Credit deflation and the reflation cycle to come.

[Gordie Lastchance]

5 minutes ago, Barnsey said:

It's been about 2 years I've felt most are tapped out and we've peaked, my goodness how things have dragged on since then with easy credit, but that finally seems to be coming to an end (for now anyway), here's looking to August for the last UK IR rise, we need a little room to manoeuvre downwards next year. 

So much happening at the moment in the wider sphere of things, first US tariffs against China come into force 4am GMT tomorrow, rhetoric really heating up today, I wonder if we'll see a psychological shock in the markets tomorrow. I think the US know exactly what they're doing, even if the contagion will inevitably spread there too.

I'd love to see one coming, but I wonder if Carnage will simply "look through" whatever stats that tells him he should raise. After all, he's been getting away with it for years. Do you see the tariff war forcing a rise on the rate-setting committee here, though?

[Majorpain]

42 minutes ago, Gordie Lastchance said:

I'd love to see one coming, but I wonder if Carnage will simply "look through" whatever stats that tells him he should raise. After all, he's been getting away with it for years. Do you see the tariff war forcing a rise on the rate-setting committee here, though? 

The Fed isnt playing in the CB's "keep everything nice and stable game" any more, and for nearly every essential raw material or product from abroad your paying in US$ (for now anyway).  IMO the choice for Carney in a potential Dollar surging world comes down to what the UK economy will withstand better, 5%+ inflation or 5%+ Interest rates.  It has been so long since we had a "normal" interest rate it seems bizzare to even suggest that 5% interest rates are possible!

Whatever will happen the £500bn BOE slush fund indicates to me the powers that be know there is a problem and are positioning themselves accordingly.  Not long now....

[Bobthebuilder]

7 minutes ago, Majorpain said:

It has been so long since we had a "normal" interest rate it seems bizzare to even suggest that 5% interest rates are possible!

The best rate i ever had on a cash isa was a 1 year fix at 6.4% with the halifax back in 2006 ish?

It feels like a lifetime ago.

[SpectrumFX]

8 minutes ago, Bobthebuilder said:

The best rate i ever had on a cash isa was a 1 year fix at 6.4% with the halifax back in 2006 ish?

It feels like a lifetime ago.

[Barnsey]

47 minutes ago, SpectrumFX said:

Brilliant!

And right on cue the Fed minutes from June have been released, suggesting a determined and disciplined path of continued steady hikes despite trade tensions:

https://www.cnbc.com/amp/2018/07/05/fed-meeting-minutes-from-june.html

Vacancies in the US are at crisis levels, just got back from a 2 week road trip and it was quite the eye opener vs previous trips, job ads everywhere, poor service in restaurants and fast food places,  made the UK look like Japan (I'm guessing they're literally grabbing anyone they can of the street through desperation), $80k per year ads for truck drivers plastered over the back of trailers and playing on radio 24/7, overheating like crazy over there, the truck traffic on the roads was intense,  and they were often by far the fastest vehicles on the roads (85mph in 60mph limits commonplace, worth the fines vs mileage based salary?).

Of course there were all the other signals, especially with the housing market, numerous adverts on tv and radio for home flipping events in exhibition centres, also a considerable number of debt legal services ads to avoid bankruptcy, ties in nicely with...

(non top 100 banks)

[DurhamBorn]

2 hours ago, Barnsey said:

It's been about 2 years I've felt most are tapped out and we've peaked, my goodness how things have dragged on since then with easy credit, but that finally seems to be coming to an end (for now anyway), here's looking to August for the last UK IR rise, we need a little room to manoeuvre downwards next year. 

So much happening at the moment in the wider sphere of things, first US tariffs against China come into force 4am GMT tomorrow, rhetoric really heating up today, I wonder if we'll see a psychological shock in the markets tomorrow. I think the US know exactly what they're doing, even if the contagion will inevitably spread there too.

Looking at the technicals and ignoring the rhetoric, the $ looks likely to turn noticeably lower now, in line with expectations highlighted on here. 

I agree on the dollar.Everyone thinks its going up,but 95/96 looks the top.The sentiment index had 95% bulls on the dollar,and only 7% bulls on gold.Those are incredible numbers.A turn should be soon.I still think we might see gold at $1450 within 12 months,maybe even within 6.

[Barnsey]

I'm reluctant to significantly pile into Silver just yet, it's good value at $16 but always seems to take quite a whack in a stock crash vs Gold, will standby ready to jump in if it trends lower after its possible temporary bull swing. Hmm decisions decisions....

