Credit deflation and the reflation cycle to come (part 2)

[JMD]

5 hours ago, Cattle Prod said:

Not quite getting the leads and lags, but not bad.

1. Will make no difference whatsoever

2. Little to no effect

3. Irrelevant

4. No effect. Would need to import and export more, thats all

5. This export lifting was not because the US was producing so much, it was because the US was producing lighter and lighter oil that it doesn't need, so the author is correct here. Would crater WTI and destroy the US industry.

6. Irrelevant, lead time is too long

7. This is much more important than the author implies, it is the one that will have the biggest short term impact. If Biden banned flaring, much of the shale production would have to shut down. They are producing more and moe gas, and they burn it off as a waste product. Its uneconomical to ship it, so well has to shut.

8. Wont impact price.

Overall, Biden will push prices higher because he will make supply problems worse, not better. Let him deal with American voters when gasoline is $5 a gallon!

Alongside this is the stupidity of not getting more Canadian heavy crude in from Keystone XL. He has 2 other options as I've said: Venezuela and the Middle East (principally Iraq, according to Anas Alhajji). Now that the military-industrial complex is back in power, I'm sure that suits them just fine.

Nice map here from @chigrl:

You can see why I bang on about Alberta, that's going to bite Uncle Joe on the arse. If Alberta was a country, it would be fifth largest producer in the world after USA, Russia, Saudi and maybe Iraq. And the Biden administration has elected to get it from thousands of miles away. The generals must be licking their lips, because they are going to have to fight for it. And probably fight China for it at that. 

CP, re point 7, have you seen any evidence of any Texas wells, instead of flaring off the gas, they are instead using the 'free energy' to power their own small scale bit mining operations? Sounds bit crazy but I heard this from, I believe, one of the Horizon Kinetics podcasts (they have similar investment view as this thread regarding the energy sector).

[Viceroy]

15 hours ago, Loki said:

Does anyone here follow grain prices and exports? Not ag stocks but the product itself

Inflationtastic

https://www.esmmagazine.com/uncategorized/chinas-corn-wheat-imports-in-2020-reach-record-highs-119403

https://www.esmmagazine.com/retail/wheat-holds-near-6-12-year-peak-as-focus-stays-on-russian-export-tax-119555

https://www.world-grain.com/articles/14759-us-cpi-grain-based-foods-indexes-turn-in-another-solid-year-of-gains

https://www.reuters.com/article/us-china-economy-trade-soybeans/chinas-2020-u-s-soybean-imports-surged-though-likely-missed-trade-target-idUSKBN29P10T

 

Armstrong has written about grains, more so wheat.  the JJG ETF (no K1 tax form required unlike DBA etf) is a way to invest in it.

Nov 2017: https://www.armstrongeconomics.com/markets-by-sector/agriculture/the-approaching-famine/Our database on wheat from 1259 forward (excluding our data on the Roman Empire grain prices), reveals that there is a serious risk of famine from 2020 onward. It appears that we may very well enter a 12-year rally into the year 2032. Our Bifurcation Models are reflecting also a gap in time between 2020 and 2031 suggesting a trend appears to last for that period of time...The most serious forecast that we see from our computer models has been a rise in agricultural prices caused by Global Cooling – not Global Warming. Crops cannot grow without the sun and water. Historically, when the weather turns cold, the crops fail.

From April 2018; https://www.armstrongeconomics.com/markets-by-sector/agriculture/wheat-the-drought-cycle/What our computer is warning about begins next year in 2019 with a Directional Change in Wheat. This cycle appears to be impacted by (1) significant climate change, and (2) the War Cycle. The combination of both is pointing to a bull market in nominal dollar terms.

