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

[leonardratso]

big kahuna burger, whopper flame grilled. Watch the fat drip off it, put some bread underneath to capture the lovely lovely fat.

[Bobthebuilder]

2 hours ago, sam1994 said:

What does BK stand for? 

Massive stock market sell off and crash. (not just stock market a big pull down in assets of all kinds).

[Bus Stop Boxer]

7 hours ago, Hardhat said:

I watched the BBC 10pm news last night for the first time in ages...

The total death figure they use (67,000 odd) has a disclaimer below the number: "deaths of any cause within 28 days of a positive covid-19 test". It's right there, on TV, beneath the big number.

Exactly how stupid do they think most people in this country are?

 

Don't answer that...

You should see my towns FB page.

Fucking Ada.

[sancho panza]

 

5 hours ago, Agent ZigZag said:

The frightening bit has been the compliance of the public, media, opposition parties, and the legal profession.

 

People will continue and will always comply when they are paid their benefits, their fairlough money etc etc. Reduce or cut off these payments then watch compliance go out the window as the masses will be affected.

Maggie Thatcher was right socialism fails when other peoples' money runs out. The UK Government can only paly this game (what ever its is - although for me it is about Global political repositioning) for so long. 

For now Im chilled although still watching carefully from the sidelines.

 

I agree I think it's a matter of time now.At some point the furlough will go or as @Noallegiance says there's a drip drip of negative sentiment and gradually the debt deflation begins.I'm not sure which will happen first but at some point the dam will break.

5 hours ago, kibuc said:

You're looking at it as if virus was making conscious decisions that benefit him personally, but that's not the case.

Viruses do what all other organisms are programmed to do: they multiply, and for that they need a host. Killing the host might be the side effect of their presence but that's not the goal. Now, if the way they multiply inside the host is beneficial to their spread, it results in them spreading wildly. If it isn't, it results in the virus slowly dying out. Natural selection with a very short turnaround time. Asking whether the virus finds something beneficial to it or not is missing the point.

There was this game in the 90s, called "Life" I think, where you had a blue dot and a red dot, and you set the "procreation" and "death" conditions for each. Then you simply hit start and watched as it all unfolded. That's basically all there is to it. With virues, due to their mutation abilities, those conditions change dynamically, but the base premise of the game stays the same.

Dr John Lee Pathologist yesterday.

https://www.dailymail.co.uk/debate/article-9073659/It-inhumane-ministers-tell-hug-Christmas.html

Step forward the wise men of the Government's Scientific Advisory Group for Emergencies (SAGE) and the New and Emerging Respiratory Virus Threats Advisory Group (NERVTAG), a narrow selection of 'experts' who are fully invested in the mistaken narrative of viral 'control'.

They are the ones who provided the impetus to Mr Johnson's justification for tearing up millions of people's Christmas plans: Namely, that a new, supposedly more infectious strain of the virus has emerged.

How this is surprising when at least 20,000 variants of Covid have been identified, I cannot fathom.

After all, mutation of this (and every other virus) is inevitable – and, in fact, it needn't always be a bad thing.

As new strains of a virus emerge, they naturally evolve towards variants that may be more transmissible but which cause mild or no disease.

Why should this be so? Because it actually benefits the virus – it is more likely to survive, reproduce and spread to ever increasing numbers of individuals if it doesn't kill its hosts.

Crucially for us, if the new strain isn't as virulent, its spread among Britain's healthy populace could even be advantageous. 

Exposure to it would stimulate the immune system to produce a response against it, so providing future protection as we move to a general level of immunity in the population.

So why don't Johnson or Hancock publicly acknowledge this? Why do they persist instead with terrifying rhetoric of a 'mutant' virus spreading out of control. 

It seems to me that from early on in this crisis, the Government developed a particular narrative of fear from which it cannot now deviate without admitting that its whole policy has been a disaster.'

