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Sugarlips

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  1. Informative
    Sugarlips got a reaction from sancho panza in Credit deflation and the reflation cycle to come (part 2)   
    Frizzers must’ve just told AEP it’s time to join the bandwagon!
    https://www.smh.com.au/business/markets/revenge-of-the-old-economy-is-this-the-start-of-the-next-commodity-supercycle-20201126-p56i3a.html
  2. Agree
    Sugarlips got a reaction from Cattle Prod in Credit deflation and the reflation cycle to come (part 2)   
    Frizzers must’ve just told AEP it’s time to join the bandwagon!
    https://www.smh.com.au/business/markets/revenge-of-the-old-economy-is-this-the-start-of-the-next-commodity-supercycle-20201126-p56i3a.html
  3. Informative
    Sugarlips got a reaction from Castlevania in Credit deflation and the reflation cycle to come (part 2)   
    Frizzers must’ve just told AEP it’s time to join the bandwagon!
    https://www.smh.com.au/business/markets/revenge-of-the-old-economy-is-this-the-start-of-the-next-commodity-supercycle-20201126-p56i3a.html
  4. Informative
    Sugarlips reacted to sancho panza in Credit deflation and the reflation cycle to come (part 2)   
    First of all a warning on CPI data,jsut stating that the inflation numbers do get adjsuted down/up sometimes asmuch as 2 or 3 quarters after the fact.As does GDP obviously.So tehre's risk in the data.
    Also a couple of dyor's with reference to the GDP data and the fact that I'm classing for all intents and purposes the two early 80's recessions as one event.Similarly,I'm using some judgement to arrive at a sensible interpretation of the march 20 low in WTI given that it was largely related to a lack of storage rather than supply/demand.Simialrly I use the monthly data on oil jsut to take away the nosie of intraday moves.
    Monthly US inflation data 1913 on
    USA GDP Quarterly data
    WTI monthly data 1970 on
    Gold price 1970 on
    If we look at the last few recessions there has been (admittedly small sample size) but a reasonable correlation between oil moving CPI.Obviously,we msut remember we're looking through from ahistorical perpsective,whetehr these moves would be apparent to the eye at the time are another matter
    In 80,90 and 07/08,the correaltion between the upturn in oil prices and the rise in CPI was pretty spot on either immediate or 6 months.Eact time you're looking at a 100% increase at the minimum.
    Confirmation of relevance is possibly in the fact oil peaks were proximate to CPI peaks eg CPI peaks Mar 80 and oil May.
    01 was the exception but then the bubble wasn't in the real economy that time which maybe explains the poor correlation.
    With this current recession there are a couple of issues where you need to use your judgement.Firstly with covid recession.The bulk of the inital downtrun is stems from the sheer poverty and short sightedness of govts worldwide.You cna either use the WTI bottom at $22 or draw sensible line throught the monthly data at about $35.Either way if you use previous bottom to top runs we can expect anything between a 130% to a 200% so using $22/$35 we get $50 to $165 at peak.
    As discussed here,most of us are looking at $60-$80 I think.
    Final point .On the first chart below they show that the 30 year rate moves relatively independently of the CPI rate.(also confirms @DurhamBorn oft quoted thesis that teh 30 yr rate drives mortgage rate rather than banking solvency).
     
                                            
    US Recession             CPI low       CPI high          Oil low          Oil High           
    Jan 80-July 80      Dec 78 7.6     Mar 80 14.8%   Jan 79 $15 May 80 $39.5    
    July 81-Nov 82
    July 90-Mar 91     May 90 4.4    Oct 90 6.3        Jun 90 $17  Sep 90 $39
    Mar 01-Nov 01      Mar 01 2.9     May 01 3.6       Nov 98 $11  Nov 00 $33
    Dec 07-Jun 09      Jul 07 2%      Jun 08 5.6%     Jan 07 $58  June 08 $140
     

     
     
