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

[DurhamBorn]

19 minutes ago, mcdongle said:

Shortage of LNG in asia..

 

https://finance.yahoo.com/news/hardly-gas-lng-price-rally-095542762.html

 

 

That cant be right can it,oil and gas are worthless,the MSM told everyone.Gas the 2nd best asset after silver in the next cycle i expect.Plenty of it,but getting it to where its needed is the question.Shell needs to get those Canadian LNG trains finished.Hopefully Repsol can rattle the Indonesia government for better terms as well.

[leonardratso]

they can blow it over with wind turbines.

[Loki]

29 minutes ago, Barnsey said:

let's see how stahkkkks hold up once it's found on U.S. shores.

Markets have hit all time highs regardless this year...clown world

[sancho panza]

On 19/12/2020 at 07:37, dnb24 said:

A&E empty - in fact at one hospital board meeting the A&e consultants said they were bored. During April/May part of June daily A&E attendances were 300, usually they are 1200-1500.

I think the excess deaths will be higher this year, but the lockdown killed and is killing a large percentage of this excess. You wouldn’t believe the illnesses that were coming through A&E at around week 5 of lockdown- stuff that had festered for 3-4 weeks that essentially should have had treatment within hours. If your A&E runs at 1/3 demand for 12 weeks, whilst GP access is significantly reduced for 9 months, no speciality services or scans for 4 months, that’s going to kill people and it is doing so.

Though tell that to my colleagues and 99/100 will tell you we should still be locked down like lockdown 1!!🤦‍♂️

I remember roaming around empty hospitals with patients and coming home and messaging you for confirmation that you were seeing the same thing.Defintiely mademea realsie something was afoot.I remember during March/April and soemtimes we didn't turn a wheel till midnight.Loads of crews but no jobs.Easiest time I've ever known in the service as we normally get smashed from start to finish.

I heard the same thing about being bored from the odd A&E consutant I know.I was going in with patients into A&E and handing over to them instead fo teh nruses because they were sat there doing nothing reading their phones.

Of late we've started to see the fall out from lockdown.I know that, as you've confirmed,many operations including curative cancer operations eg IvorLewis procedure were canned.Now the reality is that those patients aren't going tog get better while they wait are they?

I was speaking to a cardiologist a while back and was asking her about the drop in admisions through A&E and she basically said that a lot of people had been scared to come in and would suffer long term damage for not doing so.

One final thing and I don't know if I've mentioned this before  DNB I was speaking to a an officer at work who has a friend(A&E consutlant) who had been flicking through chest x rays looking for covid scarring on lungs and found a Chinese migrant labourer with covid scarring back in November.Have I mentioned this to you before????What have you heard?

 

[sancho panza]

On 19/12/2020 at 10:44, DurhamBorn said:

Iv been going over a lot of data from the early 1970s charts to try to get a feel for where our inflation might come from this time.What might be the trigger.

Its pretty obvious back in the 70s inflation was mostly a local issue,not worldwide,and it tended to ebb and flow with the odd periodic pressure from worldwide commodity prices.

Since the start of dis-inflation in 1982 there is a graph that times perfectly in the opposite direction.The growth of global supply chains,starting first with Japan and its just in time manufacturing.

That process is now in reverse,because they are forgetting the comparative advantage and are concentrating on security of supply instead and home political problems.This will make things more secure but only by using higher cost local supplies.Already these supply chains are fractured causing huge problems and thats with demand down with lockdowns etc.Indeed my own company has to keep paying people double time to work sundays when parts arrive that werent there when they should of been friday,never heard of before.I keep getting asked "is there anyone local?" 

These fragmented supply chains will give an inflation pulse very soon,and then it will be compounded as demand moves higher out of lockdowns.

There is massive liquidity building,and that means it can be done,but with much higher prices being paid.

I think that will be the story of the start of this reflation cycle.Fractured supply chains needing on shoring that means expanded energy use worldwide that then feeds into already rising costs.

I think looking at investments its clear that all companies that use complex supply chains are going to see lower profits as although they will get higher prices for their products,their supply chain changes and input costs will be higher.

