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

[JMD]

11 hours ago, Harley said:

Erroneous precision.  The art is knowing how far to go, regardless of the apparent potential.  You see that mindset everywhere, not just in finance. Trying to dissect everything because you apparently can, meanwhile killing that Leibensteinesque X factor. 

5 mins on a balance sheet is generous!  That's tops for all the financials for me!  I know what I care about, find it and make a decision there without over thinking it.  Nice and boring is great.  Of course I initially had to go deep to define my "simple" approach!

Diverged today as I saw a massive increase in the working cash flow tied up with accounts receivable for a Chinese water company.  Downloaded the accounts, looked deep into the notes, something about land rights and the directors view.

Waste of time.  If it ain't clear, move on.

I agree, plus your post kinda reminded me of something i read recently, so have linked to it below. The 'anti-fragility thing' has many overlaps with finding a successful investment style imho. 

10 Principles to Live an Antifragile Life (fs.blog)

 

[sancho panza]

21 hours ago, DurhamBorn said:

@Cattle Prod i think whats interesting this cycle is how the Fed do tighten.They might actually go to interest rate increases rather than QE removal after the initial tightening.Removing liquidity will cause an incredible bust.Tightening the cost of money might not.Thats the conversation i would be having if i was on the board.Tighten slightly through rates while leaving M3 high.Not yet of course.

They're between a rock and hard place when they do need to tighten...and they will have to tighten at some point.At that moment,if I was jereome I'd be reading the Fed's early retirement policy.

Raise rates-markets go pop.

Stop QE-markets go pop.

It's like picking the shade of your dog poo sandwich.

19 hours ago, janch said:

I'm also wondering about this as house prices are still on the rise everywhere it would seem.  The average is 12%pa in US:

https://notayesmanseconomics.wordpress.com/

Is this a temporary thing before the bust? 

Interesting discussion in the property crash thread re current hosuing market liquidty which is very much in the equity swappping sector ie not terraces/flats.Suspect it's covering a raft of woes that will come out in the summer.

[sancho panza]

 

14 hours ago, Cattle Prod said:

Don't worry, if demand increases 5.2mbd over the next six months, oil will go higher than that. I have no clue how they came to that figure, equally Goldman has no clue the damage that has been done to the supply pipeline. I was in a seminar today which said none of the majors are planning to increase oil production over the coming years, and have largely given up on exploration. Brownfield sources have been milked over the last 6 year slump, and they are simply not going to invest in greenfield.

Fsacinating input here.That's one hell of a ramp up.My only big decsion is whether we sell ahed of a BK.Reading these last few posts has put me off.But looking at the likes of EQNR hitting $21,,the sector leaders are pointing higher and then some imho.

As you say,where teh f*** is that 5.2mn going to come from?

Decl:long oilies.

14 hours ago, planit said:

 

The sentiment is also helping cloud judgement.

The article writers are all woke and see it as their duty to 'educate' the plebs. As we have seen with Trump and Covid, they are willing to make up shit if the end goal is achieved.

In the case of the oil sector they are looking for every reason or risk that people should not invest.

In parallel to that you have the activists hounding the funds and cancelling anyone not bending the knee.

Faced with all this negativity investors have questioned their own views and sold out. I could see it on the boards last two days with BP.

 

I am pretty happy still holding, as DB says, the more buybacks at current prices the better.

We have the shit Shell results to come tomorrow so I wonder how the market will take those, I think they hedged at $40 until 2029 LOL.

I thankfully took a FOMO Jul calls postion in RDSB last week.Glad I did.Looking at my technical charts ,the next 4-6 week ramp in oilies might be beginning.

13 hours ago, DurhamBorn said:

 

Most of our work is now unfolding nicely as we expected and while people are shocked at what unfolds now and concentrates on that we need to be moving along the roadmap to what follows.I dont think they have finished printing yet,i expect a few more tranches yet.

Interesting we should be discussing this.You may not remember but back late march I psoted you a question about DXY as a lot of people were calling it hgiher and the momo trade was nudging it higher.Kaplan -no less-was piling into TLT on DXY bottoming.

You said no,it's heading lower.I won't lie,I positioned on your DXY call rahter than teh others.....my thanks there DB.

[sancho panza]

I'm cheekily posting something from Lyn Alden's newsletter -well worth it imho.She hgihlights the sectoral change goijng on here from growth to value.I'm sure she wouldn't mind this as it's proportionate and advertising her newsletter in a way.

