Jump to content
DOSBODS
  • Welcome to DOSBODS

     

    DOSBODS is free of any advertising.

    Ads are annoying, and - increasingly - advertising companies limit free speech online. DOSBODS Forums are completely free to use. Please create a free account to be able to access all the features of the DOSBODS community. It only takes 20 seconds!

     

IGNORED

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


spunko

Recommended Posts

6 hours ago, Castlevania said:

They also make calculators. The first scientific calculator I ever had was a Texas Instruments one.

I had a TI-30!!

Link to comment
Share on other sites

  • Replies 35.1k
  • Created
  • Last Reply
Talking Monkey
11 hours ago, DurhamBorn said:

No,because they are priced mostly on leverage and cost of servicing that leverage.Houses will lose 60%+ inflation adjusted by the end of the cycle,most of that damage will be in the south.

Just trying to get my head around the maths DB in terms of nominal falls, if we get 70% inflation across the cycle would a 60% inflation adjusted fall mean a nominal drop of around 30%

Link to comment
Share on other sites

4 hours ago, sancho panza said:

Poorly written article.  Read a couple of those articles in a day and it'll be time for bed!  Needs another article, with a customary conclusion, clearly answering the question!  If there was ever the need for a table!  Clearly not a great communicator, leading the reader on a not so merry dance.  I think he is trying to say the answer to his question (which itself is not clear as to which period) is the US private investor and, according to the graph and despite what he says, the Fed?  Is this shocking enough to warrant the undue effort?  Er no!  The Japanese have been doing the same for yonks.  Just "debt porn"?  More interesting would be the question whether central banks are going Japanese and how that's going to work out given the Japanese experience or is this time different?

Link to comment
Share on other sites

19 hours ago, Cattle Prod said:

the EROEI aspect is really, really important and almost never commented on...

...

energy inputs to the EROEI equation are much harder to calculate than the outputs, and I don't know what assumptions have been made.

 

 

https://surplusenergyeconomics.wordpress.com/ and the SEEDS model may be of interest to you.

Link to comment
Share on other sites

5 hours ago, Harley said:

Poorly written article.  Read a couple of those articles in a day and it'll be time for bed!  Needs another article, with a customary conclusion, clearly answering the question!  If there was ever the need for a table!  Clearly not a great communicator, leading the reader on a not so merry dance.  I think he is trying to say the answer to his question (which itself is not clear as to which period) is the US private investor and, according to the graph and despite what he says, the Fed?  Is this shocking enough to warrant the undue effort?  Er no!  The Japanese have been doing the same for yonks.  Just "debt porn"?  More interesting would be the question whether central banks are going Japanese and how that's going to work out given the Japanese experience or is this time different?

Memo to self.......Don't read stuff when half asleep you grumpy old sod!

Link to comment
Share on other sites

7 hours ago, Talking Monkey said:

Just trying to get my head around the maths DB in terms of nominal falls, if we get 70% inflation across the cycle would a 60% inflation adjusted fall mean a nominal drop of around 30%

I dont do any work on house prices because they dont affect me,all my children own now.However given we are entering a rising rates cycle (with a long lag as always) there is very little chance house prices go up nominal at all.So given we are looking at around 60% to 80% inflation over the cycle then yes i think a 20% fall in nominal is likely.There are areas of the country though where prices will hold or rise,including maybe the north where i am as prices are very cheap already.

 

Link to comment
Share on other sites

6 hours ago, Harley said:

Poorly written article.  Read a couple of those articles in a day and it'll be time for bed!  Needs another article, with a customary conclusion, clearly answering the question!  If there was ever the need for a table!  Clearly not a great communicator, leading the reader on a not so merry dance.  I think he is trying to say the answer to his question (which itself is not clear as to which period) is the US private investor and, according to the graph and despite what he says, the Fed?  Is this shocking enough to warrant the undue effort?  Er no!  The Japanese have been doing the same for yonks.  Just "debt porn"?  More interesting would be the question whether central banks are going Japanese and how that's going to work out given the Japanese experience or is this time different?

Japans people and companies saved higher amounts than the government deficit.Thats why they stayed in dis-inflation,government was only making up some of the slack.We are entering a distribution cycle at the same time as deficit spending explodes,at least i hope we are because thats one of the key reasons im charting increasing inflation.O.o

Link to comment
Share on other sites

21 hours ago, Cattle Prod said:

What's the source of that, Panda? Conspiracy theories aside, the bits in bold are true, in my view, and the EROEI aspect is really, really important and almost never commented on. Oil has been a 'free ride' for humanity, and the point on EROEI is that ride is getting ever shorter. 

