Credit deflation and the reflation cycle to come (part 8)

[ThoughtCriminal]

If ever a chart told a tale. Energy cost go down, quality of life go up. Energy cost go up...........

[Long time lurking]

4 hours ago, Lightscribe said:

The melt up in the big 7 melt up  may be starting to run out of steam. Question is, how will the stock market look in the run up to the election?

Meanwhile…

 

$ denominated

Edited February 6 by Long time lurking

[TNS]

BT seem to be following vodafones performance!

[Long time lurking]

 

[geordie_lurch]

Coming to a street or even a road near you as they are driving! The future is fucked if these gimps are what we are hoping are going to force change and stop the baked in collapse  

 

[Long time lurking]

4 hours ago, Lightscribe said:

The melt up in the big 7 melt up  may be starting to run out of steam. Question is, how will the stock market look in the run up to the election?

Meanwhile…

 

I`m sure there's a term for this sort of thing 

 

 

 

[Libspero]

16 minutes ago, Cawn said:

You've ruined that thread, don't bother reading because of you, please don't ruin this thread.

I'm trying very hard not to.  

[sleepwello'nights]

1 minute ago, Libspero said:

I'm trying very hard not to.  

Yes you're very trying.

[Libspero]

I think I've put this to bed.   Let's see if it works.

Apologies for the disruption.

[No One]

20 hours ago, janch said:

One of my current EM holdings is BRFI :

BlackRock Frontiers Investment Trust PLC

LON: BRFI

 

This IT invests in smaller companies ouside of China and in a lot of EM countries and seems to be doing quite well....I'm just posting in case anyone else is interested...definitely not financial advice.

 

This review from Dec 2023 rate it:

https://www.trustintelligence.co.uk/investor/articles/news-investor-results-analysis-blackrock-frontiers-retail-dec-2023

Thanks for the info. I'll take a look.

[BurntBread]

7 hours ago, JMD said:

Apparently it's based on a survey of 500 wealth managers overseeing $2.5trillion of their clients wealth, so assume it is target allocations. Actually I believe that 18% equities is about right for the rich, however I would have expected higher % in gold, and yes less % in private residence.

Lyn Alden has a nice analogy on this one. In a fiat money system (where you are being paid in "melting ice cubes"), then fiat savings obviously erode, and precious metals keep up with inflation. However, if you look at historical long-term returns, then scarce, desirable real estate (e.g. waterfront properties) and stocks run ahead of inflation.

The best returns are therefore from "shorting" fiat in order to invest in real estate and businesses. By "shorting" in this case she means taking on cheap debt.

The analogy she used is black-jack: you want to borrow as much as possible to do that investment, but not go "over 21" -- i.e. not get sunk by cash flow problems if there is a spike in financing costs.

In her book she talks about how all this would change if there were a fast-transactable (and verifiable) hard money. Debt would become generally undesired as a financial strategy, and would only be taken on by productive enterprises where it was clear they could repay it though the outcome of investment. Nobody would choose to the play the debt black-jack game, and the whole system would be come much more stable. Its one of the key reasons she is a bitcoin advocate.

[Calcutta]

I hadn't paid much attention to Nvidia until I checked this morning and found out the company is 'worth' $1.7 trillion. More by some considerable distance than Facebook, about level with Amazon. For a company that most people have never heard of, that's balls deep in creating its own customers with a PE ratio 3x higher than meta or Amazon.

The long term chart goes straight up. Imo it's coming straight back down. Suck a trillion dollars out of the system and it's going to cause a problem.

We've been waiting a long time for the black swan, not gonna lie boys, this is the best I've seen so far. Don't think I've had an erection like this in the works canteen since they fucked off the gorgeous skinny African girl who used to empty the bins.

[Noallegiance]

27 minutes ago, BurntBread said:

Lyn Alden has a nice analogy on this one. In a fiat money system (where you are being paid in "melting ice cubes"), then fiat savings obviously erode, and precious metals keep up with inflation. However, if you look at historical long-term returns, then scarce, desirable real estate (e.g. waterfront properties) and stocks run ahead of inflation.

The best returns are therefore from "shorting" fiat in order to invest in real estate and businesses. By "shorting" in this case she means taking on cheap debt.

The analogy she used is black-jack: you want to borrow as much as possible to do that investment, but not go "over 21" -- i.e. not get sunk by cash flow problems if there is a spike in financing costs.

In her book she talks about how all this would change if there were a fast-transactable (and verifiable) hard money. Debt would become generally undesired as a financial strategy, and would only be taken on by productive enterprises where it was clear they could repay it though the outcome of investment. Nobody would choose to the play the debt black-jack game, and the whole system would be come much more stable. Its one of the key reasons she is a bitcoin advocate.

