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


spunko

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Transistor Man
11 hours ago, Cattle Prod said:

Possibly a dumb question that has been answered, why is nuclear the problem with Centrica? I'm very bullish nuclear from here on, it will be essential base load for any green economy. Is it the quality (or lack of ) their nuclear assets? Shame if they know how to run nuclear reactors and lose those skills, they will be needed. I wish the technology would move on though, it's still stuck in Cold War mentality with weapons material as a by product. I was very interested in the small scale reactors BAE proposed, govt seemed uninterested.

I’ve worked on small modular reactor studies - not for long - but I was part of a  European project called Europairs. 

We were looking at the capabilities of the Gen IV (HTR) high temp reactor to supply heat to industrial processes, as well as the production of electricity. 

(Small modular high temp reactors are not a new idea in the UK - see Dragon, operational in 1965.)

The little work I did left me not very hopeful in the technology. And I returned to semiconductor research.

For various reasons, but the main on being - for every use-case We considered, I thought: “they’d be better off burning natural gas”. 

In addition, around the same time More information came out about the experience of running a pebble-bed reactor in Julich Germany in the 70s/ 80s.

I don’t think it was BAE with the small modular reactor proposal, I think it was Rolls Royce. So this would be an mini- PWR.... a submarine reactor .... well it’s my understand those use highly enriched fuel. 

I like nuclear for base load using large PWR plant, as we are trying to get built in the UK.

Reluctantly, I think something like the CEGB should be doing it though. Borrowing the money and Commissioning the build is something the State can do better.

 

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sancho panza
7 hours ago, JMD said:

SP, I written here I have been critical our lack of virus testing since start of its outbreak here. Actually, I find how virus's spread fascinating. I do respect your professional insight into these things but some thoughts occur to me... especially in regard to the impact of virus's in relation to different societies/cultures... 

Aren't there other differences between the UK and those countries you mention - proximity to China meant that those countries probably mistrust and knew China was underreporting the virus threat (whereas we in the West were debating whether this was/wasn't even a pandemic); an adherence to rules, so although no government lock-down, they operate in a culture that is/was already in many ways already self-isolating; and perhaps most crucial of all - more cleanliness, and an everyday use of face masks. i.e. I notice today that there are reports that face masks may be at least as protective against the virus as the obeyance of performing social distancing rules.

 

However, ultimately for me 'closing-down' the economy, lock-downs, etc, are a massive over reaction. I would have preferred a very focused isolation of the old, ill/vulnerable, along with proper support including extra hospital beds, etc. Couldn't the achievement of 'herd immunity' and 'flattening the curve' been equally as successful by using these measures?  

Too be honest I have become very uneasy about why government's have rushed to implement such policies. I'm not into conspiracies (and please don't have nightmares!) but I shall pose the question: Have we just witnessed a 'power grab' of the economy by the authorities?

For example, the recent Radio4 interview with Lord Sumption, a former justice of the supreme court, is rather sobering...full interview link and transcript extract below... https://www.bbc.co.uk/sounds/play/m000gt59

 

I don't think it's cultural but rather the way they managed the crisis in a much more sensible manner.It's really that simple.I've travelled there when I was younger,they socialise as much in those countries as here.I think 95% ofhumans are sensible and woukd self isolate if they knew they were positive.

Thanks for that Lord Sumption stuff,I very much agree with it.Duly forwarded on to friends and family.

I would agree that it's been a massive over reaction.Time will tell how much of one.

I'm not nromally into conspiracy theories but there are things going on here that don't add up to me.

Ref face masks,it depends on the grade of them as to whether they work  and how long for.Most are ineffective but for dust.

10 hours ago, Loki said:

All my RDSB was bought under 1350 but above 1000.  Bit of luck, bit of judgement from this thread

My pot is nothing compared to the sums I've seen here but a now have a clearer plan after pretty much drifting financially my whole life. Not a spending junky at all but never had a clear aim.

