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Credit deflation and the reflation cycle to come.


DurhamBorn

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Democorruptcy
3 hours ago, Harley said:

All very quiet here.  Where have all the usual suspects gone?  Should I be busy doing something too?

OK I'll post something.

Quote

 

Investors are asking fresh questions over whether the $8tn market in credit derivatives offers any true protection against debt default

FT article

 

It sounds like pass the buck until it finishes up with somebody who has no bucks?

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3 hours ago, Harley said:

All very quiet here.  Where have all the usual suspects gone?  Should I be busy doing something too?

My turn. Gold and Silver are both trapped in descending triangles, soon there will be a breakout..!

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Im sitting on my hands watching what the mkt does. Is it a) kill the tax payer through a thousand cuts through higher taxation until the pips squeeze following which only then will Governments consider  reflation or will they act sooner through the markets forcing them. It appears to be the year for political uncertainty that will roller coaster the market.

On taxation. My Council tax has risen from £1500pa 2015 to £1900 in 2018. Who wants to own a house in 2029 or live in the UK with taxation the way its going.

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Democorruptcy
8 minutes ago, Agent ZigZag said:

Im sitting on my hands watching what the mkt does. Is it a) kill the tax payer through a thousand cuts through higher taxation until the pips squeeze following which only then will Governments consider  reflation or will they act sooner through the markets forcing them. It appears to be the year for political uncertainty that will roller coaster the market.

On taxation. My Council tax has risen from £1500pa 2015 to £1900 in 2018. Who wants to own a house in 2029 or live in the UK with taxation the way its going.

Don't forget the council pension machines. They have started cropping up in car parks where they have never had them before, here in Cheshire.

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4 hours ago, Harley said:

All very quiet here.  Where have all the usual suspects gone?  Should I be busy doing something too?

Not fucked off to another website again have they?

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https://www.constructionenquirer.com/2019/01/14/plant-hire-giant-hawk-falls-into-administration/

Debt deflation is happening now, ive prepared my positions to sit in so there is not much to do but watch and wait.

Steady bad news till something like Deutshe blows and everyone realises its not different this time IMO....

Its not too late to pick up Amazon at 200 PE!

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4 hours ago, Majorpain said:

ive prepared my positions

Any highlights?  For my SiPP, I'm working towards 25% in each equity, PMs, bonds, and cash equivalents.  Ok on PMs but hoping for a pull back on bonds.  Equity holdings going up as I get buy triggers.  Actually got a few last week!  Still worried about my cash holdings - that is, the return of them.  So will be happier when fully allocated.

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Iv been building a wildlife garden pond so havent had time for the markets.Gold is doing fine though and the miners drifting down again as weak hands get fed up.GDX should bounce off the $20 level,and likely at that point we will start to trend higher and higher.The dollar against the Swiss franc has made an 18 year cycle high and since then has had 4 attempts to break out against resistance of tops in 2014, 15 and 16. This is a warning to dollar bulls and very bullish for Gold. 

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9 hours ago, Harley said:

Any highlights?  For my SiPP, I'm working towards 25% in each equity, PMs, bonds, and cash equivalents.  Ok on PMs but hoping for a pull back on bonds.  Equity holdings going up as I get buy triggers.  Actually got a few last week!  Still worried about my cash holdings - that is, the return of them.  So will be happier when fully allocated.

Ah, a Harry Browne setup...so for your equities in this setup do people go for a UK index etf, a MSCI world type index etf, or just pick n mix their own individual shares...and most importantly why?

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Anyone noticed how well the transports are doing?.Really bounced a lot from the bottoms.Im not selling my bottom ladders this time though just in case they dont re-test lows again.

11 hours ago, Harley said:

Any highlights?  For my SiPP, I'm working towards 25% in each equity, PMs, bonds, and cash equivalents.  Ok on PMs but hoping for a pull back on bonds.  Equity holdings going up as I get buy triggers.  Actually got a few last week!  Still worried about my cash holdings - that is, the return of them.  So will be happier when fully allocated.