May 2019 https://www.armstrongeconomics.com/markets-by-sector/agriculture/are-we-heading-into-a-food-shortage/As I have warned, the computer has been forecasting colder winters and shorter-summers. The planting season will decline and thus the danger of a serious food shortage as we head into 2024.I previously wrote about the soaring bankruptcies among farmers and combine this with the flooding that continues, I believe the computer will be on point. I also wrote about how this year, the Russian wheat crop failed has failed because of the bitter cold with even April coming in as the coldest in more than 140 years. To make matters worse, our computer warns that the weather will not improve. The next 4 years will put even more financial pressure farmers.

Jan 2020 https://www.armstrongeconomics.com/markets-by-sector/agriculture/agriculture-yield-elected-yearly-bearish-reversal/At the end of 2019, we obtained Yearly Bearish Reversals on crop production in many areas. This is lining up with the ECM and it is warning that weather is turning against us for food production. The market tends to focus only on year/year numbers and ignore the trend on a broader perspective.

https://www.armstrongeconomics.com/markets-by-sector/agriculture/coming-famine/We see that food prices should rise between 2022 into 2024 more aggressively but this should be from shortages. There is a 17.2-year cycle in famine. This is what has emerged from our database which extends back to 2200BC. There are times when famine results in war. The last major famine, for example, in North Korea (1994-1998) killing at least 600,000 from starvation. This next famine will begin in 2022 and will extend into 2028/2029 in varying parts of the world. Therefore, it is not consistent with one particular area. However, this attempt for the Great Reset is also pushing the crisis in reducing the food supply at a time when we should be stockpiling it.

https://www.armstrongeconomics.com/markets-by-sector/agriculture/food-shortages-hitting-china/I have explained many times that while we see this 8.6-wave of the Economic Confidence Model as inflationary, this is strikingly different insofar as it will be on the back of food shortages.  I have warned that Socrates was projecting food shortages because of the weather. However, now we have these global elitists manipulating the world economy through most likely bribing politicians to further their Great Reset, the likes of Bill Gates has strategic investments in every area including meat substitutes which advocating lockdowns that have reduced the food supply as well. Now we see food shortages impacting even China. Gates may get his wish of reducing the world population by the age-old method of starvation. The most interesting aspect of this is that historically first you have food shortages which result in a reduction of population, but they also lower the health of the population which then makes them susceptible to disease. This so far is on target. We should see the rise in food prices continue and peak in 2024. So once again, stockpile some canned food while you still can.

[Loki]

Amazing @Viceroy thank you for that

[JMD]

2 hours ago, DurhamBorn said:

Indeed,she seems to be saying they are happy to print the welfare budget.Of course until everyone is on welfare.Access to the benefits they need means inflating other peoples earnings away.You can do it in a honest way with tax,but that is why people are so angry about scroungers.Through monetizing treasuries/gilts etc you do it by debasing the saved labour people have in their pensions etc.

I wonder if the newly pardoned Steve Bannon, if he returns to a strategy role, will turn the proposed Trumpism movement/TV channel toward bashing the Democrat economic policies, money debasement, etc. If things play out as per this thread's thesis then a Trumpian independent candidate (not necessarily Trump himself) could get elected next time round. The establishment think politics will now go back to normal. But what if an intelligent and (social) media friendly type were to emerge, surely they would be a near certain shoe-in come the next election. (Still think Tiger King Joey Exotic should also have been pardoned; Trump really missed out on building his dream team!).       

[wherebee]

15 hours ago, Sasquatch said:

Go on then, who is it? I'm a sucker for these penny stocks. Got loads of them! 

PNX metals.  400 bucks in, now down to 270 bucks.   There has just been a trading halt requested by the firm.  Could either mean valueless, or to da moon.  FYI A german investor came in just before new year and bought a huge chunk of shares, which I thought was interesting.

https://themarketherald.com.au/pnx-metals-asxpnx-places-shares-in-trading-halt-2021-01-21/

But 400 bucks is enough to gamble with, I reckon.  If it turns into 40,000 dollars, I'd not complain.

[wherebee]

I actually came on here to say it's a sea of red on my screen for overnight on the oilies.  I would have expected a jump with Biden cancelling the pipeline and the supply implications going forward?  What am I missing?

