Credit deflation and the reflation cycle to come (part 3)

[sancho panza]

1 hour ago, belfastchild said:

Up over 70% since I bought them!
Not investment advice but was briefly chatting to a guy from Iberdrola just over a week ago and meant to look them up when I got home. Have only done a quick google and have nothing to put in until next financial year so will look in more detail then.
In the meantime anyone else have a view or run the slide rule over them? @sancho panza @DurhamBorn @Cattle Prod

I jsut coma scored their 2020 results(2021 are inbound),17+ is a buy for me.CLearly tho these figures are out of date but hsitorically within range for Iberdrola.

Chart 1,(It's toppy),Income 3,Balance sheet 2,Cash flow 2 Sector 3(utilities are neither good or bad value imho)

total coma score 11/25.Too pricey for me.but doesn' mean it's not worht a nudge,jsut not for me.dyor natch

[geordie_lurch]

On 22/02/2022 at 09:19, geordie_lurch said:

Well not Gazprom which opened below the $7 I sold it for yesterday and hl.co.uk are currently quoting me a price of $6.68?

Well I think this was my best financial decision I've made for quite some time - getting out the burning Russian building early at over $7 per share even though that was a hard small loss I didn't want to take I've since topped up Repsol, BATS and BP with the cash from OGZD but if I'd not been actively managing my stocks and shares ISA it looks like I would have lost over £3000 which is a lot for me. All the best to those who didn't and / or gambled on it coming back

[Harley]

1 hour ago, Yadda yadda yadda said:

Woooah. Take a peek at Gazprom this morning!

How the hell will this ADS/R GDR/S stuff resolve with the Moscow market effectively shut?

PS:  Ah, I see....!

[Harley]

1 hour ago, Majorpain said:

Meanies, i was looking forward to a gamble of a couple of £k on red for 1000% yield this week!

It's for your own protection.  It always is. 

[Harley]

1 hour ago, AlfredTheLittle said:

Is that our first sighting of the legend himself?🔎

What a disappointment!

[Harley]

26 minutes ago, Yadda yadda yadda said:

Maybe the trustees have run out of domestic sellers' shares to sell!  

[DurhamBorn]

1 hour ago, Noallegiance said:

That's not a hedge.

Not anymore 

[Plan-b]

29 minutes ago, Yadda yadda yadda said:

The rich and connected will mop it all up, their gonna make a killing - like seeing and buying BTC in 2010

[jamtomorrow]

1 minute ago, Harley said:

How the hell will this ADS/R stuff resolve with the Moscow market effectively shut?

And will it result in contagion? Not just through failure of intetmediaries, but also a sudden collapse in confidence around ADR/GDR instruments generally?

"Don't panic. But if you are going to panic, make sure you panic first"

[Yadda yadda yadda]

1 minute ago, Plan-b said:

The rich and connected will mop it all up, their gonna make a killing - like seeing and buying BTC in 2010

All those oligarchs pissed off that they can't access their holiday homes in Italy might be happy again.

[sancho panza]

19 hours ago, kibuc said:

I second that, Gazprom (which is dying an absolute death today, flirting with a 0 handle) and Poly represent sectors that have been widely recognized in this thread as the places to be for this decade. They come with extreme risks, which are reflected in their price action, but the question is, as always, whether the market is right or not, and how can we benefit from it. Are the risks truly as dire, or is it an overreaction and a buying opportunity. It's no different to discussing, say, Kuya Silver and their current price in the context of last year's Peruvian elections, trying to assess whether market reaction to pit wall collapse at The One And Only Panther is overblown or figuring out how affected will BP & Shell be by the green craze. For us to win, someone else needs to be wrong, or at least less right than us.

Fascinating to see you diversifying out of PM miners into Gazprom.Lot of cognitive dissonance from Western politicians that won;t end well.

I was trying to buy some yesterday following advice on where will transact from @JimmyTheBruce but sadly,Intereactive wouldn't let me buy lukoil and HL wouldn't let me buy Gazprom.

If anyone can help mention a broker still dealing,I'd appreciate it.