Nice work.Well done.

It's not the size ofthe pot but that it matters enough to you that you nurture it and cherish the freedom it might help bring.

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sancho panza
45 minutes ago, Transistor Man said:

I’ve worked on small modular reactor studies - not for long - but I was part of a  European project called Europairs. 

We were looking at the capabilities of the Gen IV (HTR) high temp reactor to supply heat to industrial processes, as well as the production of electricity. 

(Small modular high temp reactors are not a new idea in the UK - see Dragon, operational in 1965.)

The little work I did left me not very hopeful in the technology. And I returned to semiconductor research.

For various reasons, but the main on being - for every use-case We considered, I thought: “they’d be better off burning natural gas”. 

In addition, around the same time More information came out about the experience of running a pebble-bed reactor in Julich Germany in the 70s/ 80s.

I don’t think it was BAE with the small modular reactor proposal, I think it was Rolls Royce. So this would be an mini- PWR.... a submarine reactor .... well it’s my understand those use highly enriched fuel. 

I like nuclear for base load using large PWR plant, as we are trying to get built in the UK.

Reluctantly, I think something like the CEGB should be doing it though. Borrowing the money and Commissioning the build is something the State can do better.

 

Every now and then such as with sillby billy or CP,this thread throws up some absolute gems of insider knwoledge.I feel like a pleb looking at a Dutch Master painting,dont really understand it  but still see it's magnificenceB|

I got eh bit about burning gas............submarines and rolls royce.

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13 hours ago, sancho panza said:

Ref lock down.I agree they will double down because they won't admit they've messed up taking a lead from China rather than South Korea.It very much depends if your force is run by Cressida Dick/Neil Basu or the wannabe Stasi in other parts of the country as to whether the new laws are imposed reasonably.They really need to regionalise the Police imho.

As I've said variously,test,then quarantine works and the public will approve and support it because they see a valid reason for being quarantined.Quarantining then testing selected individuals only alienates people over the medium term.

Our govt has basically quarantined people who are likely 98% healthy.Insane.Ruined businesses,held back kids educations,caused domestic distress and stress etc etc.

I heard today and would welcome anyone confirming that the govt 80% plan revolves around businesses paying the 80% then claiming back off the govt.Is that for real?

Lot of growing dissent in Germany at Angela's policy as it virtually gurantees a deep recession.

I got my first 80% last Friday so assume it came from my company initially.

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Transistor Man
11 minutes ago, sancho panza said:

Every now and then such as with sillby billy or CP,this thread throws up some absolute gems of insider knwoledge.I feel like a pleb looking at a Dutch Master painting,dont really understand it  but still see it's magnificenceB|

I got eh bit about burning gas............submarines and rolls royce.

I didn’t really do much in my brief time in Nuclear, but I have a good understanding of the subject. I was hired for some materials knowledge I had. But it didn’t work out. Fortunately, my old job took me back. 

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sancho panza
17 minutes ago, Transistor Man said:

I didn’t really do much in my brief time in Nuclear, but I have a good understanding of the subject. I was hired for some materials knowledge I had. But it didn’t work out. Fortunately, my old job took me back. 

Do you think nuclear has a big future? If so,is it along the lines CP was alluding about smaller reactors?Or is it the big old ones still?

 

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Transistor Man
6 minutes ago, sancho panza said:

Do you think nuclear has a big future? If so,is it along the lines CP was alluding about smaller reactors?Or is it the big old ones still?

 

It could and should have a big future. For the next 50 years, it should be the big old ones. By that, I mean conventional PWR.

Like Sizewell B.

it was a real shame that the follow-on reactors after Sizewell B were never built.

Sizewell B was built on time, on budget, and the performance over the past 25 years has been excellent. 

