Jump to content
DOSBODS
  • Welcome to DOSBODS

     

    DOSBODS is free of any advertising.

    Ads are annoying, and - increasingly - advertising companies limit free speech online. DOSBODS Forums are completely free to use. Please create a free account to be able to access all the features of the DOSBODS community. It only takes 20 seconds!

     

IGNORED

Credit deflation and the reflation cycle to come.


DurhamBorn

Recommended Posts

Quote

A final side-note. Though it’s not actually a part of our investment discipline, below is a chart that I keep among a pile of studies on my screen – a “moving average convergence-divergence” or MACD study of the S&P 500. It’s based on monthly data, so it largely reflects considerations similar to the old Coppock Guide, which captures deterioration in cyclical market momentum. As with that measure, double-tops or “killer waves” have historically preceded the most violent bear markets, for the simple reason that the only way to get a killer wave is for a bull market advance to persist for an unusually extended period of time.

At the end of October, this measure turned down, as it did in 2000, 2007, and at the 2015 peak that preceded a 14% swoon into early 2016. Again, our inclination is to focus on valuations and internals, but from our standpoint, conventional trend-following measures aren’t terribly favorable here either.

https://www.hussmanfunds.com/comment/mc181101/

mc181101q.jpg

Link to comment
Share on other sites

  • Replies 11.2k
  • Created
  • Last Reply
2 hours ago, Harley said:

I've just checked and my concern with GK was the cash flow statement with a significant increase in the 2018 financing charge, causing a negative cash flow.  I should look closer as the 6.88% yield looks good as do the other metrics like dividend cover.  JDW only offers 1.05% (with a massive 5.20% dividend cover).  Clearly ones a div payer (falling share price) while the other is more a growth stock.

I will have a closer look at this as I do like the whole weatherspoons set up. Cheers

Link to comment
Share on other sites

3 hours ago, Barnsey said:

RICS UK House Price Balance for Oct -10%, much worse than -2% forecast.

Intersting that it's a sentiment gauge rather than real data which would give it a much greater lag.

https://uk.reuters.com/article/uk-britain-houseprices-rics/uk-house-price-indicator-drops-to-six-year-low-rics-idUKKCN1ND00L

'LONDON (Reuters) - British house prices are falling on the broadest basis in more than six years, though the steepest declines remain focussed in London and southeast England, a monthly survey of property valuers showed on Thursday.

The Royal Institution of Chartered Surveyors (RICS) said its house price balance sank to -10 in October, its lowest since September 2012, from -2 the month before, a bigger fall than any economist had predicted in a Reuters poll.

The RICS data represents the difference between the proportion of surveyors who see falls compared with rises in property prices.

Direct measures of house prices, such as those published by mortgage lenders Halifax and Nationwide, have not shown outright price falls but do show the weakest growth in over five years.

Britain’s housing market has slowed since 2016, particularly in London where higher purchase taxes on houses costing over 1 million pounds and less foreign investor interest since the Brexit vote have had the most impact.

“Uncertainty about the economic outlook on the back of the never-ending Brexit negotiations appears a key drag on sentiment,” RICS economist Simon Rubinsohn said.

RICS said prices fell across southern and eastern England, but grew in most of central and northern England, and rose strongly in Scotland and Northern Ireland.

“Although the tone of much of the newsflow surrounding the housing market remains downbeat, this continues to disproportionately reflect developments in the south and east of England with the picture remaining rather more resilient in many other parts,” Rubinsohn said.

Sales volumes, however, were flat or negative across almost all of the United Kingdom.

Property valued at up to 500,000 pounds typically sold at or slightly above its asking price, but three quarters of homes marketed at over 1 million pounds failed to reach their asking price, RICS said.

Chancellor Philip Hammond acknowledged in parliament earlier this week that property purchase tax receipts had fallen since rates rose for the most expensive homes and exemptions were brought in for first-time buyers. But reversing changes would have significant redistributive consequences, he said.'

