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Credit deflation and the reflation cycle to come.


DurhamBorn

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Really interesting chart from here https://e-markets.nordea.com/?mc_cid=5838f53e27&mc_eid=0e2b3ce2b6#!/article/48008/nordea-view-that-came-easy-now-bet-hard

There also a very detailed outlook pdf downloadable from the same page.

Quote
Equity markets poised to retest December lows

The start of 2019 has been interesting, to say the least, with a large equity market rebound as a response to softer Fed language, officials sending positive signals regarding the USA/China trade negotiations and the possibility of a postponed Brexit. These positive shifts should now be well discounted. From a macro perspective, we still believe it is a bull trap. Over the coming six months, the market focus should shift back to slowing growth and rising wage costs, implying a high risk of an earnings recession.

Chart 1. Much higher risk of earnings recession than in 2016 

 

105569

 

 

 

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 Attached is my toplist going into the new ISA year. I will be looking for two shares initially for my LISA allowance. 

I would like one dividend payer and one potential multibagger. At the moment I am veering toward CHK - historically very cheap, directors have recently signed new 3 year contracts and bought stock. Also, TSG - read lots of positives about this miner, it fits the whole late-cycle resource thesis, has a 14% dividend and has recently been given a target of 97p by one stockbroker.

Others:

ARS - resources again, great management apparently and they are seeking to do the whole shebang themselves - aquisition, exploration and development - of their assets so the theory is they are willing and able to capture all the profits.

SNG - DOSBODS pick with a great stocko score. Recently spiked upwards. Would consider buying when it comes back and touches a few moving averages, perhaps.

YCA - uranium investment company, currently 231p, NAV gives a share price of 255p. 

CCJ - big, US uranium producer, the other half of any uranium bet, for me.

OZSC - probably shouldn't be on the toplist (my lists are all bollocks anyway - noob) but this one intrigues me. Biotech in the "Minimally Invasive Spinal" surgery sector. Big sector which they seek to disrupt through combining keyhole surgery and 3d printing type tech. Interesting but a dearth of info online.

XLM - materially oversold, online marketing (gambling) company. Great value and a well covered 8% dividend. Talk of US states legalising online gambling. Consistent profits.

RMG - on here as a "safe" dividend payer. Some early evidence to suggest recent decline is flattening so may be time now to get the 9% dividend?

 

Would welcome any thoughts.

toplist.PNG

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ashestoashes
On 15/03/2019 at 19:50, Bobthebuilder said:

Thanet Earth in Kent is interesting, grow tomatoes all year round in heated greenhouses that drive turbines to produce leccy. Big money behind it though, supermarkets i believe. Sell them everywhere now in the winter months even Aldi and Lidl.

power generated from ccgt and the waste co2 used in greenhouses to grow things

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Did anyone note Keiser Report claiming new printed US debt will be leveraged against gold! This is because the debt ceiling has been reached again.. 

Gold standard? 

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Yellow_Reduced_Sticker

"UK house price growth weakest since 2011 (-28%) as Brexit nears - RICS"

The Royal Institution for Chartered Surveyors (RICS) said its monthly house price balance sank to -28% in February, the lowest since May 2011, from -22 in January.

https://uk.reuters.com/article/uk-britain-houseprices-rics/uk-house-price-growth-weakest-since-2011-as-brexit-nears-rics-idUKKCN1QV003?il=0

Report: https://www.rics.org/globalassets/rics-website/media/knowledge/research/market-surveys/uk-residential-market-survey-february-2019-rics.pdf

Residential_market_survey-Feb_2019-graph

Apologies ...as i should of posted this last Thursday, (been busy in Tesco express looking for RYS xD)

Anyway, checking online the areas in the SE where i'd like to buy, those houses still ONLY down -5% to -10%...from peck of 2017

@DurhamBorn Questions if i may SIR... Is there any info on ya road maps ?

How do you see the housing downturn playing out:

1) VERY Slow downward trend over many years say a decade ?

2) A full on CRASH like we saw in 1990 to 1993 ?

3) if you expect a full on crash ...could ya give an estimate on when this is likely to unfold, CHEERS! :Beer:

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20 hours ago, subutai80 said:

Really interesting chart from here https://e-markets.nordea.com/?mc_cid=5838f53e27&mc_eid=0e2b3ce2b6#!/article/48008/nordea-view-that-came-easy-now-bet-hard

There also a very detailed outlook pdf downloadable from the same page.

