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

[JMD]

1 hour ago, Talking Monkey said:

I can't help but think he's talking his book. Or at least very heavily biased due to going as he says all in on bitcoin. To even it out he seems a decent bloke. 

Yea, all in to crypto with his 'liquid wealth' apparently, (i don't expect him to give figures) but he won't define what that means. In fact i saw an interview where when pushed by the interviewer, he even then just spoke in terms of it being difficult because people have different pots of money/depending where they are on their life journey!... so who knows.  

[DurhamBorn]

Two up in the FTSE at the moment,a silver,and a telco  

[nirvana]

18 minutes ago, Yellow_Reduced_Sticker said:

@nirvana BUY the f****** DIP!

I did mate! The first time I made a few shekels, the 2nd time that ugly bastard saw me and pulled my pants down....

perhaps a lesson in your weapon of choice today when going into battle...

Rather than battling the Krauts I should have been supporting cable 

I've got another monitor up, need to get some tits in to help me multitask 

 

[Talking Monkey]

23 minutes ago, JMD said:

Yea, all in to crypto with his 'liquid wealth' apparently, (i don't expect him to give figures) but he won't define what that means. In fact i saw an interview where when pushed by the interviewer, he even then just spoke in terms of it being difficult because people have different pots of money/depending where they are on their life journey!... so who knows.  

Yes I recall that and it seemed an awfully wishy washy response

[JMD]

1 hour ago, DurhamBorn said:

Iv heard about the death of "value" investing many many times in my life,nearly always at the end of some kind of bubble in other assets.Value depends on inflation,because the value of their already built assets increase in price.

There arent many areas that can outrun inflation because it eats away spending power.Amazon for instance can increase prices as its input costs rise,but consumers have less money anyway so its margins are squeezed.

Dollar should break below 90 soon against consensus, 86 area could see the bottom,but there is room for 83 or even down to tag 80.

 

Thanks DB. Yes, Raoul's starting point in his video is for no inflation, and that the zombie economy will be left to rot away, and so other forms of asset value will need to be developed. But i thought it interesting to post an alternative theory, especially as many on here describe difficulty in seeing any value out there currently. But as you remind, an inflation (winter) is coming.                               Raoul's thesis rather conveniently(?) ignores how government policy actions might be used to create inflation, in order to fend of chaos/mass unemployment, etc. Raoul appears to want to explain things only in terms of market economy productivity drivers, etc, and 'demographic forces' (simplistic demographics is a personal irritation of mine, eg in the West retirement ages can be changed at the stroke of a ministers pen). Actually, attempting to explain things only in terms of economic forces is a bit ironic for Raoul, given that he postulates crypto itself may/probably have been planted by us/uk intelligence!  

[nirvana]

31 minutes ago, DurhamBorn said:

Two up in the FTSE at the moment,a silver,and a telco  

And of course RM...feckin cunts .......HZM were slightly up early doors just to confuse me when I'm on the edge of selling...

That Raoul Pal* geezer started off life as a salesman, quelle surprise, I won't be watching anymore vids starring him thanks

*called him Paul at first...he's no Pal o mine and I don't think he's your pal either 

[JMD]

1 hour ago, Cattle Prod said:

The present:

Clear rollover and turndown on the 7 dma. No national lockdown.

 

 

Yes, no media comment about declining rates despite there being no lock-down in India.

I also notice that Facebook yesterday banned globally, and for ever and ever (Amen!!), all posts regarding/relating in any way to purporting/explaining a view, or even mentioning any fact - on the subject of not being vaccinated (ie so called anti-vaccers). We have entered an age of blatant, full-on censorship, where you are no longer allowed to voice an opinion, except the officially sanctioned one... interesting times indeed. 

[nirvana]

1 hour ago, Cattle Prod said:

Just remember what Stan Druckenmiller did an hour before the peak of the dotcom bubble

just seen this on twitter Squawk CNBC

COMING UP: Don't miss an exclusive interview with investing legend Stanley Druckenmiller on this morning's show discussing his new WSJ op-ed saying the Fed is courting asset bubbles: The Fed Is Playing With Fire 

[JMD]

1 hour ago, Mapper said:

I know he's a smart cookie, but there is something I find unsettling about him.

