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

[DoINeedOne]

Great Interview with Ronnie Stoeferle - In Gold We Trust Report

 

[Castlevania]

30 minutes ago, DurhamBorn said:

I had a meal in Spoons last week when out with my son to watch the football,it was the worst food iv ever eaten.The burger was crap and you got about 15 chips.It used to be fine for the money.I can make 4, 3/4llb burgers for £1.70 that are beautiful and no additives.

The burgers in Wetherspoons have always been crap. 

[HousePriceMania]

It's deflation after all

 

 

 

[MrXxxx]

2 hours ago, DoINeedOne said:

Great Interview with Ronnie Stoeferle - In Gold We Trust Report

 

Really good podcast, and Stoefele`s humour is spot on.

[planit]

1 hour ago, Cattle Prod said:

This chart explains all you need to know about WTI pricing. It converts oil inventory into days supply, which is a much better metric. You'll hear 5 year averages discussed, or the inventory levels in the 2009-2014 period, but these are not corrected for what consumption was back then. Days supply incorporates that. It's effectively a 'twitchiness' measument: because supply is inelastic, price gets bid up when days supply drops. 

There are too many years on here, but you can see clearly that periods of high prices like 2006 to 2014 are around 20 days supply, and we are currently at 28 days. Price is front running inventory levels to some extent. I think it's pricing the trajectory of this drop: you can see it's already cut through 2016 and 2017. It's dropped about 5 or 6 days since May. If the trend continues, we'll be back to the low 20s by the end of summer, and we haven't been there since the days of $100 oil. That said, I think the dollar will have to drop for this trend to continue, to keep oil consumption high outside of the USA, and stop imports flooding in. WTI is priced off US inventories. I suggested a while back that WTI would close the gap to Brent or even exceed it, and that is happening now. That will attract imports. Unless other countries buy it first!

Dyodd

Thanks for this, much appreciated.

I realised the absolute levels of inventory were not low, it is the trajectory I was extrapolating to try to judge when sentiment would be good or bad. Looking for future 'newsworthy' figures that will get picked up by the press.

Oilprice.com says "The latest four-week drop in inventories was the biggest such fall on a rolling basis in EIA data going back to 1982"

As you predicted, the US oil production has not increased to fill the gap. US imports will have to increase to stop the decline.

This is where it gets interesting as I am guessing that regional oil flows don't change quickly. The US has been oil sufficient for a few years so a new flow needs to be developed. Oil demand exceeds supply in all regions at the moment so there is no spare oil looking for a home. Because of this the US will have to divert oil from another region and this will only happen if it is profitable.

Hence the need for WTI to be a high price. The gap to Brent has narrowed but the inventory draw-down has avoided the price increase that will draw in more oil. This has to change and seeing that markets are forward looking, it will not be long before this happens. A period of WTI > Brent seems to be in order.

 

Let me know if any of the above is wrong, the main question for me is whether there is a quick way of the US getting 1mbpd to stop this decline or am I correct in assuming it will take a while to rebalance?

 

OPEC+ are completely in control at the moment, if you have a winning hand you don't fold, they would be stupid to screw this up so why on earth would they have a price war.

 

[Bricormortis]

https://www.youtube.com/watch?v=VI4Xp5SH9Og

David Hunter 6th July. 30 minute video 

Not much change to the essential message.

Dollar to 80-85 soon then up to

120 minimum, then end of decade below 50 

[planit]

I am getting a bit jumpy today, market is acting nervous and I think it might be due to the Delta variant. It's the speed of the growth. It could set off a drop for a few weeks. My hand is hovering on the sell button.

I realise this is not deaths and you will tell me I am stupid.

Just a random selection:

 

Edit: 30% in cash now to have a relaxing weekend. Let's see what happens next week.

[No One]

On 08/07/2021 at 14:08, DurhamBorn said:

Do you understand German witholding tax .I notice it says 15% with treaty so i guess divi from Telefonica D would see a 15% tax,but it also says 10% for valid pension scheme,so im wondering if in a SIPP it would be zero.Most brokers are a nightmare trying to get these answers from.

Notice today Telefonica D is up 3.5% among the big falls everywhere,and @sancho panza coma scores top rated have outperformed the sector since he put them up.I own a lot of BT,but sold a small tranche at 2.04p and added to other money into Telefonica D and Brasil and an outperformance since.Seem like a very useful tool in broad sectors,even just to use to maybe slice ones that have ran and the score has dropped and increase or open new positions in ones that rate top 4 in the scores.

I got taxed 15% on my T212 Tel divi's irrespective that's inside an ISA 

[Mapper]

7 hours ago, feed said:

How many countries run dollars or Euros alongside local currency, for multiple reasons, incl. stability, availability, tax avoidance and corruption.  That isn’t going to change with a CBDC, even assuming that the technology can be implemented globally.  

