The Finance Thread

[SillyBilly]

1 hour ago, uttoxram75 said:

Not aimed as a dig SB.

I find your posts interesting and informative.

My badly written (and slightly drunk) post was meant to ask a general question to any who understand the banking and finance system how do they see the next 10 years for ordinary working people in the UK.

The current government is bringing in draconian anti-union laws despite the fact that the UK already has the strictest laws on union activities of any western democracy plus the lowest strike levels for 30 odd years.

Is it just the Tory fear and hatred of organised labour or is it to curtail any rebellion for things to come?

 

 

I don't see governments or politicians as in control anymore. They are just the puppets. Doesn't make a difference between Tories or Labour apart from window dressing. Money is control and its the banking industry which creates most of it. I know I talk about America a lot but look at the Democrats with Clinton (currently) leading the way. She is a democratic socialist?! It was the Clintons who were instrumental in repealing the Glass-Stegall Act (through bank lobbying) that created the sub-prime crisis. It was the Clintons who ensured legislation that student debt could not be erased in bankruptcy. It is Goldman which is funding Hilary's campaign. She has done tens of speeches for Wall Street firms for $250,000 a time (and up to $400,000) and refuses to release the speech transcripts. Barack Obama, the great reformer, another Goldman lapdog (see how many of his staff were ex-Goldman). Mark Carney - Goldman. Mario Draghi - Goldman. The list goes on if you care to look. The central banks protect the banking industry, that is their entire raison d'etre. Government, Central Banks and commercial banks are a troika of self-interest, all with their noses in the trough. One of the reasons I badly want us out of Europe is the level of infiltration by Goldman, Deutsche bank, Credit Suisse etc. in Brussels. They were calling the shots on Greece, alongside the unelected IMF bankers, what were elected politicians doing? I think the financial corruption will be staggering at the E.U level due to the lack of accountability (obviously that is my opinion as I can't possibly prove it).

There is just layer and layer of complexity to the system. I mean behind the central banks we have the dealers, in this country the "Exchange Equalisation Account" and in the U.S the "Exchange Stabilization Fund". Anybody ever heard of these? These essentially serve as "slush" funds for all intents and purposes. Their transactions are stealthily carried out as they do the Central Bank's bidding. Completely anonymous. We don't elect central bankers or the managers of these funds yet they control the money? And who do they work for? The banks or us?

I'd like to be positive but you'd have thought the the biggest crash since the 30's might have sparked a change. Believe me, their stranglehold has has actually got much ,much worse. What happened? Austerity for the middle class and poor with NO SYSTEM REFORM whatsoever. Tax payer bail-outs of banks. QE for banks. Stock market party. Housing bubble (lovely debt for the banks)...

The banking industry just traded the naming of instruments (which caused the crash) from CDOs "collateralised Debt Obligation" to BTOs "Bespoke Tranche Opportunity" and continued on as nothing had happened. No one went to jail. No consequences. Bigger bonuses. It was fraud. Why should we believe this crisis won't just be used again as another opportunity to transfer wealth from the poor to the rich? Everything thus far points to the fact they are preparing for much the same outcome. Bank bail-in legislation and reduction of protection guarantees etc. is a big giveaway.

 

[Ramarena]

Looks like everyone has that sinking feeling, there's a deep sea of red out there and the Chinese markets are closed. Looks like people are gunning for Deutsche Bank.

Citi group even talking about a death spiral.

Still, golds up…..shiny, shiny!!!!

[Ramarena]

Also an interesting domestic story from the Guardian. 

http://www.theguardian.com/business/2016/feb/08/ifs-says-osborne-faces-tough-choices-to-meet-deficit-target

[Ramarena]

Wow the DAX is tanking!

Banks leading the falls. 

[Zag zig]

1 hour ago, Ramarena said:

Looks like everyone has that sinking feeling, there's a deep sea of red out there and the Chinese markets are closed. Looks like people are gunning for Deutsche Bank.

Citi group even talking about a death spiral.

Still, golds up…..shiny, shiny!!!!

Yep quite a few shiny, shiny "goldies" doing well today. Just thought I'd add their is a problem to be wary about buying such as commodity stocks, in that whilst the metal itself may perform well against a market demise, you have got be be aware of forced sellers.

