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

[Democorruptcy]

10 hours ago, Cattle Prod said:

Beginning to think you're trolling...15k on a no name AIM oil stock? Nuts, being polite. And this is not a stock ramp type thread, I could have done that 50 times, LSE is the place for that. For me, this place is about the way, the philosophy, not the quick buck. Thats why I started contributing. Suggest you read from page 1 if you're serious.

He's not trolling, he posted his buys and went all in. Just hit RDSB and BP late on in relation to the thread, so at a good time. As Edward G Robinson said after beating Steve McQueen in The Cincinnatti Kid:

"That's what it's all about kid, making the wrong bet at the right time"

[Democorruptcy]

I've posted a link to the HL FTSE Heatmap before but think this one is nicer

https://www.sharecast.com/index/FTSE_100/heatmap

On the Overview tab I like the real time Volume, you could try spot your own trade

[Don Coglione]

12 minutes ago, Democorruptcy said:

He's not trolling, he posted his buys and went all in. Just hit RDSB and BP late on in relation to the thread, so at a good time. As Edward G Robinson said after beating Steve McQueen in The Cincinnatti Kid:

"That's what it's all about kid, making the wrong bet at the right time"

Oh bollocks, now you tell me. I always thought it was making the right bet at the wrong time!

[JMD]

12 hours ago, Bobthebuilder said:

 

Must say I enjoyed that, back to basics. The world needs more blokes just like him. Perhaps we will get them next cycle.

Spolier, the genesis of that epic apron he is championing is revealed in the closing minutes, the guy just keeps giving! (and so much wisdom, '...you don't fell a tree to make a spoon', priceless!)

[Democorruptcy]

29 minutes ago, Knickerless Turgid said:

Oh bollocks, now you tell me. I always thought it was making the right bet at the wrong time!

Well that was where The Cincinatti Kid went wrong! The odds were stacked against The Man but he got lucky. As my late mother used to tell me when her horse won, when on all known form it should have been mine.... "It's better to be lucky than good"

[DurhamBorn]

1 hour ago, Noallegiance said:

From a spending review warm up article:

"It's likely to mean a freeze on pay for much of the public sector, cut on foreign aid, tight spending limits for government departments and eye-watering levels of debt.

One former treasury minister described it as a multigenerational debt which will have implications for the rest of our lives in terms of what the British state can afford"

A few comments about likely minimal if any tax rises until next year's budget or even later.

Interesting from so-called 'new Tory MPs' (presumably red wall?) Making comments like "...our voters want something tangible they can see at the end of their street".

If by 'voters' they mean 'Dosbodders', then yes we do! Especially if one may own Ibstock stock!

Defs red wall MPs.Inflation will be the tax that takes,it will transfer wealth from bonds and a lot of houses to other areas.BOE has monetised most of the debt and they will hand back coupons to government.Gets interesting when rates increase of course.Thats when government really needs to stop rolling over debt.

The UK state is hugely bloated,massive room for cuts,but the left have taken over that many institutions its very hard to do.

I think NI and tax merged is very likely at some point so NI on pensions etc over £12.5k.

Tax relief at 40% is certain to go,just when and how.They might cut tax free bit of 25%,but that isnt really saving anything now.Changing upgrades to the new inflation measure CPIH also hit hard as it undershoots real inflation.

[JMD]

17 hours ago, Cattle Prod said:

He's making an error there - the BP Alaska deal was agreed before the price drop, it was not a fire sale. I know anecdotally that the buyer is crying into their beer over it! Univestible is a bit strong I think, there is a case here that BP is making a market for its own products. Time will tell.

I wouldn't worry about BP lagging Shell by a relative 10%, XOM is lagging further. It's just noise. Thats why you buy a few of them IMO. Decl I own BP and Gazprom. No dilemna for me.