[TheCountOfNowhere]

11 hours ago, Yellow_Reduced_Sticker said:

 

Pardon...?

Was a message for someone.

 

I hear they are here from the secret forum.

 

All will become apparant

[Bear Hug]

On 27/06/2018 at 23:05, Admiral Pepe said:

I've just come across https://www.degiro.co.uk/ who seem really cheap. Has anyone got any experience with them?

Also, offer the ability to transfer in GBP, Euro's and USD, people could use revolut etc to save on FX if they don't have the currency already. Upon further reading, they don't allow that. Does seem their fx charges aren't bad though. So overall it appears these guys make it a bit more cost effective to dollar cost average in.

 

I have opened Degiro account!

Put a hundred pounds in to test if it works, waited for it for 2 days to arrive.  Followed up by putting a thousand in, which arrived next day.

Filled w8-BEN form, and had great fun shopping for PM stocks mentioned by @DurhamBorn and others on NYSE. 

It does look like charges are tiny (half a euro + 0.1% FX fee, so worked out ~50p a go), so I am well happy with the result.

I know it's a bit of a gamble but at least charges allow small transactions, unlike most ISA-wrapped accounts.

[Agent ZigZag]

36 minutes ago, DurhamBorn said:

I agree on the dollar.Everyone thinks its going up,but 95/96 looks the top.The sentiment index had 95% bulls on the dollar,and only 7% bulls on gold.Those are incredible numbers.A turn should be soon.I still think we might see gold at $1450 within 12 months,maybe even within 6.

From your macro charts would I be correct in saying that your bullish sentiment with the gold minors is a short term trade that will be sold when god hits $1450, taking profits, and the dollar index hits let’s say 86, then after the market corrects across the board you consider it then a buy signal to step back in after the dust has settled.

[invalid]

Tapped out.

I used to have an excellent/perfect credit score. I maxed out some 0% on purchases credit cards for a family holiday (had the cash but put it to use elsewhere) a couple of years back. Every month I check my credit score and see what cards are available for 0% purchases or low fee balance transfer. Despite an improving credit score and reducing debt, the number of cards available has gone from around a dozen at the start, down to a handfull and now down to nothing despite my credit score being almost back where it was. The initial big reduction in cards available was simply due to me taking out cards and having a £15k debt. But over the last year, it really has dwindled down to bugger all. I'm pretty sure the 0% cards are tightening up.

I have the means to repay in full before they come to the end of the 0%.

I'll bet many people will have maxed out as I have but don't have the means to repay and no longer have access to 0% on purchases cards.

[invalid]

Oil prices.

I've followed oil prices for 20 years now. It's so fundamental to our way of life and feeds into everything, energy, transport, chemicals, plastics, transport etc. We are in the oil age.

I've been tracking the 12 month rolling average for crude and comparing it to the previous year. I prefer 12 month rolling for this type of thing to smooth out blips and show a trend. First column is avg price for the month, second is 12 month average and the third is the percentage increase/decrease from a year ago. It's been a pretty steady circa 20% increase for a while now.

Surely that has to be feeding through into inflation  by now?

 

[invalid]

DB - I was a long time lurker on ToS and only signed up to make some posts on your thread and likewise signed up over here when ToS went into its death spiral. I apreciate greatly that you share your thoughts.

I asked this question before and so apologise for asking a very similiar question again.

It's like a journey from A to B. We are at A and we think we are going to B.

Imagine a piece of string joins A and B. How long is that piece of string? Where are we on that line? I understand its the big question.

What metrics can we use to identify where we are at? We are lost at sea, how do we navigate and chart where we are?

I think oil prices and inflation figures are obvious. What else do think we should watching to give a clue to where we are at?

[Barnsey]

I look for patterns, big believer in cycles, despite QE. Yes, I'll always be guilty of a degree of confirmation bias, but lots of cyclical patterns are beyond, at, or very close to the pattern highs.

What's changed recently is the return of China weakness driven by trade war, the flattening of the yield curve, the rapid rise in subprime defaults, record high employment continuing up, stock market now propped up solely by stock buybacks and so on. Over here it's becoming clear that business is starting to trigger contingency plans in the face of no clear Brexit position, just 9 months left.

It's impossible to time it, but I'd rather be a little early than too late. 2020 is being commonly banded about by respected economists in the media, but they would naturally be on the conservative side of estimates as to not cause a panic and jeopardise their customer base.

[reformed nice guy]

50 minutes ago, null; said:

Oil prices.

