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

[baffledbyzirp]

2 hours ago, sancho panza said:

Sh1t getting real in the land of the rising sun.Chickens are looking for a perch

a roadmap for turning a sov debt crisis into a currency crisis? @DurhamBorn

https://wolfstreet.com/2024/04/16/yen-drops-to-155-against-usd-currency-collapse-at-work-50-against-usd-since-2012-32-since-2021/

Yen Drops to 155 against USD. Currency Collapse at Work, -32% against USD since 2021, -50% since 2012

Turns out, collapse of the currency is the price Japan is now paying for years of crazed monetary policies.

The only thing that is amazing is how long these kinds of crazed monetary policies can be maintained before something breaks, but then something does break, something big, like a currency. And the free-lunch theory that had driven all this turns out to have been fake.

The BOJ has started to react in tiny baby steps, but there is nothing in these tiny baby steps that would stop the destruction of the yen – it’s still destroying the yen, but in slightly smaller increments.

Thanks for the post SP. Very interesting. I have observed on Chrono24, an international website for luxury watches, that the cheapest examples of all Rolex models are heavily skewed towards Japan. By contrast the models available in the UK are on the right hand tail of the distribution. I realise this is anecdotal, however metrics that are largely ignored by the MSM, including, cost of shipping containers, energy use, traffic volumes, amount of waste, Baltic Dry Index etc. are far more revealing than the conventional tropes beloved of Bloomberg such as GDP, unemployment rates, inflation, deficits etc.

Tracking data of prices relative to location and changes over time would allow insight into where people are really feeling the pinch and having to sell their favourite toys together with relative currency strengths. You can already track used prices on the site and I believe there is a Birkin Bag Index. 

It looks as though people who bought high end watches in Japan, when the Yen was comparatively stronger, are now taking the profit resulting from currency devaluation and the watch market in general. What next? What is the last asset you sell when you are skint?

[DurhamBorn]

52 minutes ago, afly said:

Interesting scheme that follows DB's more with less prediction

https://www.shareandcare.co.uk/sharers/

Youngsters living with oldies for very low rent in exchange for jobs/upkeep/company

Mentioned in todays telegraph as it seems to be getting popular in pricier parts of the country.

https://www.telegraph.co.uk/money/property/house-share-with-pensioner-cheap-rent-social-benefits/

I can see some default family inheritors getting a bit twitchy!

Those schemes popping up are interesting,its starting.One of the best things ever for me was drinking late teens early 20s with the old fellas in the workmans club.Great laugh and taught me more than i would ever learn in school,could be great for both parties.Like you say inheritors who do very little for older family members but expect the inheritance might start to worry.

[M S E Refugee]

2 hours ago, Royston said:

Hes held 29% for a good long time so it was always surely on the cards, unfortunately for now at least it's still not even uplifted the sp back to where it was just a few months ago and still a long way below where I wish I'd sold up at as a long term holder!

Thoughts from @M S E Refugee our only remaining resident postie?

He probably needs to merge Royal Mail and Parcelforce,it's daft having two companies doing essentially the same work.

Also the vehicle fleet urgently needs replaced.

As always Royal Mail had plenty of unrealised potential.

[Festival]

2 hours ago, Alifelessbinary said:

Would you short the market based on this call?

While it’s agreed that the S&P 500 is looking expensive based on historic metrics it’s not the only market you can invest in.

The biggest drag to my performance over the last 5 years has been my overweight position in UK stocks. I thought that the commodity, oil  and dividend payers at sensible valuations would provide a hedge against over priced US stocks but the market decided differently.

The simplest thing to predict in investing is a crash, most people on Twitter have predicted 50 of the last few downturns. 

Protecting capital is more important than going for growth for most people. 

 Couldn’t agree more with this. I run two portfolios one is overweight UK stocks (baccy, commodities, telcos gold etc) and the other for Mrs F is broadly invested in global equities low cost trackers. She is beating me comfortably over last 5-7 years. Both have protected capital to a greater or lesser extent compared to 60/40  over the same period, but low cost accumulating funds in US, Jap, even EU has won hands down total return wise to this point. Maybe the cycle will turn now decisively towards commodities in a second wave of inflation and I’ll keep some weighting for this but I won’t be the house on any outcome and I expect many won’t either unless they are either quite new to the investment game or have little to lose and much to gain. 

[DoINeedOne]

25 minutes ago, M S E Refugee said:

He probably needs to merge Royal Mail and Parcelforce,it's daft having two companies doing essentially the same work.

Also the vehicle fleet urgently needs replaced.

