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

[sancho panza]

1 minute ago, Eventually Right said:

What about the risk of a political deadlock if there's dispute over the election result, or a democrat/republican split in between the white house and one or other of the houses of congress, that means the make-up/size of the stimulus package gets argued over for a couple of months?

(granted, that's kinda what everyone expects right now-the most surprising thing would be if Trump graciously concedes in a week's time, and a bipartisan stimulus package is agreed within a couple of weeks-then we might get the melt-up David talks about!)

you are trading the election here.If Trump gets reelected with more than say a 12 electoral college vote majority,there will be no challenge.

If Biden wins it'll be more than 12 seats.

Reality is that it looks like Trump has florida,two routes to the white house follow given he's likely to retain Texas/Ohio/Iowa/Gerogia/North Carolina

1) Nevada/New Hampshire/one of Michigan or Wisconsin

2) trump retains Mich/Wisc/poss Pennsylvania

 

Biden looks like he now has one real route the the WH and that's

1) Wisc/Mich/Penn

If Biden wins by decent margins in those states,Trump won't challenge.

 

Decl:msot likely by Modnay,we'll have moeny on a Trump win.

[Democorruptcy]

 

9 minutes ago, Cattle Prod said:

I think the election movements will be short term, I don't think either candidate will be good or bad for the oil market, the seeds are now sown and neither can really influence it as market forces can. Tinker around the edges, maybe. Examples:

- Fracking has massively declined under Trump.

- Only something like 5% of lease sales have been taken up in the USA under Trump.

- Biden might get cosy with Iran, but they are already exporting a bunch of their oil covertly. Remains to be seen how much more they could add

- Neither will get Venezuela back on its feet in time.

- Neither will be able to arrest the decline in Mexico.

- Both will have to get cosy with the Middle East again.

The oil market direction will be largely be driven by Asian demand, and OPEC supply. 

I agree the election movement might only be short term but it seems to be perceived as Biden is an anti-fossil fuel climate changer but Trump is the opposite. The Trump administration put a report out this month
 

Quote

 

The Trump administration’s energy department is rolling out a lengthy report touting oil and gas as “providing energy security and supporting our quality of life”, without acknowledging that fossil fuels are the main cause of the climate crisis.

Released a month before the election, the report is strikingly at odds with the realities of climate change that the American public has been coping with over the past few months, from huge wildfires to destructive derecho storms and a series of intense hurricanes.

The cover of the report features verdant produce and a happy couple cooking over a gas stove. The department uses the word “climate” in the report only once, in reference to an industry initiative. The department estimates it spent about $200,000 on the project.

“Over the past two decades, Americans have witnessed dramatic growth in our nation’s ability to produce the oil and natural gas needed to power our vibrant economy and support our modern lifestyle,” the introduction says.

more at https://www.theguardian.com/us-news/2020/oct/06/trump-report-touts-oil-and-gas-as-energy-security-amid-us-climate-disasters

 

 

[sancho panza]

19 minutes ago, Democorruptcy said:

The up day for oil last week was after the Biden/Trump 2nd debate. Trump did better than in the first one and I think he is seen as better for oil and gas. I think if Trump won oil jumps up. Latest Betfair odds are roughly 1/2 Biden and 2/1 Trump so not that much in it.

Bang on Dm.Early voting showing Trump is close in Mich and Wisc.Florida looks good for him

It's 'place your bets' time.

[sancho panza]

11 minutes ago, Cattle Prod said:

I think the election movements will be short term, I don't think either candidate will be good or bad for the oil market, the seeds are now sown and neither can really influence it as market forces can. Tinker around the edges, maybe. Examples:

- Fracking has massively declined under Trump.

- Only something like 5% of lease sales have been taken up in the USA under Trump.

- Biden might get cosy with Iran, but they are already exporting a bunch of their oil covertly. Remains to be seen how much more they could add

- Neither will get Venezuela back on its feet in time.

- Neither will be able to arrest the decline in Mexico.

- Both will have to get cosy with the Middle East again.

The oil market direction will be largely be driven by Asian demand, and OPEC supply. 

I think there'll be a sugar rush stimulus if we get a clear winner.I think we will in the electoral college.

Longer term that 11mn barrels a day going into China will drive the market as you say.Especially if India climbs on board the train.

[kibuc]

3 minutes ago, sancho panza said:

I think there'll be a sugar rush stimulus if we get a clear winner.I think we will in the electoral college.

Longer term that 11mn barrels a day going into China will drive the market as you say.Especially if India climbs on board the train.

I have a similar feeling, that the package will be agreed on shortly after the election regardless of the result. At the moment, nobody wants to give the other side the opportunity to claim credit, but once all those ballot papers are in there's no need for posturing anymore.

[sancho panza]

6 minutes ago, Barnsey said:

 

March/Apirl is my timeframe for a decent sell off.If oil has moved upo by then,we could be getting inflation in the pipelines but the timeframe is likely too tight for that tbh.

 

[sancho panza]

On 03/09/2020 at 14:27, sancho panza said:

as per DB's thanks ,much apprecaite the education.

ref oil price triggering BK,I'm in that camp with what I see as good reason.Clearly there are a lot more variables than oil but still correlation causation  etc.

