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


spunko

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8 hours ago, dnb24 said:

Compare this year to last year- hospitalisation and deaths fell off a cliff during summer too in 2020. This Autumn/winter will be the acid test of vaccines- however conclusions on their effectiveness will Have to take into account the “dry tinder” that was taken out of the population last year, and the “herd immunity”. 
If there is anything approaching normal excess deaths this winter or exceed normal excess deaths then conclusion on the vaccines would indicate they were useless or they are actually causing people to die.

I agree (though arriving at any medical/political 'conclusions' might be pushing it, just more fuddle i predict), and in India back in April - where the Indian/Delta variant was causing a huge death spike, but then it mysteriously fell away. And this was despite any avertive action such as lock-downs happening, plus hardly anyone over there had been immunised... peculiar that?

I know viruses are not 'alive', in the trad. sense of the term. But i suspect if they could, these pesky things would be laughing their little glycoproteins off!!  

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18 minutes ago, Boon said:

Dominic Bummings should do what he does best, and that is simply work in the background, unseen. He cannot be a public face. 

But I'm not sure anyone could get past the Conservatives in the short-term - all they need to do is be better than Labour, and job is done.

Look how much shit has been thrown at Johnson and nothing has stuck..... people would still support him even if it turned out he was corrupt. 

It seems to me because of a few things, his public facade is of a dumbo so incompetence is expected, and most people that make up the voters are heavily selfish of their own interests.

Thus an alternative policy to reduce inequality, perhaps by taking measures to reduce stupidly high house prices, would just be unpopular. A bit like people pretending they want to be green, but when asked if they want to pay for it, the answer changes.

I think inequality will have to become worse before anything gets better. But that might be years away.

This is the worst conservative government iv ever seen by a very large margin and yet a billion times better than Labour.The red wall seats all fell around me because people are sick of scroungers.Those landing on boats,and those home born.The government have no backbone at all though and have created a huge mess.Shelves are half empty yet nobody wants to work.It will need the BOE to pull back from QE to then focus the mind.My partner is a nurse but working for the council in a responder role.They are really short staffed and all their bosses are sat at home on huge salaries doing nothing at all really.They advertised jobs,but only 2 candidates were suitable,and one decided they didnt want the job.So a big push got them one employee when they needed 8.Almost all my partners workmates are wanting to retire soon and starting to go on the sick every few months to force the issue.

This is what happens when people see others better off than them for doing nothing at all.

 

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10 hours ago, wherebee said:

I agree 100% that they are reducing symptoms for current variants.  However, I am not sure that the markets, or most people, will see a situation where the vaccines do not reduce your chance of infection compared with unvaxxed, but do reduce symptoms, as what they were sold.  If, as some doctors are saying, the vaxxed will also be more vulnerable to variants in future (as they evolve to infect the largest pool of victims, which is now the vaxxed in the UK), that will again hit perceptions of 'winning'.

Add into that the side effects are growing in number and knowledge.

Add into that the possibility for ADE (which I don't known enough about to know if it is a real risk).

In short, the market recovered from 2020 based on 'vaccines = beating the virus and back to normal'.  It looks to me like the story is 'vaccines = you have less chance of death but you'll still be unable to travel or spend money like you used to' and it's all a bit market destroying.

Good argument. 

The normal course is for viruses to become more infectious but less dangerous.  The current "vaccines" may be reducing the current danger but at the unknown longer term costs of introducing a non-sterilising "vaccine" mid pandemic (against the previously internationally accepted and agreed pandemic response).  

Later, the current "vaccines" may take undue credit for reducing the danger when the variants themselves have become less dangerous.  Regardless, the "vaccines" could be declared a success and what happens next in regard lockdowns, etc and their impact on the macro could depend on the real underlying government agenda ("Great Reset" et al?).

The joker card is if anything happens longer term because of the original use of the original "vaccines".  Talk of ADE, etc puts that at say 9 months post "vax" so we are entering the zone if it indeed happens.  The risk would be the government portrays this as a new variant with a repeat of lockdowns and new "vaccines" (boosters) so we rinse and repeat.  Maybe the current drive to get everyone "vaccinated" is more to reduce an available control group of "unvaxxed" available for comparison purposes.  They have apparently already "vaxxed" the original "vaccine" phase test control groups, which is not normal practice!  Another joker could be the virus does not progress as is more normal and then it's all bets off but maybe the same response.

