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Credit deflation and the reflation cycle to come.


DurhamBorn

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2 hours ago, Sugarlips said:

Question for DB, do you see any correlation for Silver spot price and the AUD? If your predictions are correct and Silver does leap in value at some point, will the "little aussie battler" strengthen in tandem (all else being equal)?

If you had decent cash savings would you park it in £, ¥, $, AUD/CAD or other at this present time please?

Many thanks :)

It depends what the cash savings were for.If it was to buy a house id have it mostly in sterling.I dont hold any cash in other currency.I own US treasuries for dollar exposure,and for my CAD exposure i own gold miners etc.I would expect commod currencies like the AUS and CAD to do well in the next cycle,but no currency will do as well as commods themselves.

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47 minutes ago, Castlevania said:

That new Vanguard Global Capital Cycles fund sounds a lot like an off the shelf fund for us (or at least those who believe in a deflationary collapse and a reflation afterwards).

Pretty interesting ain't it, especially the timing?

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40 minutes ago, Castlevania said:

That new Vanguard Global Capital Cycles fund sounds a lot like an off the shelf fund for us (or at least those who believe in a deflationary collapse and a reflation afterwards).

From the press release: 

 

 

EDIT: will we be able to actually buy into it?

Notice how they say rare assets like utility and telecoms.Its interesting to hear a fund manager actually state that.Most people wouldnt consider those assets as rare,but they are.In a reflation you arent going to be able to built huge telco networks in time to capture the profits and of course the capital to build them anyway is going to go up,,a lot.

I was happy with Centrica's results today.Pretty stable free cash even though they have sold off quite a few assets and debt is in range now to be nearly cleared if they sell nuclear.They stated buried in the results,

" A process of pre-marketing has now commenced and we plan to commence the first round of the sales process in September".

I reckon China might buy 29% from EDF and Centrica's 20% to given them 49%.I think they might get £2 billion,though its hard to say as there might not be many bidders.It should cut the debt in half though and mean they enter the cycle with a very strong balance sheet producing over £2 billion a year of cash flow with perhaps £1 billion of capital investment a year.

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Noallegiance
10 minutes ago, DurhamBorn said:

It depends what the cash savings were for.If it was to buy a house id have it mostly in sterling.I dont hold any cash in other currency.I own US treasuries for dollar exposure,and for my CAD exposure i own gold miners etc.I would expect commod currencies like the AUS and CAD to do well in the next cycle,but no currency will do as well as commods themselves.

Any concern over the current downward pressure on PMs?

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Just now, Noallegiance said:

Any concern over the current downward pressure on PMs?

None at all,sentiment is rock bottom,lowest iv ever recorded in the sector,all my indicators are saying buy,and i have.The sector has cleaned out most of the weak hands.The miners are coiled springs,if gold turns they should outperform by a wide margin.Time will tell.

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sancho panza
15 hours ago, azzuri82 said:

If you don't mind me asking, what sort of analysis do you do when deciding to short a particular stock? Care to share any of your work re: Domino's?

I'll reply later,currently in the middle of reshorting BDEV and watching my TPK profits cover losses on RB.Off work today,so got a lot to do.

1 hour ago, DurhamBorn said:

Notice how they say rare assets like utility and telecoms.Its interesting to hear a fund manager actually state that.Most people wouldnt consider those assets as rare,but they are.In a reflation you arent going to be able to built huge telco networks in time to capture the profits and of course the capital to build them anyway is going to go up,,a lot.

I was happy with Centrica's results today.Pretty stable free cash even though they have sold off quite a few assets and debt is in range now to be nearly cleared if they sell nuclear.They stated buried in the results,

" A process of pre-marketing has now commenced and we plan to commence the first round of the sales process in September".

I reckon China might buy 29% from EDF and Centrica's 20% to given them 49%.I think they might get £2 billion,though its hard to say as there might not be many bidders.It should cut the debt in half though and mean they enter the cycle with a very strong balance sheet producing over £2 billion a year of cash flow with perhaps £1 billion of capital investment a year.