 

105569

 

 

 

The stock market is purely liquidity based, and Powell's recent comments have served to defrost credit markets, I thought we had already seen the melt up (S&P now within 4% of 2018 highs) but perhaps it's only getting started. Mr Market both IS and ISN'T the economy, I'm convinced even if there was an asteroid heading to earth, the S&P would still break 3000.

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On 15/03/2019 at 19:40, Castlevania said:

Based on farmed Salmon I don’t like the idea of aquaponics 

No, I draw a line between salmon farming and the likes of fresh water fish in a farm set up.

Paddy fish to raibow trout or tilipia.

 

 

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On 16/03/2019 at 01:04, stokiescum said:

Mate of mine claimed that much is grown here some people are exporting it no idea if it’s true

If .... you a nrob the leccy then UK growers are far more clued up on maxing THC.

However ..... its the free leccy.

If the scallies go to Spain - or any other country with more sunshine than the UK - and if they dont get into the local manyana mind set then theyll dominate growing in Europe.

 

 

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2 hours ago, Yellow_Reduced_Sticker said:

"UK house price growth weakest since 2011 (-28%) as Brexit nears - RICS"

The Royal Institution for Chartered Surveyors (RICS) said its monthly house price balance sank to -28% in February, the lowest since May 2011, from -22 in January.

https://uk.reuters.com/article/uk-britain-houseprices-rics/uk-house-price-growth-weakest-since-2011-as-brexit-nears-rics-idUKKCN1QV003?il=0

Report: https://www.rics.org/globalassets/rics-website/media/knowledge/research/market-surveys/uk-residential-market-survey-february-2019-rics.pdf

Residential_market_survey-Feb_2019-graph

Apologies ...as i should of posted this last Thursday, (been busy in Tesco express looking for RYS xD)

Anyway, checking online the areas in the SE where i'd like to buy, those houses still ONLY down -5% to -10%...from peck of 2017

@DurhamBorn Questions if i may SIR... Is there any info on ya road maps ?

How do you see the housing downturn playing out:

1) VERY Slow downward trend over many years say a decade ?

2) A full on CRASH like we saw in 1990 to 1993 ?

3) if you expect a full on crash ...could ya give an estimate on when this is likely to unfold, CHEERS! :Beer:

I dont really bother with housing mainly as il die in the one i already own outright though i do have some interest in that my son hasnt bought yet (my daughters will be mortgage free by 30 and 33 in 3 bed semis).

However i see a down 15%,small flat line or perhaps 3% increase,then slow falls in nominal and bigger in real terms.By 2028 i expect southern house prices to be down inflation adjusted by around 70%,45% minimum.

Here in the north i expect maybe 25% down inflation adjusted in some areas,nominal perhaps very small falls.Iv seen lots of southerners moving here the last year to get away from the immigration and crime in other southern areas.Never seen that before.

In short i wouldnt touch a southern house,i would buy a northern one as a home and aim to pay it off quickly before rates really jack up towards the end of the next cycle,say 2027.

If i was buying a southern house,it would be around 2028/29 as rates top out prices likely bottom inflation adjusted.

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Bricks & Mortar
29 minutes ago, spygirl 🏆 said:

If the scallies go to Spain - or any other country with more sunshine than the UK - and if they dont get into the local manyana mind set then theyll dominate growing in Europe.

I'm not so sure.  The advantages of indoor growing are more than just being out of sight.  Turning the lights on and off means 4 crops a year.  Total control of the environment, (nutrients/CO2/light/wind - is needed to get those super-strong-fuck-you-up strengths.  If it were legal, I think there's a place for warehouse growing, close to the market.  It'd be a premium product, mind.

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1 hour ago, Barnsey said:

The stock market is purely liquidity based, and Powell's recent comments have served to defrost credit markets, I thought we had already seen the melt up (S&P now within 4% of 2018 highs) but perhaps it's only getting started. Mr Market both IS and ISN'T the economy, I'm convinced even if there was an asteroid heading to earth, the S&P would still break 3000.

My friends view,

 a melt-up in coming months that will take the S&P to 3500-4000 . This will be followed by the biggest bear market since 1929 with the potential for an 80% drop in the bust. We will not revisit the bull market highs again for decades.My gold and silver targets remain unchanged. I continue to expect $1550 gold & $26 silver by late summer. My GDX & GDXJ targets remain the same at $40 & $70, respectively. 
I continue to expect the dollar to decline to 85-86 in coming months (months not month). Current pullback could take GDXJ back below $30 before the march to $70 resumes

This is not trading advice,just putting it out there,these are macro calls based on extremes of the liquidity and debt profiles he sees.