     
  5. Lol
  6. Informative
    Sugarlips reacted to DurhamBorn in Credit deflation and the reflation cycle to come (part 2)   
    Most of the 20s starting about 14 months from now,maybe a little later.I expect 3% inflation will see 0.75% rates 4% inflation 1.5% rates.I think CBs will think inflation will then top out,but then it will go 5%,6% etc.It might flatline a while mid cycle between 4% and 6%,then instead of falling move higher and then CBs will try to remove QE,but that wont be easy as so much is now owed by governments.
    These rates are based on a lot more printing yet though to come.For now we have passed printing back the disinflation however a sharp move into outright deflation could hit us yet,but very short term.
    I need to add this quote from an article in The Telegraph,they are in for a massive shock.
    With interest rates close to zero, and now likely to stay there for a generation, we can afford to carry debt of 100pc of GDP, and perhaps 110pc or 120pc. It isn’t a catastrophe.
  7. Informative
    Sugarlips reacted to DurhamBorn in Credit deflation and the reflation cycle to come (part 2)   
    @Froggy2000 thankyou for joining in and for enjoying the threads,we are all learning on here and thats fantastic.
    You have actually answered the question yourself if you think it through.
    Its all about the transfer mechanism.
    In the financial crash the printing was for the banks.The Fed will of expected the money multiplier to set to work where the CB created the reserves and the banks then lend out 10x etc with fraction reserve banking.
    However the money actually simply filled a hole on the banks balance sheets,the multiplier didnt work because the banks were filling the tank bank they had emptied over the prior several years.
    This time the CBs are printing direct to the economy.In that i mean they are buying newly issued gilts and treasuries etc in the market from governments.They arent putting reserves into banks waiting for them to lend,they are injecting direct.They have merged monetary and fiscal policy.
    Remember in most cycle ends the falls create demand falls,but this crisis has seen production falls.So production falls,but demand is growing.Demand from governments to stop revolution etc.
    Now why de-complex.Its really simple for a macro strategist and a contratian angle.The de-complex areas hate dis-inflation so after a long long cycle of that the areas are on their knees,hated by investors,blamed for destroying shareholder value and every sin going.However i can track liquidity creation in the economy.I know that all that liquidity will go to de-complex areas at some point.So i know that over a cycle those areas will exerience much higher prices,because unlike dis-inflation areas it takes much longer to bring online a new mine,new telecom network,new Liquid natural gas train.
    My work is all about leads and lags.Thats where we earn our butter.
  8. Informative
    Sugarlips reacted to stokiescum in They are coming for your pension again   
    But 1 gold coin a month when you retire sell one a month .it’s something they won’t bank on I hope .ie a boost to your pension .
  9. Agree
    Sugarlips reacted to JoeDavola in They are coming for your pension again   
    This is why I'm never going to put myself in a position where I'm working myself ragged now, with the vain hope that decades into the future I can retire.
    I expect the goalposts to be moved, again and again, as the country continues to go bust. I expect there's a good chance I'll be working when I'm 65 regardless. So I'll try and make the easiest money I can from one year to the next.
  10. Lol
    Sugarlips reacted to chicker in Hand of God   
    Many years back I was in a pub in Hull when DM was very ill and we were told at deaths door.
     
    On the bar was a card. Inside it read
    "Get well soon you lying, cheating C*nt"
  11. Agree
    Sugarlips reacted to Yadda yadda yadda in Hand of God   
    Probably the best footballer ever. Complete loon but I expect going from Argentine slums to superstar and partying with the likes of the Camorra and Pablo Escobar will do that to a man. Unbelievable skills. Broke my then very young heart in 86. Time gives perspective though.
  12. Agree
    Sugarlips got a reaction from papi in Credit deflation and the reflation cycle to come (part 2)   
    Lyn Alden:
    ”Gold continues to do what it has consistently done for decades: follow real interest rates inversely.”
     
    https://twitter.com/LynAldenContact/status/1331374332635983873?s=20


  13. Informative
    Sugarlips got a reaction from Tingles in Credit deflation and the reflation cycle to come (part 2)   
    Lyn Alden:
    ”Gold continues to do what it has consistently done for decades: follow real interest rates inversely.”
     
    https://twitter.com/LynAldenContact/status/1331374332635983873?s=20


  14. Informative
    Sugarlips got a reaction from janch in Credit deflation and the reflation cycle to come (part 2)   
    Lyn Alden:
    ”Gold continues to do what it has consistently done for decades: follow real interest rates inversely.”
     