So if we think in simple terms its how many links to the consumer.A car has around 15,000 links,each part etc.A fag from BAT probably has around 15 .

An integrated oil company hardly any.

Potash probably less than 10

A telco,its it around 3? is it direct sale of product once cables are in the ground?

If my thesis on this is correct,then the winners in the cycle ahead will be the companies with the lowest numbers.They will be able to price up with the inflation everyone else is suffering,but will only be suffering a small amount of that inflation themselves.However they need to be companies where demand wont fall much and they are needed/wanted.

Some complex areas will be expanding ,yet might make no money out of the cycle.

It could be no EV car maker makes any money during the cycle for instance.

 

 

 

 

It's very interesting you should psot this.Mind blowing stuff if I may say.The last few days have been arevelation even by this threads standards...

Your logic is impeccable and reminds me of some posts from @Cattle Prod a while back about energy security becoming a feature of the next decade for Japan/China ie willing to pay higher prices.

On 19/12/2020 at 11:33, Dogtania said:

Sorry, definitely know there are other places to discuss so don't want to clutter here but just this morning chatting to someone at work who has a family friend who works or owns a crematorium.  Apparantly cause of death is nearly always covid or there about.  Guy at work thinks a bit ridiculous and obviously just pushing a few close to death over (terminal, immune suppressed etc).

Don't want to say much more other than its quite common to hear the same guy (or type of guy ie normal people) to see this but equally don't understand concern with vaccine or question wider picture...ie disjointed thinking. (Depressing or illuminating how many think?) Briefly mentioned I didn't want to take vaccine but agreed older people should if does protect.... With I hadn't.  Nothing else was said but going to back pedal later and say something slightly positive re vaccine to muddy my tracks.  I know I'm not fighting the good fight, there are other battles personally in the future and someone like this work guy, lad  about town, big mouth,I just don't want hassle of anything remotely contactrian.

I ramble enough elsewhere about this anyway... But it does hold that this all cause mortality figures is pretty important so just added the crematorium thing in as anecdote.

There has been mucho misslabelling of covid deaths according to Prof Carl Heneghan and Pathologist Clare Craig

On 19/12/2020 at 11:53, Noallegiance said:

The atmosphere has changed immediately. I'm surrounded by rabbit-in-the-headlights eyes. People complaining that they suddenly can't get by. The tide has gone out.

From what I can gather from body language, most people are relying on debt for their lifestyle (whether ostentatious or otherwise) and what's coming now and in the years to come is going to be ugly for these people.

I have a multi-faceted emotional reaction to this. I'm not sorry for them enough to remove my thoughts about living off debt. One makes one's choices. But to be in the presence of people who are now realising that they will genuinely struggle is a first for my lifetime and it smells awful. It also produces within me a validation for at least two-decades-worth of choices, even down to the woman I married and how lucky I am that she is like me on the things that truly matter.

It's a curious and potent mix of satisfaction, fear, pity, happiness and sorrow within me right now. For individuals, nation's and he wider world. So much to digest. So much to cope with. So much witnessed and yet to witness. And how to steer a course? A difficult challenge.

I hope everyone here has a decent end to the year and can ride the ugliness ahead with poise and determination. 

Shit's coming for a lot of people and even those not directly affected will see it and feel it.

An absolutely super post NA.I'm 50.I remember the last proper recession in the 90's when joblessness was a real issue and interest rates were high.

People forget.

[Loki]

On 11/12/2020 at 22:08, Loki said:

Monday 21st for me (If I had to call one for what's left of this month)

 

Pure gut feel

Err guys 

[Dogtania]

1 hour ago, DurhamBorn said:

That cant be right can it,oil and gas are worthless,the MSM told everyone.Gas the 2nd best asset after silver in the next cycle i expect.Plenty of it,but getting it to where its needed is the question.Shell needs to get those Canadian LNG trains finished.Hopefully Repsol can rattle the Indonesia government for better terms as well.

Really need to go back and find videos I previously watched regarding oil and gas being finished. 

One in particular, I think was a YouTube channel, young bright sounding pair, large audience.

Explaining how oil finished as well as ICE and the future all electric etc etc.  Tesla best thing since sliced bread

Maybe not all the dots connected.  But like I say, personally may find interesting to rewatch now (or in next few years maybe).

