Credit deflation and the reflation cycle to come.

[stoobs]

https://www.bbc.co.uk/news/business-46669300

In my limited experience, nothing screams 'the banks have a problem!' quite as loud as a finance minister telling us out of the blue that the banks don't have a problem.

[Barnsey]

3 hours ago, stoobs said:

https://www.bbc.co.uk/news/business-46669300

In my limited experience, nothing screams 'the banks have a problem!' quite as loud as a finance minister telling us out of the blue that the banks don't have a problem.

I've never seen a nugget of finance news spread so rapidly as this did yesterday, really spooked everyone.

[invalid]

A little something for those who like metals and miners:

With EV's about to massivley increase in numbers with the Kona, Niro, Tesla M3 and VW ID, I would assume there will be increased demand for certain metals.

https://researchinterfaces.com/know-next-generation-nmc-811-cathode/

 

 

[invalid]

Quote

Tessien’s article mentions Tesla, Rivian, and legacy OEMS and focuses on the impact of EVs on the oil industry and gas-powered cars. Ross believes that ICE car sales will plummet by 50 percent by 2025. He also sees a major surplus of oil by 2023, followed by about one billion electric cars on the road globally by 2031. The 22-page article is highly detailed, contains plenty of interesting graphs, and is not a simple read. However, we suggest that you set aside some time to take it all in. Thankfully, Zac and Jesse break it down and discuss its implications.

The Impending Big Auto/Oil Implosion Explained: Video

https://insideevs.com/big-auto-oil-implosion-explained-video/

[invalid]

26 minutes ago, null; said:

The Impending Big Auto/Oil Implosion Explained: Video

https://insideevs.com/big-auto-oil-implosion-explained-video/

Was just thinking that quite a few things in that video tie in with DB's theories on a dip before the inflation.

[sancho panza]

On 23/12/2018 at 10:20, Sideysid said:

I found the following paper interesting (as much as these topics can be anyway) in regards to silver usage in green energy. The amount of industrial usage looks set to decline by refined processes such as ‘thrifting’ but will be offset with sheer demand for the likes of demand for green energy and vehicles. Certainly very relevant and covers a lot of the stuff we’ve discussed on here.

https://www.silverinstitute.org/wp-content/uploads/2018/07/Role_of_Silver_Green_Revolution_28Jun2018.pdf

The way I see it,eityher the yellow stuff comes down or silver goes up.

14 hours ago, Cattle Prod said:

ENI are the best explorers out there, the ones we all try and copy. They are setting themselves up very well for the supply crunch coming in a few years. But big oil companies are not valued on their exploration, but their production. I don't know much about their production to be honest, though they have alot in Africa which is low costs. I hadn't noticed they were that beat up to be honest, I need to take a good look under the bonnet

Thanks for the insight CP,please feel free to keep me psoted.

For the unitiated,if you were to build an ETF and feature 5-10 oil stocks,what would you stick in.

Feel free to not answer.DYOR etc etc.

 

6 hours ago, stoobs said:

https://www.bbc.co.uk/news/business-46669300

In my limited experience, nothing screams 'the banks have a problem!' quite as loud as a finance minister telling us out of the blue that the banks don't have a problem.

It's not the big banks that will be the problem this time.I suspect their houses are in order.I think the problem lies more with the smaller banks who are gettting hosed by IR rises squeezing their credit card operations.

Price action in Visa and Amex is telling imho.

Pretty similar here in a way.I suspect Barc/HSBA will be moderately ok.Nationwide/Coventry/Hinkley&Rugby.................................on the other hand.

[sancho panza]

16 hours ago, UnconventionalWisdom said:

They are not trying to cover up that you need to underestimate the dangers and risk if you are to bank with them. 

This is from 2015 but huge exposure to btl

 

@stoobs

Check out the Cov in the league table.

[Majorpain]

1 hour ago, sancho panza said:

@stoobs

Check out the Cov in the league table.

Paragon and Aldermore are also heavily into invoice financing for business's, ive noticed a couple of the more "high risk" ones use them.

Great in good times, buts it a post 2008 service utilising the cheap debt so its never been tested in a serious downturn.

When the debt deflation hits, they will be ground zero as business loans start get defaulted on.  Got a 10 mill factory as collateral?  If the max someone will pay for it is 2 youve got a problem mate...

https://www.paragonbank.co.uk/business/loans/invoice-finance

https://www.aldermore.co.uk/business/business-finance/

[zugzwang]

Pro-Trump post from Steve Keen!