Thanks CP. My 2nd largest oil stock is BP (behind shell) and all my oilies are long term holds. My open question was more to do with helping me keep a 'balanced view' on them, i.e. i cant stop thinking i have too much BP, opportunity cost of holding something better. But admit its a nice dilemma to have all in all.

I will maintain my overall 22% portfolio allocation to the sector, but that blog has some interesting ideas, worth a read through i think. For example he mentions the Italian oil Saipem, low debt, over 1bn sitting in cash apparently (nb. i haven't checked this yet), ENI own 30%. Its a small cap but I'll probably put them on my watchlist for if we get a BK moment. CP, i wonder do you know/heard anything about Saipen?

[Talking Monkey]

45 minutes ago, DurhamBorn said:

Defs red wall MPs.Inflation will be the tax that takes,it will transfer wealth from bonds and a lot of houses to other areas.BOE has monetised most of the debt and they will hand back coupons to government.Gets interesting when rates increase of course.Thats when government really needs to stop rolling over debt.

The UK state is hugely bloated,massive room for cuts,but the left have taken over that many institutions its very hard to do.

I think NI and tax merged is very likely at some point so NI on pensions etc over £12.5k.

Tax relief at 40% is certain to go,just when and how.They might cut tax free bit of 25%,but that isnt really saving anything now.Changing upgrades to the new inflation measure CPIH also hit hard as it undershoots real inflation.

Once the tax relief on pensions gone that will be the last of the ladders pulled up for the young, no final salary, no large tax break to contribute to pension in the later part of their career, huge student debt and very expensive housing. 

Agree with you DB those cuts to the public sector will be very very hard to do, when things hit the wall later this decade it will be carnage

[sancho panza]

food for thought for copper longs

hattip kaplan

 

for longer term context

[VeryMeanReversion]

50 minutes ago, DurhamBorn said:

I think NI and tax merged is very likely at some point so NI on pensions etc over £12.5k.

Tax relief at 40% is certain to go,just when and how.They might cut tax free bit of 25%,but that isnt really saving anything now.Changing upgrades to the new inflation measure CPIH also hit hard as it undershoots real inflation.

 

For the last forty years, income tax has been trending down whilst NI has been going up.  I assume this is because nobody notices NI.  Maybe they think income tax is being taken from them whereas NI is going towards their pension/benefits/health.

The pensioners will stop NI and income tax being merged.  I think a lifting/removal of the NI upper band limits is more likely.

Regarding tax relief, I've just bumped up my salary sacrifice to 50% from today just in case, making use of the carry forward rules for the last three years.  I'll make use of the allowance whilst I can. If they don't take it away, I've just saved more than I need and will retire earlier.

Drifting off-topic, I'm  looking again at solar panels.  The typical payback seems to be around 20 years in the UK but with rising energy costs expected in the short-term (https://www.statista.com/statistics/720679/projected-electricity-price-united-kingdom/), this may reduce to 12-13 years.

Spending capital now to buy future energy starts to look very sensible if that energy is going to be expensive.

 

[DurhamBorn]

3 minutes ago, Talking Monkey said:

Once the tax relief on pensions gone that will be the last of the ladders pulled up for the young, no final salary, no large tax break to contribute to pension in the later part of their career, huge student debt and very expensive housing. 

Agree with you DB those cuts to the public sector will be very very hard to do, when things hit the wall later this decade it will be carnage

Iv often explained this to younger people.An old guy i worked with when i was just 19 pretty much explained how it all worked.The elite/government simply need to keep the 80% ,now more like 50% working and being paid just enough to keep them going to pay for the scroungers both at the bottom and top.Thats it.Nothing else.In the modern era the young are falling for all the lefty woke crap thats just another way of keeping their eye off the real problems.Its incredible to think they cheer for the likes of Rashford a millionaire on free school meals for people who already get massive amounts of benefits paid for by those very young people.The other weapon of choice of course is mortgage debt.Trap people into that and they work forever.