Link to comment
Share on other sites

16 hours ago, subutai80 said:

A higher high on the MACD is not a double top.  I use MACD and others for my timing signals so am a bit of a student of this indicator.  True, I'm still learning on the sell side but I don't get this unless he is merely saying now is the time for caution (well it is now November!).  We may well be heading for a turn but I don't see one just yet.  True, RSI peaked Jan 18 and set a lower high in Sep 18, but the MACD signal has been rising steadily into Oct 18.  The technicals are turning down in Nov 18 so time to be careful (but we can see that without too much effort!).  We need the month to finish (if using monthly charts) before deciding we have a sell signal.

PS:  100% agree with the comment now is the time to be looking at value investing (or momentum based trading) rather than broad momentum (trend) investing.  But that's always been the case when you have a major break of trend (not that we are quite there yet).  So yes, I'm out of growth stocks and only buying those stocks with good dividends and internals, plus a few momentum trades, while keeping my non-equity balances high.  Happy to even staircase down on good dividend stocks in beaten down markets like the FTSE100 (hence the sell triggers not so important right now), as there is a risk things could again go higher as before and I can't time a bottom to save my life (except this March and October, yeah!).   

PPS: Perhaps more concerning is we had a higher high (Jan 18 versus Sep 18) before the October downturn.  No seen that before on the candle charts.  That to me is indeed a warning of an exhaustion top or the total opposite!

Link to comment
Share on other sites

3 hours ago, Lavalas said:

https://www.rics.org/globalassets/rics-website/media/knowledge/research/market-surveys/uk-residential-market-survey-october-2018.pdf

Full report

 

Keep meaning to start a single thread for all the HPI indices. Will get round to it if useful.

good idea.it's nice to have a few threads for reference when debating in teh deflation thread.So many indices as well,LCP Acadata,RICS<LSL Acadata,Haliwide etc

Link to comment
Share on other sites

1 hour ago, Harley said:

A higher high on the MACD is not a double top.  I use MACD and others for my timing signals so am a bit of a student of this indicator.  True, I'm still learning on the sell side but I don't get this unless he is merely saying now is the time for caution (well it is now November!).  We may well be heading for a turn but I don't see one just yet.  True, RSI peaked Jan 18 and set a lower high in Sep 18, but the MACD signal has been rising steadily into Oct 18.  The technicals are turning down in Nov 18 so time to be careful (but we can see that without too much effort!).  We need the month to finish (if using monthly charts) before deciding we have a sell signal.

PS:  100% agree with the comment now is the time to be looking at value investing (or momentum based trading) rather than broad momentum (trend) investing.  But that's always been the case when you have a major break of trend (not that we are quite there yet).  So yes, I'm out of growth stocks and only buying those stocks with good dividends and internals, plus a few momentum trades, while keeping my non-equity balances high.  Happy to even staircase down on good dividend stocks in beaten down markets like the FTSE100 (hence the sell triggers not so important right now), as there is a risk things could again go higher as before and I can't time a bottom to save my life (except this March and October, yeah!).   

PPS: Perhaps more concerning is we had a higher high (Jan 18 versus Sep 18) before the October downturn.  No seen that before on the candle charts.  That to me is indeed a warning of an exhaustion top or the total opposite!

These were the key quotes for me from his piece(aside from the graph I posted previously).He is an uber doom monger but then he was one of the few to get out before 00 and 08.Wise words aon letting the market moves dictate change your trading plan imho.