Kind of sometimes how I think, how reading old news or commentary can be illuminating etc with hindsight.

[Bus Stop Boxer]

On 18/12/2020 at 16:44, Bobthebuilder said:

Great posts @sancho panza and @Cattle Prod.

I am finding that I really need to bite my lip now as I go around and do my small business. Half the population seem to have gone potty with nothing based in fact to back up the fear.

You're in Dorset too aren't you?

There's a lot of it about down here.

[Dogtania]

2 hours ago, UnconventionalWisdom said:

New apps advertising to the masses. The market change to hurt the most people will be on rocket fuel with a load of youngsters thinking they are savvy getting into investing. Moths to a flame. I work in an sme developing 3d systems-we push innovation and new tech, most think tesla will be the next big thing- crazy, ford have the infrastructure in place- they aren't going to sit idly by and watch a competitor steel their market share.

There is something very religious obviously around Tesla, well around Musk.

I read his biography (or one of the main ones) a couple of years ago and can see why...I definitely thought he was interesting but after reading thought so even more.

I still think he's a dreamer and a doer (clearly he is) but not sure that translates into actual iron Man stuff and justification for valuation worth zillion and a bit.

I think it's also gone to his head, not saying he's narcissist but think a bit crazy now.

There is that podcast a while back, think I posted here, that seems to detail some pretty insane stuff (his micro manage, acting like mob boss, even involved possibly with cartels).  Who knows if it's true but clearly not all well.... As long as the share price keeps rising all is well though.

Can't win all the time surely, and like you say the big old lumbering car makers have advantages and won't surely won't stay down for ever.  Gravity still exists surely.

[Hunty]

Go Oil and Silver

Nice Xmas Pressie for us Contrariant Tools 

[sancho panza]

 

 

10 hours ago, Cattle Prod said:

No, I think you'll get 5x, but you'll also need to catch the top within 10% to not blow up your account (they start closing your position at 50% down). I'm not smart enough to do that, especially when the long side is completely irrational. 

Decl: I have some shorts (put options) for insurance reasons and to profit from short term corrections in a long term trend). I used to try and do this with spread bets but it was very time consuming. Options - you just spend the money as an insurance premium, no more downside.

I've had some fortune with calls/puts over time.My spread betting was plus 30% first year down 50% wecond year.

Must say I've sized some puts lately-I tend to ladder in-but TSLA are off the scale expensive.Far more prefer QQQ which is 5% TSLA and as below.I liek to hedge my risk as cheaply as possible.As  per @BurntBread I'd buy MSFT at the right price but it's a long way frok where they are.

https://etfdb.com/etf/QQQ/#holdings

[Loki]

$900b stimulus agreed

[Dogtania]

I know a lot here are far more sensible than the vast majority but my only experience with spread betting (apart from signing up for juicy free money back in the day and doing the bare minimum) is two different people I have known.

One was doing well for I think maybe a year possibly longer.  Bright guy, someone that sits and watches.  Blew quite a lot chasing losses and all profit I think wiped in day.  Never returned to.

Other guy maybe less bright and no complicated strategies but had various positions but I think the one that hurt was the long position on that fraud company aim darling that went to nothing.  Actually I had a small bit in but was happy just lost a few hundred rather than thousand that can happen pretty easy spreadbetting. Had to look up company name forgot, it was byod (bring your own device) tech company Greek CEO, ex Pro windsurfer or something... Company was globo.

Lots of accounts were faked, shell companies etc.  Icing on cake was Greek CEO sold lots shares days before was exposed.

Somehow nothing happened to him... Just read when looking for company info now (dated 2018 - article about the accountants or auditors getting let off the hook lol). That the Greek now resurfaced as bitcoin consultant or some gibberish.

I digress... Just be careful with the spreads.  The options stuff I know less again but definitely get the impression there are ways to make money there whilst not all our gambling like the spreads.

 

[JMD]

3 hours ago, sancho panza said:

 

I genuinely think most of the Westmisnter Class are incompetent.However,I think the some Govts are much shrewder than others.I think China's had a good covid crisis.Not only did they manage to feed mosWestern govts their 'covid research' but They're pretty much back at full throttle,have been for buying up cheap oil and coal for months and are now primed ready for the sugar rush stimulus splurge.