Wow.

Sounds incredible.

We could call it CAPITALism.

Novel.

[Harley]

4 hours ago, DoINeedOne said:

Same for me but I was 20 years old, now 42 , things that my dad did that I thought were odd when I was younger, I now do and while we had a rough relationship I honestly think we would be best buddies now as I think I understand him better 

Typical young guy thought I knew everything

 

https://pracap.com/the-blowoff/

Do you remember the first quarter of 2000?? Tech screamed. Everyone chased. Sure, there was a bubble in speculative internet stocks. We all remember Pets.Com. What’s less remembered is the mad rush into mega-cap tech names. Plain vanilla funds had spent years ignoring these names as they were overvalued. Eventually, they had no choice but to pay crazy multiples for the big liquid names that dominated the indexes. The underperformance led to redemptions; it became existential to trail the indexes. They had to close their eyes and buy overpriced tech. Cisco, Nortel, Microsoft, Sun Microsystems, AOL, JDS Uniphase, Yahoo, etc. These stocks went up every day, relentlessly. Everything else got sold to fund it. Even the greats of our industry, guys like Druck, got sucked in. He simply couldn’t stand to underperform. That pressure is powerful, and it makes guys do stupid things.

I feel like we’re reliving the first quarter of 2000, but in the narrow world of the MAG7. On one side, capital keeps flowing into a handful of names. On the other side, there is a relentless undertow in everything else—as it’s sold to fund more NVIDIA. I look at my book and feel my names under pressure, names that I think are going to report amazing year-end quarters. These names shouldn’t be getting sold, but they are—guys need to fund more MAG7.

I don’t know when this ends, as these things have a way of feeding on themselves. I just know that it eventually ends. I also know that it usually doesn’t end in a gradual way. Rather, it ends with a violent sector rotation, as capital floods back into the companies that have underperformed, and out of the MAG7. Think back to the first quarter of 2022. I think it’s going to be like that, but even more violent. The catalyst is likely going to be a big break in bonds. They’re starting to leak again. They’re sick, and I think it’s terminal. In that case, I feel like we’re a few points away from bonds infecting other duration assets.

I cannot time when this rotation happens, but I can recognize what’s happening. I’m immune to these performance pressures. If I’m destined to underperform for a period, then I’ll underperform. I’m not going to do something foolish, just to have a few months with better numbers. A lot of portfolio managers do not have that luxury. They’re stampeding in, fully expecting that they can get out in time. They’ll all get trapped.

ATM a (83%) China story with not a whole lot else.

Daily technical +ve signals (our definition!) for the stated universe of stocks >£500M:

52% on the weekly:

19% on the monthly:

The ageing for the US being 3% Daily, 8% Weekly, 20% Monthly.

Like Mexican waves!

Not to say things can't get overbought and overbought can't become more overbought!

26% of US stocks are currently overbought (Monthly stochastic > 80%).

But for new blood: Largely China?

 

Edited February 6 by Harley

[belfastchild]

18 hours ago, sancho panza said:

Im scpetical too but some people are deep in debt and people on wages are exposed to inflation.

@janch

Ive just watched it and it doesnt tie in with the nurses I know personally. Multiple foreign holidays per year, big cars some even have btls.
In the interview bit before he goes on to talk about teachers and nurses in food banks the guy says what @sancho panza says. Its about modern lifestyles and being sucked into consumerism and living beyond your means. The guy is trying not to say they turn up in range rovers or pcp cars with holidays etc and thats where the problem lies.

Also the RCN also includes care workers which come under the all encompassing 'nurses'. On the picket line last year most were care workers, not actual front line nurses.

I agree with the main thrust of the piece that its cheap credit both in terms of government and personal spend that are causing the problems. One is increasing inflation and the other means any increase in inflation above the 'norm' of 2% or whatever causes problems which will only compound over time.

I sat down with someone last week who told me they couldnt afford their mercedes any more but couldnt now get the credit to buy it out or continue the payments. I told them to get rid as they are in the hand the keys back for what its worth window and get a smaller car. They said they had always dreamed of driving a mercedes and couldnt take the shame of being seen driving round in something smaller/cheaper they could afford. Theres no arguing with that. I suspect that mindset isnt restricted to a single individual. I have no doubt they will be a food bank interviewee at a certain point.

[honkydonkey]

33 minutes ago, belfastchild said:

I have no doubt they will be a food bank interviewee at a certain point.

There's less shame in using a food bank than there is driving a crap car.

It's thought now you're an idiot to not use a food bank. It's free food.

