sancho panza

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  1. The only goldies I'm selling this side of the June 08 moment is NGD to be honest.After June 08 moment will be hopfuly buying them all back cheaper for the very long term.Everything elese ticking along nicely.Along with many others,didn't expect the market to race lik it has meaning our allotment plan has had to be rejigged givne I don't like chasing hot money markets. Took advantage of the price being £2 over the 2015 £6 low and bought some Fres today.Reality is that it looks like I'm going to be well short of our intended 20% portfolio value.Currently at around 12%. On the plus side,we now know thsi bull market is real and that were' likely at the end of the beginning rather than the bgeginning of the end.very few big Wall St banks coming in yet-although I suspect the recent price action indiates that has changed.Some decent size shares still look reasonable value eg KGC/IAM and Yamana,the smallies are yet to run.Things like Rio2/Superior are yet to see any real money,so may add more of the smaller GDXJ/explorecos/producers insted of chasing Alamos and HMY at current prices. Agreed CV.Fed is key here.Whatever they do,my read is that we're entering weaker dollar territory which is bullish.If they cut,then it's really game on,if they don't and we get a gold pull back,then I'll be plugging our 8% in rapid. Bigger players are genereally less leveraged.Leveraged plays move more quickly as rising asset prices ease the financial constraints they face in terms of arranging lines of credit etc.Aslo would likely reduce interest and also give option of rights issue/warrants. I've been in this game nearly 26 years since my grandad first got me buying Barclays shares with money I'd earned as a security guard).I've seena few bubbles and seen some incredible shares do nothing for years then explode with virtually similar revenue/net income figures.That's markets.I'm sat on plenty CNA/Big Oil.Just about to start buying some bombed out smaller US oil/gas companies that look very cheap. Been sifting through OIH/FCG/PSCE ETF's. DYOR natch With you.Sounds strange but one thing I don't want is more exponential ramp up.Well until I've reached full allotment
  2. Fresnillo down 8% today https://www.reuters.com/article/britain-stocks/oil-majors-fresnillo-drag-ftse-lower-idUSL4N24I1MF
  3. Shamelessly lifted from the main o/t board who are more ahead of the news than we are. https://www.bbc.co.uk/news/business-49016543 Detached homes in London fell in value by more than £50,000 in a year, according to official figures, driving the slowdown in UK house price growth. Typically, this type of property cost £903,088 in May last year, but fell by 6.1% to £847,998 by this May, Land Registry figures show. The prices of other property types in the capital also fell, but by less. Annual property price rises overall in the UK slowed to 1.2% in May, from 1.5% the previous month. The fact they are still rising at all is thanks to price increases in homes outside London. The London housing market has been affected by factors ranging from stamp duty and other tax changes to sentiment among buyers and sellers owing to Brexit. The Land Registry data shows that prices fell by 4.4% in the year to May - the biggest drop since a 7% decrease was recorded during the financial crisis in August 2009. This is made up of the 6.1% fall for detached homes, as well as drops of 5% for flats and maisonettes, 4% for semi-detached houses, and 2.9% for terraced homes. Flats out of fashion with first-time buyers 'We camped in our cars to buy a house' How landlords can refuse to let to tenants with children "The scale of London's fall is also a reminder of the definitive shift in the dynamic in the capital," said Jonathan Hopper, managing director of Garrington Property Finders. "Buyers are now setting the tempo, dictating terms in price negotiations and frequently able to secure additional discounts on properties that are already reduced." However, the average London home is still valued at £457,471, the Land Registry data shows, which is much greater than the UK average of £229,000. The average price of homes in the UK is also still rising - up by 1.2% in the year to May, according to the Office for National Statistics. However, this was a slowdown from annual growth of 1.5% in April.
  4. Thanks for that That hedge has really reduced their room for manouvre.Incredible really when it could have really helped bail them out. I've set things up a bit more conservatively,weihted us towards the $1bn + producers in HUI/GDX/XAU, then tailing off through GDXJ/SIL components into the smaller explorecos.I learned from my experiences with EGO and NGD so don't regret them but I do wish I'd put more upfront into HMY/SIB. Ref PAAS/B2G,somethign jsut stopped me investing in them for whatever reason.PAAS chart reminds me of Barclays bank for some reason.... I think I'm just going to top up stocks we already own rather than buying those two.Poss HMY/SIB. Thanks again.Always appreciate your insight.
