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

[Harley]

9 minutes ago, sancho panza said:

As part of my work I've learned the art and indeed value of calm reflection

Indeed.  The problem with selling is you have to get back in again and that can be even more fretful.  I prefer a little short hedge instead if desperate, mostly to lose money to show me these things are just too volatile to reliably deal with!  I've rarely done well doing an "out and back in" but I've done just fine buying and holding PMs over many years.  My bit of wealth went down (relatively to what it was) a lot when we had a slump in PMs but I didn't need the money right then, had the time, and things went back up in the end.  I could have made more getting out and back in again but I would be severely kidding myself if I thought I would have got that timing right.

[Harley]

28 minutes ago, onlyme said:

Hydrogen is going to be cumbersome to pipe / ship around, embrittlement is a persistent problem and you are looking at another step in the generation cycle - generate the electricity, electrolysis to create the hydrogen, then compress, chill  and liquify it to thanker it, or pump it raw and then do the same. So much easier just to shunt the current down the transmission lines.

Don't you need an intermediate media to buffer imbalances between (renewable based) supply and (electricity) demand?  Also something that can be piped to where it is used to generate electricity (e.g. DRAX) from where it is produced (e.g. solar farm).  Hydrogen could meet this roll (as could hydro)?

[sancho panza]

11 hours ago, confused said:

I remember talking to some Halifax employees in 2007, they had 'invested' in their beloved employee at circa £12/share and the management kept telling them it was a no brainer!

Then the shares dropped to 40p.......RBS dropped to 5p......

Anyway it appears a lot of you guys like a good fight with 'Mr Market'??? I learnt a long time ago it's not good to fight with him 

The ECB and the Central Bank of Japan already have negative interest rates, so you're putting your faith in the FED? and that 'small player' the BOE? I know it worked in 2008 but this time it might be different!!??

Who remembers what Woodrow Wilson said about the FED shortly after it was created???

@Tdog and anyone else who thinks covid19 is 'just the flu' aren't you worried about this graph?

And @Chewing Grass reckons the cases in South Korea are increasing at nearly 50%/day for the last 12 days....I've asked him for a mortality rate....data, need more data, lol

EDIT: update from chewing grass, he reckons the mortality rate is 4% and Dave down the pub says he's a bit of a clever bastard 

Right enough of this banter, I'm off out to 'have some fun' before it's too late!!! Failing that I might just ride my bike 

 

World ometer says 87,000 infections thus far worldwide.

for context wuhan is a cit with 11mn people in it.Most of whom were happily intermingling with each other for a few weeks while the head sheds in Beijing were fiddling away.So thus far even if all 87k infections were in wuhan that 0.009% of the population of wuhan.

I'm sorry that people have died but as @Tdog says, ebola this ain't.

Without getting dull,you need to consider mortality rates agaisnt pre existing comorbidities and more particularly the fact that a proportion of those who've died might have passed away anyway.

People die every day for a raft of reasons,most natural some not.

For context lets consdier road deaths in China,points conceded on collation but more likely to be understated particualrly in rural provinces with poor comms/police/mabulance services

In 2018 Wiki states 256,000 road traffic deaths in China.

https://en.wikipedia.org/wiki/List_of_countries_by_traffic-related_death_rate

Full list here.

https://www.worldometers.info/coronavirus/

https://en.wikipedia.org/wiki/List_of_countries_by_traffic-related_death_rate

[sancho panza]

15 minutes ago, Harley said:

Indeed.  The problem with selling is you have to get back in again and that can be even more fretful.  I prefer a little short hedge instead if desperate, mostly to lose money to show me these things are just too volatile to reliably deal with!  I've rarely done well doing an "out and back in" but I've done just fine buying and holding PMs over many years.  My bit of wealth went down (relatively to what it was) a lot when we had a slump in PMs but I didn't need the money right then, had the time, and things went back up in the end.  I could have made more getting out and back in again but I would be severely kidding myself if I thought I would have got that timing right.

Absolutely.Getting back into positons that run away on you is hard.I know myself and I know I pronbly wouldnt.

