Credit deflation and the reflation cycle to come.

[kibuc]

1 hour ago, Sideysid said:

Going on from that we here in the UK can now get Coinbase Visa debit card.

https://www.coindesk.com/coinbase-launches-crypto-visa-debit-card-for-uk-and-eu-customers

Obviously fees would be an issue with BTC, but that’s where other day to day low fee use crypto comes in.

I'd say the main issue is that you can only spend from your Coinbase account. How is that different from spending fiat from your bank account? The entire selling point of crypto is lost there.

Wake me up when I can spend crypto like this instantly from my wallet.

[sancho panza]

From the 'history doesn't repeat itself but it sure does rhyme' section

 

Double top in 07 well before the big dump in  08

[sancho panza]

1 hour ago, kibuc said:

I'd say the main issue is that you can only spend from your Coinbase account. How is that different from spending fiat from your bank account? The entire selling point of crypto is lost there.

Wake me up when I can spend crypto like this instantly from my wallet.

Agreed.But I admit I may be something of an old fart in this regard.

Problem with Crypto as well is that nothing stops people setting up new ones.

Worth pointing out that PM's are already a sort of crypto.

I concede soem numbers on a hard drive are easier to sneak through customs.

[Majorpain]

19 minutes ago, sancho panza said:

From the 'history doesn't repeat itself but it sure does rhyme' section

****Jerome Powell's Office****

Money printing solves all economic problems everything is fine.....  Hang on, Trump is putting tariffs on HOW many imports???!!!

[Lightscribe]

2 hours ago, kibuc said:

I'd say the main issue is that you can only spend from your Coinbase account. How is that different from spending fiat from your bank account? The entire selling point of crypto is lost there.

Wake me up when I can spend crypto like this instantly from my wallet.

This is where DEX comes in

https://merehead.com/blog/decentralized-vs-centralized-cryptocurrency-exchange-dex-cex/

[Lightscribe]

42 minutes ago, sancho panza said:

Agreed.But I admit I may be something of an old fart in this regard.

Problem with Crypto as well is that nothing stops people setting up new ones.

Worth pointing out that PM's are already a sort of crypto.

I concede soem numbers on a hard drive are easier to sneak through customs.

True, there’s thousands of tokens and coins all with market caps and circulating and max supplies. The ER20 token based on ETH is a platform for this very purpose.

Theres few that are actually deemed stable alt coins in relation to BTC however that are actually used for example on the dark web.

Multiple currencies can co-exist as they have different features.

BTC usability will never be there due to fees, transaction speed (LTC similarly), so that’s where the likes of Bitcoin cash comes in. 

Monero has been about a while and is the king of privacy by design, and countries are already banning exchanges from listing it. Will this stop the elites using it as an equivalent of an off-shore bank account to avoid tax and launder money P2P? We’ll see.

[kibuc]

1 hour ago, sancho panza said:

Problem with Crypto as well is that nothing stops people setting up new ones.

To be fair, nothing stops people from spawning as many non-crypto currencies as they please, either. The tricky part is to convince people to assign value to it.

I could start printing Kibucian Dolars any moment, hence giving birth to a new currency, but I don't think King Dollar would notice.

The same happens to fringe cryptocurrencies, they have no effect on the big boy(s) in the sphere.

[Harley]

Nice inverse head and shoulders on cable today.  Bottomed?

Silver in both USD and GBP caught a bid this week after a lunchtime putdown on Tuesday. Hmm!

Lots of selling of the main indicies at some of the opens his week.  Oh!

Treasuries still on a tear this week.  Safety on?

All quiet on my divy front but some getting there while others weakening.

A dead week ahead for new trades.

[DurhamBorn]

1 hour ago, Harley said:

Nice inverse head and shoulders on cable today.  Bottomed?

Silver in both USD and GBP caught a bid this week after a lunchtime putdown on Tuesday. Hmm!

Lots of selling of the main indicies at some of the opens his week.  Oh!

Treasuries still on a tear this week.  Safety on?

All quiet on my divy front but some getting there while others weakening.

A dead week ahead for new trades.

Gold and the miners running just as expected late May/early June.Just needs the market to sniff inflation now to send the GDX up around 40% i think.Im looking for $26 on the GDX before i offload some miners.I think silver is going to $180 over the cycle,but lots of ups and downs along the way.I hope they run and the reflation stocks im buying fall and hit ladder points.Iv also started to buy tobacco stocks back.They arent reflation stocks,but i think they will return 50% over three years from here.Some brutal falls in the UK market thats for sure.Iv stocks hitting my ladder points 4 out of 5 or 5 out of 5 and i didnt expect that,though i did expect PEs of 6 to 8 and that is the level most are at at ladder point 4.