Its amazing isnt it when our main concern is not leaving too much in cash too long.It shows the insane way governments have spent (mostly on welfare both client state and corporate) and the CBs have allowed them by monetizing the debt (or in the UK case about half the increase).I have zero faith in fiat going forward.I have no doubt we will all have pounds in our pocket,but the value will be inflated away.The first round of inflation they printed went into assets (in the UK mostly houses) and inflated spending power away that way,the next lot will go into other real assets,energy,food,commods etc.That round will do the real damage to most people.Rates will tighten,but behind the curve.My home is my pension will be blown away through the cycle,that im certain of.

Iv managed to find a IFA who will handle a final salary pension transfer into a SIPP,a good friend of mine uses him.He is as dodgy as they come and likes the folding stuff as he has a thirst for women of the night and will rubber stamp it for £700,:Beer:

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1 hour ago, DurhamBorn said:

He is as dodgy as they come and likes the folding stuff as he has a thirst for women of the night and will rubber stamp it for £700,:Beer:

Not all heroes wear capes.

On another subject....any thoughts on National Express? Not too exposed to rail, got quite a few new coaches on the road, run a few school buses in the US....and I used to love getting put on them when I was a kid and whichever parent didn't want me around for a bit...

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13 hours ago, Harley said:

Any highlights?  For my SiPP, I'm working towards 25% in each equity, PMs, bonds, and cash equivalents.  Ok on PMs but hoping for a pull back on bonds.  Equity holdings going up as I get buy triggers.  Actually got a few last week!  Still worried about my cash holdings - that is, the return of them.  So will be happier when fully allocated.

Nothing particularly exciting, just a spread of high quality PM companies in the Americas.  I'm staying out of Europe, Africa and Asia till we see how those dice fall.

European Bonds in particular are one to avoid, the ECB indiscriminately buying will come back to haunt them one day.

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On 17/06/2018 at 12:08, Band said:

Which companies are looking good for battery technology? Surely Lithium will be a good investment also

Around the time you posted this a Canadian company called Plateau Energy Metals claim to have found a couple of million tonnes of lithium in Peru. I know the vague area, it is easy to get to as their bumpf says, as for anything more technical I have no idea, but just thought I'd chuck this on here....

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8 hours ago, MrXxx said:

Ah, a Harry Browne setup...so for your equities in this setup do people go for a UK index etf, a MSCI world type index etf, or just pick n mix their own individual shares...and most importantly why?

Oh, that question was like a stake to the heart!  Exactly what I'm wrestling with!  As a rule, I don't like the idea of doing all that research and finally finding an allocation model you like, only to then start tweaking it (as it potentially invalidates the data used in the research).

Strictly, per Browne, you should buy domestic (UK) equities and use a general market ETF,  fund, etc.  But I've already veered away from that and just started to additionally buy ETFs in each geographical region (Europe, APD, Japan, NA, EM).  My rationale is my worry about the relative strength of sterling in the long term.  But I'm sure Browne looked at this and had an argument against it (e.g. that's what the PMs are for, match the currency, etc to the expenditure currency, etc). 

Anyways I will probably keep a small allocation in non UK equities.  I'm using Vanguard ETFs as they offer the lowest cost and seem to do less security lending.  One thing I might do though is look to switch to a worldwide ETF instead.  But my concern is not to have too much invested in any one ETF or fund to minimise any institutional risk.  I got burnt once!

I'm splitting my UK equities between Vanguard and iShare ETFs to again minimise any institutional risk.  I may need to add others if these holdings get too big.  But then I was thinking about buying a portfolio of high UK yielders instead or in addition to these ETFs.  But then I have an ISA that does this and the yields of the current ETFs are not too bad (>4.5%) so maybe best not too.  Plus more expensive.  I could always venture into trusts instead of individual equities.

