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

[nirvana]

My take on RDSB...

Chartists got a 'hard on' last week cos the sub £9 dip did indeed turn out to be a 'double dip'

ie it visited the March lows..

So far in October crude has been on the ropes BUT we've had a circa 5% bounce since the Friday lows so looking good in that respect

IF RDSB can reach the April highs of £14 odd then that's a good area to 'take some profit'.....

Sub £8.90 dump the lot cos it's going lower 

Edit: inspired by Talking Heads 

 

[sancho panza]

From jesse Felder twitter feed.

We've been here before it seems.

[Ellandback]

59 minutes ago, Loki said:

What are the thread contributors thoughts on the miners at the moment?  

I was going to post asking the same, Thus far I've bought only established silver majors and producers and they have performed very well for me over the past 12 months I've had them but I have decided to up the ante somewhat and buy a list of silver micro/nano cap stocks (c. 15) starting from today, tricky as HL don't have some names I'm interested in. Plan is to exit these early next year but that could of course prove folly. Wish me luck!

[nirvana]

Gold is on a rocket too.......breaking out above 1900.......CBs on the buttons today?

 

[MrXxxx]

3 hours ago, Talking Monkey said:

But if you needed to travel you would be stuck. I wonder if there would be any GPs that would give you a certificate even if you didnt take the thing, i'm sure there are dodgy ones around

Won't be certificates, as part of the vaccination you will get an embedded nano code...this will allow instant swiping as you move across national borders.

[sancho panza]

On 04/10/2020 at 00:58, Cattle Prod said:

Nail, head.

We are adaptive creatures. We've always been that way. Recently, we've adapted to world war and real pestilence like the Spanish Flu or even the Black Death and the like over and over again. And ....this is really looking like a bad flu. 

I'm very pleased to see the civil disobedience this time round, as ever, common sense wisdom is again beating the government experts (and I reiterate my view that any scientist who ends up a civik servant is essentially a dud). Ive said since March that all the lockdown crap has been by old peole for old people without a thought for young people (and 50 is young!). That said, I hope Trump pulls through because if he doesn't the boomers are going to go into the bunkers again and screw us all royally.

I was watching a Wolf interview an hour or two back and he was saying how covid has really jsut speeded up processess that would have taken years eg Yanks not shopping in malls any more.

Assuming the previously normal rate of change will return post covid is an assumption to far for me.

As the bungling by the boomers in charge unravels and beceomes mroe and more obvious as time progresses,they'll lose their moral authority.That loss will be a significant turning point generationally.

On 04/10/2020 at 02:33, DurhamBorn said:

Young people will go back to normal very quickly,followed by older people.In my teens i was bombarded with adverts about AIDS to the point it used to put you off your crispy pancake tea,but as soon as Sharon gave me the eye in a bar in Ibiza we were at it on the beach and wild horses couldnt of stopped me.The call of the wild is far stronger than some government scare campaign.

Funny thing was years later i actually worked on drugs (azidothymidine) that actually pretty much eliminated AIDS.Human nature isnt to waste away scared,its to experience and taste life.

That made me laugh and rtemember my own misspent youth.I remember the graffitti

'ADIS,don't die of dyslexia.'

Like you say,the hsyteria didn't last long amongst low risk groups and that was a sight more danagerous than covid.I can't believe that people under 50 are literally more likely to die of either suicide or a car crash than covid given the restrcitions they face.

On 04/10/2020 at 04:30, Harley said:

Good point.  Something else to add to the Covid implications list?  Accelerating the trend or a catalyst for a material shift in power and influence from one generation to the other.  They will either need to give way here and elsewhere or double down and fight their corner and suppress any generational baton passing.  This is why extrapolating the past may not be the best approach for roadmapping the future at what is a turning.

That in bold there H.

I think the people 50+ with hosues paid off by inflation,no student loans to pay back,infaltion proof final salary pensions,free social care etc are going to have to accept there's going to be a price they have to pay for this mess given they've jsut handed the bill for their solution to a bunch of people who will have none of the above.

[sancho panza]

22 hours ago, JMD said:

SP, your macro-economics observation about Art Berman (point 2?) Is interesting. I'm no expert about those things, but when I visited Art's webpage a while back I did notice he had articles from economists he 'greatly admired'. Each to their own of course, but when I read the articles, let's just say they were not from the 'Dave Hunter/pragmatic school'. That may perhaps explain some bias going on and useful to know I think. Easy to find on his website, but if not let me know and I'll provide a link.

We're all generlaists to a degree,but everyone has something they know more about.Due to time pressures,I'm not averse to paying for good information as it can save me horus of research.