 

'In the context of obscene valuations and unfavorable market internals (which we have to watch flexibly), the only time we’ve seen anywhere near the number of classic top features as Sep 20, 2018 was the week of March 24, 2000. '

'So be careful about strategy-creep. I don’t encourage anyone to change their discipline, whether they are passive investors, trend-followers, value-investors, or swing-traders. What I do encourage, however, is that you have a full understanding of where we are in the market cycle; that you consider the potential downside risk of the market; and that you honestly assess the amount of market weakness you would be able to tolerate without abandoning your discipline. '

Link to comment
Share on other sites

 

I'll do my Steve keen impersonation here and bang on about private detb and how the neo classicals at the CB ignore it.One of the comments is really quite enlightening and on point

Lost Tiger
Nov 7, 2018 at 10:24 pm

GDP = private consumption + gross investment + government spending + (exports − imports).

Does all that consumer debt fall into the private consumption category of the US GDP calculations?

  •  
    Nov 7, 2018 at 10:33 pm

    The debt doesn’t show up in GDP. But the spending funded by that debt shows up in “private consumption.”

https://wolfstreet.com/2018/11/07/the-state-of-the-american-debt-slaves-q3-2018/

 

The State of the American Debt Slaves, Q3 2018

by Wolf Richter • Nov 7, 2018 • 18 Comments

Consumers are being lackadaisical again with their plastic.

Consumer debt – or euphemistically, consumer “credit” – jumped 4.9% in the third quarter compared to the third quarter last year, or by $182 billion, to almost, but no cigar, $4 trillion, or more precisely $3.93 trillion (not seasonally adjusted), according to the Federal Reserve this afternoon. As befits the stalwart American consumers, it was the highest ever.

Consumer debt includes credit-card debt, auto loans, and student loans, but does not include mortgage-related debt:

US-consumer-credit-total-2018-Q3.png

The nearly $4 trillion in consumer debt is up 49% from the prior peak at the cusp of the Financial Crisis in Q2 2008 (not adjusted for inflation). Over the same period, nominal GDP (not adjusted for inflation) is up 39% — thus continuing the time-honored trend of debt rising faster than nominal GDP.

But a hot economy is helping out: While over the past 12 months, consumer debt jumped by 4.9%, nominal GDP jumped by 5.5%. A similar phenomenon also occurred in Q2. This is rather rare. The last time nominal GDP outgrew consumer credit, and the only time since the Great Recession, was in the three quarters from Q1 through Q3 2015.

Auto loans and leases

Auto loans and leases for new and used vehicles in Q3 jumped by $41 billion from a year ago, or by 3.7%, to a record of $1.11 trillion. These loan balances are impacted mainly by these factors: prices of vehicles, mix of new and used, number of vehicles financed, the average loan-to-value ratio, and duration of loans originated in prior years.

US-consumer-credit-auto-2018-Q3.png

The green line in the chart represents the old data before the adjustment in September 2017. These adjustments to consumer credit occur every five years, based on new Census survey data. Most of the adjustments affected auto-loan balances, reducing them by $38 billion retroactively to 2015.  I included the green line to show that it wasn’t a forgotten collapse of the car business in Q3 2015 that did this.

Revolving credit

It has bedeviled economists and bankers for years that consumers aren’t going hog-wild borrowing on their credit cards. This is a problem for two reasons: Credit cards carry enormous interest rates, and bankers feel deprived if consumers don’t use them. And two, spending cranks up the economy, and if otherwise cash-strapped consumers would charge more on their credit cards to spend money they don’t have, Corporate America could show higher earnings.

So credit card debt and other revolving credit in Q3 rose 3.9% year-over-year to $1.0 trillion (not seasonally adjusted). Given that nominal GDP rose 5.5% over the same period, consumers clearly didn’t do their jobs with their credit cards. Compared to the prior peak a decade ago, credit card debt is about flat (Sheesh, makes economist, shakes head):

US-consumer-credit-cards-2018-Q3.png

The student-loan GDP scam

Student loans in Q3 jumped by 5.6% year-over-year, or by $83 billion, to $1.56 trillion (not seasonally adjusted), another sad record:

US-consumer-credit-student-loans-2018-Q3

Looking at the sharp and steady surge of student loan balances, you’d think that student enrollment is booming, as millions more Americans must be enrolling in college to lean what it takes to be successful in this economy. But no.