Whereas we in the UK have incurred huge debts,decimated large chunks of the economy,all in pursuit of crushing a virus that John Ioaniddis(Prof Epidemiology Stanford Uni-what would he know?) estimates has an IFR not far above flu.

I have similar problems at home JMD.Topic is virtually banned.

 

I'd go with the sociopaths&suckers assessment CP.I think the as the crisis developed they OxBridge PPE set sjut didn't have the vaguest clue what to do and deferred to the experts in their circle eg Neil Ferguson who as far as I'm aware still hasn't published his code that predicted 500,000 deaths for peer review-which is quite shocking imho.

I spoke with and A&E consultant I met whilst our kids were playing on the park togehr during lock down.He reckons that the death rate from lcokdown will be roughly triple the covid deaths.We chatted for some time,he knew his onions.It was telling that during lockdown the only people I met using the swings for their kids at the park were two A&E consultants and a policeman.I jest not.One of the A&E Drs wives said they'd got some stares from some old biddies but she didn't give a toss,kids come first and I couldn't agree more.

AS for the control the poipulation element,I think it's emerged gradually.Some ex squaddie chatter here.But basically,initally Govt feared Covid was a China/Russia threat.Hence military involved.Once military involved then it's hard to disengage.I'm not a conspiracy theorist but Gen Carter admitted in March that 77 Brigade were inolved in CV crisis and like I said,it's hard to disengage once they've got their teeth in.It's the definiton of mission creep.The following is from an unsual source but one of the authors is bona fide.

https://www.dailymaverick.co.za/article/2020-09-30-uk-information-operations-in-the-time-of-coronavirus/

What roles are secretive British army units 77th Brigade and Specialist Group Military Intelligence playing in the UK government’s battle against coronavirus?

SP, we don't agree on this do we? My take is that i think it is our 'democratic' system that is at fault, in reality its a modern benign form of feudalism, but how we might start making it more libertarian - which would be my preference - is a difficult nut to crack (maybe tech/Blockchain offers some hope). You however think our MPs incompetent and sociopaths - but if so, wouldn't that equally apply to those medical consultants whose actions/inaction, vis a vis Covid, despite knowing far better, are directly harming their own patients (or are they just following hospital orders!)? Cheap shot on my part perhaps, but the point I'm making is that all individuals work within a system/bubble. Western elected officials of a very similar hue have been repeatedly voted back in for decades. So why should they risk their careers by being radical, especially when their ultimate loyalty is to their party, whatever they would have us beleive. Ok, so In terms of potential solutions, i view the current charade through the lens of systemic failing institutions encompassing all types of policy failings... whether these be political, social, legal. We talk a lot here about economic monetary collapse risk, I would expect/hope that if such an event happened it would also trigger many kinds of other disruption and change. Some positive some negative, but so long as our future leaders don't overstretch and aim for a 'utopia', I think things/institutions, etc, will end up being better than what we currently have to endure. 

[Sugarlips]

6 hours ago, mcdongle said:

Shortage of LNG in asia..

 

https://finance.yahoo.com/news/hardly-gas-lng-price-rally-095542762.html

 

 

And coal..

China is suffering mass power cuts in the south, prompting cities to dim street lights, suspend factory production and tell office blocks to turn off heating unless the temperature falls below 3C.

The electricity crisis appears to have been prompted by a shortage of coal after Beijing banned imports from Australia. China imposed trade bans against Australia after Canberra demanded an inquiry into the origins of coronavirus and criticised Beijing’s treatment of the people of Hong Kong.

…China has insisted it is trying to reduce its dependence on coal. However, the combined effect of a surge in demand for electricity prompted by a colder than usual winter and the economic rebound following lockdown suggests that the country may not be able to wean itself off Australian coal so rapidly.

In the southern province of Hunan an energy official said that coal reserves had fallen 18.5 per cent and that generators may not be able to run at full capacity. Zhang Xiaojun, an assistant general manager of the State Grid Hunan Electric Power Company, told state media that electricity generated from wind and solar power would not make up the shortfall.

