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


spunko

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sancho panza
On 22/07/2021 at 01:16, 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.

The simple reality is that the further down the road we get the worse the choices are for the government.Stop printing,the debt looms large,keep printing,the inflationary spiral looms large.Pick your poison.

 I think one of the themes you're running at the minute regarding working class peoplestarting to reassess where their money has been going is bang on.I'm seeing a darker more pragmetic attitude towards the welfare state,a growing relaistation that all the money we've poured into the lockdown has been pointless.

Echoing that latter point,we had a meet up today with an old family friend who has been very compliant with lockdown and it didn't take much to find her cynicism about the whole episode coming through with reference to her kids being forced to isolate and stay off school,implications for the NSHS in terms of fmaily members not seeing GP's.

At work,we're swamped,A&E is swamped,hospitals are swamped.Not with covid but the consequences of the lockdown.The true scale of the fiasco is becoming apparent to people in terms of the health systemThe economy is yet to come.

On 22/07/2021 at 11:20, Transistor Man said:

This is how I though nuclear would go, but I was one business cycle too early. Therefore, wrong! Looks like it’s going to happen this time.

Story of my trading life TM

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sancho panza
On 22/07/2021 at 17:00, Starsend said:

Fucking outrageous the way they are trying to force people to get jabbed. All this shit has been covered in the past with clear laws/ethical guidelines being developed to say that you cannot coerce people in any way to have medical treatment they do not want. It's no wonder the conspiracy theorists are going nuts with all this stuff - I actually felt distinctly uneasy getting jabbed myself - I don't believe they are trying to kill us all but fuck me it does cross your mind the way they are behaving.

There are serious breaches of post war protocols ongoing.The silence of the 'liberal' MSM is deafening.

On 22/07/2021 at 21:16, feed said:

Kind of related to a bunch of stuff.

3% for the NHS and a threat of strike action. 

Rise is three times higher than initial 1% offer but nurses likely to reject award and may take industrial action in protest

https://www.theguardian.com/society/2021/jul/21/government-offers-nhs-staff-in-england-3-pay-rise

Nothing for the police and vote of no confidence in Patel. 

Rank-and-file police officers have overwhelmingly supported a vote of no confidence in the home secretary, Priti Patel, the first such move in more than a decade.

In a scathing announcement, the Police Federation of England and Wales (PFEW), which represents 130,000 officers, said Patel and the government “could not be trusted” and warned “warm words are no longer enough”.

The move comes after Wednesday’s confirmation that officers paid £24,000 or more would be hit by a pay freeze in 2021-22.

https://www.theguardian.com/uk-news/2021/jul/22/we-have-no-confidence-in-priti-patel-says-police-federation

 

I think the government have given up.  Good luck with authoritarianism with striking nurses and no support from the police.  

They have been lucky to have been able to give the appearance of having the ability to be authoritarian although that's more to do with the compliancy of the geneal population than police numbers.

Speak to any policeman who works the city streets of the UK outside London and they'll explain that it's more illusion than anything else and that the blue line is thinner than it's ever been.

I think the memory that stays with me the msot from the last year was the police in Bristol who arrested a preacher for giving soup to the homeless on the grounds he had breached corona regs.

I think the authoritarian tendenceis are there but I think our police are woefully short of numbers currently

On 22/07/2021 at 21:56, planit said:

I would love to say that it is a conspiracy but this is just  the result of a mathematical calculation.

R number of 5+ for the delta variant, to be safe say 6.

 

Need 5/6ths of the population vaccinated which is 83%. when you take into account really young kids and others who refuse it, it is obvious that you need to try to get the 11-18 and 18-30's vaccinated too.

I just wish they were honest rather than treating us like imbeciles.

India has a pretty poor vacciantion strategy and here's the cases/deaths data.

image.png.647edf315fcaa4a09ef2c4614cd8f274.png

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1 hour ago, sancho panza said:

image.png.647edf315fcaa4a09ef2c4614cd8f274.png

image.png.1b92360d78835f051a341ca5173e1fcf.png

Is my basic maths right, that is a fatality rate of 1%?

And that is in India, which you would imagine doesn't have the best healthcare system. AND I guess a lot of the deaths were older people.

Is 1% high?

EDIT:

https://www.goodrx.com/blog/flu-vs-coronavirus-mortality-and-death-rates-by-year/

Says Flu in the US had a fatality rate of 0.1%, so 10x higher.

The above page says COVID fatality rate in the US is 3.6%. Why is it so much higher than India?

