durhamborn

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About durhamborn

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  1. The likes of Reckitt and BAT tobacco.The likes of Domino Pizza have trebled in the 250.Lots of deflation stocks have enjoyed the cycle and priced as if its going on forever.
  2. Rates will go negative,they already are against inflation.In the US i see the 10 year going to 1/2%.They will rise during the next cycle slowly and speed up.Im expecting maybe even double figures by 2025 and inflation at between 10% and 15%.
  3. No,but in the next cycle rates will be going up a lot,perhaps to double figures.There is also the issue of the AAs bonds being BBB- and the interest bill being £100 million.They need to make a 10% margin on turnover just to pay the coupons on their bonds.They could end up with zero free cash flow for dividends. Not investment advice of course,the shares could do very well from here,but anyone buying them over the last few years (including Woodford) is sitting on 40% to 50% losses.In a deflation where margins are being crushed the one cost that might seperate companies out is debt repayments.Its not in fashion to have low debts and EBITDA debt ranges are all the rage 2 x 3 x etc.Those are based on top of cycle profits and will look very different in a cash flow collapse. Notice today Capita whacked again.Sell off its best asset and debt is still at 2.2+ EBITDA.This bear market seems to be slicing companies down one at a time.
  4. In a big deflation money will flow to the government guarantee.The CBs will QE massive amounts to stop a free falling financial system.Since this dis-inflation cycle started in 1982 most money has flowed to consumption.Government borrows billions to hand to benefit claims to buy Chinese made trampolines and tat.In the same time the countries infrastructure has seen chronic under investment.Not just here,all over the west,the US is as bad.This is about to change.The cycle is ending,and almost everyone is looking the wrong way.People mostly are expecting a bit of inflation.They arent expecting a deflation bigger than before the war followed by a full on reflation and distribution cycle.I think they are wrong.Massive wealth destruction ahead.Cycles end in their own time,but this one is close if all the macro indicators and cross market signals i follow are right.Time will tell as ever.
  5. Sibanye have bought Lonmin.That means they now have smelters for their platinum mines in South Africa. When i did my currency work Fence and saw the dollar going from 102 to 88/86 i had sterling going from £1.22 to $1.40.I think CAD,AUS,AUD and the pound should continue to rally against the dollar.Euro might get to 1.27,Yen 1.00. In a deflationary bust i could see the pound going below 1.00,perhaps even to 0.90.Its one of the reasons iv been slowly buying US treasuries. The miners bounced hard yesterday many up 5%+.It will be interesting to see if this is the start of a big move.I had GDXJ going to $60 and gold $1450+ in this last bear market rally before much lower lows in the complex,but they have been very very stubborn and struggled to get out of the 5 year consolidation.
  6. @ Fence,ah the AA.Is it £2.7 billion of debt on £900 million turnover?.What could go wrong.Apart from interest rates going up and wiping out your free cash flow then boom.
  7. The 250 has lots of stocks down over 50%.Transports well down,Stagecoach 54%,Go Ahead down 40%.Retailers down over 50%,Dixons for example down 65%.Stocks like Inmarsat down 60%.There are stocks trading at PEs around 20 propping up the index,but any sniff of earnings missing and they can expect 30% haircuts for starters.There are pockets of value showing themselves though.The Uk market isnt as over valued as the US etc because a lot of stocks have already had their bear markets.Its interesting that PE ratios of 7 and 8 are appearing,those are the sort of levels id expect in a reflation.
  8. Dows tricky due to its make up.I think the S+P might go down 50%+ or maybe even 75%+ top to bottom.Here in the UK its more tricky.We have already seen a lot of 50%+ falls across much of the market.The index is being propped up by a few very over valued big caps.Currency might come into things of course if the dollar surges. Of course anything could happen and the market could carry on upwards.We can only try to tread carefully,the CBs have made things very difficult for ordinary investors.