Of the last three recessions,each has been preceded by a 50% + rise in the oil price.

As per our recent discussion on dollar weakness,one of my triggers for selling dollar hedges and buying dollars is a rising oil price.Hence,for where we are now,we're set for BK psot an oil price rise past $80 or so(and/or copper>$3.60,GSR <45,DXY<85,cable>$1.65,UST>2%).May sound ambitious but I see a key part of fed not being able to print HAS  to be heighenting infaltion expectations of which I think oil rising will play it's part.As long as the Fed can print the credit event/BK is unlikely.

You say history doesn't repaert but I'm going to throw some timelines out here.Using monthlies.

Early 90's recession

Oct 1998 Oil bottoms monthly close $13.58,intraday $12.28

July 1990  US recession starts with oil at $20.69

Sept 1990 oil peaks at monthly close $39.51

Oct 1990 oil intraday peak $41.15

Oct 1990 S&P 500 bottoms

March 1991 US recession ends with oil at $19.63

 

Tech Bubble bursting

Dec 1998  Oil bottoms at $10.35,turns up

Mar 2000  US recession starts with Oil at $26.90

Aug 2000 S&P500 monthly peak

Sep 2000 Intraday oil peak at $37.80

Nov 2000 US recession ends-Greenspan put.

Nov 2000 Oil peaks on monthlies at $33.82

Aug 2002 S&P bottoms on the monthlies

 

2008 Recession

Jan 2007 Oil bottoms on the monthlies at $58.14

Oct 2007 S&P peaks on monthlies

Dec 2007 US enters recession with Oil at $95.98

June 2008 Oil peaks at $140-monthlies

Feb 2009 S&P bottoms

June 2009 US recession ends with oil at $69.89

 

2020's recession

April 2020 oil bottoms on the monthlies at $19.56

 

 

As I've shown before,in the last three big recessions oil has risen before each one.Will this time be different?

[Harley]

I really should have kept me mouth shut.  Bad day yesterday and again today.  Worse for my LSE stocks that the index (what's the opposite of "alpha")!  I want to get off, can I have my money back please?   Wasn't me fault!

[Harley]

13 hours ago, sancho panza said:

This really highlights the problem for msot investors in that they're looking the wrong way ie West rather than East.

What I've been saying.  My stock screens point to Asian stocks.  The US ones tend to look bloated on price, debt and intangibles with some not being able to fund all their divs out of operating cash flow.

[Harley]

3 hours ago, Tingles said:

First ladders in this morning on BP, RDSB and REP.  Hopefully some XOM this afternoon.

I always like your posts.....well avatar actually!

[Harley]

1 hour ago, Popuplights said:

My portfolio has just gone overall red. 

Please do keep up at the back will you!

[NogintheNog]

Commodities bull coming, but not oil.

Yet....

https://youtu.be/PGdZAxvM9Gc

Quote

The cost of going 'Green' will be $20,000 per year for an American family of four until 2050

Cripes, try doing that without money printing and inflation!

[Harley]

47 minutes ago, Eventually Right said:

What about the risk of a political deadlock if there's dispute over the election result, or a democrat/republican split in between the white house and one or other of the houses of congress, that means the make-up/size of the stimulus package gets argued over for a couple of months?

(granted, that's kinda what everyone expects right now-the most surprising thing would be if Trump graciously concedes in a week's time, and a bipartisan stimulus package is agreed within a couple of weeks-then we might get the melt-up David talks about!)

I can see an early stimulus FWIW.  Either winner will want to placate the masses as at least one side will think the election was "stolen".  But ultimately (apart from what discretion the President has) that depends on the composition of the Houses.  When is that due to change?

[Castlevania]

1 hour ago, Democorruptcy said:

The up day for oil last week was after the Biden/Trump 2nd debate. Trump did better than in the first one and I think he is seen as better for oil and gas. I think if Trump won oil jumps up. Latest Betfair odds are roughly 1/2 Biden and 2/1 Trump so not that much in it.

Go long shale. Go long ConocoPhillips. Assuming you expect a Trump victory that is.

[Eventually Right]

4 minutes ago, Harley said:

I can see an early stimulus FWIW.  Either winner will want to placate the masses as at least one side will think the election was "stolen".  But ultimately (apart from what discretion the President has) that depends on the composition of the Houses.  When is that due to change?

That's a good point on placating the masses-but I still think that could come Q1 2021 rather than any sooner.

Senate and House elections same day as the presidential election-so in theory could be completely different make-up this time next week.

 

[Harley]

2 minutes ago, Castlevania said:

Go long shale. Go long ConocoPhillips. Assuming you expect a Trump victory that is.

Bought my first tranche a week or so ago.  Scored well on my screener.  Do shale do they?!

[NogintheNog]

1 hour ago, sancho panza said:

Dont want to drop our gold exposure but sometimes you look at the stats and think that your Barrick money from 2017 could today buy 5 times as many BP shares as you could  have when you bought the barrick..............................

That's what I did the other day from the sale of some HGM shares.