He looks like the kind of guy who would try to get you to go to a swingers party. Or failing that, try to sell you Amway products.

(Disclosure: Not watched the video)

I know what you mean, plus so many of these commentators are stationed off-shore, but always so very keen to state that they pay all their taxes... however... 

'The Cayman Islands is the third worst tax haven for corporate tax avoidance and the world's worst tax haven in terms of financial secrecy according to the Tax Justice Network.'

...just saying.

[nirvana]

You know the zoomers think he's great?

 

 

[JMD]

35 minutes ago, Talking Monkey said:

Yes I recall that and it seemed an awfully wishy washy response

I guess Raoul Pal is not quiet as grubby/slimy as that other island hugging hedgie - Hugh Hendry (manic-depressive or what?).

[Mapper]

31 minutes ago, JMD said:

'The Cayman Islands is the third worst tax haven for corporate tax avoidance

Out of interest, who beat them for gold and silver?

[Animal Spirits]

27 minutes ago, JMD said:

I guess Raoul Pal is not quiet as grubby/slimy as that other island hugging hedgie - Hugh Hendry (manic-depressive or what?).

@TESLAcharts account is worth monitoring. Covers all things from Tesla to Spacs and other related hype stories.

[sancho panza]

15 hours ago, Animal Spirits said:

“If you do not control public credit, it will control you”

And his final conclusion is that, when a state has mortgaged all of its future revenues, the state lapses into tranquillity, languor and impotence.

 

Great quote.I really like Lacy,he's done some great interviews-Macrovoices was one iirc.

This is the end game approaching for msot Western countries.Without some sort of default,Eurozone periphery will descend into sociall upheavel

In the UK,our political class are looking at the hartlepool result and thinking they're still in charge.58% of people felt there was noone worth voting for.

The sort of changes that are coming to disposable incomes in teh next decade normally precede significant social + political changes

2 hours ago, Cattle Prod said:

Personally I think there iare at least a few more months, and that Fed signals will tell us what to do, but my point is that you will not time this jumping in and out. If FOMO can kill one of the greatest traders and investors of all time, with respect, it will kill you. If you decide to get out, stay out IMO. Turn off the computer and do some gardening. I like your cautious voice on this thread, I wish you luck.

 

It's easier to read the bits not in bold.That's super advice for anyone.

I know that opne day in the next 3-12 months I'll get up,look at the oil/gold price/DXY and

plan A-sell everything then move to cash or UST's/dollar proxies

plan B-keep the bottom ladders in oilies/goldies/potash,then sell everything,move to cash/UST's

plan C-as above but move shorts on.

 

I have a gambling streak,I don't see the tops in for oilies/goldies by any stretch,but I could be seriously worng.

dyodd as ever.

[sancho panza]

This is taken from Lyn Aldens sub.I'm sure she wouldn't mind as it's good advertising.Very much backing up @Cattle Prod thesis

 

'In 2019, global oil demand reached just over 100 million barrels per day. After falling very fast in 2020, demand has since recovered to about 95 million barrels per day, with various forecasts that generally point to late 2021 or sometime in 2022 that it’ll reach previous peak demand levels.

China and India still present significant oil demand potential. They have a lot of consumption growth that is offsetting the stagnant levels of energy consumption in developed markets. Here’s China’s pre-pandemic oil consumption per year:

Chart Source: CEIC

To put things into perspective, the United States consumes more than 3x as much oil per capita as Thailand, and Thailand consumes more than 2x as much oil per capita as China. If China ever reaches the point where it consumes as much oil per capita as Thailand does now, that change alone would add 15 million barrels of daily demand.

India consumes a little over a third as much oil per capita as China, which totals about 5 million barrels per day. If they ever reach China’s current consumption levels (which, again, are only half as much as Thailand and one sixth as much as the US), that would add nearly 10 million barrels to daily global demand.

And then there’s Indonesia, Nigeria, and other large population countries with low per capita demand that have a lot of upward demand potential as well.'

[sancho panza]

Nick Corbishly on fire for Wolf St.

Aplogies to the LPP but cutting too much out would lose some of the nuances.Bits in bold for skim readers

 

https://wolfstreet.com/2021/05/10/mortgage-applications-spike-to-record-in-the-uk-after-boe-government-stoke-housing-fire/

Mortgage applications spike to record, while 130,000 homeowners are on mortgage holidays, 500,000 on tailored payment plans, and over 1 million are in unmortgageable apartments due to the flammable cladding crisis.

