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

[DurhamBorn]

5 hours ago, Green Devil said:

Rates? Up? 😂😂 

That's clutching at straws a bit. 😉

Over 5% by late cycle,30% chance they touch 10%.Massive inflation building in the system.UK is tiny in the scheme of things.Sterling down 80% or rates up.BOE wont be driving rates,US long bond will.Fed will be fighting inflation so wont engage at the long end much.

[Barnsey]

Fun day ahead? 

 

[DurhamBorn]

7 hours ago, UnconventionalWisdom said:

I agree with you- inflation will destroy pensions as they are mainly lifestyle funds with a higher proportion of bonds as people approach retirement age. What do you think the polotical fall-out will be if they lose say 50%. The majority of people haven't bothered to learn anything about how pensions work and expect it to be sorted by the fund managers. Not only will there be a lot of angry and worried retirees, but younger people will question whether to save if their pensions can be decimated. 

I think we'll see a big drop in stock and bond prices leading to people wanting to move into cash causing further drops.

It will be a distribution cycle so people will be selling down assets to keep up with inflation/living expenses etc.High bond allocations will see a lot of damage i expect.Even a 25% loss with no coupons to make up for it will be a disaster with cycle inflation of 60%+.Younger people should be buying inflation assets now,my son bought nearly £30k of silver and is up nearly 50%.Hes 22 and intends to pay his house off with it when the mortgage meets the silver value.If he sold now he would only have a mortgage for £40k on a really nice house.Young people need to educate themselves a bit because what i see at work etc is a complete lack of knowledge about finance,some even opted out of the pension where 100% costs you 31%.Crazy.They could transfer into a SIPP the day they leave.

[Loki]

41 minutes ago, Barnsey said:

Fun day ahead? 

It's going to be a bloodbath and I'm working today. No mobiles allowed either

[Majorpain]

8 hours ago, Loki said:

Can you elaborate? I understand the magnitude of the event but not the mechanics 

Tell me about it, its a question of timing the mixture of the US political system and Geopolitics, neither of which are simple. 

Hunter Biden stuff filled in a lot of the blanks, Joe's enriching himself in public office leaves him with debts/favours for others to cash in.  Needless to say if they can create enough turmoil its very dollar negative IMO, so not all bad news for us, although very bad news for the US.

[CVG]

BP posts $100 million profit in third quarter, beating forecast

[MrXxxx]

9 hours ago, UnconventionalWisdom said:

I agree with you- inflation will destroy pensions as they are mainly lifestyle funds with a higher proportion of bonds as people approach retirement age. What do you think the polotical fall-out will be if they lose say 50%. The majority of people haven't bothered to learn anything about how pensions work and expect it to be sorted by the fund managers. Not only will there be a lot of angry and worried retirees, but younger people will question whether to save if their pensions can be decimated. 

I think we'll see a big drop in stock and bond prices leading to people wanting to move into cash causing further drops.

Agree, and the government will reverse the pension reforms by stopping people taking lump sums and making the purchase of an annuity compulsory.

[MrXxxx]

1 hour ago, DurhamBorn said:

Young people need to educate themselves a bit because what i see at work etc is a complete lack of knowledge about finance,some even opted out of the pension where 100% costs you 31%.Crazy.

The problem is DB tha we get our education from mainly two sources, the state and our parents. The former has an agenda in keeping the populus financially illiterate, with the majority in the latter group being a product of this the lack of education is self-fulfilling. I would say you and the majority on here are the exception to the rule.

[MrXxxx]

1 minute ago, MrXxxx said:

The problem is DB tha we get our education from mainly two sources, the state and our parents. The former has an agenda in keeping the populus financially illiterate, with the majority in the latter group being a product of this the lack of education is self-fulfilling. I would say you and the majority on here are the exception to the rule.

Meant to be `that`...you see the longer I spend on this forum with you bloody Northerners, the more I'm starting to talk like you...next I'll be putting gravy on my chips! :-)

[StrugglingMillennial]

1 hour ago, DurhamBorn said:

It will be a distribution cycle so people will be selling down assets to keep up with inflation/living expenses etc.High bond allocations will see a lot of damage i expect.Even a 25% loss with no coupons to make up for it will be a disaster with cycle inflation of 60%+.Younger people should be buying inflation assets now,my son bought nearly £30k of silver and is up nearly 50%.Hes 22 and intends to pay his house off with it when the mortgage meets the silver value.If he sold now he would only have a mortgage for £40k on a really nice house.Young people need to educate themselves a bit because what i see at work etc is a complete lack of knowledge about finance,some even opted out of the pension where 100% costs you 31%.Crazy.They could transfer into a SIPP the day they leave.