So far it's not working

[stoobs]

If Trump wins, the stimulus will happen quickly

If Trump loses narrowly, who knows what will happen. Martial law?

If Trump loses convincingly, is it likely he will behave predictably or cooperatively for the 10 weeks until Biden's inauguration?

[geordie_lurch]

I'm thinking about my Stocks & Shares ISA like the cat in the famous Schrödinger's cat idea... if I just don't log back into my account for a few months then the current carnage will have both happened and not happened but it's not until I log in it actually happens

[Talking Monkey]

2 hours ago, Barnsey said:

As soon as it was confirmed that the stimulus package was a no go before the election (therefore Q1 2021 at earliest), and covid cases going parabolic, radio silence. Coincidence?

Much of his melt up thesis relied on a stimulus package being passed asap.

He did make comments on occasion that it was only a part of his thesis but I think in reality it is most of it

[Sugarlips]

https://www.kitco.com/commentaries/2020-10-28/Equities-in-panic-mode-gold-selling-off.html

What is everyone’s Gold & Silver price target if we get a proper flash crash?

I know the Macrovoices guys said they would be adding at lowish $1800’s and backing the truck up if it heads anywhere near $1600...

[Starsend]

Hi all

I'm sure many of you have heard of Rick Rule/Sprott, bit of an investment legend, especially PMs. Lot of stuff from him on YouTube, I have a lot of respect for his opinions.

They do a portfolio review service where they grade your stocks (natural resources only) from 1 to 10 with 1 being the best and 10 I guess ultra shit. He does say ones are extremely rare. I'm not sure exactly what the exact parameters are, stability, future profitability etc but I thought it worth sharing as some of the comments are interesting and the things such as BP being ranked higher than Shell.

You can only enter a set number of stocks, some others on my watch list I would have liked an opinion on as well but perhaps other people can avail themselves of this free service.

BP p.l.c. (LSE:BP.)	5
Royal Dutch Shell plc (ENXTAM:RDSA)	6
Repsol, S.A. (BME:REP)	5
Schlumberger Limited (NYSE:SLB)		no opinion
Occidental Petroleum Corporation (NYSE:OXY)	6	new balance sheet issues
GasLog Partners LP (NYSE:GLOP)		no opinion
Fresnillo Plc (LSE:FRES)	5	very cheap, but opaque
VanEck Vectors ETF Trust - VanEck Vectors Junior Gold Miners ETF (ARCA:GDXJ)	5
GDX	5
MAG Silver Corp. (TSX:MAG)	4	superb deposit
Barrick Gold (NYSE:GOLD)	4	best of the biggies. First stop for generalist investors, in gold space
Agnico Eagle Mines Limited (NYSE:AEM)	4	superb, not cheap, rapid free cash growth, major capital spend passed
Pan American Silver Corp. (TSX:PAAS)	4	core silver name, big price run up, huge upside, big political risk
First Majestic Silver Corp. (TSX:FR)	5	not cheap, big recent price run up, great silver leverage, cult stock, marginal at these prices
Fortuna Silver Mines Inc. (TSX:FVI)	5	cheap, well run, cash short, Lindero implementation challenges
Hochschild Mining plc (LSE:HOC)	5
Endeavour Silver Corp. (TSX:EDR)	6	great silver leverage, unprofitable, small mines
Wesdome Gold Mines Ltd. (TSX:WDO)	5	well run, very fully priced
Harmony Gold Mining Company Limited (JSE:HAR)	5
Yamana Gold Inc. (TSX:YRI)	6	low inside ownership, high G&A
Franco-Nevada Corporation (TSX:FNV)	4	best of the best, growth built in, not cheap
Anglo American plc (LSE:AAL)		no opinion
Nutrien Ltd. (TSX:NTR)	4	world leading integrated plant nutrient business
Hecla Mining Company (NYSE:HL)	7	low inside ownership, high G&A
AngloGold Ashanti Limited (JSE:ANG)	5
Coeur Mining, Inc. (NYSE:CDE)	6	good following, low inside ownership, high G&A

[Democorruptcy]

41 minutes ago, Castlevania said:

Go long shale. Go long ConocoPhillips. Assuming you expect a Trump victory that is.

Cheers but I don't really have an opinion on the election and don't really want to put any more money into oil.

[JMD]

2 hours ago, Loki said:

True.  I'll give him the benefit of the doubt for now due to the timescales of being a macro guy and not a trader.  I couldn't offer much by way of a counter-argument to his posts other than "LOOK IT'S ALL RED" when who knows what next week or month will bring

I've dabbled a bit on silver with 'fun' money and that's down, I'm just going to let that ride until the fees (CFD) erode the spare margin and I get margin called.  No point throwing good money after bad.  Different story with dividend paying stocks, I've never sold any of mine at a loss, you never know what will happen. 

I guess you guys have seen this, but just in case not i have posted it below. DH did do a interview last week. I notice he is more low key in his 'forward-guidance' predictions... apparently melt-up still due to happen anytime soon with/without stimulous, with bust to occur in first half of next year. 

 

[reformed nice guy]

VIX up 13%, good times!