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


spunko

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4 hours ago, sancho panza said:

It was interesting the point raised by CP yesterday ref Lyn Aldens assertion that the sharp drop in DXY during covid was down to punters seeking currencies with solid current accoutn surpluses. I'm struggling to understand why anyone would buy the yen for safety ref the USD. The subsequent upspike -and huge over reaction to the intial downspike in the USD- would hint that the inital fleeing of the dollar was panic rather than logical thought. 

SP, I'm no expert so welcome your critical response... Anyway for what its worth, Lyn Alden's view on the punter flight from dollar might stem from a bit of 'internal bias', we all have these so would not be overly critical here. Alden doesn't explicitly say it, but it appears to me from her writings/videos, that she is not convinced that America's future economy will benefit from supporting the dollar as the world's currency/petrodollar, etc. Up to now and operating from a position of supremacy, the US could pretty much call the shots, with most/all international finance/trade agreements 'going their way'. But with the looming Cold War II, China push-back/currency wars, etc - in the future there is probably more down-side for the US in attempting to support the dollar's international status. 

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5 hours ago, TheCountOfNowhere said:

Isn't that an oxymoron, written by a real moron ?

Isn't it called 'journalese'... where journalists rather arrogantly put both sides of the argument in the same sentence? It's so blatantly done that the average reader doesn't notice. Though this trick is usually more well hidden in separate paragraphs of an article. ...Or maybe it was just written by one of those new robo-journalists we keep hearing about, and the algorithm need tweaking.

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Anyone have any comments on this oilie?  Tempted to hold some ISA

https://www.hl.co.uk/shares/shares-search-results/w/wentworth-resources-plc-ord-npv

 

Quote

Wed 17 Jun 2020 07:00

RNS Number : 1660Q
Wentworth Resources PLC
17 June 2020
 

PRESS RELEASE                                                                                                                                  17 June 2020

WENTWORTH RESOURCES PLC
("Wentworth" or the "Company")

Operational Update

Wentworth Resources (AIM: WEN), the independent, East Africa-focused natural gas company, is pleased to announce an operational update ahead of its Annual General Meeting ("AGM") to be held today. As previously announced and in light of the COVID-19 pandemic, shareholders (other than the minimum number required to form a quorum, as arranged by the Company) will not be able to attend the AGM in person and have been invited to submit questions by email in advance. Following the conclusion of the AGM, an Investor Presentation and Q&A answering the submitted questions will be made available on the Company's website at www.wentplc.com.

HIGHLIGHTS

2020 Operations and Outlook

·    The health and safety of our employees is the priority and robust precautionary measures have been put in place to ensure the continued safety of our staff; there have been no reported cases of COVID-19 at Mnazi Bay

·   Mnazi Bay remains fully operational, with 2020 production guidance remaining unchanged at 65-75 MMscf/day (gross)

·    Average daily production from 1 January 2020 to 31 May 2020 of 58.2 MMscf/day (gross)

·   Partnered with the Government of the United Republic of Tanzania ("Government of Tanzania") to provide PPE, medical supplies and equipment to hospitals in Mtwara and Dar es Salaam

·    The Government of Tanzania has re-opened business and travel within the country

·   Gas volumes expected to increase in H2 2020 now that the rainy season has passed and COVID-19 restrictions in Tanzania have been lifted

Financial

·    Debt free with $15.7 million cash on hand at end May 2020

·   Dividend of $2 million declared on 24 April 2020 payable by the end of June 2020, bringing a total distribution in respect of FY 2019 of US$3.0 million, representing an annual yield of 7.8% based on the closing share price of 16 June 2020

·    Tanzania Petroleum Development Corporation ("TPDC") now fully current with payments as of end May 2020

·    Tanzania Electric Supply Company ("TANESCO") expected to settle all remaining arrears

Sustainability

·    Wentworth is committed to being a long-term partner for Tanzania and to deliver low-carbon, domestic energy supply growth that will underpin the socio-economic development of the country in the future

·    As a responsible business, Wentworth recognises the importance of maintaining relationships with its stakeholders that are based on trust, respect and transparency

·    Wentworth is committed to increasing its disclosure on its business impact to align with international best practice

·    Work is underway to review Wentworth's current disclosure frameworks and it looks forward to updating all stakeholders on progress during H2 2020 

 

 

Operations

 

Production over the period from 1 January to 31 May 2020 averaged 58.2 MMscf/day (gross). This period covers the traditional rainy season when hydroelectric power displaces natural gas-powered electricity generation, as well as the decreased industrial and consumer demand as a result of the temporary Government restrictions put in place to reduce the spread of COVID-19.