 

 

Prof Carl Heneghan yesterday

https://www.dailymail.co.uk/news/article-9073765/Scientists-call-clarity-claim-new-Covid-19-variant-strain-70-contagious.html

'Carl Heneghan, Professor of Evidence Based Medicine at Oxford University's Nuffield Department of Primary Care, expressed scepticism over the 70 per cent figure. 

He said: 'I've been doing this job for 25 years and I can tell you can't establish a quantifiable number in such a short time frame.' 

He added 'every expert is saying it's too early to draw such an inference'.

Professor Heneghan said there was no doubt this time of the year, the 'height of the viral season', was a difficult time for the NHS. But he said failure to put out the basis of the figures was undermining public trust.

[DurhamBorn]

The reason the government is selling it for now is because half the country is sat at home on full benefits are doing a couple of hours working from home etc.However the reckoning will be on its way.Our local council has almost everyone at home on full pay doing hardly anything while putting council tax up 5%.

Massive problems for government once inflation starts to move and the CBs cut off the QE.Its then cancel some of the QE,force rates up.Keep amount of QE ,but increase rates.

[sancho panza]

3 hours ago, dnb24 said:

 

I know this has taken the thread in a slightly different direction. Using DBs insight - sars coV-2 is essentially the deflationary BK of a number of health industries. Pure disinflation, the health service infrastructure has had 40 years of disinflation- anyone visiting our hospital would appreciate that- it’s a relic. The health systems IT structure is stuck in 2008 (at best). Our supply systems are all Chinese based and shit. The nursing programmes have to rely on 3rd world countries to bring in staff etc etc. We have just been told they will build us a new hospital to the tune of £1bill- government directly financing. I wouldn’t have seen this so clearly if it hadn’t been for the thread and DB.

There's an unsustainability to the NHS.Not jsut in terms of it's manamgenet being msotly reactive rather than proactive.But also in terms of demogrpahics.

In terms of the first ,it's been in managed decline for decades.Mission creep on the demand front and constriction on the supply side-eg nursing/drs etc as you say,pulled from third world counrties that need them.The public have been raised on an NHS that's above critiscism,clapping while it was sending covid +ve pts back to care homes where the staff weren't trained or equiped to cope and while curative cancer operations were being cancelled etc etc.The politicians are no better,hiding behind budget increases creating an illusion that spending more money equates with a better healthcare system.

On the demand side,we're struggling to cope with an aging society.Social/Health care costs are balloning and the tax base supporting them is shrinking.

Something has to give.The NHS either changes or gets even more of GDP,maybe both.

[sancho panza]

8 minutes ago, DurhamBorn said:

The reason the government is selling it for now is because half the country is sat at home on full benefits are doing a couple of hours working from home etc.However the reckoning will be on its way.Our local council has almost everyone at home on full pay doing hardly anything while putting council tax up 5%.

Massive problems for government once inflation starts to move and the CBs cut off the QE.Its then cancel some of the QE,force rates up.Keep amount of QE ,but increase rates.

Must say DB you and CP posts on BP have got me looking at them for a little nudge here.I've been hoiping for a pull back as we've some spare at teh mo and now we've got $900bn inbound.

The current drop is based on this new mutation and as per my previous Carl Heneghan/John Lee articles,it looks like a damp squib in a long line of damp covid squibs.

ALSo lining up some Vodafone at £1-20 and some Rockhopper sub £0.06

With a bit of luck we might get some more downside.

These are intense times.I'm of the opinion this isn't the BK yet.

[sancho panza]

29 minutes ago, DurhamBorn said:

The reason the government is selling it for now is because half the country is sat at home on full benefits are doing a couple of hours working from home etc.However the reckoning will be on its way.Our local council has almost everyone at home on full pay doing hardly anything while putting council tax up 5%.

Massive problems for government once inflation starts to move and the CBs cut off the QE.Its then cancel some of the QE,force rates up.Keep amount of QE ,but increase rates.

I obviously like the bit about oil going up.

