho panza]

3 hours ago, Cattle Prod said:

So if a quarter are RPI linked, it means that three quarters are not. So three quarters of the debt is below the level of inflation. Because it's government debt, they get nice low fixed rates, it's being eroded away at a rapid pace.And there is a monumental gaslighting threaded through it: owners of that debt (such as the BOE pension fund) have their savings protected from inflation. But YOU don't, plebs:

It's worth reiterating on thread as some may not be aware but teh BoE pension fund you pooint out is 90% linked to RPI iirc.This isn't jsut a standard devitation from 25%........

Truly scandalous,all the time people's NEST pension funds are selling BP at £2 at the bottom and buying non linked gubbermint bonds.

[MrXxxx]

8 minutes ago, sancho panza said:

It's worth reiterating on thread as some may not be aware but teh BoE pension fund you pooint out is 90% linked to RPI iirc.This isn't jsut a standard devitation from 25%........

Truly scandalous,all the time people's NEST pension funds are selling BP at £2 at the bottom and buying non linked gubbermint bonds.

But 'The ignorant are punished' , and so everyone needs to be interested in their pension more than their iPhone specification!

[HousePriceMania]

RE: Ashtead, came across this today

https://simplywall.st/stocks/gb/capital-goods/lse-aht/ashtead-group-shares/news/as-ashtead-group-plcs-lonaht-market-cap-dropped-by-uk25b-ins

Over the past year, insiders sold US$3.1m worth of Ashtead Group plc (LON:AHT) stock at an average price of US$54.47 per share allowing them to get the most out of their money. The company's market worth decreased by UK£2.5b over the past week after the stock price dropped 9.9%, although insiders were able to minimize their losses


Nothing says share price falls like a bit of insider trading at the peak.

[CannonFodder]

So much of the national debt is printed that the gov now pays a lot of interest to itself.

Its becoming meaningless to print money to pay as interest to one self for debt held on the balance sheet to oneself 

Counting central bank and gov as same thing here

For debt held by others, then pay them more printed money

I dont think this matters as long as printers are rumbling. The only consequence is inflation.

[Lightscribe]

33 minutes ago, HousePriceMania said:

I might join you in the JDW

 

 

What other "rotation" stocks ?

Low cost airlines must be on the list, what else ?

 

Interesting spoons has always been on my watch list.

Everyone likes cheap booze in a recession (as cheap as inflation allows compared to other establishments which will be closing down due to footfall and costs).

Could give Martin a bit of a monopoly. Haven’t got any exposure to the sector as Diageo was always too expensive so spoons could be worth a punt for me.

[DoINeedOne]

57 minutes ago, MrXxxx said:

Or government interference....look what they did in the UK in the late 80s/early 90s i.e. National Curriculum...you had government ministers and academic experts [who between them had never done a days practical teaching] telling experience, time served teachers 'how its done'...no wonder so many left and they had [and still have] trouble recruiting teachers.

Partner is a TA at a primary school, honestly the stories i hear from her not only about the budget, but kids, parents and staff always leaving its like a shitty run company 

Even she who loves working with the kids is now looking else where

I think just in the last year they have lost 4 of there best teachers and 2 TA's

 

The weird one for me was when she told me the school just bought a shit ton of iPads even though they were not needed, why i asked?

if they don't use up the budget they won't get the same next year 

So you're not rewarded for spending money efficiently or making savings, no that comes from the trust its under they want to spend as minimum as possible per school they run, no doubt so they can pay them selfs better

 

But currently they don't have money for anything staff member off can't afford cover 

Kids with special requirements or behaviour issues Trust gets extra funding but they spend so much time on these kids that the rest of the class suffers but hey we got extra funding 

 

Honestly you couldn't make some of the stuff up if you ran a company like it it would be bankrupt 

 

Like most government services its easy spending someone else's money

[Democorruptcy]

45 minutes ago, HousePriceMania said:

I might join you in the JDW

 

 

What other "rotation" stocks ?

Low cost airlines must be on the list, what else ?

 

I didn't mean JDW as a 'rotation' stock. I was just looking for something beaten down by covid rules, that might have a bounce. I haven't make my mind up about it yet and not bought any.

[HousePriceMania]

2 minutes ago, Democorruptcy said:

I didn't mean JDW as a 'rotation' stock. I was just looking for something beaten down by covid rules, that might have a bounce. I haven't make my mind up about it yet and not bought any.

That;s what I assumed you meant by rotation stock !!!  Have you invented a new phrase ?

[Democorruptcy]

Just now, HousePriceMania said:

That;s what I assumed you meant by rotation stock !!!  Have you invented a new phrase ?

I thought we classed 'rotation' stocks as those that didn't do well in disinflation but might do better now, if they can put prices up, i.e. telecoms. Like yesterday the market was down but telecoms were doing well, hence that comment. I'm not sure JDW fit that, they had done well in disinflation? At least their pub prices are low to start! I was more just looking for a punt on a..... 'covid bouncer'?

[arrow]

1 hour ago, Cattle Prod said:

I can well imagine! I've just bought him a decent looking year 7 textbook/study guide on Amazon for £4.95. It's clearly not a resources issue. Something ideological or union driven, no doubt. If they had textbooks, the teachers might actually have to set and mark relevant homework...

Well off thread now, sorry!

Overheard a conversation at work. Someone's wife is a teacher. According to this "work colleague", the best teachers are those who barely passed their exams and weren't good at the subject. The worst teachers are those who know their field inside out. He said that the teachers at this wife's school all thought the same. Puzzled me as I thought the best in their field are the ones who write the text books. Still remember watching the OU programmes many moons ago when they were on bbc2 or early in the morning. As a kid, it was so easy to understand matrices, geometry, etc when the presenters were committed, excellent academics. I thought why can't my school teachers explain things so clearly. Now, I have to do the same as you Cattle Prod. Buying textbooks and teaching my kids. It used to make me despair when I knew more maths than the teacher but now I accept it

[HousePriceMania]

9 minutes ago, arrow said:

Overheard a conversation at work. Someone's wife is a teacher. According to this "work colleague", the best teachers are those who barely passed their exams and weren't good at the subject. The worst teachers are those who know their field inside out. He said that the teachers at this wife's school all thought the same. Puzzled me as I thought the best in their field are the ones who write the text books. Still remember watching the OU programmes many moons ago when they were on bbc2 or early in the morning. As a kid, it was so easy to understand matrices, geometry, etc when the presenters were committed, excellent academics. I thought why can't my school teachers explain things so clearly. Now, I have to do the same as you Cattle Prod. Buying textbooks and teaching my kids. It used to make me despair when I knew more maths than the teacher but now I accept it

Ahhh, I come across this now and again.

This probably applies to most people here...you know how you doubt yourself, your ability, how others perceive you....well, that's normal.

On the other hand, some people suffer from the Dunning Kruger Effect....

https://en.wikipedia.org/wiki/Dunning–Kruger_effect

"The Dunning–Kruger effect is the cognitive bias whereby people with low ability at a task overestimate their ability"

A friend of mine who studied psychology says, first thing they do try find out if you are mad is to ask you if you are mad.  Only mad people say no !!!  

Try it, see what the people at work say

[janch]

47 minutes ago, DoINeedOne said:

if they don't use up the budget they won't get the same next year

This is the normal state of affairs across all of government as far as ai know and has been for years.

[HousePriceMania]

10 minutes ago, janch said:

This is the normal state of affairs across all of government as far as ai know and has been for years.

And a lot of companies.