 

Demand in H2 2018 and H2 2019 was c.12% higher than H1 2018 and H1 2019, respectively. Given this historical context, the expected rebound in industrial customer demand from the lifting of COVID-19 restrictions, as well as the pick-up in volumes in June 2020, management expects a significant increase in natural gas demand in H2 2020. With no operational disruptions due to COVID-19, the existing well stock at Mnazi Bay is strongly positioned to meet this expected surge in demand.

 

As previously announced, the Mnazi Bay JV Partners have agreed to a limited 2020 firm work programme totalling approximately $4.6 million net to Wentworth. This programme will ensure that Mnazi Bay maintains well integrity and is primed to support the growing in-country demand.

 

Financial

 

The Company continues to receive consistent monthly payments for gas sales with TPDC now fully current. The Mnazi Bay Partners are working with TANESCO to reach settlement of all outstanding arrears. As previously announced, the Company repaid its term loan in full on 31 January 2020 and is now debt-free. The Company's net cash balance at 31 May 2020 was $15.7 million. In accordance with the Company's sustainable dividend policy, established in 2019, Wentworth declared its second interim dividend for 2019 in April 2020, which will be paid this month.

Sustainability

The power access gap in Tanzania is growing despite energy supply increasing, with a reported access rate of only 32.7%, leaving 7.7 million households without power. Transformational growth is needed in domestic energy supply to deliver the Government's target of universal access by 2030 through low-cost, low carbon solutions, aligned with the UN's Sustainable Development Goals.

Natural gas will play a critical role in meeting this target to support cheaper and more reliable electricity as well as facilitating an enabling environment for carbon-free renewable energy systems, such as hydro and solar. Wentworth is committed to being a long-term partner for Tanzania to deliver low-carbon, domestic energy supply growth that will underpin the socio-economic development of the country in the near and longer-term. This commitment underscores our approach to responsible and sustainable growth in Tanzania that creates shared value for all stakeholders.

Understanding our business impact on employees, host communities as well as society at large in Tanzania is critical to ensuring that our business operates responsibly and aligns with societal needs. The Company is undergoing a review to increase our disclosure on our business impacts that aligns with global goals and internationally recognised reporting frameworks. A further update will be provided during H2 2020. 

Katherine Roe, Chief Executive of Wentworth, said:

"The health and safety of our workforce across our assets and offices is our priority and I'm grateful to the entire team for their dedication and hard-work to ensure that our business can continue to operate safely and seamlessly during this challenging time. As a result of their efforts, we have seen no impact on operational performance during the COVID-19 pandemic.

Despite these challenges and Tanzania-specific reduced demand due to above average rainfall, Wentworth continues to demonstrate business resilience with a strong balance sheet, and operational readiness and flexibility.

Emerging from this pandemic, it will be critical for businesses to be able to transparently demonstrate their impact on society as well as their resilience to these types of economic shocks in the future. We know that our business has a real opportunity to deliver significant, positive change for the people of Tanzania through gas to power and we are committed to increasing our disclosure on our business risks and impacts to align Wentworth with international best practice. The sustainability and ESG landscape is constantly evolving, meaning that this will be an ongoing journey for Wentworth and we look forward to updating you further on our progress later in the year. 

In the second half of 2020, we expect to supply increased gas volumes now that the rainy season has passed and COVID-19 restrictions in Tanzania have been lifted. We look forward to building on this foundation and remain committed to being a leading player in Tanzania's energy growth and transition as it seeks to deliver universal access in the country by 2030."

