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

[Democorruptcy]

1 hour ago, working woman said:

I don't understand their priorities, they gave 10k out to second home / holiday home owners (not essential) in Spring last year due to Covid and have known about the cladding issue for several years following Grenfell and are slow to act on properties that are people's main homes.

I recently emailed the Welsh mob and asked what covid grants were available for an AirBnB owner. This is their reply:

Quote

There have to date been 4 rounds of grants:
In April /May £10,000
In October/November £1000 (plus discretionary elements according to circumstances)
In December/January £3000 (currently still open for applications)
Currently open for applications, for February/March £3000.

£17,000 or £326 a week over the year when they had a surge of bookings with staycations last summer. They are having their best ever year because people are dying with covid! They are being gifted other taxpayer's money for weeks out of season when they wouldn't have even had any bookings! Lots of that money will go on deposits for more holiday lets.  The housing problem is one of under occupancy, too many houses are empty too many nights each year. This madness will make it much worse.

[Hancock]

Just now, Democorruptcy said:

I recently email the Welsh mob and asked what covid grants were available for an AirBnB owner. This is their reply:

£17,000 or £326 a week over the year when they had a surge of bookings with staycations last summer. They are having their best ever people because people are dying with covid! They are being gifted other taxpayer's money for weeks out of season when they wouldn't have even had any bookings! Lots of that money will go on deposits for more holiday lets.  The housing problem is one of under occupancy, too many houses are empty too many nights each year. This madness will make it much worse.

So these are "grants" not "loans".

FFS this is a fucken disgrace, no wonder shite fucken houses are going up in price.

I can accept hotels getting bail outs and even B & B's, but fucken landlords getting this kind of money is wrong.

Socialism for lazy, thick as fuck parasitic cunts.

 

[RJT1979]

58 minutes ago, Hancock said:

Fair play to you for having big bollocks to put that kind of money in and keep it there for so long.

Live changing win for being early to the ponzi.

 

My dad has 400k of bitcoin in SIPP.

[sancho panza]

I was parked up the other night for an hours standby,watched the snow come down and this mind blowing interview with Luke Gromen.George is getting up there with Erik Townsend/Patrick Ceresna for making the msot of their guests.

Brings to gether a lot of themes discussed on thread but in one hour.Interesting to see LG talk about the possibility of 10-20% inflation and bond holders getting reamed,US having lost it's industrial base to China etc.Also interesting discussiona the end re Eurodollar system.Doesn't foresee a BK this year.

For those who don't have time,I've written it up for family members and am reposting here.

 

 

 

Minute 1:Fed trying to ride two horses with one ass ie they need to stimulate economy and they want to stop $ falling chaotically.Traditonally they work togher ie weaker $ =stmulus.Now with $ at DXY 90,we could get disorderly decline in $.Fed's worst nightmare-capital flight.
US net investment  negative 60% of GDP(weakest postion ever)postion weak, ie foreigners own lots of US assets.If S&P is making 10% but losing it all on DXY then stocks will drop with dollar as foreigners sell.

Only way out then would be to raise rates............

Mar 2020-the horses were riding in the same direction.Now DXY is 90 and stimulus still needed.horses are riding in tow different directions.

4: Disorderly decline in $ what's driving it-down to are they going to run Soros Druckenmiller strong $ playbook-ie run big deficits for stimulus but tighten monetary policy you attract capital flows-seen in early 80's and Germany 80's.Last time was Q2 2018- $up,stocks up,,rates up until somethign breaks.

5: Whats govt doing in stimulus and how much is fed buying-enough and not enough.Luke doesn't see fed buying as many bonds into 21.

6: reflation narrative with vaccines-rates backing up at long end,asset prices rising.$64,000 question-whwne does something break and what will fed response be.

8:We'll see first problems in emerging markets eg Argentina but also possibly with things like gamestop.Sees long end of the curve casuing the problems as it takes capital from elsewhere.

10: risk is that with foreginers being net long dollars(net international invesment postion),to access their dollars they need to sell assets which works unless stock market stops rising

US economy only works with stocks rising.If foerigners start selling then ->assets down,consumption down,tax receipts down,deficits up.

Long end of the curve currently rising.

11: Fed looking for a Hail mary /kicking can down the road.fed know the issues.Fed people only get honest when they're out of office.In office they are politicians as much as central bankers.

Need a massive spike in productivity to get out of the entitlement problem eg nuclear fusion

13:disorderly drop in the $ looks like DXY 90 to 80 ina 2 week span ie when it becomes easy to make money shorting the $ month on month.Fed will want an orderly decline.