  5. Worth also noting that commercials are record net short on the yellow stuff.Maybe adjusting to the new normal of $1400 but hedging it they are.This was discussed earlier ref the commercials being net long back in Oct 18
  6. I think that call on Gold in GBP has some backing from the COT data.Commercials are long GBP at near year highs.Gold in sterling-by it's very nature- is always arbed ref the dollar price. Have to say that longer term I personally think gold will get reported on in 1000's not 100's in the longer term.The Central banks/legislators(think Glass Steagall repeal 1998/Basel 1+2+3) have made an absolute mess of the last twenty years.
  7. Cheers for that summary Kibuc.I'm not the sharpest card in the pack but I can follow logic and your logic here is sound.Grade/Hedging restricting profits(any idea when the hedge stops?)/Debt.As I said in another post on something else, debt is real. As long as there's enough equity on the balance sheet then companies can carry on but equity is a lot less tangible than debt and grade You got a view on the current run up.XAU has hit 89 from 66 on 29 may ---6 weeks or so.My charts are saying overbought but each day the pull back ends with another melt up. It seems to me that the bull has really begun .We had a similar face ripper at the start of 2016 that pulled back but the wider macro picture is just getting worse and worse.We got our intial three tranches well spread now-with particular thanks to yourself @DurhamBorn and @Majorpain ,but have to say that I'm beginning to think we could deploy more here purely as a momentum play. Ref Wesdome-we still don't own any because I was too tight to buy a stock that had quadrupled since it's 2015 low.............hangs head in disappointment in self. On a side note,have you got a view on B2G/PAAS by any chance? It's an impressive effort by any standards.They should merge with Marks & Sparks....
  8. Yeah we got mullered by not averaging in back in 2017 and not being spread wisely and widely enough. On reflection,it was a big lesson and it says something that I've managed to emerge from a nascent bull market with a 50% loser in New Gold.
  9. To be fair Kibuc,you know your apples.Your last opinion on new gold was something to the effect of the $400mn loan is still due in 2021 and the production performance isn't exactly stellar. What surprises me with this rally is that it's some of the worst shares that are having the strongest performance eg Hecla/New Gold(own both lol) We're only down 50% now on new gold (it was one of our first purchases in the sector 2017).I may well follow your line of thinking and do the unthinkable ie sell.Everything else will get sat on and I always said I wouldn't sell anything for a few years but have to admit I'm tempted with new gold.Got more chance of double bagging in something like Kinross/Yamana, or one of the more 'leverage to gold price plays ' eg Superior You got a view on Natural gas? FCG ETF https://etfdb.com/etf/FCG/ My inital interest is in Devon/Noble/PDCE/Murphy/Encana/Vermilion/EQT/CNX/Antero/Enerplus/QEP Also TAN ETF which is solar energy.Some humdinging 90% losers in there https://etfdb.com/etf/TAN/
  10. There's more warning that you realsie.Market tops cna be mundane affairs.FTSE 100 Dec07 to Jan 08 dropped 10% but the big falls were later that year..Peak to trough then was from Oct 07 to Feb 09 ie 16 months.Current FTSE peak was July 18,so Ftse bottom could be anywhere from Oct 19 to Dec 20. We're already heavily cash but still sat on some utlities/oilies/goldies/telecoms.Given recent peak in the S&P we could be looking at 2020/21 for the US bottom although earlier if the Russell 2000 is the primary timing mechanism for the US that some say it should be. I've been doing a lot of childcare last two days as Mrs P has been away but spent last night combing through the SOIL ETF for my potash picks going forward (tempted to invest alreay to be honest but will wait and see if they chuck the baby out with the bath water. Nutrien/Yara/PhosAgro/Mosaic/Compass/Incitec/K+S/Nufarm/Interpid.Interesting times if I can get these on 5% yields. Worth ntoing that the hosuebuilders still haven't dropped much but look to have peaked(decl short).For example BDEV peak Dec 06 bottom Nov 08 Banks look to have peaked eg Barc (decl short) which is hard to time off as it's so bombed out.Worth noting the 10 year decline from £3-51 peak post crisis for barc
  11. There's been the usual poo pooing of DB's gross derivatives exposure by the Banker gliteratti. However,it's worth remembering that when Lehman imploded,a team got tasked with working out their net exposure and effectively ended up guessing at it.How do I know? 