 

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1 hour ago, JMD said:

DB, this is so interesting for next cycle macro trends. And congrats as I believe you flagged this up as potential some months ago? 

But if I remember correctly?... you have also said something about China going to war with Pakistan, or have I got this wrong? Only if you do think this, could you say more about it, as I believe China/Pakistan have good relations?

No,i said China and India,China want Pakistan onside so they can connect to Iran.Thats why they are rattling India's cage to gain favour in Packistan.US and the west will "help" India and they would like to focus China there while the Yanks can keep them pinned in the Pacific.We have this as part of the cycle ahead,but didnt expect things to  happen so early.

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54 minutes ago, Transistor Man said:

It’s a completely new design though. Far bigger than their submarine reactors.

Who will do the forgings? Could it be done in Sheffield forgemasters? 

It’s difficult. Areava messed up the pressure vessel steel for the EPR.

Who will make the Steam generators? Etc. Etc. 

TransistorMan, thanks for the previous information.

Good questions. I was thinking similar, or rather I was just generally thinking why hasn't more progress been made, re. project was setup back in 2016. Perhaps delay is down to the design changes - assuming they have now finalised it? - which has now been supersized to power medium sized towns (in terms of max. output; I assume the energy produced is still fed into the national grid isn't it?), was reason for delay.   

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1 hour ago, MrXxxx said:

Don't take offence @Harley, as it wasn't meant to cause any, I just wondered if the time spent on added complexity actually added any real benefits.

As for me knowing all the answers, far from it, which is why I come on here, contribute and encourage anyone to challenge my thoughts/postings...through a process of critical dialogue hopefully others will help me see the expensive mistakes I haven't appreciated before I make them.

We think there is a benefit. For my part it is superior returns with minimized volatily. Rest easy and make money. I have frequently posted links to Portfolio Charts (all the data is there) and recommended reading the Harry Browne book.

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Transistor Man
32 minutes ago, JMD said:

TransistorMan, thanks for the previous information.

Good questions. I was thinking similar, or rather I was just generally thinking why hasn't more progress been made, re. project was setup back in 2016. Perhaps delay is down to the design changes - assuming they have now finalised it? - which has now been supersized to power medium sized towns (in terms of max. output; I assume the energy produced is still fed into the national grid isn't it?), was reason for delay.   

I only know what I’ve read on the RR site. Yes, it’s for grid electricity production.

There’s no sea at Trawsfynydd, where they want to build the demonstrator,  which is a problem in itself. 

Id be delighted to see it all happen, but I’m pretty doubtful. 

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2 hours ago, MrXxxx said:

Don't take offence @Harley, as it wasn't meant to cause any, I just wondered if the time spent on added complexity actually added any real benefits.

As for me knowing all the answers, far from it, which is why I come on here, contribute and encourage anyone to challenge my thoughts/postings...through a process of critical dialogue hopefully others will help me see the expensive mistakes I haven't appreciated before I make them.

OK!  Just it was like the old days(!) huddled around the pub table with a few blokes talking about Chelsea's chances this season and up walks some guy to inform us he doesn't like football!:)

Yeh, me being prickly what with all the shite these days with people out there killing off discussions one way or another with their over-riding view.  Again, me being prickly so apologies if needed.

Finance is currently about the last place you can, indeed need to, respect the data, alternatives, etc.  That's the basis for a another thought stream.

Your point about DIY versus not is a valid (but separate!) one.  And I do try and question my approach.  I actually work at quite a high level, feeling there is an early point where more is often less.

There was a time my investing approach more closely resembled a 14 year old at a party.  Hopefully I'm a bit more top down, structured, and (please, don't go there) selective these days!

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Chewing Grass
7 minutes ago, Transistor Man said:

I only know what I’ve read on the RR site. Yes, it’s for grid electricity production.

There’s no sea at Trawsfynydd, where they want to build the demonstrator,  which is a problem in itself. 

Id be delighted to see it all happen, but I’m pretty doubtful. 

Yep, they have been on about this for as long as I can remember, they are fishing for development money as that's where the immediate income is for RR.