As always Royal Mail had plenty of unrealised potential.

Honest question, why are RoyalMail so bad at scanning parcels or tracked letters, laziness or just a shit system

Edited April 17 by DoINeedOne

[Lightscribe]

15 minutes ago, Festival said:

 Couldn’t agree more with this. I run two portfolios one is overweight UK stocks (baccy, commodities, telcos gold etc) and the other for Mrs F is broadly invested in global equities low cost trackers. She is beating me comfortably over last 5-7 years. Both have protected capital to a greater or lesser extent compared to 60/40  over the same period, but low cost accumulating funds in US, Jap, even EU has won hands down total return wise to this point. Maybe the cycle will turn now decisively towards commodities in a second wave of inflation and I’ll keep some weighting for this but I won’t be the house on any outcome and I expect many won’t either unless they are either quite new to the investment game or have little to lose and much to gain. 

Because commodities don’t go up in a straight line in a series of inflationary cycles.

In 2022 it may of been the other way around when tech and the Mag 7 sold off.

Taking the last window of 7 years you’ve mixed up both disinflationary and inflationary period (I was 100% in a passive US/developed world/EMs weighted 60/30/10 up until 2019)

2020 was the start of an inflationary cycle. I also sold off commodities as they reached peaks in the first inflationary wave and have rebought in the deflationary stage when the markets expected rate cuts and the it looked like inflation was dropping.

It’s like gold/silver, they are cylindrical. Now during this secondary inflationary wave onwards would historically be bearish for growth stocks for the rest of the decade. Weighted in commodities historically in similar circumstances would outperform.

Basically your window of reference does not allow enough correlation. The last time we faced similar circumstances was in the 1970’s.

Edited April 17 by Lightscribe

[AWW]

8 minutes ago, Lightscribe said:

It’s like gold/silver, they are cylindrical.

Nah, they're trapezoidal prisms.

Unless you only stack coins.

[M S E Refugee]

14 minutes ago, DoINeedOne said:

Honest question, why are RoyalMail so bad at scanning parcels or tracked letters, laziness or just a shit system

Much of it is still done by hand with a finger scanner.

But in general our systems are antiquated.

[nirvana]

alright bruvs........anyone wanna buy any sovs? cushty

have I missed much? got bored upstairs......

[Noallegiance]

2 hours ago, afly said:

Interesting scheme that follows DB's more with less prediction

https://www.shareandcare.co.uk/sharers/

Youngsters living with oldies for very low rent in exchange for jobs/upkeep/company

Mentioned in todays telegraph as it seems to be getting popular in pricier parts of the country.

https://www.telegraph.co.uk/money/property/house-share-with-pensioner-cheap-rent-social-benefits/

I can see some default family inheritors getting a bit twitchy!

An indication of the return of the old-school community back-scratching.

The opposite side of the swing-o-meter to globalisation is localisation.

[nirvana]

fuk me, those quarter sovs that were 100 notes in Jan.......are now 163 lol

https://www.royalmint.com/invest/bullion/bullion-coins/gold-coins/the-quarter-sovereign-2024-gold-bullion-coin-in-blister/

high 5 @ @M S E Refugee

[SpectrumFX]

10 minutes ago, nirvana said:

alright bruvs........anyone wanna buy any sovs? cushty

have I missed much? got bored upstairs......

We all got rich for 5 minutes on Friday. And then as quick as it had come it was gone. I missed it all I was getting very very pissed.

Other than that it's the same old stuff.

[Royston]

1 hour ago, M S E Refugee said:

He probably needs to merge Royal Mail and Parcelforce,it's daft having two companies doing essentially the same work.

Also the vehicle fleet urgently needs replaced.

As always Royal Mail had plenty of unrealised potential.

Or just cut RM loose altogether from IDS.

GLS can all he could really be interested in in terms of purchasing IDS.

[Mandalorian]

2 hours ago, DurhamBorn said:

These metals seem to be determined to go up,they could be a coiled spring.Its funny seeing the MSM almost begging for rate cuts,you suspect they are up to their neck in property leverage.They need to campaign for massive bennie and spending cuts,because without a huge cut in consumption by the none producing AND a long big ramp up in production,including energy,food,etc etc this inflation will be rising again soon enough.

https://www.telegraph.co.uk/business/2024/04/16/gold-price-surge-china-warchest-geopolitical-dystopia/

Interesting.  Use archive.ph if the paywall comes up.

[nirvana]

4 minutes ago, Mandalorian said:

Use archive.ph if the paywall comes up.

this is good too https://github.com/iamadamdev/bypass-paywalls-chrome

here's a weird fukker that Ambrose custard mind you lol

Nasdaq is tanking.....shipwreck ahoy me hearties!!!!