'met a bloke in a pub once'......... I always dislike it when people start a discussion with 'if you question this then you're dumb or scaremongering'. Lucky people took a more enlightened approach Thalidomide. The answer must be much more nuanced than is being claimed by either the FT or the Tweet below.For a start,you need to understand the nature of DB's derivatives book and just as importantly ,how it is hedged. Hedging is only as good as the counterparty the other side of it and I'd presume there's a reasonable chance that some Italian/Spanish/Greek banks have been active in these markets,particularly Euro swaps. Ergo,the central issue with DB's derivatives exposure doesn't actually lie with DB itself but the counterparties that run off it.As one of the biggest books they are 'systemic'.ISDA link below shows notional outstanding of $980 trn(IRD +OTC),ergo DB 4.6% of the market. Also,such confidence appears to ignore existential risk.If the Euro goes pop,will the system be able to handle it? IRD includes Euro denomintaed interest rate derivatives, a $112trn market. If DB is a chunky player here-and I'd suspect it is,questions should be asked about it's notional outstanding exposure. ISDA basically saying gross credit exposure of the whole derivatives market is $2.3 trillion on $544trn + $436 trn +others= £980trn++. German taxpayers should get a second opinion as it appears some deals are being done without any margin being posted. Would welcome our resident options traders view @MvR https://ftalphaville.ft.com/2019/07/08/1562575972000/Deutsche-Bank-derivative-dumbness/ https://www.isda.org/a/9atME/Key-Trends-in-Size-and-Composition-of-OTC-Derivatives-Markets.pdf OTC derivatives notional outstanding was $544.4 trillion at the end of 2018, 8.5% lower compared with mid-year 2018 and 2.3% higher compared with year-end 2017 IRD notional outstanding was $436.8 trillion at year-end 2018. Gross credit exposure – gross market value after netting – also declined to its lowest level since 2007. The gross credit exposure of OTC derivatives, which is a more accurate measure of counterparty credit risk, continued to decline and totaled $2.3 trillion, accounting for 0.4% of notional outstanding at year-end 2018 Following the implementation of the margin rules for noncleared derivatives from September 2016, the amount of collateral received and posted by market participants has been increasing. The ISDA margin survey for the full year 2018 found that the 20 largest market participants (phaseone firms) collected approximately $1.1 trillion of initial margin (IM) and variation margin (VM) for their non-cleared derivatives transactions at year-end 2018. As more firms and transactions become subject to the margin requirements, ISDA expects IM and VM to continue to grow, and net credit exposure of OTC derivatives, which adjusts gross credit exposure for collateral, to continue to decline9
  12. https://www.hussmanfunds.com/comment/observations/obs190714/ One of the most important warnings offered by firefighters is simple: get out early. In the face of wildfires, some homeowners get the idea of staying in their homes and riding it out. As one firefighter warned “The point is to go.” But if you don’t, it’s better to stay than to panic and run in the midst of a firestorm of smoke and embers. It’s not the fire that gets you. It’s the heat. Even before the flames reach the house, it can be fatal to stand outside trying to protect what you have (h/t John Galvin). Similarly, our “Exit Rule for Bubbles” is straightforward: You only get out if you panic before everyone else does. You have to decide whether to look like an idiot before the crash, or look like an idiot after it. Worse, investors often capitulate into panic selling only after their losses have become extreme. By then, it’s too late. It’s not the fire that gets them. It’s the heat. Once the warning signs are flashing, get out early. Attempting to squeeze the last bit out of a vulnerable, hypervalued market is what value investor Howard Marks describes as “getting cute.” The key is that overvaluation is not enough. Extreme overvaluation can persist for long periods of time if investors have a speculative bit in their teeth. In prior market cycles across history, an effective approach would have been to tolerate overvaluation until either a) uniformly favorable market internals gave way to dispersion and divergence, indicating that investors had shifted from a speculative mindset to a risk-averse one, or b) extreme “overvalued, overbought, overbullish” features indicated that speculation had reached a precarious limit. Once divergent internals or overextended syndromes emerged, overvaluation typically permitted steep and often immediate market losses. Indeed, those considerations were exactly the ones that allowed us to anticipate the 2000-2002 and 2007-2009 collapses, and to shift to a constructive outlook in-between. Our value-conscious discipline was enormously effective in multiple complete market cycles into 2009. The advancing half-cycle since 2009 has been legitimately “different” from history in one specific way. While market internals have continued to be an effective gauge of speculation even amid the Federal Reserve’s policies of quantitative easing and zero interest rates, it was detrimental, in this cycle, to act on the idea that speculation had any reliable “limit” at all. To be clear, I was wrong. As long as investors had a speculative bit in their teeth, as evidenced by uniform market internals, even the most extreme “overvalued, overbought, overbullish” syndromes had no consequence. The most extreme speculation actually tapped itself out by January 2018. On Friday of last week, the S&P 500 Index