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3 hours ago, sancho panza said:

ALso seeing a lot of people declining overtime.Last night shift I was on we had 60% of normal crew levels and we had 60% more work.Short story long,it was a stresful night and I totally get why we're losing staff.The money's crap until you've been in a few years and by then most people are burned out.

A&E is getting smashed too.Lot of GP's not seeing many people.

Must say,these lockdowns have a lot of unintended cosnsequences.I warned acquaintances who were pro lockdown what would happen a year down the line and here we are and it's even worse than I thought.

It would be useful for the common good if when discussing the upcoming 'crisis' in the NHS you can make people realise it's not a lack of funding, it's things like the points you make above re the system rewarding bad personal choices which will lead to NHS demand that are the root of the issue.

 

Oh, plus of course the whole pandemic fuckup which is baked in to massively increase demand on the NHS even if the virus magically disappeared tomorrow, due to mental and health issues created by the lockdowns.

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Has anyone looked over Q2 forthcoming results for BP from the weekly updates,  the averages are now closed with weeklies updating for Q3   

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6 hours ago, sancho panza said:

There are serious breaches of post war protocols ongoing.The silence of the 'liberal' MSM is deafening.

They have been lucky to have been able to give the appearance of having the ability to be authoritarian although that's more to do with the compliancy of the geneal population than police numbers.

Speak to any policeman who works the city streets of the UK outside London and they'll explain that it's more illusion than anything else and that the blue line is thinner than it's ever been.

I think the memory that stays with me the msot from the last year was the police in Bristol who arrested a preacher for giving soup to the homeless on the grounds he had breached corona regs.

I think the authoritarian tendenceis are there but I think our police are woefully short of numbers currently

I grew up in Rotherham and although my grandfather had retired from mining, i still remember the police 
beating the shit out of the miners.  The miners didn't have the public on side and the police were lumps back then.

I don't think todays police would stand a chance in a similar long running conflict.  But i don't know if there is anything remaining that could align a group of working class men the same way today.  
 

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They were expecting a cash flow deficit for Q2 given gulf of Mexico payments and further severance,  RMM however is $5 higher in Q2 than Q1 that is worth a fag packet calculation of $2b   its only a guess but wont be far off as its rounded down,  and Brent sits at an $8 average for the quarter and way above the $45 needed for the second half  again no volumes are given but BP rule of thumb is another $2b     Its difficult to see how they will not be cash flow positive for the Quarter,  just my musings to see if anyone else had looked    

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20 minutes ago, StrugglingMillennial said:

I looks like the transition to the chinese model is about to begin.

https://www.dailymail.co.uk/news/article-9820061/Families-discounts-free-tickets-government-backed-rewards-scheme.html

Get ready for your digital yuan everyone!

All that stuff above about the govt being skint ... yet they can easily afford more communist/crony capitalist policies.

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9 hours ago, sancho panza said:

 

ALso seeing a lot of people declining overtime.Last night shift I was on we had 60% of normal crew levels and we had 60% more work.Short story long,it was a stresful night and I totally get why we're losing staff.

Was it to do with nightclubs being open, and it actually being more likely a person will die or get a life changing injury in a drunken fight, than from "the virus"!

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1 minute ago, Hancock said:

All that stuff above about the govt being skint ... yet they can easily afford more communist/crony capitalist policies.

It's the first rule of running a corrupt regime. The allocation of scarce resource based on political whim and favour.

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56 minutes ago, SpectrumFX said:

It's the first rule of running a corrupt regime. The allocation of scarce resource based on political whim and favour.

We will give you £50 billion to get fat benefits including housing benefit and a free car and youl never have to work again,or £3.00 if you dont and push your pension age back and back to pay for the former so those fatties live longer than you because your worn out.

Chippies were rammed yesterday at Seaton Carew and mostly sub 20 year old benefit claims with several kids.

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Castlevania
7 hours ago, Mapper said:

The above page says COVID fatality rate in the US is 3.6%. Why is it so much higher than India?

I don’t think you can compare due to different ways in collecting the data. However, the US is an older and much fatter populace than India so would expect Covid to be more lethal in the US.

