Credit deflation and the reflation cycle to come.

[Barnsey]

Just want to thank @DurhamBorn for helping us all by starting this topic way back when on t'other site to discuss what was then a relatively abstract prediction for next 5+ years once the markets solidly turn down, amazing to see this prediction pan out and become more commonly discussed on the Twittersphere by all sorts of unrelated folks. Everything going on right now is just noise I guess, some losses heading into the deflationary bust will be inevitable, and to try to maintain my sanity I'll be concentrating on how they do coming out the other end, very difficult as I do like to keep an incredibly close eye on daily moves. Stressful and exhilarating in relatively equal measure. This really is tax free gambling in some ways, dangerously addictive.

Obviously there are so many others here making very valuable insightful contributions, some who trade in shorter time frames, and the lines become a little blurred between short term gains and longer term holds, but continues to make this topic a great place to share ideas, thanks to all thus far and here's to a very dynamic few months ahead!

[King Penda]

if the shit realy hits the fan do you guys think your shares say in the miners are actualy safe,look what venuzwala did it confiscated everything.the african nations are capable of doing exactly the same thing,particualy if china comes calling for repayment of its loans.

[sancho panza]

 

10 hours ago, Barnsey said:

Looking bit ugly out there this morning, just like the weather, a Globally synchronized risk-off run into the weekend. Much of it driven by futures in the U.S. (as always)

- Amazon pre-market still around -10%, Google -7.5% 

- RBS first UK bank to come out warning of "uncertain economic outlook"

- Worst month for Europe (Stoxx600) since August 2011, MSCI all countries worst month since May 2013 

- USDCNY now at 6.96, Chinese willing to throw everything at it to prevent the break through 7.0 

The signs are all there, momentum building, do we collapse now or miraculously find temporary respite?

Amazons chart is soemthing to behold.Nearly 20% off peak,it's careered through it's 20 week and is on the 50.
.
I think China has a host of demographic/property bubble/banking problems that may finally be coming to bear in terms of the Communist party losing control

Each day this markt doesn't rally confirms we're at the start of the downturn.I've broadened out on the short side but still well short of my full allotment.Experience has taught me we could get a snap back/short squeeze rally ,particualrly in Nov/Dec.

 

8 hours ago, Barnsey said:

Crazy to see VOD sitting at it's 2008 lows, hard not to keep piling in but must be diverse. Centrica hovering around the 2003 low another one I have to restrain myself from scooping up manically 

I know.My favourite two buys in the FTSE as well.We're full up on CNA but haven't taken the first staircase in VOD which is weird because I've been keen since 190,but every time  I look,it's downtrend remains firm.

7 hours ago, Harley said:

2,100!  Shallow!

Totally see what he means though.

I think 2100 is shallow,unless we rally from 2100 before resuming track downwards.

2 hours ago, DurhamBorn said:

Take a look at the HUI to gold ratio Harley over time.The miners are already hugely undervalued compared to gold.The rubber band is pulled right back with lots of energy.The SA miners usually lead the turns in the complex and thats what they have done this time.Sibanye and Harmony turning first and hardest.My rubber banders have pinged in line though a few with deep problems are still under the cosh as expected in that type of list.Next up id expect some of the smaller silver miners to start to move.Im long Endeavour Silver and then First Majestic for this.They should then lead the whole complex higher.Daily sentiment on the dollar hit 97% bulls and is over 90%.That will reverse soon and help gold as well.The candlesticks on the equity markets points to drawn out falls coming of the highs we have seen.If they do buy this dip it will be the last one i think.

Lots to consider over the weekend.........................thought provoking post,

[sancho panza]

24 minutes ago, stokiescum said:

if the shit realy hits the fan do you guys think your shares say in the miners are actualy safe,look what venuzwala did it confiscated everything.the african nations are capable of doing exactly the same thing,particualy if china comes calling for repayment of its loans.

I've thought a lot about this Stokie.

Hey things

1) spread yourself in companies with assets in geo politilically safe areas-Can/USA esp.

2) If say, Mexico-which has just elected a socialist govt-started sequestering assets,then the price of the yellow stuff would rocket.

Just my views DYOR as ever.

[King Penda]

35 minutes ago, sancho panza said:

I've thought a lot about this Stokie.

Hey things

1) spread yourself in companies with assets in geo politilically safe areas-Can/USA esp.

2) If say, Mexico-which has just elected a socialist govt-started sequestering assets,then the price of the yellow stuff would rocket.

Just my views DYOR as ever.

em,but doesnt venzuwalia have the worlds largest amount of recoverable oil,when vadez or whatever his name stole everything oil actualy went down in value,yes other factors at play ie yank shale ,recession ,etc etc but the principle is the same.ps america has a history for confiscating gold bullion and replaceing it with worthless ious never mind stealing bits of paper.