I've followed oil prices for 20 years now. It's so fundamental to our way of life and feeds into everything, energy, transport, chemicals, plastics, transport etc. We are in the oil age.

I've been tracking the 12 month rolling average for crude and comparing it to the previous year. I prefer 12 month rolling for this type of thing to smooth out blips and show a trend. First column is avg price for the month, second is 12 month average and the third is the percentage increase/decrease from a year ago. It's been a pretty steady circa 20% increase for a while now.

 Surely that has to be feeding through into inflation  by now?

 

very interesting way to look at things

Does anyone else have any independent or alternative measures of inflation?

I remember reading about someone tracking prostitution cost and supply as a measure of consumer spending/confidence but a google search doesnt return anything

[DurhamBorn]

1 hour ago, Agent ZigZag said:

From your macro charts would I be correct in saying that your bullish sentiment with the gold minors is a short term trade that will be sold when god hits $1450, taking profits, and the dollar index hits let’s say 86, then after the market corrects across the board you consider it then a buy signal to step back in after the dust has settled.

Il be selling my miners once gold goes over $1450 yes as i think there will be a pullback.I do see a path for the dollar down to 77,but 86 is more likely.

[Thorn]

6 minutes ago, reformed nice guy said:

very interesting way to look at things

Does anyone else have any independent or alternative measures of inflation?

I remember reading about someone tracking prostitution cost and supply as a measure of consumer spending/confidence but a google search doesnt return anything

After the GFC I read - seriously - that STDs skyrocket during a Boom...

 

But Margin Debt peaks a few months before the S+P hits the top?

(Was going to apologise there for going a bit OT, but then remembered the title of the site so I think we're grand

[DurhamBorn]

48 minutes ago, null; said:

DB - I was a long time lurker on ToS and only signed up to make some posts on your thread and likewise signed up over here when ToS went into its death spiral. I apreciate greatly that you share your thoughts.

I asked this question before and so apologise for asking a very similiar question again.

It's like a journey from A to B. We are at A and we think we are going to B.

Imagine a piece of string joins A and B. How long is that piece of string? Where are we on that line? I understand its the big question.

What metrics can we use to identify where we are at? We are lost at sea, how do we navigate and chart where we are?

I think oil prices and inflation figures are obvious. What else do think we should watching to give a clue to where we are at?

Simple answer is we cant.Im looking at where we might/should be in 5 to 10 years.Those are the sort of leads and lags that matter.There are shorter cycles mixed in though.The dollar calls were shorter cycle trading calls.At the moment our main call is that the dollar tops out at 96 and gold goes to $1450.

Everything we have seen has convinced us the reflation is on.The only thing we are waiting for is a debt deflation caused by falling liquidity.That is happening,we just need to wait for it.

[Inoperational Bumblebee]

5 hours ago, Gordie Lastchance said:

So folk north of the Border can't even drown their sorrows with a cheap drink!

Not Scotland-specific, but it wouldn't surprise me if illegal drug use went up if it is proportionally cheaper than booze per 'go'.

2 hours ago, Bear Hug said:

I have opened Degiro account!

Put a hundred pounds in to test if it works, waited for it for 2 days to arrive.  Followed up by putting a thousand in, which arrived next day.

Filled w8-BEN form, and had great fun shopping for PM stocks mentioned by @DurhamBorn and others on NYSE. 

It does look like charges are tiny (half a euro + 0.1% FX fee, so worked out ~50p a go), so I am well happy with the result.

I know it's a bit of a gamble but at least charges allow small transactions, unlike most ISA-wrapped accounts.

Worthwhile getting on their list to be notified when they make an ISA wrapper available.

2 hours ago, null; said:

What else do think we should watching to give a clue to where we are at?

IIRC, gold hitting $1450, TLT hitting $150, dollar index dropping again. Just off the top of my head. [EDIT plus whopping stock market and potentially house price drops]
From there on, it's QE for infrastructure that will drive the reflation, so watch drops in interest rates, money printing, government initiatives to build houses, electrical infrastructure (especially renewables), improve roads, increased military spending, etc.

As usual, this is not financial advice, do your own research...

[Talking Monkey]

11 hours ago, DurhamBorn said:

I agree on the dollar.Everyone thinks its going up,but 95/96 looks the top.The sentiment index had 95% bulls on the dollar,and only 7% bulls on gold.Those are incredible numbers.A turn should be soon.I still think we might see gold at $1450 within 12 months,maybe even within 6.

