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

[leonardratso]

13 minutes ago, Loki said:

K+S potash back up by 5%

might have been worth buying the dip as i did there then, but i dont trust those krauts very much these days, klaus can lie like an american when theres cash at the door.

[JMD]

1 hour ago, Cattle Prod said:

https://www.wsj.com/articles/well-have-herd-immunity-by-april-11613669731

 

I noticed that 'our (so called) BBC' begun reporting only yesterday about the Covid panik-demic in terms of good news, declining death rates, etc. I was wondering/waiting for them to do this.

But I nearly fell off my chair last week when the Covid government briefings had Chris Whitty talking about living with the virus/herd immunity and 'acceptable levels of covid deaths' going forward. He even mentioned flu deaths being between 7-30,000/year, for comparison of how to frame the discussion.

The government stats say 120,000 people died 'with covid', which probably equates to at the very most half that number actually dying 'from covid', especialy if factoring in for how many of these mostly very old people would have succumbed alternatively to the flu in 'normal years', instead of corona. I also think that proper shielding of the vulnerable would have bought the numbers down by perhaps another 50%, so maybe to 30,000 deaths.

Ok, i accept those are 'my own' questionable(?) figures, but i still think it interesting that my lowest covid figure overlaps with the highest flu stat figure. But i'll cut to the chase and suggest that the discussion now underway by Whitty+co, and begun last week, is really all about pacifying peoples increasing anger over the closure of the NHS, long waiting lists, increased deaths of all-age groups (though i expect suppression of this information). It is deeply ironic that the NHS has been bought to its knees by government policy meant to 'save the NHS' (Orwellian or what?). At the same time the economy has been almost destroyed. If people begin to cotton on to any of these subjects, they will become very-very angry... so now open the NHS sluice gates, and build some Boris hospitals double quick!!!

Ok this is a Covid related post, but relevant i think because helps examplify the type of casual, draconian, statist government thinking -and actions - we will all need to become accustomed to in future.  

[Bricormortis]

Re above, March 23rd is the one year anniversary of lockdown. They know public support is going to ebb away beyond that date.

[Noallegiance]

58 minutes ago, JMD said:

I am a fan of DH. However i note that DH mentions in his new video that he has redone his figures and now forecasts a q2 melt-up with sp500 going to 4,600+++. With the big market correction happening in the subsequent 6-months following said melt-up.                                                                         I use the word 'forecasts' because DH himself comments in video that other financial commentators are now beginning to join his thesis, but that in order to be right, you really need to get the 'timing correct'!! He's 100% correct in saying that about the timing, but as others have noted before - DH is a macro guy so why does he continue to make detailed calls? Especially as he keeps moving his own predictions forward every 3/6 months... so by his own definition, he is also wrong, wrong, wrong, then eventually right? Very frustrating.

I think that's just part of being a macro strategist. He understands the trajectory and has to give a rough idea of an expected timeframe otherwise any strategy calls have zero use. I guess a combination of a fast-paced world + impatience and the option of shorter term trading means it seems these things take forever to play out.

And then there's the plate-spinning expert interventionists.

As a non-gambler, I'm happy to be months or even years early than risk being 1 second too late.

[JREWING]

30 minutes ago, Bricormortis said:

Re above, March 23rd is the one year anniversary of lockdown. They know public support is going to ebb away beyond that date.

CURE FOR FLUDEMIC

I think this mess will be all over soon. They've used up all their goodwill promises now.

[Harley]

2 hours ago, Cattle Prod said:

We now have a 6% correction on WTI and 5% on Brent. Looking back at previous runs up, 7%-14% seems to be the range of most corrections. So we could already be half way there. I'm seeing some nicely bearish news creeping in to encourage weak hands to take profits like an Iran deal back on, and all the refineries knocked out in the US backing up crude stocks. US data will be a mess for the next three weeks or so, ideal to push people out. A couple more weeks like this will reset the weekly RSI which was giving me sell signals.

