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

[JREWING]

40 minutes ago, wherebee said:

 

I wonder if you'd get a 20% correction, be able to buy back in cheaper again?

I'm a gambler by nature. All in or nothing.

Took my profits this late afternoon. Top slice.

Will head to the casino doors tomorrow @ 8am.

Was/am balls deep in BP_RDSB.

If I'm wrong, f++k it. 12k for ten week's investing.

If I'm right. It's only money. Might not be here in 2030. If I am my only regret. Not lived/played hard enough.

Great thread. Learnt loads. Good luck old mucker's....

X

 

[DurhamBorn]

Spending review tomorrow.Interesting part will be to try to spot if they understand that the BOE fiscal monetising will end for a whole cycle soon.They need to get large parts of the state spending to go under inflation  for years while areas that are investment need to grow.

I think its likely they will delay big tax increases,but they might signal some.

 

[Sugarlips]

Lyn Alden:

”Gold continues to do what it has consistently done for decades: follow real interest rates inversely.”

 

https://twitter.com/LynAldenContact/status/1331374332635983873?s=20

[Loki]

@Sugarlips that chart is excellent, more fuel for us stackers

[MrXxxx]

7 hours ago, Cattle Prod said:

Beginning to think you're trolling...15k on a no name AIM oil stock? Nuts, being polite. And this is not a stock ramp type thread, I could have done that 50 times, LSE is the place for that. For me, this place is about the way, the philosophy, not the quick buck. Thats why I started contributing. Suggest you read from page 1 if you're serious.

Ah LSE, found it by accident about three months ago...glad I found this site first, as otherwise with all the good investment `advice` offered there I would be pennyless and living in a shed by now...like @panda is about to do when his plan backfires and his wife finds out he has spunked their life savings :-) :-) :-)

[MrXxxx]

8 hours ago, DurhamBorn said:

Spending review tomorrow.Interesting part will be to try to spot if they understand that the BOE fiscal monetising will end for a whole cycle soon.They need to get large parts of the state spending to go under inflation  for years while areas that are investment need to grow.

I think its likely they will delay big tax increases,but they might signal some.

 

So for education purposes can you give a few policy examples and what how you expect the market to behave I.e increased roadbuilding=likely increase in IBST....and no, none of it will be deemed financial advice! :-)

[DurhamBorn]

1 hour ago, MrXxxx said:

So for education purposes can you give a few policy examples and what how you expect the market to behave I.e increased roadbuilding=likely increase in IBST....and no, none of it will be deemed financial advice! :-)

The policy isnt really that important,its the fact it funnels money direct into the economy freshly printed.Watch for them trying to hold down spending on wages/services/soft areas and instead increasing spending on actually investing/making something.Thats whats happening around the world soon.Its subtle,but it means more money into things that produce,less to consumers,the backbone of econonomies.There will be some huge winners in the cycle in many areas,but the best way for ordinary investors like us to do ok/well/very well in the cycle is to de-complex things.We dont know who will win in the green energy space,but we do know as a whole it will need a massive amount of energy to get there for instance.Less carbon in the air or a slow down means millions more starve as crop yields go down,more potash needed etc.

 

 

[Noallegiance]

From a spending review warm up article:

"It's likely to mean a freeze on pay for much of the public sector, cut on foreign aid, tight spending limits for government departments and eye-watering levels of debt.

One former treasury minister described it as a multigenerational debt which will have implications for the rest of our lives in terms of what the British state can afford"

A few comments about likely minimal if any tax rises until next year's budget or even later.

Interesting from so-called 'new Tory MPs' (presumably red wall?) Making comments like "...our voters want something tangible they can see at the end of their street".

If by 'voters' they mean 'Dosbodders', then yes we do! Especially if one may own Ibstock stock!

[Loki]

2 hours ago, MrXxxx said:

Ah LSE, found it by accident about three months ago...glad I found this site first

Same here, when you read it within the context of this thread (which as i said elsewhere is all i have ever known financially), some of the posts are head in hands painful to read

[Loki]

AFC back in the blue today

17/11/2020

(Sharecast News) - Hydrogen power technology company AFC Energy has signed a binding agreement with BK Gulf, it announced on Tuesday, to support the immediate scale-up of manufacturing capacity for delivery of its proprietary 'H-Power' fuel cell system.

