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

[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 

[JMD]

13 hours ago, sancho panza said:

Nothing new to us but a lot of info in one place

https://www.dailymail.co.uk/news/article-13315727/sicknote-Briton-refusing-job-shocking-insight-lives-economically-inactive.html

'I get £1,300 a month and all my housing costs paid. Why would I need the hassle of work?'

•  Britain is once again being labelled 'the sick man of Europe' with 2.8m people on long term sick leave.
• 4,000 applications for sickness benefits were being made every single day

On the nearby seafront, four men in their 20s and early 30s can be seen laughing as they stroll along the pier. In contrast to James, who did have a job until he suffered an injury and subsequently developed tinnitus and mental health problems, none of this quartet has ever been employed or had any ambitions to take an occupation or career.

All are on benefits and living with their parents. 'I don't feel ready; I just couldn't work,' says one. 'I can't handle the pressure. I find it overwhelming,' says another.

What is particularly striking is that all four now claim disability payments because of poor mental health, citing problems such as depression and anxiety.

A total of 9.4 million people of working age are now economically inactive, meaning they are neither employed nor looking for work.

Of this huge group, around 5.5 million are claiming benefits.

And yesterday it was revealed that more than 2.8 million of these are on long-term sick leave — the highest figure ever.

Currently standing at £297 billion, the overall welfare bill is projected to climb to £360 billion over the next five years — the equivalent of 11 per cent of Britain's entire economic output. Over the same period, spending on sickness benefits is expected to rise from £66 billion to more than £90 billion.

One major international investor, Neeraj Kanwar of India-based Apollo Tyres, has said that he would not open a factory in Britain because the welfare state has bred a spirit of idleness here. 'British workers hardly work — they go down to the pub,' he complained.

The introduction of the £97 billion furlough scheme, under which millions were effectively paid to stay at home, broke down the stigma of claiming something for nothing. The whole nation was doing it with the express approval of the Government, and that spirit still lingers.

A single adult aged over 25, deemed fit for work, will receive £393.45 a month in Universal Credit. But if they are found by a Work Capability Assessment to be unfit for work, they could be entitled to an extra £416 on top of this standard rate.

And this payment does not even include additional subsidies for housing, travel, child support and council tax discounts.

Once in place, the money from PIP keeps flowing. Since April 2019, out of 2.4 million Work Capability Assessments conducted, no fewer than 65 per cent of them concluded that the claimant would never have to work again.

The second consequence of the current neurosis about mental health is it has robbed too many young people of their resilience. With all the emphasis on 'trigger warnings', 'victimhood' and 'safe spaces', they inevitably feel daunted by challenges rather than determined to overcome them, particularly in the wake of the disruptions and isolation they had to endure during the pandemic.

I can't help think there is a covert agenda behind the total ambivalence shown by Western governments toward getting people back to work post-p(l)andemic.

Maybe it's because UBI implementation (followed closely by a CBDC, initially just for the benefit crowd) is much nearer than we think and so government sees little point in pretending to 'get Britain back to work'. And on a darker note perhaps the social security experiment could also be to identify the workshy/bennie types within our community, and where ultimately for them, CBDC will tragically mean Central Bank Debt Culling!!   ...After all, anything and everything really does seem possible these days. May you live in zero-interest'ing times! (Chinese curse, sort of)

Edited April 18 by JMD

[honkydonkey]

1 hour ago, ashestoashes said:

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

Emerging market, big brics member, etf quite heavy commodity and energy. Yes. 

[Noallegiance]

Oh look!

[Long time lurking]

10 minutes ago, JMD said:

I can't help think there is a covert agenda behind the total ambivalence shown by Western governments toward getting people back to work post-p(l)andemic.

Maybe it's because UBI implementation (followed closely by a CBDC, initially just for the benefit crowd) is much nearer than we think and so government sees little point in pretending to 'get Britain back to work'. And on a darker note perhaps the social security experiment could also be to identify the workshy/bennie types within our community, and where ultimately for them, CBDC will tragically mean Central Bank Debt Culling!!   ...After all, anything and everything really does seem possible these days. May you live in zero-interest'ing times! (Chinese curse, sort of)

Zimbabwe tried it ,although it was not digital the end result will be the same 

The position we are in now is due to other countries seeing us "just printing" money to buy their labour ,you just have to stop and think what the consequence would be if it went full on UBI ? 

International trade cant be based on who`s got the biggest printer wins,this is what the rest of the world are telling the west now,currently IMO we are at the beginning of the end of that game   

[Loki]

1 minute ago, Noallegiance said:

Oh look!

While The Science still believes that CO2 can influence the climate in any meaningful way, and people are happy to be fed the absolute intellectual slop, this sort of newsbite doesn't really mean anything

[sancho panza]

7 hours ago, DurhamBorn said:

Glad to others i respect come onto the roadmap 6 years later,the numbers were showing it back then,but of course a long way off in time,but it was underway.You would expect some policy changes by now,but nothing,they doubled down.So bennies and inflation linked none producing are driving the economy.Incredible,but true.I think when i look back at life i will remember i told Catherine Mann the above face to face.Someone who left school at 16 from the shittest of shit comps,in one of the poorest towns in the country right,the entire BOE rate setting board wrong.