This weeks US data was pre-storm. Another big draw in build season, but what most people missed is that implied demand (as measured by products spplied) in the USA is back to normal, looking at a 1 year window. In fact, this week was higher than the corresponding week last year. We have to be careful with this, as there may have been Covid effects creeping into mid Feb last year, and comparing to 2018 would now be better. But it's within the noise. I don't know what they are doing in the US, but they are consuming as much petroleum as they ever did. Diesel is up by almost exactly the amount gasoline and jet fuel is down. When gasoline and jet fuel normalise, will diesel go back down? Maybe a bit, but I bet it won't fully retrace.

And the truth is finally being released (on Biden's watch, naturally), the UK will follow as it always does:

https://www.wsj.com/articles/well-have-herd-immunity-by-april-11613669731

So I'm hoping for more downside in the oil price in the next few weeks. There'll be a lot of noisy data coming out of the USA till they sort out the storm. But all through last year I said "demand is the big unknown for me"; it seems to be coming back far more quickly than I thought it would.

Edit:

I re read that and realise it's a bit short term trade-ey rather than macro-ey, not really my thing. I guess I feel that there is a shakeout coming, and wanted to offer my thoughts beforehand. Dyodd as ever

Think I'll try laddering in, on the down.

[AlfredTheLittle]

13 minutes ago, Harley said:

Think I'll try laddering in, on the down.

Not so sure there will be a down, bp and rdsb are both still lower than 1 month ago, despite the increase in price of oil. Maybe no one yet believes the increase will be sustained 

[Agent ZigZag]

22 hours ago, DurhamBorn said:

More cross market involved,but big risk sterling sees 30% falls by mid cycle and that will see inflation roar even more.

An invaluable piece of information that you have shared with us all. So thank you. I would be very interested in what your final micro cross market shows. If this remains the case then for me it cements your thesis from the very beginning and the stocks discussed that will benefit most, ie front run inflation.

 

[Harley]

26 minutes ago, Harley said:

Think I'll try laddering in, on the down.

Yep, maybe a good risk/reward.

[DurhamBorn]

3 minutes ago, Agent ZigZag said:

An invaluable piece of information that you have shared with us all. So thank you. I would be very interested in what your final micro cross market shows. If this remains the case then for me it cements your thesis from the very beginning and the stocks discussed that will benefit most, ie front run inflation.

 

It shows sterling around $1,but its very very fuzzy late cycle because so much is still in play and a lot depends on political actions,for instance sterling will be lower if government fiscal deficits go on benefits rather than investment,or higher etc.A lot also depends on the US,how much they print,for how long,and also if they slacken on China or tighten.

The one fly is energy.The UK is one of the best placed in the world almost for renewables.IF we get to scale it will support sterling because this cycle will see energy sucking up a lot of spending.Lots of fog,but direction is clear.

[DurhamBorn]

2 hours ago, JREWING said:

Inghell....

Half asleep, I meant sub 12.30 GSK.

 

The highest they ever hit was early 99 when i left them after a decade and i sold all my share options at the top.Im sure the two things arent correlated 

At the time they got rid of great managers and replaced with accountants and it has destroyed shareholder value while those managers filled their boots.I think the split will help them get back to the good days,hence me starting to buy again now after not holding since i sold all my options.

[JREWING]

29 minutes ago, DurhamBorn said:

The highest they ever hit was early 99 when i left them after a decade and i sold all my share options at the top.Im sure the two things arent correlated 

At the time they got rid of great managers and replaced with accountants and it has destroyed shareholder value while those managers filled their boots.I think the split will help them get back to the good days,hence me starting to buy again now after not holding since i sold all my options.

I'm in with £40k, Average £12.3335 after all costs, so pretty happy. 