AB is incredible on the supply side of the oil market.I'm a little more scpetical on his demand side  because,quite simply,there are a lot more moving parts to the equation.

In the end I always make my own decision on the information in front of me.I'm jsut slightly worried that at a crucail moment on the damnad side,Art could be looking the wrong way.

[nirvana]

1 hour ago, Cattle Prod said:

I see it as pick n mix. Like Harley has said, listen to a wide range of commentators, and choose who you inform yourself with. Always add a few in you respect but disagree with (like getting the black licorice one in the pick n mix).

interesting analogy.....to me all 'commentators' are full o shite*......just like pick n mix 

zerohedge is the only one that 'speaks the truth' but unfortunately they've predicted 57 out of last 2 recessions so get labelled as loons 

latest news 

Leaked Document Reveals Exxon's Plan To Increase Emissions As Energy Space Prepares For Decarbonization

https://www.zerohedge.com/commodities/leaked-document-reveals-exxons-plan-increase-emissions-energy-space-prepares

boo hissssss, might have to dump my Exxon shares......the trauma of being an 'investor' and having a 'conscience' at the same time.....quelle world 

*eg that Lyn bird was interesting then she started popping up on bitcoin interviews...

EDit: sorry that sounds harsh.....it's these ECONOMISTS who keep popping up all the time thinking they can predict the future.....gets up my bloody nostrils!!!  Right I'm off to find that Lyn interview...

here it is https://www.whatbitcoindid.com/podcast/why-a-currency-devaluation-is-likely-with-lyn-alden

silly fooking bitch, everyone knows that by printing money you're devaluing your currency.......my mate down the pub said years ago 'it's a race to the bottom'....

right I'm giving myself a 'yellow card' for a while.....for those terrible comments 

[Loki]

18 minutes ago, 5min OCD speculator said:

boo hissssss, might have to dump my Exxon shares......the trauma of being an 'investor' and having a 'conscience' at the same time

Relax.  CO2 is harmless.  Not going to stop me making money off the hysteria though.  I did my bit and got called a science denier, so I will take the money and keep my mouth shut.

[leonardratso]

they have their books and subscriptions to flog mate, you are literally taking the bread out of their kids mouths by calling them full of shite. You cruel cruel bastard, thnk of the chilun.

[nirvana]

7 minutes ago, Loki said:

Relax

And breathe.....I've found my meds.....

 

[nirvana]

OIL is seriously bombing it up the motorway today!!! 

It's a sign from GOD I tell you!!! Right, this is defo my last post for a while, too much coffee and I need to go speak to a higher power....

 

 

[janch]

4 hours ago, Harley said:

I've noticed a fair few commentators become more global in outlook

In the short/medium term, how quickly economies can recover from the Covid shock is bound to make a difference and with all the bad news coming out of the UK/Europe/US about how inept governments have been in handling it all I'm starting to think some of the emerging economies are likely to do better than the developed.  This along with @Cattle Prod's charts re oil demand in India/China etc reinforces that view. 

I'm also looking at charts of companies/etfs/investment trusts etc to see if they've regained their position from before the March dip.  For instance yesterday's Mail on Sunday mentioned a good divi due from City of London Investment Trust (CTY) but it hasn't done that well from it's chart:

[janch]

Compare this with JFJ which I bought a while back as I was getting fed up with everything being red

[DoINeedOne]

Make of this what you will most traded stock per country

[DoINeedOne]

Seems Costco is now selling gold bars 500g

EXPERTS warn people may be getting a poor deal due to price swings in the price of gold then goes on to say the price gold has risen around 28% in the last 12 months

 

[JMD]

2 hours ago, sancho panza said:

We're all generlaists to a degree,but everyone has something they know more about.Due to time pressures,I'm not averse to paying for good information as it can save me horus of research.

AB is incredible on the supply side of the oil market.I'm a little more scpetical on his demand side  because,quite simply,there are a lot more moving parts to the equation.

In the end I always make my own decision on the information in front of me.I'm jsut slightly worried that at a crucail moment on the damnad side,Art could be looking the wrong way.

SP, i think you have misunderstood me, i wasn't trying to split hairs. Instead i was attempting to pick up on your point-2 in your earlier post, by drawing attention to Art Berman's belief that a worldwide irreversible contraction in gdp is imminent.  

I know this doesn't detract from his useful ideas about US supply, its just that CattleProd and others have commented before that Art Berman appears negative about US demand recovery - but as far as i understand Art's thinking goes much further... i.e. he believes that a great reset to the economy is coming.  

