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Credit deflation and the reflation cycle to come.


DurhamBorn

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Wolf podcast -Well worth 10 minutes listen as to why this one might be different...

eg 'noone taking this sell off seriously...too confident...brushing off fed's tightening......no big crash imminent......overtime this will draw out into a widespread sell off...'

Good discussion on junk bond market-$1.2 trillion, leveraged loan market $2trn,

https://wolfstreet.com/2018/10/21/the-wolf-street-report-why-do-these-markets-smell-different/

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On 21/10/2018 at 21:27, DurhamBorn said:

Noticed today 10 fish fingers in Aldi are now £1.39.

Funny, I noticed higher prices in Aldi during last week's shop.  Quite a few products seem to have broken through their price points.  I'm beginning to wonder if old Morrisions is cheaper or at least the same price!

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2018-10-23_7-15-00.jpg?itok=1Cim7yN

Things are getting interesting, Amazon is starting to fall but Apple is holding steady so far.  If that begins to drop then its game on IMO.

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31 minutes ago, Majorpain said:

Things are getting interesting, Amazon is starting to fall but Apple is holding steady so far.  If that begins to drop then its game on IMO.

Indeed.  A decent gap down on the S&P today following some pretty poor moves.  Normally I would expect the gap to get filled first before anything else major but the technicals don't look like they want to.  One pump on the 16th but otherwise all dumps since the 9th (to be generous).  Today is further testing support.  Looks like it's playing catchup with the other international markets.  Not that I don't think there's a bit more life left, just hard to see how.  That pump on the 16th and the subsequent moves is whispering to me this is more than a "normal" correction that's almost done.  I was getting close to buying in (internationally) but think I'll wait and see.

PS: Note it's the earnings blackout in the US so no/little share buy backs at present.  Things could change once the earnings season is over.

PPS:  Can't read the detail in your charts.

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Fresnillo’s shares are flying today. Q3 results tomorrow. There’s either been a leak and the results are actually very good, or they’ll return to earth tomorrow.

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1 hour ago, sancho panza said:

Wolf podcast -Well worth 10 minutes listen as to why this one might be different...

eg 'noone taking this sell off seriously...too confident...brushing off fed's tightening......no big crash imminent......overtime this will draw out into a widespread sell off...'

Good discussion on junk bond market-$1.2 trillion, leveraged loan market $2trn,

https://wolfstreet.com/2018/10/21/the-wolf-street-report-why-do-these-markets-smell-different/

Ta.  The comments are also good, especially vinyl1 et al.

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2 hours ago, Majorpain said:

2018-10-23_7-15-00.jpg?itok=1Cim7yN

Things are getting interesting, Amazon is starting to fall but Apple is holding steady so far.  If that begins to drop then its game on IMO.

Everything rests on Apple at the moment. Netflix and Facebook have been a bit 'meh' for the last few weeks.

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2 hours ago, sancho panza said:

Wolf podcast -Well worth 10 minutes listen as to why this one might be different...

eg 'noone taking this sell off seriously...too confident...brushing off fed's tightening......no big crash imminent......overtime this will draw out into a widespread sell off...'

Good discussion on junk bond market-$1.2 trillion, leveraged loan market $2trn,

https://wolfstreet.com/2018/10/21/the-wolf-street-report-why-do-these-markets-smell-different/

 

My favourite comment from there re: Netflix:

 

"On another equally amusing front I read Netflix spent an average of $1,000 in Q3 2018 to attract a new subscriber: this means they spent one cool million to attract one thousand new subscribers and so on.


Which would be fine if the numbers didn’t add up, quite literally. The average Netflix subscription worldwide is about $9/month, or $27/quarter, or $108/year. Combined with the fixed costs Netflix has to sustain day in day out it’s literally impossible to break even, let alone turn a profit.


Even more so than the Church of Musk, Netflix depends on the ability to finance that deeply negative cash flow at much repressed rates, and in my opinion Netflix is where we should keep our eyes on to see how the cycle will break: while negative cash flow companies have been the norm during periods of excessive economic enthusiasm for centuries, we’ve never seen anything this size."

