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

[Democorruptcy]

Being announced today

Quote

 

The last date to buy a new petrol, diesel or hybrid car in the UK will be brought forward from 2040 to 2035, under government plans.

Hybrid vehicles are also now being included in the proposals, which were originally announced in July 2017.

https://www.bbc.co.uk/news/science-environment-51366123

 

 

[Democorruptcy]

Latest OFCOM children's media report published today includes

Quote

 

10 is becoming the age of digital independence. Between age nine and 10, the proportion of children who own a smartphone doubles to 50% – giving them greater digital freedom as they prepare to move to secondary school. By the time they are 15, almost all children have one.

https://www.ofcom.org.uk/about-ofcom/latest/features-and-news/parents-more-concerned-about-their-children-online

 

 

[Majorpain]

8 hours ago, Barnsey said:

 

Been doing some copper research

China in 2018 consumed 49% of the worlds copper, or to put it another way it consumed as much as the rest of the world put together.  Significant chunk of that demand has now gone offline for who knows how long.

https://energyandmines.com/2015/11/these-10-mines-will-set-the-copper-price-for-the-next-decade/

That chart is from 2015, so a little out of date.  Average total costs are IMO going to be somewhere in the region of $1.5 to $2 a lb, i know for sure Escondida's grades have declined and thats the cash cost shown not the AISC number.  There is therefore still a long way to go before the big mines start becoming unprofitable to produce.

[kibuc]

8 hours ago, Popuplights said:

Sorry, not my area. I'm an electrical power systems engineer. 

 

Massive short covering perhaps? Anyway, it looks like TESLA is doing a bitcoin and the end must be nigh.

 

[DurhamBorn]

15 minutes ago, kibuc said:

 

Massive short covering perhaps? Anyway, it looks like TESLA is doing a bitcoin and the end must be nigh.

 

Seeing all the usual talk,its worth $3trillion because its not a car company etc etcThe same talk that telcos werent telcos etc during the last tech boom,before they did investors for 80%+.I wouldnt like to value it,but its a good example of why i avoid shorting.

 

7 hours ago, Cattle Prod said:

 

I don't think so, and it won't be physical market that takes it down to $10. I think he's looking at liquidity primarily, and sees that the paper market will trash the oil price in a bust. What will be going on underneath all that will be increasing supply constraints. I'm already seeing something happening similar to when I sold silver coins for 10-15 dollars over spot in the 2012 - producers are selling physical oil at xyz prices above Brent. As soon as the paper market realises there is a physical shortage, the price will explode. I think the catalyst will be the shale patch rolling over, as that is what is giving the illusion of supply. So it may well be that that drives it toward 300. I'm not really bothered, other than trying to catch bargains, I'm investing for the decade ahead.

 

David's job would be to simply look at the macro picture and then plonk that in front of the other guys in the team.They would then look at what to buy and when based on the figures.He wouldnt have anything to do with what they did with the road map,only the road map itself.In affect they would look at a picture like that and start to buy the sector and probably assume something like last buys if oil hit $15 in the paper market.The trading would be set up to take as much advantage of the upside while respecting Davids macro work on the downside.

My friend told me these reports used to go to the stock pickers and their managers back in the 70s/80s and they would use them to then get their strategy and the stocks they wanted in order.Now he says the report would sit gathering dust.Momentum,algos etc and narrative have taken over.

I see $43 oil,maybe sub $20 in the paper market in a bust,but likely very short term.The longer term upside is huge from where we are already.Contrarians should be already building positions as every $ off is a $ more away from the $200+ its going to later.

As i always say,the crucial thing to remember is the market hurts as many people as possible.In this instance that likely means everyone positions for oil to die and electric batteries to win,only for that to prove false.

I think your right that when oil does turn it will be quick,and then sustained for the whole cycle.

[Loki]

Crude nudged back to 51 dollars

[BadAlchemy]

BP has bounced up to 4.72 from yesterdays close of 4.52. And I set some ladders only this morning to buy some more but at prices lower than yesterday's close  

I think I will wait then. Without ladders I would probably be panicking and diving in right now.. so it is probably the most useful lesson I have taken from this forum so far. Cheers and good luck!

[Democorruptcy]

2 hours ago, Loki said:

Crude nudged back to 51 dollars

There's talk of production cuts to support the price. Dropping below $50 yesterday was probably the trigger for it.

[Loki]

11 minutes ago, Democorruptcy said:

There's talk of production cuts to support the price. Dropping below $50 yesterday was probably the trigger for it.

I see, which would explain why the oil cos will then go down even as the price of crude goes up. Thanks! Probably with a lag factor though? 

[Democorruptcy]

2 minutes ago, Loki said:

I see, which would explain why the oil cos will then go down even as the price of crude goes up. Thanks! Probably with a lag factor though? 