We've been certificating Centrica since buying and picking up some divi's at prices where I think I must be the only 'loser' left in the room who thinks they're a steal.VOD are definitely one for the long term.Just had a long discussion with family member re their debt and prospects.Incredible that 1Berkeley share gets you 19 Vod...............................

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sancho panza

Wickes getting pounded.this is game on.

http://www.thisismoney.co.uk/money/markets/article-6010545/Travis-Perkins-warns-year-profits-DIY-chain-Wickes-falters-amid-tough-trading-conditions.html

'

Travis Perkins warns on profits as its DIY chain Wickes suffers from cash-strapped Brits delaying home improvement projects

  • Travis Perkins swung to a £112m half-year loss after writing off £246 on Wickes
  • The group downgraded its profit forecast amid waning consumer confidence
  • Same store sales slid 7.7 per cent at DIY chain Wickes, which is now under review
  • Travis Perkins shares slumped 8 per cent on the news  

By Emily Hardy For This Is Money

Tool hire and building materials firm Travis Perkins said today its full-year profits will be at the bottom half of analyst expectations as its retail arm Wickes limps along in a weak home DIY market.

A fall in the number of homeowners splashing out on major projects, like kitchens and bathrooms, led to a 7.7 per cent decline in like-for-like sales at Wickes in the last six months, while profit at the chain shrunk by £14m.

The group, which also runs trade-facing units and Toolstation, swung from a £183m profit to a £112m pre-tax loss, after writing off £246m against goodwill at Wickes.

The Travis Perkins-owned DIY chain Wickes has more than 230 stores across the UK

The downgrade triggered its share price to drop more than eight per cent in early trading. Shares in B&Q and Screwfix owner Kingfisher also fell more than 2 per cent in sympathy.

‘Against a backdrop of changing market conditions which are expected to continue for the foreseeable future, the group has commenced a comprehensive review of its business, with a view to driving stronger performance and enhanced value for shareholders in the medium term,' said Travis Perkins boss John Carter. 

A number of cost saving measures have already been identified at Wickes, including cutting more than a third of its head office roles.

It’s shaping up to be a dismal year for home and DIY retailers, which got off to a terrible start when the freezing weather hurt sales during the critical Easter trading period.

The firms that sell expensive, bulky items such as furniture, kitchens or tools are particularly vulnerable to the ongoing economic uncertainty too, which makes shoppers nervous about spending large amounts of money, or starting costly home improvement projects.

DIY chains are struggling amid tough conditions as shoppers swerve costly home projects 

Consumer confidence falls again in July 

Consumer confidence is showing no immediate sign of recovery as, according to the latest findings by GfK, it slipped 1 point to -10 in July, with the feel-good factor from sport and warm weather failing to materialise. 

The report contained more bad news for big ticket retailers too as the major purchase index fell into negative territory to reach -2. A number of Wickes' peers are feeling the heat: B&Q reported falling sales at its last update, floorings specialist Carpetright is closing nearly 100 stores, and Homebase was handed over to private equity firm Hilco after Wesfarmers took a £454m hit on the chain and walked away from the venture altogether.

Carter flagged that Travis Perkins' trade-focused businesses were showing ‘encouraging momentum’. Sales across the group rose 4.2 per cent. '

 

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3 hours ago, sancho panza said:

I'll reply later,currently in the middle of reshorting BDEV and watching my TPK profits cover losses on RB.Off work today,so got a lot to do.

We've been certificating Centrica since buying and picking up some divi's at prices where I think I must be the only 'loser' left in the room who thinks they're a steal.VOD are definitely one for the long term.Just had a long discussion with family member re their debt and prospects.Incredible that 1Berkeley share gets you 19 Vod...............................

