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

[DurhamBorn]

2 hours ago, Harley said:

it's far worse.  My partner buys in pizza bases!

That better be a joke  

For people triggered by talk of "shop bought pizza bases" here is how you make fantastic home made.

1kg Italian 00 grade flour,25g fresh yeast (buy in 400g blocks on ebay and freeze in 25g chunks wrapped in clingfilm) teaspoon of salt teaspoon of garlic powder or granules tablespoon olive oil. 520ml warm water.

Stir yeast well in water and leave for around 15 minutes.The knack is to need for long enough,food processor with dough arm (everyone should have one,can get 2nd and on facebook marketplace),i need mine for 10 minutes in processor minimum around 13 mins is better.

Weigh dough then divide into 4 same sized balls rub small amount of oil on ,cover and rise for around 2 hours.Then knock back.Ready to use or freeze.If freezing rub in olive oil and wrap in freezer bag and make sure no air in.Will last 3 months.

That pizza dough is as good as any you will get anywhere and 50p a base

Here is the yeast i use

https://www.ebay.co.uk/itm/PROFESSIONAL-FRESH-BAKERS-YEAST-400g-with-FREE-Recipe-For-Bread-Maker/262503346068

Here is the flour im using at the moment,and i find as good as any like Caputo,this will likely have short dates,maybe 3 or 4 months.

https://www.ebay.co.uk/itm/10-X-1-KG-CASILLO-FLOUR/174471184260

 

[DurhamBorn]

41 minutes ago, Boon said:

Correct me if I'm wrong but the FOMC stuff yesterday calmed the treasury markets..... yet looking just now the 10yr has gone above 1.7% now and almost touched 1.75% today.

Would have thought this would be bad for equities but the markets seem to be shrugging it all off.

Anyone think that increasing yields may force the Fed's hand at some point? If the yields drop down to 1% like Hunter says that could propel the FTSE way past 7000 easily and maybe to new highs.

Got some cash waiting but if the Fed stepping in to reduce the yields is so easily telegraphed then maybe a dip won't even occur as it's already been priced in.

The theme of this thread is that rising inflation and rates are very very good for many companies.

Take BT.

They own a massive network,half paid for,the other half already fixed debt over 20 years at very low rates.

Competitor comes along and wants to expand into that market.They have two choices,debt or equity.If interest rates have increased it costs them more to borrow and built a network.That means they have to charge more and means they cant compete.So at the same time as as new entrants cant enter the market they also get to put their prices up with inflation or more.

That is why markets miss-priced the areas we were all buying.They were looking backwards to a dis-inflation.So right at the end of that cycle,just before the CBs and governments would be forced to act,the markets threw the towel in on the sectors.

A good part of the profits are now gone and in many areas its a case of slicing those profits off and looking the the roadmap to see if there are other areas as the cycle develops,and also ready to deploy if a big kahuna hits.

 

[AWW]

40 minutes ago, Barnsey said:

Got a VOXI (Vodafone) 5G SIM and bought a cheap 5G phone, I've had 236 Mbit/s in central Birmingham. £12 a month (no contract) for 12 GB and unlimited social media and streaming. Does make you think.

I use 4G mobile broadband, however, as you'd expect, get nowhere near those speeds. I have been looking at upgrading, using a DD-WRT router tethered to a cheap 5G phone. It's the lack of being tied into a contract that attracts me to mobile vs a physical connection.

[DurhamBorn]

1 hour ago, Cattle Prod said:

Hydrogen on Teeside, as DB said...

https://www.reuters.com/article/uk-bp-decarbonisation-idUSKBN2BA0PZ

 

Notice how its blue hydrogen as well.

 

58 minutes ago, AWW said:

https://www.ofcom.org.uk/about-ofcom/latest/features-and-news/rollout-full-fibre-broadband

"Over the last few years, we’ve brought down the price that Openreach charges telecoms providers such as BT, Sky and TalkTalk for its entry-level (40 Mbit/s) superfast copper broadband service. We are now keeping this price flat in real terms, along with the prices of slower copper broadband packages.

Openreach’s fastest fibre services will continue to be free from pricing regulation, since people can choose the entry-level service as an alternative.

Openreach can also charge a bit more for regulated products that are delivered over full fibre instead of copper, because full fibre is consistently faster, and much more reliable.

This approach encourages investment by providing BT and its rivals with a margin to build the new networks. It also helps make sure people can still access affordable broadband.

We aim to allow all companies the opportunity to achieve a fair return over their whole investment period.

So we don’t expect to introduce cost-based prices for fibre services for at least ten years."