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1 hour ago, Harley said:

IPS: Note it's the earnings blackout in the US so no/little share buy backs at present.  Things could change once the earnings season is over.

PPS:  Can't read the detail in your charts.

I dont disagree that the share buy backs could come back with a vengeance, but i suspect a lot of that was funded with cheap debt.  Which isnt cheap any more.

Its someone else's chart, it shows the trend nicely but i agree its missing a few pixels.

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3 hours ago, Harley said:

PS: Note it's the earnings blackout in the US so no/little share buy backs at present.  Things could change once the earnings season is over.

 

I am sort of counting on it.  Still have a huge chunk of my work pension DC funds in default option that looks like mainly US equities, and starting to worry I have missed the boat.

Not that there is a lot of choice but was hoping to part at least half of it in cash for now as I can't SIPP it out easily

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52 minutes ago, Bear Hug said:

I am sort of counting on it.  Still have a huge chunk of my work pension DC funds in default option that looks like mainly US equities, and starting to worry I have missed the boat.

Not that there is a lot of choice but was hoping to part at least half of it in cash for now as I can't SIPP it out easily

I was thinking of doing exactly that, moving my work DC pension funds into a SIPP. Is there something I've overlooked? Not started yet but just seemed like lots of form-filling.

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3 hours ago, Harley said:

Miners having a nice day contra to the overall market:

Capture3.PNG.42c6eb8cec9be540c75e19513ffb39c9.PNG

even the rubbers:

Capture2.PNG.d6282e1a7324c354e1558177a7af0b29.PNG

And GDX filling all its gaps.

I think if GDX can get through 21 and gold can get over $1239 its game on as the moving averages are looking very tight now.UK market is already in capitulation stage for many stocks.Look at that rubber band list,just New Gold letting us down the old dog xD

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4 minutes ago, Funn3r said:

I was thinking of doing exactly that, moving my work DC pension funds into a SIPP. Is there something I've overlooked? Not started yet but just seemed like lots of form-filling.

My new jobs pension goes in a world wide tracker with 50% US exposure :S.As soon as i get the log in il change it to the cash fund,then transfer out into my SIPP once i leave.

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13 minutes ago, DurhamBorn said:

I think if GDX can get through 21 and gold can get over $1239 its game on as the moving averages are looking very tight now.UK market is already in capitulation stage for many stocks.Look at that rubber band list,just New Gold letting us down the old dog xD

Old Dog Q3 results out after close tomorrow with an explanatory webcast the following day before opening. Doesn’t bode well really so the market probably pricing that in. I’ve got a weird fondness for NGD. Proper willing it to turn around. Must be a glutton for punishment :D

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Eventually Right

I treated myself to a real vision subscription recently, and was listening to one of their latest videos today, an interview with a PM fund manager, Ned Naylor-Leyland.

I found one of the points he made about how gold reacted initially in 2008 interesting.

his argument was basically that gold’s 30% price dip in 2008 was due to the market’s believing that the use of unconventional monetary policies (QE etc) was very unlikely to occur. Once it became obvious that they were going to be used, gold quickly reversed. As markets no longer have that psychological hurdle to believing QE to infinity can/will be used, his argument is that a market/economic crash wouldn’t have that same depressing initial influence that happened in 2008. In fact it would be the opposite. 

I’ll post the relevant transcript below-I’d be interested in people’s views on this, why it might be wrong/right.

“So 2008 often gets referred to. But we're not there anymore. And it's not a it's-different-this-time point. It's very, very clear what happened to me.
If you look at the Real Yield index I referred to, what you will see is before QE was mentioned, we were in a deflationary collapse. That meant that money on deposit, dollars on deposit, on a forward-looking basis were, according to the bond market, gathering purchasing power just being sat there. Now that is not good for the dollar-gold price.
So the dollar-gold price went down nearly 30% in very short order during 2008 before this new, wonderful world of QE was even discussed openly. The moment that happened, it turned. The bond market understood that we are now in an environment where conventional-monetary policy is not around.
And we are still in that post-'08 environment, where if we need to, we can go into yet more unconventional environments-- more QE, negative rates-- all these things. We're not where we were in '08 when gold went down 30%. It went down 30% because the bond market-- if you look at the Barclay's-Bloomberg index, it was pricing $1.04. So it was saying, money will be worth 4% more in seven to 10 years' time than it is today.
I cannot see any environment of stress where the bond market is going to be pricing that. For me, it's clearly going to go the other way. And people will realize we're going from what is already a tight environment to an extreme-loose one very quickly. It should be the opposite of what we had before.”