15:Foreigners own $14 trillion dollars of US assets more than US owns of foreign assets. ie negative 60%.In 2008 it was negative 8%.US has hawked family silver for their recovery.

18: digital yuan/Bitcoin-China creating network of investments world wide eg Africa/Asia/Europe and then rolling out digital yuan to compete with $ and do trade in local currencies.

Much like Apple did with microsoft ie they couldn't beat them,so they changed the game.

21: 1971 to present US has settled trade imbalances thru capital account ie selling UST's/US assets.Chinese want to trade in multiple currencies and possibly settled in something else eg gold.Key thing is there won't be a huge capital account imbalance.

23:Currencies will trade based on the balance of trade ie currenceis will be in free float.Production will be about adding economic value rather than consuming and netting off on the US capital account.China doesn't want to take over from $.We're moving to a much broader trade network.Much more level playing field currency wise

26: If we move to a system where the country with the most reserves and the strongest current account surplus,then the $is the 'dirtiest dirty shirt by far',would be a $ collapse.

Where would the $ have to fall to make the USA competitive?

28: US is not Venezuela/Argentina,but it will get characteristics of them ie 10%-20% inflation for four or five years.Debt markets would marked down hugely on today.It's what needs to happen so US govt could delever.

Happened to Israel in 80's-bond holders will get burned.Israel replaced currency,labour reforms,raising rates and came out of it.

31: important to keep gold.$ has hyper inflated against Bitcoin over last 4 months at 50% per month.If we look at US as centre of the world then Bitocin price makes no sense.If we look at Bitcoin as centre of world then the US makes no sense and $ is hyper inflating.BTC is the only temperature gauge that the fed hasn't been able to disable.

33: BTC to big to get banned.

35: Biggest read of the gamestop situation was that a short squeeze on a mall based retailer that was quite small,ended up with regulators stepping in and changing the rules.BTC now to importnant to consumption to get banned.

37: Stock market matters to US consumption.In 1995 Clinton made stock options favourable from a tax position.C Suite began taking pay in stocks.From 1970 to 1995 stock market returns and tax receipts had little correlation.From 1995 Stock market returns began to lead tax receipts on both downside and upside.Mathemtacially impossible for tax receipts to grow without stocks rising.Same with consumer spending.

If consumer spending isn't growing GDP can't grow.If GDP doesn't grow then USA is en route to defaulting on either debt/entitelemtns.that isn't going to happen.Top 5% of US taxpayers pay 60% of US taxes.

All points to if stocks don't rise at a faster rate,US govt tax receipts fall short.

42: As retial investors pile in then Stock Market becomes even more important,same with home equity.

43:US not going to become Weimar Germany.Weimar had debts that were owed in godl.As they printed the detb rose.The USA has debts owed to the baby boomers.You can't print healthcare.There is an inflation adjsuted component to US liabilities.

45: US has debts it owes but like Wiemer Germany it has lost the industrial part of the economy to China and the East.Financialisation at all costs over last 30 years has it's costs.

47: Eurodollar system: is a source of power to US but increasingly being used against US by China.China has lent Eurodollars to EM countries with hard assets as collateral.IF US sternghens dollar,then China and EM's default then China gets the assets.

China has used Eurodollar system to do a leveraged buy out of the world,back stoped by the Fed and protected by the US military.It makes no sense.US military has been saying thsi for years.

Eurodollar system is now a threat to US.

50:If Fed bails Eurodollar system then $ will fall sharply.

52: bullish gold,PM miners,silver,BTC,industrials.Would rather hold gold than bonds.Or Bitcoin.Both have way more upside.Jailbreak ongoing out of high taxed areas eg NYC.Very regionalised.Stock market higher in 2021  but only when measured versus CPI not versus gold/BTC or commodities.

56: US and Western democracies are cornered.Fiscal side is the key here,US cannot abide postive real rates hence you want to own Bitcoin Gold without leverage so you don't get shaken out.

 

 

 

[Democorruptcy]

1 hour ago, geordie_lurch said:

Oil major Royal Dutch Shell on Thursday outlined the details of its near-term and long-term plans to transition to cleaner energy, saying its oil production and total carbon emissions have already peaked....

https://www.cnbc.com/2021/02/11/oil-giant-shell-says-carbon-emissions-and-oil-production-have-peaked.html

Is the oil bit guff and if not does it matter too those of us with their shares?

From their release:

Quote

 

Shell reiterated its cash priorities to deliver value for shareholders today while growing value for tomorrow, including:

Maintain the progressive dividend policy, increasing dividend per share by around 4% per year, subject to Board approval.