[Sugarlips]

Do we know why the Vodafone’s and BT’s are still falling with the market, are they not seen as defensive divi payers by the wider market or is there more to it?

[King Penda]

35 minutes ago, Sugarlips said:

Do we know why the Vodafone’s and BT’s are still falling with the market, are they not seen as defensive divi payers by the wider market or is there more to it?

even defensive stocks will fall in value,they just dont fall has much....ignore me i know nothing.ps and they are paying a divi which will help off set the drop.another fact is the money will move to tradional defencive stocks and help bolster them.

[Barnsey]

31 minutes ago, sancho panza said:

Each day this markt doesn't rally confirms we're at the start of the downturn.I've broadened out on the short side but still well short of my full allotment.Experience has taught me we could get a snap back/short squeeze rally ,particualrly in Nov/Dec.

This seems to be the great ? right now, do we go straight down from here (certainly a few indicators pointing to similarities with Oct 2000) or bounce up into Jan and then down we go. Those on both sides of this dilemma are generally in agreement about what comes afterwards.

[Barnsey]

2 minutes ago, stokiescum said:

even defensive stocks will fall in value,they just dont fall has much....ignore me i know nothing.ps and they are paying a divi which will help off set the drop.another fact is the money will move to tradional defencive stocks and help bolster them.

Spot on Stokie, generally everything moves down, all about which floor of the burning building they jump off from. What helps me sleep at night is diversifying in defensive stocks with a loooooong history that are already close to their previous cyclical lows, yet still paying out healthy dividends. Boring, hated sectors.

[sancho panza]

15 minutes ago, stokiescum said:

em,but doesnt venzuwalia have the worlds largest amount of recoverable oil,when vadez or whatever his name stole everything oil actualy went down in value,yes other factors at play ie yank shale ,recession ,etc etc but the principle is the same.ps america has a history for confiscating gold bullion and replaceing it with worthless ious never mind stealing bits of paper.

A lot of PM miners have a spread of assets.WHen I'm picking,it plays a part in the process for me at least.

Ref Venezuela,I'm not sure on the facts in terms of reserves but there are a whole host of countries worldwide that could fill the gap.(From what Iremember Venezuelan reserves are mainly heavy crude but I could be wrong).WIth things like Silver,Gold and Platinum,there are far fewer countries with those minerals in the ground

Ref CB's stealing gold,there are no gurantees it won't happen again.

 

 

6 minutes ago, stokiescum said:

even defensive stocks will fall in value,they just dont fall has much....ignore me i know nothing.ps and they are paying a divi which will help off set the drop.another fact is the money will move to tradional defencive stocks and help bolster them.

Succinctly put.You know a lot more than nothing Stokie..........

[sancho panza]

5 minutes ago, Barnsey said:

This seems to be the great ? right now, do we go straight down from here (certainly a few indicators pointing to similarities with Oct 2000) or bounce up into Jan and then down we go. Those on both sides of this dilemma are generally in agreement about what comes afterwards.

For me,they're the two most likely situations I envisage and I have no idea which one will occur-if either....

I'd also query whether we get a humdinging crash or a long slow draw down(my money would be on the latter but the force of selling over the last few days has been persistent enough to make me question.I think we need to see if buy back activity returns to previous levels in Nov/Dec.

To be fair,we have had more than a few markets peak around New Year iirc

[King Penda]

28 minutes ago, sancho panza said:

A lot of PM miners have a spread of assets.WHen I'm picking,it plays a part in the process for me at least.

Ref Venezuela,I'm not sure on the facts in terms of reserves but there are a whole host of countries worldwide that could fill the gap.(From what Iremember Venezuelan reserves are mainly heavy crude but I could be wrong).WIth things like Silver,Gold and Platinum,there are far fewer countries with those minerals in the ground

Ref CB's stealing gold,there are no gurantees it won't happen again.

 

 

Succinctly put.You know a lot more than nothing Stokie..........

sadly i dont have your lots cash to play this game,but i might be able to make a few quid after we crash.most will move into defensive stocks obviesly its about spoting companys that can survive,those into defensive stocks will stay there until well after the recovery has started imo.all fun anyway

[King Penda]

37 minutes ago, sancho panza said:

A lot of PM miners have a spread of assets.WHen I'm picking,it plays a part in the process for me at least.

Ref Venezuela,I'm not sure on the facts in terms of reserves but there are a whole host of countries worldwide that could fill the gap.(From what Iremember Venezuelan reserves are mainly heavy crude but I could be wrong).WIth things like Silver,Gold and Platinum,there are far fewer countries with those minerals in the ground

Ref CB's stealing gold,there are no gurantees it won't happen again.

