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

[wherebee]

Just now, DurhamBorn said:

Only a few years with a 78 tag on the dollar.Iv handed my notice in at work and leave next month.Im going to do a lot more work on things like that and will put all my road map targets on here.One thing is for sure,the west is in serious trouble,mainly due to welfare/left woke etc.I need to try to cross market all this onto the road maps and havent got time working.Sterling depends on a couple of things.The first is energy,the UK is best placed for renewables etc,most arent,the other side is welfare/state jobs are out of control.If energy starts to fail and no welfare cuts sterling will start to decline again,though at the moment i dont see much risk.

I think DB those reading should consider how they can plan for a 20 year period in which energy costs are up, taxation is up, civil unrest is up, and possible wealth taxes/bail ins are on the table.

I wonder if investing in something as prosaic as, for example, Pilkington glass via NSG

https://www.nsg.com/en/investors/shares-and-bonds/share-price

[MrXxxx]

18 hours ago, Cattle Prod said:

. The revaluation would be worldwide too, or else all physical gold would flow to USA

Unless the IMF ties SDR to gold and in the process revalues gold....

[geordie_lurch]

An interesting and important read to see what the EU have been leaked attempting and how it will all end badly if / when inflation rises...

Central Bank Machinations with No Exit: ECB Leaks New Thingy, It’s Doing Yield Spread Control 

"Yield curve control was used by the Fed in mid-1942 to reduce the borrowing costs of the US government during the war. The Fed set the short-term yields at 0.375%, the 10-year yield at 2.0%, and the long-bond yield at 2.5%. It explicitly communicated these yields, and communicated that it would buy whatever it took to maintain those yields, and that’s how it went. By 1947, inflation was 18%, and the Fed gradually undid yield curve control."

https://wolfstreet.com/2021/01/19/central-bank-machinations-getting-absurder-and-absurder-ecb-leaks-new-thingy-yield-spread-control/

[MrXxxx]

16 hours ago, Democorruptcy said:

Just saying....

<insert name>

Mmmmm, I can see where that one is going..

[Democorruptcy]

16 minutes ago, MrXxxx said:

Mmmmm, I can see where that one is going..

It's not going to rocket, it's just a lot of hot air?

[Loki]

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

 

[DoINeedOne]

Great discussion about hydrogen boilers and the alternatives 

Few random things I noted down 

Hydrogen ready boilers 
3 components will need to be changed In The boiler once switching over to hydrogen 

Burner
Gas valve 
Printed circuit board size of a stamp

government seems to be aiming from 2025-26 only hydrogen ready boilers installed when new ones are installed

After 10 years we should have 17 million homes with hydrogen ready boilers

Heat pumps checkered experience with them not suitable for all homes 

Bayes wanted to trail 750 heat pumps ended up only fitting 13 after surveying all the homes 

So good for hydrogen 

Also hydrogen flame is invisible 

[geordie_lurch]

8 minutes ago, DoINeedOne said:

Great discussion about hydrogen boilers and the alternatives 

Few random things I noted down 

Hydrogen ready boilers 
3 components will need to be changed In The boiler once switching over to hydrogen 

Burner
Gas valve 
Printed circuit board size of a stamp

government seems to be aiming from 2025-26 only hydrogen ready boilers installed when new ones are installed

After 10 years we should have 17 million homes with hydrogen ready boilers

Heat pumps checkered experience with them not suitable for all homes 

Bayes wanted to trailed 750 heat pumps ended up only fitting 13 after surveying all the homes 

So good for hydrogen 

Also hydrogen flame is invisible 

I'm not an expert on any of this but some of the comments under the video seem to suggest Hydrogen might have some potential safety issues...

Quote

"Have to say, the prospect all this hydrogen fuelled consumer gear scares me sh1tless - Invisible flame, gas leakage (H2 molecule is far smaller than CH4), hydrogen embrittlement and to top it off, a much bigger bang (or, to put it another way, much less gas required for the same destructive effect) when it goes wrong."