By Nick Corbishley for WOLF STREET:

Net mortgage borrowing in the UK hit £11.8 billion in March, the strongest since the series began in 1993, according to Bank of England data. The previous peak was in October 2006 (£10.4 billion), when the UK was in the grip of the pre-financial crisis bubble. The difference between then and now is that back then the economy was about to fall off a cliff, whereas now it has already fallen off a cliff, having last year suffered its biggest drop in economic output in 300 years.

The UK’s biggest lender HSBC said it doled out more mortgages in March than in any other month of more than 40 years offering home loans.

There are plenty of reasons for this lending boom, including the ongoing exodus from the cities to the villages of rural England, even as London’s population is shrinking for the first time in 30 years, and rents have been falling for 13 straight months.

 

But home prices are also rising, albeit less steeply, in London and other major cities. In April 2021 Chestertons reported 65% more buyer enquiries in London, 75% more sales agreed and 90% more sales completed than in April 2019. These findings chime with HMRC’s latest figures, which show record transactions numbers in March across the UK – up 93% from 2019.

The most important reason for the surging volume of residential property transactions is the support provided by the Bank of England and UK government to property buyers and investors.

In mid-March 2020, as it grappled with the early fallout of the virus crisis, the BoE slashed the UK’s base interest rate from 0.75% to 0.25%, then a week later to 0.1%, the lowest ever. The rate cut was in response to the economic stress caused by the shutdown of the UK economy. And the falling mortgage rates have stoked demand for housing.

The government too has pursued policies aimed at inflating the housing market and propping up the mortgage lending industry. First, it introduced a stamp duty holiday that was supposed to end at the end of March but was extended at the last minute til the end of June. This has driven much of the recent surge in new mortgages.

Then, last month, the Chancellor announced the launch of new government-backed mortgages with 5% down-payments. If borrowers default on the mortgages, taxpayers rather than the banks will be on the hook. Here’s what the government had to say at the launch of the lending program:

“First announced at the Budget, the scheme will help first time buyers or current homeowners secure a mortgage with just a 5% deposit to buy a house of up to £600,000 – providing an affordable route to home ownership for aspiring home-owners.

“The government will offer lenders the guarantee they need to provide mortgages that cover the other 95%, subject to the usual affordability checks.”

The government admitted that the COVID-19 pandemic “has led to a reduction in the availability of high loan-to-value (LTV) mortgage products, particularly for prospective homebuyers with only a 5% deposit.”

Banks, it seems, are no longer offering the 95% or 100% deals on mortgages to first-time homeowners that were essentially guaranteed by parents or other family members. You can’t exactly blame banks for tightening their lending standards. Given the acute economic uncertainty that continues to prevail even as the UK economy begins to reopen, it’s not easy to tell who will still be solvent in a year or two’s time.

So the government is committed, it says, “to supporting people who aspire to become homeowners, helping over 685,000 households to purchase a home since 2010 through government backed schemes including Help to Buy and Right to Buy.”

The government’s own National Audit Office had found that the Help to Buy scheme dished out billions of pounds of publicly subsidized loans to relatively well heeled homeowners who were perfectly capable of buying their first property without need for outside help. As of 2018 only 37% of the roughly 210,000 people who had benefited from Help to Buy would not have been able to afford a property without it.

In the Help-to-Buy scheme first-time property buyers got to put down a deposit of as little as 5% on a new-build home worth as much as £600,000 and received an “equity loan” from the government. The loan covered between 20%-40% of the property price depending on its location. The rest of the financing was covered by a traditional mortgage.

Now the government is going the full hog and offering to subsidize mortgages with 5% down payments for first-time buyers. Banks such as Lloyds, Santander, Barclays, HSBC and NatWest are already offering the mortgages. And they’re also slashing their mortgage rates. Presumably, they are also loosening their lending standards. After all, it’s the government’s problem — not theirs — if a borrower defaults.

But no cost is too high when it comes to sustaining the UK’s all-important housing bubble. And for the moment it’s working: according to the mortgage lender Nationwide, in April, the average UK house price jumped 2.1% compared with March, the biggest monthly rise recorded in 17 years.