 

 

Succinctly put.You know a lot more than nothing Stokie..........

agreed,but even america has confiscated private bullion in the past.china owns half of africa ,and i dont think the russians are selling any gold they produce.china is stockpileing gold and the indian goverment has been desperate in the past to influence internal gold sales.id not put it past any goverment in the world to confiscate a national asset if needed.id class us ie the uk has the safest ironicly.

[MrXxx]

8 hours ago, stokiescum said:

em,but doesnt venzuwalia have the worlds largest amount of recoverable oil,when vadez or whatever his name stole everything oil actualy went down in value,yes other factors at play ie yank shale ,recession ,etc etc but the principle is the same.ps america has a history for confiscating gold bullion and replaceing it with worthless ious never mind stealing bits of paper.

Confiscating gold, QE of FIAT...are they not one of the same thing?!

[MrXxx]

So why do markets historically do better/recover in the Nov/Dec/Jan period?

[King Penda]

33 minutes ago, MrXxx said:

Confiscating gold, QE of FIAT...are they not one of the same thing?!

they confiscated it under the threat of jail and a criminal record,and they confiscated it off those that made an effert to provide for a rainy day.but your right qe is diluteing the currency but look on the brightside most of the western world has done it.even britain has never stole gold and silver i do think vat was brought in mind to pay for a war maybe the napolionic one .but goverments will steal from the population never forget that ,was it cyprus recently that had a tenth of everyonesbank account.

[MrXxx]

12 minutes ago, stokiescum said:

they confiscated it under the threat of jail and a criminal record,and they confiscated it off those that made an effert to provide for a rainy day.but your right qe is diluteing the currency but look on the brightside most of the western world has done it.even britain has never stole gold and silver i do think vat was brought in mind to pay for a war maybe the napolionic one .but goverments will steal from the population never forget that ,was it cyprus recently that had a tenth of everyonesbank account.

I think (regarding the `common` man) if they wanted to governments would devise a way to steal your breath whilst you sleeping!

[King Penda]

1 hour ago, MrXxx said:

Confiscating gold, QE of FIAT...are they not one of the same thing?!

they confiscated it under the threat of jail and a criminal record,and they confiscated it off those that made an effert to provide for a rainy day.but your right qe is diluteing the currency but look on the brightside most of the western world has done it.even britain has never stole gold and silver i do think vat was brought in mind to pay for a war maybe the napolionic one .but goverments will steal from the population never forget that ,was it cyprus recently that had a tenth of everyonesbank account.these guys are metal detectorists gold hunting in australia i wonder why 2 have covered there faces lol.one of my friends from milton keynes is out there now trying his luck and writeing a review about a new minelab metal detector

[BurntBread]

Thinking about the reflation on the other side, now: R4 this morning said that it was virtually agreed that the government would support the re-opening of the Oxford/Cambridge rail line, the construction of an express-way covering the Oxford/Northampton/Cambridge arc, and the building of a million homes in the area.

[DoINeedOne]

1 hour ago, stokiescum said:

they confiscated it under the threat of jail and a criminal record,and they confiscated it off those that made an effert to provide for a rainy day.but your right qe is diluteing the currency but look on the brightside most of the western world has done it.even britain has never stole gold and silver i do think vat was brought in mind to pay for a war maybe the napolionic one .but goverments will steal from the population never forget that ,was it cyprus recently that had a tenth of everyonesbank account.

Just some notes i've saved also knew someone who was in Cyprus 

Digital wealth is easier to seize

IRELAND 2009: Took Eur4.4bn National Pension Reserve Fund assets to bail out banks.  The Fund was established in 2001 to ensure the Government could pay pensions in 2025-2050

 

PORTUGAL 2010:  Nationalised pension assets of Portugal Telecom

 

IRELAND 2010: Took remaining Euro 2.5bn National Pension Reserve Fund assets

 

FRANCE 2010: Took Euro33bn from its National Reserve Pension Fund that was intended to fund pensions in 2020-2040 but used the money to fund today’s pensions instead

 

HUNGARY 2010: Nationalised $14bn of individual private pension accounts which had been set up in 1998 to limit state pension liabilities and used the money to reduce state debt

 

PORTUGAL 2011: Confiscated pension assets of its largest banks which comprised around three-quarters of private pension assets

 

POLAND 2011:  In 2011, Poland reduced the mandatory contributions into its second pillar privately-managed pension funds from 7% of salary to 2.3%, with the balance being paid into the state pension system

 

UK 2012: Transferred £24bn of Royal Mail pension assets to the Treasury and used the funds to reduce the current budget deficit

 

POLAND 2013: Nationalised half private pension assets by confiscating bond holdings

 

Also reminds me of this

Cyprus end up taking / frooze 47.5% of people's money as a bail in to start with the above screenshot was posted by a business based in Cyprus at the time, remember him posting that he will be sacking something like 10+ people and moving his business out of Cyprus

 

 

Also had a friend who's aunt had just sold her house where she lived in Cyprus and had the money blocked last I heard she was living with her sister (my friends mum) as she lost money

 

 

[DurhamBorn]

10 hours ago, Sugarlips said:

Do we know why the Vodafone’s and BT’s are still falling with the market, are they not seen as defensive divi payers by the wider market or is there more to it?