[Castlevania]

5 minutes ago, DurhamBorn said:

Gold and the miners running just as expected late May/early June.Just needs the market to sniff inflation now to send the GDX up around 40% i think.Im looking for $26 on the GDX before i offload some miners.I think silver is going to $180 over the cycle,but lots of ups and downs along the way.I hope they run and the reflation stocks im buying fall and hit ladder points.Iv also started to buy tobacco stocks back.They arent reflation stocks,but i think they will return 50% over three years from here.Some brutal falls in the UK market thats for sure.Iv stocks hitting my ladder points 4 out of 5 or 5 out of 5 and i didnt expect that,though i did expect PEs of 6 to 8 and that is the level most are at at ladder point 4.

What I’m finding intriguing are the number of stocks that are hitting lows not seen in 10+ years. 

Gold miners flying today. Makes a change

[invalid]

8 hours ago, kibuc said:

I'd say the main issue is that you can only spend from your Coinbase account. How is that different from spending fiat from your bank account? The entire selling point of crypto is lost there.

Wake me up when I can spend crypto like this instantly from my wallet.

I've been keeping an eye on this one for a while:

https://www.graft.network/

[DurhamBorn]

20 minutes ago, Castlevania said:

What I’m finding intriguing are the number of stocks that are hitting lows not seen in 10+ years. 

Gold miners flying today. Makes a change

Yes and two camp.Lots of stocks that wont likely ever recover,then stocks that for me have had a whole cycle against them that is now ending.There are many areas that thrive when we have inflation.If you take the telcos,Vod and BT you can see this in action.Lots of investment in a deflation cycle means big debts and flat profits.The market sees this as a never ending thing and give up on them.Just before inflation starts to run and price increases then drop straight to the bottom line as free cash.If the debt profile is right then the debt should be paid off as it comes due with no need to roll over at higher interest rates.

Lots of capitulation in many areas of the UK market now.

[Talking Monkey]

26 minutes ago, DurhamBorn said:

Yes and two camp.Lots of stocks that wont likely ever recover,then stocks that for me have had a whole cycle against them that is now ending.There are many areas that thrive when we have inflation.If you take the telcos,Vod and BT you can see this in action.Lots of investment in a deflation cycle means big debts and flat profits.The market sees this as a never ending thing and give up on them.Just before inflation starts to run and price increases then drop straight to the bottom line as free cash.If the debt profile is right then the debt should be paid off as it comes due with no need to roll over at higher interest rates.

Lots of capitulation in many areas of the UK market now.

Do you still see a market blowoff before big declines DB, there was talk of that a couple of months back

[sancho panza]

1 hour ago, DurhamBorn said:

Gold and the miners running just as expected late May/early June.Just needs the market to sniff inflation now to send the GDX up around 40% i think.Im looking for $26 on the GDX before i offload some miners.I think silver is going to $180 over the cycle,but lots of ups and downs along the way.I hope they run and the reflation stocks im buying fall and hit ladder points.Iv also started to buy tobacco stocks back.They arent reflation stocks,but i think they will return 50% over three years from here.Some brutal falls in the UK market thats for sure.Iv stocks hitting my ladder points 4 out of 5 or 5 out of 5 and i didnt expect that,though i did expect PEs of 6 to 8 and that is the level most are at at ladder point 4.

I had a little punt on Imperial the other day that got stopped out 3% below the open as it jsut popped south straight away.There's not many things I'm long on to be fair but IMB has dropped onto my watch list for purchase.

As for the miners I was weighing tranche 3 of our purchases and then today happened.Some real easing off over the last month.

 

1 hour ago, Castlevania said:

What I’m finding intriguing are the number of stocks that are hitting lows not seen in 10+ years. 

Gold miners flying today. Makes a change

Indeed and then you've got flyers like Whitbread,LSE,IHG,housebuilders etc etc all up on middling revenue growth.

Strange really,surreal even.

[sancho panza]

1 hour ago, DurhamBorn said:

Yes and two camp.Lots of stocks that wont likely ever recover,then stocks that for me have had a whole cycle against them that is now ending.There are many areas that thrive when we have inflation.If you take the telcos,Vod and BT you can see this in action.Lots of investment in a deflation cycle means big debts and flat profits.The market sees this as a never ending thing and give up on them.Just before inflation starts to run and price increases then drop straight to the bottom line as free cash.If the debt profile is right then the debt should be paid off as it comes due with no need to roll over at higher interest rates.