“When the coal reserve is inadequate, you immediately see the drop in the power generated,” an unnamed electric engineer told state media.

“We would be lying if we say this has nothing to do with the China-Australia tensions,” a former electricity official said

paywalled link for validity: https://www.thetimes.co.uk/edition/world/mass-blackouts-after-china-cuts-australian-coal-imports-phx3fgvtg

[wherebee]

I'm watching out for inflationary pressures surfacing in news reports about other stuff.  Here's a beauty: the focus is on 'made in Australia fuck yeah' but the real message is what we have all been talking about re supply chains:

 

"Well known Australian brand R.M. Williams is looking to source its leather from Australia, recently its been imported from France and New Zealand.

Chief executive Raju Vuppalapati told The Sydney Morning Herald supply chains were becoming "complicated" and the company was exploring opportunities of establishing its own tannery.

Let’s hope they start making all their products back in Australian not just the boots"

[DurhamBorn]

1 hour ago, wherebee said:

I'm watching out for inflationary pressures surfacing in news reports about other stuff.  Here's a beauty: the focus is on 'made in Australia fuck yeah' but the real message is what we have all been talking about re supply chains:

 

"Well known Australian brand R.M. Williams is looking to source its leather from Australia, recently its been imported from France and New Zealand.

Chief executive Raju Vuppalapati told The Sydney Morning Herald supply chains were becoming "complicated" and the company was exploring opportunities of establishing its own tannery.

Let’s hope they start making all their products back in Australian not just the boots"

Little things like that show the road ahead dont they.We need to really think about the affects because they are huge.Im working a a big multi-national who have very complex supply lines.We make all the big expensive bits outselves but its the thousands of smaller parts causing the trouble.We have see out lines down 3 times in two weeks for the lack of a small gasket.

[nirvana]

6 hours ago, Loki said:

$900b stimulus agreed

and yet futures are heavily down 

 

DAX just shat it's arse +100 in less than 30 minutes

Do you see my some folk trade CFDs now? 

[Boon]

Looks like the FTSE is in for a beating today

Think the markets were disappointed by the size of the stimulus, were the Dems not after $3 trillion plus at one point?

Could be another opportunity to add this week, if there are more scare stories on the new UK virus

[dnb24]

30 minutes ago, sancho panza said:

I remember roaming around empty hospitals with patients and coming home and messaging you for confirmation that you were seeing the same thing.Defintiely mademea realsie something was afoot.I remember during March/April and soemtimes we didn't turn a wheel till midnight.Loads of crews but no jobs.Easiest time I've ever known in the service as we normally get smashed from start to finish.

I heard the same thing about being bored from the odd A&E consutant I know.I was going in with patients into A&E and handing over to them instead fo teh nruses because they were sat there doing nothing reading their phones.

Of late we've started to see the fall out from lockdown.I know that, as you've confirmed,many operations including curative cancer operations eg IvorLewis procedure were canned.Now the reality is that those patients aren't going tog get better while they wait are they?

I was speaking to a cardiologist a while back and was asking her about the drop in admisions through A&E and she basically said that a lot of people had been scared to come in and would suffer long term damage for not doing so.

One final thing and I don't know if I've mentioned this before  DNB I was speaking to a an officer at work who has a friend(A&E consutlant) who had been flicking through chest x rays looking for covid scarring on lungs and found a Chinese migrant labourer with covid scarring back in November.Have I mentioned this to you before????What have you heard?

 

No you didn’t mention the scarring on X-ray before, the radiologists I’ve spoken to did mention seeing some atypical pneumonia’s in late Dec and as I mention we had first “confirmed case”  in early Jan. 

The weird and wonderful started coming through with us about 4-5 weeks post initial lockdown- remember one lady coming in suffering from temporal arteritis - had symptoms for 3 weeks, only attended a&e as was now blind, obviously never going to get sight back now- many stories like that (she would have recovered if seen within 1st week and given basic steroids). Report from GOSH with 1500% increase in Infant Head trauma cases in first 6 weeks of lockdown, St George’s reporting doubling of still birth rate in their hospital etc etc. 