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1 hour ago, Seacrest said:

They were expecting a cash flow deficit for Q2 given gulf of Mexico payments and further severance,  RMM however is $5 higher in Q2 than Q1 that is worth a fag packet calculation of $2b   its only a guess but wont be far off as its rounded down,  and Brent sits at an $8 average for the quarter and way above the $45 needed for the second half  again no volumes are given but BP rule of thumb is another $2b     Its difficult to see how they will not be cash flow positive for the Quarter,  just my musings to see if anyone else had looked    

Key to them now if buybacks.They should start heavily in the next quarter.At this share price the 60% for buybacks should include the other 40% so hopefully 100% of excess cash flow to buybacks.The worry is they use the extra 40% for more renewable investment.This quarter should show what they intend.They could pay small special divis on top with some of the extra 40%,but at this point of where the share price is buybacks are better,until there is a £4 in front of the shares.

We should be looking at 6%-8% a year share buybacks,but i have a feeling they will row that down a bit.The big risk is that they get tempted for a big takeover in the green space .

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1 hour ago, Seacrest said:

They were expecting a cash flow deficit for Q2 given gulf of Mexico payments and further severance,  RMM however is $5 higher in Q2 than Q1 that is worth a fag packet calculation of $2b   its only a guess but wont be far off as its rounded down,  and Brent sits at an $8 average for the quarter and way above the $45 needed for the second half  again no volumes are given but BP rule of thumb is another $2b     Its difficult to see how they will not be cash flow positive for the Quarter,  just my musings to see if anyone else had looked    

The $45 includes the divi and capital investment i think,they will be just below $30 for cash break even running costs.

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27 minutes ago, DurhamBorn said:

Key to them now if buybacks.They should start heavily in the next quarter.At this share price the 60% for buybacks should include the other 40% so hopefully 100% of excess cash flow to buybacks.The worry is they use the extra 40% for more renewable investment.This quarter should show what they intend.They could pay small special divis on top with some of the extra 40%,but at this point of where the share price is buybacks are better,until there is a £4 in front of the shares.

We should be looking at 6%-8% a year share buybacks,but i have a feeling they will row that down a bit.The big risk is that they get tempted for a big takeover in the green space .

Is there an AGM or shareholders meeting where something like this could be submitted formally?

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I enjoyed this MacroVoices podcast number 281 with Darius Dale. 

Erik sees a crack up boom in the equity markets but Darius (also a non-transitory inflationist), based on his data models, sees this in a more nuanced way with waves of inflation interspersed with deflation (at least asset deflation).  He currently sees a mild deflation in assets before a resumption, something I've also been wondering about when looking at the (overbought) charts.  He's looking at a period from say this September through to mid year next year.

The charts are overbought (especially the resource ones) and look to be flagging but then this could just be a mild pullback as surely one definition of a crack up boom would be crazy charts staying in the overbought zones for an uncharacteristically long time.  But I like the idea we have to first work through the current wave of inflation and its base effects with a period of meaningful deceleration of economic activity.

"I personally am very much a secular inflation guy long term. And I'm not smart enough to figure out short term. I think what you're telling me is we just had the first wave of the secular inflation, which I expect to take a full decade to play out, if not more. You're saying it looks like that first wave is ending. But it sounds to me like you're also saying you see the second wave coming, just like I do. Did I get that right?"

But the key point to me was to emphasise nothing will go in a straight line and he at least thinks there may be another chance to load up on our lovelies.  I hope so as I'm continuing to sell down holdings to a third or half (depending on holding) so I'm not totally out but hopefully can buy back better (Yey, "Buy Back Better" from the "Harley Economic Forum"!)

PS:  As I wrote "transitory inflationist" I just knew I was writing bullocks! :)

 

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2 hours ago, DurhamBorn said:

Key to them now if buybacks.They should start heavily in the next quarter.At this share price the 60% for buybacks should include the other 40% so hopefully 100% of excess cash flow to buybacks.The worry is they use the extra 40% for more renewable investment.This quarter should show what they intend.They could pay small special divis on top with some of the extra 40%,but at this point of where the share price is buybacks are better,until there is a £4 in front of the shares.

We should be looking at 6%-8% a year share buybacks,but i have a feeling they will row that down a bit.The big risk is that they get tempted for a big takeover in the green space .

SO once they start buybacks, is this the time where you see their share price on a upward protectory. 

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5 hours ago, Seacrest said:

They were expecting a cash flow deficit for Q2 given gulf of Mexico payments and further severance,  RMM however is $5 higher in Q2 than Q1 that is worth a fag packet calculation of $2b   its only a guess but wont be far off as its rounded down,  and Brent sits at an $8 average for the quarter and way above the $45 needed for the second half  again no volumes are given but BP rule of thumb is another $2b     Its difficult to see how they will not be cash flow positive for the Quarter,  just my musings to see if anyone else had looked    

Remember to divide the figures by 4 if you want for the qtr.