 

[Talking Monkey]

47 minutes ago, DurhamBorn said:

It shows sterling around $1,but its very very fuzzy late cycle because so much is still in play and a lot depends on political actions,for instance sterling will be lower if government fiscal deficits go on benefits rather than investment,or higher etc.A lot also depends on the US,how much they print,for how long,and also if they slacken on China or tighten.

The one fly is energy.The UK is one of the best placed in the world almost for renewables.IF we get to scale it will support sterling because this cycle will see energy sucking up a lot of spending.Lots of fog,but direction is clear.

DB in some quarters the UK is always bashed, but on balance with more of the upcoming cycle coming into focus how would you rate it will fare relative to the western economies over the next decade from a quality of life perspective. I don't buy the grass is greener elsewhere. There's going to be all sorts of energy and water stress around the globe, I'd rather be here than elsewhere. 

[Hancock]

1 hour ago, JREWING said:

CURE FOR FLUDEMIC

I think this mess will be all over soon. They've used up all their goodwill promises now.

I think they could continue it forever such is the complaint nature of most Brits.

[Hancock]

1 hour ago, DurhamBorn said:

It shows sterling around $1,but its very very fuzzy late cycle because so much is still in play and a lot depends on political actions,for instance sterling will be lower if government fiscal deficits go on benefits rather than investment,or higher etc.A lot also depends on the US,how much they print,for how long,and also if they slacken on China or tighten.

The one fly is energy.The UK is one of the best placed in the world almost for renewables.IF we get to scale it will support sterling because this cycle will see energy sucking up a lot of spending.Lots of fog,but direction is clear.

By then UK interest rates will be on the up and rising, surely this not give GBP some support.

Just now, Hancock said:

By then UK interest rates will be on the up and rising, surely this not give GBP some support.

By then UK interest rates will be on the up and rising, surely this would give GBP some support.

[Castlevania]

3 hours ago, leonardratso said:

might have been worth buying the dip as i did there then, but i dont trust those krauts very much these days, klaus can lie like an american when theres cash at the door.

Do you trust anyone?

[leonardratso]

4 minutes ago, Castlevania said:

Do you trust anyone?

yes, rogerio silverado, a mexicant whom i lent £100 to several years ago at work, he said he'd be back with 10x as much within a decade, i await his return.

[Lightscribe]

53 minutes ago, Hancock said:

I think they could continue it forever such is the complaint nature of most Brits.

We have a ‘service’ economy. Most of our white collared workers have positively loved it and would prefer WFH to continue forever. Move house to a nice rural location, hot summer in the garden, save fortunes not commuting, Devon/Cornwall posh holiday to be amongst other really clever people like yourselves win win. Recession, what recession? My house purchase has already risen in value by 10%!

However April is fast approaching. Companies will be looking at the new financial year to prepare to cut costs and to survive reduced budgets to navigate through this year and beyond. Spreadsheets will lay bare the facts that most of these people were never actually ‘needed’ anyway. Fairytale Furlough will end and reality beckons.

I expect lots of complaints and unions getting involved in regards to why people couldn’t possibly return to work as before. Civil service ‘covid risk’ will mean you won’t see public sector staff for dust. May as well offer medical retirement or early departure payoffs to most of them now.

The amount of shit to come from all of this will be immense.

[Hancock]

2 minutes ago, Lightscribe said:

We have a ‘service’ economy. Most of our white collared workers have positively loved it and would prefer WFH to continue forever. Move house to a nice rural location, hot summer in the garden, save fortunes not commuting, Devon/Cornwall posh holiday to be amongst other really clever people like yourselves win win. Recession, what recession? My house purchase is already risen in value by 10%!

However April is fast approaching. Companies will be looking at the new financial year to prepare to cut costs and survive budgets to navigate through this year and beyond. Spreadsheets will lay bare the facts that most of these people were never actually ‘needed’ anyway. Fairytale Furlough will end and reality beckons.

I expect lots of complaints and unions getting involved in regards to why people couldn’t possibly return to work as before. Civil service ‘covid risk’ will mean you won’t see public sector staff for dust. May as well offer medical retirement or early departure payoffs to most of them now.