Isn't 3% next year roundabouts where you were DB?It's asi f he's been reading you

https://www.telegraph.co.uk/business/2020/12/20/inflation-casts-cloud-recovery-hopes/

[Hunty]

1 hour ago, sancho panza said:

Must say DB you and CP posts on BP have got me looking at them for a little nudge here.I've been hoiping for a pull back as we've some spare at teh mo

Been watching BP since mid Aug. 2020.

I missed the bottom.

~1.88 Albeit my mistake. Thought we'd see 1.6.

My first ladder in was 2.794. Knew we're on an upward trend. My average now is. Down to 2.67...But I'd rather a high entry point on an upward trajectory rather than a high entry point on a downward trajectory...

How low can she go.  Hey.

I'll buy more. The more she drops.

Absolute steal under £3.

The TA fundamentals. See a trading range of 2.4 - 2.8 until we break out of 2.8 holding.. Then I see 3.3 plus.  

WTI Oil holds at $50 we're safely in the 3's.  

Happy Xmas fellow Contrariant Chaps and girls.    

 

 

[wherebee]

Goodness me - haven't checked positions since last week and logged on just now to find that the markets have done a 'Belfast date' (h/t Joe Davola) all over the place.

Still, the nice thing is that all the oilies are still in the green from average buy prices.  So I can sit and wait.

Bad news is I had to take out 15k cash to pay an unexpected tax adjustment from a shitty country overseas where they just realised the 15k refund they gave me 2 years ago was wrong as their systems added up numbers incorrectly. fuckers.

[MrXxxx]

8 hours ago, sancho panza said:

There's an unsustainability to the NHS.Not jsut in terms of it's manamgenet being msotly reactive rather than proactive.But also in terms of demogrpahics.

In terms of the first ,it's been in managed decline for decades.Mission creep on the demand front and constriction on the supply side-eg nursing/drs etc as you say,pulled from third world counrties that need them.The public have been raised on an NHS that's above critiscism,clapping while it was sending covid +ve pts back to care homes where the staff weren't trained or equiped to cope and while curative cancer operations were being cancelled etc etc.The politicians are no better,hiding behind budget increases creating an illusion that spending more money equates with a better healthcare system.

On the demand side,we're struggling to cope with an aging society.Social/Health care costs are balloning and the tax base supporting them is shrinking.

Something has to give.The NHS either changes or gets even more of GDP,maybe both.

And don't forget a change in societal responsibility I.e "It free" so I'll take/use it for the slightest reason, self-responsible for own health (diet/weight/substace abuse) etc

[Harley]

This is what I expect to be been more key (i.e. explicit) in 2021 and onwards.  And what I mean by standing in the burning building.  Limited point discussing stock A versus stock B, wealth taxes, etc when FCA regulations deem you must put x% of your investments into a long term bond (with a nice name and mood music) paying well below real inflation.  An escalation in the war on savers, playing to the inter-generational, over-indebted, and spendthrift gallery.  The ramping of social causes and the new language being promoted makes sense - but as always look at what they do not what they say and remember, it's always about the money.  Pure political economy.  Happy Christmas!

https://moneyweek.com/investments/investment-strategy/602483/russell-napier-on-debt-financial-repression-and-what-it

or

https://api.spreaker.com/download/episode/42496485/201202_russell_napier.mp3

PS: And with regulation comes.....cronyism and corruption as it is decided by "them" what investments are deemed "productive"!

[Harley]

A reminder to think about and mitigate risk:

https://www.ftadviser.com/regulation/2020/12/21/fca-fines-charles-schwab-8-96m-for-safeguarding-failures/?utm_campaign=FTAdviser news&utm_source=emailCampaign&utm_medium=email&utm_content=

"According to the regulator.....client money was swept across from the company to its affiliate Charles Schwab & Co. in the US.

The client assets, which were subject to UK rules, were held in a general pool, which contained both firm and client money held for both UK and non-UK clients".

[Harley]

10 hours ago, sancho panza said:

I agree I think it's a matter of time now.

 

"Until then, I love the smell of free money in the morning"!