[onlyme]

6 minutes ago, Harley said:

Don't you need an intermediate media to buffer imbalances between (renewable based) supply and (electricity) demand?  Also something that can be piped to where it is used to generate electricity (e.g. DRAX) from where it is produced (e.g. solar farm).  Hydrogen could meet this roll (as could hydro)?

Outside of peak demand you do. Could use charging points themselves - not just a charger linked to to the grid but one which contains offline storage bank, charges up during off peak times and then gives off that power augmenting the grid supplied power to provide rapid charging - helps to reduce the requirement for larger feeds from the grid to charging sites too. Also the cars themselves are effectively providing the load dump during off peak, it would be economical for the car owner to charge overnight off peak and also good for load balancing. Nissan I think were even looking to use the car's onboard battery as a combined power dump/source for the associated house supply - now this wouldn't be good use of an expensive battery that degraded significantly but would work well if the battery were significantly cheaper and did not degrade much as a result. All comes down to the battery tech really, all the rest of it apart from the generating side is fairly trivial and known science/engineering. Pumped hydro is reasonably efficient so could work as well - maybe in association with maintaining water supply as pumping costs are a main cost in the water industry, kill two birds with one stone maybe. 

[sancho panza]

On 28/02/2020 at 18:59, BearyBear said:

None. I’d rather wait for Gold to hit the ground first ($1000?) but it’s up to you. And I consider myself the biggest Gold Bug here   but I no longer see my $1800 target. It’s over guys.
btw. Anyone who buys any shares now is very brave, I’d sit on cash.

Of course I can be wrong and this is just my opinion.

 

 

11 hours ago, Errol said:

I must be immune to being shocked. I guess it's as a result of holding gold since 2000.

In any event gold is still up 20% this year in dollars. And still at near record highs in GBP, Euro etc etc. I'm not sure what all the so-called panic is about. It would have to fall hundreds of dollars in a few days for me to really wake up (say from $1600 to below $1300 in two days).

Gold/silver shares are very interesting now and I will buying more next week. Also looking at Freeport for copper exposure.

My name is sancho panza,for many years I was swimming in a river in Egypt.Then in 2017 I finall realsied Errol,Goldfinger,CGNAO etc had a valid point

[Harley]

The trouble with wind power is the wind blows when it wants to.  The trouble with solar farms in Wales is sheep spend 90% of their time trying to kill themselves so will be forever pulling the plugs out!

[sancho panza]

9 hours ago, Ash4781b said:

Posted in the wrong thread but Intu Plc looks doomed. They Needed an equity capital injection prior to the malaise. Now the risk could also ramp up on their tenant side obliterating cashflows. They’ll be unlikely to firesale assets only at steep discounts. Only grace might be the lenders don’t want to take control in this environment.

I think CRE is going to crimp a lot of bank balance sheets moving forward.Youve been mentioning Intu for a couple of years iirc Ash and this looks like th end of the road to me.I personally cant believe how quickly the profitability is leaving the retial sector.

A lot of thes shopping centers cant even get shops filled with free rent.

[sancho panza]

Some from pamplona trader particualrly ref energy and copper.Looks like I'll be rebuying our FCX soon

[Innkeeper]

1 hour ago, onlyme said:

Wouldn't frame it as Tesla vs Hydrogen (or oil co's), Tesla (together with most car manufacturers) are obviously keen on the model revolving around the distribution of electricity and oil companies are used to shifting a physical product in tanks and have their eggs in that model

If you go back to the very beginning of cars as transport it was a close run thing between electric and gas, far closer than history would lead anyone to believe, it was only cheap and plentiful oil supply that allowed the ICE engine car to dominate. The likes of Shell certainly don't want to be squeezed out but there's a hell of a battle ahead for them.

Electricity distribution is well proven tech and is cheap, not that difficult to expand either - for a start the system is only running at peak load a small part of the day, you could up the utilisation factor and much around a lot more energy overnight and during the other non peak periods, you'd need cheap storage though.

