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

[ThoughtCriminal]

3 hours ago, afly said:

Required a double take 

Busy boy either way 

🤣🤣🤣

 

I run my own demolition and asbestos removal company, the cash is from people who need some to "disappear".

 

If I could make that sort of money wanking people off then I'd buy shares in baby oil. 😆

[CVG]

16 minutes ago, ThoughtCriminal said:

people who need some to "disappear".

Phew. Misread that as "someone"

[ThoughtCriminal]

2 minutes ago, CVG said:

Phew. Misread that as "someone"

I'm too busy hiding asbestos and wanking people off to get into the contract killing business 😝

[leonardratso]

6 minutes ago, ThoughtCriminal said:

I'm too busy hiding asbestos and wanking people off to get into the contract killing business 😝

still that cash has to go somewhere doesnt it? its not doing any good sat there waiting for the dog to find it and chew it up.

even if you spent it and got something in exchange that you could use for whatever, its got to be better than just cash, especially the amount it is.

[DurhamBorn]

45 minutes ago, Harley said:

Sure, in that sense, but TBF the guarantee is about a bust not rates, one way or the other.

PS:  Versus inflation they, and probably everyone else, are already paying negative rates!  Indeed, it might be a bit more obvious and actionable if they did bring them in!

My roadmap says rates negative to inflation by 2% to 3% pa over the cycle Harley to repair the economy including government finances.Printing is to fund the private sector, but by passing it through government instead of the clearing banks.Once its in the economy,M3 should ensure inflation increases so that through tax and growth it flows back to government in a greater amount lowering the debt ratios.During this those who park the government money in none productive savings of cash or government paper will see it eroded,and only those putting it in areas the economy needs to repair its backbone will gain.

Its the key to the macro cycle we are in.

The macro signals and the actions of the CBs and governments is there in plain site now,but very few people understand what it actually means because they have never seen a distribution cycle,and have very little memory of cycles where ROCE increases thanks to past investments rather than forward investments.

[ThoughtCriminal]

26 minutes ago, leonardratso said:

still that cash has to go somewhere doesnt it? its not doing any good sat there waiting for the dog to find it and chew it up.

even if you spent it and got something in exchange that you could use for whatever, its got to be better than just cash, especially the amount it is.

I know, you're right. 

 

I've been mulling it for a while. 

 

I keep getting a crazy idea of going all in with it for physical silver. 

 

Then if it goes tits up I get to come on here and slag DB off I suppose lol

 

[Bobthebuilder]

Just been reading the latest gas safe magazine, article about UK government energy policies to achieve net-zero carbon by 2050.

A lot of talk about renewables and carbon capture, but the key points for me are.

1. Coal for electric production to cease by 2024.

2. Natural gas to continue for many years yet while renewables are introduced. 23 million gas boilers in the UK means investment into new gas pipes will continue for the foreseeable future.

They seem to have kicked the can a bit further. A few months ago it was 100% Hydrogen ready boilers by 2025, now they are saying ready to convert by 2035.

[Bobthebuilder]

To add to the above. They seem to be suggesting that 60% of the current gas produced electric will be nuclear by 2050.

[Hardhat]

30 minutes ago, Bobthebuilder said:

Just been reading the latest gas safe magazine, article about UK government energy policies to achieve net-zero carbon by 2050.

A lot of talk about renewables and carbon capture, but the key points for me are.

1. Coal for electric production to cease by 2024.

2. Natural gas to continue for many years yet while renewables are introduced. 23 million gas boilers in the UK means investment into new gas pipes will continue for the foreseeable future.

They seem to have kicked the can a bit further. A few months ago it was 100% Hydrogen ready boilers by 2025, now they are saying ready to convert by 2035.

Massively bullish for Hydrogen.

Edit: should explain my reasoning here is that long-term, a % mix of hydrogen with natural gas is much more likely with shorter term investment into natural gas infrastructure and the phasing out of other FF sources of generation.

I sometimes think the biggest risk for investing in the hydrogen sector is that the smaller companies developing hydrogen tech will get bought out before they realise any major share price gains.

[Loki]

4 minutes ago, Hardhat said:

Massively bullish for Hydrogen.

Edit: should explain my reasoning here is that long-term, a % mix of hydrogen with natural gas is much more likely with shorter term investment into natural gas infrastructure and the phasing out of other FF sources of generation.

I sometimes think the biggest risk for investing in the hydrogen sector is that the smaller companies developing hydrogen tech will get bought out before they realise any major share price gains.

That and they are on the AIM. I've bailed from them with the shirt still on my back. Not saying there isn't potential there though.