Retain near-term annual Cash capital expenditure of $19-22 billion.

Reduce net debt to $65 billion.On reducing net debt to $65 billion, target total shareholder distributions of 20-30% of cash flow from operations; increased shareholder distributions achieved through a combination of Shell's progressive dividends and share buybacks.

 

If that's a nominal 4% a year and not tied to inflation it's pretty crap. The dividend for Q4 2020 was $0.1665 compared to $0.47 for Q4 2019. You do the maths for how many years it would take it to nearly triple, to get back to where it was.

They need to reduce the debt for the promised shareholder distributions, it went up in Q4!

 

[geordie_lurch]

13 minutes ago, Cattle Prod said:

Ok, now go and check if Van Beurden actually said overall production peaked. He's not quoted as saying so in the article. I wonder if the journo made the same assumption you did.

I don't know @Cattle Prodbut several journalists and publications are leading with the above so are they all wrong? I don't have time to go through their full Annual Report but anyone can find it below:

https://www.shell.com/about-us/annual-publications/annual-reports-download-centre.html

For the record, I own RDSB and think they are a great buy long term but maybe not for their ability to profit from oil as much as they used to in the past seeing as their oil production is going to decline 1-2% per year each year from here

[Hancock]

1 minute ago, RJT1979 said:

My dad has 400k of bitcoin in SIPP.

I used to watch Max Keiser when living overseas around 2010, i bought a 500GB hard drive to buy a few hundred quids worth ... but then came back to England and had to spend a bit of time somewhere with no internet access ... then totally forgot about them.

Then in late 2013 was talking to the accounts guy on a job in NZ when they got to a spiked to a few hundred $$ and thought better of it then.

[Democorruptcy]

15 minutes ago, Hancock said:

So these are "grants" not "loans".

FFS this is a fucken disgrace, no wonder shite fucken houses are going up in price.

I can accept hotels getting bail outs and even B & B's, but fucken landlords getting this kind of money is wrong.

Socialism for lazy, thick as fuck parasitic cunts.

After the £10k gift they added some extra stipulations:

Quote

For holiday let businesses further eligibility criteria apply as follows, at the discretion of the Local Authority:
As of 20 April 2020, in relation to self-catering accommodation, properties will not be eligible for grant unless the following criteria are met:
·       The self-catering accommodation can produce two years of trading accounts directly preceding the current financial year of the business
·       The self-catering accommodation must actually have been let for a period of 140 days or more in the financial year 2019-20
·       The self-catering accommodation business must be the primary source of income for the owner (minimum threshold is 50%).

They reward someone for 140 days letting which means it empty for 225 days and so a net loser to the local economy. Tourism does not bring business, if they net off the unoccupied nights.

A person could have the property in their name for the 50% income rule but their spouse could be earning a lot. It's not household income.

I have suggested another rule:

"No grants to any property previously used for residential purposes"

Why reward property speculators for reducing the housing stock? Help for caravan, chalet parks, hotels only, purpose built holiday lets only.

[Barnsey]

Interesting read

 

[Harley]

1 hour ago, geordie_lurch said:

And vaccines

UK now too?

[arrow]

1 hour ago, geordie_lurch said:

Oil major Royal Dutch Shell on Thursday outlined the details of its near-term and long-term plans to transition to cleaner energy, saying its oil production and total carbon emissions have already peaked....

https://www.cnbc.com/2021/02/11/oil-giant-shell-says-carbon-emissions-and-oil-production-have-peaked.html

Is the oil bit guff and if not does it matter too those of us with their shares?

 

From spglobal on Shell,

"Oil output likely to have peaked in 2019, emissions in 2018

Transition business capex to pull ahead of upstream

Interim targets set path to 2050 net zero emission goal

London — Shell expects its oil production to decrease by 1%-2% annually as it prioritizes spending on transition projects in an acceleration of its strategy to achieve net zero emissions by 2050, it said Feb. 11.

In a strategy update, Europe's largest oil and gas company said it was likely that its oil production had already peaked in 2019 and its CO2 emissions in 2018. The further decline in oil production would result from asset sales and natural decline, it said.

Sketching out its near-term investment plans, it said it expects spending in the traditional upstream segment to fall behind spending in "transition pillar" areas, comprised of the LNG-focused Integrated Gas division, as well as chemicals and oil products.

In the near term, it expects annual upstream capital expenditures of $8 billion, with capex in the transition pillar businesses of $8 billion-$9 billion, and $5 billion-$6 billion of capex in the "growth" business of marketing, renewables and energy solutions.