From a stats perspective- death rates increased in UK from 2010ish onwards and this year looks very normal, in fact could be less than last year! USA death rate increase is same as last year and less than 2017, so I sit with SP in that the people behind this are capricious bastards. 
Still, with DBs direction and this threads knowledge my HL account  is up 35%, I’m ready for the next 10 years with knowing the direction of travel, just have to get through this bollocks first.

[Democorruptcy]

1 hour ago, Boon said:

Looks like the FTSE is in for a beating today

Think the markets were disappointed by the size of the stimulus, were the Dems not after $3 trillion plus at one point?

Could be another opportunity to add this week, if there are more scare stories on the new UK virus

You missed Brexit, the more people shares, banks, builders are having a bad day so far.

RDSB 4th quarter results a bit downbeat and the oil price is down, VOD pulled out of the 2bn+ sale of assets in Egypt

[Castlevania]

How much is the Telefonica dividend? Telefonica’s own website doesn’t seem to have the information.

[dnb24]

7 hours ago, JMD said:

SP, we don't agree on this do we? My take is that i think it is our 'democratic' system that is at fault, in reality its a modern benign form of feudalism, but how we might start making it more libertarian - which would be my preference - is a difficult nut to crack (maybe tech/Blockchain offers some hope). You however think our MPs incompetent and sociopaths - but if so, wouldn't that equally apply to those medical consultants whose actions/inaction, vis a vis Covid, despite knowing far better, are directly harming their own patients (or are they just following hospital orders!)? Cheap shot on my part perhaps, but the point I'm making is that all individuals work within a system/bubble. Western elected officials of a very similar hue have been repeatedly voted back in for decades. So why should they risk their careers by being radical, especially when their ultimate loyalty is to their party, whatever they would have us beleive. Ok, so In terms of potential solutions, i view the current charade through the lens of systemic failing institutions encompassing all types of policy failings... whether these be political, social, legal. We talk a lot here about economic monetary collapse risk, I would expect/hope that if such an event happened it would also trigger many kinds of other disruption and change. Some positive some negative, but so long as our future leaders don't overstretch and aim for a 'utopia', I think things/institutions, etc, will end up being better than what we currently have to endure. 

I tend to agree to an extent, however what I seen this past year I think there is another layer on top of this that set the direction of travel with a message. For example from a medical perspective- 2 years ago you’d never put someone who is in respiratory failure on a ventilator in a rapid fashion, there would be a work up through various o2 delivery systems.Yet the message came from somewhere, and our icu consultants were putting people on vents straight from their admission. Then there was the message in our hospital of needing 1000 icu beds- that came from somewhere and was intentional to cause panic, as within a week managers were told we’d keep beds as they were. A big one for me was sitting on a hospital management board, our hospitals ICU couldn’t staff enough beds in early April, someone mentioned that the big central London hospital nearest to us had 100 free ICU beds! Still transferring patients wasn’t an option. A message needed to be sent that hospitals couldn’t cope. 
I do agree though that the societal, political and economic qualities of the populace are what drive the direction of travel. 

[Majorpain]

2 hours ago, DurhamBorn said:

Little things like that show the road ahead dont they.We need to really think about the affects because they are huge.Im working a a big multi-national who have very complex supply lines.We make all the big expensive bits outselves but its the thousands of smaller parts causing the trouble.We have see out lines down 3 times in two weeks for the lack of a small gasket.

https://www.constructionenquirer.com/2020/12/21/structural-steel-prices-to-soar-by-nearly-20/

 

Quote

 

British Steel first put the industry on notice in early December for a £30 a tonne New Year rise, blaming raw materials costs and a surge in global steel prices.

But this notice was suddenly withdrawn seven days later.

Now it has come back with a figure that is nearly treble the original planned increase, blaming unprecedented increases in raw materials costs.

 

De-complex theory playing out nicely, although its a shame that they are now Chinese owned!

[Democorruptcy]

31 minutes ago, Castlevania said:

How much is the Telefonica dividend? Telefonica’s own website doesn’t seem to have the information.

https://seekingalpha.com/article/4394925-telefonicas-inducement-to-shareholders-to-accept-stock-dividend-may-be-losing-appeal