Seen it before, when you get a liquidity crunch and everyone becomes a forced seller, gold, silver stocks etc can also be punished; even further than their recent demise. Remember a lot of big stocks have positions held by funds, you only have to look at what happened to stocks held by such as RAB special situations in the U.K which was a high octane fund that specialised in such plays a few years back. When they liquidated, the stocks the were involved with went down heavy.

On a smaller scale, the typical mining minnows that list on the London AIM market  and attract retail punters, will get punished simply because market makers trigger stop losses, sentiment is fragile etc owing to the number of "investors" that need funds or cannot bear to ride out the downswing. All goes back to market psychology and being able to ride through tough times, few retail punters can do this if heavily exposed.

[Ramarena]

Deutsche Bank 10% down in a single day, that's a pretty mighty fall, especially given their exposure to derivatives, which I believe are quite a few times larger than the entire German economy. 

There will be no saving that sucker if it collapses, no amount of bail-ins will cover it

 

[ketteringram]

Yay! A death spiral! 

[SillyBilly]

5 hours ago, Zag zig said:

Yep quite a few shiny, shiny "goldies" doing well today. Just thought I'd add their is a problem to be wary about buying such as commodity stocks, in that whilst the metal itself may perform well against a market demise, you have got be be aware of forced sellers.

Seen it before, when you get a liquidity crunch and everyone becomes a forced seller, gold, silver stocks etc can also be punished; even further than their recent demise. Remember a lot of big stocks have positions held by funds, you only have to look at what happened to stocks held by such as RAB special situations in the U.K which was a high octane fund that specialised in such plays a few years back. When they liquidated, the stocks the were involved with went down heavy.

On a smaller scale, the typical mining minnows that list on the London AIM market  and attract retail punters, will get punished simply because market makers trigger stop losses, sentiment is fragile etc owing to the number of "investors" that need funds or cannot bear to ride out the downswing. All goes back to market psychology and being able to ride through tough times, few retail punters can do this if heavily exposed.

Yes, I am expecting the same reaction with gold & silver as the last crash. Everything tanks when there is a liquidity crunch. I expect it to be the best short term vehicle in the immediate aftermath though. I honesty think we're just warming up here so no money has been made or lost yet. 2016 is setting the scene for 2017. I can't see how Greece can't be back at the table in 2017 given their figures.

[SillyBilly]

On ‎14‎/‎12‎/‎2015 at 18:52, SillyBilly said:

This technical chartist is pretty bearish on FTSE!

Not looking good for the FTSE. Been waiting for 5500 since the high and we're now approaching that point. 3 year low today. FTSE won't bottom for another 18 months or so in my view.

 

[ketteringram]

1 hour ago, SillyBilly said:

Not looking good for the FTSE. Been waiting for 5500 since the high and we're now approaching that point. 3 year low today. FTSE won't bottom for another 18 months or so in my view.

 

It might get to 5500 in a very short time! If you don't think it will bottom for another 18 months, what action will you take when it hits 5500? 

 

[SillyBilly]

Nothing at present KR. Had been saying it might be worth a toe in when it hits that number but I would rather set the next "wait and see" until 5000 comes and goes now . I notice we bounced off the low today. I think we'll go straight through it on the next down leg. Weaker rallies and lower lows.

[Ramarena]

On 9 February 2016 at 19:59, ketteringram said:

It might get to 5500 in a very short time! If you don't think it will bottom for another 18 months, what action will you take when it hits 5500? 

 

Yep it's at 5531 as I type. Not far to go and this certainly doesn't look like the bottom. 

DB also taking another beating on the DAX, something is very wrong there. 

[ketteringram]

Yes. Nearly there. 

[loweman2]

will we never learn !

Over the past few days, markets have taken another leg downwards. This move is once more off the back of nervous sentiment stemming from the usual suspects; the oil price, China, and UK/US interest rates. However over the past couple of days, a new player has walked onto the field, adding an additional trigger to this mix. Since the start of the year, banking stocks have lost 25% in Europe, 19% in the US and 15% in Asia. Negative sentiment has overshadowed earning releases; this negative sentiment having been caused by concerns over the health of European banks.

