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

[ONC]

Interesting OBR report on “Debt maturity, quantitative easing and interest rate sensitivity”
 

https://obr.uk/box/debt-maturity-quantitative-easing-and-interest-rate-sensitivity/

Seems to say that mean maturity of uk government debt has been reduced by QE, because the QE money financed at overnight rate. Thus making overall debt far more sensitive to increases in interest rates than was the case before the 2008 financial crisis. Possibility of viscous fiscal feedback cycle coming?

 

 

[Castlevania]

22 minutes ago, CVG said:

Are we expecting BT to resume dividends with an interim in Feb? If they resumed at previous rates then that would be around 8%. Is 4 or 5% more likely?

They’ve announced that they will cut. I’m expecting between 5 and 8 pence per share as an annual dividend once they resume. 

[Harley]

2 hours ago, DoINeedOne said:

One of the issues with the internet news, blogs, social media is its too much information not just about covid it can be about anything

NOISE

I think we can all do well in switching off the news whilst i don't watch the news and have a huge twitter keyword block list for keywords like Brexit, Covid, Covid19 etc....

Even with that i have been feeling quite drained with it all lately

Need to block more keywords and accounts and restrict my reading down to just a few newsletters and websites like here

And focus on moving forward 

Agreed.  Some successful traders say their performance (and quality of life) went up leaving Wall Street and turning off MNBC.

I don't do msm or social media apart from here and TalkRadio or TimesRadio (only a bit).  Even then I skip the news.  I don't even have a TV licence (not needed).  I have some targeted newsletters and read what I need but then the charts are everything to me.  I don't waste energy on natter or speculation, I just look at the price action.  Just the facts.  KISS.  I used to be different (avid R4, etc).  It's taken many years to get to this point.  I'm very happy.

My one posting vice is here (but then the quality of information is A1)!

[DurhamBorn]

BT divi will be 7.7p ,they might go slightly higher at 7.9p.Id expect the interim to be first and likely at 1/3 final.Id expect the divi to increase at around 4%pa

Notice today Vodafone saying revenue up 3%.They will say its extra customers etc,and some of the African bit will be,but it should be the start of inflation starting to feed through.Id expect the affect on free cash to be double,then halfway through cycle as capex falls treble to quadruple.We need to see if the other big telcos also come up with service revenue growth,if they all or mostly do inflation is starting to feed in,just the start.

On Vod i expect they will want another Euro 5 billion of their debts yet,but then a share buyback more likely than divi increases,or a 2% divi increase and 3% share buybacks.

[planit]

18 minutes ago, Harley said:

Agreed.  Some successful traders say their performance (and quality of life) went up leaving Wall Street and turning off MNBC.

I don't do msm or social media apart from here and TalkRadio or TimesRadio (only a bit).  Even then I skip the news.  I don't even have a TV licence (not needed).  I have some targeted newsletters and read what I need but then the charts are everything to me.  I don't waste energy on natter or speculation, I just look at the price action.  Just the facts.  KISS.  I used to be different (avid R4, etc).  It's taken many years to get to this point.  I'm very happy.

My one posting vice is here (but then the quality of information is A1)!

I hope that one of my skills is scanning the news, quickly filter out the crap and adjust for bias.

Bias, for example, is the woke journalists, you look for key words they use to get an idea for how far gone they are and then you know how much to adjust for. The FT coal article I posted earlier was ok but there was another article on Biden that was pretty skewed. 

The problem is people are investing with ESG goggles on so it is inevitable we will be missing out on good opportunities as the biggest moves will be irrational to our thinking.

Examples are ESG funds, crazy hydrogen projects that will eventually go bust, EV car companies that have never built a production line etc.

Long term I am using BP for these as they will cherry pick the working ones as the cycle moves on. But I want to trade much shorter term so I need to learn more and buy a pair of woke tinted sunglasses.