[Harley]

As I said.....

https://www.common-wealth.co.uk/reports/doing-well-by-doing-good-examining-the-rise-of-environmental-social-governance-esg-investing

"Within the climate-themed funds,  12 funds (one third of the cohort) held oil & gas producing companies as of their recent filings (Q1/Q2 2020), of which three had stakes in ExxonMobil".

FYI: https://www.common-wealth.co.uk/about

[Barnsey]

Something to consider

But looking into this in more detail reveals the obvious

 

[Harley]

2 minutes ago, Barnsey said:

Something to consider

 

"Will".  Wow, economics is a science, indeed more of a science than well....science!

[MrXxxx]

Not arguing either way but here is an FT take on why 60/40 is still relevant just for a balanced argument:

https://www.ft.com/content/d19cadbb-5c4f-4310-8152-13fa01191595

[Democorruptcy]

4 minutes ago, MrXxxx said:

Not arguing either way but here is an FT take on why 60/40 is still relevant just for a balanced argument:

https://www.ft.com/content/d19cadbb-5c4f-4310-8152-13fa01191595

Just reading 60-30-10 estimated returns in the latest Hussman downdate

https://www.hussmanfunds.com/comment/mc201220/

 

[MrXxxx]

32 minutes ago, Barnsey said:

Something to consider

 

Irregardless of vaccine efficacy, I think the damage has already been done and all those savings are going to be needed to pay the bills when unemployment strikes in the spring, unless of course if Rishi finds more 'down the back of the sofa'...remember benefits are means tested in relation to savings, and if you have over £16k you get no government support at all.

[Barnsey]

5 minutes ago, MrXxxx said:

Irregardless of vaccine efficacy, I think the damage has already been done and all those savings are going to be needed to pay the bills when unemployment strikes in the spring, unless of course if Rishi finds more 'down the back of the sofa'...remember benefits are means tested in relation to savings, and if you have over £16k you get no government support at all.

As the second chart in the post shows, it's primarily amongst those earning 55k + so very much a higher income phenomenon who would have made up a significant % of savers pre virus anyway. Begs the question where and when those funds will be spent later next year.

[wherebee]

9 minutes ago, Barnsey said:

As the second chart in the post shows, it's primarily amongst those earning 55k + so very much a higher income phenomenon who would have made up a significant % of savers pre virus anyway. Begs the question where and when those funds will be spent later next year.

a fair bit will be spent keeping kids and grandkids out of debt hell.  I'm already hearing this from friends back in the UK.

[Barnsey]

In terms of unemployment, I just don't think we're going to see a sudden dramatic spike in unemployment next year. An increase is inevitable, but It's been very obvious Sunak and co don't have the balls to let go, furlough already randomly extended by a month to end of April. I'd imagine we'll see some kind of permanent kurzarbeit scheme announced in the March budget. 

As for the stamp duty holiday, "independent" CEBR now recommending an extension would be advantageous. You can see the direction this is all going. There is no cliff edge, so much more to come. We're in a new paradigm. Lessons have (and haven't) been learned.

 

[The_Doc]

On 25/01/2020 at 20:56, Noallegiance said:

As a complete novice I've been doing a bit of reading on the UK hydrogen situation. Quite a few companies involved, some with UK Gov backing. So far:

Powerhouse Energy

ITM Power

Ceres

AFC Energy

The sector seems like a good punt given the low share prices, upcoming budget, clean energy drive and stuff already covered in this thread.

More reading!

Hat tip to Noallegiance:

Year to date...

Powerhouse +1219%

AFC +308%

ITM +590%

Ceres +395%

I hope you folllowed through on these :-)

[Hardhat]

8 minutes ago, The_Doc said:

Hat tip to Noallegiance:

Year to date...

Powerhouse +1219%

AFC +308%

ITM +590%

Ceres +395%

I hope you folllowed through on these :-)

Crazy, real surge on Powerhouse over the last week.

Hydrogen sector is very hot. But as we know a lot of big energy and engineering companies are betting on this technology. Could be more upside from here.