Art Berman appears to have moved his webpage article i referenced last time; however the article below, though not by Art himself, is a good summary of what Art thinks.  

As i say, not trying to split hairs here. Both Art Berman and Tim Morgan talk about the importance of the energy-economy but each seems to have very different predictions/drawn different conclusions. e.g. Am i correct in thinking Tim thinks energy is a very good future investment, but Art thinks it a neutral one at best?  

https://un-denial.com/2020/09/07/by-art-berman-stop-expecting-oil-and-the-economy-to-recover/comment-page-1/

[sancho panza]

20 minutes ago, JMD said:

SP, i think you have misunderstood me, i wasn't trying to split hairs. Instead i was attempting to pick up on your point-2 in your earlier post, by drawing attention to Art Berman's belief that a worldwide irreversible contraction in gdp is imminent.  

I know this doesn't detract from his useful ideas about US supply, its just that CattleProd and others have commented before that Art Berman appears negative about US demand recovery - but as far as i understand Art's thinking goes much further... i.e. he believes that a great reset to the economy is coming.  

Art Berman appears to have moved his webpage article i referenced last time; however the article below, though not by Art himself, is a good summary of what Art thinks.  

As i say, not trying to split hairs here. Both Art Berman and Tim Morgan talk about the importance of the energy-economy but each seems to have very different predictions/drawn different conclusions. e.g. Am i correct in thinking Tim thinks energy is a very good future investment, but Art thinks it a neutral one at best?  

https://un-denial.com/2020/09/07/by-art-berman-stop-expecting-oil-and-the-economy-to-recover/comment-page-1/

I understood that to be your point JMD,sorry if I mangled my answer.

Tim and Art are a great example of what I'm tlaking about.Tim has a view on the utility of energy going forward,can see that in terms of enrgy calories,we've had an amazing 40 years and that energy is and will be the economy.I would generally agree.

I'm not sure Art's long term views on energy but he's not as bullish as others because he sees supply cosntarints being offset by demand drops.

I'd put it this way,Tim guides to the asset class to invest in and Art helps you time your entry.

 

Edit to add ,there's a new Tim Morgan post

https://surplusenergyeconomics.wordpress.com/2020/10/01/182-the-castaways-dilemma-part-two/

[sancho panza]

Not sure if we've had this but it covers a lot of what CP has been saying

3/9/2020

http://blog.gorozen.com/blog/global-oil-demand-and-the-impact-of-emerging-markets

“Over the past decade, there has been a chronic bias in the IEA estimates for non-OECD demand, and we believe this time is no different. Our models suggest that emerging market oil demand has held up much better than widely appreciated.”

 

The impact of the coronavirus on global oil demand was drastically less than originally feared. Many oil analysts expected quarantines and travel bans to impact demand by as much as 30 mm b/d during the second quarter. Instead, our models suggest that the impact on demand was nearly 70% less and instead of falling by 30 mm b/d only fell by 10 mm b/d during the quarter.

 

The difference between our estimates and the consensus opinion once again revolves around the so-called “missing barrels,” which have reemerged as a key issue over the past few months. In May, the IEA released its monthly Oil Market Report in which it estimated second quarter demand would fall by 20 m b/d year-on-year to 79.3 m b/d. Such a drop would be consistent with a single-month drop of 30 mm b/d year-on-year for May – the prevailing bear case at the time.

 

As the quarter progressed, however, it became clear that OECD inventories were not building as expected. According to the IEA’s figures, OECD inventories should have grown by 645 million barrels in April. Instead, they only built by 145 million barrels, resulting in a massive 500 million “missing” barrels.

 

Similarly, May OECD inventories should have built by 6.5 mm b/d or 200 mm bbl total. Instead, inventories built by less than half that amount. 

 

Long time readers of our letters know that we believe “missing barrels” reflect understated demand. Over the past decade, there has been a chronic bias in the IEA estimates for non-OECD demand, and we believe this time is no different. Our models suggest that emerging market oil demand has held up much better than widely appreciated.

 

Emerging markets have been critical to global energy markets for many years. However, it is helpful to think back to a period before their ascendency to understand how much things have changed. In the late 1970s high prices and weak economic conditions led to a 10% drop in oil demand between 1979 and 1982. The developed world made up two-thirds of all oil demand and fell 15% while the emerging markets made up the remaining one-third and grew slightly. The developing world was clearly the growth engine, but it only represented a small fraction of total demand. As a result, it took a decade before global oil demand surpassed its old 1979 high.