To be honest Durham thats why i followed you over from the other forum that this thread used to he on.

I will be honest and say that i didn't have a great understanding of most of it at the start so my gold and silver holding never became that large but i feel like ive built up a nice variety of shares in an ISA and ive learnt alot along the way.

Being a millenial i can honestly say that most people of my generation do not care about their future, following a thread like this would be deemed as boring and a distraction from the instagram,holiday,party and iphone life that most of them want but i am grateful of the content that people post on here.

 

[MrXxxx]

21 minutes ago, CVG said:

BP posts $100 million profit in third quarter, beating forecast

Bugger!...although knowing the illogical way the markets have behaved recently it probably means they will drop by 10%! :-)

[geordie_lurch]

26 minutes ago, CVG said:

BP posts $100 million profit in third quarter, beating forecast

Bloomberg not as positive as I took that headline...

BP Plc narrowly avoided a third-quarter loss, defying analyst expectations as a rebound in earnings from fuel sales offset “extremely weak” refining margins.

The surprise profit may do little to change the gloomy outlook for Big Oil earnings. While crude prices have recovered from historic lows seen in April, BP’s profit was down 96% from a year earlier as restrictions put in place to slow the spread of the coronavirus in Europe and the U.S. kept fuel demand at bay.

[Democorruptcy]

39 minutes ago, CVG said:

BP posts $100 million profit in third quarter, beating forecast

$100m?

It's like finding a penny down the back of the settee for them.

[CVG]

13 minutes ago, geordie_lurch said:

Bloomberg not as positive as I took that headline...

BP Plc narrowly avoided a third-quarter loss, defying analyst expectations as a rebound in earnings from fuel sales offset “extremely weak” refining margins.

The surprise profit may do little to change the gloomy outlook for Big Oil earnings. While crude prices have recovered from historic lows seen in April, BP’s profit was down 96% from a year earlier as restrictions put in place to slow the spread of the coronavirus in Europe and the U.S. kept fuel demand at bay.

It's funny how bias can be introduced without lying.

This kind of reporting is what we want for now.

[Harley]

38 minutes ago, MrXxxx said:

Meant to be `that`...you see the longer I spend on this forum with you bloody Northerners, the more I'm starting to talk like you...next I'll be putting gravy on my chips! :-)

I put Sunday's remaining gravy on my potato croquettes last night.  Very nice!  I am kind of central after all.

Moving on, things seem quite quiet here and the other threads.  Covid depression?  All on holiday?!  Specifically for this thread - slackwater, what to do?

[Democorruptcy]

Is the replacement cost profit helped by selling the petrochemicals business to Ineos for $5bn?

Divi the same

Quote

 

BP said its third-quarter performance showed signs of improvement despite a difficult environment brought about by the coronavirus pandemic.

For the third quarter ended September 30, BP posted a loss of USD45 million, narrowed from USD749 million last year; however its replacement cost loss widened to USD644 million from USD351 million.

Underlying replacement cost profit, the company's preferred measure, was USD100 million, compared with a loss of USD6.7 billion in the second quarter, and USD2.3 billion profit for the third quarter of 2019.

BP said that compared to the second quarter, the results benefited from the absence of significant exploration write-offs and recovering oil and gas prices and demand. This was partly offset by significantly lower oil trading result.

BP declared a third-quarter dividend of 5.25 US cents, halved from 10.25 cents in the third quarter last year.

Looking ahead, BP said the ongoing effects of the Covid-19 pandemic continue to create a volatile and challenging trading environment. There have been some early signs of global economic recovery as countries move to more regional or localised restrictions on movement and governments continue to offer monetary and fiscal policy stimulus. However, the shape and pace of the recovery is uncertain, as it depends on the further spread of the pandemic.

https://www.lse.co.uk/news/BP./london-market-pre-open-bp-sees-improvement-in-third-quarter-d13hcppjslwh2ka.html

 

BP Refining running at 80% capacity and fuel sales down 15%.

https://www.lse.co.uk/news/BP./weak-oil-demand-unchanged-so-far-in-q4-bp-cfo-79przzavt57981b.html

[geordie_lurch]

Well that current 1.45% up today on their 'good' news means I'm almost back to only 30% down on my BP shares and I bought all mine at 300 or under Good job I'm in this for the long term as per others on here

[Popuplights]

1 hour ago, Democorruptcy said:

It's like finding a penny down the back of the settee for them.