[DurhamBorn]

4 hours ago, wherebee said:

I actually came on here to say it's a sea of red on my screen for overnight on the oilies.  I would have expected a jump with Biden cancelling the pipeline and the supply implications going forward?  What am I missing?

Markets arent linear and will go to where they are going in their own time.

Oil on my road map was going to come down from $58 and it got very close.Most people still think oil is finished and the market doesnt want to give the really big profits to people so will keep shaking them out  on the way up.

Biden hates oil.Clinton hated tobacco.In the words of an old bloke i worked with,whatever that daft cunt says,the world will still do a turn in 24 hours.

[Barnsey]

5 minutes ago, DurhamBorn said:

Markets arent linear and will go to where they are going in their own time.

Oil on my road map was going to come down from $58 and it got very close.Most people still think oil is finished and the market doesnt want to give the really big profits to people so will keep shaking them out  on the way up.

Biden hates oil.Clinton hated tobacco.In the words of an old bloke i worked with,whatever that daft cunt says,the world will still do a turn in 24 hours.

And this:

 

[Barnsey]

https://www.ft.com/content/6536113f-f509-41e2-bee0-597ed90843b6

[geordie_lurch]

6 hours ago, Noallegiance said:

I think there's something to be said for continual underestimation of tptb and their accounting tricks that continue to make things look far better than they are. Which is saying something.

Can-kicking has been turned into an art form.

Yep I'm still not sure tptb haven't got many other tricks to keep the can kicking going like Japan have for so long

Everything in this thread makes logical sense but I have a slightly uneasy feeling that we might look back in 10 years time like many of those who sat out of the property market did around 2018 on ToS thinking I've done everything right and I've still been fucked over via help to buy and low interest rates etc

I think my biggest concern is still the possibility of tptb getting everyone dependent on the state due to Covid and then moving us all over to their Central Bank Digital Currencies forcing the 'smart' ones like us to take a haircut for even trying to protect ourselves from this madness

[geordie_lurch]

38 minutes ago, Barnsey said:

And this:

 

This was what I was on about the other day when I mentioned an anecdotal about the same factories shutting down again over there due to Covid via my contact who has a lot of stuff manufactured there. It's also been in the news recently VW and other car manufacturers are having to shut down production lines again due to chip shortages.

Such delays are certainly going to push up the price of things in 2021 not reduce them so maybe we will get our inflation quicker than expected?

[geordie_lurch]

I had a feeling the oilies would drop a bit today but didn't put any stop losses on as I'm hoping this isn't a dumping day by others - BP and Shell down around 2% on open

[Harley]

6 hours ago, wherebee said:

I actually came on here to say it's a sea of red on my screen for overnight on the oilies.  I would have expected a jump with Biden cancelling the pipeline and the supply implications going forward?  What am I missing?

Hong Kong too.  Tokyo OK though.

[BurntBread]

22 minutes ago, geordie_lurch said:

I had a feeling the oilies would drop a bit today but didn't put any stop losses on as I'm hoping this isn't a dumping day by others - BP and Shell down 2% on open

BP/Shell/Equinor/Repsol/XOM/Gazprom/Schlum all long-term holds for me. I've been down a considerable amount on them, and I'm not setting any stop-losses.

[geordie_lurch]

9 minutes ago, BurntBread said:

BP/Shell/Equinor/Repsol/XOM/Gazprom/Schlum all long-term holds for me. I've been down a considerable amount on them, and I'm not setting any stop-losses.

Yeah I'm the same overall BUT as others have said there might be an opportunity to buy a few extra % in each of them during a BK or a SK if you don't have spare cash lying around via having some stop-losses set alongside some buy back prices in ladders but like everything in life there's a risk in trying be too clever 

[Talking Monkey]

2 hours ago, geordie_lurch said:

I had a feeling the oilies would drop a bit today but didn't put any stop losses on as I'm hoping this isn't a dumping day by others - BP and Shell down around 2% on open

In my Sipp and ISA, I have the inflation stocks we discuss. Oilies included, no stop losses as they are to hold for many years

[Lightscribe]

I think although the underlying movement and cycle drives the fundamentals forward and everything is already priced in going up the chain (as we all do), there is a lot of noise in between.

