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

[reformed nice guy]

16 hours ago, DurhamBorn said:

Only slowing its purchases remember though,the question is do they remove any liquidity they printed,or do they use rates instead.I think they will use rates and not remove the liquidity so starting the cycle with a much higher monetary base.They are going to say theres the inflation,let the market share it out.

Sorry to be a bit morbid, but how would a "black swan event" like conflict (Taiwan for example) or a major terrorist event (9/11 style) relate to your road map?

Would that cancel rate rises and cause printing to go insane?

[Wheeler]

21 minutes ago, Harley said:

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?

I wouldn’t bother. When you are dead it’s someone else’s problem.

[Noallegiance]

5 minutes ago, Wheeler said:

When you are dead stupid it’s someone else’s problem.

More apt for the times, I feel.

[geordie_lurch]

1 hour ago, Noallegiance said:

Here it comes...

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

Wow - what a story @Noallegiance

 

[Noallegiance]

Just now, geordie_lurch said:

Wow - what a story @Noallegiance

Wow - what a story @Noallegiance

Wow - what a story @Noallegiance

Thanks

Thanks

Thanks

[Harley]

11 minutes ago, Wheeler said:

I wouldn’t bother. When you are dead it’s someone else’s problem.

I run a family office, of sorts! 

[Barnsey]

5 hours ago, DurhamBorn said:

I think we will be close to double digit here in the UK though i dont trust the way we measure to pick it up.Lots of items in the shops are going up 20% in one jump.Iv been stocking up on tins etc with 2 years supply 

I bought 42 carex hand soaps from Amazon 

[Barnsey]

1 hour ago, Noallegiance said:

Here it comes...

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

What did I tell you all way back! 

[Noallegiance]

7 minutes ago, Barnsey said:

What did I tell you all way back! 

People given money to produce fuck all.

Let's pour some Castrol on that inflationary pyre.

Other oils are available.

[Barnsey]

4 minutes ago, Noallegiance said:

People given money to produce fuck all.

Let's pour some Castrol on that inflationary pyre.

Other oils are available.

Setting aside my own personal feelings about the fairness of furlough, it has kinda worked though hasn't it? Wages on the up both here and the States.

[feed]

14 minutes ago, Barnsey said:

What did I tell you all way back! 

where unemployment support is paid at 80% at previous pay for three months 

well the proposal is 3 months and it's base on previous pay. i.e. if you've worked you get better benefits. 

Not that it's getting implemented, anyway.  

[JMD]

2 hours ago, feed said:

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.  
 

Thanks Feed. Useful discussion i think. Yes i agree, but aren't the auto manufactures half way there already?... After all don't they make most of their profit from leasing own vehicles (so ownership effectively stays with them). As i believe you are saying, they have been preparing for these industry changes for some time.

But I think we 'detoured slightly off-thread(!)' - entirely my fault as i should have made clear that i was really initially asking in terms of the de-complex trade, a favorite low-risk reflation strategy of the thread (plus i am not clever enough to choose between the various debt/pension laiden car makers). So i was more thinking in terms of the the production numbers globally remaining high (i believe that is what you're saying will happen?) regardless of the future business/personal ownership model. 

My specific personal reason for asking was in regard the commodities and battery-tech companies (those are speculative i know) remaining a potential strong sector bet. Not asking for investment advice of course. Its just that 'shared stuff', whether it be cars or rental accommodation, gets high wear/tear, and so is replaced more often than privately owned goods. i.e. car production numbers remains high, especially if also factoring for China/India growth? 

[JMD]

1 hour ago, Harley said:

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)!

Thanks Harley, yes car price increases (more inflation) for sure. I was really asking about the investment opportunities (or change of investment opps.) for us common Dosbod folk (or 'rude mechanicals' as Shakepeare termed us!!)... which i confess i didn't make clear in my initial post question. (i.e. mainly commods, plus i fancy some small bets/positions on battery tech co's)

[feed]

21 minutes ago, JMD said:

Thanks Feed. Useful discussion i think. Yes i agree, but aren't the auto manufactures half way there already?... After all don't they make most of their profit from leasing own vehicles (so ownership effectively stays with them). As i believe you are saying, they have been preparing for these industry changes for some time.

But I think we 'detoured slightly off-thread(!)' - entirely my fault as i should have made clear that i was really initially asking in terms of the de-complex trade, a favorite low-risk reflation strategy of the thread (plus i am not clever enough to choose between the various debt/pension laiden car makers). So i was more thinking in terms of the the production numbers globally remaining high (i believe that is what you're saying will happen?) regardless of the future business/personal ownership model. 

My specific personal reason for asking was in regard the commodities and battery-tech companies (those are speculative i know) remaining a potential strong sector bet. Not asking for investment advice of course. Its just that 'shared stuff', whether it be cars or rental accommodation, gets high wear/tear, and so is replaced more often than privately owned goods. i.e. car production numbers remains high, especially if also factoring for China/India growth? 