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reformed nice guy

More debt deflation? "NHS to benefit from £13.4 billion debt write-off. Health Secretary announces over £13 billion of debt will be written off as part of a major financial reset for NHS providers."

https://www.gov.uk/government/news/nhs-to-benefit-from-13-4-billion-debt-write-off

At the bottom it says "The debt will be effectively written off by converting the loans to equity (Public Dividend Capital)." I looked up "Public Dividend Capital" and it says:

" Public dividend capital (PDC) represents the Department of Health’s (DH’s) equity interest in defined public assets across the NHS. The DH is required to make a return on its net assets, including the assets of NHS trusts, of 3.5%."

@DurhamBorn would this be an example of the monetization that you have previously mentioned? 3.5% of £13.4 billion, which appears to be perpetual, seems like something that would be flogged.

 

 

 

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sancho panza

SHaun RIchards

https://notayesmanseconomics.wordpress.com/2020/04/02/the-spectre-of-mass-unemployment-is-starting-to-haunt-us/

The spectre of mass unemployment is starting to haunt us

Posted on April 2, 2020

Today’s topic is one that I hoped never to have to write. If we look back to the last century then mass unemployment scarred the economic landscape on several occasions and particularly so in the Great Depression. The credit crunch era initially brought higher unemployment but fortunately we managed to reduce that over time. Indeed from around 2013 we saw considerable improvements on that front in mnay countries. The leader of the pack in this regard has been Japan where the unemployment rate has fallen as low as 2.2%. The UK and US saw strong improvements too with the unemployment rate falling below 4%. More latterly the Euro area has seen unemployment fall too although its progress has been slower leading to its unemployment rate being more like 7%

That was the good news section of the labour market as employment rose and unemployment fell. Although there always was the issue of under employment as a cloud in the sky as we wondered what jobs were being taken and how employment is defined? The waters also had something of a shark in them as the strong quantity numbers were accompanied by at best weak real wage growth something my country the UK has been particularly affected by. Especially troubling is the way the establishment has responded which is to impose poorer measures of inflation  ( the Imputed Rent driven CPIH ) to flatter the figures and mislead the unwary. Along the way the economic Ivory Towers had plenty of troubles too as the unemployment rate fell below their definitions of “full employment ” and made their “output gap” theories crumble. I am sure many of you still remember when Governor Carney of the Bank of England signposted a 7% unemployment rate as significant before exhibiting the sort of behaviour that led to him being called the “Unreliable Boyfriend ”

The US

Last week this provided something of a forerunner of what we can now expect.As Politico points out below even that shock may have been an understatement.

Last week’s headline number of 3.28 million claims — itself a more than 1,000 percent increase — is also expected to be revised upward, in part because of stark discrepancies between data that states reported at the ground level and what the Department of Labor recorded.

Florida’s initial claims hit a record for the week ended March 21, and then tripled to 222,054 for the week ended March 28, according to the state Department of Economic Opportunity.Florida’s initial claims hit a record for the week ended March 21, and then tripled to 222,054 for the week ended March 28, according to the state Department of Economic Opportunity…..Florida’s initial claims hit a record for the week ended March 21, and then tripled to 222,054 for the week ended March 28, according to the state Department of Economic Opportunity.

So as you can see the situation in the United States looks as though it may be even worse than we feared even last week. The old saying that a week is a long time in politics is being outdone by economics at the moment.

The UK

Yesterday brought a moment to the UK which we had feared was about to arrive.

Nearly a million people have successfully applied for universal credit in the last fortnight, in a rush to welfare support that reveals the depth of the jobs crisis caused by the UK’s lockdown.

Despite the government’s job support schemes offering 80% of earnings to employees and the self-employed who cannot work, 950,000 people applied for the main income support benefit between 16 and 31 March. There are normally about 100,000 applicants for the benefit in any given two-week period.

Applications started flooding in as soon as Boris Johnson told the nation to stop non-essential contact with others and cease all unnecessary travel. ( The Guardian)

Care is needed here as these are social security payments rather than a labour force measure or indeed a claimant count but we do get a very string hint from the data here.Out of it there is at least a small positive.

