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

[DurhamBorn]

Cost push inflation 

https://www.dailymail.co.uk/news/article-8988113/Families-face-council-tax-rise-100-fund-social-care-police-forces.html

5% tax increase,hammering ordinary workers to pay for people mostly sat at home for a year.Council tax is a disgusting tax,but the good thing about it is the suffering it causes people paying it makes them more and more resentful of councils.

[Errol]

1 hour ago, Harley said:

The beauty of unintended consequences as banning all those ETFs was the best thing they did as it's forced me to go hunting for groups of individual international stocks and I've thereby avoided a lot of dross and maybe excess downstream counterparty, liquidity, and passive risk!

I found this as well. I used to always just buy GDX, GDXJ, SIL, GOAU, GOEX etc. Only after they were banned did I start really looking at individual stocks. 

It was a strange move from the regulator. Surely the ETF is less risky than people being forced to pick, research and buy individual gold companies?

[DurhamBorn]

https://www.dailymail.co.uk/money/pensions/article-8966327/What-PensionBees-new-Fossil-Fuel-Free-plan-commit.html

Almost a contrarians wet dream.Incredible.They even had to add tobacco stocks as well.So you lovely wokes how about tracking the market during an inflation cycle without any exposure to inflation stocks  ,i take it they forget that the wind farms might have to refinance at much higher rates unless they have 30 year repayment debt.

'Many savers are looking at this and forming opinions about whether they think these stocks will be profitable again as we come out of the pandemic. 

'Many people believe the oil industry has no future and they want to capitalise on that by investing in this fund.'

If you have a renewable energy development, say an offshore wind farm, then you know what that revenue is pretty much going to be over the next 20 to 30 years. 

[DurhamBorn]

https://gridwatch.co.uk/

Right now this minute gas is producing 57% of the UK electic,wind 3%.Lots of those wind farms sat idle at the moment with big demand and little wind.24GW of wind turbines producing 1.124gw so running at about 4% of capacity.

Luckily DRAX is producing 9%.

 

[Yadda yadda yadda]

8 minutes ago, DurhamBorn said:

https://gridwatch.co.uk/

Right now this minute gas is producing 57% of the UK electic,wind 3%.Lots of those wind farms sat idle at the moment with big demand and little wind.24GW of wind turbines producing 1.124gw so running at about 4% of capacity.

Luckily DRAX is producing 9%.

 

Some coal being burned too, is that not also Drax?

That is about as bad as it gets for wind generation. If it was a proper cold winters day the grid would be stretched.

[DurhamBorn]

6 minutes ago, Yadda yadda yadda said:

Some coal being burned too, is that not also Drax?

That is about as bad as it gets for wind generation. If it was a proper cold winters day the grid would be stretched.

Indeed,its an extreme but shows the massive need for base load.The UK is windy as well.Imagine India or other countries.

Wind is hugely bullish for gas because its stopped nuclear being built as quick as it should of been.No wonder big oilies push wind,nuclear is their real enemy.Hence hedge with Uranium.

[sleepwello'nights]

On 24/11/2020 at 17:00, Cattle Prod said:

Centrica. I still have it 

Its now a long term investment.  That is one whose value has dropped in value so much you can't bear to sell it and crystallise the loss.  

[DurhamBorn]

Ok this is getting ridiculous,

are all these hacks suddenly reading this thread,even pinching the "roaring 20s"

https://www.telegraph.co.uk/business/2020/11/26/lockdown-savings-splurge-may-herald-new-roaring-twenties/

[leonardratso]

since your on a daily mail trawl, theres a story in there about RMG being able to save a few million by going to 5 days a week delivery instead of 6. Another old idea from this thread i believe.

[reformed nice guy]

48 minutes ago, DurhamBorn said:

https://gridwatch.co.uk/

Right now this minute gas is producing 57% of the UK electic,wind 3%.Lots of those wind farms sat idle at the moment with big demand and little wind.24GW of wind turbines producing 1.124gw so running at about 4% of capacity.

Luckily DRAX is producing 9%.

 

On the really cold, still nights if you close your eyes and listen really really carefully you can hear the flutter of the dividends growing for the big gas producers

[sancho panza]

5 hours ago, Cattle Prod said:

The have oil data! 