 

[geordie_lurch]

Bitcoin hovering around £24,000 today - looks like it's got further to drop back to me

[Noallegiance]

20 minutes ago, DoINeedOne said:

Great discussion about hydrogen boilers and the alternatives 

Few random things I noted down 

Hydrogen ready boilers 
3 components will need to be changed In The boiler once switching over to hydrogen 

Burner
Gas valve 
Printed circuit board size of a stamp

government seems to be aiming from 2025-26 only hydrogen ready boilers installed when new ones are installed

After 10 years we should have 17 million homes with hydrogen ready boilers

Heat pumps checkered experience with them not suitable for all homes 

Bayes wanted to trailed 750 heat pumps ended up only fitting 13 after surveying all the homes 

So good for hydrogen 

Also hydrogen flame is invisible 

Any idea who makes the chips?!

[Noallegiance]

Well well well...

https://www.bbc.co.uk/news/education-55735178

Universities degree 'not the only route to success'

Education and training for young people in England after the age of 16 is to be overhauled to ensure employers get the skilled workforce they need.

[Sasquatch]

7 hours ago, wherebee said:

I have about 3-5k in what I mentally class as punt stocks - those penny stocks which might turn into huge growers if they hit the right stride - for example, an aussie owner of a huge goldfield which is unexploited right now, but if it turns out to be diggable and the gold price goes up could be a 100x share price jumper.  If they go to zero, it's always tax deductible against dividends.

 

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

[Harley]

Harley woke up at 3am and started thinking as he lied there listening to a podcast where the smart guys finally admitted they've run to the sunny hills because they know what shite we're all in for.  Angry by 5am.  Angry Trump didn't do a better job.  Angry his lovely US of A has ratcheted up its journey towards banana republic status with the UK riding on its coat tails as usual.  Angry his country's politicians are thieving liars happy to go to any extent to feather their nests.  Angry his public administrators are absolutely shite.  That the media, the shitetiest of shite, spew a constant stream of lies and provocative anger.  Of censorship and every other form of delusional superiority.  That "smart" people think they're actually smart.  Angry it's been raining so long, blowing a gale and his house walls leak.  That he needs a roof repair and yet trade people don't turn up but will expect a big wack of dosh if/when they do while he plods on doing his best.  Angry he didn't start that move to Portugal last year when he had the chance.  Angry he didn't just buy the S&P ten years ago and got on with his life.  Just so effing angry about all that and so much more.  Harley retired from being angry but the b'tards just wouldn't leave him alone.  So be it.  Anger can help you climb mountains if you know how to use it.  It can give you a refreshing clarity and practical focus.  Oh yes, Harley's got his mission financial.  No effing duff on that one.  Cash is trash.  Nothing's gone up, it's just that toilet paper that's gone down, down where it always goes.  Time to get out of cash and as far away as possible from every other scam these b'tards are playing. 

[Hancock]

34 minutes ago, Sasquatch said:

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

If you want to get rich take a punt on ironveld. (i will stick a grand in if it goes down a little more)

[JMD]

4 hours ago, wherebee said:

I think DB those reading should consider how they can plan for a 20 year period in which energy costs are up, taxation is up, civil unrest is up, and possible wealth taxes/bail ins are on the table.

I wonder if investing in something as prosaic as, for example, Pilkington glass via NSG

https://www.nsg.com/en/investors/shares-and-bonds/share-price

That is actually an interesting thought. I see where your coming from and it is perhaps a brutal hedge, but i like it!! Any similar ideas?

But why 'via NSG'? Why not de-complex and select Pilkington or other big glass manufacturers?  

(btw, i had always spoken against the preppers and their plans/fears, thought it all overblown - but last year's events Covid-mistrust/US-unrest, has got me seriously thinking/concerned about these issues)

[DoINeedOne]

1 hour ago, geordie_lurch said:

I'm not an expert on any of this but some of the comments under the video seem to suggest Hydrogen might have some potential safety issues...