[Castlevania]

24 minutes ago, DurhamBorn said:

BT divi will be 7.7p ,they might go slightly higher at 7.9p.Id expect the interim to be first and likely at 1/3 final.Id expect the divi to increase at around 4%pa

Notice today Vodafone saying revenue up 3%.They will say its extra customers etc,and some of the African bit will be,but it should be the start of inflation starting to feed through.Id expect the affect on free cash to be double,then halfway through cycle as capex falls treble to quadruple.We need to see if the other big telcos also come up with service revenue growth,if they all or mostly do inflation is starting to feed in,just the start.

On Vod i expect they will want another Euro 5 billion of their debts yet,but then a share buyback more likely than divi increases,or a 2% divi increase and 3% share buybacks.

Vodafone’s annual inflation linked price increase for mobile phone contracts is now CPI plus 3.9%

[Bricormortis]

Question.....  if i buy an etf with an annual charge of 1%, and hold it for one tenth of a year, generally should I expect to get charged 0.1% or the whole 1 % ?

I have tended to think well if you want to play the game  it is what it is. But I am thinking about how I might be organising myself in the future and I think I need to get wise as regards charges. The info supplied on Kids or whatever seems a bit scant and uninformative. Tells you what you dont need to know instead of what you do need to know.

[Castlevania]

35 minutes ago, Bricormortis said:

Question.....  if i buy an etf with an annual charge of 1%, and hold it for one tenth of a year, generally should I expect to get charged 0.1% or the whole 1 % ?

I have tended to think well if you want to play the game  it is what it is. But I am thinking about how I might be organising myself in the future and I think I need to get wise as regards charges. The info supplied on Kids or whatever seems a bit scant and uninformative. Tells you what you dont need to know instead of what you do need to know.

Should be charged daily

[Mapper]

52 minutes ago, planit said:

woke tinted sunglasses.

This year's DOSBODs must have stocking filler.

[sancho panza]

On 20/07/2021 at 20:26, Cattle Prod said:

I guess the question is chicken or egg: did population grow because of the availability of fossil fuels. Yes, I think. Global warming is a thing, it's always been a thing, mostly controlled by the giant nuclear reactor in the sky. Only question is are we doing it now? Probably. Is it a probelm? I doubt it. Someone upthread mentioned a large dynamic system and that is exactly what Earth is. Far, far too complex to model. We've only been able to get the weather forecast out from 3 days to 10 days with all our computing power, never mind global climate. Modelling climate is impossible, as much like epidemic modelling you either add in or leave out key variables (according to your bias!). One thing you can say with certainty is that the Earth had handled CO2 levels way higher than present: they were 4 x higher in the Jurassic, and the dinosaurs had pretty good craic it seems. The second thing you can say is our CO2 contributions will level off naturally at a much lower level as the supply of fossil fuels levels off and then declines. I suspect that the powers behind the ESG/woke/Greta movement can see this, and are simply trying to grab the opportunity before it passes. Over a geoloical time span, current CO2 levels are actually very low. Any greenhouse effect with our CO2 contribution will likely be offset and regulated elsewhere in the complex dyanamic sytem we live on, that is not yet understood. Probably the oceans, they regulate almost everything.

It's what I call teh Greta paradox.She wants the world's 7 billion population she just doesn't want the fossil fuels that created them and sustains them.

[sancho panza]

On 21/07/2021 at 07:32, dnb24 said:

Compare this year to last year- hospitalisation and deaths fell off a cliff during summer too in 2020. This Autumn/winter will be the acid test of vaccines- however conclusions on their effectiveness will Have to take into account the “dry tinder” that was taken out of the population last year, and the “herd immunity”. 
If there is anything approaching normal excess deaths this winter or exceed normal excess deaths then conclusion on the vaccines would indicate they were useless or they are actually causing people to die.

It would also be nice to see a vaguely independent assessment of the risk reward for various age groups.The vaccine isn't prefect by any stretch and there are clear dangers.UK yellow card system reporting 1470 detahs so far,linked to vaccine.WHere do you read that in the press?

Over the last year,I've got really tired of hearing how young kids should be off school.LS reporting only 1.6% of kids test postive during isolation today.

On 21/07/2021 at 08:01, Castlevania said:

Cases dropped significantly last Summer. What we’re seeing is a huge increase in cases and both hospitalisation and deaths collapsing. It does suggest that the vaccines are working.

