Credit deflation and the reflation cycle to come (part 9)

[HousePriceMania]

It's not the big reset, it's the big heist.

[AWW]

27 minutes ago, ashestoashes said:

aren't there trillions in obligations that can't be paid, banks about to go bust, inflation etc plus there's a declared desire by tptb for a great reset

It can all be paid. We live in a fiat currency regime.
What happens to the currency is another matter...

[Long time lurking]

Wheres Stuey 

 

 

Edited April 18 by Long time lurking

[Long time lurking]

9 minutes ago, AWW said:

It can all be paid. We live in a fiat currency regime.
What happens to the currency is another matter...

That is exactly what the shit show of the last 4 years and continuing is all about

When demand for a currency falls ,the second sentence comes into play 

They are saying it out loud now 

 

Edited April 18 by Long time lurking

[DurhamBorn]

3 minutes ago, Long time lurking said:

Wheres Stuey 

 

 

https://www.pitchup.com/tents/England/North_East/Co_Durham/Stockton-on-Tees/

[DurhamBorn]

Where i think almost everyone gets inflation wrong is in thinking its always best to be outside the currency suffering the inflation.Its compelling of course,and right in many ways,but not always.Sometimes its better to be in areas WITHIN the inflation country/currency as long as they can price with inflation AND not see demand destruction.I have been buying ABRDn heavily in the £1.36 to £1.40 area.Why when asset managers are hated and according to the market in structural decline?.Because they have huge holdings OUTSIDE our inflation economy BUT can suck in more investments as wages grow faster so pension savings increase.Of course the first stages of a distribution cycle see asset draw down as incomes lag the inflation,but then flatline and then increase as wages increase (nominal) .Telcos should be the same once network builds top out,however they have the worry of regulators etc forcing them to hold price increases down,but even then they will struggle to argue below inflation increases.

Even baccie,it suffers during the first stages of an inflation cycle as incomes are squeezed,but then as wages start to shoot up it becomes much easier to increase prices.Someone in the UK for instance spending £50 a week on baccie might spend 10% of net income on it.If they get 17% bennie/wage increases over two years their wage/bennies go to £585 and baccie spend down to 8.5% of income.IMPs can increase baccie prices by 20% and be the same percentage spend as before .Even if you take in volume decline they can get close to that inflation with a very low cost base (almost zero capital investment)

This of course does not protect from currency collapse,only currency decline,so real assets outside of the home currency are also crucial.

[Noallegiance]

2 minutes ago, DurhamBorn said:

Where i think almost everyone gets inflation wrong is in thinking its always best to be outside the currency suffering the inflation.Its compelling of course,and right in many ways,but not always.Sometimes its better to be in areas WITHIN the inflation country/currency as long as they can price with inflation AND not see demand destruction.I have been buying ABRDn heavily in the £1.36 to £1.40 area.Why when asset managers are hated and according to the market in structural decline?.Because they have huge holdings OUTSIDE our inflation economy BUT can suck in more investments as wages grow faster so pension savings increase.Of course the first stages of a distribution cycle see asset draw down as incomes lag the inflation,but then flatline and then increase as wages increase (nominal) .Telcos should be the same once network builds top out,however they have the worry of regulators etc forcing them to hold price increases down,but even then they will struggle to argue below inflation increases.

Even baccie,it suffers during the first stages of an inflation cycle as incomes are squeezed,but then as wages start to shoot up it becomes much easier to increase prices.Someone in the UK for instance spending £50 a week on baccie might spend 10% of net income on it.If they get 17% bennie/wage increases over two years their wage/bennies go to £585 and baccie spend down to 8.5% of income.IMPs can increase baccie prices by 20% and be the same percentage spend as before .Even if you take in volume decline they can get close to that inflation with a very low cost base (almost zero capital investment)

This of course does not protect from currency collapse,only currency decline,so real assets outside of the home currency are also crucial.

With all this talk of rising rates and rate cuts being pushed out, does the situation regarding the repo account running down and a kick-start of a new US private credit cycle still hold? Are these market commentators looking the wrong way? Will the Fed go against the bond market?

[DurhamBorn]

14 minutes ago, Noallegiance said:

With all this talk of rising rates and rate cuts being pushed out, does the situation regarding the repo account running down and a kick-start of a new US private credit cycle still hold? Are these market commentators looking the wrong way? Will the Fed go against the bond market?

They will have to choose because if they dont kick in a private sector debt cycle soon governments will go bust.CBs made the mistake of monetising welfare spending for governments in the west,that is why they are trapped.For inflation and rates to fall much they need welfare spending down and investment up.The setup in the UK is the worst i have ever seen.