[Mandalorian]

1 hour ago, Festival said:

 Couldn’t agree more with this. I run two portfolios one is overweight UK stocks (baccy, commodities, telcos gold etc) and the other for Mrs F is broadly invested in global equities low cost trackers. She is beating me comfortably over last 5-7 years. Both have protected capital to a greater or lesser extent compared to 60/40  over the same period, but low cost accumulating funds in US, Jap, even EU has won hands down total return wise to this point. Maybe the cycle will turn now decisively towards commodities in a second wave of inflation and I’ll keep some weighting for this but I won’t be the house on any outcome and I expect many won’t either unless they are either quite new to the investment game or have little to lose and much to gain. 

Reversion to the mean is a well known thing.  But I spot no signs of it happening yet.  If it ever does.

That would mean total return of circa 7% p.a. for the FTSE 100 and circa 10% p.a. for the S&P 500. 

Note.  That's the index as a whole.  Not shitty shares in stagnating telecoms and declining tobacco companies,

[Mandalorian]

1 hour ago, DoINeedOne said:

Honest question, why are RoyalMail so bad at scanning parcels or tracked letters, laziness or just a shit system

Ex public sector, state run enterprise.

The owner changed.  The mindset didn't.

[Jesus Wept]

3 hours ago, Alifelessbinary said:

Would you short the market based on this call?

While it’s agreed that the S&P 500 is looking expensive based on historic metrics it’s not the only market you can invest in.

The biggest drag to my performance over the last 5 years has been my overweight position in UK stocks. I thought that the commodity, oil  and dividend payers at sensible valuations would provide a hedge against over priced US stocks but the market decided differently.

The simplest thing to predict in investing is a crash, most people on Twitter have predicted 50 of the last few downturns. 

Protecting capital is more important than going for growth for most people. 

Nope never go short.

Unlike going long - your losses are unlimited until you close the position. 

It has cost me in the past. 

This is interesting - sums up my views - produced a few weeks after I positioned myself.

- gold / silver

- miners

- energy

- cash 

As a hedge - not too much initially - as a crash will take “everything” all down on margin calls and recession  - then go in heavy as the market prints again after the crash. 

US can’t default and can’t payback what they owe.

They will eventually print. 

 

Edited April 17 by Jesus Wept

[Onsamui]

2 hours ago, DurhamBorn said:

Those schemes popping up are interesting,its starting.One of the best things ever for me was drinking late teens early 20s with the old fellas in the workmans club.Great laugh and taught me more than i would ever learn in school,could be great for both parties.Like you say inheritors who do very little for older family members but expect the inheritance might start to worry.

Paywall.

[nirvana]

2 minutes ago, Jesus Wept said:

Nope never go short.

pussy.......

Rickards has been calling collapse for at least 10 years........I think he's one of those 'gold bug-gers'

[afly]

5 minutes ago, Onsamui said:

Paywall.

https://archive.ph/BC8FP

[leonardratso]

Didnt know max wall's zombie was a gold bug.

[nirvana]

5 minutes ago, leonardratso said:

Didnt know max wall's zombie was a gold bug.

Rickards’ obsession with gold will get plenty of attention. The internet gold sites that already quote him widely will find plenty to get excited about. Others are likely to be more sniffy, especially about the lengthy discussion on a return to the gold standard.

https://earthbound.report/2014/04/03/the-death-of-money-by-james-rickards/

[DurhamBorn]

24 minutes ago, Mandalorian said:

Reversion to the mean is a well known thing.  But I spot no signs of it happening yet.  If it ever does.

That would mean total return of circa 7% p.a. for the FTSE 100 and circa 10% p.a. for the S&P 500. 

Note.  That's the index as a whole.  Not shitty shares in stagnating telecoms and declining tobacco companies,

Nicotine value pool on a global basis is growing,not shrinking.BAT is a growth company.Telcos have build new networks with regulators on their throats at the same time as the big tech users of those networks get away without paying.Huge rubber band pulled right back on the sector.They could continue as poor investments for a while of course,or what tends to happen  is something changes and the reverse is quick and full of velocity.Iv sold several telcos in the last 3 years with profits of 50%,50%,27% (over a few months Verizon),89% and 100%,,,,,oh plus divs 

 

[DurhamBorn]

24 minutes ago, nirvana said:

pussy.......

Rickards has been calling collapse for at least 10 years........I think he's one of those 'gold bug-gers'

Have you cleaned up on silver?,