As for whether there’s any need to take it. If you’re old or fat you should take the vaccine. If you don’t fit into those categories then you never had anything to fear from Covid.

WHat I suspect we're seeing is a virus  mutating into a weaker more infectious form.

AS for your advice on whetehr to take the vaccine,I think you're more bag on than most of the doctors they parade on GMTV.Genuinely good advice that will stand the test of time imho.

On 21/07/2021 at 16:25, DurhamBorn said:

This is the worst conservative government iv ever seen by a very large margin and yet a billion times better than Labour.The red wall seats all fell around me because people are sick of scroungers.Those landing on boats,and those home born.The government have no backbone at all though and have created a huge mess.Shelves are half empty yet nobody wants to work.It will need the BOE to pull back from QE to then focus the mind.My partner is a nurse but working for the council in a responder role.They are really short staffed and all their bosses are sat at home on huge salaries doing nothing at all really.They advertised jobs,but only 2 candidates were suitable,and one decided they didnt want the job.So a big push got them one employee when they needed 8.Almost all my partners workmates are wanting to retire soon and starting to go on the sick every few months to force the issue.

This is what happens when people see others better off than them for doing nothing at all.

 

I'm noticing changes in attitudes at work -NHS.Lot of the younger members of staff are making quietly critical comments on the amount of money some people are getting on benefits-particularly the alcholics for instance who get disability-not for the alcholism but the problems caused by the alcohol-.
Things are changing.

ALso seeing a lot of people declining overtime.Last night shift I was on we had 60% of normal crew levels and we had 60% more work.Short story long,it was a stresful night and I totally get why we're losing staff.The money's crap until you've been in a few years and by then most people are burned out.

A&E is getting smashed too.Lot of GP's not seeing many people.

Must say,these lockdowns have a lot of unintended cosnsequences.I warned acquaintances who were pro lockdown what would happen a year down the line and here we are and it's even worse than I thought.

[sancho panza]

On 22/07/2021 at 01:16, DurhamBorn said:

We are already in the reflation now and any violent deflations will be short term events.Once QE stops government will have to borrow on the open market and pay higher rates.There are two big risks then.First is that the BOE blinks and starts printing simply to fund government deficits again.Second that government decides not to cut spending but raise tax instead.Death spiral in sterling would follow both.The government is in a terrible position.This pingdemic fiasco shows how clueless they are.

The simple reality is that the further down the road we get the worse the choices are for the government.Stop printing,the debt looms large,keep printing,the inflationary spiral looms large.Pick your poison.

 I think one of the themes you're running at the minute regarding working class peoplestarting to reassess where their money has been going is bang on.I'm seeing a darker more pragmetic attitude towards the welfare state,a growing relaistation that all the money we've poured into the lockdown has been pointless.

Echoing that latter point,we had a meet up today with an old family friend who has been very compliant with lockdown and it didn't take much to find her cynicism about the whole episode coming through with reference to her kids being forced to isolate and stay off school,implications for the NSHS in terms of fmaily members not seeing GP's.

At work,we're swamped,A&E is swamped,hospitals are swamped.Not with covid but the consequences of the lockdown.The true scale of the fiasco is becoming apparent to people in terms of the health systemThe economy is yet to come.

On 22/07/2021 at 11:20, Transistor Man said:

This is how I though nuclear would go, but I was one business cycle too early. Therefore, wrong! Looks like it’s going to happen this time.

Story of my trading life TM

[sancho panza]

On 22/07/2021 at 17:00, Starsend said:

Fucking outrageous the way they are trying to force people to get jabbed. All this shit has been covered in the past with clear laws/ethical guidelines being developed to say that you cannot coerce people in any way to have medical treatment they do not want. It's no wonder the conspiracy theorists are going nuts with all this stuff - I actually felt distinctly uneasy getting jabbed myself - I don't believe they are trying to kill us all but fuck me it does cross your mind the way they are behaving.

There are serious breaches of post war protocols ongoing.The silence of the 'liberal' MSM is deafening.