[Lightscribe]

20 minutes ago, Noallegiance said:

With all this talk of rising rates and rate cuts being pushed out, does the situation regarding the repo account running down and a kick-start of a new US private credit cycle still hold? Are these market commentators looking the wrong way? Will the Fed go against the bond market?

3 scenarios

1) Fed holds rates (even raises them) 2nd inflation wave takes hold. Recession, stagflation. Countries continue to shore up in gold with their falling currencies against the $. Gold goes up.

2) Fed holds. BoE, ECB and other central banks cut against the Fed because they have no choice (UKs economy is the housing market). £ and € tank against the $. 2nd inflationary is devastating to UK/EU. Gold goes up.

3) War. Escalating to a global conflict. All central banks cut rates and return to QE. Trillions printed. If the markets doesn’t shore up in USTs taking the yield from uninversion, then YCC. Gold goes through the roof.

Edited April 18 by Lightscribe

[Harley]

46 minutes ago, DurhamBorn said:

Where i think almost everyone gets inflation wrong is in thinking its always best to be outside the currency suffering the inflation.Its compelling of course,and right in many ways,but not always.Sometimes its better to be in areas WITHIN the inflation country/currency as long as they can price with inflation AND not see demand destruction.I have been buying ABRDn heavily in the £1.36 to £1.40 area.Why when asset managers are hated and according to the market in structural decline?.Because they have huge holdings OUTSIDE our inflation economy BUT can suck in more investments as wages grow faster so pension savings increase.Of course the first stages of a distribution cycle see asset draw down as incomes lag the inflation,but then flatline and then increase as wages increase (nominal) .Telcos should be the same once network builds top out,however they have the worry of regulators etc forcing them to hold price increases down,but even then they will struggle to argue below inflation increases.

Even baccie,it suffers during the first stages of an inflation cycle as incomes are squeezed,but then as wages start to shoot up it becomes much easier to increase prices.Someone in the UK for instance spending £50 a week on baccie might spend 10% of net income on it.If they get 17% bennie/wage increases over two years their wage/bennies go to £585 and baccie spend down to 8.5% of income.IMPs can increase baccie prices by 20% and be the same percentage spend as before .Even if you take in volume decline they can get close to that inflation with a very low cost base (almost zero capital investment)

This of course does not protect from currency collapse,only currency decline,so real assets outside of the home currency are also crucial.

Dumped me ABDN trade yesterday, again!  There is contention amongst the underlying techs so summing will likey happen some time but......!

[Long time lurking]

14 hours ago, Harley said:

Maybe the EMs are waiting for the "Year of the Tortoise"?

 

[nirvana]

18 hours ago, DurhamBorn said:

Have you cleaned up on silver?,

 

[nirvana]

16 hours ago, Jesus Wept said:

The Stockmarket loves low inflation massive amounts of cheap money printing

FTFY

Edited April 18 by nirvana

[DurhamBorn]

42 minutes ago, Harley said:

Dumped me ABDN trade yesterday, again!  There is contention amongst the underlying techs so summing will likey happen some time but......!

Im happy to ladder buy them here down to £1.22 if needed for a long term hold.I got a bit lucky on them as i sold them north of £2 for a decent profit,i nearly kept them,i only sold them at the time to buy a full holding in SEDY.They wont turn until EMs turn hard i suspect.I would love to see a merger in the sector,but im avoiding the companies with direct gilt exposure like M&G,L&G etc (ABRDN has some exposure,but small compared to most).They have very big EM exposure in their equity funds and are starting to get flows from Asia itself now.Notice flows to them from Singapore for instance.Hated sector of course.

 

[crashmonitor]

Bailey's dovish stance post Tuesday's poor CPI Release came as a bit of a surprise to me. You'd think after printing nearly 25% of inflation since Covid ( and missing  target 2% by a country mile) the guy would have a bit of shame and at least act Hawkish. He has helped the 2 year swap off its annual high of 5%, now down at 4.9%.

Weirdly the Market is now more Hawkish than Bailey himself. He has always been one of the  Champions of loose policy on the Committee, he will be one of the first to join Team Dinghra.

 

https://www.theguardian.com/business/2024/apr/17/uk-inflation-falls-bank-of-england-interest-rates

Edited April 18 by crashmonitor

[Harley]

29 minutes ago, DurhamBorn said:

Im happy to ladder buy them here down to £1.22 if needed for a long term hold.I got a bit lucky on them as i sold them north of £2 for a decent profit,i nearly kept them,i only sold them at the time to buy a full holding in SEDY.They wont turn until EMs turn hard i suspect.I would love to see a merger in the sector,but im avoiding the companies with direct gilt exposure like M&G,L&G etc (ABRDN has some exposure,but small compared to most).They have very big EM exposure in their equity funds and are starting to get flows from Asia itself now.Notice flows to them from Singapore for instance.Hated sector of course.

