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


spunko

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26 minutes ago, Chewing Grass said:

Transport = Fake Economy (especially Rail)

Power Generation = Fake Economy

Telco's = Fake Economy

Water = Fake Economy

All privatised in the name of competition but so regulated there isn't any.

Shop around and literally say a couple of quid per month max.

Yep,but in a reflation they all increase prices.Tobacco were the classic example.Once only a few big players they dont bother to compete much.They all know far better to all increase prices.

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31 minutes ago, Option5 said:

Rail companies can't win now, if the continue with the prices they have they go bust because a lot of people have got out of the habit of commuting so revenues will fall. If they increase the prices enough to make a difference a lot of people won't be able to afford to commute or want to travel for leisure because of the expense.

Car sharing will make more sense financially.

The only way forward is to nationalise the railways.

Telecos now have many customers who willwant to continue to work from home and will have to swallow the increases. The telecos will say are to cover infrastructure improvements (5G, fibre to house etc) that people will want.

Transports will suffer until oil hits $200 later in the cycle then come good.Rail is crazy due to unions.Should be really cheap yet costs crazy amounts.National Express can get you to London from Darlington on a bus for a tenner outside of lockdown.

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2 hours ago, DurhamBorn said:

UK will do a Cuba and everyone will be driving old cars and keeping them on the road for decades.

Agree. Petrol cars will be clear majority on the roads way past 2050. For a start, everyone will be sure to buy a petrol car in late 2029. Those cars will still be going/alive past 2040.

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58 minutes ago, DurhamBorn said:

Transports will suffer until oil hits $200 later in the cycle then come good.Rail is crazy due to unions.Should be really cheap yet costs crazy amounts.National Express can get you to London from Darlington on a bus for a tenner outside of lockdown.

25% go on wages

33% goes on leasing/maintaining trains, 17% infrastucture costs (network rail), 10% business admin, 8% to uk gov, 5% fuel/energy, 2% profit

The money is in train/infrastructure manufacturers, there are only a few, they operate like tobacco companies.

If western governments follow through on their green policies, companies making trains/maintaining infrastructure should be secure steady earners.

Siemens is one I'll be looking at after the market bust

 

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34 minutes ago, arrow said:

 

Siemens is one I'll be looking at after the market bust

 

Definitely one to pick up in a bust, they cover a lot of the areas we discuss on this thread.

I made the decision to buy oil instead in March, but they are a target.

They've also spun off their renewables arm into Siemens Gamesa, which is another target in a bust.

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1 hour ago, Errol said:

Agree. Petrol cars will be clear majority on the roads way past 2050. For a start, everyone will be sure to buy a petrol car in late 2029. Those cars will still be going/alive past 2040.

Im more likely to keep a 10 year old diesel from now Errol.10 plate Pug probably.Much easier to fix and more robust than new cars,they have massive amounts of sensors etc to go wrong.An even better option is a small or mid sized van.Very easy to maintain,very robust,very easy to work in the engine bay,lot less sensors etc.The Fiat Doblos are great but dont like going over 60mph really.

Il get some plates from a hybrid copied if i need to enter any cities where diesels are banned and change them over :)

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On 13/11/2020 at 15:43, Errol said:

This is huge but isn't getting much coverage in the Western media:

 

China about to pull off ‘diplomatic coup’ by striking world’s largest free trade agreement

Fifteen Asia-Pacific nations including China and Japan plan to sign the world’s biggest free trade deal this weekend. The FTA will cut tariffs, strengthen supply chains with common rules of origin, and codify new e-commerce rules.

The Regional Comprehensive Economic Partnership (RCEP) is expected to be announced at the Association of Southeast Asian Nations (ASEAN) Summit, which Vietnam is hosting virtually. It will involve the ten member states of the ASEAN bloc – Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam – as well as their trade partners Australia, China, Japan, New Zealand, and South Korea.

The new economic bloc will thus represent around a third of the world’s gross domestic product and population.

It will become the first-ever free trade agreement to include China, Japan, and South Korea – Asia’s first, second and fourth-largest economies. 

https://www.rt.com/business/506564-china-worlds-largest-free-trade/

 

Fifteen countries, including China, agree to form world's largest trading bloc

China and 14 other countries agreed to set up the world's largest trading bloc - accounting for almost a third of all global economic activity. The Regional Comprehensive Economic Partnership (RCEP) was signed virtually on Sunday at the annual 10-nation Association of Southeast Asian Nations (ASEAN) in Vietnam.

https://news.sky.com/story/fifteen-countries-including-china-agree-to-form-worlds-largest-trading-bloc-12133171

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14 minutes ago, Errol said:

 

Fifteen countries, including China, agree to form world's largest trading bloc

China and 14 other countries agreed to set up the world's largest trading bloc - accounting for almost a third of all global economic activity. The Regional Comprehensive Economic Partnership (RCEP) was signed virtually on Sunday at the annual 10-nation Association of Southeast Asian Nations (ASEAN) in Vietnam.

https://news.sky.com/story/fifteen-countries-including-china-agree-to-form-worlds-largest-trading-bloc-12133171

Bet they ain't settling in US$.

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On 14/11/2020 at 12:00, Thorn said:

For leverage to Bitcoin there are companies like MARA, Argo blockchain, Hive which seem to go up when it rises.

I'm tempted to put a small amount into some of these crypto miners. Are there any views on here as to which are the better ones for a long term hold? Ie some miners are more successful than others, plus also some mine different coins other than btc. Are there any ideas on which are a better bet especially if looking for alternative to btc. I already own some btc so am looking for something different.

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Interesting Youtube interview (

)

Min 28-Timing for macro strategy

Min 29-Sizing of investments

Min 40-Lack of current opportunities and volatility change

Min 43.43-Late stage momentum, then meltdown in next 18 months; US will be worst, diversify away

Min 47.46-Benefits of Permanent portfolio...but without the bonds! (for attn of @Harley !)

Min 56-Dangers of short term supported liquidity and long term solvency

Min 59.30-Banks and problems/negativity of negative rates, insolvency....Bank equities=0, but Bank bonds=some retained capital?

 

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Bobthebuilder
3 hours ago, Errol said:

Agree. Petrol cars will be clear majority on the roads way past 2050. For a start, everyone will be sure to buy a petrol car in late 2029. Those cars will still be going/alive past 2040.

I have thought for a few years now that carmakers could do well with the final models they make with ICE. Say Ford or Ferrari make a car designed to last for a long time with parts available going forward. Or an old classic with a big spare parts supply already in place like Minis or air cooled VWs plus golf etc. They could make a few retro types with carburettors and no computers.

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5 hours ago, Option5 said:

Rail companies can't win now, if the continue with the prices they have they go bust because a lot of people have got out of the habit of commuting so revenues will fall. If they increase the prices enough to make a difference a lot of people won't be able to afford to commute or want to travel for leisure because of the expense.

Car sharing will make more sense financially.

The only way forward is to nationalise the railways.

Telecos now have many customers who willwant to continue to work from home and will have to swallow the increases. The telecos will say are to cover infrastructure improvements (5G, fibre to house etc) that people will want.

The costs/wages have always been nationalised.

The way forward is to let the whole lit go bust then employ people on new contract.

Despite Labours obsession with trains they are only regularly used by well off people in the South.

Ask around people who dont live in London and earn under 50k. You'll be lucky to find snyonewhos used a train in the last few years.

 

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Chewing Grass
1 minute ago, spygirl said:

Despite Labours obsession with trains they are only regularly used by well off people in the South.

Ask around people who dont live in London and earn under 50k. You'll be lucky to find snyonewhos used a train in the last few years.

HS2 is exactly like that and just like a Toy Train Layout the pleasure is in the building and running it for the first time, after that it becomes boring and eventually starts to fall apart.

HS2 is that, a political Toy Train Set.

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31 minutes ago, Bobthebuilder said:

Ferrari 

I think naturally aspirated Ferrari's (not the newer turbo ones) will be as valuable as a Rembrant or a Matisse in the future.

If I was hundreds of millions of pounds-type rich, I would be buying up all the naturally aspirated ferraris I could find and storing them in a purpose-built facility (with upkeep and cleaning etc etc). The 458 Speciale would be a perfect car to acquire for this purpose. In 50-100 years these cars will be seen as absolutely amazing items. People (the super elite/rich) will be fighting to buy them.

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1 minute ago, Errol said:

In 50-100 years these cars will be seen as absolutely amazing items.

And you'll be dead. Doesn't really seem worth the hassle.

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On 14/11/2020 at 09:51, AWW said:

That doesn't pass the sniff test when you look at the last 20 years. Big HPI with depressed wages.

BoE MMR enforces a hard link between mortgages n wages.

Before that, banks used to have low leverage- 3x main + 1 other income.

Of the last 20 years, 13 have been permanently recession.

And you've had all Labours migrants flood in, followed by ~8m EUers.

These were thrown out of window from late 90s til the UK banking sector blew up in 2007.

Sine then the number of UK mortgages sold has been bouncing along multi decades I.e since mass mortgages started in the 70s.

https://tradingeconomics.com/united-kingdom/mortgage-approvals

All that's happening is an ever  decreasing circle of existing home owners selling houses between each other.

Theyll die out soon, quicker with covid.

 

 

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1 minute ago, Alex said:

And you'll be dead. Doesn't really seem worth the hassle.

It's how dynastic wealth is built and continued. Hence why the great families that have survived are often those with biggest collections of fine things (art, furniture, jewels etc). 

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22 hours ago, sancho panza said:

Euro has been the problem for 20 years.

I think there's a real problem for some of these BTLers in that the assumption that underpins their thesis is that if peolle can't hokiday abroad,they'll holiday here.