This comes as some 130,000 homeowners were still on mortgage holidays as of March, according to trade body UK Finance. Another 500,000 people are on tailored payment plans with their banks. There are also over a million people trapped in unmortgageable apartments due to the flammable cladding crisis, which is already having an effect on prices at the lower end of the market, where the specter of forced sellers looms large. By Nick Corbishley, for WOLF STREET.

[wherebee]

1 hour ago, JMD said:

I know what you mean, plus so many of these commentators are stationed off-shore, but always so very keen to state that they pay all their taxes... however... 

'The Cayman Islands is the third worst tax haven for corporate tax avoidance and the world's worst tax haven in terms of financial secrecy according to the Tax Justice Network.'

...just saying.

'The Cayman Islands is the third best tax haven for legally keeping your money away from the warmongering governments who hate you and the world's best tax haven in terms of financial secrecy according to the Tax Justice Network.'

FTFY

[goldbug9999]

11 hours ago, JMD said:

Please note this is NOT just another BTC content video, I know there has been quite a lot of discussions lately... instead Raoul presents here his thesis that macro and value/growth investing is kinda dead, or at least very suboptimal. Is he just talking his book? Or does he have a point? I am definitely not suggesting to sell our deflation stocks and copy what he's doing, but Raoul does introduce some interesting ideas in the video. (Eg He mentions the Elon Musk Starling satellite project, what are people's thoughts on the negative affects it may have on telecoms sector? I'm concerned as I own a lot of the telecoms).                                                                       Raoul is now fully embedded in crypto, heck he thinks now even BTC was probably created as a US/UK psyops! ...but actually I'm being uncharitable, this video is apparently his first attempt at introducing his next cycle thesis which he has been developing. Very broadly, he thinks coming cycle will be deflation (inflation I think he says is impossible), driven by technology/productivity, with crypto initially acting as a massive disruptor to finance sector, then other sectors, and ultimately becoming backbone of economy. I await a more detailed exploration of his thesis as this one is a bit basic but is still worth watching.                                                               

                                                                                                                              

What hes saying tallies with what I've been saying about there being no mean reversion that a lot of people here are banking on,

[nirvana]

zzzzz, dunno whether to have a power nap before the yankees open shop or sell everything now...it's not looking good

there's a load o rsoles due to talk shite later, wonder what impact they'll have 

edit: i'm gonna hodl the line, I think they're bluffing this time......

BATTLESTATIONS FOR BTFD AGAIN 

[Popuplights]

I knew I should have put more into KOD.....😢🤣🤣🤣

 

[Loki]

41 minutes ago, nirvana said:

BATTLESTATIONS FOR BTFD AGAIN 

Edited 14 minutes ago by nirvana

😆😆😆👌

[Noallegiance]

1 hour ago, sancho panza said:

Nick Corbishly on fire for Wolf St.

Aplogies to the LPP but cutting too much out would lose some of the nuances.Bits in bold for skim readers

 

https://wolfstreet.com/2021/05/10/mortgage-applications-spike-to-record-in-the-uk-after-boe-government-stoke-housing-fire/

Mortgage applications spike to record, while 130,000 homeowners are on mortgage holidays, 500,000 on tailored payment plans, and over 1 million are in unmortgageable apartments due to the flammable cladding crisis.

By Nick Corbishley for WOLF STREET:

Net mortgage borrowing in the UK hit £11.8 billion in March, the strongest since the series began in 1993, according to Bank of England data. The previous peak was in October 2006 (£10.4 billion), when the UK was in the grip of the pre-financial crisis bubble. The difference between then and now is that back then the economy was about to fall off a cliff, whereas now it has already fallen off a cliff, having last year suffered its biggest drop in economic output in 300 years.

The UK’s biggest lender HSBC said it doled out more mortgages in March than in any other month of more than 40 years offering home loans.

There are plenty of reasons for this lending boom, including the ongoing exodus from the cities to the villages of rural England, even as London’s population is shrinking for the first time in 30 years, and rents have been falling for 13 straight months.