The recent fear has been sparked by a bond known as a ‘coco’, a tier one contingent convertible bond. Coco bonds are designed to allow banks to rebuild their capital ratios when they are close to breaching the minimum capital requirements from regulators. The cocos may transform automatically from debt to equity, halt their coupon payments or alternatively can be written off when losses force a bank’s capital below a certain threshold. To compensate investors for the risks, coco bonds often paid coupons of 6-7% which was attractive given the yielding environment.   The bonds have their roots in the financial crisis when governments were forced to bail out banks, a situation going forward they are clearly keen to avoid. There have been questions over whether Deutsche Bank is able to pay the coupon on their cocos, not for this year or next but for the few years after that. This has sparked general nervousness over the strength of the European banking sector.

the Fed and BofE are now unlikely to now raise interest rates this year and secondly this sell-off has become compounded by the fresh concern over European banks which to my mind is sentiment led and an overcorrection of a market searching for a direction other than that of moves in the oil price.

[SillyBilly]

^ +1.

It gets better - Government bonds held are equivalent to cash on the balance sheet for capital reserve calculations. Hmmm... so given we are arguably approaching a SOVEREIGN debt crisis (all we did in 08/09 was transfer the debt from private to public) are we expected to be confident in the solvency of banks?! Think we will find that a lot of those bonds are junk status. Just because we have manipulated bond prices to record highs through QE is not a sign of strength! Its like sub-prime all over again...giving total crap a AAA rating. Given the massive exposure to commodities in loans too (NPL's) we will see more stress develop. Eyes are still on Glencore and Greece for me. Greece or Glencore go pot then it is Deutsche bank standing naked. A derivatives contagion would then spread like wildfire to other banks. Eyes on the copper price!

 

 

[ketteringram]

I'm picturing SB, with a bank of screens in front of him, and his finger hovering over the button. 

[eddie]

23 minutes ago, ketteringram said:

I'm picturing SB, with a bank of screens in front of him, and his finger hovering over the button. 

[SillyBilly]

I put another wad in Barrick Gold again this morning. Gold absolutely smashed through resistance this week so looking short term very bullish to me for a pop at $1300. This is a short term play though as I don't expect gold to make the breakout move (past previous highs) until 2017 onwards. Won't be too attached. I see the dollar strengthening for the following reasons which will pull gold back in the medium term (before then paving the way for the major rally once people see the game is up):

- Chinese export more deflation to the States with a Yuan devaluation (within 2016)

- Flight to perceived quality (principally capital flight from emerging markets & China). You can see now the US stock market has not been as severely affected as Europe's or EMs markets. This creates dollar demand. Expect it to intensify.

- Debt destruction. $ trillions of dollars are ripe for default and being written off. Destroy debt = destroy currency = less dollars = higher dollar.

It is often said gold doesn't do well overall in a deflation and is a principally a hedge against inflation...gold stocks were the major performers in the Great Depression. It is a hedge against crisis, not inflation IMO!

Homestake Mining (now Barrick Gold), the largest gold miner in the U.S. at the time, and Dome Mines, Canada’s biggest producer:

                                 Stock Price 1929    Stock Price   1933          Total Gain

Homestake Mining            $65                             $373                      474%

Dome Mines                       $6                            $39.50                    558%

It is hard to know whether the market knows something on Deutsche Bank or not. We should be pretty worried if it goes under, it is Lehman on steroids. Heard a banker on Bloomberg saying not to worry... "the German government won't let that happen". Obviously not seen Deutsche's derivatives exposure...

[SillyBilly]

8 hours ago, loweman2 said:

 

the Fed and BofE are now unlikely to now raise interest rates this year and secondly this sell-off has become compounded by the fresh concern over European banks which to my mind is sentiment led and an overcorrection of a market searching for a direction other than that of moves in the oil price.

Disagree its an overcorrection. You would think that given a collapse in the FTSE 100 would move the p/e ratio to a more reasonable 17 or less....................its 21!! The losses are actually being more than offset by corporate profits collapsing which is the real story, that is why I have revised down markedly from 5500, it is not cheap on even my most basic of valuation metrics at the moment. Corporate debt is twice as high as 08 as well, earnings are heading (and will continue to IMO) in the wrong direction. We have a long way down from here IMV. US market is a different kettle of fish.

 

[SillyBilly]

If we are heading for recession, give it 18 months and we'll be at P/E ratio of 10 or less as would be typical of other recessions. No reason we can't go sub 5 if the STHF. That would be sub 3500. Like I say, we're not even cheap now IMO.