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

[Barnsey]

Well there we have it, furlough extension to March (£20bn minimum)

[Bobthebuilder]

31 minutes ago, AWW said:

Yep London and suburbs are choked with traffic and have been since yesterday afternoon. I've never seen anything like it.

Yesterday was busy, A2 down to one lane in Kent so SE London chaos last 2 weeks. Drove into Canary Wharf this morning, much lighter traffic compared, i would say 80% down.

[AWW]

"Working from home" is quite the misnomer. Might be alright if you've got a massive pad with an office, but for most people it means laptop on the couch while trying to get a minutes peace from the kids!

[Boon]

Seems to me to be a half-hearted lockdown.

Shops are closed, but McDonalds/KFC are still open? 

I'm going out for a walk later in the name of 'exercise'....

Personally I think the novelty of lockdown has worn off compared to the first time. 

[Democorruptcy]

5 minutes ago, Boon said:

Seems to me to be a half-hearted lockdown.

Shops are closed, but McDonalds/KFC are still open? 

I'm going out for a walk later in the name of 'exercise'....

Personally I think the novelty of lockdown has worn off compared to the first time. 

It's just an excuse to get more money out there.

In the debate the other day Sir Keir Rammer was suggesting ending the lockdown on Dec 2nd might be too early and it needed extending. Boris replied there would be no need because the R rate is barely over 1 already.

 

[kibuc]

Two quick takes on the go:

Great Panther reports spectatular 3Q financials, not only posting record revenues, record cash flow, record literaly everything, but also coming up with massively reduced AISC, $200/oz lower than ytd average anf the same amount down yoy. Fantastic numbers. 

First Majestic with record earnings and cash flow too, obviously, but what's impressive is that they delivered it against average sale price of $22.5 per punce of silver. Average spot fpr the quarter was $24.5/oz. Haven't read the full report yet so dunno why they sold their silver so cheaply, but early there's a lof of upside of they star achieving spot prices. 

[Boon]

I agree. Personally I think the lockdown is just covering up stuff. The R rate IMO can be attributed to stuff like students going back to uni and Eat out to Help out.

Neither are catalysts this time around, so I think even if there was no lockdown the R rate would continue to fall. 

I think protecting Christmas might be it. If by chance stuff continued to get worse, I don't think a lockdown order would be obeyed by many over Christmas and also unpopular and hard to enforce. So best to get it out of the way now.

The furlough stuff pretty much kicks the can down the road. It's obvious there is going to be a lot of job losses when it ends, if nothing material has changed by March you can easily see it being extended again or replaced with something else different in name but similar in nature. Amazing to think that paying loads of peoples wages is not actually a large figure nowadays relative to the amounts of money being printed.

[kibuc]

Bitcoin doing great recently, tapping on 15k.

I'm hoping to pick up a solid amount of it after the bust if it goes down to 2k-3k range. 

[Democorruptcy]

3 hours ago, Yellow_Reduced_Sticker said:

 

WRONG!

 

They have INCREASED it by a mere...£50bn!

 

The decision was voted through unanimously by the 9-person MPC.

 

"Bank of England to pump another £150bn into UK economy"

https://uk.finance.yahoo.com/news/coronavirus-uk-interest-rates-bank-of-england-november-mpc-meeting-070710497.html

 

As the theme of this thread...Music to our ear-holes!

Is it the right sort of QE though? Doesn't sound like pumping money into infrastructure, more into benefits and consumer spending. I don't see how it helps anyone on here wanting a cheaper house? FT:

 

Quote

 

Bank of England launches £150bn stimulus to boost consumer spending

The Bank of England voted to purchase another £150bn of government bonds on Thursday in a bid to boost spending in the economy as England enters a second coronavirus lockdown.

The MPC said the action taken was in response to “signs that consumer spending has softened across a range of high-frequency indicators, while investment intentions have remained weak”.

Part of the way the MPC intends to encourage businesses to invest and households to spend is to commit to keeping interest rates at rock-bottom until “there is clear evidence that significant progress is being made in eliminating spare capacity and achieving the 2 per cent inflation target sustainably”. With CPI inflation at 0.7 per cent in September, it is expected to remain well below the BoE’s 2 per cent target through 2021 and only meet the conditions set by the committee for raising rates late in 2023 at the earliest.

 

 

 

[Barnsey]

1 hour ago, Boon said:

The furlough stuff pretty much kicks the can down the road. It's obvious there is going to be a lot of job losses when it ends, if nothing material has changed by March you can easily see it being extended again or replaced with something else different in name but similar in nature. Amazing to think that paying loads of peoples wages is not actually a large figure nowadays relative to the amounts of money being printed.

Mass unemployment during this modern era of "I want it now" personal debt is inherently deflationary, hence ever closer cooperation between Sunak and Bailey. Like you say, I think this will continue in some form indefinitely aka permanent "kurzarbeit" facility.