Years ago its was the pebble bed reactor.

https://en.wikipedia.org/wiki/Pebble-bed_reactor

Now its the small factory built modular reactor but you need an order book of almost 100 to even start making money unless somebody is daft enough to front it (like the government).

https://en.wikipedia.org/wiki/Small_modular_reactor

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42 minutes ago, CVG said:

We think there is a benefit. For my part it is superior returns with minimized volatily. Rest easy and make money. I have frequently posted links to Portfolio Charts (all the data is there) and recommended reading the Harry Browne book.

Agreed.  Portfolio Charts really changed things for me when hunting for a close-to/in retirement strategy.  That and Monevator talking about floor and upside funds.  I work top down now.  Get the strategy right (re. risk/reward, etc) and the remaining detail largely falls into place.  Like I pick stocks rather than ETFs because of the risks of ETFs and, post KID, their poor availability.  I'm only trying to pick the most robust and representative stocks in my chosen sectors rather than pick high alpha stocks, in the belief the number one success factor is sector rather than stock selection.  I have a lot of technical, etc knowledge, or at least enough to know more (too much) often means less!  Everyone will have different goals, stages in the journey, attitudes, abilities, etc.  That's why sometimes it's helpful to explain the context of something first to avoid the unwarranted debate.  Like my economics teacher (the marvelous Mr Carter) would said, "first, define your assumptions"! 

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Transistor Man
17 minutes ago, Chewing Grass said:

Yep, they have been on about this for as long as I can remember, they are fishing for development money as that's where the immediate income is for RR.

Years ago its was the pebble bed reactor.

https://en.wikipedia.org/wiki/Pebble-bed_reactor

Now its the small factory built modular reactor but you need an order book of almost 100 to even start making money unless somebody is daft enough to front it (like the government).

https://en.wikipedia.org/wiki/Small_modular_reactor

I worked on a project using a HTR - a pebble bed reactor or similar - to supply electricity and process heat to industry. Nuclear cogeneration. I didn’t think it was very sensible.

the South African government was rinsed for a lot of money for their pebble bed reactor. They had a huge number working on it, but I don’t think they really got very far. 

Also, the report on the long term performance of the similar reactor in Julich came out, which was a little damning, if I remember correctly. 

That’s why I think the RR SMR only really makes sense if they took their submarine PWR and put it on a barge, or a container. Like the Russians have done. 

But it wouldn’t be economic for electricity production.  The thermal efficiency would be very low. Also, it would need military grade fuel. 

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2 hours ago, Harley said:

Agreed.  Portfolio Charts really changed things for me when hunting for a close-to/in retirement strategy.  That and Monevator talking about floor and upside funds.  I work top down now.  Get the strategy right (re. risk/reward, etc) and the remaining detail largely falls into place.  Like I pick stocks rather than ETFs because of the risks of ETFs and, post KID, their poor availability.  I'm only trying to pick the most robust and representative stocks in my chosen sectors rather than pick high alpha stocks, in the belief the number one success factor is sector rather than stock selection.  I have a lot of technical, etc knowledge, or at least enough to know more (too much) often means less!  Everyone will have different goals, stages in the journey, attitudes, abilities, etc.  That's why sometimes it's helpful to explain the context of something first to avoid the unwarranted debate.  Like my economics teacher (the marvelous Mr Carter) would said, "first, define your assumptions"! 

And I'd add that although my overall approach is different to many on here, I use the incredibly valuable contributions on this forum to advise my equity and gold (precious metal) investments.

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reformed nice guy

I was clearing out my spam folder today and noticed some emails from a website that I must have signed up for years ago called Primary Bid:

https://primarybid.com/

It allows retail punters to buy into share offerings.

It was normally small AIM listed companies: Tissue Regenix Group, Open Orphan Plc,Futura Medical PLC, Scientific Digital Imaging plc etc.

Recent listings include: SSP Group (ftse250), Ocado, Biffa, William Hill, Taylor Wimpey.

I remember @DurhamBorn making the prediction that more companies would start to raise equity rather than issue bonds.  