[Bobthebuilder]

3 minutes ago, Hardhat said:

Massively bullish for Hydrogen.

I sometimes think the biggest risk for investing in the hydrogen sector is that the smaller companies developing hydrogen tech will get bought out before they realise any major share price gains.

Bought out by whom? Its one of the reasons I hold the likes of Shell and Repsol. By the way I would like to buy more Repsol, but I am currently up 27%, nice.

[JMD]

17 hours ago, sancho panza said:

IKN has a good point ongoing about royalty PM miners suffering as goldies can access captial markets so not needing the streamers any more.Hence,as coal is getting backroomed,so the streamers should be a good place to hide.

Defo got me thinking about ditching Osisko and Sandstrom for Barrick.

That is really interesting - re potential direct financing of the pm's - and so by passing the current streamer model. SP I believe you were/still are (?) a relatively big investor in the pm royalty cos?                                                            I may have to reconsider my current (maybe overweight?) allocation to the pm streamers, as 15% of my total allocation to the 'pm miners' are royalty companies. I'm thinking trim back some of them, but keep Wheaton, Royal, Metala - as these are I think good royalty co. silver plays.                                                                          Not asking for investment advise of course, but would welcome thoughts on getting/maintaining leverage to the pm miners - which the royalty companies are meant to provide? They were also seen as a way to get diverse exposure, operating a relatively low risk business model. Perhaps they still do provide those benefits, but I believe some also carry lot more debt than others, so thinking those ones are definite candidates for selling.

[DurhamBorn]

1 hour ago, Bobthebuilder said:

Bought out by whom? Its one of the reasons I hold the likes of Shell and Repsol. By the way I would like to buy more Repsol, but I am currently up 27%, nice.

Repsol might float off the renewables side of the business as well.Most integrated oilies will likely end up doing that.Then shareholders can expect the legacy business to be ran for cash and dividends.Repsol will likely float off 49% ,but id rather they floated the shares to shareholders instead.

[Barnsey]

[Noallegiance]

29 minutes ago, Barnsey said:

Does this Blanchard fella write Sleepy's speeches?

[sancho panza]

14 hours ago, Cattle Prod said:

Recall what we discussed about XOM being your man if you want a pure play on oil and gas. They are an outlier in not investing in wind or solar. BP is the other end of the spectrum. Maybe the shorters don't believe in the BP strategy either?

Yeah I do CP,hence XOM is our biggest oilie holding now.It's good to balance it though.Ref the BP shorts,I ahve the utmost respect for anyone who surfs the short side of a big oilie stock with a 5% divi  into a $60 Brent headwind,25% of a 25 year low in the monthlies.These guys have balls.Big balls.

Interesting to see Muddy Waters still doing their stuff on Chinese frauds.

12 hours ago, DurhamBorn said:

It would be done at the BOE where banks park money over night.Banks would have to choose how to use it on their customers/account holders.In theory it would force banks to lend more and carry less capital,but the BOE should know that isnt the problem.The economy doesnt need bank lending,it isnt big enough for where we are in the cycles.It needs massive and sustained government fiscal pulses.In other words the BOE is talking shit.Negative rates would pull liquidity from the system,not add to it and cripple velocity as M3 falls hard.

The problem with western economies is we dont have enough economic backbone to pa for all the scrounging demands on the system.You can cut those demands,increase the economic backbone,or some of both.

It's funny,ever since we saw Joe Public take the stimulus cheques and pay down credit card debt in mar/April 2020,the already shockingly poor thesis for neg rates got even worse.For neg rates to work,you need a public that wants to borrow-I'll be more specific-you need members of the public that can and wil repay the laon to borrow not the people won't and can't repay.

This is what eventually led me to be persusaded by your thesis for the thread re govts injecting directly ie I have serious doubts the pubic will borrow their way our of this mess(see proviso above-banks lending to ninja's doesn't count),however,govts have a long track recored of being willing to spend beyond all levels of snaity

7 hours ago, JMD said:

That is really interesting - re potential direct financing of the pm's - and so by passing the current streamer model. SP I believe you were/still are (?) a relatively big investor in the pm royalty cos?                                                            I may have to reconsider my current (maybe overweight?) allocation to the pm streamers, as 15% of my total allocation to the 'pm miners' are royalty companies. I'm thinking trim back some of them, but keep Wheaton, Royal, Metala - as these are I think good royalty co. silver plays.                                                                          Not asking for investment advise of course, but would welcome thoughts on getting/maintaining leverage to the pm miners - which the royalty companies are meant to provide? They were also seen as a way to get diverse exposure, operating a relatively low risk business model. Perhaps they still do provide those benefits, but I believe some also carry lot more debt than others, so thinking those ones are definite candidates for selling.

we're around 15% iirc as well but I've lsot track a bit as they're held across differnet accounts, I only really track what we invest rahter than what it's worth now.Some of the the smaller runners eg Rio2 and Minera ALamos have done pretty well,the likes of Barrick,BVN,NCM,AU,AUY etc have all gone up.