In summary:

o Asset allocation is a key driver of performance and needs to match your personal situation (e.g. age)

o A good asset allocation should ideally not require tweaks

o Institutional risk (including the risk of one of the counterparties if not the main the provider) is real

o Splitting allocations across several similar institutional (and type of) offerings is probably prudent to reduce institutional risk

o Need to look at a specific portfolio (e.g. SIPP) in the whole, with all your other holdings

o Costs (purchase and maintenace) are a consideration, especially over the long term, as is complexity.

Then repeat for bonds, PMs, and cash equivalents!

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5 hours ago, DurhamBorn said:

Anyone noticed how well the transports are doing?.Really bounced a lot from the bottoms.Im not selling my bottom ladders this time though just in case they dont re-test lows again.

Its amazing isnt it when our main concern is not leaving too much in cash too long.It shows the insane way governments have spent (mostly on welfare both client state and corporate) and the CBs have allowed them by monetizing the debt (or in the UK case about half the increase).I have zero faith in fiat going forward.I have no doubt we will all have pounds in our pocket,but the value will be inflated away.The first round of inflation they printed went into assets (in the UK mostly houses) and inflated spending power away that way,the next lot will go into other real assets,energy,food,commods etc.That round will do the real damage to most people.Rates will tighten,but behind the curve.My home is my pension will be blown away through the cycle,that im certain of.

Iv managed to find a IFA who will handle a final salary pension transfer into a SIPP,a good friend of mine uses him.He is as dodgy as they come and likes the folding stuff as he has a thirst for women of the night and will rubber stamp it for £700,:Beer:

Ah yes, the old "good inflation followed by the bad"!  Just wish I had ridden up the good times and not now trying to just hunker down for the bad ones!  At least I expect trading to offer some relatively good returns compared to that the dart-monkey approach we've had.

PS:  Wildlife pond, for sure.  There's gold beneath that pond I tell you!

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Quote

Late last year, the Finance Ministry asked BaFin for its data on how different merger scenarios could play out for the German banks, said people familiar with the matter.

During a strategy retreat in September, Deutsche Bank executives concluded that a merger with Swiss competitor UBS Group AG was the most favorable option among potential European partners, though they determined that the time isn’t right due to the German lender’s weak share price, people familiar with the matter have said. BaFin’s analysis came to a similar conclusion, the people said.

Deutsche cant merge with Commerzbank because they are both too weak to benefit.

So the proposal is to merge it with another "foreign" bank so the load of bailing out the behemoth can be spread over as  many countries as possible and not just the German taxpayer.

Who in the right mind is going to sign off a deal which has potentially Trillions of liabilities dependant on how the derivatives loan book plays out?

Its mad, totally mad.

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8 minutes ago, Majorpain said:

Deutsche cant merge with Commerzbank because they are both too weak to benefit.

So the proposal is to merge it with another "foreign" bank so the load of bailing out the behemoth can be spread over as  many countries as possible and not just the German taxpayer.

Who in the right mind is going to sign off a deal which has potentially Trillions of liabilities dependant on how the derivatives loan book plays out?

Its mad, totally mad.

Logic has been thrown out of the window.  I've no idea what any of them are going to do, or why.

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1 hour ago, Majorpain said:

Deutsche cant merge with Commerzbank because they are both too weak to benefit.

So the proposal is to merge it with another "foreign" bank so the load of bailing out the behemoth can be spread over as  many countries as possible and not just the German taxpayer.

Who in the right mind is going to sign off a deal which has potentially Trillions of liabilities dependant on how the derivatives loan book plays out?

Its mad, totally mad.

Gordon Brown?

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16 minutes ago, Majorpain said:

Ah, yes!

Flash Gordon needs to save the world.  Again.

February 2009: "Now is not the time to apportion blame."

A get out jail card for the bankers but in hindsight the rocking-horse jockey was absolving himself of responsibility, too.

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10 hours ago, DurhamBorn said:

He is as dodgy as they come and likes the folding stuff as he has a thirst for women of the night

Ah, someone we can trust, as the intelligence bods would say.

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