set a fresh record high, but that high was just 4.9% above the January 2018 pre-correction peak, and just 2.8% above the September 2018 pre-correction peak. Much of the market’s volatility in the interim has been a battle between investors excited by the prospect of fresh Federal Reserve easing, and investors concerned about extreme valuations, emerging recession risk, and the potential for steep full-cycle market losses. This has produced market action that some might label a “megaphone.” Look carefully at this chart. Our measures of market internals shifted negative on February 2, 2018, and except for a brief positive whipsaw earlier this year, have been unfavorable during the recent push to fresh market highs. We’ve seen a great deal of market volatility since early 2018, but little in the way of durable market gains. The internal divergence over the past year has been a headwind for hedged equity strategies. The price-insensitive exodus toward passive investing has favored hypervalued, large-cap S&P 500 index components and “glamour stocks” over any disciplined stock selection approach. That’s not terribly unusual for late-stage bull market advances. Still, recognize that the market has been in a broadening top formation since market internals deteriorated in early 2018. The chart below shows the cumulative total return of the S&P 500 since 1998 (when we initially introduced our measures of market internals), along with the cumulative total return of the S&P 500 restricted to periods of favorable market internals, accruing Treasury bill returns otherwise. Note that this chart is purely historical, does not depict the returns of any investment strategy, and that there is no assurance that market internals will distinguish periods of speculation and risk-aversion similarly in the future. Overvalued, overbought, overbullish As I’ve detailed extensively, the Federal Reserve’s extraordinary policies of quantitative easing and zero interest rates disabled every historically reliable “overvalued, overbought, overbullish” limit to speculation. In late-2017, we finally threw up our hands and abandoned those “limits.” While sufficiently extreme conditions can encourage us to adopt a neutral outlook, we will no longer adopt nor amplify a negative market outlook except in periods where our measures of internals are unfavorable. Given a hypervalued market with still-unfavorable internals, history suggests that a “trap door” is already open here, which is permissive of abrupt and potentially vertical declines. Yet that was also the case at the beginning of July, so why post an interim update? The reason is this. Though we no longer adopt a bearish outlook in response to extreme “overvalued, overbought, overbullish” syndromes when market internals remain favorable, I believe that it is still important to track when those syndromes emerge in the context of negative market internals, as we see presently. One version of these syndromes is so extreme that I’ve simply labeled it “Bubble” in our database. Prior to the current market cycle, this extreme variant has only emerged just before the worst market collapses in the past century. The list of these instances: August 1929, the week of the market peak; August 1972, after which the S&P 500 would advance about 7% by year-end, and then drop by half; August 1987, the week of the market peak; July 1999, just before an abrupt 12% market correction, with a secondary signal in March 2000, the week of the final market peak; and July 2007, within a few points of the final peak in the S&P 500, with a secondary signal in October 2007, the week of that final market peak. We observed a few instances of this syndrome, to no effect, in late-2016 and early-2017 during post-election exuberance about corporate tax cuts. As with other “overvalued, overbought, overbullish” syndromes, this syndrome hasn’t been enough – in itself – to place a reliable “limit” on speculation in the current market cycle. What’s notable is that we observed this “Bubble” syndrome again last week, this time in the context of negative market internals and a relatively flat yield curve (where “relatively” flat here means a 10-year Treasury bond yield less than 1% above the 3-month Treasury bill yield). From my perspective, that’s a combination worth noting, because the only time we’ve observed it in weekly data was at the exact market high of March 2000, the exact market high of October 2007, the pre-correction market high of September 2018, and today. Restrict the criteria to a yield spread of 0.5% or less, and last week’s signal joins only two other ones, which precisely identify the bull market peaks of 2000 and 2007. The point here is not to “call a market top,” though I certainly believe that the likelihood is significant. Rather, my point is to call attention to the full-cycle implications of where the market is at present. See, whether or not this is the very last chance to avoid the firestorm, “the point is to go.” I normally encourage passive investors to adhere to their discipline, provided that they have fully examined their tolerance for the steep market losses that regularly emerge over the completion of the cycle. That’s because the