Lots of capitulation in many areas of the UK market now.

I think the majority of the capitulation is yet to come.

I posted a VOD chart the other day from 2008 showing how it barely dropped into the crash as the bulk of the falls had been done.Some early indicators are suggesting bear market is entrenched eg travel companies IAG/EZY/TUI, housebuilders appear to have peaked and are dropping.

Falls in substantive chunks of the market are hidden by charts like this

[Harley]

2 hours ago, DurhamBorn said:

Gold and the miners running just as expected late May/early June.Just needs the market to sniff inflation now to send the GDX up around 40% i think.Im looking for $26 on the GDX before i offload some miners.I think silver is going to $180 over the cycle,but lots of ups and downs along the way.I hope they run and the reflation stocks im buying fall and hit ladder points.Iv also started to buy tobacco stocks back.They arent reflation stocks,but i think they will return 50% over three years from here.Some brutal falls in the UK market thats for sure.Iv stocks hitting my ladder points 4 out of 5 or 5 out of 5 and i didnt expect that,though i did expect PEs of 6 to 8 and that is the level most are at at ladder point 4.

For me:

. I got a buy signal on the weekly for Imperial as a div stock but it looked suspect so am holding off until late next week to see.

. Hoping for further falls before buying more stocks.  Some are on the floor (and may stay there for a few more weeks), but others may have only just started to turn down.

. GDX (in GBP) may have bottomed but is still up 20% from it's Sep 2018 low!  $26 would be disappointing from here.

[Ash4781b]

7 hours ago, sancho panza said:

I had a little punt on Imperial the other day that got stopped out 3% below the open as it jsut popped south straight away.There's not many things I'm long on to be fair but IMB has dropped onto my watch list for purchase.

As for the miners I was weighing tranche 3 of our purchases and then today happened.Some real easing off over the last month.

 

Indeed and then you've got flyers like Whitbread,LSE,IHG,housebuilders etc etc all up on middling revenue growth.

Strange really,surreal even.

Blimey. I’d not picked up on the likes of EasyJet, etc. What’s going on ? Margins  collapsed across sectors. Looks like bloodbath on the consumer?

[Democorruptcy]

11 hours ago, sancho panza said:

I had a little punt on Imperial the other day that got stopped out 3% below the open as it jsut popped south straight away.There's not many things I'm long on to be fair but IMB has dropped onto my watch list for purchase.

As for the miners I was weighing tranche 3 of our purchases and then today happened.Some real easing off over the last month.

 

Indeed and then you've got flyers like Whitbread,LSE,IHG,housebuilders etc etc all up on middling revenue growth.

Strange really,surreal even.

Looking at it the other way, for if things did change?

 

[Castlevania]

4 hours ago, Ash4781b said:

Blimey. I’d not picked up on the likes of EasyJet, etc. What’s going on ? Margins  collapsed across sectors. Looks like bloodbath on the consumer?

Overcapacity in Europe. I went to Krakow from London some 6 years ago. The only airline at the time that flew that route was Ryanair. Today Ryanair, Wizz, Easyjet and BA fly that route. Fares have more than halved.

In addition the glut of ex communist air force pilots that flooded the market following the fall of communism and allowed airlines to pay peanuts for pilots and allowed the massive growth of the likes of Ryanair have been retiring. The cost of hiring a pilot has soared.

[NogintheNog]

8 minutes ago, Castlevania said:

Overcapacity in Europe. I went to Krakow from London some 6 years ago. The only airline at the time that flew that route was Ryanair. Today Ryanair, Wizz, Easyjet and BA fly that route. Fares have more than halved.

In addition the glut of ex communist air force pilots that flooded the market following the fall of communism and allowed airlines to pay peanuts for pilots and allowed the massive growth of the likes of Ryanair have been retiring. The cost of hiring a pilot has soared.

Yes, and they won't be able to pass that pilot staff cost on in a deflation event. So in 6 years time they'll be two airlines flying the Krakow route, with the prices doubled.

(Wish I knew which two)

[Lightscribe]

15 hours ago, DurhamBorn said:

Yes and two camp.Lots of stocks that wont likely ever recover,then stocks that for me have had a whole cycle against them that is now ending.There are many areas that thrive when we have inflation.If you take the telcos,Vod and BT you can see this in action.Lots of investment in a deflation cycle means big debts and flat profits.The market sees this as a never ending thing and give up on them.Just before inflation starts to run and price increases then drop straight to the bottom line as free cash.If the debt profile is right then the debt should be paid off as it comes due with no need to roll over at higher interest rates.