From a macro though, assuming a benign and less incompetent government response, we could see a pullback due to shock the "vaccines" do not "work" (i.e. meet the incorrect expectation of no infection), but then a relief rally that this infection is not so bad and we can live with it.  Later may come the more serious impacts which can be delayed by the general obfuscation so well demonstrated to date but what happens then depends as the damage is done so let's move on.

To me, those are the knowns and the known unknows!  How much does it matter to the strategic macro?  Bumpy but IMO there are equal if not more important drivers in play, many of which were ramping up before the pandemic and which never went away.  Looking for a positive, it's an opportunity to use any volatility to help enter positions to meet these other drivers.  So I'll just do what I do and follow the financial data within the framework of my pre covid strategic framework (indeed more so given the money printing) and let things fall as they do.       

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3 hours ago, Barnsey said:

;)20210721_133759.thumb.jpg.c58e56231f18572f538b3591de527102.jpg

Spot on and has been the case for some time.  Tax wrappers like SIPPs and ISAs can make this difficult though given the often limited market access, and in the ISA case, forex.  Obviously funds are an option.  That then becomes funds v ETFs v trusts and that opens up consideration of passive versus active (if indeed active = active!).  Me, I've been buying international stocks and if I can in a SIPP, etc so good but I won't let the tax tail wag my investing dog (dog being an accurate word!).

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1 hour ago, JMD said:

however, where i ask were the 'sane doctors' during this time? Even now they are eerily silent!!

A bit off topic but I can't really criticise my local GPs and indeed find their response quite informative.  Mine offer a video service and will see you if they must (they did me so well done to them).  They are mostly older (coming up to retirement) and if they know masks, etc offer little protection, the "vaccines" could be dangerous, etc then what they are doing is probably the optimal solution.  Sure you could argue they should be doing more and raising the red flag, although I would say the BMJ (as opposed to the IMO deplorable Lancet) has been quite good.  What I find interesting is they have not badgered me to take the "vaccine".  So all in all, what they don't say and don't do says a lot!

PS:  A sector macro trend here was the emergence before covid of remote consultations.  This was something I was looking at personally as were some companies I know.  We could see this as a disrupter in what is one of the few remaining untouched areas.  There are considerable advances that could be made in this area (AI, etc) and increasing pressure to make this happen.  The biggest hurdle would be regulatory, something I have experienced as I looked into getting a consultation for some covid prophylactics from an Indian based doctor!

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1 hour ago, Boon said:

Dominic Bummings should do what he does best, and that is simply work in the background, unseen. He cannot be a public face. 

But I'm not sure anyone could get past the Conservatives in the short-term - all they need to do is be better than Labour, and job is done.

Look how much shit has been thrown at Johnson and nothing has stuck..... people would still support him even if it turned out he was corrupt. 

It seems to me because of a few things, his public facade is of a dumbo so incompetence is expected, and most people that make up the voters are heavily selfish of their own interests.

Thus an alternative policy to reduce inequality, perhaps by taking measures to reduce stupidly high house prices, would just be unpopular. A bit like people pretending they want to be green, but when asked if they want to pay for it, the answer changes.

I think inequality will have to become worse before anything gets better. But that might be years away.

Boris is playing the long game, like we should!

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Nice to see the pullback in the oillies (short term pain, long term gain?) but I'm wondering if this could take some time.  In general, I see the weekly data as showing oversold but the monthly still overbought and only now just moving into sell mode.  If however it (unusually?) flips here so soon and we get a buy on the weekly then the monthlies will remain overbought which is often not a good for further material gains.  Elsewhere in the resources sector, BHP and co seem to be doing this and not really doing much price wise.  Anything could happen but I'd prefer more basing on the weeklies in the oversold area to bring down the monthly and then make a serious turn to the up.

PS:  Aka, gimme more vol!

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sleepwello'nights
On 20/07/2021 at 10:27, Harley said:

I've always liked the guy.  Been very useful.  I totally agree having looked at all this in detail over several months several years ago.  Fine if you build a house around the pump(!) but no way as a retrofit for many properties.