very long-term prospects of maintaining a passive investment position typically exceed Treasury bill yields, even at bull market tops. The problem here is that, as of Friday July 12, our estimate of likely 12-year total returns for a conventional portfolio mix invested 60% in the S&P 500, 30% in Treasury bonds, and 10% in Treasury bills, has dropped to just 0.5%. A passive investment strategy is now closer to “all risk and no reward” than at any moment in history outside of the three weeks surrounding the 1929 market peak. Look, I get it. The S&P 500 just hit a new record high, and it feels like vindication that the market has completely recovered last year’s October-December loss. This hubristic level of overconfidence is clear in the churlish and even aggressive way that any remark about potential market losses is dismissed. But objectively, the index is less than 3% above its September 2018 high, with the same warning signs and more – particularly on the economic front. Psychologically, it’s very difficult for investors to exit a bull market once stocks are even 7-8% off of their highs. Bear markets are punctuated by fast, furious, prone-to-failure rallies exactly to maintain the hope of recovering. That’s the whole point of our Exit Rule for Bubbles – you only get out if you panic before everyone else does. Examine past bull market peaks, and you’ll invariably find that the initial decline was steep enough, usually within the first 15-30 trading sessions, to paralyze investors and keep them hoping and holding through the entire bear market that followed. Once the March 2000 peak was registered, the S&P 500 fell -11.2% over the next 15 trading sessions. Though the S&P 500 nearly recovered its peak at the beginning of September 2000, it gave back -12.6% over the next 28 sessions. Similarly rapid losses followed the 1987, 1990, and 2007 market peaks. Those initial losses are precisely what lock investors into paralysis. They’re running toward the fire The current market highs are dominated by a single concept: the idea that the Federal Reserve is likely to shift to an easing mode in the months ahead, most likely at its July 30-31 meeting. I don’t doubt that prospect at all. The problem, as I observed in my regular July comment, is that with the exceptions of 1967 and 1996, every initial Fed easing (ultimately amounting to a cumulative cut of 0.5% or more, following a period of tightening in excess of 0.5%), has been associated with a U.S. economic recession. When we examine our leading measures of economic activity, based on national and regional Federal Reserve and purchasing managers surveys, we find that weakness in the broad composite tends to lead employment data by about two months. Specifically, a 10-month change in the composite measure is well-correlated with the change in non-farm payrolls over the following two months, relative to average job growth over the preceding 10 months. To put some numbers around this, over the past 10 months, non-farm payrolls have grown by about 185,000 jobs per month. Yet the plunge we’ve observed in leading measures implies a shortfall of over 250,000 from that average, suggesting that we may observe negative payroll numbers in the coming months. That’s a noisy estimate, of course, and payroll numbers are often heavily revised well after economic turning points have been set, but investors should allow for the distinct possibility that the jobs data will take a rather dark turn shortly. It’s also notable that we’re observing a very wide dispersion between Civilian Employment (reflecting the “household” survey used to calculate the unemployment rate) and Non-Farm Payrolls (reflecting the “establishment” survey that typically makes headlines). In the first 6 months of 2019, Civilian Employment grew by only 60,000 jobs. The chart below offers some idea of that dispersion. Notably, if we examine points in history similar to the present, where Civilian Employment grew by less than 1.4% year-over-year (a threshold originally proposed by Martin Zweig), Non-Farm Payrolls grew by less than 0.7% over the prior 6-month period, and aggregate hours worked were flat or down over the prior 3-month period, all of the previous instances were associated with U.S. recessions. Put simply, while investors appear exuberant about the prospect for Fed easing, they seem largely unaware that initial Fed easings have almost invariably been associated with U.S. recessions. They’re running toward the fire. Valuation review Finally, as a brief update to valuations, the two charts below present the measures we find best correlated with actual subsequent S&P 500 total returns in market cycles across history, easily outperforming price/forward earnings, the Shiller CAPE, and the Fed Model, among other measures. The first chart shows our measure of nonfinancial market capitalization to nonfinancial corporate gross value-added, including estimated foreign revenues. Notice something. The current multiple is 2.27. The highest level ever observed at the end of any market cycle in history was in October 2002, when the multiple set a trough of 1.11. Of course, that trough proved to be temporary, and both market valuations and the S&P 