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

[MrXxxx]

23 hours ago, Cattle Prod said:

Exactly. I'm not sure what my currency would be, think I'd start growing weed 

Growing weed, sex or alcohol....fortunately for me I can make a decent bottle of Mead, otherwise I would starve! :-)

[MrXxxx]

22 hours ago, Cattle Prod said:

What an opportunity that was, enormous demand for a relatively harmless substance banned outright by idiotic pols and bureaucrats. A once in a lifetime market, oh, to have a crack at something like that.

I had a granduncle emigrant who got his start in New York running a speakeasy at that time. My cousins, his grandchildren, live in the Hamptons. Sounds like a tall internet tale, I know, but it's true.

Well all theses SMEs put out of business due to the absurd Covid restrictions will have to turn their hands to something else then!

[Barnsey]

Top apps on Google play store right now tells you quite a bit about where we are...

[MrXxxx]

12 hours ago, JimmyTheBruce said:

According to the lead story on the BBC this morning, the proles are busy making banners about some fellas kicking a ball about.  Seems the PM and parliament also have it high on their agenda.  Why do I feel like my attention is intentionally being diverted from something that is actually important 🤔

I'll keep watching, I'm sure the piece on inflation, CBDCs, creeping socialism, and the impending implosion of the economy will be on next.......

Agree, I couldn't believe on the news, peoples civil rights are being eroded day by day a they sit there `swallowing it`, mention a change in football and they are `up in arms`....what a clueless a infantile nation we have!

[MrXxxx]

10 hours ago, JimmyTheBruce said:

Another poke in the eye for tobacco.....

https://www.msn.com/en-us/money/companies/cigarette-makers-plunge-on-news-that-us-may-curb-nicotine/ar-BB1fPg9b

Might buy some more BATS 

 

Not a problem, the manufacturers will `hawk` vapes in the restricted markets, and ciggies in the Developing nations....win/win!

[MrXxxx]

5 hours ago, AWW said:

Exactly. The fans are all out making banners in protest, but they carry on buying season tickets and paying Sky subscriptions.

Sheep!

[Loki]

32 minutes ago, Barnsey said:

Top apps on Google play store right now tells you quite a bit about where we are...

I was torn between laughing and info reaction and went for info as it's really a very interesting data point! 

[Yellow_Reduced_Sticker]

On 16/04/2021 at 12:31, sancho panza said:

Worth a full watch as ever.But from 15 minutes,he begins the 'Road to Serfdom' and it's utterly compelling.

Basement dwellers are familair with the theme of how FUBAR the West is,but this really spells it out for simpeltons like me.

 

 

I banned myself from the covid threads as they just got me down , ...anyway I had a watch of this video last night, in a way glad i watched it for the info...BUT Really wish i never watched this as the ending was VERY DEPRESSING!!!

 

@DurhamBorn have you watched this? Also are YOU still in touch with the elderly gentlemen that taught you the macro stuff back in the day? I remember you always saying that he hoped he would be gone by 2030?

 

It would be nice to have ya thoughts/view on this video's ending theme, CHEERS mate!

 

[AWW]

Some more anecdata, my new workplace has said I'll be going back into the office when the roadmap allows, but they're only mandating two days a week. The other three, I can work from home. This is at a place that previously limited working from home to two days a month.

I don't know anyone who works in the city who is being asked to return full time.

I think London resi is utterly, utterly fucked now.

[sancho panza]

6 hours ago, planit said:

@Cattle Prod

Here is the OIES April report link. Hopefully we are not oiling up the thread by delving deeper into this.

I agree with you regarding the Saudi production situation, I feel the press don't want to call Saudi out because of the history but there does seem a good case here that they won't be able to consistently produce the stated figures. They probably like this current "voluntary" production drop as it is giving their wells a couple of years to become fertile again. If we take that graph as production limits they will be able to reach 10.3mbpd for a year, or 10mbpd for a longer period. If their production drops to 9.5mbpd at end of 2022 that would be a real surprise to everyone.

 

@sancho panza

This looks like a bit of a binary bet to me, if OPEC stay in control of people's beliefs then iol will not go over $70. If the market gets a hint that there will be a shortage 12 months into the future then they will start trying to trade the squeeze and oil will rise fast.