 

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Reading the below i think shows the value of this thread and why trying to work out where we are in macro terms and cycle terms is crucial.Looks like he bought Shell and BP at £23 and £5.50 from this,and would think the 50% fall was at worst and some recovery,probably 35% down.Banking job would have a final salary,or pension,so looks like he maybe did a transfer and invested himself once he packed in work.Looks like a classic case of needed 100% of dividend income on the original purchase prices.I expect assets are being sold to make up for it.This is how the cycle will be but more for people in lifestyle type funds as bonds take the pain.

https://www.dailymail.co.uk/money/pensions/article-8427425/Why-50s-fear-Covid-force-work-10-years-more.html

 

Recently retired David Thompson, 63, saw his pension savings fall by 50 per cent in the recent stock market crash.

He finished his banking job in February and was looking forward to retirement. But he is now searching for work again as he has a pension black hole — much of his money was in oil stocks, which have plummeted in value as demand and the oil price collapsed.

David, who lives in Edinburgh, says: 'I retired at the beginning of this year with no idea of what was around the corner. I planned to live abroad for six months with six months in the UK. But that's not looking likely now.'

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2 hours ago, Harley said:

Agreed.  Portfolio Charts really changed things for me when hunting for a close-to/in retirement strategy.  That and Monevator talking about floor and upside funds.  I work top down now.  Get the strategy right (re. risk/reward, etc) and the remaining detail largely falls into place.  Like I pick stocks rather than ETFs because of the risks of ETFs and, post KID, their poor availability.  I'm only trying to pick the most robust and representative stocks in my chosen sectors rather than pick high alpha stocks, in the belief the number one success factor is sector rather than stock selection.  I have a lot of technical, etc knowledge, or at least enough to know more (too much) often means less!  Everyone will have different goals, stages in the journey, attitudes, abilities, etc.  That's why sometimes it's helpful to explain the context of something first to avoid the unwarranted debate.  Like my economics teacher (the marvelous Mr Carter) would said, "first, define your assumptions"! 

Now for fear of `poking a sleeping lion with a stick` :-), its interesting that you cite The Monevator as he is of the opinion that passive rather than active investing is more effective , although The Accumulator on the same site gives a nice counterpoint....

....both of these (and others) got me thinking that perhaps either approach can be more effective than the other, but the important point is timing in the cycle. Active  a better option/performer for the turbulent times that we are about to go into, where big growth stocks (AMAZON et al) may get hammered and so have a bigger impact in an Index ETF such as S_P 500 due to their overrepresentation having a dramatic proportional impact in contrast to a suite of well chosen value stocks, and a passive approach giving better growth when the times are good/stable?...just a thought, not a definitive statement :-)

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@DurhamBorn I had at the back of my mind you said negative rates here were unlikely, but a quick search shows you saying nothing of the sort (In this thread, anyway)

What are your thoughts on them?

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TheCountOfNowhere
3 minutes ago, DurhamBorn said:

 

 

Recently retired David Thompson, 63, saw his pension savings investment gamble fall by 50 per cent in the recent stock market crash.

He finished his banking job in February and was looking forward to retirement. But he is now searching for work again as he has a pension black hole — much of his money was in oil stocks, which have plummeted in value as demand and the oil price collapsed.

David, who lives in Edinburgh, says: 'I retired at the beginning of this year with no idea of what was around the corner. I planned to live abroad for six months with six months in the UK. But that's not looking likely now.'

I think I see the problem here.

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22 minutes ago, TheCountOfNowhere said:

Bankster of England promising £1T of stolen money for this cronies.

As I've said for a long time. THEY WILL NOT STOP.

https://www.standard.co.uk/business/bank-set-to-push-qe-to-a-trillion-and-beyond-a4471276.html

 

 

 

 

Count,i told you they would do nearly a trillion 3 years ago.You already knew this.They will stop at about a trillion and there will be no more printing under the present system as they will be chasing after inflation then give or take a few hundred billion.

Those CBs are way behind us,they can only react,we can see what they are going to have to react to .Every time they add the liquidity my portfolio is like.............