On 22/07/2021 at 21:16, feed said:

Kind of related to a bunch of stuff.

3% for the NHS and a threat of strike action. 

Rise is three times higher than initial 1% offer but nurses likely to reject award and may take industrial action in protest

https://www.theguardian.com/society/2021/jul/21/government-offers-nhs-staff-in-england-3-pay-rise

Nothing for the police and vote of no confidence in Patel. 

Rank-and-file police officers have overwhelmingly supported a vote of no confidence in the home secretary, Priti Patel, the first such move in more than a decade.

In a scathing announcement, the Police Federation of England and Wales (PFEW), which represents 130,000 officers, said Patel and the government “could not be trusted” and warned “warm words are no longer enough”.

The move comes after Wednesday’s confirmation that officers paid £24,000 or more would be hit by a pay freeze in 2021-22.

https://www.theguardian.com/uk-news/2021/jul/22/we-have-no-confidence-in-priti-patel-says-police-federation

 

I think the government have given up.  Good luck with authoritarianism with striking nurses and no support from the police.  

They have been lucky to have been able to give the appearance of having the ability to be authoritarian although that's more to do with the compliancy of the geneal population than police numbers.

Speak to any policeman who works the city streets of the UK outside London and they'll explain that it's more illusion than anything else and that the blue line is thinner than it's ever been.

I think the memory that stays with me the msot from the last year was the police in Bristol who arrested a preacher for giving soup to the homeless on the grounds he had breached corona regs.

I think the authoritarian tendenceis are there but I think our police are woefully short of numbers currently

On 22/07/2021 at 21:56, planit said:

I would love to say that it is a conspiracy but this is just  the result of a mathematical calculation.

R number of 5+ for the delta variant, to be safe say 6.

 

Need 5/6ths of the population vaccinated which is 83%. when you take into account really young kids and others who refuse it, it is obvious that you need to try to get the 11-18 and 18-30's vaccinated too.

I just wish they were honest rather than treating us like imbeciles.

India has a pretty poor vacciantion strategy and here's the cases/deaths data.

[Mapper]

1 hour ago, sancho panza said:

Is my basic maths right, that is a fatality rate of 1%?

And that is in India, which you would imagine doesn't have the best healthcare system. AND I guess a lot of the deaths were older people.

Is 1% high?

EDIT:

https://www.goodrx.com/blog/flu-vs-coronavirus-mortality-and-death-rates-by-year/

Says Flu in the US had a fatality rate of 0.1%, so 10x higher.

The above page says COVID fatality rate in the US is 3.6%. Why is it so much higher than India?

[wherebee]

3 hours ago, sancho panza said:

ALso seeing a lot of people declining overtime.Last night shift I was on we had 60% of normal crew levels and we had 60% more work.Short story long,it was a stresful night and I totally get why we're losing staff.The money's crap until you've been in a few years and by then most people are burned out.

A&E is getting smashed too.Lot of GP's not seeing many people.

Must say,these lockdowns have a lot of unintended cosnsequences.I warned acquaintances who were pro lockdown what would happen a year down the line and here we are and it's even worse than I thought.

It would be useful for the common good if when discussing the upcoming 'crisis' in the NHS you can make people realise it's not a lack of funding, it's things like the points you make above re the system rewarding bad personal choices which will lead to NHS demand that are the root of the issue.

 

Oh, plus of course the whole pandemic fuckup which is baked in to massively increase demand on the NHS even if the virus magically disappeared tomorrow, due to mental and health issues created by the lockdowns.

[Seacrest]

Has anyone looked over Q2 forthcoming results for BP from the weekly updates,  the averages are now closed with weeklies updating for Q3   

[feed]

6 hours ago, sancho panza said:

There are serious breaches of post war protocols ongoing.The silence of the 'liberal' MSM is deafening.

They have been lucky to have been able to give the appearance of having the ability to be authoritarian although that's more to do with the compliancy of the geneal population than police numbers.

Speak to any policeman who works the city streets of the UK outside London and they'll explain that it's more illusion than anything else and that the blue line is thinner than it's ever been.