The AIM-traded firm said BK Gulf, a wholly owned subsidiary of Middle East conglomerate Dutco Group, is one of the region's largest specialist mechanical and electrical contractors.

It said BK Gulf would invest in a detailed value engineering process to further optimise the H-Power system's layout, and drive cost reduction, starting immediately.

Existing capacity would deliver several hundred fitted-out containerised modules per annum, to address future customer demand, with the first fabricated units expected in the first quarter of 2021.

"Today's agreement with BK Gulf is a further important step in cementing AFC Energy's manufacturing strategy aligned with the growth in our commercial pipeline and in bringing down response time and cost in meeting customer expectations," said chief executive officer Adam Bond.

"Dutco Group and BK Gulf have long been strong allies of AFC Energy in the region and with their leading engineering and fabrication capability, are an ideal partner in supporting a strong commitment to the growth of the Hydrogen economy in the Gulf region and world-wide.

"We look forward to delivering on our partnership with BK Gulf and in working with their team in taking our fuel cell system to market."

At 1152 GMT, shares in AFC Energy were up 7.11% at 24.21p.

[Democorruptcy]

10 hours ago, Cattle Prod said:

Beginning to think you're trolling...15k on a no name AIM oil stock? Nuts, being polite. And this is not a stock ramp type thread, I could have done that 50 times, LSE is the place for that. For me, this place is about the way, the philosophy, not the quick buck. Thats why I started contributing. Suggest you read from page 1 if you're serious.

He's not trolling, he posted his buys and went all in. Just hit RDSB and BP late on in relation to the thread, so at a good time. As Edward G Robinson said after beating Steve McQueen in The Cincinnatti Kid:

"That's what it's all about kid, making the wrong bet at the right time"

[Democorruptcy]

I've posted a link to the HL FTSE Heatmap before but think this one is nicer

https://www.sharecast.com/index/FTSE_100/heatmap

On the Overview tab I like the real time Volume, you could try spot your own trade

[Don Coglione]

12 minutes ago, Democorruptcy said:

He's not trolling, he posted his buys and went all in. Just hit RDSB and BP late on in relation to the thread, so at a good time. As Edward G Robinson said after beating Steve McQueen in The Cincinnatti Kid:

"That's what it's all about kid, making the wrong bet at the right time"

Oh bollocks, now you tell me. I always thought it was making the right bet at the wrong time!

[JMD]

12 hours ago, Bobthebuilder said:

 

Must say I enjoyed that, back to basics. The world needs more blokes just like him. Perhaps we will get them next cycle.

Spolier, the genesis of that epic apron he is championing is revealed in the closing minutes, the guy just keeps giving! (and so much wisdom, '...you don't fell a tree to make a spoon', priceless!)

[Democorruptcy]

29 minutes ago, Knickerless Turgid said:

Oh bollocks, now you tell me. I always thought it was making the right bet at the wrong time!

Well that was where The Cincinatti Kid went wrong! The odds were stacked against The Man but he got lucky. As my late mother used to tell me when her horse won, when on all known form it should have been mine.... "It's better to be lucky than good"

[DurhamBorn]

1 hour ago, Noallegiance said:

From a spending review warm up article:

"It's likely to mean a freeze on pay for much of the public sector, cut on foreign aid, tight spending limits for government departments and eye-watering levels of debt.

One former treasury minister described it as a multigenerational debt which will have implications for the rest of our lives in terms of what the British state can afford"

A few comments about likely minimal if any tax rises until next year's budget or even later.

Interesting from so-called 'new Tory MPs' (presumably red wall?) Making comments like "...our voters want something tangible they can see at the end of their street".

If by 'voters' they mean 'Dosbodders', then yes we do! Especially if one may own Ibstock stock!