I actually took my profits on Great Panther Silver on friday.I had a 70% profit on it and although i would like to hold until silver hits targets,i have lots of silver positions.Im going to use the profits to buy some physical silver i think and if it pulls back to $1.05 re-enter.

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Solzhenitsyn
1 hour ago, DurhamBorn said:

My friends view,

 a melt-up in coming months that will take the S&P to 3500-4000 . This will be followed by the biggest bear market since 1929 with the potential for an 80% drop in the bust. We will not revisit the bull market highs again for decades.My gold and silver targets remain unchanged. I continue to expect $1550 gold & $26 silver by late summer. My GDX & GDXJ targets remain the same at $40 & $70, respectively. 
I continue to expect the dollar to decline to 85-86 in coming months (months not month). Current pullback could take GDXJ back below $30 before the march to $70 resumes

This is not trading advice,just putting it out there,these are macro calls based on extremes of the liquidity and debt profiles he sees.

I actually took my profits on Great Panther Silver on friday.I had a 70% profit on it and although i would like to hold until silver hits targets,i have lots of silver positions.Im going to use the profits to buy some physical silver i think and if it pulls back to $1.05 re-enter.

Your friend must be David Hunter? 🤫

 

DCADF441-7121-47D2-AA9F-E009D54918B4.thumb.jpeg.3aaec51f88b0de69b63da96a10fdc3c7.jpeg8A33ADF6-5B59-4A71-A806-9A5C145EC5F5.jpeg.adaa7965351835fdc6c81ac7213209c1.jpegC73E6775-3FF4-4258-A2B3-84D4EAEEBE25.jpeg.7f472cdd8db365bdab77f031195cb065.jpeg

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Talking Monkey
1 hour ago, DurhamBorn said:

My friends view,

 a melt-up in coming months that will take the S&P to 3500-4000 . This will be followed by the biggest bear market since 1929 with the potential for an 80% drop in the bust. We will not revisit the bull market highs again for decades.My gold and silver targets remain unchanged. I continue to expect $1550 gold & $26 silver by late summer. My GDX & GDXJ targets remain the same at $40 & $70, respectively. 
I continue to expect the dollar to decline to 85-86 in coming months (months not month). Current pullback could take GDXJ back below $30 before the march to $70 resumes

This is not trading advice,just putting it out there,these are macro calls based on extremes of the liquidity and debt profiles he sees.

I actually took my profits on Great Panther Silver on friday.I had a 70% profit on it and although i would like to hold until silver hits targets,i have lots of silver positions.Im going to use the profits to buy some physical silver i think and if it pulls back to $1.05 re-enter.

My god DB 3500-4000 would be an insane meltup, what would drive that huge move in the next 6 or so months, I'm guessing Q1 and Q2 earnings will be poor, would it be pure momentum

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40 minutes ago, Talking Monkey said:

My god DB 3500-4000 would be an insane meltup, what would drive that huge move in the next 6 or so months, I'm guessing Q1 and Q2 earnings will be poor, would it be pure momentum

All about liquidity, so expect further more overt signalling from Fed regarding easing and a return to QE. Of course there are nasty macro reasons why they are doing this but markets really don't care until SHTF.

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sancho panza
4 hours ago, Barnsey said:

The stock market is purely liquidity based, and Powell's recent comments have served to defrost credit markets, I thought we had already seen the melt up (S&P now within 4% of 2018 highs) but perhaps it's only getting started. Mr Market both IS and ISN'T the economy, I'm convinced even if there was an asteroid heading to earth, the S&P would still break 3000.

There are some really strange things going on inside the headline index figures.Where the fang stocks have been smacked some unexpected strenght in other areas.I've recycled som short profits from last year dipping my toes but been burned.I'm very wary of a melt up possibilities.Boeing was $444 a week back.......

The key here is to not get run over and to use long term MA's and stick with the tide.Very hard at times but the DJI/S&P 20/50 have crossed on the southern side,which is a warning but jsut over 1`% so no really firm trend to discern imho.but to me the bear trend is intact but other long term MA's yet to cross over eg 10/12 monthly

Visa

image.png.bead9101211ff94aa3aac8070e424c63.png

American Express

image.png.5c13aebcd0c91b0b637a8434a5784645.png

image.png.07a4eeaafe997e08a7a8f4e8f13a2e60.png

 

2 hours ago, DurhamBorn said:

I dont really bother with housing mainly as il die in the one i already own outright though i do have some interest in that my son hasnt bought yet (my daughters will be mortgage free by 30 and 33 in 3 bed semis).