 

Around the 8:00 mark they talk about they needed to use a UV cell to check the flame in the hydrogen boiler and also about how the guy has seen a cooker with a ceramic or shroud that adds colour to the flame also i suppose as the video and people here have mention it probably be a mix of gas and hydrogen so i would assume it would have colour and smell

1 hour ago, Noallegiance said:

Any idea who makes the chips?!

Not sure but would be interesting to find out also seems as a few articles suggest the UV cell is the best way to detect if the flame is lit 

maybe @Bobthebuilder may know some more

[Tingles]

30 minutes ago, Harley said:

Harley woke up at 3am and started thinking as he lied there listening to a podcast where the smart guys finally admitted they've run to the sunny hills because they know what shite we're all in for.  Angry by 5am.  Angry Trump didn't do a better job.  Angry his lovely US of A has ratcheted up its journey towards banana republic status with the UK riding on its coat tails as usual.  Angry his country's politicians are thieving liars happy to go to any extent to feather their nests.  Angry his public administrators are absolutely shite.  That the media, the shitetiest of shite, spew a constant stream of lies and provocative anger.  Of censorship and every other form of delusional superiority.  That "smart" people think they're actually smart.  Angry it's been raining so long, blowing a gale and his house walls leak.  That he needs a roof repair and yet trade people don't turn up but will expect a big wack of dosh if/when they do while he plods on doing his best.  Angry he didn't start that move to Portugal last year when he had the chance.  Angry he didn't just buy the S&P ten years ago and got on with his life.  Just so effing angry about all that and so much more.  Harley retired from being angry but the b'tards just wouldn't leave him alone.  So be it.  Anger can help you climb mountains if you know how to use it.  It can give you a refreshing clarity and practical focus.  Oh yes, Harley's got his mission financial.  No effing duff on that one.  Cash is trash.  Nothing's gone up, it's just that toilet paper that's gone down, down where it always goes.  Time to get out of cash and as far away as possible from every other scam these b'tards are playing. 

Harley, RELEASE THE EVIL!!

Thanks for this post, I agree/empathise on all counts.

 

[sancho panza]

4 hours ago, Barnsey said:

Like I say, no cliff edge for furlough

 

There is and there isn't barnsey.They can't keep doing this ad infintum.

BoE website is lot harder to use than St Louis fed.

So Basically,BoE has bought £250bn gilts via QE March 2020 to Nov 2020

Govt projected net borrowing for first 5 months of 2020 finacial year to be circa £176bn according toONS

So bascially BoE buying 100% net issuance roundabouts.

ONS

 

UK national debt at the end of fincail year 2020 was according to ONS. UK headed over 100% GDP this year.And we all know 12% of GDP is an accounting fiction #imputed rents as explained by Shaun Richards in 2016

https://www.bankofengland.co.uk/monetary-policy/quantitative-easing

[JMD]

44 minutes ago, Harley said:

Harley woke up at 3am and started thinking as he lied there listening to a podcast where the smart guys finally admitted they've run to the sunny hills because they know what shite we're all in for.  Angry by 5am.  Angry Trump didn't do a better job.  Angry his lovely US of A has ratcheted up its journey towards banana republic status with the UK riding on its coat tails as usual.  Angry his country's politicians are thieving liars happy to go to any extent to feather their nests.  Angry his public administrators are absolutely shite.  That the media, the shitetiest of shite, spew a constant stream of lies and provocative anger.  Of censorship and every other form of delusional superiority.  That "smart" people think they're actually smart.  Angry it's been raining so long, blowing a gale and his house walls leak.  That he needs a roof repair and yet trade people don't turn up but will expect a big wack of dosh if/when they do while he plods on doing his best.  Angry he didn't start that move to Portugal last year when he had the chance.  Angry he didn't just buy the S&P ten years ago and got on with his life.  Just so effing angry about all that and so much more.  Harley retired from being angry but the b'tards just wouldn't leave him alone.  So be it.  Anger can help you climb mountains if you know how to use it.  It can give you a refreshing clarity and practical focus.  Oh yes, Harley's got his mission financial.  No effing duff on that one.  Cash is trash.  Nothing's gone up, it's just that toilet paper that's gone down, down where it always goes.  Time to get out of cash and as far away as possible from every other scam these b'tards are playing. 