 

That July 2009 CPI deflationary downdraft caught my eye. The bottom also correlates with a 100%, $900 move in gold to Sep 2011! ( I divided it by 10 to get it on the dollar axis)

They've got copper too.....neat trick with dividing the gold price by 10...preempted my next question.Thanks for explaining in simple terms CP

 

 

1 hour ago, Harley said:

Anyone know of a stocks and shares ISA offering proper (primary) broad international market access for a reasonable price, better than Saxo or II, as most ISAs (and SIPPs) are IMO limiting people to the dog end of the markets.

We have some with HL and they're ok,but it's a buy and hold portfolio so haven't made any changes.I had a look at II but the charges were a little high iirc.

HSBC only offer US and UK via investdirect.And it's quite a poor interface all in all , given the size of HSBC.

39 minutes ago, DurhamBorn said:

Cost push inflation 

https://www.dailymail.co.uk/news/article-8988113/Families-face-council-tax-rise-100-fund-social-care-police-forces.html

5% tax increase,hammering ordinary workers to pay for people mostly sat at home for a year.Council tax is a disgusting tax,but the good thing about it is the suffering it causes people paying it makes them more and more resentful of councils.

I did a back of fag packet calculation for a basic care package,generally there are a number of care packages depending what you need doing.4 x 2 carers daily is normal for the really infirm/bed bound,probably paying average £15 an hour so in a 30 day month =>(30x4x2x15)/2=£1800.Obviously that bill goes up significantly if the patient needs more time.

Generally people receiving care packages will be on reduced council tax as well and could be on other benefits.

I know Leicester council paid all the bills for a friend of my Mum's who was well off and yet someone a few doors up(in a different Council,picked up the whole lot).COuncils apparently have discrettion to do this,so I suspect in Leicester we'll jsut end up with a smaller tax base paying for more people

The interesting thing is that the local authority pick up the whole tab if you're off limited means.If you've got more than £23k in savings then it's goodbye to them.

I genuinely do begin to wonder what the incentive to work is when having no money is such a good option.

https://www.ageuk.org.uk/information-advice/care/paying-for-care/paying-for-homecare/

 

[sancho panza]

6 minutes ago, leonardratso said:

since your on a daily mail trawl, theres a story in there about RMG being able to save a few million by going to 5 days a week delivery instead of 6. Another old idea from this thread i believe.

I was a postie 25 years ago.The sixth day never made any ssense.

[sancho panza]

21 minutes ago, DurhamBorn said:

Ok this is getting ridiculous,

are all these hacks suddenly reading this thread,even pinching the "roaring 20s"

https://www.telegraph.co.uk/business/2020/11/26/lockdown-savings-splurge-may-herald-new-roaring-twenties/

Second time I've used the word 'uncanny' today....

 

[Rave]

3 hours ago, Yadda yadda yadda said:

Some coal being burned too, is that not also Drax?

More likely to be Ratcliffe or West Burton, it's not particularly helpful for grid balancing to have all the power being produced in one place and when Drax's Biomass units are at full pelt they pump out 2.6GW.

https://en.wikipedia.org/wiki/List_of_active_coal-fired_power_stations_in_the_United_Kingdom

[Barnsey]

3 hours ago, DurhamBorn said:

Ok this is getting ridiculous,

are all these hacks suddenly reading this thread,even pinching the "roaring 20s"

https://www.telegraph.co.uk/business/2020/11/26/lockdown-savings-splurge-may-herald-new-roaring-twenties/

This narrative of the reflation trade seems a little too linear. I know the markets are forward looking but seeing this everywhere makes me think we should have one more shakeout as ultimately this is still a demand shock over supply but being masked by shut downs and inventory builds.

[Harley]

5 hours ago, DurhamBorn said:

i take it they forget that the wind farms might have to refinance at much higher rates unless they have 30 year repayment debt.

And the solar farms - I was surprised and still unclear why the likes of TRIG went down so much in Feb/Mar - investor margin calls or some other worry?

[wherebee]

4 hours ago, sancho panza said:

I was a postie 25 years ago.The sixth day never made any ssense.

I thought you lot needed the sixth day to steal all the good stuff you had identified on days 1-5?

[DurhamBorn]

2 hours ago, Barnsey said:

This narrative of the reflation trade seems a little too linear. I know the markets are forward looking but seeing this everywhere makes me think we should have one more shakeout as ultimately this is still a demand shock over supply but being masked by shut downs and inventory builds.

I think thats probably right @Barnsey .Another sharp down leg would shake out the weak hands.I also think we will keep seeing sharp pull backs and more and more will bail.Its likely we will see parabolic increases in reflation assets late in the cycle as people panic that the CBs have lost control of inflation.