The UK private sector is an amazing thing,probably the best in the world.I can get a large chicken in Lidl for £3.09 for instance.A fantastic wholemeal seeded loaf for 75p.The problem is the state.

[DurhamBorn]

@VeryMeanReversion i think you might be right on NI and its something to watch.Its obvious they need to raise more from pensioners and that would be the main weapon.They really need to scale back welfare and the state and create lots of £28k a year jobs in production etc and i think thats what they will aim to do.

[sancho panza]

13 hours ago, Sugarlips said:

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

They're super charts.Incredible.Basically,when the infaltion starts running and CPIH is 1%,then sit back and hold on tight..

1 hour ago, DurhamBorn said:

BOE has monetised most of the debt and they will hand back coupons to government.Gets interesting when rates increase of course.Thats when government really needs to stop rolling over debt.

The UK state is hugely bloated,massive room for cuts,but the left have taken over that many institutions its very hard to do.

Absolutely.I'm struggling to see how there's any way out of the mess that's looming given how addicted the people are to 'free money'.This has been reinforced by the messaging from the media during covid with all the deference to the NHS and it's workers despite the fact that the senior management(both NHS and Westminster) look to have made some horrendous errors-the most basic of which was to only listen to one side of the argument.

Aside from the NHS ,noone politically is talking about the elephant in the fiscal room that is the welfare budget.The political class's defence of the Triple Lock tells us all aobout both their level of understanding and their priorities.

 

Decl:I work in the NHS.

 

For an assessment of where we are ref covid,this is well worth watch-Consultant Pathologist-what would she know that Boris doesn't?

'Boris Johnson and Chris Whitty have to start questioning whether they are wrong.'

 

[sancho panza]

1 hour ago, Talking Monkey said:

Once the tax relief on pensions gone that will be the last of the ladders pulled up for the young, no final salary, no large tax break to contribute to pension in the later part of their career, huge student debt and very expensive housing. 

Agree with you DB those cuts to the public sector will be very very hard to do, when things hit the wall later this decade it will be carnage

I'm not sure it's going to take a decade for the chucks to get to bed.

Interest rates move up,food/fuel prices rise,

defaults rise,banks go pop,consumer credit unwinds,economy tanks,taxes rise,benefits drop,public sector employment tanks............

defaults rise,banks go pop,consumer credit unwinds,economy tanks,taxes rise,benefits drop,public sector employment tanks.......and on and on

[UnconventionalWisdom]

13 hours ago, Sugarlips said:

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

Very interesting but the interest rate was also accompanied by expansion or contraction of the fed's balance book. The qe loosing or tightening is prob affecting gold price rather than the interest rates. If interest rates go up it should cause a reduction in gold price but could be v. different if people are losing faith in the purchasing power of fiat.

[Noallegiance]

I wonder if the projected jobless rate for next year includes the jobs to be lost by raising the minimum and national living wage...

[Chewing Grass]

This just popped up with numbers.

Sunak will reveal a three-year programme — the Restart Scheme — to try to assist more than a million long-term unemployed.

The scheme will give those who have been out of work for 12 months-plus regular intensive support.

But the Treasury estimates the scheme could be successful for only around 300,000, though they claim this will make it worthwhile.

That's just 70,000 more than would find work without the extra support, costing taxpayers around £42,000 for each job found.

They need to stop pretending that there is enough full time employment to go around on this over populated island.

https://www.thesun.co.uk/news/13288275/rishi-sunak-covid-package-unemployed/

[Yellow_Reduced_Sticker]

35 minutes ago, sancho panza said:

...

'Boris Johnson and Chris Whitty have to start questioning whether they are wrong.'

 

 

I don't believe that will NEVER EVER happen! I bloody well hope I'm WRONG!

 

Just LOOKING at the pic in that video of the UK's 2 BIGGEST idiots is enough to make you THROW UP!