 

Good result.Basic package still regulated,but frozen price "in real terms" so they can increase prices with inflation on the basic package to other companies.Given the companies will have other costs it means we should see prices increase minimum with inflation.Thats what we wanted.

I expect BT would of liked cost based prices on new fibre left alone for 15 years,hence asking for 20 and 10 is less than they would want.Though it does say at least 10 years.Likely the cost cuts would come in slowly after that over another decade.

The key to the sector is that they can move to increasing price with inflation,minimum,and that at the same time the amount of connections increases.

 

[geordie_lurch]

1 hour ago, Barnsey said:

Got a VOXI (Vodafone) 5G SIM and bought a cheap 5G phone, I've had 236 Mbit/s in central Birmingham. £12 a month (no contract) for 12 GB and unlimited social media and streaming. Does make you think.

Yep I think once cheap 5G routers come out (even just the smaller MiFi ones) then fibre will be less of a concern for consumers and therefore less profitable for BT and us with shares in them. 

I can already get a reliable 80Mbps download and 25Mbps upload on 4G+ where I am with o2 as I'm very close to a mast via a second hand CAT 6 MiFi that cost me £35 so I ditched my fixed line broadband earlier this year. You can get unlimited 4G and 5G for £16 a month using 3's network on 12 month contracts but their 4G network is known to be one of the slowest although I have no experience of their 5G.

[kibuc]

59 minutes ago, DurhamBorn said:

That better be a joke  

For people triggered by talk of "shop bought pizza bases" here is how you make fantastic home made.

1kg Italian 00 grade flour,25g fresh yeast (buy in 400g blocks on ebay and freeze in 25g chunks wrapped in clingfilm) teaspoon of salt teaspoon of garlic powder or granules tablespoon olive oil. 520ml warm water.

Stir yeast well in water and leave for around 15 minutes.The knack is to need for long enough,food processor with dough arm (everyone should have one,can get 2nd and on facebook marketplace),i need mine for 10 minutes in processor minimum around 13 mins is better.

Weigh dough then divide into 4 same sized balls rub small amount of oil on ,cover and rise for around 2 hours.Then knock back.Ready to use or freeze.If freezing rub in olive oil and wrap in freezer bag and make sure no air in.Will last 3 months.

That pizza dough is as good as any you will get anywhere and 50p a base

Here is the yeast i use

https://www.ebay.co.uk/itm/PROFESSIONAL-FRESH-BAKERS-YEAST-400g-with-FREE-Recipe-For-Bread-Maker/262503346068

Here is the flour im using at the moment,and i find as good as any like Caputo,this will likely have short dates,maybe 3 or 4 months.

https://www.ebay.co.uk/itm/10-X-1-KG-CASILLO-FLOUR/174471184260

 

In my experience the proportions don't matter too much, it's all about kneeding + giving it time to rise. I wrap mine in foil and let it rise in the fridge for 5-7 days, reeks like moonshine after that but is head and shoulders above anything else.

[JMD]

On 17/03/2021 at 09:45, Bricormortis said:

 Notes from video above with Russell Napier posted by Loki as I understood it on a listen through.

1. Yield curve control is on, yields to run behind inflation. ECB has told people it will inflate away debt. yIeld cap and potential for government control ( of savings and investments ) is positive for gold.  Sees ECB ycc as a disaster for Europe.

2.  " inflation at 4 % does not send people rushing into assets. We have had inflation at 4 % three times in the last 30 years and people did not rush into assets." 

3.  Financial repression could entail restricting gold sales and crypto will face equivilant restriction. Too big a threat.

4. CB digital currency could only be introduced gradually to avoid destablising banks. US is intending to remove anonymity from crypto, stated objective now.

5.   Capital controls could happen but we cant know the form precisely. Govts have to have buyers for bonds. ( eg investors, savers ? ) Equities could be going downhill at that point in time.

6. The first rule of repression is get your money out of the country to a country that does not repress. That was Switzerland after 1945 ( they had no debt ).  Mentions gold, possibly real estate as safer havens. Possibly emerging markets for lower dept to gdp ratios. 

Good video that. Napier is a bit more forthcoming with info. since he started his retail advise service (I'm a cynic!).                                                                                                                                                                                    But just to add to your point 7, regarding buying 'safe assets', I note Napier mentioned perhaps to buy property with fixed rate lending so can inflate away debt. ...Sounds like if we got a property correction and cheap rates were available (Napier I think believes rates will be kept low for financial repression purposes) the contrarian thing would maybe to go into BTL? For the hassle involved I think the yield would need to be 15%, enabling also a high enough margin for using an agent to manage.                                                                                   Napier gave few other options for safeguarding our wealth, apart from gold and emerging markets. What do others think? Is this type of financial contemplation - ie BTL - an evil thing to ponder upon, is it providing a home to our fellow man, or robbing him of a home? Hmm, moral decisions and investment really don't mix do they?