Even a serious NPD sufferer can be more correct about the state of the economy than a Fed full of neoclassical economists. 

https://www.patreon.com/posts/trump-warns-rate-23426662

[UnconventionalWisdom]

Nasdaq down 5% (Google has a higher previous close than other sites, not sure why. Nasdaq prob more like 2%), dow Jones down  nearly 3%, SPX down over 2%. 

GDX and gdxj up ~3%

[Majorpain]

As its Christmas eve, here is a nice story about how some bankers got their ass handed to them by the market!  No bonus for them this year?

Quote

Looking at some recent news articles Peel Hunt was trimming profit estimates but recommended that Kier's then share price was undervalued in September 2018. How wrong they were. Imagine investors got sucked in at that time at a much higher share price!

Peel Hunt, together with other underwriters of the rights issue, announced at lunch time today that they were going to sell 28,101,162 shares in the range of 360 - 375 p using a book builder process. They have eventually sold these shares today at 360 p. It shows how reluctant the market was in investing in Kier.

As the rights issue price was 409 p and they sold them at 360 p they have lost 49 p a share as the underwriters, amounting to approximately £13.8 million before expenses.

This must be one of the worst rights issues assignments ever undertaken by stockbrokers and investment bankers. They have not gained anything despite earning fees, which have now been negated by the loss described above. Their reputation is tarnished to some extent.

The directors of Kier recommended a final divided of 46 p a share in late September and the dividend was paid on 3rd December. If my memory serves me right the final dividend was payable on 93 million shares in circulation, costing the company about £43 million. All this was amid the rights issue exercise asking investors to support the company. There is no logic to the directors' action paying the dividend because the company could not afford it. This is as much as a political bribe.

 

[leonardratso]

19 minutes ago, Majorpain said:

As its Christmas eve, here is a nice story about how some bankers got their ass handed to them by the market!  No bonus for them this year?

 

what a great story, its warmed my cockles.

[Barnsey]

Happy crashmas all! 

[sancho panza]

3 minutes ago, Barnsey said:

Happy crashmas all! 

AMZN has lost $700 from $2000 since start of september 19.................lol.That's some tax loss selling.

I'm still in the New Year rally camp,like I was in the Santa rally camp.

3 hours ago, Majorpain said:

Paragon and Aldermore are also heavily into invoice financing for business's, ive noticed a couple of the more "high risk" ones use them.

Great in good times, buts it a post 2008 service utilising the cheap debt so its never been tested in a serious downturn.

When the debt deflation hits, they will be ground zero as business loans start get defaulted on.  Got a 10 mill factory as collateral?  If the max someone will pay for it is 2 youve got a problem mate...

https://www.paragonbank.co.uk/business/loans/invoice-finance

https://www.aldermore.co.uk/business/business-finance/

Yeah,I find it hard to see these making it through the big kahuna.There's jsut no way out of the hole they're in

2 hours ago, UnconventionalWisdom said:

Nasdaq down 5% (Google has a higher previous close than other sites, not sure why. Nasdaq prob more like 2%), dow Jones down  nearly 3%, SPX down over 2%. 

GDX and gdxj up ~3%

Intertesting to see the goldies moving up on down days.Unlike 2008

[DurhamBorn]

The PMs are getting some wind from the equity problems,but the main reason is the dollar is heading to 86.The Fed is tightening the world into a debt deflation and epic bear market.It will be interesting to see if stocks rally if gold keeps moving higher.

[Bear Hug]

2 hours ago, sancho panza said:

AMZN has lost $700 from $2000 since start of september 19.................lol.That's some tax loss selling.

I'm still in the New Year rally camp,like I was in the Santa rally camp.

Intertesting to see the goldies moving up on down days.Unlike 2008

Looks more like Santa's bloodbath at the moment. I wish I didn't sit on my hands with a majority of my DC pension fund all the way down to where we are now.

However, my ISA/LISA and unwrapped share funds did much as I was following this thread.

[macca]

3 hours ago, DurhamBorn said:

The PMs are getting some wind from the equity problems,but the main reason is the dollar is heading to 86.The Fed is tightening the world into a debt deflation and epic bear market.It will be interesting to see if stocks rally if gold keeps moving higher.

I see on Keiser Report a law suit is pending for gold and silver manipulation.. It has been suspended following further investigation to see who was involved and how high up the food chain the corruption goes.. This is since a someone was found guilty of PM manipulation  and said that his orders came from above! 

Could this be the start of something? 