Which gets to the batteries, they are improving in single digit percentages every year. Moreover the tech around them is beginning to mature - how to warm/coll those batteries to get the maximum lifetime out of them - life of car is the goal. life of drivetrain which is already 100,00's miles (or should be as very simple mechanics and tech really) - this wold also apply to fuel cell driven cars as the motors would be the same. There is so much money going into battery tech and so many different avenues to remove the most expensive elements used in them or new solid state type batteries that sooner or later it is most lily there will be a step change in price/supply and this will tilt the market so heavily in favour of all electric - from the point of generation to the local storage/charging point/car/home that I think it will be a slam dunk that hydrogen will really struggle to compete against.

Hydrogen is going to be cumbersome to pipe / ship around, embrittlement is a persistent problem and you are looking at another step in the generation cycle - generate the electricity, electrolysis to create the hydrogen, then compress, chill  and liquify it to thanker it, or pump it raw and then do the same. So much easier just to shunt the current down the transmission lines.

Electric may be the answer for personal transport but moving the commercial fleet off fossil fuels is never discussed and remains unanswered.  Hydrogen provides a potential solution so I see both electric and hydrogen in the future servicing separate sectors.

[Wheeler]

57 minutes ago, onlyme said:

A repeat of an earlier battle. Henry Ford's wife didn't drive a Ford (model T) , she didn't  like it!  She drove a Detroit Electric.

 

I'd prefer a Stanley Steamer.

[sancho panza]

15 hours ago, Majorpain said:

This will be what makes pumping more QE a difficult decision, Lack of goods + Money printing = inflation.

Obviously government spending at infrastructure etc. is less of an issue, targeting consumer spending is a big no no when there are less goods to buy.

This post been playing on my mind for the last 24 hrs.Whislt I;ve always beena confiremd debt deflationista,I've been relatively agnostic on price inflation.

I'm struggling to see how this corona virus wont end up causing price inflation.bringing production back onshore/money printing/commodiy price drops creating supply side poressue with the lag etc etc.....

All the money now is one a fed cut in march.Possibly start of the weka dllar pahse.

[onlyme]

7 minutes ago, Innkeeper said:

Electric may be the answer for personal transport but moving the commercial fleet off fossil fuels is never discussed and remains unanswered.  Hydrogen provides a potential solution so I see both electric and hydrogen in the future servicing separate sectors.

Can't see batteries being big enough for a good while for  a day's haulage (or even long distance), rapid charging is the solution - maybe at the distributions centres, already pretty major jumps in charging rates and reduction in time to full/high percentage charge, improvements should go in lock step with the battery tech as both aspects are intertwined somewhat in the tech. Heat one killer for batteries which is why low charge rates were common in early cars, supplemental temperature control (heating and cooling circuits) mediate this a lot but what it really requires is battery tech that does not have that inherent problem (or much less so).

[Wheeler]

4 minutes ago, sancho panza said:

This post been playing on my mind for the last 24 hrs.Whislt I;ve always beena confiremd debt deflationista,I've been relatively agnostic on price inflation.

I'm struggling to see how this corona virus wont end up causing price inflation.bringing production back onshore/money printing/commodiy price drops creating supply side poressue with the lag etc etc.....

All the money now is one a fed cut in march.Possibly start of the weka dllar pahse.

I've been thinking about the same issues as well.

The shutdown in China will hit the supply of goods, but with a bit of a lag - a month for the ships to get here? Whereas an increase in the public perception of the covid-19 pandemic will impact the demand.

Clearly if the supply crunch hits before or harder than the drop in demand then we'll get price inflation. Trying to boost demand in this case by interest rates cuts or helicopter money will increase the price inflation effect. 

If demand falls then I think they will try boost it by increasing the currency supply but it won't work because people would be worried that things will get worse and so will save the extra to give themselves a bit of a cushion. It will be when the CV clears and people think things are picking up again that the extra currency will enter the economy and price inflation will take off.

Price inflation either way I think. Either quickly or slowly, and then quickly!