£8 billion cap with around £2 billion cash flow at the end of a long dis-inflation with an asset for sale that will clear,or nearly clear their debts.The market is worried about them losing 1% of customers.In the next cycle the smaller players will be destroyed.I have no doubt once nuclear is gone and the cuts are finished they will ramp up the distributed energy business.They will probably go over £5 easily in the next cycle.I can wait.

Vods debt isnt a problem.The long term costs they have fixed at are very shrewd.I reckon a 10% increase in prices would see free cash go from £5.5billion a year to £8.5 billion.£15 billion a year wouldnt shock me towards the end of the next cycle.

Perkins looking way over priced.Tempted to dust off my CFD account and short a few companies.:ph34r:

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7 hours ago, Option5 said:

Will the Bank of England follow the Japanese model?

Paul Donovan, chief economist at UBS:

"The Bank of Japan met, and did nothing that is worth mentioning.

The Bank of Japan has had a lot of practice at doing nothing worth mentioning."

2/3rds of Londoners receive some sort of benefit.. our economy is a joke! More people on top of more people is not a viable working economic model.. we have to do something other than provide services for our ever expanding population.. Everything the BOE and government do is just stalling the inevitable total economic collapse.. 

We can’t have a benefits system that only a few people contribute and the majority are a net drain, all run on expanding debt and cuts.. 

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sancho panza
1 hour ago, DurhamBorn said:

£8 billion cap with around £2 billion cash flow at the end of a long dis-inflation with an asset for sale that will clear,or nearly clear their debts.The market is worried about them losing 1% of their most marginally profitable customers.In the next cycle the smaller players will be destroyed.I have no doubt once nuclear is gone and the cuts are finished they will ramp up the distributed energy business.They will probably go over £5 easily in the next cycle.I can wait.

Vods debt isnt a problem.The long term costs they have fixed at are very shrewd.I reckon a 10% increase in prices would see free cash go from £5.5billion a year to £8.5 billion.£15 billion a year wouldnt shock me towards the end of the next cycle.

Perkins looking way over priced.Tempted to dust off my CFD account and short a few companies.:ph34r:

There's still more to come on Perkins and UK building more generally.TPK rolled over a year or two back,an early warning sign things weren't well maybe?

Their downtrend is firmly entrenched.I'm jsut playing with weightings at the minute,getting used to the emotions.This will be a long bear campaign.The likes of Domino's,Facebook,Boeing etc are the big prize but they're still firmly in uptrend.

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sancho panza
20 hours ago, azzuri82 said:

If you don't mind me asking, what sort of analysis do you do when deciding to short a particular stock? Care to share any of your work re: Domino's?

This is the way it's developing.

I use fundamental analysis to identify the sectors that face structural decline-considering barriers of entry/competition/demand and pricing distortions etc etc.EA's would fit this as a sector in decline.

I use technical charts to identify overvaluation in specific companies and entry/exit points.There are a lot of technical indicators out there and there's a lot of people trying to sell surefire ways to win using TA.That just isn't realistic.With charts you have to gain experience of what works for you and what doesn't.Three technicians could look at the same chart and reach 30 different opinions.For me,the art is developing an understanding that's reliable-as much as it can be (my chart work took me into Reckitt B and I got mullered)- to enable consistent application of your plan (ie 'plan your trades,trade your plan'...and old maxim that's very true).

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2 minutes ago, sancho panza said:

There's still more to come on Perkins and UK building more generally.TPK rolled over a year or two back,an early warning sign things weren't well maybe?

Their downtrend is firmly entrenched.I'm jsut playing with weightings at the minute,getting used to the emotions.This will be a long bear campaign.The likes of Domino's,Facebook,Boeing etc are the big prize but they're still firmly in uptrend.

Domino's has a bigger market cap than half the transport sector combined,insane,and hugely expensive.Those margins wont last going forward.