  9. Exactly zugzwang.Idiot politicians who have ramped green costs on providers would rather hit them with a stick for short term political relief.All that has done is force companies to unload capital heavy assets and/or fail to invest in them.Like you say in the end this simply leads to massive inflation.Pay to keep Rough going for storage when your always attacking us?.No thanks,we will just pump from Cygnus at a 50% price increase instead. £16 million a year goes into my small town of 11,000 on benefits.You cant get a bus after 10.30pm.Thats whats happened over this disinflation cycle.Consume Chinese tat for free on welfare,let the infrastructure go to the dogs.
  10. Just for the record il throw in my thoughts.Gold up to $1450+,silver up to $23+ as they bounce off a 5 year consolidation in their bear markets sometime over the next year.Then gold down below $1000,maybe even below $700 for a couple of months and silver below $10 in a deflation,maybe even below $7 for a few months.Next cycle will see gold go north of $5000,probably north of $8000 and silver up to maybe $200,or even $250+.I do think there is a very good chance the miners might be massive winners in the next cycle.Some 50 or 100 x up etc. All just my opinion though and not trading advice.As we know there is a lot of divided opinion on where we go from here and i certainly wouldnt ever say told you so,or if making a bad call expect the same.Its a really tough call. A lot depends on if/when the metals gain enough traction to come out of this long consolidation.They look very coiled spring like to me,but are struggling to gain lift off.Interesting times.
  11. Im not sure on that Errol,but i know what you mean.They might try to divert the funds into the real economy in joint ventures instead.Legal and General build 10k houses for rent etc.The CBs will be able to print as much as they want given the scale of the deflation we are looking at so governments should be ok this cycle.Of course they will kick in a reflation so government debt is the last place you want to be for that.In now,out soon.
  12. Lack of storage in the UK.Centrica has shut a lot of it due to low margins.Government hitting them over the head with a stick over gas bills so they decide to run down and shut low margin/high capital assets.Thanks to short term thinking and passing the blame by politicians the country might freeze.Instead Centrica can now charge 30% more than two days ago for all the gas it pumps.(of course most will be hedged etc but the point is valid).
  13. 100% certain.The CBs will be printing massive amounts.In a deflation money will pile into government debt.There is no political capital to give to bankers (though they will of course),but plenty to spend in the real economy.I think we will be looking at very long dated debt at perhaps 0.25% coupons.
  14. I think the Fed do think wage inflation is next yes,and i think they are wrong.My charting has been closer to the real inflation figures in the US the last 8 years than the Feds and mine are pointing to maybe deflation at -3% in the US as this cycle ends.That takes in they tighten twice more and stop QT around May next year.If they stop tightening now i see maybe -1% deflation. The key point to this is the leverage.My cross market model shows if deflation hits -3% then we could see defaults explode and the stock market in the US go down 75%.To turn the free falling financial system that same model points to $8 trillion of QE needed.(US),and in the UK between £500 billion and £750 billion. I think the CBs know QE doesnt help the real economy and they are in no doubt western democracy is at risk.That is why i see the only way governments will play this is a full on reflation.Just yesterday the main oil and gas pipe from the north north sea was shut.Gas prices spiked 30%.This is a prime example of where our crucial assets are creaking due to years of under investment due to margins falling too low.Governments have hit the providers over the head with a stick and handed out the printed money to tax credit claims to spend on Chinese made trampolines instead and housing benefit for spiv landlords.That is about to change.The printed money will not go on consumption,it will go mostly into massive investment. Look at the huge changes last week with rail.The government bailed Stagecoach out of a bad contract.Not because they are generous,but because they are moving to a joint structure where the public sector and private sector act together.Rail line extensions into the regions are certain,funded by gilts at 0.25% and operated by the joint ventures. House prices are going to get butchered of course.Thats already underway.
  15. I do.I think the models they use are wrong.They think inflation is coming back due to low unemployment,but those jobs mostly have zero wage power.The leverage on the system is incredible and balance sheets simply cant take much deflation.Margins are being crushed.Iv gone back to around 1910 and i cant find any time they tightened with inflation and velocity at such levels (apart from the mid 1930 than pushed the world back into depression)..It seems to me they are simply trying to slow asset increases and gain some firepower for the next recession.Of course they are walking a tightrope of their own making.I think at some point next year they will stop tightening as they cause a recession.Time will tell.