The DWP said it had moved more than 10,000 staff to deal with claims and was recruiting more.

The numbers above compare to a situation only a couple of weeks ago when we were told this by our official statisticians.

For November 2019 to January 2020, an estimated 1.34 million people were unemployed. This is 5,000 more than a year earlier but 515,000 fewer than five years earlier. The small increase on the year is the first annual increase in unemployment since May to July 2012, and it was caused by a 20,000 increase for men.

Sadly we seem set to go through 2 million fairly quickly and maybe 3 million. However the numbers will need some interpreting because it looks as though those who are “furloughed” will continue to be counted as in employment. Personally I think it would be better if a new category was created.

Let me welcome the effort by the Office of National Statistics to produce some new data although sadly even the new weekly measures are of course now well behind the times.

Over a quarter (27%) of responding businesses said they were reducing staff levels in the short term in the period 9 March to 22 March 2020, while 5% reported that they were recruiting staff in the short term.

Spain

This mornings news from Spain was grim too.

MADRID (Reuters) – The rise in Spanish jobless numbers in March is the highest monthly increase ever recorded, Labour Minister Yolanda Diaz said at a news conference on Thursday.

The number of jobless jumped 9.3% from the previous month bringing the total number of unemployed people to around 3.5 million. That total number was still below record highs of 2013.

The recent better phase of economic growth for Spain had played its part in bringing unemployment down from a bit over 5 million to just over 3 million last summer. But sadly the mood music had changed and is now dark.

Comment

This is a grim phase with echoes of the 1920s and 30s. I fear for the unemployment numbers that will come from Italy which had its own economic problems ( the essentially 0% economic growth of our “Good Italy: Bad Italy” theme ) before the pandemic started. Some yesterday were promoting this as good news.

The unemployment rate slightly decreased to 9.7% (-0.1 percentage points) while the youth rate stayed stable to 29.6%.

Sadly they did not seem to have read this bit.

This press release is referred to February 2020, therefore it is related to the pre-COVID-19 health emergency phase.

Italy and many other countries are about to see a tsunami of unemployment and our best hope is that it will be brief.

 

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7 minutes ago, reformed nice guy said:

More debt deflation? "NHS to benefit from £13.4 billion debt write-off. Health Secretary announces over £13 billion of debt will be written off as part of a major financial reset for NHS providers."

https://www.gov.uk/government/news/nhs-to-benefit-from-13-4-billion-debt-write-off

At the bottom it says "The debt will be effectively written off by converting the loans to equity (Public Dividend Capital)." I looked up "Public Dividend Capital" and it says:

" Public dividend capital (PDC) represents the Department of Health’s (DH’s) equity interest in defined public assets across the NHS. The DH is required to make a return on its net assets, including the assets of NHS trusts, of 3.5%."

@DurhamBorn would this be an example of the monetization that you have previously mentioned? 3.5% of £13.4 billion, which appears to be perpetual, seems like something that would be flogged.

 

 

 

Yes and no.Governments cant monetize their debts,its the CBs who expand their reserves who do.Of course the BOE has or is buying around £150billion of UK gilts and although the coupons will have to be paid they are pretty much monetizing them so the government can spend the lot.

Iv got some very good charts etc on how the inflation of the 70s happened and although there were lots of thoughts on oil shocks,strikes etc,the real reason was loose money.Its quite hard to grasp that when the massive problem we have,and the systemic risk is deflation,yet we are preparing for inflation.

The reality is,if they dont stop the deflation then we see the biggest crash in history and dislocation on a scale unimagined.Or we get inflation.In a way we are actually getting the purest form of inflation you can get.They are handing out massive amounts of money to people to do nothing and create nothing.