Goldman nailed their DXY call, they must have needed to sell some Dollars to their clients .

I am hoping RDSB get pulled up by BP but they really screwed up their hedging and trading by the sounds of things and the voting at the AGM isn't what investors want to hear. Medium to long term I am sure it will be fine.

 

Edited to add after reading another of Sancho's posts:

Theory is that the prices of BP and RDSB (and potentially the others that have risen further already) are good value working on the predicted prices of oil for this year of $60-$65 (we are already 4 months in), this covers the buy and we get these free 'bets' as a bonus

Seems like there is a couple of bites of the cherry for the lack of supply trade:

Firstly that the hibernating supply will take longer to get back on line than the market needs. Secondly, a year or 2 out, the lack of investment along with the limit of Saudi production will cause a  structural shortage lasting a couple of years.

High demand also has a bite of the cherry if all the stimulus and green energy spend sends demand rocketing as we have a 'roaring twenties'

 

Not such a good day today

No,no,let's delve into it.I've learned so much from the oil disucssion ehre and it's postively shaped my investment thesis going forward.Discussing all this in detail is good for the soul and msot likely good for perpsective.

The more I'm reading you and CP's recent posts,the more I'm comingto the conclusion that we're heading for a supply shock moment.I've psoted before about oil price rises preceding recessions/crash phases and this one will likely follow historical precedent.

AS you hgighlight,it looks like the inventory drawdown confiming this.

For me,as a simple soul,I look at Brent.$65 today.I'm not seeing $40-$45 on a supply demand basis without a BK.

The long term trade is to sit tight,but I've got soem free bet money from XOM/BP/SHell options  and whilst I'm leaving the shares to run,I do fancy another run at the casino table.

I'll read that report tmrw,but i saw the folowing chart and seriously pondering some RDSB calls tmrw and also possibly selling EQNR to buy a cross section fo the others.

Using monthlies,this chart starts when Brent was last $65 Dec 2019.Time for sleep.Interesting day.Learned loads of this thread today.

 

[Noallegiance]

5 minutes ago, AWW said:

.

I think London resi is utterly, utterly fucked now.

Shame

[Viceroy]

8 hours ago, DoINeedOne said:

In addition to the above, Armstrong expanded on this a few week ago;

'..The main objective is to stop the pipeline from Russia of fuel to Europe. If they can create a NATO crisis, then the pipeline will be stopped. Those calling the shots we would normally call environmental terrorists of Green Peace. Please understand that this will not appear on the open blog. We have confirmation of Russian tanks moving to the border. I believe that the people really pulling the strings in the White House are doing this for environmental purposes which will be used to shut down the controversial natural gas pipeline Nord Stream 2.The construction of Nord Stream 2 has been delayed for more than a year and completion is increasingly at risk after the U.S. imposed sanctions on involved companies and threatened further steps. The pipeline under the Baltic Sea has been the subject of heated debate for years as environmentalists have tried to stop it. The project has been all about allowing Russian gas to flow directly to Germany. This has been a strategic investment that has been a cornerstone to Europe's energy supply security. The opponents criticize the project on environmental grounds whereas the US has called it a geopolitical risk on security grounds. The Biden Administration has targeted this pipeline as well as being its environmental objective to build-back-better which must be exclusively GREEN.The Biden administration in mid-March made clear it would prosecute sanctions against companies constructing the project.  They called on the companies to "immediately abandon work on the pipeline". While people expected a deal between Germany and the U.S., it is more likely that Germany will allow the stoppage and blame the USA. There was false hope that President Joe Biden might be willing to make a deal with Germany on Nord Stream 2. My sources said no way.However, it appears that the Biden Administration is deliberately putting pressure on Ukraine to wage war to retain Crimea and to use this excuse to justify shutting down the pipeline.In late January 2021, the European parliament called for a halt to Nord Stream 2 after the arrest of Russian opposition leader Alexei Navalny. On the same day, German Chancellor Angela Merkel reaffirmed her support for Nord Stream 2. “My basic attitude has not yet changed to the point where I say the project should not exist,” Merkel said. It appears that Biden is simply trying to create a geopolitical conflict as the excuse to shut down the pipeline. The real question is, will the Biden unleash World War III for Environmental reasons while China would be a fool not to link up with Russia to take down the arrogance of the political establishment in Washington once and for all? It does not look good 2025-2027 for world peace