 

On 01/03/2022 at 07:52, BadAlchemy said:

Luke Gromen - "US can't sanction Russian energy without risking systemic collapse"

Time Stamp References:
0:00 – Introduction
1:31 – Russia’s Options
7:55 – Forced Solutions
10:14 – China & Europe
16:06 – Russia’s Gold
20:37 – Bond Market Risks
24:57 – LBMA & Comex Risk
27:29 – Scenarios
35:38 – Weaponizing Bitcoin
38:26 – Fed & EuroDollar
43:30 – Taper/Tighten?
47:20 – Gold in 2019
49:58 – Trudeau & Miners
53:53 – Crypto & Fiat Risk
58:05 – Hedging Options
1:01:55- Wrap Up

Incredible Luke Gromen vid.

Interesting that he follows up something @Cattle Proddiscussed many moons back about thre Chinese buying Iranian oil/oil being traded oustide dollar system.

ALso interesting how he sees gold as being central to it and the issues leading to China banning crypto being mainly linked to power usage.

West has to be careful here,if the US collapses economcially ,they'll be nothing counter balancing the Putins of this world.

[Pip321]

1 hour ago, DurhamBorn said:

Anything happening,im busy finishing off removing this hedge i started in September ,got a bit out of hand  big ladders out ,

 

17 fence panels to fit today after I took the old ones to the tip yesterday.  For the first time ever the neighbour offered to chip in half. So I am up on the day.😉

Unfortunately these horizontal latted panels are metric so everyone needs a wood filler screwed in on either side so this 1 hour job has turned into the whole day. 

My only consolation is that I won’t be tempted to do anything daft like buy more russian shares whilst I am busy.

Perhaps someone should have got Putin to fit his own fence panels or cut his own hedge…would have kept him out of trouble.🤷🏻‍♂️

[Barnsey]

From the Guardian business feed:

Germany is considering a slower exit from coal-powered energy, in case Russia stops gas deliveries to Europe, economy minister Robert Habeck said today.

EDIT: He's the Federal Minister for Economic Affairs and Climate Action

[Bear Hug]

Polymetal, Evraz etc is like catching a falling knife this morning. I place an order at minus 10% of current price and it fills few min later. 

OK, exaggerated slightly, but - 5% maybe. 

Tiny amounts on  trading 212

[Harley]

Listened to the podcast yesterday.  You know how they always say "for entertainment purposes only" at the end of these tings?  Totally apt here.  Two hours planting fruit trees and laughing (mostly!). OK, the Ukraine prediction didn't last well, but for a blast of unwoke, unspin, unpc, un*, banter, an enjoyable tickle (with a serious thread)!  Laser beam stuff.  How did I not know about the Prof before?  Tim (and is it Paul?) good value too!

[DurhamBorn]

Russia is playing an amazing game,buying back some of the best inflation assets in the world for nothing.Is the attack on Ukraine really an attack on the dollar system?.The west spent 35 years exchanging deficits for other countries labour.Thats ending,and fast.The more goes on the basics the less people have.More work,less disposable is where this goes.

I think for funds Asia,Japan and Latin America are the places to be.I thought the dislocation would be mostly financial,but this inflation looks really nasty.

 

[sancho panza]

5 hours ago, jamtomorrow said:

This in spades.

The industries will still be there and they will do just fine.

The thing that's changed and will continue changing is the likes of you, me and the 99% being allowed access to the instruments of ownership.

The great globalisation that accompanied the great disinflation of the last 40 years created a proliferation of all sorts of cross-border instruments and mechanisms, all enabled by the extraordinary rise of global finance. We take most of it for granted, and it seems unshakeable.

But much of that will now unwind. So please don't mistake the situation with ADRs of Russian companies as some kind of exceptional circumstance. It is very much the opposite, a straw in the wind. The system will find all sorts of ways to lock us out: wealth taxes, expropriation, nationalisation, private buyouts, withdrawal of instruments.

I'm still positioned for a possible BK (50% of my stockpot is still sat on the sidelines in cash), but the 50% I've deployed is going under the microscope, and will likely undergo some big changes from here.

Put it this way, if I can't drive to the home of the CEO of the intermediary or counterparty in under half a day to put a brick through their window, I'm probably going to divest. I want my saved labour in the hands of scumbags that live right among us, just to keep the incentives nice and straight.

This run up in the oil price has all the hallmarks of the oil price rises that occurred before the recessions in 1990,2000,2008.Whether and when we get the BK is the next question.