There are going to be some huge changes after this.For one welfare spending will have the screws turned,as will public sector pensions.They are the two sectors taking zero pain at the moment,and the hard working public who are suffering will be boiling with anger once the dust settles.

Its really crucial people protect from the coming inflation,but we are still in very dangerous territory for the markets.We have played it very well so far,but its like swimming half way across a river and not drowing,its pointless until we reach the other bank.

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@sancho panza the cost of unemployment always seems larger and more urgent to reduce than the cost of inflation.This is exactly the mistake that was made in the 1970s and it going to be a big driver of the cycle.Id already added in very high unemployment into my reflation road maps.However it looks like the numbers i used are going to over shoot,maybe by double or more.I havent tried to add them in yet because it will likely only increase the affect we are expecting,but lets say it overshoots what i expected by 50%.It would then add to the risk 20% inflation is very likely,not 12%.

 

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3 hours ago, Cattle Prod said:

...

Am I reading that wrong, that they are not ranked top to bottom? Are the scores the ranking?!

Ranked by market cap, not scores.   The greens indicate metrics better than the group average while the green scores are the top 3 (or more if many have equal scores).  So CNOOC and EOG score the best (3) because they have one year of better OCF growth.  A relatively minor difference and a pretty similar group overall score wise, although some of the actual metrics are quite different between companies.  Exxon has a very low quick ratio - current liabilities twice current assets while Conocco has a ratio of 2.26 which is very good!  I was expecting a more diverse industry, score wise, as in other industries but no. So hard on that basis to pick the better ones to invest in.  Maybe I should look further down the cap list to Equinor and Repsol (which are not far down in the top 20).  I excluded the Russian companies as they require ADRs/GDRs/CDIs to invest (I don't have access to the Moscow exchange), something else I maybe should relax.

More interesting in the service industry.  Some potentially mild stinkers debt wise (needs closer review)!  Plus a few have paid at least one years dividends above their OCF (i.e. from cash reserves and/or debt/equity issues).  Plus a high debt to capital ratio may also be due to that, more legitimate capex, or (quite common market wide), stock buy backs, or a mix of all three.  Any future asset write downs (and some balance sheets market wide do look a bit high, especially on intangibles and investments) in companies with such high debt ratios may cause greater pain to fall on the relatively smaller equity (shareholder) pool, assuming the debt is well secured with a margin. 

I also generally focus on cash flow metrics because of the potential for creative accounting regarding EPS, etc (due to share buy backs, etc).  Harder to fake real operating cash, although total cash flow can be prettied up by increased debt financing or stock issues, hence the focus on operating cash flows.  I'd rather see growing operating cash flows than growing revenues!  Ideally, they should correlate but if games are being played.....!  Not many places to hide in a cash flow statement, probably one reason companies may seemingly hide it amongst the accounts!  Overall, a liquidators mindset but maybe a good one if debt financing costs (interest rates) are to increase.  Plus things like the Quick Ratio tend to highlight well/poorly managed companies.    

I've been through a few cycles in my time with periods of financial "optimism" followed by the cull.  Indeed I spent time with a liquidator once during such a cull and it was a horrific "Come to Jesus" moment.  A shark who could instinctively taste and unearth such things. The new management wanted an accurate financial picture but ended up asking him to leave before he totally destroyed the balance sheet!    It feels like an unfolding one now, bar the printed money, but plus the exiting CEOs!

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2 hours ago, sancho panza said:

The spectre of mass unemployment is starting to haunt us

Have the corporates be handed the opportunity to do a bit of zero based budgeting employee (and indeed other cost) wise and could this be a key driver to much higher unemployment?  If I was a company now with a large part of my workforce working from home or not working at all, I would take the opportunity to evaluate employee contributions, my cost (e.g. office rent) base, and alternative delivery models.  I would have IT (analytics), HR and finance working overtime to analyse the situation (which is a kind of enforced lab test).  As with zero based budgeting, I may only bring back what I can see adds value according to a newly reconfigured and "spring cleaned" (pardon the pun) delivery model.  Add back a little at a time and see how it goes and leave the rest at home, some permenantly.  The lockdown presents a golden opportunity for a major corporate re-organisations both in terms of clarity (data) and means ("political" cover).  And any such outcome would presumably fall more on the private sector, further raising the private versus public schism (DB just mentioned public sector pensions).  People talk about the employment benefits through on-shoring (to improve the security of supply chains), but as often happens, such things may not be so clear cut.   