Turns out, the opposite is the case. Higher-education enrollment peaked in 2010 at 18.1 million  and then declined 6.6% to 16.9 million by 2016, according to the latest data available from the National Center for Education Statistics. And yet, even while enrollment declined since 2010, student loan balances nearly doubled, from $800 billion to $1.56 billion.

So the cause of the fiasco isn’t that there are too many Americans getting an education – I wish that were the problem. Instead a mix of factors stick out:

  • Colleges are charging too damn much;
  • Entire industries, such as consumer electronics and the student housing sector – a thriving subcategory of commercial real estate – are relentlessly sucking on those student loans;
  • And occasionally, just a wee bit, the students themselves need to do some navel-gazing; These kids get this borrowed money, and it’s easy money to spend (iPhones, concert tickets, video games, nice housing rather than a dump, clothes…); later, it turns into hard money to pay back, and they’re left wondering how not to buckle under the debt.

And what do these factors of the student loan fiasco have in common? Ha, this is what makes the American economy tick: They all add to debt-fueled GDP!

“It’s time to wait patiently as the air is slowly let out of this bizarre Ponzi balloon created by the venture capital industry,” says a Silicon Valley investor who has been accused of being outspoken before and, after this, will likely be so accused again. Read…  Startup Boom a “Dangerous, High-Stakes Ponzi Scheme”: Silicon Valley Investor  

Link to comment
Share on other sites

1 hour ago, sancho panza said:

'So be careful about strategy-creep. I don’t encourage anyone to change their discipline, whether they are passive investors, trend-followers, value-investors, or swing-traders. What I do encourage, however, is that you have a full understanding of where we are in the market cycle; that you consider the potential downside risk of the market; and that you honestly assess the amount of market weakness you would be able to tolerate without abandoning your discipline. '

Not sure.  Disciplines come and go depending on the season, in that some become relatively more profitable at certain times (not that all can't be profitable if correctly applied).  Making money in these markets have required you to do two things:  be lazy (and buy a passive index fund) and don't think too much (in case you worry).  If we get any closer to a turn, you'll need to do the exact opposite.  But most people are lazy and don't think too much!   Which is good as this is a zero sum game!

Link to comment
Share on other sites

1 hour ago, sancho panza said:

I'll do my Steve keen impersonation here and bang on about private detb and how the neo classicals at the CB ignore it.One of the comments is really quite enlightening and on point 

Wow.  Great selection there. 

You couldn't have put such a depressing set of quotes together:

o GDP is yet again totally flawed - they quote GDP for a period but miss off the debt fuelling it, debt which is consumption stolen from the future - talk about a lack of "matching".

o We are now back to, indeed past 2008, but in a worse place to deal with it.

o We've found new areas (student loans, etc) to turbo charge things even more.

These CBs and polos are criminals.

Link to comment
Share on other sites

44 minutes ago, Barnsey said:

So erm, yeah, what about the S&P 500 in recent days? O.o 

Heck of a turnaround, one last rally up to the 3000-3200 level then batten down the hatches? :ph34r:

The magic is fading and the Fangs are sliding.  Amazon's chart in particular is showing the big spike downwards in the long run now, the trend is not your friend this time IMO!  See Bitcoin...

If all the central banks money printing inflated the market, then all the central banks tightening will deflate it.

Link to comment
Share on other sites

1 hour ago, Barnsey said:

So erm, yeah, what about the S&P 500 in recent days? O.o 

Heck of a turnaround, one last rally up to the 3000-3200 level then batten down the hatches? :ph34r:

As an amateur...

Strong buy signal on the daily on 30 October 18. 

Daily stochastic in the evelated zone but can always stay there for a while.

Weekly has a potential bullish type of MACD cross forming so maybe a smallish correction followed by a resumption of the uptrend to EOY.