We know we’ve hit the bottom point A, oversupply, negative WTI etc (even with the BK, inflation, bottle neck demand they big oil companies can’t go much lower). We all know where it’s heading to point B with rubber band supply/demand, inflation and into green energy and beyond.

Different from other crashes/corrections, there is a lot of stimulus flooding into the stock markets from the average Joe that’s speculative (David Hunter may be right with his Tesla and FAANG melt up before the BK) online trading making things slightly more volatile, algos that react accordingly.

We know the media ignore any fundamentals and just apply the narrative. Oil and the big companies are bad (ignore any green energy transition, hydrogen etc). The president says he will do this/that for climate change. All that noise will have an intermittent effect on the bumpy road going  forward. I’ll admit I took profits last week, and I’m timing the market somewhat. I’ve re-bought some today though and will continue to follow the ups and downs. It’s one of the only safest sectors for me as I’m pretty much certain we’ve seen the bottom or there abouts.

[leonardratso]

very minor point but thought id put it here anyway, i like buying bourses since they make cash up and down.

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[Democorruptcy]

1 hour ago, Lightscribe said:

I think although the underlying movement and cycle drives the fundamentals forward and everything is already priced in going up the chain (as we all do), there is a lot of noise in between.

We know we’ve hit the bottom point A, oversupply, negative WTI etc (even with the BK, inflation, bottle neck demand they big oil companies can’t go much lower). We all know where it’s heading to point B with rubber band supply/demand, inflation and into green energy and beyond.

Different from other crashes/corrections, there is a lot of stimulus flooding into the stock markets from the average Joe that’s speculative (David Hunter may be right with his Tesla and FAANG melt up before the BK) online trading making things slightly more volatile, algos that react accordingly.

We know the media ignore any fundamentals and just apply the narrative. Oil and the big companies are bad (ignore any green energy transition, hydrogen etc). The president says he will do this/that for climate change. All that noise will have an intermittent effect on the bumpy road going  forward. I’ll admit I took profits last week, and I’m timing the market somewhat. I’ve re-bought some today though and will continue to follow the ups and downs. It’s one of the only safest sectors for me as I’m pretty much certain we’ve seen the bottom or there abouts.

Do you gamble on other things, sport etc.?

I don't see anything wrong with banking profits. The thing that puzzles me is that people on here will squeeze every penny out of their cash celebrating a £1 off a joint of meat. Yet they might also expect the market to pullback but will hold through it. If they sell and buy back lower, they can buy back more units for more capital gain and more dividends. 

[Sugarlips]

Inflation is real in some sectors!

https://www.gumtree.com.au/s-ad/perth/dogs-puppies/miniature-schnauzer-male-puppy-only-1-left/1265767825

[geordie_lurch]

30 minutes ago, Democorruptcy said:

Do you gamble on other things, sport etc.?

I don't see anything wrong with banking profits. The thing that puzzles me is that people on here will squeeze every penny out of their cash celebrating a £1 off a joint of meat. Yet they might also expect the market to pullback but will hold through it. If they sell and buy back lower, they can buy back more units for more capital gain and more dividends. 

Yep I'm with you there as my only ISA fund in total is just under a single 20k limit so I'm prepared to set some automatic stop losses and buy back prices as limit orders in order to take out the emotion and to some extent the mentality of these being a 'one way bet' to maximise what I can this tax year

EDIT: It will be interesting to see what the oilies do at the UK close today

[Yadda yadda yadda]

47 minutes ago, Democorruptcy said:

Do you gamble on other things, sport etc.?