Defs red wall MPs.Inflation will be the tax that takes,it will transfer wealth from bonds and a lot of houses to other areas.BOE has monetised most of the debt and they will hand back coupons to government.Gets interesting when rates increase of course.Thats when government really needs to stop rolling over debt.

The UK state is hugely bloated,massive room for cuts,but the left have taken over that many institutions its very hard to do.

I think NI and tax merged is very likely at some point so NI on pensions etc over £12.5k.

Tax relief at 40% is certain to go,just when and how.They might cut tax free bit of 25%,but that isnt really saving anything now.Changing upgrades to the new inflation measure CPIH also hit hard as it undershoots real inflation.

[JMD]

17 hours ago, Cattle Prod said:

He's making an error there - the BP Alaska deal was agreed before the price drop, it was not a fire sale. I know anecdotally that the buyer is crying into their beer over it! Univestible is a bit strong I think, there is a case here that BP is making a market for its own products. Time will tell.

I wouldn't worry about BP lagging Shell by a relative 10%, XOM is lagging further. It's just noise. Thats why you buy a few of them IMO. Decl I own BP and Gazprom. No dilemna for me.

Thanks CP. My 2nd largest oil stock is BP (behind shell) and all my oilies are long term holds. My open question was more to do with helping me keep a 'balanced view' on them, i.e. i cant stop thinking i have too much BP, opportunity cost of holding something better. But admit its a nice dilemma to have all in all.

I will maintain my overall 22% portfolio allocation to the sector, but that blog has some interesting ideas, worth a read through i think. For example he mentions the Italian oil Saipem, low debt, over 1bn sitting in cash apparently (nb. i haven't checked this yet), ENI own 30%. Its a small cap but I'll probably put them on my watchlist for if we get a BK moment. CP, i wonder do you know/heard anything about Saipen?

[Talking Monkey]

45 minutes ago, DurhamBorn said:

Defs red wall MPs.Inflation will be the tax that takes,it will transfer wealth from bonds and a lot of houses to other areas.BOE has monetised most of the debt and they will hand back coupons to government.Gets interesting when rates increase of course.Thats when government really needs to stop rolling over debt.

The UK state is hugely bloated,massive room for cuts,but the left have taken over that many institutions its very hard to do.

I think NI and tax merged is very likely at some point so NI on pensions etc over £12.5k.

Tax relief at 40% is certain to go,just when and how.They might cut tax free bit of 25%,but that isnt really saving anything now.Changing upgrades to the new inflation measure CPIH also hit hard as it undershoots real inflation.

Once the tax relief on pensions gone that will be the last of the ladders pulled up for the young, no final salary, no large tax break to contribute to pension in the later part of their career, huge student debt and very expensive housing. 

Agree with you DB those cuts to the public sector will be very very hard to do, when things hit the wall later this decade it will be carnage

[sancho panza]

food for thought for copper longs

hattip kaplan

 

for longer term context

[VeryMeanReversion]

50 minutes ago, DurhamBorn said:

I think NI and tax merged is very likely at some point so NI on pensions etc over £12.5k.

Tax relief at 40% is certain to go,just when and how.They might cut tax free bit of 25%,but that isnt really saving anything now.Changing upgrades to the new inflation measure CPIH also hit hard as it undershoots real inflation.

 

For the last forty years, income tax has been trending down whilst NI has been going up.  I assume this is because nobody notices NI.  Maybe they think income tax is being taken from them whereas NI is going towards their pension/benefits/health.

The pensioners will stop NI and income tax being merged.  I think a lifting/removal of the NI upper band limits is more likely.

Regarding tax relief, I've just bumped up my salary sacrifice to 50% from today just in case, making use of the carry forward rules for the last three years.  I'll make use of the allowance whilst I can. If they don't take it away, I've just saved more than I need and will retire earlier.

Drifting off-topic, I'm  looking again at solar panels.  The typical payback seems to be around 20 years in the UK but with rising energy costs expected in the short-term (https://www.statista.com/statistics/720679/projected-electricity-price-united-kingdom/), this may reduce to 12-13 years.

Spending capital now to buy future energy starts to look very sensible if that energy is going to be expensive.