I think the key question for people reading this thread is how to get from here to there.Do we to slice a few on sharp run ups?,then re-invest on a correction?,let dividends build and use those on the pull backs? .Its a very difficult question.

[jamtomorrow]

1 hour ago, DurhamBorn said:

I think thats probably right @Barnsey .Another sharp down leg would shake out the weak hands.I also think we will keep seeing sharp pull backs and more and more will bail.Its likely we will see parabolic increases in reflation assets late in the cycle as people panic that the CBs have lost control of inflation.

I think the key question for people reading this thread is how to get from here to there.Do we to slice a few on sharp run ups?,then re-invest on a correction?,let dividends build and use those on the pull backs? .Its a very difficult question.

Agreed. If I remember correctly DB you said yourself you wished you'd let certain winners run a bit longer, previously?

I think risk appetite is one consideration, and therefore how unbalanced a portfolio you can tolerate before you start losing sleep. Me personally, the sleep test has served me well in life - if I'm losing sleep over something, just change it, no ifs, no buts.

On the other hand, I think I invest like I garden - very lazily, and just the occasional severe pruning when I can be arsed. So if my investments end up like my garden, I'll have a handful of massive winners that have survived the alternating periods of laissez-faire and frenzied snipping, and everything else will be dead. I hope I like the survivors.

I do think I'll want to approach the problem differently from the rather industrious types on here who tend their investment allotments daily, or more.

[Loki]

I logon daily and trade rarely.  I don't see it as any different from a daily check of the markets, but why would i care what facegoog is up 

[Yadda yadda yadda]

2 hours ago, DurhamBorn said:

I think thats probably right @Barnsey .Another sharp down leg would shake out the weak hands.I also think we will keep seeing sharp pull backs and more and more will bail.Its likely we will see parabolic increases in reflation assets late in the cycle as people panic that the CBs have lost control of inflation.

I think the key question for people reading this thread is how to get from here to there.Do we to slice a few on sharp run ups?,then re-invest on a correction?,let dividends build and use those on the pull backs? .Its a very difficult question.

It is the question now. We have all seen how you have top sliced to reallocate from big winners to areas that are comparatively undervalued. Looks to be the right general approach.

For me, with less capital to invest, it is more a case of allocating new money and dividends to the better value sectors. As I see them at the time. Only if something has really taken off am I likely to trim it. Similarly if the market as a whole looks to be on shaky ground then I may keep new funds in cash for a while.

I'm also a bit younger so I have an even longer time horizon and a bit more risk appetite. I won't be trying to time every last movement and gain every last percentage point on each rally or pull back. I'd make more mistakes and probably miss out overall.

[CVG]

18 minutes ago, Yadda yadda yadda said:

Similarly if the market as a whole looks to be on shaky ground then I may keep new funds in cash for a while.

This goes back to the portfolio asset class I mentioned earlier. One class is Cash. I always aim to have a minimum of 20% in ready cash to exploit opportunities.

See Harry Browne's Permanent Portfolio book

and https://portfoliocharts.com/

[jamtomorrow]

15 hours ago, leonardratso said:

yeah the to 200K pundits will now fuck off back under their rocks until the next rally.

 

same cycle plays out time after time - and also in mini cycles within cycles.

Volatility is one of the reasons it's still treated like a curio by the mainstream, and the macro aspects are almost completely overlooked (with some honorable exceptions).

Huge mistake in my view - crypto could conceivably be one of the sources of difference compared to the previous macro cycle. Yes, still a non-trivial chance Bitcoin goes to zero before any effects are felt at the macro level. But you don't need a very big fag packet to work out the "doesn't go to zero" scenario can't be ignored, based on expected impact (small probability x big consequences).

Yesterday was ostensibly a huge setback for crypto, given the regulatory change that might be coming on self-custody, and yet BTC found support at 80% of ATH (and that's with the GBTC buying vortex shut down for Thanksgiving).

I'm taking it very seriously indeed, not because I'm certain it will be "a thing", but because the probabilities and the consequences seem self-evident.

[geordie_lurch]

3 minutes ago, jamtomorrow said:

Yesterday was ostensibly a huge setback for crypto, given the regulatory change that might be coming on self-custody, and yet BTC found support at 80% of ATH (and that's with the GBTC buying vortex shut down for Thanksgiving).

What are the possible regulatory changes on self-custody?

[jamtomorrow]

3 minutes ago, geordie_lurch said:

What are the possible regulatory changes on self-custody?

Basically a ratcheting up of KYC when you move crypto off-exchange: