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

[JMD]

I note the Cornish mining industry is opening up again for business. More modestly this time, but it still does have ambitions - and apparently also the reserves - to become Europe's largest Lithium producer. I understand that strategically this may put the UK in prime position for EV production because battery manufacture/fitting logistically means siting these things together.... Hmm, maybe Dyson will make a return to electric cars?                                                                                                                                                                         I had a look to see if I could buy some British Lithium stock, as it has rights to the largest Lithium mine, but it appears to be private company. Does anyone know of any other British miners that are worth a punt?

[Noallegiance]

Rishi: "We'll have to look at returning to sustainable public finances".

Erm.

Yo, Rish! When was the last time we had sustainable public finances and what does that look like?

Yo, Rishi my man! How's the £600bn infrastructure plan coming?

Rish! What happens to public life when the printing and handouts stop? You know? The situation we wouldn't be in if we hadn't created state reliance and credit-driven economies in the first place?

Rishi! Over here! Rishi! It's Reality! Don't you recognise me?! Rishiiiiiiiiii!!!!

[AlfredTheLittle]

1 hour ago, Noallegiance said:

Rishi: "We'll have to look at returning to sustainable public finances".

Erm.

Yo, Rish! When was the last time we had sustainable public finances and what does that look like?

Yo, Rishi my man! How's the £600bn infrastructure plan coming?

Rish! What happens to public life when the printing and handouts stop? You know? The situation we wouldn't be in if we hadn't created state reliance and credit-driven economies in the first place?

Rishi! Over here! Rishi! It's Reality! Don't you recognise me?! Rishiiiiiiiiii!!!!

Rish! What about the purple people?

No worries, I'll chuck em 50 billion, should see them through till spring.

Rishi! I've got a lorry load of masks, guaranteed covid safe. Retail price 10 billion, but I'll do you a special deal at 15!

Fantastic, I'll have them all. Got any more? 

 

 

 

[DurhamBorn]

https://www.telegraph.co.uk/business/2020/11/18/boris-johnsons-green-industrial-revolution-path-economic-political/

Fantastic that the MSM and everyone are now simply accepting of things,and missing the big picture.Massive liquidity building in the system and an area to unleash it.As we predicted it would suit the politics and the economics.

There is going to be a green bubble,thats certain,but as a macro contrarian i want to know where all this capital flows to during the transition.That will be carbon based energy.

It should also be noted the UK is better placed than anyone for green energy.The world will struggle to replicate for decades,or in Asia 50 years.

The only real risks for bit energy companies is that their capital is going up against green bonds etc at very low rates.That should change mid cycle as rates increase as big oils cash flow explodes.Big oil might get to buy up bankrupt green energy projects that struggle to re-finance etc.

The cycle will get going,but then as inflation moves governments wont be able to expand borrowing and CBs will be trapped from any QE.

Green energy and an industrial cycle is coming,but its not big oil who will suffer,its bonds and interest paying debt.

 

[UnconventionalWisdom]

https://threadreaderapp.com/thread/1330434602293489665.html

 

Not obvious, but I think this guy is predicting we are close to the deflationary bust. 

 

[Yadda yadda yadda]

1 hour ago, DurhamBorn said:

https://www.telegraph.co.uk/business/2020/11/18/boris-johnsons-green-industrial-revolution-path-economic-political/

Fantastic that the MSM and everyone are now simply accepting of things,and missing the big picture.Massive liquidity building in the system and an area to unleash it.As we predicted it would suit the politics and the economics.

There is going to be a green bubble,thats certain,but as a macro contrarian i want to know where all this capital flows to during the transition.That will be carbon based energy.

It should also be noted the UK is better placed than anyone for green energy.The world will struggle to replicate for decades,or in Asia 50 years.

The only real risks for bit energy companies is that their capital is going up against green bonds etc at very low rates.That should change mid cycle as rates increase as big oils cash flow explodes.Big oil might get to buy up bankrupt green energy projects that struggle to re-finance etc.

The cycle will get going,but then as inflation moves governments wont be able to expand borrowing and CBs will be trapped from any QE.

Green energy and an industrial cycle is coming,but its not big oil who will suffer,its bonds and interest paying debt.

 

Does Asia or any of its larger nations have a route to energy independence? Any combination of fossil fuels, green and nuclear. Ignore the Middle East here, we will count them separately. If not does that mean that their industrial competitiveness will wane? Is it even possible for them to get close to Western living standards at predicted population levels?

Obviously if UK industrial competitiveness bounces back, as expected by DB, that has to be because of comparative advantage returning from Asia. I guess I'm wondering if Asian economic expansion will hit a plateau.

[JREWING]

This can't be good news?

https://oilprice.com/Energy/Energy-General/Cushing-Oil-Inventories-Are-Soaring-Again.html

 

These lockdowns looking like a common thing going forward. 

Anybody decided to dip out lately in the likelihood of another big leg down?