[DurhamBorn]

7 minutes ago, kibuc said:

In my experience the proportions don't matter too much, it's all about kneeding + giving it time to rise. I wrap mine in foil and let it rise in the fridge for 5-7 days, reeks like moonshine after that but is head and shoulders above anything else.

Kneeding is the key yes,i use a food processor and 4 minutes looks fine but doesnt cook so well,10 to 13 minutes and then a quick hand kneed cooks fantastic.I have to stick to exact proportions kibuc or my head explodes,im a numbers guy.A long proof is even better like you say,but a few hours is fine if your using that day.

[Yellow_Reduced_Sticker]

4 hours ago, MrXxxx said:

Just as a `warning` to any newbies...I was reading LSE forum last year (yes I know, but I like to get an idea of sentiment) about the time of the RR. share reissue and some were stating after reissue they would drop from 80p down to 35p and stay there. Six months later and they have never dropped below 75p, and were top sliced yesterday at 128p...moral of the story, don't believe the shit these `experts` spout...unless of course its on this thread...and then only if its concerning pizza ovens!

 

Of course they DROPPED... (39p low)

 

WHY?

 

Because i bought 'em! ... around 80p

 

AND what happens after i BUY?

 

YOU know very Well...

 

Pull ya socks up me 'ol mucker!

 

EDIT to add: YEAH good time to sell as hitting resistate on chart at around £1.30

 

 

 

 

[JMD]

10 hours ago, stokiescum said:

A typical African hates the Chinese but knows not a single one how many Africans have I met and chatted with in the last 2 years at least 100 from over 15 country’s I’ve got 4/5 friends on Facebook that are real Africans .

Interesting, but I fear you have set me off Stokie...                                                                                                            Yes interesting but ...Of course 'woke race theory' dictates that only white people can be racist, it's a power thing apparently, something to do with punching-up. Actually similar applies regarding 'woke humour theory' where you are allowed to punch-up - that is considered funny. But you must never punch-down - that is considered hate crime ...woke wisdom is never much challenged by media or intellectuals, so although wokeness often sounds degenerate and retarded, saying or even thinking such, is itself a hateful act, punishable today by ostracism or even losing your job, but in future years who knows what puritanical punishments will be prescribed by Judge Gretta and her Star Chamber (...'how dare you') cohorts!!!

[JMD]

5 hours ago, MrXxxx said:

Have a look in some Swiss bank accounts and you will find your answer....and don't believe the Developed nations were not complicit in this, foreign aid isn't about helping the less fortunate, its about carrying political favour/allegiance.

Is that why we have decided to cut the foreign aid budget? Ie We have such a useless lot in power these days, they can't even spend their full yearly allowance for 'bribing corrupt regimes' properly!

[JMD]

5 hours ago, MrXxxx said:

Africa, the child that was never allowed to grow up (develop with tech advances) as the parents (colonists) would never let go.

Ah MrXxx, guilty of a bit of 'under reporting bias' there I think, after all when Afro-Americans were  allowed to flourish, didn't they invent/inspire all our 20th century Western music? It's something I hear more and more in the media, but is it true? Genuine question.                                                                                                                   Off topic perhaps, but I do notice there are many guitar posts here recently. So those in the know care to comment? 

[sancho panza]

On 16/03/2021 at 13:31, Cattle Prod said:

Interesting. Could tomorrow be the inflection point? 

https://www.zerohedge.com/markets/larry-mcdonald-warns-big-market-quake-coming

My guess is that the Fed will go for the easier option, and calm the dollar & bond markets down. Dollar is already looking like turning. They only blew up the world economy 4 times in the last decade because they thought they could tighten. Today, it's blatantly obvious that they can't.

Edit

Jeez there is an awful lot in there that chimes with this thread thesis! Encourage a read of all, I'm guilty of skimming it the first time.

 

One of the best reads in a long time.He's right on a lot of things imho not least selling tech stocks/buying things that have done badly in the last decade.

On the Fed he says it well- getting boxed into a corner,needs to create 10 million jobs/taper/not blow up emerging markets all at the same time as the US is trying to offload trillions in UST's.A difficult balancing act by any standards.

 

[BadAlchemy]

2 hours ago, CVG said:

I'm laddering in on 20% drops!!!