The lines of fiscal responsibility are getting very blurred, and whilst I certainly don't deny the strong possibility of a bust next year, I've been continuously surprised at the extent and rapidity of the magic M-M-Tree. Combine this with the quite dramatic capacity cuts and I'm thinking we might see inflation sooner than 2022-3.

Conclusion, I might have to lower my expectations for any serious housing bust next year given the willingness to prop everything up, aim for perhaps 10-15% off in the midst of this dark winter, with importance shifting to getting the lowest and longest fixed rate possible while we're in this nadir. Also starting to think as soon as there's a hint of inflation this could boost the housing market in the medium term in a dash for "real" assets and pull forward demand too.

[Barnsey]

Helicopter money in disguise?

[Boon]

Not quite yet, I guess there may be a time when the non-furloughed kick up a fuss and want their slice of the pie. 

Been looking at topping up the oilies today, but with a Biden administration looking likely, would people think the tax implications are bearish? 

[janch]

Read somewhere it'll be infrastructure all the way in the US if either Biden or Trump win and these 2 companies have been mentioned as being likely winners:

Ashtead AHT and Ferguson FERG.  Ashtead are for industrial equipment hire and Ferguson are plumbing and heating supplier.  Both shares are motoring at the moment and are big in the US apparently.

When I get some spare cash I think I may get some so I can have one or two shares which aren't always red

[Barnsey]

18 minutes ago, Cattle Prod said:

I think so, Barnsey. And I agree with Kevin Peachy there, I haven't got a bleeding penny! As a libertarian, I'll never want free money from the government. What I do want is a tax rebate to the amount that everyone is getting for free. And if they don't give it to me, I'll soon give it to myself by withdrawing my labour and taxes thereby.

Last tweet for today

 

[Democorruptcy]

48 minutes ago, Barnsey said:

Conclusion, I might have to lower my expectations for any serious housing bust next year given the willingness to prop everything up, aim for perhaps 10-15% off in the midst of this dark winter, with importance shifting to getting the lowest and longest fixed rate possible while we're in this nadir. Also starting to think as soon as there's a hint of inflation this could boost the housing market in the medium term in a dash for "real" assets and pull forward demand too.

I remember there was one you were tempted by early covid but you thought there would be a dip this Autumn? I suggested a discount then was real. Did you not offer or try but get knocked back. I suppose finding a distressed seller in Autumn would help. Their handling of it is textbook support prices at all costs, even now we have a so called killer plague but the housing market is open as normal, so buyers can step over the dead bodies and still complete before Christmas!

[Yellow_Reduced_Sticker]

Cor blimey gold ROCKETING...UP ...$50 as i post!

meanwhile Rolls-Royce DOWN 11% today ...well i never!

[Noallegiance]

6 hours ago, DoINeedOne said:

China has nearly 250 gigawatts (GW) of coal-fired power now under development, more than the entire coal power capacity of the United States. 

Our Chinese friends now have 97.8 GW of coal-fired power under construction, and another 151.8 GW at the planning stage. And so while some poor sap was penning Xi’s carefully crafted speech to the UN, Xi and his underlings were busy. Busy financing and building out what is likely to be the worlds most impressive global energy infrastructure.

But they are not only investing in their backyard. Nope… according to a Boston University database they have made more than $244 billion in energy investments abroad since 2000 with the bulk of that in recent years going into oil and gas. 

(Yeah not wind, solar or renewable and recyclable Unicorn farts. Good ol O&G…)

https://capitalistexploits.at/how-china-is-capturing-global-energy-market-share/

 

 

[DurhamBorn]

8 hours ago, Cattle Prod said:

Just as you said, DB. Telecoms know they are now more strategically important than ever.

Exactly and they all have an interest in seeing prices find a higher level.Once the backbone providers increase prices everyone can follow.The beauty is as well investment will fall hard mid cycle as fibre and 5G finishes roll out.The prices are so cheap at the moment as well who will really notice £28 a month instead of £24 etc.Fantastic sector for the cycle ahead,could be up there with silver miners and oil/gas as the best returns over the cycle.

[Barnsey]

1 hour ago, Democorruptcy said:

I remember there was one you were tempted by early covid but you thought there would be a dip this Autumn? I suggested a discount then was real. Did you not offer or try but get knocked back. I suppose finding a distressed seller in Autumn would help. Their handling of it is textbook support prices at all costs, even now we have a so called killer plague but the housing market is open as normal, so buyers can step over the dead bodies and still complete before Christmas!

We had two offers rejected as I greatly underestimated the pent up demand frenzy which is now most certainly coming to an end here in the West Midlands. One of the offers made was 8% below asking and the agent refused to put it forward as it was "too embarrassing". I sh*t you not. It was for the best looking back now as would have been the wrong choice. The months since have given us time to consider so many other areas I hadn't thought of.