The situation in the UK could not be worse.Reeves has just got herself a board of advisors,and they all think there should be NI on pension income,pensions should come under IHT,IHT is a very good thing etc.So there is a very good chance Labour simple keep allowances frozen and tax away all saved labour under we run out of savings.When John Major left office,the UK was in an incredible position.Labour destroyed it,the Tories decided to give up.The next Labour government will be a shit show.

How funny is this? 2016 or whenver the first thread startted on ToS you called it Reflation.Early 24 Lyn Alden starts calling it Fiscal dominance(an entirely understandable term) and then April 24 George Gammon call its......errr....Reflation.

This is a recent vid of his on why gold is rocketing uses the reflation thesis predicting an infaltionary wave with it

When I joined the thread I was an outfighr deflationist like steve van metre/rosie.then the logic you spleled out made me realsie that credit deflation and price deflation didnt necessarily follow and that credit and price could move in opposite directiosn ie credit deflting with prices inflating.it was a key moment in my investing career and luckily for us I chose to lsiten to an ex factory worker/16yo school leaver rather than the BoE and the assorted neo classicals at teh major banks.the logixc was compelling to be fair

Besdies yoursefl and the assmebled basment dwellers,this is lyn alden/george gammon/luke gromen/david hunter to name but a few all singing from the same hymn sheet.that s some f**king team.

he discusses gold rising at the same time as dollar ref real rates,saying it doesnt make sense until you look at it through bank credit(which is what I think you were referring to previosuly before DB,alongside lYn adlen from yesterday)

his conclsuion is that gold is confimring we are in a logn term commodity super cycle,peak is after 2030 with ltos of volatitilyyu

 

Edited April 18 by sancho panza

[Mandalorian]

2 hours 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.

Jam tomorrow.

Is VOD another one of DB's "growth* shares" like he said BATs was?

 

*Growth can be negative I suppose

[Loki]

2 minutes ago, Mandalorian said:

Jam tomorrow.

Is VOD another one of DB's "growth* shares" like he said BATs was?

 

*Growth can be negative I suppose

No need to be a dick about it

[DurhamBorn]

2 hours ago, Jay said:

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…

Yes,there is a chance pain could go on longer yet,but i like these kind of extreme rubber band set ups,they always snap back and provide big profits.The key really is not to avoid being in the red,its to try to get in and by down 15% or less when things turn.Its one of the things with contrarian investing,you tend to get the biggest profits from the things you sometimes wish you had bought 6 months later than you did.

[DurhamBorn]

28 minutes ago, Mandalorian said:

Jam tomorrow.

Is VOD another one of DB's "growth* shares" like he said BATs was?

 

*Growth can be negative I suppose

I bought £20k of BATs and sold that holding for £350k+ at £52.Lots of those profits went into Harmony at $1.90,Mosaic at $12 ,Sib around $3.8 ,then of course they were all sold and buying into new areas.The initial £20k in BAT has probably made me close to £600k (plus it bought my house by paying the mortgage off with those divis you hate,and helped fund my 5 years off work from 30 to 35 on top)

Iv bought £75k of BAT back at average of £24.687 and had £6 of divis since i started buying it back.Very happy so far,those divs finding their way into other investments,the last few into Sibanye.

VOD is my worst investment of the last 5 years it think,Tef Brazil on its own made me back the losses on VOD.Turkcell made me more than the VOD losses.Its annoying that the managers made mistakes but comes with investing.

BATs cash earnings are increasing every year.Thats a growth company.The market is choosing to value those cash earnings lower at the moment.Im very thankful as it meant i could buy back a big holding.

Your right index tracking the S&P is a good way for most to invest,or at least has been,but the market might be setting those people up for massive pain.Im not most people though.

 

 

 

Edited April 18 by DurhamBorn

[JMD]

33 minutes ago, Noallegiance said:

Oh look!

Surely the SNP will damn and condemn her for being a Climate denying heretic and for committing foul crimes against Scientism? ...Then again perhaps not, after all the SNP have got an election to win later this year!

[spygirl]

Just perfect  -

The great bet on rate cuts is off

We are trapped in old ways of thinking about inflation

https://www.ft.com/content/d998d679-7d83-4e47-910e-b49370e0318b

Welcome to what Goldman Sachs is calling “reflation desperation”. For policymakers and investors, this will be a nauseating and probably lengthy ride.

The embarrassing reset has come about because it turns out the inflation dragon had not been slain after all, despite markets in effect calling victory over it late last year. 

.....

The great bet on rate cuts — and it was enormous — is dead. At the start of 2024, the expectation was for six, maybe seven, US rate cuts this year. That felt silly even then, but it is unravelling in humbling fashion. Today markets are pencilling in one, maybe two.