Debt.The market thinks rates are going up a lot and BT and Vod have a big debt pile.What the market is missing is that the prices they charge will front run any rate increases pushing up free cash flow.Vod has also finished its network mostly.Others will need to fund their upgrades in a rising rates era.As ever the key is to staircase into stocks on the way down.Nobody knows how far things will fall,or if they will even stop falling.My Vod are down and my Centrica are slightly down.No concern at all,Harmony is up 2.5 x for me what they are down and as i slowly sell them into their increase il buy the reflation shares i want.Very happy with how things are going compared to the roadmap i had.My perfect ending in my roadmap points to another 15%/20% down in the shares i want (they are already at decade lows mostly) and GDX to hit $37 before it joins the sell off.Glad i went back to work for a while to access extra capital

 

[DurhamBorn]

11 hours ago, stokiescum said:

if the shit realy hits the fan do you guys think your shares say in the miners are actualy safe,look what venuzwala did it confiscated everything.the african nations are capable of doing exactly the same thing,particualy if china comes calling for repayment of its loans.

No they arent safe.Thats why the likes of some SA miners with 80 million oz in the ground trade below $1billion.However if we are entering a strong gold bull (even a short lived one) investors piling in wont consider the politics.Sentiment is all that matters then.The risk means a spread is needed,but hopefully we would be long gone before the desperation stage is reached.

[DoINeedOne]

November may be an interesting date for Vodafone not sure on others views on this

The head of Telefonica Deutschland called on Monday for EU regulators to block Vodafone’s planned acquisition of Liberty Global, saying it would lead to a “quasi-monopolisation” of the German cable TV market.

The EU antitrust regulator set a Nov. 27 deadline for its review. It can either clear the deal with or without concessions or open a full-scale investigation if the companies fail to address its concerns.

[DurhamBorn]

12 hours ago, Barnsey said:

Just want to thank @DurhamBorn for helping us all by starting this topic way back when on t'other site to discuss what was then a relatively abstract prediction for next 5+ years once the markets solidly turn down, amazing to see this prediction pan out and become more commonly discussed on the Twittersphere by all sorts of unrelated folks. Everything going on right now is just noise I guess, some losses heading into the deflationary bust will be inevitable, and to try to maintain my sanity I'll be concentrating on how they do coming out the other end, very difficult as I do like to keep an incredibly close eye on daily moves. Stressful and exhilarating in relatively equal measure. This really is tax free gambling in some ways, dangerously addictive.

Obviously there are so many others here making very valuable insightful contributions, some who trade in shorter time frames, and the lines become a little blurred between short term gains and longer term holds, but continues to make this topic a great place to share ideas, thanks to all thus far and here's to a very dynamic few months ahead!

The irony is Barnsey it was as obvious as night follows day once liquidity turns down assets follow down the road.My friend told me the reason very few see the macro picture correct now is because very few people are long term macro strategists.The big banks/investment houses etc dont use real macro strategists anymore.My friend said his reports would sit on desks,where in the past they were the first thing the traders read to decide asset allocation in the longer term.People want things now these days.They simply dont understand road maps etc.How we get somewhere doesnt matter,its the destination that counts.

If people here remember one things i hope its this.Markets always hurt the most people possible.That is a macro truth.Macro drives the sentiment that drives the bubbles.

In the UK everyone things houses and BTL etc are a sure thing.The last 40 years of macro has created that thinking.That will now deliver maximum pain.

In stock markets everyone thinks the tech companies will take over the world,and passive investing is the certain way to go.Again they will learn the fallacy of that.

There are more and more signs that the next cycle will be a full on reflation.They are rare beasts that make substantial gains for investors in certain sectors.We dont need a perfect record,they dont exist.We just need to be on the right side of things.Lots of financial dislocation ahead.The debt deflation is upon us.

As a side the UK macro picture isnt too bad at all.Weak sterling has really helped.Lots of consumers will really suffer,but UK industry might do just fine in the next cycle.We are well set for the sectors that will do well.Government will be investing hard soon in transport,town centres,energy,telcos,future travel etc.

 

[King Penda]

i wonder how many proffesional economists have seen this comeing,because in 2008 only a couple out of tens of thousands saw the titanic needed to change course,it blindsided litteraly every country in the world.i know the chinese and russians have been buying gold and we now have stress tested our banks but how many others are ready...

not sure if its fake news or not but i heard the eec had drawn up proposals for bail ins from the public if needed,any idea if this is true or a myth.