If IR's rise and people can't afford a holiday here either,most of them will still have rising mortgage payements to make.

Having said that I can see why someone who went into BTL on 4% gross yields would find the holiday BTL game attractive.ANd I can see why they'll eventiully want out ofthat for an easier life as well.

Personally,I bought the recovery story,still do(three years later...:-)),I didn't dig deep enough into the balance sheet.It's leverage wasnt that out of kilter with the sector,but each bit of bad news got it pummelled and I'm not sure Ian Conn was the man to turn it around tbh

And then I bought the dip.....And then I bought the dip.9_9

These things happen in investing.I've reflected at lenght on it and the human emotions that kept me in the trade.Out of it came the Sancho Coma Scale which has been of benefit to me and I've learned some hard lessons in sticking to buying plans.

Edit to add,jsut read DB's answer,more lucid than mine.We'll be holding and hoping ofr some divis.

UK holidays are typically the 2nd or 3rd or 4th holiday of the year.

When times are hard the spendthrift cut to a single holiday.

The UK holiday market gets abdo,tuely hammered in a recession which used to go hand in hand with higher rates and less lending.

This why youllfind only Leeds BS doing holiday let mortgages. 

 

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Bobthebuilder
20 minutes ago, Alex said:

And you'll be dead. Doesn't really seem worth the hassle.

I presume you do not have children yet?

Fair point though, in the long term we are all dead.

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33 minutes ago, Chewing Grass said:

HS2 is exactly like that and just like a Toy Train Layout the pleasure is in the building and running it for the first time, after that it becomes boring and eventually starts to fall apart.

HS2 is that, a political Toy Train Set.

The EML is operating beyond its planned capacity.

When things go to shit,  everything collapses.

The genesis of HS2 was to increase rail capacity between London n Bham n Leeds.

That's great, makes sense.

Then the plan was handed over to the railways planners, which is full of highly paid idiots who put in tye HS but.

The only route in the UK that needs HS would be London and Edinburgh.

It also didnt take into account t hiw business is changing, less so the rapid covid changes.

HS is to business what LA n convention centres are - something I used to do 25 years ago but have avoided since.

 

 

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Bobthebuilder
45 minutes ago, Chewing Grass said:

HS2 is exactly like that and just like a Toy Train Layout the pleasure is in the building and running it for the first time, after that it becomes boring and eventually starts to fall apart.

I presume you don't build model railways. Some can last for 30 years. I doubt HS2 will be the same.

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50 minutes ago, Chewing Grass said:

HS2 is exactly like that and just like a Toy Train Layout the pleasure is in the building and running it for the first time, after that it becomes boring and eventually starts to fall apart.

HS2 is that, a political Toy Train Set.

We’ve got a couple of aircraft carriers like that.

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1 hour ago, Errol said:

I think naturally aspirated Ferrari's (not the newer turbo ones) will be as valuable as a Rembrant or a Matisse in the future.

If I was hundreds of millions of pounds-type rich, I would be buying up all the naturally aspirated ferraris I could find and storing them in a purpose-built facility (with upkeep and cleaning etc etc). The 458 Speciale would be a perfect car to acquire for this purpose. In 50-100 years these cars will be seen as absolutely amazing items. People (the super elite/rich) will be fighting to buy them.

I hope so. I've got two 355s bought in the teeth of the GFC.

I really wanted a F50 but couldn't stretch to £200k, even borrowed, at the time. They're now one million plus :-(

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So, oil is dead, everyone is going to be driving an electric car and the sjw pension funds and politicians are right in disinvesting from oil companies.

But, did they forget to tell China? Or did they believe the PR nonsense put out by China that China was going green?

Admittedly, US focused, but still gives facts/figures the msm omits.

"In its annual International Outlook Report last year, the U.S. Energy Information Administration (EIA) projected that between 2018 and 2050, consumption of liquid fuels will jump by 22 percent in Asia"

"Increasing exports to India, which imports more than 80 percent of its oil, in addition to being exceptionally lucrative for U.S. energy firms (the EIA estimates India will consume more energy than the United States by 2040), would serve as a means to court the world’s largest democracy amidst its increasing hostilities with China, which in recent months have grown hot."

As for China,
"The largest facet of BRI (Belt and Road Initiative) is energy, and the associated projects are far-reaching, unprecedented, and dirty. While Xi has positioned himself to be a global leader on renewables within the People’s Republic, his government is exporting energy models that emphasize high-emissions fuels, including and especially coal—by far the worst CO2 emitter of any major fuel type."

https://nationalinterest.org/feature/get-ready-energy-export-battle-china-171843?fbclid=IwAR3WQMLj0ejYcqCE1k1Vbv9sxUqaWS7iubKbF2LjmDYgivO0YouJFQZeCOw

 

1605308190-o_1en1t61qc17nt1q051rkl1m7h1e868.jpg

The next wars won't be fought over windfarms, they'll be fought over gas and oil.

 

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