I think the memory that stays with me the msot from the last year was the police in Bristol who arrested a preacher for giving soup to the homeless on the grounds he had breached corona regs.

I think the authoritarian tendenceis are there but I think our police are woefully short of numbers currently

I grew up in Rotherham and although my grandfather had retired from mining, i still remember the police 
beating the shit out of the miners.  The miners didn't have the public on side and the police were lumps back then.

I don't think todays police would stand a chance in a similar long running conflict.  But i don't know if there is anything remaining that could align a group of working class men the same way today.  
 

[Seacrest]

They were expecting a cash flow deficit for Q2 given gulf of Mexico payments and further severance,  RMM however is $5 higher in Q2 than Q1 that is worth a fag packet calculation of $2b   its only a guess but wont be far off as its rounded down,  and Brent sits at an $8 average for the quarter and way above the $45 needed for the second half  again no volumes are given but BP rule of thumb is another $2b     Its difficult to see how they will not be cash flow positive for the Quarter,  just my musings to see if anyone else had looked    

[StrugglingMillennial]

I looks like the transition to the chinese model is about to begin.

https://www.dailymail.co.uk/news/article-9820061/Families-discounts-free-tickets-government-backed-rewards-scheme.html

Get ready for your digital yuan everyone!

[Hancock]

20 minutes ago, StrugglingMillennial said:

I looks like the transition to the chinese model is about to begin.

https://www.dailymail.co.uk/news/article-9820061/Families-discounts-free-tickets-government-backed-rewards-scheme.html

Get ready for your digital yuan everyone!

All that stuff above about the govt being skint ... yet they can easily afford more communist/crony capitalist policies.

[Hancock]

9 hours ago, sancho panza said:

 

ALso seeing a lot of people declining overtime.Last night shift I was on we had 60% of normal crew levels and we had 60% more work.Short story long,it was a stresful night and I totally get why we're losing staff.

Was it to do with nightclubs being open, and it actually being more likely a person will die or get a life changing injury in a drunken fight, than from "the virus"!

[SpectrumFX]

1 minute ago, Hancock said:

All that stuff above about the govt being skint ... yet they can easily afford more communist/crony capitalist policies.

It's the first rule of running a corrupt regime. The allocation of scarce resource based on political whim and favour.

[DurhamBorn]

56 minutes ago, SpectrumFX said:

It's the first rule of running a corrupt regime. The allocation of scarce resource based on political whim and favour.

We will give you £50 billion to get fat benefits including housing benefit and a free car and youl never have to work again,or £3.00 if you dont and push your pension age back and back to pay for the former so those fatties live longer than you because your worn out.

Chippies were rammed yesterday at Seaton Carew and mostly sub 20 year old benefit claims with several kids.

[Castlevania]

7 hours ago, Mapper said:

The above page says COVID fatality rate in the US is 3.6%. Why is it so much higher than India?

I don’t think you can compare due to different ways in collecting the data. However, the US is an older and much fatter populace than India so would expect Covid to be more lethal in the US.

[DurhamBorn]

1 hour ago, Seacrest said:

They were expecting a cash flow deficit for Q2 given gulf of Mexico payments and further severance,  RMM however is $5 higher in Q2 than Q1 that is worth a fag packet calculation of $2b   its only a guess but wont be far off as its rounded down,  and Brent sits at an $8 average for the quarter and way above the $45 needed for the second half  again no volumes are given but BP rule of thumb is another $2b     Its difficult to see how they will not be cash flow positive for the Quarter,  just my musings to see if anyone else had looked    

Key to them now if buybacks.They should start heavily in the next quarter.At this share price the 60% for buybacks should include the other 40% so hopefully 100% of excess cash flow to buybacks.The worry is they use the extra 40% for more renewable investment.This quarter should show what they intend.They could pay small special divis on top with some of the extra 40%,but at this point of where the share price is buybacks are better,until there is a £4 in front of the shares.

We should be looking at 6%-8% a year share buybacks,but i have a feeling they will row that down a bit.The big risk is that they get tempted for a big takeover in the green space .