 

I didn't even listen to the video, (only read the comments) however i have listened to some of talkradio's videos with:  Peter Hitchens, Carol McGiffin AND Richard Madeley... ALL these 3 know exactly what's going on!

 

I'll post a few comments below that video, THANKFULLY talkradio allows FREE speech unlike the rest of the MSM! Hopefully MORE folks start waking up to this UTTER BS!

 

"How come talkradio can find so many intelligent experts to talk to but the UK government can't find any?"

 

"Politely but unequivocally it's the time to start saying NO."

 

" The official WHO narrative is a joke. The official government policy is a disgrace. The lockdown is what is killing us "

 

 

AnyHOO...back on topic, otherwise i'm going to get a BOLLOCKING for being off topic!

 

Got my limit order on today to buy my final block of VOD at £102.00p LOL!

 

I bought more BT back in the summer at £1.29 ...only for it to hit the support line of 99p a couple of months latter!!!

 

I BET VOD ROCKETS just as i post this!

 

 

 

[leonardratso]

nay lad it will wait until you buy, then rocket.

 

 

(DOWN).

 

[DurhamBorn]

@Yellow_Reduced_Sticker my car is now the oldest in the car park at work out of over 500 cars.Its failed its MOT today though to my shame,a dim rear light i knew about but thought they would miss in daylight and id fix at the weekend ,just needs a new earth probably.First MOT for 18 months,and about £5 to get through.Its now cost me £11.88 a week since i bought it 11 years ago including depreciating car to zero value and all parts and repairs.Cant wait until 2030 when loads of local clubs form to keep old diesels on the road forever.

Im allowed off topic,plus for a while we were worried YRS had gone awol but he was simply waiting until his portfolio went blue to come back,

[Yadda yadda yadda]

1 hour ago, Chewing Grass said:

This just popped up with numbers.

Sunak will reveal a three-year programme — the Restart Scheme — to try to assist more than a million long-term unemployed.

The scheme will give those who have been out of work for 12 months-plus regular intensive support.

But the Treasury estimates the scheme could be successful for only around 300,000, though they claim this will make it worthwhile.

That's just 70,000 more than would find work without the extra support, costing taxpayers around £42,000 for each job found.

They need to stop pretending that there is enough full time employment to go around on this over populated island.

https://www.thesun.co.uk/news/13288275/rishi-sunak-covid-package-unemployed/

Make adult training affordable. I'd rather that was subsidised. At least the recipients would want it and have enough motivation to do something of their own accord. Work out where we have skills shortages and train people up to fill those jobs.

[janch]

@Cattle ProdI seem to come across articles about the Russians exploring in the Arctic for gas and oil especially as the permafrost is melting because of (man-made?) global warming.  There is an example here:

https://www.zerohedge.com/energy/russias-relentless-quest-arctic-oil

I don't know if the amounts mentioned are significant or not and so make any difference to the shortages in supply we are expecting.  I recall you saying in the past they wouldn't be able to get any further deposits out of the ground as it would be uneconomic but if the permafrost is melting that could make a difference. What do you think?

[BoSon]

4 hours ago, DurhamBorn said:

The problem is the state.

Yet it's all that keeps the charade going. The state grows to cover the lack of private sector jobs. The state grows to allow the government to pretend it's sustainable using historically cheap borrowing to keep the wheels turning. The state grows to cover the failing private sectors that are no longer attractive to investors in the form of renationalisation.

They may as well go the whole hog and start putting those in state paid non-jobs onto citizens income where they are then expected to perform community service if bored sat at home doing nowt.The non-jobs can become green jobs.

[DurhamBorn]

@Cattle Prod might help you graph gold,my interest rate road map says rates will lag inflation by 2.5% over the cycle as CBs run rates behind the curve all the way 

[Lightscribe]

https://earther.gizmodo.com/secret-exxon-documents-show-the-firm-may-never-recover-1845755377
 

I take it he hasn’t got Exxon in his portfolio.