Another March on the horizon or a big US selloff post election. The big K even?

If your easily in the blue on the Oilies. I know a risk, but on the upside if the market tanks. Could make a huge difference going forward on entry points to yield performance over the next decade.

Be interesting to see if there is another announcement at noon tomorrow.

Another steep upwards trajectory.

[Noallegiance]

39 minutes ago, UnconventionalWisdom said:

https://threadreaderapp.com/thread/1330434602293489665.html

 

Not obvious, but I think this guy is predicting we are close to the deflationary bust. 

 

So hard to decide whether to hold off the next tranche of buying. I know the equities I have will do well long term but the chance of picking up bargain basement prices has a strong pull.

[DurhamBorn]

2 minutes ago, Yadda yadda yadda said:

Does Asia or any of its larger nations have a route to energy independence? Any combination of fossil fuels, green and nuclear. Ignore the Middle East here, we will count them separately. If not does that mean that their industrial competitiveness will wane? Is it even possible for them to get close to Western living standards at predicted population levels?

Obviously if UK industrial competitiveness bounces back, as expected by DB, that has to be because of comparative advantage returning from Asia. I guess I'm wondering if Asian economic expansion will hit a plateau.

They will consume more themselves instead of exporting.The UK will experience an industrial recovery,but not making consumer goods,making things that are the backbone of economies.A lot of the investment in energy will come from falling house prices in the south etc.The country will get richer but most people wont.Income will rise while assets fall.

 

[Barnsey]

 

[Errol]

2 hours ago, DurhamBorn said:

It should also be noted the UK is better placed than anyone for green energy.The world will struggle to replicate for decades,or in Asia 50 years.

As far as I'm aware, China is the world leader in green technologies. The West is behind them.

 

https://www.foreignaffairs.com/articles/china/2020-02-28/how-china-became-worlds-leader-green-energy

https://www.csis.org/east-green-chinas-global-leadership-renewable-energy

https://foreignpolicy.com/2020/10/02/china-clean-energy-technology-winning-sell/

https://www.forbes.com/sites/dominicdudley/2019/01/11/china-renewable-energy-superpower/?sh=227d009c745a

[UnconventionalWisdom]

1 hour ago, Noallegiance said:

So hard to decide whether to hold off the next tranche of buying. I know the equities I have will do well long term but the chance of picking up bargain basement prices has a strong pull.

I agree. There is also a risk of being wrong which is why I added more physical last week. I think equities and gold/silver will get hit hard but if the BK doesn't happen, I don't want to miss out. 

Still, interesting times coming up. I've not gone into bitcoin but it seems there is a lot of acceptance from banks that will prob drive it up. A pullback would be welcomed so i can gain some exposure.

[UnconventionalWisdom]

2 minutes ago, Errol said:

As far as I'm aware, China is the world leader in green technologies. The West is behind them.

This is true, but the UK could buy the tech developed by China and utilise it's wind and wave benefit.

[DurhamBorn]

20 minutes ago, Errol said:

As far as I'm aware, China is the world leader in green technologies. The West is behind them.

China has tech,but the UK being small and windy has the best options for its size.China will need massive amounts of reliable base load even with lots of green energy.The north sea is crucial to it of course.Teesside or the Humber can easily add hydrogen into the gas network for instance from hydrogen made with blue or green.China would take multi decades to be abler to cover its networks.I think China will push forward on EV of course,but they will be being charged with leccy made from gas turbines exanding.

[arrow]

Jobs and capital spending prioritising the north. looks like your house price durhamborn is soon going to equal the fulham millionaires

 

"Rishi Sunak will next week commit tens of billions of pounds to major infrastructure projects as he promises to finally remedy the North-South divide despite the toll taken by coronavirus on the public finances.

He is expected to allocate money to the Department for Transport to launch Northern Powerhouse Rail, linking together major Northern cities

The Chancellor will overhaul the Treasury's investment rules, blamed for historically skewing funding towards the South-East and London, with decision-making focused on long-term objectives over instant results.

Mr Sunak will also reaffirm the Government's commitment to relocating swathes of the civil service out of London, with 22,000 jobs due to be moved to areas including the Midlands, the North-West and the North-East. 

The Treasury will set up its Northern headquarters next year and is due to announce the location in the coming weeks."

 

New treasury location, Durham?

 

 

"At the same time it would expose more civil servants to non-London life, which could alter the way policy and spending decisions are made.

The country is so over-centralised, with the most highly paid civil servants all concentrated in one place," said Andy Street, the Mayor of the West Midlands. "They cannot be close to the issues on the ground in the regions. It would be so much better if they were embedded here rather than all being in central London.

Ministers will be expected to visit their departmental staff across the country frequently, similarly exposing them more regularly to life beyond Whitehall.