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Castlevania
7 hours ago, DurhamBorn said:

Yes you get them on foreign stocks,but lots of different tax rules.US stocks in a SIPP you get the full divi,outside you pay 15% tax.Some Europe stocks you pay dividend tax etc.Repsol for instance youd pay a decent divident tax,but Repsol give you extra shares instead,if you choose to take them,you can then sell them and pay no tax (just dealing fee),or of course let the holding compound.

 

 

To add, where it gets complicated is where you hold the stock ie. if it’s in a SIPP; ISA or taxable account and where the company paying the tax is incorporated. 

In theory if there’s a dual tax agreement between the U.K. and the country you receive the dividend from (this should be the country of incorporation) then you should not pay tax twice. The idea being you’ll only pay the higher of the withholding tax or the tax payable in the U.K.

So if you do have both taxed and untaxed (an ISA for example) accounts there’s an argument to hold all foreign dividend paying stock in the taxed account.

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Don Coglione
5 hours ago, Harley said:

Have the corporates be handed the opportunity to do a bit of zero based budgeting employee (and indeed other cost) wise and could this be a key driver to much higher unemployment?  If I was a company now with a large part of my workforce working from home or not working at all, I would take the opportunity to evaluate employee contributions, my cost (e.g. office rent) base, and alternative delivery models.  I would have IT (analytics), HR and finance working overtime to analyse the situation (which is a kind of enforced lab test).  As with zero based budgeting, I may only bring back what I can see adds value according to a newly reconfigured and "spring cleaned" (pardon the pun) delivery model.  Add back a little at a time and see how it goes and leave the rest at home, some permenantly.  The lockdown presents a golden opportunity for a major corporate re-organisations both in terms of clarity (data) and means ("political" cover).  And any such outcome would presumably fall more on the private sector, further raising the private versus public schism (DB just mentioned public sector pensions).  People talk about the employment benefits through on-shoring (to improve the security of supply chains), but as often happens, such things may not be so clear cut.   

I was thinking exactly the same about companies spring cleaning last night. As you say, they have the perfect cover.

Same for dividend cuts too, alas...

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ashestoashes

problem with Centrica is the nuclear assets are largely the old AGR stations that have crumbling graphite in their reactors. The LSE chat is about Centrica being in a death spiral, time to get out ? 

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Transistor Man
26 minutes ago, ashestoashes said:

problem with Centrica is the nuclear assets are largely the old AGR stations that have crumbling graphite in their reactors. 

They originally bought the 20% stake of what was British Energy, so they could get involved in the New Build activities - but later decided they didn’t want to. 

How long can they keep giving the AGRs life extensions? 

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TheCountOfNowhere
8 hours ago, DurhamBorn said:

@sancho panza the cost of unemployment always seems larger and more urgent to reduce than the cost of inflation.This is exactly the mistake that was made in the 1970s and it going to be a big driver of the cycle.Id already added in very high unemployment into my reflation road maps.However it looks like the numbers i used are going to over shoot,maybe by double or more.I havent tried to add them in yet because it will likely only increase the affect we are expecting,but lets say it overshoots what i expected by 50%.It would then add to the risk 20% inflation is very likely,not 12%.

 

Hyperinflation then.

 

What timescale are you now looking at ?

 

Is it the straight to hyper inflation as I always feared ?

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Bricks & Mortar
27 minutes ago, TheCountOfNowhere said:

Hyperinflation then.