I think the added profit for the qtr was $1.2bn when I worked it out. I would be surprised if the added profits weren't enough to make the qtr cash flow positive (BP were expecting cashflow -ve).

I also hope the trading profits will be high again (partly because Shell f**ked up again LOL).

I won't be happy unless they announce $1.5bn in buybacks for the qtr. People are still hoping for divi increase but BP have been clear in saying they don't intend to do that up to 2025.

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3 hours ago, DurhamBorn said:

Key to them now if buybacks.They should start heavily in the next quarter.At this share price the 60% for buybacks should include the other 40% so hopefully 100% of excess cash flow to buybacks.The worry is they use the extra 40% for more renewable investment.This quarter should show what they intend.They could pay small special divis on top with some of the extra 40%,but at this point of where the share price is buybacks are better,until there is a £4 in front of the shares.

We should be looking at 6%-8% a year share buybacks,but i have a feeling they will row that down a bit.The big risk is that they get tempted for a big takeover in the green space .

That is what I want, 6-8% buybacks plus the divi giving 10%+ per year. But like you I feel they will dial it back once they see the size of the figures. This has come way more quickly than they thought when they formed the plan. The debt target was hit a year early.

A green acquisition at this stage wouldn't be bad, it will help go towards reducing the fossil fuel percentage of output. In a couple of years other oilies could be desperately trying to get their hands on renewable production to hit the stupid court mandates. That will mean their investment will double in price.

The ESG mob are so blinded that they can't see the oilies becoming the biggest suppliers of renewable energy. They will be so pissed (even though they are the ones demanding this to happen).

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1 hour ago, Hancock said:

SO once they start buybacks, is this the time where you see their share price on a upward protectory. 

There is a proverb -

An oilies' share price can dig deeper and for longer than you can stay solvent!

 

For example, the government could make it illegal for pensions to own fossil fuel companies. Or for 80% of profits to be distributed to the public for 'damage caused'.

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11 minutes ago, planit said:

For example, the government could make it illegal for pensions to own fossil fuel companies. Or for 80% of profits to be distributed to the public for 'damage caused'.

The most extreme thing to have happened to a major that i can recollect is Obama and his screwing over of BP.

What you state would result in sky high oil prices as they'd stop investing..

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sancho panza
11 hours ago, Mapper said:

Is my basic maths right, that is a fatality rate of 1%?

And that is in India, which you would imagine doesn't have the best healthcare system. AND I guess a lot of the deaths were older people.

Is 1% high?

EDIT:

https://www.goodrx.com/blog/flu-vs-coronavirus-mortality-and-death-rates-by-year/

Says Flu in the US had a fatality rate of 0.1%, so 10x higher.

The above page says COVID fatality rate in the US is 3.6%. Why is it so much higher than India?

On March 17 2020 Prof John Ioannidis wrote the following piece,effectievly arguing that the disaster was in the data they were using for the inital infection fatality rate

He bascially argued for a 0.3% IFR based on a rough estimate for the Diamond Princess cruise ship a long way from the 3.4% inital WHO IFR estimate.(and the one instrumental in bringing in lockdowns).Read the rest of the first piece and you'll see why he earned his pre eminence in his profession because a year and a bit later,he looks to have been pretty well on the money about a raft of things as well the IFR

The second paper is one published by the WHO that Prof Ioannidis updates his estimate for the IFR but with obviously much more data,published after being peer reviewed and updated Sept 13th 2020.

https://www.statnews.com/2020/03/17/a-fiasco-in-the-making-as-the-coronavirus-pandemic-takes-hold-we-are-making-decisions-without-reliable-data/

The current coronavirus disease, Covid-19, has been called a once-in-a-century pandemic. But it may also be a once-in-a-century evidence fiasco.

The data collected so far on how many people are infected and how the epidemic is evolving are utterly unreliable. Given the limited testing to date, some deaths and probably the vast majority of infections due to SARS-CoV-2 are being missed. We don’t know if we are failing to capture infections by a factor of three or 300.

This evidence fiasco creates tremendous uncertainty about the risk of dying from Covid-19. Reported case fatality rates, like the official 3.4% rate from the World Health Organization, cause horror — and are meaningless.

Projecting the Diamond Princess mortality rate onto the age structure of the U.S. population, the death rate among people infected with Covid-19 would be 0.125%. But since this estimate is based on extremely thin data — there were just seven deaths among the 700 infected passengers and crew — the real death rate could stretch from five times lower (0.025%) to five times higher (0.625%).