Lots of capitulation in many areas of the UK market now.

So it looks as though the Fed is re-starting QE.

https://www.newyorkfed.org/markets/opolicy/operating_policy_190530

Is this the point in your roadmap DB, where we’ll  see this shit show kick off?

[Lightscribe]

2 hours ago, NogintheNog said:

Yes, and they won't be able to pass that pilot staff cost on in a deflation event. So in 6 years time they'll be two airlines flying the Krakow route, with the prices doubled.

(Wish I knew which two)

Funnily enough just come back from Krakow two days ago. I’d be willing to place a decent bet that BA would be one of those two.

I’ve seen a lot first hand of the cut backs they’ve done on staff contracts, automation and service. Hand-baggage only fares, with a paid for M&S food service onboard can now cost rival the likes of Easyjet and Ryanair. They have the better slots and can bully out the competition. Even the air miles redemptions have got more stringent. Yes they may have massive overheads, but I think a lot of the smaller/less established airlines will go under.

[DurhamBorn]

18 hours ago, Harley said:

For me:

. I got a buy signal on the weekly for Imperial as a div stock but it looked suspect so am holding off until late next week to see.

. Hoping for further falls before buying more stocks.  Some are on the floor (and may stay there for a few more weeks), but others may have only just started to turn down.

. GDX (in GBP) may have bottomed but is still up 20% from it's Sep 2018 low!  $26 would be disappointing from here.

$26 only the first target Harley when il sell 30% of my holdings.I expect a pull back between $26 and $28.If not the 70% can run on.Then target is $37 on the GDX.Id probably sell a lot then.

4 hours ago, Sideysid said:

Funnily enough just come back from Krakow two days ago. I’d be willing to place a decent bet that BA would be one of those two.

I’ve seen a lot first hand of the cut backs they’ve done on staff contracts, automation and service. Hand-baggage only fares, with a paid for M&S food service onboard can now cost rival the likes of Easyjet and Ryanair. They have the better slots and can bully out the competition. Even the air miles redemptions have got more stringent. Yes they may have massive overheads, but I think a lot of the smaller/less established airlines will go under.

They will and Easyjet will likely be one of the survivors,but earnings will likely fall into a loss for a couple of years during the process and smash the shares down.£5 would be my likely entry point,or perhaps a ladder starting at £6.20.

[DurhamBorn]

4 hours ago, Sideysid said:

So it looks as though the Fed is re-starting QE.

https://www.newyorkfed.org/markets/opolicy/operating_policy_190530

Is this the point in your roadmap DB, where we’ll  see this shit show kick off?

Shit show already underway,the UK is already well through its bear market in a lot of stocks.Only a few mega caps and hugely over valued stuff masking the declines.The interesting thing is how quick stocks iv been wanting have fallen to my ladder points.The question is were my ladder points set too high to start with?.i cant know that yet,but most of the stocks im buying need to go down between 50% and 75% to hit all my ladder points and i should be down around 11% if that happens before dividends.Id be happy with that situation.The question then is inflation.If we dont get any then the portfolio im building will likely struggle,and it might also take another whack in a big sell off.This bear market looks like it is going sector by sector though and it is possible sectors turn while the index carries on down.

All i can say is i liquidated my 27 year old portfolio at the right time.The stocks im buying that i think the next cycle will favour are down mostly 40% before i start to buy and can see 70% falls with me down around 11%-15%.If they do then turn a couple of years divis should see the turn at 70% falls a break even level.The risk is we see 90% falls and that would mean a cutting in half of what im buying.Thats one of the reasons i went back into employment.Two years wages (i save 90%) would equal a lot of the falls and most of those wages has now been deployed into rubber band silver miners and gold miners.Iv covered as many angles as possible really and accept that might not be enough.

[deathfunk]

On 30/05/2019 at 21:52, sancho panza said:

The credit machine making a funny noise.

https://wolfstreet.com/2019/05/29/italian-banks-are-at-it-again-share-re-crushed/

The Italia All Share Banks Index dropped 18% so far in May, almost double the 10% fall registered by the Euro Stoxx 600 banking index during the same period:

Italy’s biggest bank, Unicredit, saw its shares fall through the €10 level for the third time this year. The stock has lost 20% of its value in May, and is close to its all-time low, registered in July 2016 when Italy’s banking system was being shaken and stirred by the slow-motion collapse of then-third largest lender Monte dei Paschi di Siena (MPS). Unicredit’s shares are down 97% since the Italian banking-hype peak in May 2007.