 

Conditions during the Global Financial Crisis were radically different. By 2007 half of global oil demand was coming from the emerging markets. Despite a ten-fold increase in oil prices and the worst financial panic since the Depression, global demand only fell by 2% from 2007 to 2009. Instead of taking a decade to recover, demand surpassed the old highs within 18 months. One decade later, global oil demand is now 15% higher than in 2007. The growth engine for global oil demand (the emerging markets) had become considerably bigger.

 

Last year, emerging markets exceeded 60% of global oil demand – an all-time high. It is no surprise that global demand is therefore coming in much stronger than expected during this downturn as well.

 

Adjusting for the “missing barrels,” we believe second quarter demand fell by 10 m b/d to average 89.5 mb/d. The IEA expects demand to rebound to within 4 mm b/d of normal by the end of the year, but this figure is likely dramatically understated as welI. Instead, we believe fourth quarter demand will be within 1 mm b/d of normal and could exceed 100 mm b/d. For 2021, our models suggest demand will average at least 100 mm b/d – nearly 2.5 mm b/d higher than the IEA is currently projecting.

 

Consensus opinion believes it will take until the end of 2021 for demand to reach normal pre-coronavirus levels. We would argue we are much closer to normal levels to begin with and demand will soon exceed prior highs.

[Harley]

Here are the partial results of my latest screening of the Oil & Gas sector related industries (as listed by Investing.com).  I'm posting the list FYI (DYOR) but mainly to check I haven't missed any major companies.  Anything major missing?

The screen details:  The top 15 companies in each industry by market cap, excluding those with a Current Ratio < 0.9, those with negative equity, those with a LTDE Ratio > 1,000%(!), those shares other than ordinary shares, and those exchanges of no interest to me.

Some companies (especially in the gas space) are listed under the Utility industry(!), which I will cover next.  May be others like that in other industries too.  Would be good to know, hence one reason for posting.

[nirvana]

there's a geezer on the FT reckons the US $ is due an imminent crash...

The dollar index fell 33 per cent in real terms both in the 1970s and the mid-1980s, and another 28 per cent from 2002 to 2011. During those three periods, the net domestic saving rate averaged 4.9 per cent (versus -1.2 per cent today) and the current account deficit was -2.5 per cent of gross domestic product (versus -3.5 per cent today). With the US having squandered its exorbitant privilege, the dollar is now far more vulnerable to a sharp correction. A crash is looming.

https://www.ft.com/content/46b1a230-8c6c-4feb-b617-21a520cc201b

so then I was getting excited (again) and thinking hmmm, maybe @DurhamBornprediction of $200 oil isn't that daft after all........then i was brought back down to earth by some commentator saying

'down 35% against what? the useless EURO'.......fair comment I thought.......need to keep one's 'cognitive biases' in check, what?

[MrXxxx]

2 hours ago, janch said:

In the short/medium term, how quickly economies can recover from the Covid shock is bound to make a difference and with all the bad news coming out of the UK/Europe/US about how inept governments have been in handling it all I'm starting to think some of the emerging economies are likely to do better than the developed.  This along with @Cattle Prod's charts re oil demand in India/China etc reinforces that view. 

I'm also looking at charts of companies/etfs/investment trusts etc to see if they've regained their position from before the March dip.  For instance yesterday's Mail on Sunday mentioned a good divi due from City of London Investment Trust (CTY) but it hasn't done that well from it's chart:

Its interesting, as I was looking at exactly the same thing yesterday regarding workplace DC pension options. Initial reaction was the same as you, but then I thought "Wait a moment, when is the best time to buy in at a top or bottom?"...also considering switching into the cash option available for a few months to avoid the BK drop that may be triggered by the election, and the buying back into an equity option after they have dropped, and then holding for the long term...not decided yet.

[JREWING]

Analyst consensus for the RDSB share price forecast trends towards the stock is moving higher. Of the 20 analysts that have issued 12-month price targets for the stock, the median target is £15.25, with a high estimate of £31.00 and a low of £10.50, suggesting a 62 per cent increase in the share price, according to Financial Times data.

Swiss bank UBS (UBSG) on September 28 set a price target for the stock of £17.50 and a “buy” rating, while on September 30, Credit Suisse (CS) reiterated its “buy” rating with a target of £15.50 per share.

 

https://capital.com/shell-share-price-forecast-for-years-ahead

[nirvana]

@Pandayoung man.....capital.con are a CFD 'bucket shop'.....trading CFDs can be very dangerous for your wealth and possibly your health, does your wife know? 

[macca]

On 04/10/2020 at 16:15, JMD said:

'Make America Green Again'!!  

I have Siemens shares.. They are about to split my shares as Siemens renewable is separating into its own company..

Very interesting, and clearly something is afoot..