 

[DurhamBorn]

10 hours ago, onlyme said:

Wouldn't frame it as Tesla vs Hydrogen (or oil co's), Tesla (together with most car manufacturers) are obviously keen on the model revolving around the distribution of electricity and oil companies are used to shifting a physical product in tanks and have their eggs in that model

If you go back to the very beginning of cars as transport it was a close run thing between electric and gas, far closer than history would lead anyone to believe, it was only cheap and plentiful oil supply that allowed the ICE engine car to dominate. The likes of Shell certainly don't want to be squeezed out but there's a hell of a battle ahead for them.

Electricity distribution is well proven tech and is cheap, not that difficult to expand either - for a start the system is only running at peak load a small part of the day, you could up the utilisation factor and much around a lot more energy overnight and during the other non peak periods, you'd need cheap storage though.

Which gets to the batteries, they are improving in single digit percentages every year. Moreover the tech around them is beginning to mature - how to warm/coll those batteries to get the maximum lifetime out of them - life of car is the goal. life of drivetrain which is already 100,00's miles (or should be as very simple mechanics and tech really) - this wold also apply to fuel cell driven cars as the motors would be the same. There is so much money going into battery tech and so many different avenues to remove the most expensive elements used in them or new solid state type batteries that sooner or later it is most lily there will be a step change in price/supply and this will tilt the market so heavily in favour of all electric - from the point of generation to the local storage/charging point/car/home that I think it will be a slam dunk that hydrogen will really struggle to compete against.

Hydrogen is going to be cumbersome to pipe / ship around, embrittlement is a persistent problem and you are looking at another step in the generation cycle - generate the electricity, electrolysis to create the hydrogen, then compress, chill  and liquify it to thanker it, or pump it raw and then do the same. So much easier just to shunt the current down the transmission lines.

Very interesting,we like to hear all these different angles as we see the cycle unfold.I think a lot of what might happen will be driven by what capital there is.The next cycle looks like the oil companies will have more of it than any industry outside of the smaller PM sector.I can say 100% though if i had been chief exec at Shell or BP i would of launched a bid for SSE when they were below £11.If i was SSE or Equinor id be launching a bid for Drax.Hydrogen might start off being added 20% to the gas network,and of course in transport it will be buses and trucks.

[M S E Refugee]

Any guesses to how the markets will react on Monday?

More low information voters have been spoon fed coronavirus news over the weekend and those amongst them who only have a cursory interest in their stocks and shares ISA could start selling up.

[DurhamBorn]

9 hours ago, Innkeeper said:

Electric may be the answer for personal transport but moving the commercial fleet off fossil fuels is never discussed and remains unanswered.  Hydrogen provides a potential solution so I see both electric and hydrogen in the future servicing separate sectors.

We were buying up lots of hydrogen tech (Cummins) and our engineers were working on it in big numbers.Our engines wouldnt take much to go all hydrogen.

https://www.cummins.com/news/releases/2019/09/09/cummins-closes-its-acquisition-hydrogenics

[DurhamBorn]

3 minutes ago, M S E Refugee said:

Any guesses to how the markets will react on Monday?

More low information voters have been spoon fed coronavirus news over the weekend and those amongst them who only have a cursory interest in their stocks and shares ISA could start selling up.

I noticed on a few forums people being very scared that their pensions had fallen,especially the ones in draw down.You would think most would have 3 years money in cash so they can stop taking money out,but maybe not.They have been spoon fed it will increase 5% a year after costs in a 40/60 fund.

[M S E Refugee]

11 minutes ago, DurhamBorn said:

I noticed on a few forums people being very scared that their pensions had fallen,especially the ones in draw down.You would think most would have 3 years money in cash so they can stop taking money out,but maybe not.They have been spoon fed it will increase 5% a year after costs in a 40/60 fund.

3 weeks ago I told a good friend of mine that I was selling all of my investments because I was concerned about the Coronavirus.

I knew that he had a significant amount in his Halifax Stocks&Shares ISA and he has only ever seen it rise in value,this is the type of investor that I could soon see scrambling for the exit.