MPS, now 68% state owned following a controversial taxpayer funded bailout in 2017, is already reverting to type. In the first quarter of this year its net profits slumped 85% to €27.9 million euros as shrinking revenues and larger write-downs on problem loans due to Italy’s weak economy took their toll. MPS’s shares, now at €1.07, are down 36% year to date and 78% since the bank’s shares were re-floated in October 2017 .

 

Ever since pouring €8 billion of public funds into MPS to stave off its collapse, the government’s “investment” has done nothing but lose value. Every now and then, a passing reference is made to the possibility of re-privatizing the bank, but in reality there are no interested buyers, partly because MPS’ balance sheet, still infested with non-performing loans (NPLs), keeps getting messier as the Italian economy stagnates, but also because there are no banks in Italy healthy enough to take on such a burden.

Mid-sized lender Banca Carige, which failed earlier this year and was temporarily propped up by the government, ran out of potential rescuers two week ago after asset management behemoth BlackRock, having seen what it would get into, walked away from the table. If Carige can’t find a last-minute buyer in the next few weeks, European bank supervisors say it should be closed. But that runs contrary to Rome’s plan for a state-funded rescue. And relations between Brussels and Rome could be about to get even more fraught.

Unicredit has its sights set on acquiring Germany’s second largest lender Commerzbank, but labor representatives on Commerzbank’s supervisory board have vowed to do whatever it takes to block the merger.

As for Italy’s second largest lender, Intesa Saopaolo, it is still trying to fully digest the two Veneto-based banks it picked up in a shotgun marriage in 2017. Intesa has seen its market cap plunge 20% in the last month and 40% since May 15, 2018, by which date the formation of the current heavily populist, big spending, anti-EU establishment coalition government had become a foregone certainty. Italy’s third and fourth largest lenders, Banco BPM and Unione di Banche Italiane, are also respectively down 31% and 20% in the last month and 45% and 47% since May 15.

One of the reasons for the latest deterioration is the ongoing, escalating standoff between Brussels and Rome over Italy’s 2019 budget and other matters. For the moment neither side shows any inclination to back down.

On Monday Italian Deputy Prime Minister Matteo Salvini, flush from La Lega’s victory in the European elections, said he now has a mandate to push through tax cuts and fight for changes to EU budget rules. Which went down like a lead balloon in Brussels, which hit back by threatening to fine Italy €4 billion over its rising debt and structural deficit levels.

Since then, Italy’s 10-year risk premium — the spread between Italian ten-year bond yields and their German counterparts — has surged almost 20 basis points to 289 basis points, its highest level since February. Given the constellation of threats and dangers circling Italy’s economy, this is arguably lower than it actually should be. Italy’s current 10-year yield of 2.675% pales in comparison with the 7.56% the Italian government was paying in November 2011, during the peak of the Eurozone debt crisis.

But it’s still three times as high as Spain’s risk premium (95 basis points), 2.6 times higher than Portugal’s (108 basis points) and just 39 points lower than Greece’s (329 basis points). In other words, the price of risk for Italian public debt is rising just as the price of risk for the public debt of just about all other Club Med economies, even that of Greece, is falling.

And that is particularly bad news for Italian banks, which are notorious hoarders of Italian treasuries. After the Bank of Italy, they are the second largest holders of Italian debt. Italian government bonds make up 20% of the banks’ entire asset base. While other Euro area banks, including even those in Spain, Germany and France, were net sellers of domestic government bonds in April, Italian banks doubled down on their purchases, buying up €7 billion more.

Over the last 12 months, Italian banks have increased their holdings of domestic government debt by €62 billion. This issue has been termed the “doom loop,” the interdependence between shaky banks and shaky government debt: When one gets in trouble, it will make the condition of the other even worse, thus creating a feedback loop.

As the ECB has gradually exited the market with the ending of QE, and with other market players unwilling and able to take up the slack, Italy’s banks and other financial institutions made up the difference. But they do so at huge risk to their already fragile financial health. By Don Quijones.

Just bumping along the bottom, from hopeless to hope and back to hopeless. Read…  Deutsche Bank Death Spiral Hits Historic Low. European Banks Get Re-Hammered

This is why I am not too concerned about Brexit happening. The dodgy money system will force individual nations apart. Does the average Greek feel like a fully integrated, equal citizen of the EU as, say, a German? I don't think so. And there is only so much Technocrats can do to hold populations in check.