What is important is that EV’s are being used to drive a business model change in the west.  It’s not purely a tech change play.   And when you put that into the context of the lack infrastructure for EV charging, say.  It makes more sense.  

Growth and production (and where production) is a difficult question. Because protectionism.  

Western Autos are heavily align with their state and a lot of their future strategy relies on being able to leverage relationship that to keep out cheap imports based on stolen IP from india and china.  Narrative because climate change.

Either we end up with. 

1.    Western service model, where the western autos dominate and prices rise as ownership falls and a separate protectionist China/India market, that could still be predominantly ICE
2.    A global market dominated by the Asians, with mixed ICE/EV and growth depending on the region and bankrupt western autos

Take your pick. 
 

[Noallegiance]

29 minutes ago, Barnsey said:

Setting aside my own personal feelings about the fairness of furlough, it has kinda worked though hasn't it? Wages on the up both here and the States.

I'm not quite sure what to do with this question so I'll leave it!

[JMD]

59 minutes ago, Wheeler said:

I wouldn’t bother. When you are dead it’s someone else’s problem.

But doesn't always have to be 'a problem'. My old Dad used to refer to it as 'pushing up the daisies'... and to keep things strictly on thread topic, i guess there are winners and losers to every trade.

[sancho panza]

5 hours ago, Majorpain said:

Timber and steel shortages set to intensify | Construction Enquirer News

 

Interesting @Cattle Prod to wonder if this bodes well for ye olde oil price.It's not had the demand increase during pandemic,but it sure as hell has had the drop in investment and exploration.

Look at that price spike.................

Yahoo finance 29/4/21

Lumber prices are up 232% and ‘could spiral out of control in the next few months’

"The market is in trouble. It could spiral out of control in the next few months," Dustin Jalbert, senior economist at Fastmarkets RISI, told Fortune. The issue? Supply, which is already backlogged, simply can't catch up as demand continues to grow with the start of the home building and home renovation seasons.

This supply and demand mismatch is largely a result of the pandemic. At the same time that state-mandated lockdowns caused mills to halt production, bored quarantining Americans were rushing to [hotlink]Home Depot[/hotlink] and Lowe’s to buy up materials for do-it-yourself projects. That caused lumber inventory to plummet. It only got worse from there: Recession-induced record-low interest rates caused a housing boom. In March, new housing starts hit their highest levels since 2006. Of course, new homes require a lot of lumber, thus exacerbating the shortage.

[Chewing Grass]

3 minutes ago, sancho panza said:

Recession-induced record-low interest rates caused a housing boom. In March, new housing starts hit their highest levels since 2006.

Recession causes housing boom????

One can only hope there is a quick recovery or the patient will end up sicker.

[Noallegiance]

Seems topical:

The coming oil shortage – Part II (goldmoney.com)

[planit]

@Noallegiance

Many thanks for that, it is great to see a complete set of research that doesn't include [what I see as] impossible targets of EV use and peak oil so close into the future. 

 

99.999% of the world are not Hollywood actors willing to buy an EV even if running costs are higher (because oil is at $20).

The transition to electric requires high oil prices or it won't even happen. It's why China is still building coal plants, they are cheap units of electricity and supply can be guaranteed as it is local.

 

Things have moved very fast over the last week if you take into account the oil price increase, confidence in US/China economy and Saudi Prince's comments, look at the difference between the standard and bold type from article 

Quote

In his interview, MBS claimed that output from major oil producers such as Russia and the US will precipitously decline in the coming years, allowing Saudi Arabia to pump more crude to offset the supply shortfalls.

"The US, for example, will not be an oil-producing country in 10 years," MBS said, forecasting that American production would shrink five-fold to about 2 million b/d in that span.

Russia, meanwhile, will see its production drop to 1 million b/d in about 20 years, from 11 million b/d today, he said. It was unclear where the crown prince derived his figures from.

Platts Analytics forecasts that US crude production will rise to 13.8 million b/d in 2030, while Russia will average about 10 million b/d, the same as Saudi Arabia.

If MBS is even half correct, things will reach a head pretty quickly and this doesnt' even take into account what @Cattle Prod said about Aramco potentially declining.

 

BP and Shell doing terribly, if anyone has a way for me to read what this negative says 

FT: Oil stocks: liquidity-fuelled rally will not last - PREMIUM

then I would be grateful, my student subscription doesn't cover it 

[sancho panza]

57 minutes ago, Noallegiance said:

Seems topical:

The coming oil shortage – Part II (goldmoney.com)

Nice find.Interesting that they argue that EV's won't reduce demand much as EM's growth will suck it up.

I think the Greta's of this world are kidding themselves that EV's are going to reduce demand for fossil fuels.

1 hour ago, Chewing Grass said:

Recession causes housing boom????