[Transistor Man]

13 minutes ago, DurhamBorn said:

We were buying up lots of hydrogen tech (Cummins) and our engineers were working on it in big numbers.Our engines wouldnt take much to go all hydrogen.

https://www.cummins.com/news/releases/2019/09/09/cummins-closes-its-acquisition-hydrogenics

Reading around,  it looks like Cummins are interested in the fuel cell approach, not hydrogen internal combustion engine.

[Majorpain]

9 hours ago, Cattle Prod said:

 

I don't think QE will be a difficult decision at all, because they want and need inflation. It's the only solution to the debt. In fact, I think they must be delighted to finally have cover to do it.

Your right, but it how you get to wiping out the debt with inflation which is the hard bit.

Slow and steady ramping up is much more desirable than CPI going to 10% in 2020.  Bonds would blow up for a start, along with everyone's pensions.....

[onlyme]

46 minutes ago, DurhamBorn said:

Very interesting,we like to hear all these different angles as we see the cycle unfold.I think a lot of what might happen will be driven by what capital there is.The next cycle looks like the oil companies will have more of it than any industry outside of the smaller PM sector.I can say 100% though if i had been chief exec at Shell or BP i would of launched a bid for SSE when they were below £11.If i was SSE or Equinor id be launching a bid for Drax.Hydrogen might start off being added 20% to the gas network,and of course in transport it will be buses and trucks.

Yes, it is only the hydrogen part and how significant part this could play is where i'm unsure of the competitive benefits. Energy companies more diversified for sure. Total seems to be dipping their toe in quite considerably into offshore and onshore (smaller scale) wind. Bp Solar were one of the big players in solar until the market was undercut by Chinese panels at a fraction of the price. The energy companies with their existing forecourt infrastructure are well placed to provide the charing infrastructure - if you could get down to 10 minute or less charging for a decent top up then the station visit would hardly be any longer than currently, you could use the parking spaces even for that rather than the drive through bays.  Hydrogen into the gas pipes - didn't realise that they could get round some the embrittlement issues - seems like they can, https://www.theengineer.co.uk/converting-the-gas-network-to-hydrogen/, so certainly more mileage in that than I originally thought. Sectors like farming I'm assuming are going to be totally dominated by diesel for decades, large construction equipment too (unless static), mining etc. One aspect of say transport and haulage that might increase the conversion rate (either EV or fuel cell ) is the link with automated driving - distribution centre to distribution centre the possibility of lorry trains running along main highway routes could offset the significant cost of rig replacement - multiple drivers down to one and very cheap running costs due to slipstreaming the following rigs could make a big impact.

Might start an investment thread gif anybody interested to put some the information coming from this sector - a lot are tiddlers and risky but reckon there should be a few diamonds in the rough, Maxwell Technologies got snaffled up by Tesla, they are leaders in the Ultracapacitor market,  the problem is the volume of new info and the majority just releasing lab/university early research result.

[onlyme]

40 minutes ago, Transistor Man said:

Reading around,  it looks like Cummins are interested in the fuel cell approach, not hydrogen internal combustion engine.

An electric drivetrain is so simple and robust in comparison, most cases there will be a transmission but for the the motor itself you are replacing an engine with maybe hundreds of static/moving parts with one rotating assembly.  The model S drivetrain is supposedly designed for a million mile life. Apparently Model 3 as well. An IC engine is running in a bath of contaminents and combustion byproducts, nasty environment to try and seek out a long product life, not so with a electric motor. (Warranty is much less though, 8 years/100K).

https://www.thedrive.com/news/24242/tesla-shows-off-model-3-drive-unit-after-one-million-miles-of-driving

[Hardhat]

12 minutes ago, onlyme said:

Might start an investment thread gif anybody interested to put some the information coming from this sector

Good idea

[dgul]

1 hour ago, M S E Refugee said:

Any guesses to how the markets will react on Monday?

More low information voters have been spoon fed coronavirus news over the weekend and those amongst them who only have a cursory interest in their stocks and shares ISA could start selling up.

It is very dependent on when announcements are made, and from whom.

If they suggest more QE then it'll be an interesting tug-of-war between fear and FOMO.