Thankfully I'm seeing quite a bit of inventory sticking recently and very little going sold STC, VERY area specific, some new build prices even coming down a little (very surprised given how they're reluctant to do so for land reg reasons), been the case for about a month now I'd say and worsening.

The lending market really needs to ease up as it's incredibly restrictive at the high LTV/FTB end which is a killer for chains.

[Democorruptcy]

2 minutes ago, Barnsey said:

We had two offers rejected as I greatly underestimated the pent up demand frenzy which is now most certainly coming to an end here in the West Midlands. One of the offers made was 8% below asking and the agent refused to put it forward as it was "too embarrassing". I sh*t you not. It was for the best looking back now as would have been the wrong choice. The months since have given us time to consider so many other areas I hadn't thought of.

Thankfully I'm seeing quite a bit of inventory sticking recently and very little going sold STC, VERY area specific, some new build prices even coming down a little (very surprised given how they're reluctant to do so for land reg reasons), been the case for about a month now I'd say and worsening.

The lending market really needs to ease up as it's incredibly restrictive at the high LTV/FTB end which is a killer for chains.

Agent's shouldn't be refusing to put offers forward. Sounds like the market was dipping a bit where you are. I've only very recently thought the same where I am. Being a touristy place it's probably due to the end of the season. Maybe this is why they have fire-hosed so much money today? The only problem with looking at more areas is it makes it harder to make a decision. I say that as someone who has recently lived in 3 countries and nowhere nearer making a decision but it's not a complaint, I'm happy as I am. I hope it works out for you in the end. Good luck.

[leonardratso]

ive gone and done it now, i bet the frigging farm on emmerdale farm;

[DurhamBorn]

3 hours ago, Barnsey said:

Last tweet for today

 

 

I think a good time to add a few lines from the very first post on this thread,

"Once this does hit the central banks will be slow to react with the right response as they themselves will be shocked at the speed and scale.They will panic and print direct into the economy by passing money/debt to governments at 0.1% or zero coupons.This is what will kick in the first reflation cycle since the 70s"

The UK BOE bank rate is now 0.1% just as i predicted it would be as the BOE prints direct into the economy by passing money to the government.

https://uk.reuters.com/article/uk-britain-boe-sunak-idUKKBN27L0X2

 

By my dis-inflation calculations we are about through printing back now,so future QE will start the inflation ball rolling.No stopping it now.Macro road map is very clear.

All coming along nicely apart from a few bloodied and beaten stocks .

 

[Barnsey]

12 minutes ago, DurhamBorn said:

 

I think a good time to add a few lines from the very first post on this thread,

"Once this does hit the central banks will be slow to react with the right response as they themselves will be shocked at the speed and scale.They will panic and print direct into the economy by passing money/debt to governments at 0.1% or zero coupons.This is what will kick in the first reflation cycle since the 70s"

The UK BOE bank rate is now 0.1% just as i predicted it would be as the BOE prints direct into the economy by passing money to the government.

https://uk.reuters.com/article/uk-britain-boe-sunak-idUKKBN27L0X2

 

By my dis-inflation calculations we are about through printing back now,so future QE will start the inflation ball rolling.No stopping it now.Macro road map is very clear.

All coming along nicely apart from a few bloodied and beaten stocks .

 

I was just about to ask you about this, read my mind!

[Chewing Grass]

7 minutes ago, DurhamBorn said:

By my dis-inflation calculations we are about through printing back now,so future QE will start the inflation ball rolling.No stopping it now.Macro road map is very clear.

I have noticed the first real signs of inflation in the supermarket economy with everything nudging up, meat is up 10% for starters along with dairy, the signs are everywhere. The biggest one I noticed this week is toothpaste almost doubling in price for some reason.

I just about remember 1970s inflation when I was a kid, crisps going from 2p a bag to 10p a big over the course of junior school and my father once saying that when he sold his 1973 ford escort after 4 years he got what he paid for it four years earlier.

If you live on benefits you will struggle to cope with what is to come.

[DurhamBorn]

6 hours ago, kibuc said:

Two quick takes on the go:

Great Panther reports spectatular 3Q financials, not only posting record revenues, record cash flow, record literaly everything, but also coming up with massively reduced AISC, $200/oz lower than ytd average anf the same amount down yoy. Fantastic numbers. 

First Majestic with record earnings and cash flow too, obviously, but what's impressive is that they delivered it against average sale price of $22.5 per punce of silver. Average spot fpr the quarter was $24.5/oz. Haven't read the full report yet so dunno why they sold their silver so cheaply, but early there's a lof of upside of they star achieving spot prices. 

Ha youl have to take it back kibuc on the nasty names you called Great Panther when it was on my rubber band silver list,the stinking pile of turd it was