There will always be a demand for dollars in Africa and Mexico is a de facto narco state with a massive demand for physical dollars. What would the cartels use with a 100% digital dollar? Pesos?  Same for the Euro, the North African drug trade all the way to Afghanistan and you're paying in Euros. 

Any major currency that switches to digital only, creates a vacuum for other currencies to operate in those environment. No major currency region will want to give up the benefits of those markets; non domestic and black.  If we have a CBDC pound then we will also have a physical pound.  Because if we don’t have a physical pound, we’ll have a physical dollar or Euro or crypto for anonymous payments, because the rest of the world will have a process for anonymous payments.  And the banks will not want a competing payment system in something as widespread as the black-market. 

CBDC for benefits, bank loans with varying interest rates and paying taxes seems likely, but not for functional exchange.  

If BOE goes 100% CBDC, then people will be buying drugs and hookers in dollars or Euros. 

 

Firstly, I’ll say I hope so. It’s music to my ears that others think that the human spirit (black market or not) will prevail.

But, playing Devil’s Advocate what if there are NO physical currencies? If the Dollar and Euro go digital, what are you left with that anyone trusts?

Even drug dealers need a currency that people accept, trust, holds its value etc.

Some smaller country still has physical notes, but who wants them?

Will it (can it) be something else that oils the wheels of the black market?

Domestically it could be some commodity I guess, but internationally that’s not going to work.

[Castlevania]

1 hour ago, No One said:

I got taxed 15% on my T212 Tel divi's irrespective that's inside an ISA 

ISA’s are only tax free accounts in the eyes of the U.K. 

You can offset the withholding tax paid against U.K. dividend tax. Clearly there’s no offset if held in an ISA, but worth being aware so you can look to minimise tax for those with a reasonable amount of savings outside an ISA.

[feed]

3 minutes ago, Mapper said:

Firstly, I’ll say I hope so. It’s music to my ears that others think that the human spirit (black market or not) will prevail.

But, playing Devil’s Advocate what if there are NO physical currencies? If the Dollar and Euro go digital, what are you left with that anyone trusts?

Even drug dealers need a currency that people accept, trust, holds its value etc.

Some smaller country still has physical notes, but who wants them?

Will it (can it) be something else that oils the wheels of the black market?

Domestically it could be some commodity I guess, but internationally that’s not going to work.

Physical USD isn’t going anywhere (soon). 

Today, the Treasury and Board of Governors staffs estimate that nearly 60 percent of all U.S. banknotes in circulation, or close to $500 billion, is held outside the United States.
 

[Loki]

I've got a little bit of IBTL, but have to admit I have completely forgotten how we are playing this. 

Assuming David Hunter's forecast comes true, would you sell at TLT ~$150 or keep holding?

I know less about bonds than I do about stocks. 

[ThoughtCriminal]

 

[Talking Monkey]

2 hours ago, Loki said:

I've got a little bit of IBTL, but have to admit I have completely forgotten how we are playing this. 

Assuming David Hunter's forecast comes true, would you sell at TLT ~$150 or keep holding?

I know less about bonds than I do about stocks. 

I have some ibtl, I sold a quarter of it yesterday  holding the rest as a hedge in case of BK. I'm going to add more if it drops back to close to 130.

I have almost no idea what I'm doing with these Bond things, though I must say it's all very exciting.

Edit I'm taking my buy sell levels off of tlt although I hold ibtl

[ThoughtCriminal]

 

[Transistor Man]

38 minutes ago, ThoughtCriminal said:

 

Tech/ Semiconductors - on this, Mr Hunter has been bang-on for the past 15 months. I can’t believe the parabolic ramp of, Nvidia.

[arrow]

15 hours ago, ThoughtCriminal said:

 

Yes, sort of. Shell is selling its share of the refinery to Liwathon which was (is?) owned by Barclay Rowland (private equity snapping up bargains again?). The other shares are owned by Eni and Rosneft (Gazprom indirectly) which have both been mentioned before on this thread. Eni and Rosneft/gazprom are not selling their shares. Perhaps not as much green pressure?

[arrow]

17 hours ago, Cattle Prod said:

 

 

Edit: BASF owns 67% of WintershallDEA, the biggest independent oil producer in Europe, and with some very nice Russian gas fields too. I recommended it here way back when, I hope some of you like this news.

I think as part of the former US sanctions on Nordstream 2, Basf had to give up a financial interest in Nordstream 2. It gave it up to Gazprom in exchange for Gazprom oil fields.

[DurhamBorn]

https://wolfstreet.com/2021/07/09/container-freight-rates-hit-new-extremes-up-6x-asia-to-us-europe-peak-shipping-season-still-ahead/

I sometimes forget,but i had a very successful one man band import business that i ran down and closed to get all the capital out because my roadmap showed that model was about to be destroyed.Most of the capital from that ended up in the goldies and silvers etc.