I don't see anything wrong with banking profits. The thing that puzzles me is that people on here will squeeze every penny out of their cash celebrating a £1 off a joint of meat. Yet they might also expect the market to pullback but will hold through it. If they sell and buy back lower, they can buy back more units for more capital gain and more dividends. 

If I was certain that a share would trade lower on Monday then I'd sell and buy back then. I'm not certain so I won't. It could be higher. I don't know when the price will reverse course.

If I see a steak with a yellow sticker on it I know that the price is likely lower than I'd pay for a similar steak the next day.

[Barnsey]

5 hours ago, geordie_lurch said:

This was what I was on about the other day when I mentioned an anecdotal about the same factories shutting down again over there due to Covid via my contact who has a lot of stuff manufactured there. It's also been in the news recently VW and other car manufacturers are having to shut down production lines again due to chip shortages.

Such delays are certainly going to push up the price of things in 2021 not reduce them so maybe we will get our inflation quicker than expected?

This is where we have to be careful. Original thesis on here was that we'll have a melt up, central banks will tighten, derivative crisis, BK.

Now we have a lingering virus which has been the perfect accelerant of quite unprecedented stimulus which we were expecting to see AFTER the BK. PLUS, as you rightly point out, the virus has caused global supply chain chaos, AND there's the expense and chaos of customs charges hitting UK consumers now. This will naturally be resolved in time but it's inflationary influence will be lasting.

Logistical and insolvency problems with the supply chain, an artificial suspension of spending with an impressive savings rate building up thanks to 'free' money. What happens when we're allowed to do whatever we want again? They know they can't pull back otherwise we'll just get another GFC if not worse. Very few authorities are warning not to spend spend spend. Austerity is dead.

Fascinating times.

 

[Harley]

4 hours ago, geordie_lurch said:

Yeah I'm the same overall BUT as others have said there might be an opportunity to buy a few extra % in each of them during a BK or a SK if you don't have spare cash lying around via having some stop-losses set alongside some buy back prices in ladders but like everything in life there's a risk in trying be too clever 

Yep, not clever so I just bought a bit of this and that where they had good technicals.  Alas, fully allocated in some.  Finally sold my last Hills though at 89% profit.  Was held as an income stock but who knows going forward.  Still below my overall target equity allocation though in the hope of lower prices.  Hopefully today's buying will flush out that BK on Monday!

PS: SK = Small Kahuna?

 

[geordie_lurch]

32 minutes ago, Harley said:

PS: SK = Small Kahuna?

I am just an amateur at all this but was thinking more a Slow Kahuna as I'd seen other's mention the possibility of a slow grinding pull back in these strange times but I am totally on board that inflation is coming and my stocks and shares ISA is positioned for this via oilies and other decent dividend payers. How much and how we pull back again from here I'm not sure about but I'm happy setting stop losses alongside limit orders in case we have a wild down day that no one sees coming followed by a quick reversal even if I lose a few % upside but reduce the downsides to single digits

There could still be a melt up like some have suggested or with Biden in this could be the start of another sector rotation back out of metals and oilies as the risk is seen as 'off' again? There's also the possibility the can is going to be able to be kicked for many more month or years by all the Western Government's Japan style. None of us know for sure otherwise we wouldn't be on here so much

For example, I bought physical silver over 10 years ago as I was 'clever' and could see the system was on it's knees etc but also hedged my bets with the cheapest house for my family in the best area I could get into around 2013 when everyone on the other site said the real crash was just around the corner etc etc. Sitting here in 2021 the silver price hasn't changed in £ terms and is looking like it's probably going to drop back down a decent bit here IMHO to £16 or less so I will be 'down' on that again yet that house has added over £100,000 in the same time frame not even taking into account the 7 years of mortgage payments on a tracker rate I was also told was mad to get at the time.

The point I think I'm trying to make is that at the end of the day you have to do what's right for your and those closest to you using the best information you have and your gut instincts. Sometimes this might mean being even more contrarian than other contrarians even though you agree on the most likely end game