It would show a genuine, long-term commitment to levelling up," said Ben Houchen, the Mayor of Tees Valley. "If you have got  senior civil servants in regions like Teesside, policies will better reflect those areas. Relocating to cities like Birmingham or Manchester doesn't change that dynamic – bringing them to Teesside would."

 

 

Right about civil servants. Away from coffee shops, stockbrokers, billionaires and slum landlords will make them concentrate on industry and infrastructure

 

https://www.telegraph.co.uk/politics/2020/11/20/rishi-sunak-commit-tens-billions-pounds-infrastructure-seeks/

[Noallegiance]

13 minutes ago, Cattle Prod said:

You can get away with poor timing on the long side as long as you're not leveraged.

That's a gem of a thought I'd not had.

I have zero debt for anything.

I think I was making too much of the situation. 

[DurhamBorn]

@arrow Darlington could be an option,mainline station 2 hrs to London and Teesside airport 10 minutes.

Durham is also on the mainline,but much less available space and of course a World Heritage site.

House prices have stayed down up here mostly at quite affordable levels for ordinary people.Can get a terrace for £50k if your single,can get a nice semi for £130kish for a couple/family.

I expect most of the investment in the North East will focus on Teesside.

Here is a bargain for a BTL ,burn me at the stake  

https://www.rightmove.co.uk/properties/100072319#/

Backs direct onto Redcar Racecourse that the mile start at the side of the back garden photo,straight onto the A174 to get direct on the A19 as well.

[Yadda yadda yadda]

The civil servants can live in Yarm. Put the department of energy and climate change up there.

[Yadda yadda yadda]

2 hours ago, Barnsey said:

 

What is the source? GS = Goldman Sachs?

Significant coal, oil and especially gas for the next 100 years.

[BoSon]

4 hours ago, DurhamBorn said:

It should also be noted the UK is better placed than anyone for green energy.The world will struggle to replicate for decades,or in Asia 50 years.

 

I wonder how the UK government will squander such an opportunity, as they are bound to.

Maybe all the fields covered in solar panels affects food supply so we are more reliant on other countries, or causes food prices in the supermarkets to rise beyond the advantage gained from the energy input into the national grid.

Maybe they'll replace the 'soon to be sold down the river in the brexit deal with EU' UK fishing with wind farms around the coast.

 

[MrXxxx]

On 20/11/2020 at 17:08, janch said:

Here is Lyn Alden's latest newsletter which is very timely as it explains all about inflation from a macro perspective.  I find her articles pitched at the right level and easy to read and understand.  She also gives details of her investments and what she alters from month to month.  Her portfolio rises steadily.............(I wish mine did the same!) It's all from a US perspective but equally applicable here:

 

https://www.lynalden.com/november-2020-newsletter/

 

 

Thanks Janch, really helped me put everything into context and think about what may happen in the next 10 yrs (and why) and as you say Lyn Alden has a great way of explaining things to the financially challenged like myself!

[MrXxxx]

6 hours ago, AlfredTheLittle said:

Rish! What about the purple people?

No worries, I'll chuck em 50 billion, should see them through till spring.

Rishi! I've got a lorry load of masks, guaranteed covid safe. Retail price 10 billion, but I'll do you a special deal at 15!

Fantastic, I'll have them all. Got any more? 

 

 

 

No, but I have some vaccines that are 90% effective...what ever that means?!

[DurhamBorn]

2 hours ago, Yadda yadda yadda said:

What is the source? GS = Goldman Sachs?

Significant coal, oil and especially gas for the next 100 years.

Needs to be said as well thats share,demand will be increasing hugely,so share of a bigger pot.I think gas use might treble by 2050.

[JREWING]

https://oftwominds.cloudhostedresources.com

Interesting read.

Puts things into perspective.

Talks about cheap oil a thing of the past.....

The great reset has been and gone...

[DurhamBorn]

39 minutes ago, Cattle Prod said:

In oil, gas, not a hope. See the graphs I put up before, its a chasm between supply and demand.

Coal - though they burn most of the worlds stuff and have a fair bit they still need to import Aussie coal as it is. Nuclear- mines are in Kazakhstan and Canada. Wind on its own - good luck. Need something new like molten salt reactors. Asian energy needs are going to be the story of the 2020s I think.

Here's a little thought exercise the G20:

From that lot, only Russia, Saudi, Mexico, Canada and Brazil are energy (oil and gas) independent. Mexico and Brazil are soon to cross over to needing to import. So just Russia, Saudi and Canada with plenty of excess. Formerly energy independent are the USA, UK, China, Arg, Aus, Indonesia, India, 

Explains a lot about what goes on in the world. And again, I note that two of the most energy poor, Germany and Japan, went to war with the large energy independent countries (Russia and the USA) 80 years ago in part for oil and other resources.

I guess that is why Repsol is getting contracts done for Canadian heavy crude,they know whats coming.Enbridge could be a nice investment as well.Looks like a lot more Canadian crude will be flowing south.