One can only hope there is a quick recovery or the patient will end up sicker.

It's ironic isn't it but liek you say,thsi pump and dump in hosuing will jsut bring a round of new suckers in who are leveraged to the gills.

It won't tkae much oif a rasie in Ir's to sink this one.

[DurhamBorn]

25 minutes ago, planit said:

@Noallegiance

Many thanks for that, it is great to see a complete set of research that doesn't include [what I see as] impossible targets of EV use and peak oil so close into the future. 

 

99.999% of the world are not Hollywood actors willing to buy an EV even if running costs are higher (because oil is at $20).

The transition to electric requires high oil prices or it won't even happen. It's why China is still building coal plants, they are cheap units of electricity and supply can be guaranteed as it is local.

 

Things have moved very fast over the last week if you take into account the oil price increase, confidence in US/China economy and Saudi Prince's comments, look at the difference between the standard and bold type from article 

If MBS is even half correct, things will reach a head pretty quickly and this doesnt' even take into account what @Cattle Prod said about Aramco potentially declining.

 

BP and Shell doing terribly, if anyone has a way for me to read what this negative says 

FT: Oil stocks: liquidity-fuelled rally will not last - PREMIUM

then I would be grateful, my student subscription doesn't cover it 

Iv messaged you it  .I love it.Cant last blah blah.Im sure my 45% green on the stocks including divis is real.There is so much wrong with what they have to say there is no point.I love the comment below though  ,what the fuck is responsible investing?.Its woke rubbish.I read a comment today that said the oil companies were the new tobacco, in terminal decline.I actually agree,they are the new tobacco,thats why i bought so many hoping to part repeat the profits tobacco made me.

Most portfolio managers today cannot easily square holding lots of oil stocks with the demands of clients keen to address climate change. This year, the EU’s Sustainable Finance Disclosure Regulation will put pressure on European fund managers to back up their promises on responsible investing

 

[The Idiocrat]

1 hour ago, feed said:

What is important is that EV’s are being used to drive a business model change in the west.  It’s not purely a tech change play.   And when you put that into the context of the lack infrastructure for EV charging, say.  It makes more sense.  

Growth and production (and where production) is a difficult question. Because protectionism.  

Western Autos are heavily align with their state and a lot of their future strategy relies on being able to leverage relationship that to keep out cheap imports based on stolen IP from india and china.  Narrative because climate change.

Either we end up with. 

1.    Western service model, where the western autos dominate and prices rise as ownership falls and a separate protectionist China/India market, that could still be predominantly ICE
2.    A global market dominated by the Asians, with mixed ICE/EV and growth depending on the region and bankrupt western autos

Take your pick. 
 

I tend to agree, although in the western autos I'd also include the Japanese with factories in the west as they're so embedded. I'm mainly working in connected vehicles at the moment, with my main client one of those. Their strategy is very much to assume that ownership is going to fall and that they therefore need to be one of the winners, although they're pretty much backing all horses at the moment - things like "pay as you drive" business models, multi-modal mobility where you're integrating different forms of transport,  as well as ultimately summoning a vehicle when you need it rather than owning it. It is still by no means clear that people won't want to retain ownership, or rather, exclusive use of a vehicle at their house, not only for the practical reasons of "popping out for milk", but also for the ego reason - cars to many people are status symbols, they're overt because they're large and in the street, and in many cultures, especially the UK, that's a big deal, although part of the thinking is that this is a generational thing and millenials and after won't be at all bothered since everything is on subscription/monthly payments for them already, be it iPhones, Netflix, food (eg. Hello Fresh), utilities of course, uni fees, etc.

[Don Coglione]

I received an email from ii today, asking whether investing my pension ethically was important to me.

Fuck no, I just want to have some money in my retirement! What defines "ethically" anyway?

[Yadda yadda yadda]

2 hours ago, feed said:

where unemployment support is paid at 80% at previous pay for three months 

well the proposal is 3 months and it's base on previous pay. i.e. if you've worked you get better benefits. 

Not that it's getting implemented, anyway.  

It is a good proposal. Take someone's earnings over the previous six months or year and pay them 80% of the average as unemployment if they lose their job for up to three months. Cap it at £3k per month (£2,400 pay out) or whatever is thought appropriate.

Three months is a reasonable time to find a new job. This would be a link between tax and benefit, which is a good thing. It will also encourage people to move between jobs rather than stick at the same place because of security. If it doesn't work out then you're not immediately plunged into financial crisis - something that is a threat for a lot of the population. Less need to keep hold of the safety net of a redundancy package. Likely that wages would go up as people move round to chase them. Also, and people might disapprove of this, there will be a higher propensity to spend as there is less need for a couple of months spare money just in case.

The cost seems low. Well worth doing but I doubt we'll get such a sensible reform. It isn't a communist means tested benefit.