 

But home prices are also rising, albeit less steeply, in London and other major cities. In April 2021 Chestertons reported 65% more buyer enquiries in London, 75% more sales agreed and 90% more sales completed than in April 2019. These findings chime with HMRC’s latest figures, which show record transactions numbers in March across the UK – up 93% from 2019.

The most important reason for the surging volume of residential property transactions is the support provided by the Bank of England and UK government to property buyers and investors.

In mid-March 2020, as it grappled with the early fallout of the virus crisis, the BoE slashed the UK’s base interest rate from 0.75% to 0.25%, then a week later to 0.1%, the lowest ever. The rate cut was in response to the economic stress caused by the shutdown of the UK economy. And the falling mortgage rates have stoked demand for housing.

The government too has pursued policies aimed at inflating the housing market and propping up the mortgage lending industry. First, it introduced a stamp duty holiday that was supposed to end at the end of March but was extended at the last minute til the end of June. This has driven much of the recent surge in new mortgages.

Then, last month, the Chancellor announced the launch of new government-backed mortgages with 5% down-payments. If borrowers default on the mortgages, taxpayers rather than the banks will be on the hook. Here’s what the government had to say at the launch of the lending program:

“First announced at the Budget, the scheme will help first time buyers or current homeowners secure a mortgage with just a 5% deposit to buy a house of up to £600,000 – providing an affordable route to home ownership for aspiring home-owners.

“The government will offer lenders the guarantee they need to provide mortgages that cover the other 95%, subject to the usual affordability checks.”

The government admitted that the COVID-19 pandemic “has led to a reduction in the availability of high loan-to-value (LTV) mortgage products, particularly for prospective homebuyers with only a 5% deposit.”

Banks, it seems, are no longer offering the 95% or 100% deals on mortgages to first-time homeowners that were essentially guaranteed by parents or other family members. You can’t exactly blame banks for tightening their lending standards. Given the acute economic uncertainty that continues to prevail even as the UK economy begins to reopen, it’s not easy to tell who will still be solvent in a year or two’s time.

So the government is committed, it says, “to supporting people who aspire to become homeowners, helping over 685,000 households to purchase a home since 2010 through government backed schemes including Help to Buy and Right to Buy.”

The government’s own National Audit Office had found that the Help to Buy scheme dished out billions of pounds of publicly subsidized loans to relatively well heeled homeowners who were perfectly capable of buying their first property without need for outside help. As of 2018 only 37% of the roughly 210,000 people who had benefited from Help to Buy would not have been able to afford a property without it.

In the Help-to-Buy scheme first-time property buyers got to put down a deposit of as little as 5% on a new-build home worth as much as £600,000 and received an “equity loan” from the government. The loan covered between 20%-40% of the property price depending on its location. The rest of the financing was covered by a traditional mortgage.

Now the government is going the full hog and offering to subsidize mortgages with 5% down payments for first-time buyers. Banks such as Lloyds, Santander, Barclays, HSBC and NatWest are already offering the mortgages. And they’re also slashing their mortgage rates. Presumably, they are also loosening their lending standards. After all, it’s the government’s problem — not theirs — if a borrower defaults.

But no cost is too high when it comes to sustaining the UK’s all-important housing bubble. And for the moment it’s working: according to the mortgage lender Nationwide, in April, the average UK house price jumped 2.1% compared with March, the biggest monthly rise recorded in 17 years.

This comes as some 130,000 homeowners were still on mortgage holidays as of March, according to trade body UK Finance. Another 500,000 people are on tailored payment plans with their banks. There are also over a million people trapped in unmortgageable apartments due to the flammable cladding crisis, which is already having an effect on prices at the lower end of the market, where the specter of forced sellers looms large. By Nick Corbishley, for WOLF STREET.

It just feels so good.

Not only do I have to subsidise people's chosen layabout standard of living, landlords, the workshy, higher prices across the board and government salaries, but I now have to pay for people who may well stare at being undone having chosen to buy into the biggest housing bubble of all time.

This is why I did not vote. 

[nirvana]

latest!

*STANLEY DRUCKENMILLER SAYS FED IN DANGER OF WAITING TOO LONG TO RAISE RATES - CNBC INTERVIEW

 

[nirvana]

Prepare for battle! 

 

[nirvana]

holy cock they slammed cable on a DT....look you're all distracting me! STFU and let me get on with it