 

What timescale are you now looking at ?

 

Is it the straight to hyper inflation as I always feared ?

Think we need to be clear on the definition.   Most economists seem to go with hyperinflation being 50% or more per month.

I don't think DB is saying that.  At least, that's not how I understood it.
https://en.wikipedia.org/wiki/Hyperinflation

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TheCountOfNowhere
38 minutes ago, Bricks & Mortar said:

Think we need to be clear on the definition.   Most economists seem to go with hyperinflation being 50% or more per month.

I don't think DB is saying that.  At least, that's not how I understood it.
https://en.wikipedia.org/wiki/Hyperinflation

a month....blimey, 20% a year will kill everyones incomes and savings unless interest rates are 30%

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1 hour ago, TheCountOfNowhere said:

Hyperinflation then.

 

What timescale are you now looking at ?

 

Is it the straight to hyper inflation as I always feared ?

No,there is zero risk of hyper-inflation this cycle,they are printing into the biggest deflation in history and havent even right sized that yet.High inflation is painful,but its not out of control,20% is possible from where we are,but my zone is showing 12% to 14% is the likely area where rates catch up.The end of the next cycle is the real danger zone.Today the CBs can print as much as they want,with inflation running hot at the end of the next one they wont be able to act.It might seem crazy,but i fear the end of the next cycle more than i fear this one.I dont spend much time looking at it as its too far away,and we have more than we need to focus on now,but at the moment it looks like there will be nowhere to hide,no asset,and that is very very scary.However the fog will clear as the cycle gets mid way through.

 

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Terminated (but declared) divi...more and more seem to be following this action over the last week or so...

...so, should it be viewed as a wise long term business preservation decision by the board, and the opportunity to pick up a reduced price stock if it drops OR

...is it better to look for a more `reliable boyfriend`?

...also the other C word (not Coronavirus!), are they really now in a `death spiral` as is being reported, and is the nuclear issue such a big deal when it only equates to 10% of their total assets?

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TheCountOfNowhere
1 minute ago, DurhamBorn said:

No,there is zero risk of hyper-inflation this cycle,they are printing into the biggest deflation in history and havent even right sized that yet.High inflation is painful,but its not out of control,20% is possible from where we are,but my zone is showing 12% to 14% is the likely area where rates catch up.The end of the next cycle is the real danger zone.Today the CBs can print as much as they want,with inflation running hot at the end of the next one they wont be able to act.It might seem crazy,but i fear the end of the next cycle more than i fear this one.I dont spend much time looking at it as its too far away,and we have more than we need to focus on now,but at the moment it looks like there will be nowhere to hide,no asset,and that is very very scary.However the fog will clear as the cycle gets mid way through.

 

Lets hope so. You're a clever man DB.

Thoughts on timescales are always useful to us lesser mortals and we wont hold you to them :-)

Your predictions must be changing due to the  unprecedented nature of what we are seeing.

Im still not convinced it's not just a big cash grab by the rich, again.

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2 minutes ago, TheCountOfNowhere said:

a month....blimey, 20% a year will kill everyones incomes and savings unless interest rates are 30%

Rates will top out at 12% i think,maybe undershoot at around 10%..

The market has slammed down all the areas that can actually hold their own in a reflation,because the last cycle that is ending now was against them.People are mostly macro tourists.They see whats happening now,and project forward.The see the deflation,the affects,but dont understand about leads and lags.The difficult part for a macro strategist is buying the correct stocks.The road map work is superb if i say it myself,but it doesnt tell you when to buy,because the best buy points are within a range.Thats why its crucial to use ladders,not emotion,and also a broad spread of sectors,and of course because the macro cycle has hurt,some companies might not make it,Centrica's struggles a prime example.In simple terms the next cycle will see governments trying to take over the loss of the consumer in the economy.They cant green light 25 coffee shops in York,but they can green light a new electric arc furnace in Teesside 

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