When my kids were small they always liked to have a rake about down the back of the chairs and settee at my in-laws house as my FIL had a habit of losing pound coins down them . They usually came away happy!!

[The Idiocrat]

 

1 hour ago, geordie_lurch said:

Well that current 1.45% up today on their 'good' news means I'm almost back to only 30% down on my BP shares and I bought all mine at 300 or under Good job I'm in this for the long term as per others on here

If it's any consolation I'm still down 35% and have continured to buy ladders and reinvest divies. I started buying after it "bottomed" after Deep Water Horizon in 2010! 

[nirvana]

It's an interesting psychological battle this 'investing'.....

Just looked at my SIPP and I'm down over 10% this year....in it for the long term eh?

Whereas my ISAs in profit cos I'm more ruthless at cutting the losers.....

So why aren't you guys being more ruthless? Is it the fear of admitting to yourself 'I was wrong'?

Oh yeah and all that SIPP loss is fooking oilies 

[Loki]

6 minutes ago, 5min OCD speculator said:

So why aren't you guys being more ruthless? Is it the fear of admitting to yourself 'I was wrong'?

Because when I over-fiddle with things, it generally goes wrong.  Would never say anyone who is happy to buy and sell shouldn't do though!

[nirvana]

12 minutes ago, Loki said:

Because when I over-fiddle with things

yeah I dunno if we do this through boredom or thinking we're the next Warren Buffet......

Think I'll get the paper out and stick 'Cut your losers, run your winners' on the bottom of my monitor......

and 'WARNING: You're never too old to behave like a cunt' on the other one 

[nirvana]

Does anyone recall me saying 'RDSB sub £8.90 dump the lot'? Well I'm hovering over the sell button but it's such a horrendous loss I'm physically shaking............or maybe it's too cold and I need to throw more wads o cash on the log burner

see the early loss is the easy loss  

Edit: phew it's bounced off 890 

[Talking Monkey]

1 hour ago, 5min OCD speculator said:

It's an interesting psychological battle this 'investing'.....

Just looked at my SIPP and I'm down over 10% this year....in it for the long term eh?

Whereas my ISAs in profit cos I'm more ruthless at cutting the losers.....

So why aren't you guys being more ruthless? Is it the fear of admitting to yourself 'I was wrong'?

Oh yeah and all that SIPP loss is fooking oilies 

In terms of investing rather than day trading the thesis on this thread is to hold for the long term through at least to the other side of 2025 probably closer to 2030. 

In terms of the payoff for the type of portfolio this thread has a preference for, the capital gains and substantially increasing dividends are expected to start materializing 2023-24 onward 

The oil stocks are down, with the first tranches substantially down, however this I think is a positive as it allows the lower ladders to be triggered. In terms of admitting being wrong I don't think what is materializing is evidence of being wrong, rather it is short term market dynamics with the added complexity of the overlay of a) A cycle turn b) This drama with Covid.

Each of us have to make our own decisions but I think in terms of an individuals positioning in oil stocks whatever the p/l on those current positions looks like it may be wise if one does not need the cash to just let the positions now run through the cycle

For me the thesis is still sound, I bought a tranche of Repsol and BP today

[nirvana]

16 minutes ago, Talking Monkey said:

For me the thesis is still sound, I bought a tranche of Repsol and BP today

wooo you're a glutton for punishment 

What I'm struggling with at the moment is it's pretty clear to me the markets are going down 'short term'*

Not only do the charts say so but so does the news, the elections, the lurgy, the bailout is off blah blah

THERE IS NO FOOKING GOOD NEWS.......even the weather is shite 

Christ I need to go looking for shrooms in the forest....STEP AWAY FROM THE COMPUTER 

*And if it's pretty clear something is going to be cheaper tomorrow, you sell and buy back cheaper or wait.....