We can see that the greenback is positioning itself for a renewed rally against the Ruble. This is clearly an inspiration brought on for climate change. There is ZERO justification for Ukraine to demand the return of Crimea when it was only assigned to them during the Soviet Union. It was never historically Ukrainian.Likewise, our war index is trading against its Monthly Bullish Reversal. We may elect an important buy signal at the end of April. Meanwhile, the capital flows are clearly shifting and this is not something we should ignore.I seriously question the thinking process going on in the Biden Administration. Neither Biden nor Harris is in charge and it's not even Rice. There is a serious question in my mind that this is being greatly influenced by the World Economic Forum and one additional goal is to raise the stature of the United Nations as a one-world government. Interesting theory since from the start those in the United Nations have always lusted for power and world dominance.  But when we look at our models which correlate the entire world, they are seriously on the wrong side of this theory of self-aggrandizement.

Everything is lining up in a fashion that shows this idea of boosting the Green New Deal and elevating the United Nations as a one-world government, will fail but in the process, Schwb and his buddies are likely to create world war III. I cannot stress how dangerous these people are and their attempt to discredit me over the years because I would not join this cabal will not change the outcome.

They think this is a game of INFLUENCE and that is the key to their success so trying to eliminate me they thought would remove the influence. They fail to grasp that the computer will survive and it has never been my opinion. Schwab has climbed the ladder of success by offering world leaders for people to rub shoulders with. His entire operation was built on influence. His film the FORUM was produced by the same person as my film the FORECASTER - Marcus Vetter. When Nigel Farage spoke at our Rome WEC, he said he had to come because we were "the alternative to Davos."

So be aware that if Ukraine begins a war with Russia at the prodding of the USA, expect that China will then use that opportunity to retake Taiwan on the very same theory - was once China. Our model is warning that this can be a major high for the market in Taiwan here in 2021. This is total insanity all for this Great Reset dreamed up by a bunch of academics with NO REAL WORLD experience whatsoever! They are clueless even about military tactics. I do not have to be a brilliant general to realize that if the USA gets into a confrontation with Russia, that is the time to start a conflict in the USA. That is how Napoleon was defeated - fighting too many wars.

This comes from page 16 on the UNESCO declaration of its purpose from the very outset. They have long viewed that freedom as we know it is wrong. They have long believed in an authoritarian state between freedom of the individual (republic-democracy) and totalitarian dictatorship, with the United Nations in charge - of course! They will create war to elevate themselves to the glory and power they believe is rightfully their's.'

[Bear Hug]

7 hours ago, sancho panza said:

No,no,let's delve into it.I've learned so much from the oil disucssion ehre and it's postively shaped my investment thesis going forward.Discussing all this in detail is good for the soul and msot likely good for perpsective.

The more I'm reading you and CP's recent posts,the more I'm comingto the conclusion that we're heading for a supply shock moment.I've psoted before about oil price rises preceding recessions/crash phases and this one will likely follow historical precedent.

AS you hgighlight,it looks like the inventory drawdown confiming this.

For me,as a simple soul,I look at Brent.$65 today.I'm not seeing $40-$45 on a supply demand basis without a BK.

The long term trade is to sit tight,but I've got soem free bet money from XOM/BP/SHell options  and whilst I'm leaving the shares to run,I do fancy another run at the casino table.

I'll read that report tmrw,but i saw the folowing chart and seriously pondering some RDSB calls tmrw and also possibly selling EQNR to buy a cross section fo the others.

Using monthlies,this chart starts when Brent was last $65 Dec 2019.Time for sleep.Interesting day.Learned loads of this thread today.

 

Is this chart allowing for gbp vs usd increase over that time period? If it isn't, allowing for it may take some of that gap away. 

[sancho panza]

8 hours ago, AWW said:

Some more anecdata, my new workplace has said I'll be going back into the office when the roadmap allows, but they're only mandating two days a week. The other three, I can work from home. This is at a place that previously limited working from home to two days a month.

I don't know anyone who works in the city who is being asked to return full time.

I think London resi is utterly, utterly fucked now.