Here's the origianl piece from 2021.I also include the warning markers in terms of the GDP and it's deflator jsut for context but the central point remains that hsitotically,oil price rises precede recessions.

April 22 2021

Personally,I don't set too much store by the exact date of the start/end of the technical recession as I can't really make any money off it or move asset classes on the back of it.What I can try and trade is market tops/bottoms.I psoted the chart as a reference point I suppose.

Also,GDP data is heavily gameable,eg imputed rents which are around 8% of USA GDP and are effectievly an accounting fiction.They would have been lower back in the early 90's but the point needs considering.

GDP also is rarely quoted per capita but it should be imho,as we'd have a very different outlook on our national wealth if we did.

The inflation data is also game able depending which measure they use eg CPI/CPIH/RPI and when it comes to real GDP which deflator they use and what it excludes.

Here are some charts for the recessions concerned using Real GDP measures.You can see that sometimes a quarter or two before the technical recession begins,the weakness is apparent.The crucial aspect in terms of Real GDP is that the implied price deflator used excludes imports which means that it's not particualrly reliable

https://www.bea.gov/data/prices-inflation/gdp-price-deflator

A lot of the following is from a previous post

1990

You can see that in Q4 1989,there was already a likely negative GDP print in real terms or at least sever weakness economically.

Oct 1988 Oil bottoms monthly close $13.58,intraday $12.28

Jan 1990 WTI at $24.20 intraday peak a 78% rise from Oct 1988

Jan 90 S&P 500 first attempt at 360 intraday

May 90 S&P 500 peaks around 360

July 1990  US recession starts with oil at $20.69

Sept 1990 oil peaks at monthly close $39.51

Oct 1990 oil intraday peak $41.15

Oct 1990 S&P 500 bottoms

March 1991 US recession ends with oil at $19.63

https://www.macrotrends.net/countries/USA/united-states/gdp-gross-domestic-product

 

2000

Dec 1998  Oil bottoms at $10.35,turns up

Mar 2000 S&P 500 Intraday peak

Aug 2000 S&P500 monthly peak

Sep 2000 Intraday oil peak at $37.80

Jul-Sept 2000 Real GDP 0.53%-possible start of US recession not using real world view of economy.

Nov 2000 Oil peaks on monthlies at $33.82

Mar 2001 US recession begins

Nov 2001 US recession ends.

Aug 2002 S&P bottoms on the monthlies

 

2008

Jan 2007 Oil bottoms on the monthlies at $58.14

Oct 2007 S&P peaks on monthlies at 1550

Dec 2007 US enters recession with Oil at $95.98

June 2008 Oil peaks at $140-monthlies

Feb 2009 S&P bottoms around 730 on the monthlies

June 2009 US recession ends with oil at $69.89

 

 

Obviously with any of this you have to apply your own judgement.It's been interesting for me to run back over this stuff from last year.There are obviously many other factors involved in the deciosn to move to cash,UST's or go short.

 

[belfastchild]

8 minutes ago, Harley said:

 How did I not know about the Prof before?  Tim (and is it Paul?) good value too!

His year in review is always worth waiting for!

[Harley]

4 minutes ago, sancho panza said:

This run up in the oil price has all the hallmarks of the oil price rises that occurred before the recessions in 1990,2000,2008.Whether and when we get the BK is the next question.

Here's the origianl piece from April 21.I also include the warning markers in terms of the GDP and it's deflator jsut for context but the central point remains that hsitotically,oil price rises precede recessions.

https://www.dosbods.co.uk/topic/10490-credit-deflation-and-the-reflation-cycle-to-come-part-2/page/1171/

Personally,I don't set too much store by the exact date of the start/end of the technical recession as I can't really make any money off it or move asset classes on the back of it.What I can try and trade is market tops/bottoms.I psoted the chart as a reference point I suppose.

Also,GDP data is heavily gameable,eg imputed rents which are around 8% of USA GDP and are effectievly an accounting fiction.They would have been lower back in the early 90's but the point needs considering.

GDP also is rarely quoted per capita but it should be imho,as we'd have a very different outlook on our national wealth if we did.