Harley, when you are next speaking to 'Harley' (ie 3rd person Harley), please tell him that i agree with him.

[Bobthebuilder]

7 minutes ago, DoINeedOne said:

Around the 8:00 mark they talk about they needed to use a UV cell to check the flame in the hydrogen boiler and also about how the guy has seen a cooker with a ceramic or shroud that adds colour to the flame

Not sure but would be interesting to find out also seems as a few articles suggest the UV cell is the best way to detect if the flame is lit 

maybe @Bobthebuilder may know some more

The current guidelines we have been given are for a 20% Hydrogen to 80% Methane mix. No higher ratios are currently in the regulations. Nothing changes at this ratio, flame picture, tightness testing all remain the same.

When they release more info I will of course post it up here.

[Castlevania]

29 minutes ago, JMD said:

That is actually an interesting thought. I see where your coming from and it is perhaps a brutal hedge, but i like it!! Any similar ideas?

But why 'via NSG'? Why not de-complex and select Pilkington or other big glass manufacturers?  

(btw, i had always spoken against the preppers and their plans/fears, thought it all overblown - but last year's events Covid-mistrust/US-unrest, has got me seriously thinking/concerned about these issues)

Pilkington are owned by NSG (Nippon Sheet Glass)

[Chewing Grass]

2 minutes ago, Castlevania said:

Pilkington are owned by NSG (Nippon Sheet Glass)

Relatively very few traditional British names are British owned anymore.

[sancho panza]

15 hours ago, dnb24 said:

Will be interesting to find out- it’s something I keep thinking about-as we are now looking at buying in Midlands- however one thing I keep coming back to is that all assets will be hit if a BK comes along- I’d rather borrow at a higher % then if the asset I’m buying has had a decent haircut, than borrow now at a lower % but without the haircut. Especially as I aim to pay off the mortgage as soon as possible with some reflation stocks helping out. 

My plan A is to run the family fiances to maximise long term protection against inflaiton/credit deflation and to cover living costs if needed.Hence,I'm extrememly unwilling to surrender oilies and goldies currently.Our average price on BP is circa £3,RDSB circa £11-50 etc.

That gives us flexibility going forward.Ideally I don't want to have to use any of that for a hosue for me and Mrs P,as renting on a gross 3% yield makes a lot of sense given our family situation.

Having said that reading Luke Gromen interview and Barnsey 15 year fix all of a sudden,I'm drawing up a plan B.Hosues in Leicester arent cheap for what you get.If they were 2004 prices then it'd make a lot more sense.

I've said before we'll see a heavy credit deflation in UK banks but mroe and mroe I'm beginning to accept that the UK govt will print with reckless abandon and average Joe's like us have two chocies in that scenario

1) lever up and let inflation deal with your debt

2) run a portfolio of assets that hedge sterling weakness

or both lol..I'd welcome any otehr ideas.

15 hours ago, Talking Monkey said:

If we go with Dave Hunters thesis ie near term uptick in inflation followed by BK, then in the BK what are thoughts on the rates on long term fixed mortgages. Would there be some top deals to be had with a hefty deposit

It depends on the banks balance sheet and the mortgagor positon.Low LTV lending may not see that much change due to the fact that these are the assets banks are after.Your IO/high LTV will likely get decimated.

Its a delicate balancing act depending on your finacial postion.15 year mortgages change the maths considerably in a number of ways.