To me this is a key move we need to see on the check lsit before BK

[JMD]

6 hours ago, Harley said:

Most people won't be able to afford anything!  Maybe rent for special occasions but that'll be it.

Interesting discussion Harley. So what am i missing, i.e. how does the politics affect the investment case? 

To summarise,  I'm aware of the 'sharing economy/you'll own nothing...' theory. I even think large swathes of housing stock will move into government hands (government mortgage loan guarantees eventually force property assets to be swallowed up by the state as/when banks fail).

However, regarding EV's, i fail to see how a change in ownership model substantially affects the production numbers or the transition timescales to EV/hydrogen, etc. What i mean is - in terms of investment - if we get less cars built in the West, surely that would be more than offset by increases across China/India?

(isn't it really the same case made frequently on here regarding future energy/oil demand increasing in Asia, so despite what many would have us believe, oil companies are will continue to be very investible?)

 

[JMD]

3 hours ago, CVG said:

https://www.bbc.co.uk/news/uk-wales-56920734

Gold £10,000 coin weighing 22lb produced at Royal Mint in Llantrisant

Worth around £450K spot?

"The mint said the price of the £10,000 denomination gold version was available on application."

Probaby about £600K then. Who will apply to find out?

 

I heard that Carrie Symonds bought it to use as a coffee table... the No 10 flat refurb. was lacking a 'statement piece'!!

[feed]

19 minutes ago, JMD said:

However, regarding EV's, i fail to see how a change in ownership model substantially affects the production numbers or the transition timescales to EV/hydrogen, etc. What i mean is - in terms of investment - if we get less cars built in the West, surely that would be more than offset by increases across China/India?

(isn't it really the same case made frequently on here regarding future energy/oil demand increasing in Asia, so despite what many would have us believe, oil companies are will continue to be very investible?)

 

There is a fundamental problem with the car industry for the autos today. 

Profit is front end.  Bulk of it is point of sale, with a decreasing amount from service as the vehicle ages, by the time it gets to around 5 years, nothing is going back to the automotive company.  And it’s worse than that, as a 5 year old vehicle can act as a competition to new sales, due to longevity.  Not so bad when a car would rust to dust on a few years after forecourt.  But today, autos are basically creating their own competition.  

Move to cars as a service redistributes the profit from secondary markets and late age parts and service back to the autos.  And if you can mandate the removal of 5 year vehicles out of the market, for whatever reason you like.  It could lead to an increase in production, but with shorter lifespans.  

None of this is guaranteed of course, but it’s the path the large western autos want.  For obvious reasons.  
 

[VeryMeanReversion]

I've made two years of net salary in the last two months on investments as SIPP hits an ATH.

I'm losing my nerve for holding on much longer so now have sell-limit orders at a few % above current prices on any SIPP investments that aren't oil/miners/tobacco/utilities/PM's.  I want to get off the "wall of worry".  I hope (and that's all it is) any losses on the stuff I keep will just be temporary.

The graphs for Hussman MAPE and US margin debt balances are beyond crazy now.

That will teach me for reading "The Day the Bubble Burst - A Social History of the Wall Street Crash of 1929" (audiobook).   My conclusion is that it was all about "margin" as the instrument of greed and fear.

[Noallegiance]

43 minutes ago, VeryMeanReversion said:

I've made two years of net salary in the last two months on investments as SIPP hits an ATH.

I'm losing my nerve for holding on much longer so now have sell-limit orders at a few % above current prices on any SIPP investments that aren't oil/miners/tobacco/utilities/PM's.  I want to get off the "wall of worry".  I hope (and that's all it is) any losses on the stuff I keep will just be temporary.

The graphs for Hussman MAPE and US margin debt balances are beyond crazy now.

That will teach me for reading "The Day the Bubble Burst - A Social History of the Wall Street Crash of 1929" (audiobook).   My conclusion is that it was all about "margin" as the instrument of greed and fear.

Yes I'm getting twitchy some days but think this could run for a lot of the summer.

I just need to remind myself that if I sell out at N and it carries on to V then it's OK cos I'm waiting for a return to D. Plus, I'm not selling all of everything so I'll still catch a bit more of the up to trickle-sell if economical to do so on fees. 

Early in profit vs late in loss is a no-brainer.

[JMD]

2 hours ago, feed said:

The move towards it is breath-taking, it’s going to take many people by surprise how quickly it happens. 