The inflation data is also game able depending which measure they use eg CPI/CPIH/RPI and when it comes to real GDP which deflator they use and what it excludes.

Here are some charts for the recessions concerned using Real GDP measures.You can see that sometimes a quarter or two before the technical recession begins,the weakness is apparent.The crucial aspect in terms of Real GDP is that the implied price deflator used excludes imports which means that it's not particualrly reliable

https://www.bea.gov/data/prices-inflation/gdp-price-deflator

A lot of the following is from a previous post

1990

You can see that in Q4 1989,there was already a likely negative GDP print in real terms or at least sever weakness economically.

Oct 1988 Oil bottoms monthly close $13.58,intraday $12.28

Jan 1990 WTI at $24.20 intraday peak a 78% rise from Oct 1988

Jan 90 S&P 500 first attempt at 360 intraday

May 90 S&P 500 peaks around 360

July 1990  US recession starts with oil at $20.69

Sept 1990 oil peaks at monthly close $39.51

Oct 1990 oil intraday peak $41.15

Oct 1990 S&P 500 bottoms

March 1991 US recession ends with oil at $19.63

https://www.macrotrends.net/countries/USA/united-states/gdp-gross-domestic-product

 

2000

Dec 1998  Oil bottoms at $10.35,turns up

Mar 2000 S&P 500 Intraday peak

Aug 2000 S&P500 monthly peak

Sep 2000 Intraday oil peak at $37.80

Jul-Sept 2000 Real GDP 0.53%-possible start of US recession not using real world view of economy.

Nov 2000 Oil peaks on monthlies at $33.82

Mar 2001 US recession begins

Nov 2001 US recession ends.

Aug 2002 S&P bottoms on the monthlies

 

2008

Jan 2007 Oil bottoms on the monthlies at $58.14

Oct 2007 S&P peaks on monthlies at 1550

Dec 2007 US enters recession with Oil at $95.98

June 2008 Oil peaks at $140-monthlies

Feb 2009 S&P bottoms around 730 on the monthlies

June 2009 US recession ends with oil at $69.89

 

 

Obviously with any of this you have to apply your own judgement.It's been interesting for me to run back over this stuff from last year.There are obviously many other factors involved in the deciosn to move to cash,UST's or go short.

 

Towards the end of the podcast I just posted they mention how long it took to recover from such things as the South Sea (or was it Tulip?) Bubble, etc.  Also how a real crash needs not just a fall in price but revulsion and that we've not had that for a very long time.  So much else too.  It could be very brutal if/when it happens.  Stealth theft by inflation seems almost caring by comparison!

[Festival]

7 minutes ago, sancho panza said:

This run up in the oil price has all the hallmarks of the oil price rises that occurred before the recessions in 1990,2000,2008.Whether and when we get the BK is the next question.

Here's the origianl piece from April 21.I also include the warning markers in terms of the GDP and it's deflator jsut for context but the central point remains that hsitotically,oil price rises precede recessions.

https://www.dosbods.co.uk/topic/10490-credit-deflation-and-the-reflation-cycle-to-come-part-2/page/1171/

Personally,I don't set too much store by the exact date of the start/end of the technical recession as I can't really make any money off it or move asset classes on the back of it.What I can try and trade is market tops/bottoms.I psoted the chart as a reference point I suppose.

Also,GDP data is heavily gameable,eg imputed rents which are around 8% of USA GDP and are effectievly an accounting fiction.They would have been lower back in the early 90's but the point needs considering.

GDP also is rarely quoted per capita but it should be imho,as we'd have a very different outlook on our national wealth if we did.

The inflation data is also game able depending which measure they use eg CPI/CPIH/RPI and when it comes to real GDP which deflator they use and what it excludes.

Here are some charts for the recessions concerned using Real GDP measures.You can see that sometimes a quarter or two before the technical recession begins,the weakness is apparent.The crucial aspect in terms of Real GDP is that the implied price deflator used excludes imports which means that it's not particualrly reliable

https://www.bea.gov/data/prices-inflation/gdp-price-deflator

A lot of the following is from a previous post

1990

You can see that in Q4 1989,there was already a likely negative GDP print in real terms or at least sever weakness economically.