Potential triple top forming on the weekly by year-end.

Or you could just look and say it's gone up too quickly so needs a pull back, we usually get a year-end rally,  but things are getting tired!

Or not - WTFKs!

PS: BTW the Jan 18 blow off top was a rarity (to go up, let alone that much) and was duly corrected in Feb 18.  Most Jans are negative months.  It seems that froth has stayed with us all year as we've had about half the year below it and half a year above with the downs being brutal and quick.  Nov and Dec will decide whether there are any significant gains for the year.  Not very healthy.

PPS: The monthly candles. especially their wicks, say a lot.....

Capture.PNG.f72e1d7e93152e518b62dee456e32d90.PNG

Personally, it's going to take some very special magic (not unknown) to break the Sep 18 high.

 

Link to comment
Share on other sites

1 hour ago, Majorpain said:

The magic is fading and the Fangs are sliding.  Amazon's chart in particular is showing the big spike downwards in the long run now, the trend is not your friend this time IMO!  See Bitcoin...

If all the central banks money printing inflated the market, then all the central banks tightening will deflate it.

This.

Link to comment
Share on other sites

23 hours ago, Harley said:

I've just checked and my concern with GK was the cash flow statement with a significant increase in the 2018 financing charge, causing a negative cash flow.  I should look closer as the 6.88% yield looks good as do the other metrics like dividend cover.  JDW only offers 1.05% (with a massive 5.20% dividend cover).  Clearly ones a div payer (falling share price) while the other is more a growth stock.

High financing charge due to a repayment of borrowings.

Complicated and all above my pay grade!

Link to comment
Share on other sites

1 hour ago, Majorpain said:

Amazon's chart in particular is showing the big spike downwards in the long run now

Still in play, for now.  Buy signal 31 Oct 18 (1,598).  Held on 5 Nov 18 pull back.  Currently indecision and having a lovely tug of war at 1,753 (9.6% up).  Would be healthy to give up some of yesterday's gains.  Looks very much like the S&P but then it kinda is!   

Link to comment
Share on other sites

4 hours ago, Harley said:

Wow.  Great selection there. 

You couldn't have put such a depressing set of quotes together:

o GDP is yet again totally flawed - they quote GDP for a period but miss off the debt fuelling it, debt which is consumption stolen from the future - talk about a lack of "matching".

o We are now back to, indeed past 2008, but in a worse place to deal with it.

o We've found new areas (student loans, etc) to turbo charge things even more.

These CBs and polos are criminals.

They also miss off the fact that 12% of most Western GDP's is imputed rents-an accoutning fiction to make the neo classicals sleep at night.

3 hours ago, Barnsey said:

So erm, yeah, what about the S&P 500 in recent days? O.o 

Heck of a turnaround, one last rally up to the 3000-3200 level then batten down the hatches? :ph34r:

It was oversold heavily,except in a big downdraft like 08 or 00,it rarely drops consistently below long term parameters imho.Without the fangs pumping on all cylinders I can't see 3200...........can I?

Having said that,I've already reshorted UK builders since I sold em all.Couldn't help myself.Looking a 100% sea of red in my IG a/c....

 

2 hours ago, Majorpain said:

The magic is fading and the Fangs are sliding.  Amazon's chart in particular is showing the big spike downwards in the long run now, the trend is not your friend this time IMO!  See Bitcoin...

If all the central banks money printing inflated the market, then all the central banks tightening will deflate it.

The fangs are sliding MP as you say and way below the normal dip in a long term bull.Something has changed.The problem I have with the S&P is that the Fang stocks have stopped people noticing that some sectors have been selling off for months.

 

Bit in bold is bang on.

2 hours ago, Harley said:

As an amateur...

Strong buy signal on the daily on 30 October 18. 

Daily stochastic in the evelated zone but can always stay there for a while.