Looking at the LCP data published konthyl,90% of new tenannts are under 30.So let's read between the lines,rents are coming down.Wages for under 30's have been struggling in real terms for some time,even if you use the rather unrepresentative CPI

I think Londinium will be the epicentre of the coming resi mess

21 hours ago, Cattle Prod said:

(For anyones interest: These fields are waterflooded. Oil floats on water, right? So to increase oil recovery, you inject water underneath the pool of oil to make it float up to the producing wells. Saudi water cut is probably around 50% now, so they need to inject ~8m barrels of water every day to get 8m barrels of oil back. That's a lot of water. When you increase production, you effectively suck harder, which brings more water from the pool under the oil to the producing wellbore. If you do this too much, you can 'cone' water in the wellbore such that it stays connected, and the well is useless. You can't recover any more oil. So you cycle production, and let the reservoir rest after a burst of production. We do this in the North Sea, and you can see the same cycling in production profiles from the govt website).

The next test of this will be this summer, when Saudi has to produce around 1m bbl more to fuel the summer cooling needs. With a growing population, this eats into exports, and possibly their inventory.

One last point: the Neutral Zone oil and other recent production additions are not Arab Light grade. It's heavier, stickier and more sulphurous. Still useful, but more more expensive to produce. Oil production always, always goes for the easy stuff first. There is diminishing returns everywhere for Saudi.

Sounds like I'm going off piste here, but I really think the market is blindsided by this. Almost all analysts I read focus on demand, and take Saudi (and US) supply as a given. If this plays out, we are in an entirely different oil world, and macro world in general. Saudi production, or the perception of it, really is that important. Think I mentioned this on my very first post on here.

That's a common mistake I see in this commentary "but it hasn't happened in the last 50 years". Oil production, like most natural systems, follow a curve, without exception. There is a steep ramp up, a plateau (if the field is big), and a long slow decline (fast decline in shale). Saudi fields are in long slow decline: part of the Aramco sale meant they had to have their fields audited, and the report was published. The next 50 years will not be like the last 50.

Thanks for these technical explanations CP.

I finally (roughly) understand why Saudi can only pump the extra couple of mn bpd for a couple of months.So it does look as if we've got a potentially nasty trifecta of factors out there that could create a price spike.

1) spare capacity significantly oversestimated

2) time lag before spare capacity can be brought online especailly US shale

3) fragility of that spare capcacity given the waterflooding issue in Saudi.

 

Given this,your statement about the market being blindsided by this looks bang on.Particualrly in light of the current 'we don't need oil anymore' windmill bullshoot.

Using historic pre recession run ups in oil price,I've predicted an $80 barrel peak before the BK,using a rough estimation of the bottom last year in Brent.Reading what you and @planit are talking about then,I may look at moving my estimates higher

[sancho panza]

52 minutes ago, Bear Hug said:

Is this chart allowing for gbp vs usd increase over that time period? If it isn't, allowing for it may take some of that gap away. 

these are price charts.its RDSB in £ versus Brent $ EQNR $,REP ENI Eurio etc.

last time Bretn was $65 on the monthlies,RDSB was £22,currently £13

XOM was $69 bucks versus $55.I'll post coma scores on these when I'm on my desktop in a bit.RDSB standing out like  sore thumb.

I'm tempted to liquidate BP 260/270 calls that are well in profit adn bugn them on orange here.

got to do the family breakfasts.back later.

[MrXxxx]

11 hours ago, Yellow_Reduced_Sticker said:

 

I banned myself from the covid threads as they just got me down , ...anyway I had a watch of this video last night, in a way glad i watched it for the info...BUT Really wish i never watched this as the ending was VERY DEPRESSING!!!

 

@DurhamBorn have you watched this? Also are YOU still in touch with the elderly gentlemen that taught you the macro stuff back in the day? I remember you always saying that he hoped he would be gone by 2030?

 

It would be nice to have ya thoughts/view on this video's ending theme, CHEERS mate!

 

OK so here is my take/summary on this:

1. Wealth is not how much perse you have, BUT how much % of the total, both within a National and an International economy.

2. Big government will 'farm out' the role of production to an external source i.e. another country, this way it can control the supply away from its populus. This allows them to a) 'manage' inflation by importing more/less, whilst also b) permitting QE without 'crashing an economy; maybe its not a case of them being unable to stop QE as everyone seems to think. In addition, the recent Covid lockdown of businesses has allowed them to start along this route by making an independent business owner into a dependent benefits receiver.