[Ash4781b]

Emergency conference calls over Christmas dinner?  Dangerous times with Trump Versus the Fed. Where does it leads if Trump can’t get his way? (Alternative view if he gets is way)

[dgul]

39 minutes ago, Ash4781b said:

Emergency conference calls over Christmas dinner?  Dangerous times with Trump Versus the Fed. Where does it leads if Trump can’t get his way? (Alternative view if he gets is way)

Interesting enough article:

https://ftalphaville.ft.com/2018/12/24/1545650804000/There-s-no-process-left-at-the-White-House/

[I think there is a mistake or two in the article's assumptions, but it is interesting nonetheless]

[Barnsey]

10 hours ago, macca said:

I see on Keiser Report a law suit is pending for gold and silver manipulation.. It has been suspended following further investigation to see who was involved and how high up the food chain the corruption goes.. This is since a someone was found guilty of PM manipulation  and said that his orders came from above! 

Could this be the start of something? 

JP Morgan have been big buyers of Silver since 2011, rumours that they're keeping it capped under $14.90 in the short term by shorting digital market whilst buying physical.

[Barnsey]

45 minutes ago, Ash4781b said:

Emergency conference calls over Christmas dinner?  Dangerous times with Trump Versus the Fed. Where does it leads if Trump can’t get his way? (Alternative view if he gets is way)

I tweeted out the following link:

https://www.federalreserve.gov/aboutthefed/section10.htm (10.2)

Got sizeable backlash that it can't happen, then the news broke a day later.

Worth reminding ourselves that the January buyback blackout is the biggest of the year.

With Nikkei down 4.9% overnight, the contagion effect is clear for all to see, a preview of what's to come.

 

[DurhamBorn]

Happy xmas everyone.Everything is going to plan.Oil is heading down to $20 (or $15) roadmap had $62 as the top so was out by a few dollars,but great call.$ continues to bounce of the 97 mark as expected.Gold now has bullish patterns in all currencies including at last the Yen and dollar and Renminbi.A bounce in the equity markets is very likely.The key will be if the dollar falls alongside that.If it does gold and the PMs should at last deliver.GDXJ is in the top 98 percentile now of performing funds over the last few months.

The news will blame Trump,Brexit,trade etc etc.None of that is true.The Fed caused the problems and as soon as liquidity started to fall (our liquidity trackers proved almost perfect,we expected a 12 month lag to affects,it was around 14 months) then the rest was certain in such a leveraged system.

The only interesting point now is with Trump acting as he is,will the Fed wait too long to loosen.If so the financial dislocation ahead could be even worse.

What is certain to me is the next cycle.Its a reflation.A bells and whistles one.Good luck to the leveraged with no pricing power in 7 years.

Off to my daughters for lunch,iv got them a lovely xmas present.Silver.

[Thorn]

8 minutes ago, DurhamBorn said:

Happy xmas everyone.Everything is going to plan.Oil is heading down to $20 (or $15) roadmap had $62 as the top so was out by a few dollars,but great call.$ continues to bounce of the 97 mark as expected.Gold now has bullish patterns in all currencies including at last the Yen and dollar and Renminbi.A bounce in the equity markets is very likely.The key will be if the dollar falls alongside that.If it does gold and the PMs should at last deliver.GDXJ is in the top 98 percentile now of performing funds over the last few months.

The news will blame Trump,Brexit,trade etc etc.None of that is true.The Fed caused the problems and as soon as liquidity started to fall (our liquidity trackers proved almost perfect,we expected a 12 month lag to affects,it was around 14 months) then the rest was certain in such a leveraged system.

The only interesting point now is with Trump acting as he is,will the Fed wait too long to loosen.If so the financial dislocation ahead could be even worse.

What is certain to me is the next cycle.Its a reflation.A bells and whistles one.Good luck to the leveraged with no pricing power in 7 years.

Off to my daughters for lunch,iv got them a lovely xmas present.Silver.

Happy Christmas Durhamborn to you and yours. You’re our Saint Nick.

[Barnsey]

35 minutes ago, DurhamBorn said:

What is certain to me is the next cycle.Its a reflation.A bells and whistles one.Good luck to the leveraged with no pricing power in 7 years.

Off to my daughters for lunch,iv got them a lovely xmas present.Silver.

Merry Xmas @DurhamBorn and everyone else for ongoing invaluable contributions to this topic. This time of year is always a good one for reflection on what has happened in 2018 and what happens next, short term and long term.

There's little doubt in my mind that 2019 is going to make the history books, look after yourselves and your families, stay healthy, and keep your finances as safe as you can for the opportunities that lay beyond the carnage will be incredible 

[King Penda]

I should be able to join the fun I’ve a little pension of 32-36 k I can get my hands on in 18 months providing it’s not destroyed before hand lol