I've said before our new house has an air source heat pump, underfloor heating and is well insulated. Our electricity bill for Jan and Feb was almost £600. We will probably use about 10,000 kWh annually. 

I've switched to a lower price supplier, almost half the unit price of British Gas. Even so I reckon our electricity bill will be double the combined gas and electric bill of our more or less same size previous house.

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Bobthebuilder
34 minutes ago, sleepwello'nights said:

I've said before our new house has an air source heat pump, underfloor heating and is well insulated. Our electricity bill for Jan and Feb was almost £600. We will probably use about 10,000 kWh annually. 

I've switched to a lower price supplier, almost half the unit price of British Gas. Even so I reckon our electricity bill will be double the combined gas and electric bill of our more or less same size previous house.

Years ago, I converted someone's house from gas to electric for the heating and hot water. Now I assume things have got a lot more efficient for electric, but back then when we fired it up you could watch the old style leccy meter spinning around like a helicopter blades. They lasted a year, then converted back to gas.

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1 hour ago, Cattle Prod said:

What do you see as oversold, do you mind me asking?

Really nice to see you get me drift.

Stochastic.  CXV and ENI for example. Around 80 so on the monthlies, not massive and starting down.  And as we agree (nice reply there!), would be nice if the weekly drives the monthly down.

Ah, you do recall the HA candles I mentioned well back! :)  You gave me a rep at the time so I new then we were on the same wavelength!  I kinda wrote this post for you!  Working very well for me.  Take a look on the monthlies for the above - defo a sign of a turn.  So overall, I'm leaning more towards a further decline on the monthly.

A subtlety - the Stochastic normally turns ahead of the MACD.  HA helps tell you if it's a blip or not.

I never really got into RSI.  I optimised on a few indicators so picked the STO over the RSI for my momentum signal.

 

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https://www.telegraph.co.uk/business/2021/07/21/putins-gas-showdown-europe-risks-epic-winter-fuel-crisis/

2023 iv got for the structural bull to really get going in gas,but these are the first shots coming now.The cost of carbon credits forcing coal out a big driver.This will lead to nature based solutions becoming the biggest factor in net zero at some point.Still struggling to find a way to play that though BP have a very interesting business in the sector.

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1 hour ago, Cattle Prod said:

Check out how accurate weekly Renko is at calling trend changes in oil.

Is that available in TradingView? I assume so!  I'll look but I like the HA as I'm learning to read the candle patterns.  I've got a great dual chart layout on my new Ultrawide monitor!

I mentioned upthread about maybe needing to combine weeklies with monthlies as neither are great on their own.  Weeklies give too may false signals for what I'm after and the monthlies mean I miss too much profit or take too much loss atm.

In true iterative fashion, I came up with a combo this week which looks promising - the old confirmation approach!

PS:  I'm dying to use our similar approach on option trades for US ETFs when I have the time.  Maybe TastyWorks and more towards LEAPS.  That would complement my current activity.

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5 minutes ago, DurhamBorn said:

https://www.telegraph.co.uk/business/2021/07/21/putins-gas-showdown-europe-risks-epic-winter-fuel-crisis/

2023 iv got for the structural bull to really get going in gas,but these are the first shots coming now.The cost of carbon credits forcing coal out a big driver.This will lead to nature based solutions becoming the biggest factor in net zero at some point.Still struggling to find a way to play that though BP have a very interesting business in the sector.

Heh...is it just me or...

He (Putin the Terrible, boo hiss) is quietly orchestrating a European gas supply crisis by restricting pipeline flows.

But gas is bad and we need to be carbon neutral, can't get more neutral than no gas, which is what they seem to want.  (Ref heat pumps, no gas mains etc)

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26 minutes ago, Loki said:

Heh...is it just me or...

He (Putin the Terrible, boo hiss) is quietly orchestrating a European gas supply crisis by restricting pipeline flows.

But gas is bad and we need to be carbon neutral, can't get more neutral than no gas, which is what they seem to want.  (Ref heat pumps, no gas mains etc)

That was the impression I had, he is killing 3 birds with one stone. Not paying Ukraine for the extra gas transport makes him happy, it also punishes them for the games they have been pulling over the years. At the same time the EU stocks are diminishing which shifts the power balance towards Russia. Lastly he should be able to make the money back up when the other pipeline opens.