500 itself plunged to lower levels during the 2007-2009 collapse. Still, even a retreat in valuations to the highest level ever observed at a bear market trough would take the S&P about 51% lower. I actually view that outcome as optimistic. The next chart shows our Margin-Adjusted P/E (MAPE), which behaves largely as a market-wide price/revenue ratio, and allows calculation back to the 1920’s. As of Friday, July 12, the MAPE stood at 46.02. The highest level ever observed at the end of any complete market cycle was 19.83, in October 2002. A retreat simply matching that level would imply a market loss of about -57% over the completion of the current cycle. Averaging the “optimistic” outcomes for the MAPE and MarketCap/GVA, the S&P 500 would have to lose about -54% simply to reach the highest level of valuation seen at any bear market trough. Such a loss would be enough to wipe out every bit of total return that the S&P has enjoyed, over-and-above Treasury bills, all the way back to 2000. Complete cycles matter. Notice that the MAPE actually exceeds the level observed at the 1929 peak. That’s not to suggest that I expect Depression-like market losses to follow. As I’ve noted before, the -89% market loss during the Depression can be thought of as two back-to-back losses, each representing two-thirds of the market’s value. The first two-thirds was a rather standard, run-of-the-mill outcome, given the hypervaluation of the market at the 1929 peak. It was the second two-thirds loss, largely the result of policy failures, that made Depression losses so severe. One may argue, perhaps defensibly, that aggressive monetary and fiscal policy can avoid Depression-type economic outcomes, but remember that there’s really very little correlation between Federal Reserve policy changes and more general, cyclical economic fluctuations. Indeed, the trajectory of every U.S. economic expansion – including this one – has followed a very simple mean-reverting path, where the output gap (real GDP vs. potential GDP) at the recession low has narrowed at a rate of roughly 8% per quarter. That trajectory has not been affected even by the most extraordinary monetary policies. As for the financial markets, remember that the Fed eased aggressively throughout both the 2000-2002 and 2007-2009 collapses, and that the market’s response to Fed easing is highly conditional on investor psychology and the condition of market internals. In my view, unless market internals are explicitly favorable, one shouldn’t rely on Fed easing to provide much durable support for financial assets. I continue to expect a market loss on the order of 60-65% over the completion of the current cycle. A 50% loss is a rather optimistic scenario, given that it would not even take valuations to the level we observed in October 2002, which was the highest level of valuation ever observed at the end of a market cycle. If our measures of internals were uniformly favorable, these full-cycle risks would remain, but we would defer our immediate concerns. It will remain important to monitor those internals, regardless of how extreme market valuations have become. Presently, we observe market conditions that have been associated almost exclusively, and in most cases precisely, with the most extreme bull market peaks across history.
  13. The price of food and fuel never lies.Nor does the rent.Nor does your pay packet.Food inflation is one thing you can't mask for very long.Unlike the price of sofas. Genuinely hadn't thought of that aspect highlighted in bold.But makes perfect sense.
  14. The problem is that debt is very real.As are Forex markets.The reason so many Western govts haven't seen their currencies trashed is that most of the others are doing it and finding willing buyers of their debt issuance in tehmselves if all else fails.The JGB owns a huge chunk of Japanese isuance and has even started buying ETF's in the stock market.You couldn't make it up. Imputed rents are 12% of GDP near enough.Even worse,for up until the last year or two the two rental measures used in GDP for imputed rents and CPIH(rental equivalence measure added to CPI) were based on different data.The former -according to no less a luminary than Shaun Richards-had the effect of bumping up GDP and the latter had the effect of suppressing the H in CPIH.You'd need someone with Shaun's knowledge to break down the mechanisms but there are all sorts of statistical turns of the wrist being used. Currently,the two measures now use the same data sets See above.So you take a flawed measure of national output(GDP),use it to set off the national debt(Debt to GDP anyone), then to make sure noone's being conned they deflate it in real terms using a flawed inflation measure. Even better,with GDP they rarely focus on the population adjusted measure which could be quite important if we suffer any sort of depopulation . Imputed taxi fares for when you use your own car,imputed restaurant meals for when you cook your own food.The ways we can create wealth are limitless. Beautifully put. Also,little adjustment for substituion and other ways consumers work around price inflation This will all work until it doesn't and then we'd better stand by for the show.