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sancho panza
4 minutes ago, DurhamBorn said:

 

Domino's has a bigger market cap than half the transport sector combined,insane,and hugely expensive.Those margins wont last going forward.

PE of 40 .............go figure.

 

UK version has a £1.5bn market cap.

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One thing with Gold/Silver i get why you say they will go to the moon once the printing press in the USA is up and running again, but with interest rates rising  and the  US economy growing by 4% why will they continue to rise between now and a downturn.

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ashestoashes
1 hour ago, DurhamBorn said:

£8 billion cap with around £2 billion cash flow at the end of a long dis-inflation with an asset for sale that will clear,or nearly clear their debts.The market is worried about them losing 1% of customers.In the next cycle the smaller players will be destroyed.I have no doubt once nuclear is gone and the cuts are finished they will ramp up the distributed energy business.They will probably go over £5 easily in the next cycle.I can wait.

Vods debt isnt a problem.The long term costs they have fixed at are very shrewd.I reckon a 10% increase in prices would see free cash go from £5.5billion a year to £8.5 billion.£15 billion a year wouldnt shock me towards the end of the next cycle.

Perkins looking way over priced.Tempted to dust off my CFD account and short a few companies.:ph34r:

re Centrica - is the threat of a Labour government priced in ?

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3 minutes ago, ashestoashes said:

re Centrica - is the threat of a Labour government priced in ?

I never consider political risks its just noise.I paid my mortgage off with money from tobacco stocks.I bought them when everyone said Clinton would destroy them with legislation.

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5 minutes ago, Banned said:

One thing with Gold/Silver i get why you say they will go to the moon once the printing press in the USA is up and running again, but with interest rates rising  and the  US economy growing by 4% why will it continue to rise between now and a downturn.

Because the people selling already know rates are going up,and know GDP is growing.Sentiment is terrible,8% bulls on gold,94% bulls on the dollar.Those sort of extremes are where reversals happen.Many gold stocks are showing very strong technical patterns.They are moving up even with gold down and sentiment rock bottom.I buy when the odds are in my favour.Some calls fail,but long term i know il come out in front.

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13 hours ago, Majorpain said:

Yup, sadly the Margin call price is kept under wraps for obvious reasons.  However, the one thing guaranteed is the lower Tesla's share price goes the more frequent and deranged Musk's tweets will get!

he will buy back more and say he has burnt the shorters,is he still camping at the factory ? we might soon start to hear amazon type work related stories and maybe the odd apple type suicides

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54 minutes ago, DurhamBorn said:

Because the people selling already know rates are going up,and know GDP is growing.Sentiment is terrible,8% bulls on gold,94% bulls on the dollar.Those sort of extremes are where reversals happen.Many gold stocks are showing very strong technical patterns.They are moving up even with gold down and sentiment rock bottom.I buy when the odds are in my favour.Some calls fail,but long term i know il come out in front.

Cheers i  think i get you. 

So what youre saying is when some of the 94% come back to gold itll rise ... and then when the recession/depression/ deflationaryburst happens theyll run back to the dollar and gold/silver crashes and the dollar rises .... at which point you get back into gold silver for what you see as an epic bull run in PMs as sometime around then the FED prints like crazy and fiat is good for wiping ones backside on.

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19 minutes ago, Banned said:

Cheers i  think i get you. 

So what youre saying is when some of the 94% come back to gold itll rise ... and then when the recession/depression/ deflationaryburst happens theyll run back to the dollar and gold/silver crashes and the dollar rises .... at which point you get back into gold silver for what you see as an epic bull run in PMs as sometime around then the FED prints like crazy and fiat is good for wiping ones backside on.

Iv always been a contrarian investor based on cycle macro work.While everyone is selling gold and the miners there are people buying.The execs and high ranking staff at the companies.Who is more likely to be right?.If only 8% of people are bullish on gold its not very likely they are holding the miners,they have already sold.The people left are committed hands,less likely to sell,more likely to hold whatever.