 

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32 minutes ago, TheCountOfNowhere said:

Bankster of England promising £1T of stolen money for this cronies.

As I've said for a long time. THEY WILL NOT STOP.

https://www.standard.co.uk/business/bank-set-to-push-qe-to-a-trillion-and-beyond-a4471276.html

 

 

 

 

 

Quote

Some members of the Monetary Policy Committee, notably Michael Saunders, have suggested the Bank might as well do the same amount of QE in one “big bazooka” attempt to boost the economy. Saunders says the Bank must be “aggressive”.

My face when: see pic

Go on. Do it.  I dare you.  My buckets are ready and waiting for the money hose.

hans-landa.jpg

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TheCountOfNowhere
29 minutes ago, DurhamBorn said:

Count,i told you they would do nearly a trillion 3 years ago.You already knew this.They will stop at about a trillion and there will be no more printing under the present system as they will be chasing after inflation then give or take a few hundred billion.

Those CBs are way behind us,they can only react,we can see what they are going to have to react to .Every time they add the liquidity my portfolio is like.............

 

That's all well and good DB.  You can celebrate if you like but we all know the Bankers are robbing the people and every penny you or I make is coming off some people bastards back.

Nothing to celebrate there for me.

P.S. I've currently made -£500 :P:P on my investments.

PPS. Just check on my physical hold holding, I keep it tucked away like Papillion.  I hold small amount now, in case of emergencies, up 50%, should have gone balls deep before the Brexit vote.  My silver holidays, down 10%.  The VATs the killer but at least I'll have some coinage to throw to peasants as a ride my horse through the countryside after melt down.

 

 

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10 minutes ago, DurhamBorn said:

Reading the below i think shows the value of this thread and why trying to work out where we are in macro terms and cycle terms is crucial.Looks like he bought Shell and BP at £23 and £5.50 from this,and would think the 50% fall was at worst and some recovery,probably 35% down.Banking job would have a final salary,or pension,so looks like he maybe did a transfer and invested himself once he packed in work.Looks like a classic case of needed 100% of dividend income on the original purchase prices.I expect assets are being sold to make up for it.This is how the cycle will be but more for people in lifestyle type funds as bonds take the pain.

https://www.dailymail.co.uk/money/pensions/article-8427425/Why-50s-fear-Covid-force-work-10-years-more.html

 

Recently retired David Thompson, 63, saw his pension savings fall by 50 per cent in the recent stock market crash.

He finished his banking job in February and was looking forward to retirement. But he is now searching for work again as he has a pension black hole — much of his money was in oil stocks, which have plummeted in value as demand and the oil price collapsed.

David, who lives in Edinburgh, says: 'I retired at the beginning of this year with no idea of what was around the corner. I planned to live abroad for six months with six months in the UK. But that's not looking likely now.'

This is where I wonder if a transfer out of a DB pension is such a good idea..ok the transfer values can be good, and it looks as though this guy didn't diversify, but the DB acts like an insurance/annuity giving you a safe-ish guaranteed income You can then play the stock market knowing that whatever happens you have a safety net...or perhaps it just reflects my personality?!

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15 minutes ago, Loki said:

@DurhamBorn I had at the back of my mind you said negative rates here were unlikely, but a quick search shows you saying nothing of the sort (In this thread, anyway)

What are your thoughts on them?

Rates have been negative for a long time,against inflation,in macro terms,thats what counts.I doubt we will see outright negative base rates,or for long,this cycle turn is all about fiscal injections being monetized,market will wake up to that at some point.

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TheCountOfNowhere
Just now, DurhamBorn said:

Rates have been negative for a long time,against inflation,in macro terms,thats what counts.I doubt we will see outright negative base rates,or for long,this cycle turn is all about fiscal injections being monetized,market will wake up to that at some point.

And do what ?

I might have missed that post :S

image.png

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Just now, DurhamBorn said:

Rates have been negative for a long time,against inflation,in macro terms,thats what counts.I doubt we will see outright negative base rates,or for long,this cycle turn is all about fiscal injections being monetized,market will wake up to that at some point.

That's what I thought thanks, effectively negative but nominally(?) not

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