 

[DurhamBorn]

3 minutes ago, Talking Monkey said:

Once the tax relief on pensions gone that will be the last of the ladders pulled up for the young, no final salary, no large tax break to contribute to pension in the later part of their career, huge student debt and very expensive housing. 

Agree with you DB those cuts to the public sector will be very very hard to do, when things hit the wall later this decade it will be carnage

Iv often explained this to younger people.An old guy i worked with when i was just 19 pretty much explained how it all worked.The elite/government simply need to keep the 80% ,now more like 50% working and being paid just enough to keep them going to pay for the scroungers both at the bottom and top.Thats it.Nothing else.In the modern era the young are falling for all the lefty woke crap thats just another way of keeping their eye off the real problems.Its incredible to think they cheer for the likes of Rashford a millionaire on free school meals for people who already get massive amounts of benefits paid for by those very young people.The other weapon of choice of course is mortgage debt.Trap people into that and they work forever.

The UK private sector is an amazing thing,probably the best in the world.I can get a large chicken in Lidl for £3.09 for instance.A fantastic wholemeal seeded loaf for 75p.The problem is the state.

[DurhamBorn]

@VeryMeanReversion i think you might be right on NI and its something to watch.Its obvious they need to raise more from pensioners and that would be the main weapon.They really need to scale back welfare and the state and create lots of £28k a year jobs in production etc and i think thats what they will aim to do.

[sancho panza]

13 hours ago, Sugarlips said:

Lyn Alden:

”Gold continues to do what it has consistently done for decades: follow real interest rates inversely.”

 

https://twitter.com/LynAldenContact/status/1331374332635983873?s=20

They're super charts.Incredible.Basically,when the infaltion starts running and CPIH is 1%,then sit back and hold on tight..

1 hour ago, DurhamBorn said:

BOE has monetised most of the debt and they will hand back coupons to government.Gets interesting when rates increase of course.Thats when government really needs to stop rolling over debt.

The UK state is hugely bloated,massive room for cuts,but the left have taken over that many institutions its very hard to do.

Absolutely.I'm struggling to see how there's any way out of the mess that's looming given how addicted the people are to 'free money'.This has been reinforced by the messaging from the media during covid with all the deference to the NHS and it's workers despite the fact that the senior management(both NHS and Westminster) look to have made some horrendous errors-the most basic of which was to only listen to one side of the argument.

Aside from the NHS ,noone politically is talking about the elephant in the fiscal room that is the welfare budget.The political class's defence of the Triple Lock tells us all aobout both their level of understanding and their priorities.

 

Decl:I work in the NHS.

 

For an assessment of where we are ref covid,this is well worth watch-Consultant Pathologist-what would she know that Boris doesn't?

'Boris Johnson and Chris Whitty have to start questioning whether they are wrong.'

 

[sancho panza]

1 hour ago, Talking Monkey said:

Once the tax relief on pensions gone that will be the last of the ladders pulled up for the young, no final salary, no large tax break to contribute to pension in the later part of their career, huge student debt and very expensive housing. 

Agree with you DB those cuts to the public sector will be very very hard to do, when things hit the wall later this decade it will be carnage

I'm not sure it's going to take a decade for the chucks to get to bed.

Interest rates move up,food/fuel prices rise,

defaults rise,banks go pop,consumer credit unwinds,economy tanks,taxes rise,benefits drop,public sector employment tanks............

defaults rise,banks go pop,consumer credit unwinds,economy tanks,taxes rise,benefits drop,public sector employment tanks.......and on and on

[UnconventionalWisdom]

13 hours ago, Sugarlips said:

Lyn Alden:

”Gold continues to do what it has consistently done for decades: follow real interest rates inversely.”

 

https://twitter.com/LynAldenContact/status/1331374332635983873?s=20

Very interesting but the interest rate was also accompanied by expansion or contraction of the fed's balance book. The qe loosing or tightening is prob affecting gold price rather than the interest rates. If interest rates go up it should cause a reduction in gold price but could be v. different if people are losing faith in the purchasing power of fiat.