    https://twitter.com/LynAldenContact/status/1331374332635983873?s=20


  15. Informative
    Sugarlips got a reaction from UnconventionalWisdom in Credit deflation and the reflation cycle to come (part 2)   
    Lyn Alden:
    ”Gold continues to do what it has consistently done for decades: follow real interest rates inversely.”
     
    https://twitter.com/LynAldenContact/status/1331374332635983873?s=20


  16. Informative
    Sugarlips got a reaction from sancho panza in Credit deflation and the reflation cycle to come (part 2)   
    Lyn Alden:
    ”Gold continues to do what it has consistently done for decades: follow real interest rates inversely.”
     
    https://twitter.com/LynAldenContact/status/1331374332635983873?s=20


  17. Informative
    Sugarlips got a reaction from Bricormortis in Credit deflation and the reflation cycle to come (part 2)   
    Lyn Alden:
    ”Gold continues to do what it has consistently done for decades: follow real interest rates inversely.”
     
    https://twitter.com/LynAldenContact/status/1331374332635983873?s=20


  18. Informative
    Sugarlips got a reaction from geordie_lurch in Credit deflation and the reflation cycle to come (part 2)   
    Lyn Alden:
    ”Gold continues to do what it has consistently done for decades: follow real interest rates inversely.”
     
    https://twitter.com/LynAldenContact/status/1331374332635983873?s=20


  19. Informative
    Sugarlips got a reaction from Erewhon888 in Credit deflation and the reflation cycle to come (part 2)   
    Lyn Alden:
    ”Gold continues to do what it has consistently done for decades: follow real interest rates inversely.”
     
    https://twitter.com/LynAldenContact/status/1331374332635983873?s=20


  20. Agree
    Sugarlips got a reaction from Cattle Prod in Credit deflation and the reflation cycle to come (part 2)   
    Lyn Alden:
    ”Gold continues to do what it has consistently done for decades: follow real interest rates inversely.”
     
    https://twitter.com/LynAldenContact/status/1331374332635983873?s=20


  21. Informative
    Sugarlips got a reaction from Loki in Credit deflation and the reflation cycle to come (part 2)   
    Lyn Alden:
    ”Gold continues to do what it has consistently done for decades: follow real interest rates inversely.”
     
    https://twitter.com/LynAldenContact/status/1331374332635983873?s=20


  22. Informative
    Sugarlips reacted to Errol in Credit deflation and the reflation cycle to come (part 2)   
    For those wondering about gold - apart from it being Comex options expiry nonsense, gold is also nicely completing the handle of a 10 year cup and handle formation (see below). It could retrace as far as $1700.
     

  23. Cheers
    Sugarlips reacted to VeryMeanReversion in Credit deflation and the reflation cycle to come (part 2)   
    I bought an extra £55K of RDSB and BP just before this crazy rise making ~£22K => Genius
    However, I've lost more than that (£29K) on the one that cannot be named => Idiot
    The consolation is that including divis from all of them over the last few years, its basically even.
    SIPP is £11K up in a day overall so best ever, now six figures in RDSB/BP.  I'm going to fill up on super-unleaded next time to celebrate.
    In an inflationary world, energy will be the new money.
  24. Informative
    Sugarlips reacted to sancho panza in Credit deflation and the reflation cycle to come (part 2)   
    Must say I'm starting to run my slide rule over some goldies again after  selling some in early sept.Some are still way too high but I reckon the following might dip enough for us.
    Big boys
    Newcrest sub 18,Barrick sub 20
    Medium size
    Anglogold Ashantisub 20,Buenaventurasub 10,Hochschild sub 190(cheap cheap,have barely moved all year which says they're a bit unloved),New Goild sub 1.50,Osisiko sub $10
     
     
  25. Informative
    Sugarlips reacted to Cattle Prod in Credit deflation and the reflation cycle to come (part 2)   
    And here is the breakdown of CPI to October in the US from the Bureau of labour statistics:

    Energy, oil and gas in particular have been a major deflator on the CPI index this year so far, to the surprise of no one. What happens to CPI when energy goes up?
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