 

 

Found it....

https://www.zerohedge.com/political/australia-push-new-measure-detain-conspiracy-theorists

Magoo 2 days ago in comments section.

Some great comments in there...

remove
link

 

Link to comment
Share on other sites

11 hours ago, sancho panza said:

Not yet,but probably this week.Only a small holding.First line stocks will be BT/Vod/Orange/AT&T/Sing Tel

A lot of these companies have deep detbs but kicking off a lot of FCF.

We too some prfotis off the table in PM's with a view to reinvesting in other more beaten down PM's but the value seems scant to me away from BVN/EGO/RIO2 so I'm pondering building the first tranche of our telecoms .

Can't beleive I'm picking up BT at a £1.Coma scale 21,top buy in my back yard ,time will tell.

PS also worth taking a look at Proximus/Koninklijk/Nippon telegraph/Korea telecom/Airtel Africa/MTN plus a couple of otehrs I can't remember>lot of old national flag carriers there

Thanks. I looked at KPN. In terms of European mobile telcos I much prefer Vodafone. In their home market Vodafone through a joint venture with Liberty Media have Ziggo which is a far better product (broadband and TV) than that offered by KPN.

Airtel Africa and BT I have enough at current prices. Vodafone and Telefonica I’m accumulating more. Will take a look at the other suggestions.

Link to comment
Share on other sites

59 minutes ago, DurhamBorn said:

I dont do any work on house prices because they dont affect me,all my children own now.However given we are entering a rising rates cycle (with a long lag as always) there is very little chance house prices go up nominal at all.So given we are looking at around 60% to 80% inflation over the cycle then yes i think a 20% fall in nominal is likely.There are areas of the country though where prices will hold or rise,including maybe the north where i am as prices are very cheap already.

 

BAU even if houses go up in nominal but down in real!  Interesting to see the impact on the buy v rent decision (which has always been a close call if you do the sums, at the very least with moderate interest rates).

Link to comment
Share on other sites

23 minutes ago, Harley said:

BAU even if houses go up in nominal but down in real!  Interesting to see the impact on the buy v rent decision (which has always been a close call if you do the sums, at the very least with moderate interest rates).

I think government will move from caring about keeping house prices up to caring about simply getting people out of rented into owned because they will see the massive housing benefit bill ahead if they dont.My last job i was working with several single guys in their 40s who rented and were all heading towards housing benefit etc at 68 at the latest.The budget might continue the attack on BTL and keep chipping away.

Link to comment
Share on other sites

Does anyone have access to the natural gas v oil stats of all the main energy companies?

I think natural gas will be the 2nd best performing asset after silver in the cycle and im going to adjust up some holdings based on exposure to gas over oil.

I know Repsol has around 73% of reserves in gas and around 63% of production,but what are the others?

Very-Long-Term-Energy-Demand-Forecasts.png

Link to comment
Share on other sites

13 minutes ago, DurhamBorn said:

Does anyone have access to the natural gas v oil stats of all the main energy companies?

I think natural gas will be the 2nd best performing asset after silver in the cycle and im going to adjust up some holdings based on exposure to gas over oil.

I know Repsol has around 73% of reserves in gas and around 63% of production,but what are the others?

Very-Long-Term-Energy-Demand-Forecasts.png

Gazprom if you can stomach the geopolitical risk

Shell have a fair bit of gas after they bought BG (the old exploration and production arm of the share that must not be named)

Edit: found this list by gas production but doesn’t split it out versus oil. They’re mainly state owned entities.

https://www.statista.com/statistics/270732/largest-natural-gas-producers-worldwide-based-on-production-output/

Link to comment
Share on other sites

UnconventionalWisdom
3 hours ago, DurhamBorn said:

I think government will move from caring about keeping house prices up to caring about simply getting people out of rented into owned because they will see the massive housing benefit bill ahead if they dont.My last job i was working with several single guys in their 40s who rented and were all heading towards housing benefit etc at 68 at the latest.The budget might continue the attack on BTL and keep chipping away.

Proportion renting 5-10 younger is even more problematic, they have to do something, right? (Asked the anxious 35 year old still renting :Jumping:

 

home-ownership-by-age-housing-survey-2019.png

Link to comment
Share on other sites

UnconventionalWisdom
4 hours ago, Underwhelmed said:

Interesting discussion with Jeff Booth, author of 'Price of Tomorrow' on tech disruption and deflation.

 

I may buy jeff booth's book "the price of tomorrow". Sounds interesting from the blurb.