OPEC is doing the same with oil, they are wrestling more control away from everyone else by managing stockpiles down to a place where users get nervous and are willing to pay more. I see them as completely in control now, they pretend their meetings are all serious but they are probably more like a celebration.

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6 hours ago, leonardratso said:

More contrarian than a contrarian is a fake contrarian - hahahaha, hancock?

I've not got twitter you cheeky cunt, but id like to shag his daughter.

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37 minutes ago, Cattle Prod said:

Yes it is, just learning it myself!

3 of us then, I was buying a book the other day:

Japanese Candlestick Charting Techniques: A Contemporary Guide to the Ancient Investment Techniques of the Far East

I got sidetracked so will finish my purchase now.

 

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46 minutes ago, Cattle Prod said:

Yes it is, just learning it myself!

All good.  The Jap stuff honed back in the day rice trading holds up well!

48 minutes ago, Cattle Prod said:

Much appreciated, Harley. Food for thought.

Please let us know your take as and when.  Interesting to compare buy signals.

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Noallegiance

@DurhamBorn just to clarify/restate; when you talk of the BoE having to stop QE, do you see this as being this end of the cycle and part of a bust, or much later? And why will this happen?

Also, does this essentially mean that ANY part of the public or private sector that currently receives cash from the government will no longer?

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30 minutes ago, Noallegiance said:

@DurhamBorn just to clarify/restate; when you talk of the BoE having to stop QE, do you see this as being this end of the cycle and part of a bust, or much later? And why will this happen?

Also, does this essentially mean that ANY part of the public or private sector that currently receives cash from the government will no longer?

We are already in the reflation now and any violent deflations will be short term events.Once QE stops government will have to borrow on the open market and pay higher rates.There are two big risks then.First is that the BOE blinks and starts printing simply to fund government deficits again.Second that government decides not to cut spending but raise tax instead.Death spiral in sterling would follow both.The government is in a terrible position.This pingdemic fiasco shows how clueless they are.

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31 minutes ago, DurhamBorn said:

We are already in the reflation now and any violent deflations will be short term events.Once QE stops government will have to borrow on the open market and pay higher rates.There are two big risks then.First is that the BOE blinks and starts printing simply to fund government deficits again.Second that government decides not to cut spending but raise tax instead.Death spiral in sterling would follow both.The government is in a terrible position.This pingdemic fiasco shows how clueless they are.

This chimes with an article by Alvaro de Menard referenced in Dominic Cummings Substack. He gives links to 'Some interesting things I've read recently'.  I would highly  recommend a monthly subscription. There is so much good information which more than justifies the cost of subscription.

God alone knows how he can keep across so many important developments in politics, economics and science. I genuinely believe he is one of the most important thinkers living in our times.

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5 hours ago, Straingone said:

This chimes with an article by Alvaro de Menard referenced in Dominic Cummings Substack. He gives links to 'Some interesting things I've read recently'.  I would highly  recommend a monthly subscription. There is so much good information which more than justifies the cost of subscription.

God alone knows how he can keep across so many important developments in politics, economics and science. I genuinely believe he is one of the most important thinkers living in our times.

link?

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Noallegiance
7 hours ago, DurhamBorn said:

We are already in the reflation now and any violent deflations will be short term events.Once QE stops government will have to borrow on the open market and pay higher rates.There are two big risks then.First is that the BOE blinks and starts printing simply to fund government deficits again.Second that government decides not to cut spending but raise tax instead.Death spiral in sterling would follow both.The government is in a terrible position.This pingdemic fiasco shows how clueless they are.

Thanks.

I'm struggling with why the QE habit will be stopped, though. Can you explain and tie in with CB printing overdrive if the bust occurs? 

E.g. stop soon, restart when there's no other option? Why?

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Construction Product Availability Statement » Construction Leadership Council

Quote

 

Overall, prices for products and materials have increased by a reported 10-15%, consistent with the Office of National Statistics figure for May of 10.2% overall with 12.8% for those most commonly used in RMI.  Specific products, especially timber, has seen increases of 20-50% for most products and over 100% for OSB and other sheet materials. For the first time we have had reports that some merchants are destocking certain products that are no longer economic.

Quick update on UK raw material prices, more info in link.

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