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43 minutes ago, Lavalas said:

Old Dog Q3 results out after close tomorrow with an explanatory webcast the following day before opening. Doesn’t bode well really so the market probably pricing that in. I’ve got a weird fondness for NGD. Proper willing it to turn around. Must be a glutton for punishment :D

The more I think about it, the more I think it will take a miracle for NGD to turn things around. They might be moving in line with the wider market for now, only slightly underperforming, but once everyone else starts reporting profits while NGD keeps sinking money down Rainy River shafts, that might be game over. A quick spiral towards zero, until one of the bigger players picks up the scraps.

There is definitely some movement, one of their vice presidents was given the boot yesterday, but it should be their next update on Rainy River that will make them or brake them.

Edit: Q3 results will be announced tomorrow (Wed) after close. I'm mightly curious.

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5 hours ago, Harley said:

Indeed.  A decent gap down on the S&P today following some pretty poor moves.  Normally I would expect the gap to get filled first before anything else major but the technicals don't look like they want to.  One pump on the 16th but otherwise all dumps since the 9th (to be generous).  Today is further testing support.  Looks like it's playing catchup with the other international markets.  Not that I don't think there's a bit more life left, just hard to see how.  That pump on the 16th and the subsequent moves is whispering to me this is more than a "normal" correction that's almost done.  I was getting close to buying in (internationally) but think I'll wait and see.

PS: Note it's the earnings blackout in the US so no/little share buy backs at present.  Things could change once the earnings season is over.

PPS:  Can't read the detail in your charts.

A lot of the stocks I'm following seem heavily oversold.BThere has indeed been a  relentless trickle of sell days.....strange,I think Wolf has it in terms of it being a different sort of sell off.

6 hours ago, Majorpain said:

2018-10-23_7-15-00.jpg?itok=1Cim7yN

Things are getting interesting, Amazon is starting to fall but Apple is holding steady so far.  If that begins to drop then its game on IMO.

I'm probably going to sound stoopid saying this but I've noticed a few star stocks hitting significant nominal milestones and then selling off eg Boeing ($400),Amazon ($2000),Facebook $200),Domino's ($300).......

 

 

 

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Inoperational Bumblebee
8 hours ago, Harley said:

Miners having a nice day contra to the overall market:

Capture3.PNG.42c6eb8cec9be540c75e19513ffb39c9.PNG

even the rubbers:

Capture2.PNG.d6282e1a7324c354e1558177a7af0b29.PNG

And GDX filling all its gaps.

Another thing I like about the miners is exchange rate effects seem to happen at the same time. PMs up, miners up more, Sterling down amplifying the gains.

It would never have occurred to me to buy miners before this (and the ToS) thread, and I'm perfectly happy with the volatility given my exposure and the fact it's much lower than crypto...

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5 hours ago, Funn3r said:

I was thinking of doing exactly that, moving my work DC pension funds into a SIPP. Is there something I've overlooked? Not started yet but just seemed like lots of form-filling.

It depends. I can't actually transfer a chunk out to SIPP from my current work's DC fund unless I leave the scheme completely for a while.  But then I will lose matching monthly employer's contributions. They do offer a few funds but it's mainly mix of UK/US equities/bonds.  Nothing sector specific like miners or utilities.

Even considering some dubious "absolute return" fund but it just looks like cash but eroded by higher fees in a long term...  

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Gordie Lastchance
On 21/10/2018 at 23:43, Bricks & Mortar said:


Mair siller?

You are Robbie Shepherd and I claim my 25p.:D

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