It also set out interim targets toward the goal of net zero emissions by 2050. Using 2016 as a baseline, it said it would cut its emissions by 6%-8% by 2023, 20% by 2030 and 45% by 2035, before reaching 100% in 2050.

"Our accelerated strategy will drive down carbon emissions and will deliver value for our shareholders, our customers and wider society," CEO Ben van Beurden said in a statement."

Shell believes coal power stations will be replaced by gas, benefitting its Transition Pillar gas business. It's investing heavily in LNG. Also in CCS(Carbon Capture and Storage) and CCUS (carbon capture, use and storage)"

 

 

This from "Powering Progess" , their new strategy. (I do wonder how much money they spent on creating the label "Powering Progess".)

"We have set targets to reduce the carbon intensity (Net Carbon Footprint) of the energy products we sell, in step with society. This includes short-term targets of 2-3% by 2021, 3-4% by 2022, and 6-8% by 2023 (compared to 2016). It also includes medium- and long-term targets of 20% by 2030, 45% by 2035, and 100% by 2050 (compared to 2016)

We have linked the pay of more than 16,500 staff to our target to reduce the carbon intensity of our energy products by 6-8% by 2023, compared to 2016. 

We believe our annual oil production peaked in 2019, and we expect our total oil production to decline by 1-2% a year until 2030.

We will invest on average $2-3 billion each year in our Renewables and Energy Solutions business.

In 2021, we expect to invest around $100 million in nature-based solutions such as forests and wetlands that store carbon.

We seek to have access to an additional 25 million tonnes a year of carbon capture and storage (CCS) capacity by 2035 – equal to 25 CCS facilities the size of our Quest site in Canada

By 2030, we will end routine flaring of gas, which generates carbon emissions, from the assets we operate.

By 2025, we expect to have kept the methane emissions intensity of Shell-operated assets to below 0.2%."

 

They "believe" their oil production peaked. Pragmatic, I guess. If they increase production, then their "belief" was an error.

[geordie_lurch]

7 minutes ago, Harley said:

UK now too?

I was taking about the alleged Gates Foundation and others testing poor people over there but yes maybe a pre cursor

[working woman]

1 hour ago, Yadda yadda yadda said:

Yes, a failure of regulation as much as anything. The work to fix it will employ people. Get it done.

Yes, lots of jobs created to fix it, produce replacement items and jobs to install them.

[working woman]

1 hour ago, RJT1979 said:

Sod that. Why should tax payers pay for it. People can deal with it themselves.  50pc of effected properties are BTL.

Yes, I can definately understand that point of view too and that is why I contrasted it with Grants given out to second home owners. From what I understand, as things currently stand, buildings over 18m are getting Govt. Grants, residents in buildings under 18m are being given Govt. loans with a £50 monthly repayment cap.

I would say in my development of 100 flats, about 30% are BTL.

[arrow]

More from Shell's "Powering Progess",

 

"

Growth:
Marketing

Target to increase Adjusted Earnings to around $6 billion by 2025 (from $4.5 billion in 2020), achieved by improving the already market-leading position of the lubricants business, an increase to 40 million customers at 55,000 retail sites (from 30 million at 46,000 sites today) and growth of global electric vehicle (EV) network from more than 60,000 charge points today to around 500,000 by 2025.

Low-carbon fuels – extend our leading biofuels production and distribution business, which in 2019 sold more than 10 billion litres of biofuels. Our joint venture Raízen, which produces low-carbon fuels from sugar cane in Brazil, recently announced the acquisition of Biosev. This is set to increase Raízen’s bioethanol production capacity by 50%, to 3.75 billion litres a year, around 3% of global production.
Renewables and Energy Solutions

Integrated Power – aim to sell some 560 terawatt hours a year by 2030 which is twice as much electricity as we sell today. We expect to serve more than 15 million retail and business customers worldwide. We aim to be a leading provider of clean Power-as-a-Service. We will make our investments go further by partnering with others with the emphasis for Shell being on managing clean electrons.

Nature-based solutions – expect to invest around $100 million a year in high-quality, independently verified projects on the ground to build a significant and profitable business to help customers meet their net-zero emissions targets.