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https://pitchbook.com/news/articles/kkr-warns-new-playbook-needed-cuts-vc-exposure

 

Nothing new to see but another source advising what seems to be very similar sentiment to what dB has been expressing for quite as while.  Hard asset allocation, energy and infrastructure, tech stocks getting a snub.

Asset valuations are at or near historic highs, as shown in the chart from Goldman Sachs above. And we are at the tail end of the Great Moderation, where a combination of globalization, low interest rates and disinflation has bolstered profits, lifted asset prices and kept volatility low

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Nicolas Turgeon

 

On 29/07/2018 at 08:57, DurhamBorn said:

Yamana were my no 1 buy on my technical set up top 10 so im really pleased about them.I see $8+ on them if gold goes to $1500,maybe even $10+.Another technical set up was McEwan Mining (lots of short interest who will close out).New Gold was 6th on my rubber band top 10.Those are much more risky and if the complex doesnt turn tend to inflict more pain on a portfolio.My number one pick in the rubber band stocks is Harmony Gold,second Sibanye,third Eldorado, and several others.

I buy/bought from both sets,some with the best technical set ups,some rubber band stocks and keep the country specific risk low,so i only bought a few Sibanye for instance because i bought Harmony,both South African.If the complex does turn id expect some of my rubber band stocks to double,treble,or happened in 2016 four bag.If the complex doesnt turn id expect the rubber band stocks as a whole to maybe inflict 15%/20% losses.

Im very happy with how my portfolio is doing as i move it over to reflation areas.Even BT putting on 10%.I feel the PM complex is a coiled spring with massive upside potential.The risk/reward is hugely positive.If it didnt come off im happy to sit in those stocks and wait.Even if they ended up down 30%,those can evaporate in a week when the complex turns.People should always have a good spread,and shouldnt ever buy the complex if they cant take huge hits sometimes.Its a specialist area.

Thanks for this @DurhamBorn, always great to see things from a different perspective. Very interesting way to sort your stocks into sets and then spread risk across both. I'm enjoying just watching the volatility on all these PM's!

Sandstorm Gold and Endeavour Silver results are both due out this evening (August 1st) after market closes, though I'm not holding either. Do you classify these as being on your good technical setup list? Cos from my amateur examinations they look fairly healthy!?

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sancho panza

Next High St sales down 5.9%.Online up 12.8%

If Next are in trouble,heaven help the rest

https://www.theguardian.com/business/2018/aug/01/sales-rise-at-next-defies-uk-retail-gloom

'Britain’s heatwave helped Next to stronger than expected sales over the past three months – but the retailer warned the boost from the hot weather was unlikely to last.

The clothing and homeware firm said sales rose 2.8% in the 12 weeks to 28 July, driven by a 12.5% jump in online sales as consumers updated their summer wardrobes. Sales at its shops, however, fell by 5.9% over the period.

Simon Wolfson, the chief executive, called on the government and landlords to reduce the burden for high street retailers as he said it was a battle to ensure shops remained profitable.

“It is not about space, it’s about rent. It is a simple equation on whether 550 locations are profitable or not. If [a store is] not profitable it will have to shut or get a rent reduction.”

In the first half of the year overall, full price sales – excluding discounted items – rose by 4.5% compared with the same period a year ago. This was entirely driven by online sales, which rose 15.5%, while sales across its shops fell 5.3%.'

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Talking Monkey
8 hours ago, Nicolas Turgeon said:

 

Thanks for this @DurhamBorn, always great to see things from a different perspective. Very interesting way to sort your stocks into sets and then spread risk across both. I'm enjoying just watching the volatility on all these PM's!

Sandstorm Gold and Endeavour Silver results are both due out this evening (August 1st) after market closes, though I'm not holding either. Do you classify these as being on your good technical setup list? Cos from my amateur examinations they look fairly healthy!?

Where Sandstorm and Endeavour's results any good

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