I bought some when it dropped below £4 a few weeks ago and will likely buy one or two more ladders. It worked well for me last March during the 'Corona Kahuna' as I traded it rising for falling oil shares. Hoping the same pattern repeats one day, although there was talk here a few weeks ago that may not happen this time round in any BK event (that was all above my simple head though). Seems like a good use for some spare SIPP cash I have, anyway.

[Noallegiance]

14 minutes ago, JMD said:

Ah MrXxx, guilty of a bit of 'under reporting bias' there I think, after all when Afro-Americans were  allowed to flourish, didn't they invent/inspire all our 20th century Western music? It's something I hear more and more in the media, but is it true? Genuine question.                                                                                                                   Off topic perhaps, but I do notice there are many guitar posts here recently. So those in the know care to comment? 

Absolutely.

Jazz & soul that inspired disco that morphed into four-on-the-floor dance music. 

I have a bit of a bug-bear with how the name R&B has been abused. Modern 'R&B' is nothing like the songs brought to the world by the struggling back folk of America.

[Bricormortis]

20 minutes ago, JMD said:

Ah MrXxx, guilty of a bit of 'under reporting bias' there I think, after all when Afro-Americans were  allowed to flourish, didn't they invent/inspire all our 20th century Western music? It's something I hear more and more in the media, but is it true? Genuine question.                                                                                                                   Off topic perhaps, but I do notice there are many guitar posts here recently. So those in the know care to comment? 

Yes, big contribution to the sounds of the 20th century, but it can be argued that just as influential or more so was the Irish who settled in the Apilacian area. Their music morphed into country, which was later punked up and became skiffle, which is the foundations of much of  modern pop.

[sancho panza]

On 17/03/2021 at 10:42, AWW said:

Some wage anecdata for the thread. I've just signed a new contract to year end, day rate is up 5% having not increased for 5 years. I asked why, given that the jobs market has been dead for six months - was told by recruiter (so, pinch of salt) that it's because a lot of EU citizens have gone home due to Brexit, so increased competition for the remaining pool of labour in the UK despite less hiring than usual.

I would be jumping for joy, but IR35 has increased HMRC's claim on my labour from 37% to a frankly ludicrous 55%. So, deflationary overall. And really quite upsetting.

This has happened to a friend who works in the city.Seeing 50% of your take home not get taken home is a bit of a disincentive tog raft isn't it?

On 17/03/2021 at 10:45, Bricormortis said:

 Notes from video above with Russell Napier posted by Loki as I understood it on a listen through.

1. Yield curve control is on, yields to run behind inflation. ECB has told people it will inflate away debt. yIeld cap and potential for government control ( of savings and investments ) is positive for gold.  Sees ECB ycc as a disaster for Europe.

2.  " inflation at 4 % does not send people rushing into assets. We have had inflation at 4 % three times in the last 30 years and people did not rush into assets." 

3.  Financial repression could entail restricting gold sales and crypto will face equivilant restriction. Too big a threat.

4. CB digital currency could only be introduced gradually to avoid destablising banks. US is intending to remove anonymity from crypto, stated objective now.

5.   Capital controls could happen but we cant know the form precisely. Govts have to have buyers for bonds. ( eg investors, savers ? ) Equities could be going downhill at that point in time.

6. The first rule of repression is get your money out of the country to a country that does not repress. That was Switzerland after 1945 ( they had no debt ).  Mentions gold, possibly real estate as safer havens. Possibly emerging markets for lower dept to gdp ratios. 

Thanks for the notes BM.Much appreciated.Don't really haev time for the full hour there.

On 17/03/2021 at 11:21, DurhamBorn said:

At the time we said the telcos would start to gain from liquidity and bought hard and @sancho panza did his coma score work for us all he highlighted BT as the cheapest on his scores at £1 they are up 50%

Deutsche Bank said sell.

Citi said they would go to £1.10 at best.

Barclays said underweight and worth £1.15 at best.

 

Big brokers and institutions dont use macro strategists anymore because they think/thought its dis-inflation forever.Add on the contrarian angle as well and they would choke on their sniff.

 

 

It's amazing isn't it.I'm jsut in the rpocess of wroking on this years but BT/Vod year end is mar 31st.They were incerdible value at a £1.We got a 1% postion in both vod and BT at that time.Should have been more but I was too busy buying oil stocks to bother with the things that have treble bagged ++ eg copper/potash.Some telecoms still look great but you can really see the difference between who's been able to access finance over the last decade when you compare the telecoms with the goldies.