We live in an extraordinary time. Technological advances are happening at a rate faster than our ability to understand them, and in a world that moves faster than we can imagine, we cannot afford to stand still. These advances bring efficiency and abundance—and they are profoundly deflationary. Our economic systems were built for a pre-technology era when labour and capital were inextricably linked, an era that counted on growth and inflation, an era where we made money from inefficiency. That era is over, but we keep on pretending that those economic systems still work. The only thing driving growth in the world today is easy credit, which is being created at a pace that is hard to comprehend—and with it, debt that we will never be able to pay back. As we try to artificially drive an economic system built for the past, we are creating more than just economic trouble. On our current path, our world will become profoundly more polarized and unsafe. We need to build a new framework for our local and global economies, and soon; we need to accept deflation and embrace the abundance it can bring. Otherwise, the same technology that has the power to bring abundance to us and our world will instead destroy it. 

Link to comment
Share on other sites

yeah, this contrarian way is becoming mainstream, im not much liking that so soon, much better to be wrong right to the end and then rubber band it the opposite way. I realise that we need capital to  drive it and you wont get anywhere without that, but would be nice if it stretched the rubber to breaking point beofre it released. Still, BK to look forward to, if it actually comes. Build the cash.

Link to comment
Share on other sites

20 minutes ago, Castlevania said:

I’m starting to see more and more articles that largely align with the thesis of this thread. 

Even the usually dismal Investment Times that HL see fit to insult me with every month has the following from Mark Dampier -

START "Add advancing technology and ageing demographics and I think you have a recipe for deflation and potentially a big market fall, certainly greater than March.

Central Banks and governments will do all they can to stop it, but I think this will then sow the seeds of double digit inflation later in this decade. This is not to say we shouldn't be in the market in some way. We know we have to make provisiion for ourselves, but failing to properly manage our portfolios could be equally as costly for our financial fortunes.

This decade willl be very different for investing than the last four have been. Both deflation and inflation will require a completely different asset mix. For my generation it will be more about preserving the purchasing power of your money, rather than aggressively trying to make more.

There are always so many different themes and factors that throw out events and their timing. But it's hard not to reflect that the early 1980s was a very different starting point for investing than today" END

However just because more and more people can see what's coming doesn't mean they are in a position to understand what the most suitable investments are for the next decade!

Dampier's last article for HL, either he departing as his opinions aren't welcome or he's just needs to concentrate on his own portfolio!

EDIT: he's actually retiring so old enough to have seen it all before....

Link to comment
Share on other sites

1 hour ago, Castlevania said:

I’m starting to see more and more articles that largely align with the thesis of this thread. 

https://www.zerohedge.com/markets/tug-war-across-markets-hides-trade-lifetime

Exactly what we said 4 years ago was coming,its all in motion,the amount of liquidity sat in tech and bonds yielding less than 1% is incredible.It doesnt matter though that more think it,because its tiny compared

the amount in other assets.Not 1 financial advisor for instance would advise an inflation portfolio,they simply put people in 60/40,or 40/60 portfolios and bank the fees.The younger generation will get what we all have had before,an education.They think Tesla is worth $400 billion because people will have EVs in future etc,but have no knowledge of cycle changes etc.

I would think around 80% to 90% of peoples portfolios and wealth is in dis-inflation areas.The irony is NEST and others have even sold off the few inflation assets to leave people bare.

Link to comment
Share on other sites

Yes, more mainstream.  But my hope, even expectation, is that they go either inflation or deflation.  For example load up on inflation stocks now and then pull out on the initial deflationary bust.  I'm "hedging" my bets by buying initial positions now but am currently planning on fills next year hopefully following a bust. Several target stocks are already well bid, energy largely being the exception.  For example, I'd have to think hard before buying any more BHP, RIO, etc right now other than a trade.

Regarding houses, and speaking as a home owner, if the Chancellor wants to be both radical and useful, then remove PPR and charge CGT on all housing.  Doesn't bother me in the slightest.  I only have one house, a home, what do I care about what it's worth should I choose to live in a tent!  People want to imagine their house is an investment rather than a home, well then tax them accordingly!  

Link to comment
Share on other sites

Assume negative rates later in 2020 in the UK, and maybe the US sometime thereafter too.  Assume a DH style deflationary bust and even bank collapses in 2021.  Would it not be reasonable to derisk and partially invest cash in hand in government bonds (duration?) now and fade out of these into reflation stocks in 2021?

PS:. I would add, avoiding bond ETFs who lend out securities (usually to banks in the case of bonds!).

PPS:. Ah, just seen negative UK rates has gone mainstream.  Bond door (the long capital one) closing for good!

Link to comment
Share on other sites

Archived

This topic is now archived and is closed to further replies.

  • Recently Browsing   0 members

    • No registered users viewing this page.

×
×
  • Create New...