However i see a down 15%,small flat line or perhaps 3% increase,then slow falls in nominal and bigger in real terms.By 2028 i expect southern house prices to be down inflation adjusted by around 70%,45% minimum.

Here in the north i expect maybe 25% down inflation adjusted in some areas,nominal perhaps very small falls.Iv seen lots of southerners moving here the last year to get away from the immigration and crime in other southern areas.Never seen that before.

In short i wouldnt touch a southern house,i would buy a northern one as a home and aim to pay it off quickly before rates really jack up towards the end of the next cycle,say 2027.

If i was buying a southern house,it would be around 2028/29 as rates top out prices likely bottom inflation adjusted.

Hard to disagree with those calls in terms of local salaries.Gravity always wins.Leicester needs hosing before I'll raid our pension pot to buy a hosue.Say 10% gross yield.We rent on 3% currently.

50 minutes ago, Talking Monkey said:

My god DB 3500-4000 would be an insane meltup, what would drive that huge move in the next 6 or so months, I'm guessing Q1 and Q2 earnings will be poor, would it be pure momentum

I have to rfer my self to Keynes all the time

'markets can remain irrational...'' etc etc

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Eventually Right
28 minutes ago, sancho panza said:

 

 'markets can remain irrational...'' etc etc

Very true-I have some qqq (nasdaq etf) put options expiring in Jan 2020 that I bought last autumn.  

I was extremely happy with how things were going just before Christmas, but have been very surprised with the strength of the bounce, and am wary of a melt up, even if, with all the economic data going downhill, and earnings likely to be weakening, I can’t see the rationale for prices extending even further (beyond people thinking “the fed will save us whatever happens”)

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Talking Monkey
4 hours ago, DurhamBorn said:

My friends view,

 a melt-up in coming months that will take the S&P to 3500-4000 . This will be followed by the biggest bear market since 1929 with the potential for an 80% drop in the bust. We will not revisit the bull market highs again for decades.My gold and silver targets remain unchanged. I continue to expect $1550 gold & $26 silver by late summer. My GDX & GDXJ targets remain the same at $40 & $70, respectively. 
I continue to expect the dollar to decline to 85-86 in coming months (months not month). Current pullback could take GDXJ back below $30 before the march to $70 resumes

This is not trading advice,just putting it out there,these are macro calls based on extremes of the liquidity and debt profiles he sees.

I actually took my profits on Great Panther Silver on friday.I had a 70% profit on it and although i would like to hold until silver hits targets,i have lots of silver positions.Im going to use the profits to buy some physical silver i think and if it pulls back to $1.05 re-enter.

But would we get the melt up from here, I see how the Fed signalling huge liquidity via rate cuts and QE would cause a meltup, but wouldn't we need a significant pull back first for the Fed to get going with rate cuts and reducing QT starting QE, if the stockmarket is marching higher and inflation likely to pick up in May June I can't see the Fed cutting/reducing QT unless we have a significant pullback like before Christmas.

I don't doubt your call DB at all that we get a meltup, its just I would expect a significant pullback before the conditions are in place for that final meltup

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Castlevania
On 16/03/2019 at 14:43, billfunk said:

 Attached is my toplist going into the new ISA year. I will be looking for two shares initially for my LISA allowance. 

I would like one dividend payer and one potential multibagger. At the moment I am veering toward CHK - historically very cheap, directors have recently signed new 3 year contracts and bought stock. Also, TSG - read lots of positives about this miner, it fits the whole late-cycle resource thesis, has a 14% dividend and has recently been given a target of 97p by one stockbroker.

Others:

ARS - resources again, great management apparently and they are seeking to do the whole shebang themselves - aquisition, exploration and development - of their assets so the theory is they are willing and able to capture all the profits.

SNG - DOSBODS pick with a great stocko score. Recently spiked upwards. Would consider buying when it comes back and touches a few moving averages, perhaps.

YCA - uranium investment company, currently 231p, NAV gives a share price of 255p. 

CCJ - big, US uranium producer, the other half of any uranium bet, for me.

OZSC - probably shouldn't be on the toplist (my lists are all bollocks anyway - noob) but this one intrigues me. Biotech in the "Minimally Invasive Spinal" surgery sector. Big sector which they seek to disrupt through combining keyhole surgery and 3d printing type tech. Interesting but a dearth of info online.