The dollar weakening part I still struggle to understand DB, why is it turning weaker what are the main drivers.  I assume it is temporary as when a correction/crash gets underway it would strengthen considerably as people rush to US safe haven

[invalid]

EDF raising prices, following in Eons footsteps who have also made two effective rises this year (one 'rise' being by removing their cheapest tariff)

More pressure on inflation and also household budgets and consumer spending?

From the DM, who do love a story about energy prices:

" Up by an inflation-busting 6 per cent, "

http://www.dailymail.co.uk/news/article-5923619/EDF-announces-second-price-rise-just-three-months-adding-70-annual-bills.html

 

[Barnsey]

48 minutes ago, Talking Monkey said:

The dollar weakening part I still struggle to understand DB, why is it turning weaker what are the main drivers.  I assume it is temporary as when a correction/crash gets underway it would strengthen considerably as people rush to US safe haven

DXY breadth looking exhausted (vs 20+ other currencies), usually (historically) signals a turn in DXY

[MrXxx]

13 hours ago, Majorpain said:

The Fed isnt playing in the CB's "keep everything nice and stable game" any more, and for nearly every essential raw material or product from abroad your paying in US$ (for now anyway).  IMO the choice for Carney in a potential Dollar surging world comes down to what the UK economy will withstand better, 5%+ inflation or 5%+ Interest rates.  It has been so long since we had a "normal" interest rate it seems bizzare to even suggest that 5% interest rates are possible!

Whatever will happen the £500bn BOE slush fund indicates to me the powers that be know there is a problem and are positioning themselves accordingly.  Not long now....

 

13 hours ago, Majorpain said:

The Fed isnt playing in the CB's "keep everything nice and stable game" any more, and for nearly every essential raw material or product from abroad your paying in US$ (for now anyway).  IMO the choice for Carney in a potential Dollar surging world comes down to what the UK economy will withstand better, 5%+ inflation or 5%+ Interest rates.  It has been so long since we had a "normal" interest rate it seems bizzare to even suggest that 5% interest rates are possible!

Whatever will happen the £500bn BOE slush fund indicates to me the powers that be know there is a problem and are positioning themselves accordingly.  Not long now....

5% inflation=increasing wage rates for employers OR 5% interest rates=mortgage defaulters....as majority of house "owners" are either fully paid up or if not (and sensible) on a 5~10 yr fix I can see Carnage letting the carnage falling at the door mat of BTL/late entrants (that have been "warned off" in the last two years)...couldn't see him going for his "mates"...in addition he can use Brexit as the excuse for low wage growth.

[Gordie Lastchance]

13 hours ago, Barnsey said:

Brilliant!

And right on cue the Fed minutes from June have been released, suggesting a determined and disciplined path of continued steady hikes despite trade tensions:

https://www.cnbc.com/amp/2018/07/05/fed-meeting-minutes-from-june.html

Vacancies in the US are at crisis levels, just got back from a 2 week road trip and it was quite the eye opener vs previous trips, job ads everywhere, poor service in restaurants and fast food places,  made the UK look like Japan (I'm guessing they're literally grabbing anyone they can of the street through desperation), $80k per year ads for truck drivers plastered over the back of trailers and playing on radio 24/7, overheating like crazy over there, the truck traffic on the roads was intense,  and they were often by far the fastest vehicles on the roads (85mph in 60mph limits commonplace, worth the fines vs mileage based salary?).

Of course there were all the other signals, especially with the housing market, numerous adverts on tv and radio for home flipping events in exhibition centres, also a considerable number of debt legal services ads to avoid bankruptcy, ties in nicely with...

 

(non top 100 banks)

Can't do better than this, a pair of eyes on the ground to get a sense of what's going on across the pond. DB, does this have all the hallmarks of the coiled spring of inflation to you? I get the feeling from Barnsey's trip that the genie is pushing to escape the bottle and the cork's not got long till it gives.

[DurhamBorn]

1 hour ago, Talking Monkey said:

The dollar weakening part I still struggle to understand DB, why is it turning weaker what are the main drivers.  I assume it is temporary as when a correction/crash gets underway it would strengthen considerably as people rush to US safe haven

94% of people think its going up so its probably going down.If you think something is going up,your already long.Once the crash gets going the dollar should have one last season in the sun yes.Likely its last.There is a lot going on in the world right now,so the picture can get a bit misty,but ignoring all that we see dollar 96 down to 86,worst case 77,then up.The dollar call isnt a trading call though unlike last time.We are only interested in it at the moment because of PMs and their miners.