Oct 1988 Oil bottoms monthly close $13.58,intraday $12.28

Jan 1990 WTI at $24.20 intraday peak a 78% rise from Oct 1988

Jan 90 S&P 500 first attempt at 360 intraday

May 90 S&P 500 peaks around 360

July 1990  US recession starts with oil at $20.69

Sept 1990 oil peaks at monthly close $39.51

Oct 1990 oil intraday peak $41.15

Oct 1990 S&P 500 bottoms

March 1991 US recession ends with oil at $19.63

https://www.macrotrends.net/countries/USA/united-states/gdp-gross-domestic-product

 

2000

Dec 1998  Oil bottoms at $10.35,turns up

Mar 2000 S&P 500 Intraday peak

Aug 2000 S&P500 monthly peak

Sep 2000 Intraday oil peak at $37.80

Jul-Sept 2000 Real GDP 0.53%-possible start of US recession not using real world view of economy.

Nov 2000 Oil peaks on monthlies at $33.82

Mar 2001 US recession begins

Nov 2001 US recession ends.

Aug 2002 S&P bottoms on the monthlies

 

2008

Jan 2007 Oil bottoms on the monthlies at $58.14

Oct 2007 S&P peaks on monthlies at 1550

Dec 2007 US enters recession with Oil at $95.98

June 2008 Oil peaks at $140-monthlies

Feb 2009 S&P bottoms around 730 on the monthlies

June 2009 US recession ends with oil at $69.89

 

 

Obviously with any of this you have to apply your own judgement.It's been interesting for me to run back over this stuff from last year.There are obviously many other factors involved in the deciosn to move to cash,UST's or go short.

 

This info seems to imply oil will peak a number of months after the S&P has already peaked if it follows previous recessions. Given the 10 year to 2 year UST yield curve hasn't inverted yet it may be we have quite a way to go on the oil price? 

[Harley]

11 minutes ago, belfastchild said:

His year in review is always worth waiting for!

No wonder he gets invited everywhere.  The bit about Daniela was one of many fun stories.

PS:  A defo add.  I've built up a decent ecosystem of podcasters, etc now my last bastion of regular msm (TalkRadio) has shown both its hand and that it habitually knows nothing about anything.

[sancho panza]

8 minutes ago, DurhamBorn said:

Russia is playing an amazing game,buying back some of the best inflation assets in the world for nothing.Is the attack on Ukraine really an attack on the dollar system?.

The west spent 35 years exchanging deficits for other countries labour.Thats ending,and fast.The more goes on the basics the less people have.More work,less disposable is where this goes.

I think for funds Asia,Japan and Latin America are the places to be.I thought the dislocation would be mostly financial,but this inflation looks really nasty.

 

That bit in bold is starting to loom up in the background as a reason/consequence for what's going on.People in the West think their govts are in charge of this situation.I'm not so sure.If Gromen;s right then the Chinese are currently swapping yaun for Russian gas/oil.

 

I don't know if you remember but about two years or more back we had an excellent discussion down ehre about the dollar and the conclusion was that the dollar had one crisis left in it.It's playing out.If you haven't watched that Gromen vid DB then I'd reccomend it.Nothing you don't already know I guess but brings it all together under one roof so to speak.

He talks a lot about how these oil price rises are the beginning of a long cycle of rises and price inflation more generally.I speak as someone who was a committed deflationist until I listened to your reasoning and luckily,it got me postioning for it before it arrived.Thanks for your efforts.

[sancho panza]

9 minutes ago, Harley said:

Towards the end of the podcast I just posted they mention how long it took to recover from such things as the South Sea (or was it Tulip?) Bubble, etc.  Also how a real crash needs not just a fall in price but revulsion and that we've not had that for a very long time.  So much else too.  It could be very brutal if/when it happens.  Stealth theft by inflation seems almost caring by comparison!

That's a key theme that would confirm a generational bottom.The assets that are pumped up on steroids have a long way to fall-junk bonds,govt bonds,real estate and big tech stocks.

[Hardhat]

Support at 250 for POLY?

Considering opening a ladder.

However after reading many of @Harley's posts over the last few years I always have counterparty risk/ likelihood of return of capital on my mind. Still think there's there's chance that the shares are confiscated.

[nirvana]

anyone bottom picking Evraz here? 

@Democorruptcyyou're a shrewd gambler, tempted?