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Deflationary collapse and the Reflation Cycle to Come.


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Rather than put my thoughts in other threads about how i see the end of this cycle playing out i thought a thread dedicated to this would be a much better idea.Many other posters here have some great

How convenient.

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  • 2 weeks later...
3 minutes ago, hurlerontheditch said:

UK inflation rate for August unexpectedly rises to 2.7%, highest in six months

It's only going to rise further. 60% of our food is imported, the worse the £ performs - the more inflation. What we have to watch (as always) is the propaganda they give us compared to a visit to the shops or garage.

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2 hours ago, hurlerontheditch said:

UK inflation rate for August unexpectedly rises to 2.7%, highest in six months

 

2 hours ago, jonb2 said:

It's only going to rise further. 60% of our food is imported, the worse the £ performs - the more inflation. What we have to watch (as always) is the propaganda they give us compared to a visit to the shops or garage.

Plus oil is not going down any time soon.  Expected to rise to $80pb according to market reports. 

 

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Finman (aka Fence) back again!

October 1st, start of the "fun" quarter!

I'm loving this (weekly gold in GBP).....

LhYXXjOD.thumb.png.7e614ccc961d9863fa44e3509854bcba.png

As mentioned before, could be the mother of all cup and handles.

Maybe more recently a descending triangle as a continuation pattern (to the upside).

Oscillators bouncing along the bottom.

At support #1.

Time to check my long term PM allocation!

Could always go down more though!

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Researching the following so any comments appreciated:

FTSE either topping or found support at previous highs and off to the races:

6sFQ8Wlr.gif.3381f1dedf76e5ea173301a10b6e3001.gif

But the usual dividend players are often at multi year lows (2007, 8, 12, 11, 14, etc). 

Maybe similar to the US market (just a few stocks driving the index).

But boy, the usual dividend players do look tempting right now!

Need to look at the constituents - certainly warrants a deep dive.

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7 minutes ago, chronyx said:

Welcome back mate, always liked your posts

Thanks, thats very kind.

Hope I can add some polite value.

Popped abroad but sadly the local authorities seemed to take exception to me for some unknown reason!

Back safe at home now with Mother and an undertaking to stick to finance!

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1 minute ago, The Spaniard said:

Mathematically, that can still be consistent with a long term rate of growth only slightly lower than the slope of the parallel lines.

Agreed, which dimension will win out?

My main aim was a "what if" on the bearish side, given the (horizontal) bullish potential of several tests of long term support.

I missed a line, just above the lowest which is bearish, especially given the oscillators. 

But then again could be a bullish set up like April 2018 (although I have no buy signal this time).

Pays your money and takes your chance.

Certainly is volatile compared to, and counter-trend to, many of the other markets.

Will the FTSE therefore hold up better than the other markets in a general fall?

Then again, any fall from here could be massive (i.e. a megaphone pattern).

At least my last major purchase was in March 2018!

Looking at some sold off dividend players right now (contra charts to the overall FTSE chart).

Capture.gif

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  • 2 weeks later...

Tim Morgan at Surplus Energy Economics argues against holding cash in a collapse.

https://surplusenergyeconomics.wordpress.com/2018/07/02/130-grand-bargains-dangerous-choices/comment-page-1/#comment-7477

Quote

Unfortunately, any equity market slump means that some of those who have borrowed to buy stocks can’t repay their debts. If it’s a full-on collapse, that level of default could (would) threaten to bring down the banks. That’s where bail-ins are likely – money is taken from savers to fill the gap left by defaulting borrowers.

You or I or many others might call that theft, but that doesn’t make bail-ins unlikely. Many economists think depositors at a bank are investors in that bank and, like any other investor, must accept risk. I think they’re customers, not investors, but mine is a minority view.

In short, if borrowers get wiped out on a big enough scale, depositors lose their money. Cash might be king in a modest slump, but a collapse would produce regicides (those who kill the king).