Weekly has a potential bullish type of MACD cross forming so maybe a smallish correction followed by a resumption of the uptrend to EOY.

Potential triple top forming on the weekly by year-end.

Or you could just look and say it's gone up too quickly so needs a pull back, we usually get a year-end rally,  but things are getting tired!

Or not - WTFKs!

PS: BTW the Jan 18 blow off top was a rarity (to go up, let alone that much) and was duly corrected in Feb 18.  Most Jans are negative months.  It seems that froth has stayed with us all year as we've had about half the year below it and half a year above with the downs being brutal and quick.  Nov and Dec will decide whether there are any significant gains for the year.  Not very healthy.

PPS: The monthly candles. especially their wicks, say a lot.....

Capture.PNG.f72e1d7e93152e518b62dee456e32d90.PNG

Personally, it's going to take some very special magic (not unknown) to break the Sep 18 high.

 

I read that and starting running my slide rule over some choice US stocks after swearing I'd have a month off.

You're a one Harley.

Link to comment
Share on other sites

29 minutes ago, sancho panza said:

I read that and starting running my slide rule over some choice US stocks after swearing I'd have a month off. 

Not sure if that'll be your long or short slide rule!  I wouldn't know which one to pick up as we're only 113 point away from the Sep 18 close and 140 from its high.

Better 4%'s out there.

But then suppose it could take out the Oct 19 high of 2,939.

Personally, I'm leaving the door to that nut house well and truely shut!

Much nicer in the forgotten but saner FTSE.

BTW, something funny happening with my charting software (or its user).  Now showing a bigger difference between Jan and Oct!

Link to comment
Share on other sites

56 minutes ago, Harley said:

Still in play, for now.  Buy signal 31 Oct 18 (1,598).  Held on 5 Nov 18 pull back.  Currently indecision and having a lovely tug of war at 1,753 (9.6% up).  Would be healthy to give up some of yesterday's gains.  Looks very much like the S&P but then it kinda is!   

Yes, the market is even more mad than usual so a rally from here isnt out of the question.  The problem i have is i dont like anything at the minute, it feels like im investing in the least worst option rather than something im excited about.

Link to comment
Share on other sites

15 minutes ago, Majorpain said:

Yes, the market is even more mad than usual so a rally from here isnt out of the question.  The problem i have is i dont like anything at the minute, it feels like im investing in the least worst option rather than something im excited about.

Yep, traders (not investors) market!

Link to comment
Share on other sites

2 hours ago, Majorpain said:

Yes, the market is even more mad than usual so a rally from here isnt out of the question.  The problem i have is i dont like anything at the minute, it feels like im investing in the least worst option rather than something im excited about.

S+P might go to 3300+ in a blow off top.The industrial's,Semi-conductors and the PM miners should be the big winners from here until the bear really gets going.

Link to comment
Share on other sites

S&P might be going up, but if oil closes down yet again today (day 10) it'll be the longest streak of daily red closes in history!!! This as USDCNY heads back up towards 7. The signs are becoming Vegas sized billboards.

Link to comment
Share on other sites

Wesdome Q3 results just in. Well done overall, with one particular nugget:

* Recent drilling has now extended the A zone to 600 m down plunge, and based on limited historic drilling, is interpreted to extend an additional 600 m up plunge to intersect the VC zone.

That possibility has already been mentioned by their CEO at gold forum in Denver but it's the first time they put it in their report. In Wesdome speak it means they are all but certain that the VC zone is in fact an extension of the high-grade A zone they are currently drilling and defining. That is HUGE news.

Still expecting them to drop at the open :) Market was asleep at the wheel in May and they will most likely just look at earning per share again and be like "meh". In the meantime, I'm off to sell my kidney for some more WDO shares before December resource update kick-starts another rally.

Link to comment
Share on other sites

Archived

This topic is now archived and is closed to further replies.

  • Recently Browsing   0 members

    • No registered users viewing this page.

×
×
  • Create New...