3. A move from a personal money based system of commodities [including gold] into a government/international economic power body  controlled electronic monetary system stops individuals from trading outside the system.

4. Once government has control of the system it can move a greater % of the wealth to an 'International' economic power body.

5. Ultimately 3. above then means they have total control of peoples wealth, who get's what, and when they get it. This point then allows them to force those who were unproductive [unemployed/low employed] or those formerly independently employed [SME's] into what the government/international economic power body want them to do WITHOUT any choice. This also stops any potential for people in an electronically controlled monetary system from operating outside via bartering, and their 'personal' production will be within a state controlled system.

Agree with George's outlook and its not pretty...basically "Communism without the benefits" or people farming of the many by the few [International economic power body].

 

[CVG]

Can we confirm this?

[Mapper]

27 minutes ago, MrXxxx said:

OK so here is my take/summary on this:

1. Wealth is not how much perse you have, BUT how much % of the total, both within a National and an International economy.

2. Big government will 'farm out' the role of production to an external source i.e. another country, this way it can control the supply away from its populus. This allows them to a) 'manage' inflation by importing more/less, whilst also b) permitting QE without 'crashing an economy; maybe its not a case of them being unable to stop QE as everyone seems to think. In addition, the recent Covid lockdown of businesses has allowed them to start along this route by making an independent business owner into a dependent benefits receiver.

3. A move from a personal money based system of commodities [including gold] into a government/international economic power body  controlled electronic monetary system stops individuals from trading outside the system.

4. Once government has control of the system it can move a greater % of the wealth to an 'International' economic power body.

5. Ultimately 3. above then means they have total control of peoples wealth, who get's what, and when they get it. This point then allows them to force those who were unproductive [unemployed/low employed] or those formerly independently employed [SME's] into what the government/international economic power body want them to do WITHOUT any choice. This also stops any potential for people in an electronically controlled monetary system from operating outside via bartering, and their 'personal' production will be within a state controlled system.

Agree with George's outlook and its not pretty...basically "Communism without the benefits" or people farming of the many by the few [International economic power body].

 

Maybe there needs to be more vote buttons on this forum.

Suggestions:

- Well, that's soured my day.

- Fucking depressing.

- Pass the arsenic.

[Fully Detached]

9 hours ago, AWW said:

Some more anecdata, my new workplace has said I'll be going back into the office when the roadmap allows, but they're only mandating two days a week. The other three, I can work from home. This is at a place that previously limited working from home to two days a month.

I don't know anyone who works in the city who is being asked to return full time.

I think London resi is utterly, utterly fucked now.

I seem to be largely alone in my opinion but I think this WFH thing is temporary, and the push to return to the office won't necessarily come from employers but from employees themselves. I've been long term WFH and it takes a certain personality type - I'm about as well suited to it as anyone I've ever met and even I find it hard at times.

But here's what convinces me. The corporate world is full of little bastards who would rape their grandmother for a job title, let alone a pay rise. I look at how my own contacts shamelessly promote themselves on LinkedIn, and how cutthroat many of them are with any interaction unless there's something in it for them. I swear many of them would tear their own colleagues throats out for a little bit of kudos within the business. These are the ones who will return to the office to crawl up the bosses arse (whether the boss is there or not), and at that point, everybody else is going to feel the pressure to do the same. If you're not seen you're going to get forgotten, and worse, you're going to get fucked by the type I describe above.

I'm seeing this play out in a very small way with a friend. One of his colleagues has continued to provide services and projects for their employer throughout the lockdown while all the others sat on furlough, and surprise surprise, now has some mickey mouse new job title which means nothing, but has riled the hell out of everybody else. Everybody else now complaining that they weren't given the chance to do anything over lock down 

Put those people now in an environment where they are worried about paying their mortgage and other debts. I don't see them quietly sitting at home hoping for the best.

Granted, it still needs employers to provide office space and see the value in it, but I reckon that will come soon enough too.

[NogintheNog]

1 hour ago, sancho panza said:

XOM was $69 bucks versus $55.I'll post coma scores on these when I'm on my desktop in a bit. RDSB standing out like  sore thumb.