 

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6 minutes ago, Will! said:

Tim Morgan at Surplus Energy Economics argues against holding cash in a collapse.

https://surplusenergyeconomics.wordpress.com/2018/07/02/130-grand-bargains-dangerous-choices/comment-page-1/#comment-7477

 

There is a hierarchy in the structure of bank capital. Depositors are supposed to be among the first to get paid if a bank liquidates. It's true that politicians might decide after a bank failure to mess with the capital markets by forcing losses on depositors while more junior creditors (e.g. bond- and shareholders) keep some or all of their money.

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  • 2 weeks later...

China crisis?

https://www.theguardian.com/business/2018/oct/31/china-reveals-trade-war-strain-as-yuan-slides-and-manufacturing-stalls

Quote

China’s manufacturing sector barely expanded in October as both domestic and external demand ebbed, according to a closely watched metric released on Wednesday.

The official purchasing managers’ index (PMI) fell to 50.2 in October, the lowest since July 2016 and down from 50.8 in September. A figure below 50 represents a contraction. New export orders, an indicator of future activity, contracted for a fifth straight month and at the fastest pace in at least a year.

The figures suggest a further slowing in the world’s second-biggest economy and could prompt more policy support from Beijing on top of a raft of recent initiatives.

The moves have included pumping tens of billions of dollars into the financial system and other measures to prop up local shares.

Raymond Yeung, chief economist for China at ANZ, said he expected more measures, including cutting the amount of capital banks are required to hold in reserve in order to ease liquidity.

“All the numbers from China’s PMI release today confirm a broad-based decline in economic activity,” said adding that conditions for the private sector was “much worse” than headline data suggested.

“The government’s priority is to avoid a financial blow-up.”

In a further sign of stresses in the economy, the central bank fixed the yuan lower at 6.9646 per US dollar compared with 6.9574 one day earlier. The People’s Bank of China (PBOC) allows the yuan to move 2% either side of the fix and it drifted slightly lower in subsequent trading on Wednesday.

The move will increase tensions with the Trump administration, which has come close to accusing China of currency manipulation after the yuan has fallen in value and made exports more competitive.

The rate is creeping ever closer to the 7 yuan mark – a level regarded as unthinkable three years ago when Beijing succeeded in cementing the yuan’s place as one of the world’s reserve currencies.

A falling yuan will make the country’s exports cheaper and possibly offset the impact of US tariffs, but it will also accelerate capital flight and put downward pressure on asset prices in China such as property.

However, in a sign that China may be ready to see its currency fall further, the China Daily said on Wednesday that allowing the exchange rate to float more freely could be a “wise choice for China, against the backdrop of trade conflicts and economic downside risks.

Capital Economics said this week that it “did not expect the PBOC to hold the line at 7.0 indefinitely”.

 

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UK services looking slippy.

https://www.yahoo.com/news/uk-services-growth-slows-7-month-low-firms-093408851--finance.html

Quote

Business activity in Britain's dominant services sector slowed to a seven-month low last month and firms' expectations for the coming year are the gloomiest since just after the 2016 Brexit vote, a major survey showed on Monday.

The IHS Markit/CIPS purchasing managers' index (PMI) dropped to 52.2 in October from 53.9 in September, its lowest since a patch of unusually icy weather in March and a bigger fall than economists had forecast in a Reuters poll.

Businesses' expectations for stronger activity over the next 12 months were the weakest since July 2016, when they briefly hit a post-financial crisis low following the vote to leave the European Union.

"The disappointing service sector numbers bring mounting evidence that Brexit worries are taking an increasing toll on the economy," IHS Markit economist Chris Williamson said.

Prime Minister Theresa May has yet to agree a withdrawal deal with the EU to ensure goods, services and workers will continue to be able to cross borders easily after Britain leaves the bloc on March 29 next year.

Businesses also reported headwinds from a slowing global economy, trade tensions, and financial market turbulence.

"It therefore remains unclear as to the extent to which Brexit worries are exacerbating or obfuscating a more broad-based slowing of the economy, which would have important implications for policymaking," Williamson said.

Last week the Bank of England forecast Britain's rate of economic growth would halve to 0.3 percent in the final three months of 2018 from an estimated 0.6 percent in the third quarter of the year.

 

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  • 418 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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