I'm not saying oil company prices will go down as the price of crude goes up. When DB set his roadmap at $43 as I've read a lot of companies suggest $50 is still a profitable price to operate at, I did wonder if it would get that low unless we had a big kahuna. Hence my post yesterday about RDSB v the oil price. With oil dropping below $50 we should have been able to pick RDSB up much cheaper! 

[headrow]

1 hour ago, BadAlchemy said:

BP has bounced up to 4.72 from yesterdays close of 4.52. And I set some ladders only this morning to buy some more but at prices lower than yesterday's close  

I think I will wait then. Without ladders I would probably be panicking and diving in right now.. so it is probably the most useful lesson I have taken from this forum so far. Cheers and good luck!

BP announced they were raising their dividend by 2.5% this morning too. 

[JMD]

3 hours ago, DurhamBorn said:

Seeing all the usual talk, its worth $3trillion because its not a car company etc etc The same talk that telcos werent telcos etc during the last tech boom

DB, re Tesla, I agree, I have been looking at EV tech recently and Panasonic supply and do lot r&d for Tesla. Anyway Panasonic is on my list for after market goes pop and if they go really cheap. 

[Barnsey]

Nuff said...

 

[Starsend]

Jeepers, Schlumberger down 25%

Buy buy buy!

[Loki]

18 minutes ago, Starsend said:

Jeepers, Schlumberger down 25%

Buy buy buy!

Tempted!

[DurhamBorn]

38 minutes ago, Starsend said:

Jeepers, Schlumberger down 25%

Buy buy buy!

They are up over 3%.I would guess you are looking at the fake London quote you get on Google.

[Loki]

6 minutes ago, DurhamBorn said:

They are up over 3%.I would guess you are looking at the fake London quote you get on Google.

The 3 month chart shows a drop of about 25%, I guess that's what Starsend was looking at

Might be a good one for you and the other clever ones to demonstrate how you run the numbers on a stock though

Please? 

I found this article about them

https://www.energyvoice.com/oilandgas/218855/schlumberger-posts-10-1-billion-loss-in-2019/

BP recovered after the Gulf of Mexico incident, I wonder if this will do the same

[DurhamBorn]

Just now, Loki said:

The 3 month chart shows a drop of about 25%, I guess that's what Starsend was looking at

Might be a good one for you and the other clever ones to demonstrate how you run the numbers on a stock though

Please? 

I dont run numbers much on a stock,i do macro work on the sector then simply select a few i think might be trading the most under fair value.I found that approach suits me better.Harley does a lot of technical work on them and SP runs scores across sectors on debt/cash flow etc.

[Loki]

1 minute ago, DurhamBorn said:

then simply select a few i think might be trading the most under fair value

Yes that's what I meant - what sort of criteria do you apply, do you pay attention to past performance of that share or just trust in the cyclical macro pattern? Etc.  I can't even think of all the questions I want to ask 

[DurhamBorn]

5 minutes ago, Loki said:

Yes that's what I meant - what sort of criteria do you apply, do you pay attention to past performance of that share or just trust in the cyclical macro pattern? Etc.  I can't even think of all the questions I want to ask 

I start with the macro picture,then i want contrarian picks,companies that are hated usaually,but ones that are big enough to turn around,or come back into fashion as the cycle turns.The main thing to remember is focus on what the assets are worth,not the income/profit.Profit can swing due to input costs moves etc,but assets will catch up over time.

[Loki]

20 minutes ago, DurhamBorn said:

I start with the macro picture,then i want contrarian picks,companies that are hated usaually,but ones that are big enough to turn around,or come back into fashion as the cycle turns.The main thing to remember is focus on what the assets are worth,not the income/profit.Profit can swing due to input costs moves etc,but assets will catch up over time.

A jewel of info there thanks!

[Starsend]

46 minutes ago, DurhamBorn said:

They are up over 3%.I would guess you are looking at the fake London quote you get on Google.

Must have been a glitch of some sort, was showing 25% down today but now showing 3% up.

[Majorpain]

https://en.yna.co.kr/view/AEN20200204002651320

Whilst im aware that companies run light on part stock, it appears some run lighter than others!  First domino has fallen.

[Agent ZigZag]

1 hour ago, DurhamBorn said:

I start with the macro picture,then i want contrarian picks,companies that are hated usaually,but ones that are big enough to turn around,or come back into fashion as the cycle turns.The main thing to remember is focus on what the assets are worth,not the income/profit.Profit can swing due to input costs moves etc,but assets will catch up over time.

I also think we are in a cycle were stocks and shares with the general public are going to come back into vogue. I consider a lot of private wealth will be migrating to shares as its a more liquid market over housing. Time will tell of course.

[Agent ZigZag]

I am waiting for the first seminars to start up with slick salesmen in how to leverage up and get rich in mining shares