The amount of shit to come from all of this will be immense.

Yes "long covid" will be a like a lottery win for the public sector. Strangely no "freelancers or contractors" will caught it.

I for one will love seeing the parasite class lose their non-jobs.

[nomadic]

2 hours ago, JREWING said:

CURE FOR FLUDEMIC

I think this mess will be all over soon. They've used up all their goodwill promises now.

Cures are the last things big pharma wants.

[DurhamBorn]

1 hour ago, Hancock said:

By then UK interest rates will be on the up and rising, surely this not give GBP some support.

By then UK interest rates will be on the up and rising, surely this would give GBP some support.

Yes,if the BOE keep up but there is a huge risk they keep rates way behind.Im pricing rates behind inflation by around 2.6%pa average over the cycle.

[DurhamBorn]

1 hour ago, Talking Monkey said:

DB in some quarters the UK is always bashed, but on balance with more of the upcoming cycle coming into focus how would you rate it will fare relative to the western economies over the next decade from a quality of life perspective. I don't buy the grass is greener elsewhere. There's going to be all sorts of energy and water stress around the globe, I'd rather be here than elsewhere. 

Pretty well,but our welfare system and public sector are the big problems.They need huge reform but it just keeps getting worse.We are probably the most efficient economy in the world if you removed the state.Id never move from where i live.

[Castlevania]

2 hours ago, DurhamBorn said:

The highest they ever hit was early 99 when i left them after a decade and i sold all my share options at the top.Im sure the two things arent correlated 

At the time they got rid of great managers and replaced with accountants and it has destroyed shareholder value while those managers filled their boots.I think the split will help them get back to the good days,hence me starting to buy again now after not holding since i sold all my options.

Are they splitting into two separately listed companies? If so, do you plan on holding both? Or just keep the one? 

[Yadda yadda yadda]

2 hours ago, Talking Monkey said:

DB in some quarters the UK is always bashed, but on balance with more of the upcoming cycle coming into focus how would you rate it will fare relative to the western economies over the next decade from a quality of life perspective. I don't buy the grass is greener elsewhere. There's going to be all sorts of energy and water stress around the globe, I'd rather be here than elsewhere. 

I wouldn't want to be a foreigner overseas when the shtf unless I was truly embedded and regarded as 'local' to an extent. Or at least useful. So speaking the language, known and reasonably liked. Somehow adding to the economy in a way that can't just be taken by someone else.

I know people who moved abroad and are part of their local community. That usually takes time.

Applies moving to another part of the UK too. Although much easier to fit in if you speak the language and understand the culture. If the local demographics start changing I'll be moving. I want to be part of an us that is a clear majority, if there is any chance of there being an us and a them.

[DurhamBorn]

1 hour ago, Castlevania said:

Are they splitting into two separately listed companies? If so, do you plan on holding both? Or just keep the one? 

Yes they are.When i left they had lost their way due to terrible managers.CEO Garnier was useless and ended up running it with accountants.I worked in Zantac first and back then the guys in charge were superb.I was with a 58 year old guy retiring in a year.So i was trained for a year shadowing him.No pressure etc.The technicians i worked with were hugely skilled and iv never seen better since.However it all changed with Garnier,and Witty was as bad.

Most of the problem is they simply feathered their own nests with massive salaries etc and drifted.

Roll to now and its obvious once the split happens both parts will be bought out,or they will have to buy up others themselves.It will be interesting to see how the government deals with them getting taken over,especially the pharma side.The way out for that would be for AstraZeneca to take them over and maybe the healthcare side to merge with Reckitt.I also worked for Reckitt for a year and there would be a lot of cost savings on the table as its easy to transfer over the counter medicines like tablets into single plants.

Its sad to see really,as Glaxo was hugely important to me ,but i think there is value to out yet,not huge amounts though.