Semi autonomous in passenger vehicles will be here sooner than you think.  But people really need to be thinking like more pilots in commercial aircraft.  Take off and landing.  The tech will control speed, gear change, breaking, communication etc to ensure max efficiency .  But there will be a pilot in passenger vehicles.

Fright may be different, but they’ll be more like trains on roads.  
 

Feed, but please don't get me wrong, I used to be fully onboard(!) with driver-less car tech, but lets be honest, it hasn't been 'breathtaking progress' has it? After all, back in 2013 there was lots of hype from the sector, after many decades of research projects - and still today, the AI is still very clunky, and is really not much more than image recognition. I mention this because i had thought AI 'was more' than big-data and very fast cpu's, but it is not, so this makes me very dubious of what will result when real world testing of millions of self driving cars begins (for example, part of the training of AI systems involves using outsourced teams of cheap labour in Africa where they encircle photos of cars to teach AI systems what cars are; sounds weird doesn't it, but see bbc click report on google's self drive project from approx 2 years ago).

I accept progress is being made, but i still stick with my estimate of at least 10 years away (2030+) before wide scale 'adoption' (a vague term i know). But its also an infrastructure and social/public take up thing also. Our government EV new car target of 2030 is a separate topic really. Btw i think your own description of what a 'self-driving' car is, sort of proves what i'm trying to say. After all we already have self parking cars, i just think there will be many car accidents at each stage of implementation, and this will greatly slow the adoption of the self-drive technology.

Feed, i am here to learn, so am happy to be corrected on any of my above views/interpretations. 

[feed]

3 minutes ago, JMD said:

Feed, but please don't get me wrong, I used to be fully onboard(!) with driver-less car tech, but lets be honest, it hasn't been 'breathtaking progress' has it? After all, back in 2013 there was lots of hype from the sector, after many decades of research projects - and still today, the AI is still very clunky, and is really not much more than image recognition. I mention this because i had thought AI 'was more' than big-data and very fast cpu's, but it is not, so this makes me very dubious of what will result when real world testing of millions of self driving cars begins (for example, part of the training of AI systems involves using outsourced teams of cheap labour in Africa where they encircle photos of cars to teach AI systems what cars are; sounds weird doesn't it, but see bbc click report on google's self drive project from approx 2 years ago).

I accept progress is being made, but i still stick with my estimate of at least 10 years away (2030+) before wide scale 'adoption' (a vague term i know). But its also an infrastructure and social/public take up thing also. Our government EV new car target of 2030 is a separate topic really. Btw i think your own description of what a 'self-driving' car is, sort of proves what i'm trying to say. After all we already have self parking cars, i just think there will be many car accidents at each stage of implementation, and this will greatly slow the adoption of the self-drive technology.

Feed, i am here to learn, so am happy to be corrected on any of my above views/interpretations. 

maybe this is a perception thing.  Self driving isn't really a term that the industry really uses.  It's a headline grabber.  If people are really expecting Johnny cab, then no that's not happening anytime soon for passenger vehicles 

Autonomous use looks like this. 

  

 

 

[Harley]

4 hours ago, planit said:

I know this is a Macro thread and Tesla is as far as you can get from where we are but I want to comment, if you don't want to read then **c* off and skip this post.

No need to be like that.  The trick is to say the markets are mad at the macro level (which they are) and here's a great example......!  Very good info.  I've noticed plenty of so so company fundamentals but nothing in this much detail.  What gets me is I know I'm in a bubble, as much as if I got slapped across the face by a wet fish, but I guess I'm just tranced by the pretty lights and beats.  The hangover's gonna hurt.

[Noallegiance]

Here it comes...

Calls to make furlough scheme permanent with 80% pay for people who lose their jobs (msn.com)

[Harley]

3 hours ago, CVG said:

I made the mistake of buying metal racking from B&Q. It buckled very quickly after only 60 cans of beans (plus 150+ assorted others)

No joke, I did the sums before buying my metal cupboards!

[JMD]

3 hours ago, CVG said:

I made the mistake of buying metal racking from B&Q. It buckled very quickly after only 60 cans of beans (plus 150+ assorted others)

...the '150 assorted others' intrigues me, but i shan't ask as i am easily embarrased!!

...btw, was that defective metal racking from China by any chance?!

 

[Harley]

3 hours ago, AWW said:

Exactly this. It's difficult, but short term sentiment swings should absolutely be ignored. Expect frequent 5% pullbacks in portfolio value. I've had a few psychological wobbles over the past six months (who hasn't in the current market?) but managed to ignore the gut and hold on to see portfolio make another ATH a few weeks later.