DB reasoned the royalty streamers have life left in them to trnasfer out in good order and I'd go with that,but it's on my agenda to transfer those holdings into producers instead at teh right time,ie when there;s a decent swap on.At the mo that'd be NCM,GOLD,KGC msot probably and those holdings are ave prices $16,$15,$4 so we can take a hit on bringing the ave up.Dyor natch

[Heart's Ease]

For those who enjoy a little bit of theory with their Sunday morning coffee.  Makes mention of the Permanent Portfolio towards the end of the thread.

[Harley]

49 minutes ago, Heart's Ease said:

For those who enjoy a little bit of theory with their Sunday morning coffee.  Makes mention of the Permanent Portfolio towards the end of the thread.

Well, that's outed me then!

[Seacrest]

BP risk reward doesnt seem to be in short's favour.  They provide a weekly update on the investors site for RMM and marker prices.  Lots of caveats but it gives a broad outlook.

2021 to date  brent $55.1  $/bbl   WTI $52.45 $/bbl

Q4                            $44.16                      $42.63   

RMM now 6.8 vs 6.1

If you apply BP rule of thumb to those figures that's a huge disconnect. 

[Yadda yadda yadda]

10 hours ago, sancho panza said:

Yeah I do CP,hence XOM is our biggest oilie holding now.It's good to balance it though.Ref the BP shorts,I ahve the utmost respect for anyone who surfs the short side of a big oilie stock with a 5% divi  into a $60 Brent headwind,25% of a 25 year low in the monthlies.These guys have balls.Big balls.

How up-to-date is the data on BP shorts? Could be that they have been closing them since the results.

Alternatively they could have a nefarious plan.

[Castlevania]

17 minutes ago, Yadda yadda yadda said:

How up-to-date is the data on BP shorts? Could be that they have been closing them since the results.

Alternatively they could have a nefarious plan.

Or it could be part of a long/short basis trade. Buy Repsol, sell BP for example if you expect Repsol to outperform BP.

[Castlevania]

21 hours ago, Harley said:

Ignore the bitcoin title (although what's touched on is good) - Raoul Pal sees a BK too?

https://www.spreaker.com/user/11996645/210202-raoul-pal

Amusing to listen to Merryn being somewhat in awe of the guy!  And using that MacroVoices podcast strapline about upvotes = better guests!  Might even have hired a sound engineer, or Raoul brought along his own!

 

Thanks for posting this. It was a very enjoyable podcast. I knew Raoul Pal is very bullish on bitcoin, but interesting to see him being very bullish on Emerging Markets. It’s an area I need to revisit. The Brazilian investment trust I was invested in got wound up. I have a fair bit of exposure to South America indirectly through the likes of Repsol and Telefonica and more directly through the likes of Telecom Argentina and Cresud. If the currencies rise should be good for the likes of BAT too. However I think I should revisit Africa (I own Airtel Africa which covers some of this) and Asia and try and get some more direct exposure.

[Seacrest]

RDSB and BP both disconnected further from the brent price around june 2020,  either the price of brent is coming down,  unlikely,  or the market is wrong and the shares are re rated   

short brent long BP RDSB would be the obvious hedge  play at present   but these are not normal times.  The market will regress to the norm.  Brent cash closed last month  inside the 2019 trading range, and appears to have gone unnoticed  so far, or there is simple disbelief it will stay there.    

[AlfredTheLittle]

22 minutes ago, Seacrest said:

RDSB and BP both disconnected further from the brent price around june 2020,  either the price of brent is coming down,  unlikely,  or the market is wrong and the shares are re rated   

short brent long BP RDSB would be the obvious hedge  play at present   but these are not normal times.  The market will regress to the norm.  Brent cash closed last month  inside the 2019 trading range, and appears to have gone unnoticed  so far, or there is simple disbelief it will stay there.    

Wouldn't the dividend cuts explain why BP and RDSB have been tracking Brent at a lower level? 

[Barnsey]

Closer to home, same theme...

The question now, is this the inevitable policy mistake looming causing a bust? Or will they manage to look through and implement effective YCC in the short to medium term at least? The contrarian in me thinks we have one last short sharp leg down for stocks, but fear of (or at least awareness of) inflation risk creates inflation itself.

And more on the article...