 

I see Ashmore and now the Pru bouncing around momentum wise atm.  Need to see if any develops.  All just trades for me though as not interested in the reward:risk re.the divs.

[Axeman123]

29 minutes ago, crashmonitor said:

Weirdly the Market is now more Hawkish than Bailey himself.

He would have been cutting since ~3% on the way up if it was up to him, thankfully it is all about the Fed though - and that is why the markets don't care what he says.

30 minutes ago, crashmonitor said:

Bailey's dovish stance post Tuesday's poor CPI Realise came as a bit of a surprise to me.

30 minutes ago, crashmonitor said:

He has always been one of the  Champions of loose policy on the Committee, he will be one of the first to join Team Dinghra.

The votes etc are all kayfabe IMO. They agree a policy and then construct a voting split to tilt the narrative this way or that. Since Bailey votes last (and as the casting vote in the event of a tie) it makes sense to position him for a cut early, and then adjust the reported vote split like a countdown accross meetings to signal timing to markets.

[DurhamBorn]

3 minutes ago, Harley said:

I see Ashmore and now the Pru bouncing around momentum wise atm.  Need to see if any develops.  All just trades for me though as not interested in the reward:risk re.the divs.

Yes Ashmore wants to go a lot higher,but as AUM drifts lower they sell back off to £1.80 area.To get any escape velocity they will need to see AUM go positive from flows and value.The dollar falling is the key to unlocking all the value in lots of sectors.Hence the violent moves to the downside whenever the US rate cut gets pushed out.Very tricky period.

[Axeman123]

14 minutes ago, DurhamBorn said:

The dollar falling is the key to unlocking all the value in lots of sectors.Hence the violent moves to the downside whenever the US rate cut gets pushed out.Very tricky period.

Every asset class we follow on here seems to be the same. It really is the calm before the storm IMO.

[DurhamBorn]

19 minutes ago, Axeman123 said:

Every asset class we follow on here seems to be the same. It really is the calm before the storm IMO.

You get the feeling when the dollar does top out the jump up in most assets we follow will be fast and violent.The first 30% might be over in days.I noticed today electric car sales falling hard in Europe,hybrids up.Platinum and Palladium could be prime examples for big moves to the upside sometime this year.

[Axeman123]

16 minutes ago, DurhamBorn said:

You get the feeling when the dollar does top out the jump up in most assets we follow will be fast and violent.The first 30% might be over in days.

Indeed, breaking 100 on the DXY looks like the obvious trigger for the shift in expectations/trend.

Looking at a long-term chart a move down after a peak could be rather sharp, and take the DXY past that 100 threshold very rapidly. For example it took just 3 months from ~113 to 102 following the big peak in late 2022, and the current situation feels primed for similar.

[ashestoashes]

On 17/04/2024 at 13:01, honkydonkey said:

Getting back into HBRL today.

looks a bit sick, you think it'll do well in the future ?

[ashestoashes]

who are the fools ?

https://www.fool.co.uk/2024/04/17/heres-why-the-vodafone-share-price-could-be-a-big-ftse-100-winner-in-2024/

The Vodafone (LSE: VOD) share price has been one of the growth winners of the past few years… oh, hang on, I’ve got the chart the wrong way up!

Vodafone shares have actually lost more than 50% of their value in the past five years. They bottomed out in February at 52-week low of under 63p.

At 66p as I write, the price hasn’t regained a lot. But I can’t help thinking the second half of 2024 might bring a change.

[Jay]

50 minutes ago, Axeman123 said:

Indeed, breaking 100 on the DXY looks like the obvious trigger for the shift in expectations/trend.

Looking at a long-term chart a move down after a peak could be rather sharp, and take the DXY past that 100 threshold very rapidly. For example it took just 3 months from ~113 to 102 following the big peak in late 2022, and the current situation feels primed for similar.

Dxy going to 113 from here is real possibility…euro parity and 160 plus yen..a lot of pain in em plus yields will be higher…most likely the fed cuts before that scenario..I hope..if not then be lucky…

[Loki]

8 minutes ago, ashestoashes said:

who are the fools ?

https://www.fool.co.uk/2024/04/17/heres-why-the-vodafone-share-price-could-be-a-big-ftse-100-winner-in-2024/

The Vodafone (LSE: VOD) share price has been one of the growth winners of the past few years… oh, hang on, I’ve got the chart the wrong way up!

Vodafone shares have actually lost more than 50% of their value in the past five years. They bottomed out in February at 52-week low of under 63p.

At 66p as I write, the price hasn’t regained a lot. But I can’t help thinking the second half of 2024 might bring a change.

Literally sold all of mine and put it into GDGB 30 minutes ago