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vand

"Big Big Picture" - Many long term trends are reversing

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We are at the precipice of a shift in the direction of many major global trends that have been ongoing for as long as anyone can remember:

 

- The bond market really looks to have topped out and is reversing. Last year the US 10yr went under 1.5%. Think how absurd that is. Today it stands at a near 4-yr high on 2.8%.

- Central banks are beginning to tighten in the (false) belief that the economy is strong enough to stand on its own 2 feet.

- The USD is in the early stage of a bear market

- Global stock markets, and the US in particular have been in "irrational exuberance"  mode since Trump won the election. The SP500 has not fallen more than 3% in all that time. It is a remarkable and unprecedented run of low volatility, but that parabolic move looks to be breaking down.

- Commodities have NEVER been cheaper vs stocks, but the CRB/Dow ratio look like it is ready to reverse

 

How far any of the newly developing trends run for to reverse these extremes we have yet to see, but there are more reasons than ever to position yourself to benefit from the newly emerging trends - that includes holding PMs, paying off debt, less exposure to equities, more exposure to commodities, and holding plenty cash to benefit from the new opportunities that will when these new trends really get going.

US 10yr note:

 

big.chart?nosettings=1&symb=BX:TMUBMUSD1

 

Bond market:

https://www.ft.com/content/6fe195ca-f781-11e7-8715-e94187b3017e

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Agreed, the stars are aligning. You know soomething is around the corner when one minute the business moguls and cnetral banks are preaching caution, and the next minute they are patting themselves on the back, but all the while still telling people not to let their guard down. If they were so convinced, they wouldnt need to add the "...but," to their speeches. Davos was a perfect example. So much positivity but it was all, and I mean all, tainted by words unspoken but implied, that suggested things were about to go wrong for them.

The ladt two years, I have made a concious decision to  spread my wealth into various corners. I have decent savings, cash, PMs and crytpos. I wouldnt touch stocks or bonds with someone elses right now.

 

The biggest dilemma I have is property. The ladyfriend and I are looking to buy, but I have a nasty feeling that prices are about to plummet (maybe with the next two years), just as we want to be moving in. She doesnt understand why Im so reluctant, and thinks im being too negative. Am I?

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The crypto bubble is a reflection of the optimism and exuberance of a generation of millennials raised to think that the laws of man supersede  the laws of nature. They are now being brought back down to earth with a bump, most of them out of pocket and with a few good life lessons learnt along the way.

This is just a foreshadow of the carnage to come in global financial markets once the SHTF.  The market will have its pound of flesh.

 

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12 minutes ago, StackerNoob said:

The biggest dilemma I have is property. The ladyfriend and I are looking to buy, but I have a nasty feeling that prices are about to plummet (maybe with the next two years), just as we want to be moving in. She doesnt understand why Im so reluctant, and thinks im being too negative. Am I?

 

It is a dilemma, for sure.

The greatest economic tragedy of the last 20 years has been the cost of an ordinary house being taken out of the reach of ordinary working people. 

if you had asked me in my youth I would have been of the opinion to wait until the market plummets and then buy, but it is not always that simple. For one thing, jobs and job security is usually one of the over-riding fears during these sort of times, so you may not even be in a position to take advantage of lower house prices during a crash. And there is the completely valid argument that you just suck it up and get on with your lives.

I would also say that if you go buy in this market with your eyes wide open and the expectation of a crash, then it makes it more palatable if and when it does happen. It is the suckers who borrow 6 times their salary, buy a sh1thole 1 bed in Camberwell with the hope that it will double in value over 10 year and to enable them to move to a detatched home in the Cotswolds who are the ones who are going to be repossessed. You also have the option to hedge yourself, eg shorting the FTSE-listed house-builders. Just make sure that whatever positions you take, you are able to sleep comfortably at night!

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I echo vands sentiment and have recently bought knowing full well rates gave a good chance to shoot up, prices a good chance to shoot lower. But life must go on, you could wait for decades for a crash that never comes. Sods law says you buy it will crash tomorrow.

I would say if you buy a new build, use the government's money to do so and let them take the hit of it does crash. When you sell you pay back the 20% htb loan, if prices fell, you pay less back, if prices rise you pay off the loan first then sell. :D

I didn't use htb but I tied in for 5 years on the mortgage and I'm overpaying to the point where if rates go to 7% I won't notice when I remortgage. What more can you do. The kids need security and like their school, the missus likes her job and has good opportunities for advancement. Some times you need to choose which is worth more as life won't wait for the crash. 

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That US 10yr note is continuing to spike.. up to 2.83% today. 

Peter Schiff talks about a lot of the shifting macro fundamentals that are driving this in his latest podcast (conclusion: excess dollars)

 

 

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5 minutes ago, vand said:

Here’s is another long term trend that may have bottomed.. and if it has, then watch out above..

 

https://www.zerohedge.com/news/2018-02-08/inflation-alert-velocity-money-has-finally-bottomed

I think we're going straight to deflation and a re-run of 2008 on steroids. We're looking at a early stages of the unwind of the everything bubble.

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The underpinnings of Everything We Know is looking very shaky indeed now, as Bonds continue to fall and yields continue to rise; the US 10yr is now at 2.92%

http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=BX%3ATMUBMUSD10Y&insttype=Bond

The bond market is now very clearly signalling a long term change in direction and a period of higher inflation and higher interest rates lie ahead. It will be a question of "when" not "if" this feeds through to main st.

If that 10y takes out the 2014 high just above 3% then it could easily move up to near 4% relatively quickly.

Edited by vand

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