Can't argue with the maths here. However the future is being clouded by the lingering virus and potential new variants and of course the woke brigade. Both Shell and BP seem to be far more ingrained into green washing than their American counterparts.

But from another maths viewpoint look at the current yields. Shell decided from the outset that their cut was gonna run deep, and the yield is at today's price at <4%, whereas most of the others are at >5%. Does that not help explain the differential?

[Hancock]

2 hours ago, Fully Detached said:

But here's what convinces me. The corporate world is full of little bastards who would rape their grandmother for a job title, let alone a pay rise. I look at how my own contacts shamelessly promote themselves on LinkedIn, and how cutthroat many of them are with any interaction unless there's something in it for them. I swear many of them would tear their own colleagues throats out for a little bit of kudos within the business. These are the ones who will return to the office to crawl up the bosses arse (whether the boss is there or not), and at that point, everybody else is going to feel the pressure to do the same. If you're not seen you're going to get forgotten, and worse, you're going to get fucked by the type I describe above.

Aren't those reasons that the more placid won't want to return to the orifice. 

[M S E Refugee]

1 hour ago, NogintheNog said:

Can't argue with the maths here. However the future is being clouded by the lingering virus and potential new variants and of course the woke brigade. Both Shell and BP seem to be far more ingrained into green washing than their American counterparts.

But from another maths viewpoint look at the current yields. Shell decided from the outset that their cut was gonna run deep, and the yield is at today's price at <4%, whereas most of the others are at >5%. Does that not help explain the differential?

Until I can see that Governments are willing to reopen their economies I will own no Stocks and be Happy.

Apart from some Gold Miners.

[JimmyTheBruce]

2 hours ago, Fully Detached said:

I seem to be largely alone in my opinion but I think this WFH thing is temporary, and the push to return to the office won't necessarily come from employers but from employees themselves. I've been long term WFH and it takes a certain personality type - I'm about as well suited to it as anyone I've ever met and even I find it hard at times.

But here's what convinces me. The corporate world is full of little bastards who would rape their grandmother for a job title, let alone a pay rise. I look at how my own contacts shamelessly promote themselves on LinkedIn, and how cutthroat many of them are with any interaction unless there's something in it for them. I swear many of them would tear their own colleagues throats out for a little bit of kudos within the business. These are the ones who will return to the office to crawl up the bosses arse (whether the boss is there or not), and at that point, everybody else is going to feel the pressure to do the same. If you're not seen you're going to get forgotten, and worse, you're going to get fucked by the type I describe above.

I'm seeing this play out in a very small way with a friend. One of his colleagues has continued to provide services and projects for their employer throughout the lockdown while all the others sat on furlough, and surprise surprise, now has some mickey mouse new job title which means nothing, but has riled the hell out of everybody else. Everybody else now complaining that they weren't given the chance to do anything over lock down 

Put those people now in an environment where they are worried about paying their mortgage and other debts. I don't see them quietly sitting at home hoping for the best.

Granted, it still needs employers to provide office space and see the value in it, but I reckon that will come soon enough too.

Good point well made.  Up until now I've been pretty convinced nobody would want to go back to the hassle and expense of the daily commute, but reading your post made me realise I've been guilty of looking at it from my own perspective rather than that of the little bastards that you describe so well.

Ditto your point about others being obliged to do it because of FOMO.

Why does so much of modern life seem to involve all of us having to stoop to the level of the little bastards?  I'm not playing, I opted out of the greasy pole, keeping up with the Joneses game a while ago.

[wherebee]

2 minutes ago, JimmyTheBruce said:

Good point well made.  Up until now I've been pretty convinced nobody would want to go back to the hassle and expense of the daily commute, but reading your post made me realise I've been guilty of looking at it from my own perspective rather than that of the little bastards that you describe so well.

Ditto your point about others being obliged to do it because of FOMO.

Why does so much of modern life seem to involve all of us having to stoop to the level of the little bastards?  I'm not playing, I opted out of the greasy pole, keeping up with the Joneses game a while ago.

I've been talking to a few office monkeys I know in Oz over the past month, and the push to get back in the office is growing, not least because productivity is down massively.  Of course it bloody is!  They don't call it home netwanking for nothing.

[The Idiocrat]

Good interview with David Hunter published today (apologies if already posted).