Could the Covid-19 case fatality rate be that low? No, some say, pointing to the high rate in elderly people. However, even some so-called mild or common-cold-type coronaviruses that have been known for decades can have case fatality rates as high as 8% when they infect elderly people in nursing homes. In fact, such “mild” coronaviruses infect tens of millions of people every year, and account for 3% to 11% of those hospitalized in the U.S. with lower respiratory infections each winter.

If we assume that case fatality rate among individuals infected by SARS-CoV-2 is 0.3% in the general population — a mid-range guess from my Diamond Princess analysis — and that 1% of the U.S. population gets infected (about 3.3 million people), this would translate to about 10,000 deaths.

One of the bottom lines is that we don’t know how long social distancing measures and lockdowns can be maintained without major consequences to the economy, society, and mental health. Unpredictable evolutions may ensue, including financial crisis, unrest, civil strife, war, and a meltdown of the social fabric. At a minimum, we need unbiased prevalence and incidence data for the evolving infectious load to guide decision-making.

In the most pessimistic scenario, which I do not espouse, if the new coronavirus infects 60% of the global population and 1% of the infected people die, that will translate into more than 40 million deaths globally, matching the 1918 influenza pandemic.

The vast majority of this hecatomb would be people with limited life expectancies. That’s in contrast to 1918, when many young people died.

One can only hope that, much like in 1918, life will continue. Conversely, with lockdowns of months, if not years, life largely stops, short-term and long-term consequences are entirely unknown, and billions, not just millions, of lives may be eventually at stake.

If we decide to jump off the cliff, we need some data to inform us about the rationale of such an action and the chances of landing somewhere safe.

John P.A. Ioannidis is professor of medicine and professor of epidemiology and population health, as well as professor by courtesy of biomedical data science at Stanford University School of Medicine, professor by courtesy of statistics at Stanford University School of Humanities and Sciences, and co-director of the Meta-Research Innovation Center at Stanford (METRICS) at Stanford University

 

 

 

 

Prof John Ioannidis,Sep 13th 2020.Allowing for sampling errors IFR estimate at 0.2%

https://www.who.int/bulletin/online_first/BLT.20.265892.pdf

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Share price pretty much sits where it did at the start of the  2 week run up to the last set of quarterly results.     

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sancho panza
5 hours ago, Hancock said:

Was it to do with nightclubs being open, and it actually being more likely a person will die or get a life changing injury in a drunken fight, than from "the virus"!

 and @wherebee

Staff are not wanting the overtime mainly for stress reasons as I understand it.

Currently,we're receiving 50% more calls than the busiest New Years Eve pre covid.Normally for NYE,we'll ahve extra crews on.

BackgroundWe have four categories of job,1 to 4.1 being life threatening,4 being a medical minor or hospital transfer.

In normal times,I'd take a patient into Resus maybe once every two shifts,maybe less-these are patients with acute life threatening issues.Everyone else either stays home or goes to normal A&E.

Currently,we're going to Resus two times a shift(3 the other night).Maybe we're unlucky but with less crews on,it stands to reason.These Cat 1 jobs can be very stressful as people can be near death or sometimes-very rarely thankfully-pass away on the vehicle during transport.Sustaining a pt who's on the edge of life itself,can be very stressful.

In between these jobs we're going to patients who have sometimes been waiting fiven to ten hours or more for us, and where the patient may have been on the floor for the whole ten hours.

It goes without saying really,that if people are waiting 5-10 hours for a response,by the time we get there ,their condition can often have worsened considerably.I went to a patient the other night who had three chronic issues ongoing anyone of which would have justified me ringing Resus and alerting him in-three.Not just one.

One shift last week,we were outside a care home about to alert a pt to Resus and there's a tap at the door and one of the patients in the care home has collapsed.I ditch my crew mate,go in and end up calling for back up crews to get this pt on a strecther and then alerted into Resus.The Dr at the hospital at the hospital was a bit teed off about the poor quality of my hand over but I pointed out that we'd got two pts in there and I was on my own.40 minutes later said Doctor still couldn't work out what was going on with the pt.

It's not jsut amublance staff getting frazzled but A&E staff are getting it even worse than us.

So that's the snapshot of my worklife at the minute.Hope it explains why people choose to stay home rather than pay 40% tax on their overtime payments-again credit to the thread and @DurhamBornin particular for running this theme.It's coming true.People are genuinely chinning off the overtime to avoid the stress.

Young people getting smashed and enjoying life I'm really happy to see

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