I was paying around £2000 for a 40 foot high cube container to ship,sometimes a little more.There is also VAT on the cost,so any increase in the cost sees an even bigger increase from extra tax.Thats before shipping from the port of course,you have trunking costs on top.

I used to get 550 firepits on a container so the port to port cost was about £4 a unit.Today it would be £24 a unit.

I used to land each unit and onto a pallet for an all in cost of between £35 to £38 and sell for £79

Here is one i used to sell now

https://www.amazon.co.uk/INMOZATA-Garden-Outdoor-Brazier-Firepit/dp/B07MP399R9/ref=sr_1_62?dchild=1&keywords=firepit&qid=1625908493&sr=8-62

£130

I can tell you that you can now manufacture almost all goods that are that size and over in the UK for cheaper than shipping from China.In some cases a lot cheaper,for insance shipping a washing machine will now be around £80 a unit,just the port to port.

Supply chains built on destroying ordinary peoples jobs have just walked direct into a reflation cycle wall.They are fucked.

The survivors need to pull back production quickly in bulky items and out survive their competitors and they need workers,but workers arent interested,

Thats why my phone rings every day offering job after job after job,and these are massive blue chip companies.Lower down the pecking orders the job sites are rammed with production operator jobs that they cant fill.The wages arent enough compared to retiring or welfare.

As i turn every job down i tell them the wages are far too low given the inflation in the economy (even the ones that would be considered very high wages for the NE) and i think to myself maybe you should of come to this thread in 16 and offered us 10x those wages,but not for engineering,for macro strategy.

I should add,the reason we are in the sectors we are is because they arent affected much by the above in a negative way,but they can bump up the prices with the inflation.BAT for instance gets millions of fags on a container and the shipping unit cost is tiny.

 

[JMD]

19 hours ago, Cattle Prod said:

Nothing wrong with cash, and you might be right about markets, seems like no one does the slightest due dilligence anymore. Here is the delta variant from its country of origin, it was once known as the Indian variant, remember that?! it topped out and died back in a country with no vaccination with deaths and hospitalisations one tenth of the the US or the UK. But delta variant bad!!

I agree. Plus India (or 'project delta'?!) didn't have a lockdown. And yet, like a modern fairy tale, the virus withered away. I know that people died and their tragic stories were important to see... But the rampant propaganda coverage the so called BBC put out daily about India during May still makes my blood boil. 

[Harley]

1 hour ago, JMD said:

I agree. Plus India (or 'project delta'?!) didn't have a lockdown. And yet, like a modern fairy tale, the virus withered away. I know that people died and their tragic stories were important to see... But the rampant propaganda coverage the so called BBC put out daily about India during May still makes my blood boil. 

Well said @Cattle Prod and @JMD.  So relevant to this thread too as getting into this finance stuff requires a degree of independence, data drive, etc.  Like they are only telling us now, and only because it suits them, that the track and trace pings were only advisory when most of the capable here would already have sussed that out.  It's exactly the same in finance.  You gotta enquire and think for yourself.  Emotions, media, etc noise, and herd mentality will, at least relatively, ruin most.

PS:  It's fascinating listening to the key finance guys use their well honed data skills to analyse this plandemic.  As usual, a million miles from the msm, etc.

[Heart's Ease]

 

 

We will continue to offer one of the most appealing shareholder remunerations among Ibex-listed companies. In 2021, the dividend will be around €0.60/share (cash dividend in July after the scrip dividend paid out in January. This amount will increase gradually over the course of the Strategic Plan until it reaches €0.75/share. In 2025, shareholder remuneration will be at least €1/share, including cash payment and share buybacks to be made from 2022 onwards.

Just a snippet from the Repsol website (had a nice dividend on Friday that I wasn't expecting!).

[DoINeedOne]

1 hour ago, DurhamBorn said:

BAT for instance gets millions of fags on a container and the shipping unit cost is tiny.

This is something i think about alot since you mentioned similar a while back even though it should have been so obvious and with the pandemic, watching companies have shortages especially car companies with all the parts they require

Also talking about Tobacco companies

One of the world’s biggest cigarette makers faces a backlash after striking a £927 million deal to buy a British respiratory drug company that works on treatments for smoking-related diseases.

Philip Morris International, the maker of Marlboro cigarettes, surprised the City yesterday by revealing that it had agreed to acquire Vectura, the FTSE 250-listed business, in the biggest move by a tobacco company into the healthcare industry.

[Harley]

14 hours ago, ThoughtCriminal said:

 

Maybe but it's gonna take some hefty price increases to change the negative intermediate technicals I generally see for my value stocks so maybe not them.  My weekend review should be interesting given this week's yo-yoing.  But there's much other work to do - it does seem that I usually should be paying attention at those very times I'm too busy!

[jamtomorrow]

2 hours ago, DurhamBorn said:

I used to get 550 firepits on a container so the port to port cost was about £4 a unit.Today it would be £24 a unit.

What are the main factors behind that 6x hike?