Dare I say it, there's something to the "HODL" meme.

I nearly sold some RDSB this week as the monthlies were softening but then looked harder to conclude maybe just a pullback which would probably cost net to get back into.   Thought how all this japping can make you trigger sensitive.  I've got enough profit to wait for a material signal.  

[Harley]

2 hours ago, JMD said:

I agree, plus your post kinda reminded me of something i read recently, so have linked to it below. The 'anti-fragility thing' has many overlaps with finding a successful investment style imho. 

10 Principles to Live an Antifragile Life (fs.blog)

 

Nice link thanks.  Like it very: "The resilient resists shocks and stays the same; the antifragile gets better".

 

[Alex]

35 minutes ago, feed said:

maybe this is a perception thing.  Self driving isn't really a term that the industry really uses.  It's a headline grabber.  If people are really expecting Johnny cab, then no that's not happening anytime soon for passenger vehicles 

Autonomous use looks like this. 

  

 

 

This seems appropriate:

https://www.smbc-comics.com/comic/fsd

 

[Harley]

2 hours ago, JMD said:

Interesting discussion Harley. So what am i missing, i.e. how does the politics affect the investment case? 

To summarise,  I'm aware of the 'sharing economy/you'll own nothing...' theory. I even think large swathes of housing stock will move into government hands (government mortgage loan guarantees eventually force property assets to be swallowed up by the state as/when banks fail).

However, regarding EV's, i fail to see how a change in ownership model substantially affects the production numbers or the transition timescales to EV/hydrogen, etc. What i mean is - in terms of investment - if we get less cars built in the West, surely that would be more than offset by increases across China/India?

(isn't it really the same case made frequently on here regarding future energy/oil demand increasing in Asia, so despite what many would have us believe, oil companies are will continue to be very investible?)

 

Aside any modern wokery stuff, I just see them getting very expensive to buy and run as-is, let alone any road pricing, etc.  EV when that comes will cost a fortune too.  The woke may spin and backslap but it'll be good old fashioned economics (commodity prices, income levels, etc)!

[Animal Spirits]

16 hours ago, Cattle Prod said:

I thought Powell was very poor in the presser. He was asked @DurhamBorns question about how they will tighten, by rates or by tapering, he fluffed it a bit and went back to script. Some good questions from the press today. 

Peter Boockvar was also not impressed by the sounds of this:

Major intensifying inflation pressures.

"They (The Fed) better hope that it's transitory or else they are going to be mugged by some serious reality this summer"

Some further discussion regarding Fed macro policy relevant to the thread over the short term.

[Harley]

Following on from @JMD link and its comment "In short, stop optimizing for today or tomorrow and start playing the long game. That means being less efficient in the short term but more effective in the long term".....

Bought some gold today.  Not silver at those premiums.  That was one for last year and before.  May grab some Platinum, screws, and more engine spares.  Now what else should I be doing with my fiat?!  A prepaid funeral maybe?

[Harley]

10 minutes ago, Animal Spirits said:

Peter Boockvar was also not impressed by the sounds of this:

Major intensifying inflation pressures.

"They (The Fed) better hope that it's transitory or else they are going to be mugged by some serious reality this summer"

Some further discussion regarding Fed macro policy relevant to the thread over the short term.

Never underestimate the FED and all the rest.  They have an almost unlimited ability to distract and rewrite the narrative.  Agreed, each twist may be more extreme than the last, but most just open their windows wider to accomodate the (perceived) only game in town.

[CVG]

47 minutes ago, JMD said:

...the '150 assorted others' intrigues me, but i shan't ask as i am easily embarrased!!

...btw, was that defective metal racking from China by any chance?!

 

I refuse to be sucked into posting recipes but let's just say corned beef, spam, chopped tomatoes, chickpeas, kidney beans, new potatoes, tinned fruit, evaporated milk, etc and then ...... bang!

[planit]

1 minute ago, CVG said:

I refuse to be sucked into posting recipes but let's just say corned beef, spam, chopped tomatoes, chickpeas, kidney beans, new potatoes, tinned fruit, evaporated milk, etc and then ...... bang!

bang = sick all over the place; right?

[Harley]

5 minutes ago, planit said:

bang = sick all over the place; right?

I'll keep it nice, but you mean....

Bang indeed!