[DurhamBorn]

33 minutes ago, belfastchild said:

@janch

Ive just watched it and it doesnt tie in with the nurses I know personally. Multiple foreign holidays per year, big cars some even have btls.
In the interview bit before he goes on to talk about teachers and nurses in food banks the guy says what @sancho panza says. Its about modern lifestyles and being sucked into consumerism and living beyond your means. The guy is trying not to say they turn up in range rovers or pcp cars with holidays etc and thats where the problem lies.

Also the RCN also includes care workers which come under the all encompassing 'nurses'. On the picket line last year most were care workers, not actual front line nurses.

I agree with the main thrust of the piece that its cheap credit both in terms of government and personal spend that are causing the problems. One is increasing inflation and the other means any increase in inflation above the 'norm' of 2% or whatever causes problems which will only compound over time.

I sat down with someone last week who told me they couldnt afford their mercedes any more but couldnt now get the credit to buy it out or continue the payments. I told them to get rid as they are in the hand the keys back for what its worth window and get a smaller car. They said they had always dreamed of driving a mercedes and couldnt take the shame of being seen driving round in something smaller/cheaper they could afford. Theres no arguing with that. I suspect that mindset isnt restricted to a single individual. I have no doubt they will be a food bank interviewee at a certain point.

I was really pissed off once when i saw a car on my estate older than mine.Luckily it was just visiting and things went back to mine being the oldest.The two money sinks i find the most insane are expensive cars that sit on a drive and expensive holidays to sit on some sand.I think i have spent less than £20k all in on cars and repairs in 30 years .

[belfastchild]

3 minutes ago, DurhamBorn said:

I was really pissed off once when i saw a car on my estate older than mine.Luckily it was just visiting and things went back to mine being the oldest.The two money sinks i find the most insane are expensive cars that sit on a drive and expensive holidays to sit on some sand.I think i have spent less than £20k all in on cars and repairs in 30 years .

I know!
I come from the other but similar side (if that makes sense). Ive bought new cars since 2000 and held on to them for quite a long time. Only just sold my 16 year old late last year for a new one that I hope lasts me 10, never mind the same age again.
Since 2007 mine has been tax deductable though, so there is that ;-) Part of the reason for keeping the second car, one for business, one for everything personal. Even claim mileage on the camper sometimes when I use it for work overnights or other journeys.

10 minutes ago, honkydonkey said:

There's less shame in using a food bank than there is driving a crap car.

It's thought now you're an idiot to not use a food bank. It's free food.

A very good mate of mine told the story about him helping out at a food bank he donated to. They put out a call for non staples such as biscuits and cakes and had 'Jaffa cakes' in brackets. He was fucking raging as he didnt buy jaffa cakes for his own house, never mind someone elses!

[DoINeedOne]

12 minutes ago, DurhamBorn said:

I was really pissed off once when i saw a car on my estate older than mine.Luckily it was just visiting and things went back to mine being the oldest.The two money sinks i find the most insane are expensive cars that sit on a drive and expensive holidays to sit on some sand.I think i have spent less than £20k all in on cars and repairs in 30 years .

I currently don't have a car, will get one but in no rush I had a perfectly working truck 10 years old but ULEZ forced me to sell it

I work from home 

Have shops across the road 

Pubs within a 30-minute walk

I have a dog so walk most places

But everyone keeps asking me when you going to get another car, like I'm some sort of peasant 

The Truck sat outside and maybe used it once a week

 

 

 

 

 

Edited February 6 by DoINeedOne

[Harley]

FFS, 0.x%!:

But boy is that a hair trigger I see before me:

APD down 16% yesterday because......drumroll.....

A huge gap down gonna get filled?!

Maybe I should wait on the resource stocks!

Could trade the interim with stuff like this going on.

Crazy times.

Edited February 6 by Harley

[honkydonkey]

23 minutes ago, belfastchild said:

A very good mate of mine told the story about him helping out at a food bank he donated to. They put out a call for non staples such as biscuits and cakes and had 'Jaffa cakes' in brackets. He was fucking raging as he didnt buy jaffa cakes for his own house, never mind someone elses!

Good job smoking is free in the UK. Imagine if they had to buy them too!

[Long time lurking]

Just a fine here ,which is no more than a factored in cost

Until there are proper repercussions nothing will ever change 

 

[Long time lurking]

Record amount of debt to be sold this week 

 

[Long time lurking]

 

 

[Yadda yadda yadda]

23 minutes ago, honkydonkey said:

Good job smoking is free in the UK. Imagine if they had to buy them too!

Never been to a food bank. People don't have smoking breaks half way round a supermarket. Is it a social thing? Go down the food bank, meet your mates, have a smoke and talk about the football or benefits claims. That sort of thing. Or do they queue up before opening for the best freebies? Bit like waiting for the yellow label mark downs for those spending their own money.

23 minutes ago, honkydonkey said:

 

 

Edited February 6 by Yadda yadda yadda