Hydrogen – build on Shell’s leading position in hydrogen by developing integrated hydrogen hubs to serve industry and heavy-duty transport, aim to achieve double-digit share of global clean hydrogen sales.
Transition:
Integrated Gas

Extend leadership in liquefied natural gas (LNG) volumes and markets, with selective investment in competitive LNG assets to deliver more than 7 million tonnes per annum of new capacity on-stream by middle of the decade. Continue to support customers with their own net-zero ambitions, with leading offers such as carbon-neutral LNG.
Chemicals and Products

Transform our refinery footprint from 13 sites today to six high-value Chemicals and Energy Parks and reduce production of traditional fuels by 55% by 2030. Intention to grow volumes of the chemicals portfolio and increase cash generation from Chemicals by $1-2 billion a year by 2030 compared with the medium term. Will produce chemicals from recycled waste, known as circular chemicals, and by 2025 aim to annually process 1 million tonnes a year of plastic waste.
Upstream:

Focus on value over volume, being simpler and more resilient, continuing to provide material cash flow into the 2030s. An expected gradual reduction in oil production of around 1-2% each year, including divestments and natural decline."

https://www.shell.com/investors/investor-presentations/2021-investor-presentations/strategy-day-2021.html

 

[Harley]

6 minutes ago, working woman said:

Yes, I can definately understand that point of view too and that is why I contrasted it with Grants given out to second home owners. From what I understand, as things currently stand, buildings over 18m are getting Govt. Grants, residents in buildings under 18m are being given Govt. loans with a £50 monthly repayment cap.

I would say in my development of 100 flats, about 30% are BTL.

So even if we agreed with the approach, one simple stipulation that it must be your principal private residence would reduce the bail out by say 30%.  This what we are up against, yet again.  Are we all getting the state(!) of things now!

[working woman]

26 minutes ago, Democorruptcy said:

After the £10k gift they added some extra stipulations:

They reward someone for 140 days letting which means it empty for 225 days and so a net loser to the local economy. Tourism does not bring business, if they net off the unoccupied nights.

A person could have the property in their name for the 50% income rule but their spouse could be earning a lot. It's not household income.

I have suggested another rule:

"No grants to any property previously used for residential purposes"

Why reward property speculators for reducing the housing stock? Help for caravan, chalet parks, hotels only, purpose built holiday lets only.

Thank you for the info on Grants to Holiday homes, which shows it is more than 10K. I think there should be a limit on the number of properties you own, one for your main residence and one for investment/retirement income. Anything above that is pure greed.

[Democorruptcy]

1 minute ago, working woman said:

Thank you for the info on Grants to Holiday homes, which shows it is more than 10K. I think there should be a limit on the number of properties you own, one for your main residence and one for investment/retirement income. Anything above that is pure greed.

The figures I quoted are for Wales. I don't know what applied in the rest of the UK.

[working woman]

3 minutes ago, Harley said:

So even if we agreed with the approach, one simple stipulation that it must be your principal private residence would reduce the bail out by say 30%.  This what we are up against.

It sounds like a good idea, but if Landlords don't get help to pay, they would just put the rents up and the tenant ends paying.

 

[harp]

1 hour ago, Hancock said:

I used to watch Max Keiser when living overseas around 2010, i bought a 500GB hard drive to buy a few hundred quids worth ... but then came back to England and had to spend a bit of time somewhere with no internet access ... then totally forgot about them.

Then in late 2013 was talking to the accounts guy on a job in NZ when they got to a spiked to a few hundred $$ and thought better of it then.

And you think you are still late to the party at these levels? No chance. 

[Hancock]

30 minutes ago, working woman said:

It sounds like a good idea, but if Landlords don't get help to pay, they would just put the rents up and the tenant ends paying.

 

Are the guy from HPC that would say the same thing, but end it with innit.

13 minutes ago, harp said:

And you think you are still late to the party at these levels? No chance. 

I think its a ponzi scheme, time will tell.

[Harley]

57 minutes ago, working woman said:

It sounds like a good idea, but if Landlords don't get help to pay, they would just put the rents up and the tenant ends paying.

 

Yeah, sure.  A dead cert.  Just as likely to find god.  Who knows, but plenty self interested across the gaff say such things to back whatever position.  But children will die, etc.  Probably not the best place to push such narratives.   Sorry, but I'm just so very tired of it all.  Anyways, I should move on to better things, silly me.

[Harley]

29 minutes ago, Hancock said:

I think its a ponzi scheme, time will tell.

Could well be (a good perspective), though everything is at one time or another, such us the human condition!

[jamtomorrow]

3 minutes ago, Harley said:

Could well be (a good perspective), though everything is at one time or another, such us the human condition!

See also: fiat

[Harley]

11 minutes ago, jamtomorrow said:

See also: fiat

Ah, the circle of life on this thread: macro, pizza, cars!