 

 

3 hours ago, Cattle Prod said:

Hydrogen on Teeside, as DB said...

https://www.reuters.com/article/uk-bp-decarbonisation-idUSKBN2BA0PZ

 

Thanks for posting.Gonna be interesting to see how BP does over the decade especially with reference to XOM.

[AWW]

19 minutes ago, sancho panza said:

This has happened to a friend who works in the city.Seeing 50% of your take home not get taken home is a bit of a disincentive tog raft isn't it?

It certainly is. I effectively take home double what a benefits claimant would get in my position. Given that I've been out of work for six months prior, that puts me in the same position as them this year.

[Hancock]

18 minutes ago, AWW said:

It certainly is. I effectively take home double what a benefits claimant would get in my position. Given that I've been out of work for six months prior, that puts me in the same position as them this year.

Stick 40K in your SIPP.

[sancho panza]

3 hours ago, Cattle Prod said:

The US markets aren't open yet! I expect a tantrum-y few days till the Fed answers the question he dodged on SLRs. Possibly Monday. Not doing my TLT any good, but being early is my curse. It'll resolve soon either way. Either rates will break something in the financial system, and the Fed will react to that, or they'll get ahead of it with something more substantial than yesterday.

It's funny talking about US yields.I wrote the following psot in Sept 2020 .My first attempt  at trying to build a checklist of stock market  BK red flags.At the time the US 10 yr yd was 0.623%-now 1.74%.

I'm trying to think of any other indicators that might provide a red flag,so please feel free to suggest any.None of these are set in stone but if/as more get ticked off then,I'll strt adjsuting I suspect.

1) oil price rise to $80+

2) copper> $3.60

3) GSR <45

4)DXY <85

5) cable >$1.65

6) UST 10 year >2%

To which I might add

EUR/USD>1.45,copper/gold ratio>0.0002,UST 10yr-2yr yd >1.5

 

 

 

2 hours ago, DurhamBorn said:

That is why markets miss-priced the areas we were all buying.They were looking backwards to a dis-inflation.So right at the end of that cycle,just before the CBs and governments would be forced to act,the markets threw the towel in on the sectors.

A good part of the profits are now gone and in many areas its a case of slicing those profits off and looking the the roadmap to see if there are other areas as the cycle develops,and also ready to deploy if a big kahuna hits.

 

It's surprising what a bunch of keyborad warriors with a charismatic sect leader can achieve isn't it.That one about Deutsche saying sell BT at£1.10 is hilarious.

[sancho panza]

looks like trouble ahead.

[JMD]

48 minutes ago, Noallegiance said:

Absolutely.

Jazz & soul that inspired disco that morphed into four-on-the-floor dance music. 

I have a bit of a bug-bear with how the name R&B has been abused. Modern 'R&B' is nothing like the songs brought to the world by the struggling back folk of America.

Yes I can see the heavy influence from jazz up to and including rock n roll era etc in the 50's, but by the time of the 60's were the new emerging music genres not already being more influenced by European cultural melodic influence? eg the Beatles, who then in turn massively inspired huge swathes of pop music?

[Hancock]

16 minutes ago, sancho panza said:

looks like trouble ahead.

Here is hoping as just sold all my RMG and half my DRAX both at 100% gains ... how i wish HPC was as right as DOSBODS in predicting the future!

[JMD]

1 hour ago, Bricormortis said:

Yes, big contribution to the sounds of the 20th century, but it can be argued that just as influential or more so was the Irish who settled in the Apilacian area. Their music morphed into country, which was later punked up and became skiffle, which is the foundations of much of  modern pop.

Yes, that's interesting. So not denying the spark of inspiration came from Afro-American jazz, etc. But like all torche flames (evan the so called perpetual Olympic one) they must be continually relit and refuelled by others. Plus who really 'invents' anything anyway? Eg. who actually invented the telephone - was it Bell, Edison, or the Italian guy (who's name I can never remember!)? 

[Bobthebuilder]

15 minutes ago, JMD said:

Yes, that's interesting. So not denying the spark of inspiration came from Afro-American jazz, etc. But like all torche flames (evan the so called perpetual Olympic one) they must be continually relit and refuelled by others. Plus who really 'invents' anything anyway? Eg. who actually invented the telephone - was it Bell, Edison, or the Italian guy (who's name I can never remember!)? 

My boy lollipop was a big Jamaican SKA hit in 1964 that gave birth to the reggae / SKA movement. It was first recorded in Harlem, New York in 1956. So you could say SKA began in America.

Just topped my SIPP up today, most of it was the SEISS payments. Thanks Rishi Dishi.