13 hours ago, Barnsey said:

We've been waiting on the sidelines for about 3 years now, changed jobs and location to make it happen, of course I'm conflicted but looking at the sums it made sense to look through a potential BK (we still can't be 100% Mr Hunter will be right, especially with Yellen now in place, she can come up with some truly crazy **** to keep the party alive and has already expressed she'll do just that in close coordination with Biden). Fixed long term debt at these RECORD low rates makes sense in many ways.

I think if you have a ten/15  year plan with fixes then that opens up some options.

[JMD]

13 minutes ago, Castlevania said:

Pilkington are owned by NSG (Nippon Sheet Glass)

Thanks Castlemania, (i did do a quick google but the website looked like an architectural specialist outfit, my bad for not reading further/properly)... anyway i might get some NSG (though the financials look pretty dire?)- oh, and maybe Saint Gobain, as they are also big in glass, and are already on my watchlist as do lots of construction materials. 

[Democorruptcy]

1 hour ago, Harley said:

Harley woke up at 3am and started thinking as he lied there listening to a podcast where the smart guys finally admitted they've run to the sunny hills because they know what shite we're all in for.  Angry by 5am.  Angry Trump didn't do a better job.  Angry his lovely US of A has ratcheted up its journey towards banana republic status with the UK riding on its coat tails as usual.  Angry his country's politicians are thieving liars happy to go to any extent to feather their nests.  Angry his public administrators are absolutely shite.  That the media, the shitetiest of shite, spew a constant stream of lies and provocative anger.  Of censorship and every other form of delusional superiority.  That "smart" people think they're actually smart.  Angry it's been raining so long, blowing a gale and his house walls leak.  That he needs a roof repair and yet trade people don't turn up but will expect a big wack of dosh if/when they do while he plods on doing his best.  Angry he didn't start that move to Portugal last year when he had the chance.  Angry he didn't just buy the S&P ten years ago and got on with his life.  Just so effing angry about all that and so much more.  Harley retired from being angry but the b'tards just wouldn't leave him alone.  So be it.  Anger can help you climb mountains if you know how to use it.  It can give you a refreshing clarity and practical focus.  Oh yes, Harley's got his mission financial.  No effing duff on that one.  Cash is trash.  Nothing's gone up, it's just that toilet paper that's gone down, down where it always goes.  Time to get out of cash and as far away as possible from every other scam these b'tards are playing. 

You're a stats man and you have gone and mentioned getting out of cash. You can run the figures on something that is troubling me. When I thought about it last week it made my sell finger twitch uncontrollably. 

The Oxford/Astra Zeneca vaccine was tested in the UK, Brazil and South Africa. The three new more infections strains are from the UK, Brazil and South Africa. What are the odds of that? What if....? Gulp!

Quote

 

The analysis that has led to the UK authorisation of the [Oxford-AstraZeneca] vaccine was an interim analysis, and so we still have 23 000 people being observed in my trials in the UK, Brazil, and South Africa. We’re accumulating more data, and that may be very important because we’ll have data on the new variant and hopefully efficacy against the new variants, both here and in South Africa.

https://www.bmj.com/content/372/bmj.n86

 

Edit to add:

After I read the article quoted above, I emailed the reporter and said while reading it I had wanted her to ask if the bloke thought there was a link between the new strains and the testing locations. Amazingly just after me posting earlier she replied and she did a follow up article on Monday and asked the question. He doesn't think there's a connection.

Quote

 

Is there any link between the Oxford vaccine trials—carried out in Brazil and South Africa—and the new variants?

Pollard doesn’t think so. He told The BMJ, “The number of people in the vaccine trials is so small that it’s unlikely that our efforts would put any pressure on the virus to drive it to select new variants. Most trials only have a few hundred people vaccinated in cities of hundreds of thousands or millions of people. I don’t think vaccination has anything to do with new variants today.”

https://www.bmj.com/content/372/bmj.n158