XLM - materially oversold, online marketing (gambling) company. Great value and a well covered 8% dividend. Talk of US states legalising online gambling. Consistent profits.

RMG - on here as a "safe" dividend payer. Some early evidence to suggest recent decline is flattening so may be time now to get the 9% dividend?

 

Would welcome any thoughts.

toplist.PNG

I like Shanta Gold (I have shares in them) and do think they’re cheap. Then again they’re a tiny AIM listed company with a market cap of ~£50m who operate in Tanzania. They’re risky. Do your own research etc and this definitely isn’t advice but I’m happy to hold at current prices.

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Hello Durhamborn,  In the media one reads that  JP Morgan are in possession of 750 million ounces of silver. Do you think this is real and if so, would when JP Morgan sell have an effect on your silver roadmap?

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3500-4000 S&P is quite a call.  But nothing is impossible!  Indeed a blow off top quite likely if one accepts a deflationary bust (tend to go together).

Technically, on the weekly data, most indicies, stocks, CRB and WTI have have their initial run ups from the year-end and their stochastics are now elevated (above 80%).  The stochastics are like the booster rockets that fall away at this level.  After that, best to look at the MACDs to see if there could be a continuation of the uptrend (while the stochastics remain elevated around the 80% line).  Typically a point where I would sell a tranche if I was trading just to lock in some profit.  The MACDs certainly look like they have room to run higher, although a number of prices are at moderate resistance levels, except the S&P which has just broken through and is showing a bullish inverse H&S chart pattern.  I could certainly envisage the possibility of the S&P getting up to at least the 2018 high.  High yield target stocks are either also elevated or a few are showing possible signs of bottoming such as VOD, BT, and RMG but erroneously have been here before and need time and confirmation.  Bonds are meandering, maybe weakening, and PMs are already in a pullback since the latter part of February.

Trouble is the initial run up is complete and we are now at a continuation or pull back phase, not somewhere I'd personally want to start putting a lot of new money down, other than as a quick and tight trade.  The bus left the station at year-end and I don't like running after it!

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2 hours ago, sam1994 said:

This is where I get confused.

@DurhamBorn -- you've mentioned that the goal is to pick stocks that will do well in a reinflation cycle, and named a few of these: Centrica, BAT, Royal Mail, BT etc. These are core constituents of FTSE100 and others have agreed that the FTSE100 looks undervalued, particularly with its current dividend yield.

David seems to suggest that S&P, NASDAQ and DJIA indexes are going to get smashed. Surely this would extend to other indexes such as FTSE100? Or is it just the case that S&P etc will get mullered because of FANG and semi stocks; and other companies should be OK? 

I suppose what I'm trying to ask is if these indexes will take a pasting, does it not make more sense to be in cash (and miners/PMs) and wait until shit hits the fan to buy in to these reflationary stocks? Are you just deploying cash now as a form of cost averaging / laddering and so you can slice off gains and invest them elsewhere?

Sam

The truth is nobody knows when a market will top or bottom.I have lots of different reasons to start buying individual stocks and mostly its when they hit targets.Go Ahead my target was £15 to start ladder buying for instance.I aim for 4 or 5 ladders and if i get five it means a stock is down around 80% from its highs.I tend to start buying at a minimum 40% down from highs.I think all the stocks im buying are already cheap,some very cheap but they might get cheaper.Thats why i ladder buy.

Will BAT tobacco go down if Amazon goes down 80%?.I dont know.I do know at £24 it was yielding 8.2% and was down 53% from where i sold and was happy to buy it back.Will Standard Life go below £2.32 in an equity sell off?.Almost sure it will,but i still started buying at £2.32 as i want it for the next cycle.I have no concern if my first ladder goes down 40% from there and would be happy to be getting a ladder in at £1.42

Iv learned that the way that suits me best it to slowly buy the most hated assets that the next cycle should favour and i have no problems being down for however long.

I do tend to sell bottom ladders when they go up 20%,but not always.I havent sold Go Ahead for instance and they are up 33%,but i want all that holding for the next cycle.Some i sell the whole holding.

Turning a large portfolio over takes time and caution,but i expect once fully invested id be doing very little for several years.

I should add the shares that made me the most since i started investing 34 years ago have often been down quite a lot from buying.BAT for instance was down 20%+ but ended up giving me 1000%.Whitbread similar etc.

If the FTSE does get hit hard,id expect probably 1% down for every 2.5% in the S+P 

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