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

[nirvana]

@sancho panza thanks for replying and doing some number crunching <thumbs up emoji>

I will follow your lead and use worldometer figures which show the mortality rate in Wuhan at 4.8%

Now I will try and predict death rates in the UK...rather than use a 4.8% mortality let's use Italy as they are white Europeans

Italy death rate is 2.6%

Current UK population let's say 68 million - A report from the UK government last week said up to 80% of the population could get it

Let's be optimistic and say only 60% of UK will get it

That's 41 million cases in the UK

With a death rate of 2.6% that is over 1 million UK deaths, with 4.8% that is almost 2 million UK deaths

'Escape to the country' anyone? 

[M S E Refugee]

2 minutes ago, dgul said:

It is very dependent on when announcements are made, and from whom.

If they suggest more QE then it'll be an interesting tug-of-war between fear and FOMO.

I kind of think that people would use any rise in the market via QE as an opportunity to get out of dodge.

It could mean that Central Banks could be impotent this time.

[nirvana]

6 minutes ago, M S E Refugee said:

t could mean that Central Banks could be impotent this time

Hope so, the bastards have rigged the market for far too long 

So impotent CBs combined with my 'fag packet' sums above, things are looking pretty fucked!! 

[reformed nice guy]

46 minutes ago, onlyme said:

Yes, it is only the hydrogen part and how significant part this could play is where i'm unsure of the competitive benefits. Energy companies more diversified for sure. Total seems to be dipping their toe in quite considerably into offshore and onshore (smaller scale) wind. Bp Solar were one of the big players in solar until the market was undercut by Chinese panels at a fraction of the price. The energy companies with their existing forecourt infrastructure are well placed to provide the charing infrastructure - if you could get down to 10 minute or less charging for a decent top up then the station visit would hardly be any longer than currently, you could use the parking spaces even for that rather than the drive through bays.  Hydrogen into the gas pipes - didn't realise that they could get round some the embrittlement issues - seems like they can, https://www.theengineer.co.uk/converting-the-gas-network-to-hydrogen/, so certainly more mileage in that than I originally thought. Sectors like farming I'm assuming are going to be totally dominated by diesel for decades, large construction equipment too (unless static), mining etc. One aspect of say transport and haulage that might increase the conversion rate (either EV or fuel cell ) is the link with automated driving - distribution centre to distribution centre the possibility of lorry trains running along main highway routes could offset the significant cost of rig replacement - multiple drivers down to one and very cheap running costs due to slipstreaming the following rigs could make a big impact.

Might start an investment thread gif anybody interested to put some the information coming from this sector - a lot are tiddlers and risky but reckon there should be a few diamonds in the rough, Maxwell Technologies got snaffled up by Tesla, they are leaders in the Ultracapacitor market,  the problem is the volume of new info and the majority just releasing lab/university early research result.

One that is on my radar is a Norwegian company called Nel:

https://en.wikipedia.org/wiki/Nel_ASA

https://nelhydrogen.com/

First made hydrogen in 1927! Must know a thing or two about it.

[dgul]

6 minutes ago, M S E Refugee said:

I kind of think that people would use any rise in the market via QE as an opportunity to get out of dodge.

It could mean that Central Banks could be impotent this time.

Possibly.

But I've given up on market rationality.  

I'd say markets are currently driven by leveraged speculation -- last week was (IMO) all about leveraged longs  being liquidated, and next week could just as likely* be a 10% rise because of all the new leveraged shorts being liquidated.  

[* well, not 'just as likely' -- I think it is much more likely to go down, but just to point out that I can't work it out and that it all seems continually disconnected from fundamentals]

[M S E Refugee]

7 minutes ago, dgul said:

Possibly.

But I've given up on market rationality.  

I'd say markets are currently driven by leveraged speculation -- last week was (IMO) all about leveraged longs  being liquidated, and next week could just as likely* be a 10% rise because of all the new leveraged shorts being liquidated.  

[* well, not 'just as likely' -- I think it is much more likely to go down, but just to point out that I can't work it out and that it all seems continually disconnected from fundamentals]

I am currently short the FTSE,DAX and S&P with stop losses in place and I won't suprised if they are triggered on Monday.

[onlyme]

10 minutes ago, reformed nice guy said:

One that is on my radar is a Norwegian company called Nel:

https://en.wikipedia.org/wiki/Nel_ASA

https://nelhydrogen.com/

First made hydrogen in 1927! Must know a thing or two about it.

Looks like it is on then as there is interest, will start collating some info - will largely be a data dump of companies across the field - I'll include hydrogen field as well, so broadly battery tech, ultracaps, energy storage, alternatives to current fossil fuels.

[Loki]

1 hour ago, onlyme said:

Might start an investment thread gif anybody interested to put some the information coming from this sector

Some info already here

 

[onlyme]

Just now, Loki said:

Some info already here

 

Fits the bill will post in there. I'm really not much a greenie at all, just think some of it is better tech, where it makes use case/economic  sense on a reasonably long term scale.

[Democorruptcy]

2 hours ago, M S E Refugee said:

Any guesses to how the markets will react on Monday?

More low information voters have been spoon fed coronavirus news over the weekend and those amongst them who only have a cursory interest in their stocks and shares ISA could start selling up.

That Chinese PMI was worse than expected. Though I think next week will see one of those CB co-ordinated rate cuts. The DOW has dropped about 10% after rising 150% in 10 years, so panic must be setting in.

Of the talking heads, this one seems quite well informed.

https://twitter.com/elerianm

 

[Democorruptcy]

55 minutes ago, confused said:

@sancho panza thanks for replying and doing some number crunching <thumbs up emoji>

I will follow your lead and use worldometer figures which show the mortality rate in Wuhan at 4.8%

Now I will try and predict death rates in the UK...rather than use a 4.8% mortality let's use Italy as they are white Europeans

Italy death rate is 2.6%

Current UK population let's say 68 million - A report from the UK government last week said up to 80% of the population could get it

Let's be optimistic and say only 60% of UK will get it

That's 41 million cases in the UK

With a death rate of 2.6% that is over 1 million UK deaths, with 4.8% that is almost 2 million UK deaths

'Escape to the country' anyone? 

If you are going 60% infected, you could probably squeeze some extra deaths in via collateral damage. Lots of people with existing conditions that need treatment, won't be able to get it because the NHS would be falling apart. No doubt the PFI payments, that reduce front line services, will still be made though.

[Harley]

As usual, a fair few conflicting cross currents to contend with.  I expect a bit of a bounce some time next week just as a natural reaction to the recent falls.  But things were weakening before all this so that to me is the underlying trend.  Part of that weakening is sector rotation so that's my only hope if I want to stay invested. 

I would be amazed if the Fed acted as BAU with merely more of the same.  Which means of course they may well do, or at least in part.  But the overall trend, plus supply chain issues (which I expected to be further aggravated by ongoing blips in cases), plus previously tapped out and now scared consumers, means we must be at the end of that journey.  Furthermore, given Trump's election narrative of booming markets was turning out to be a bad idea, the Administration needs a new narrative and this crisis provides cover for such a change.

I would not therefore be surprised to see "son of QE" whatever that is.  Maybe MMT and possibly support and investment for onshoring and other strategic initiatives, stuff that has already been underway in part.  Now not only "bringing jobs home but "protecting America".  That again would point to sector rotation into those capital, etc industries.  DB's predictions in this area could be right on the money.

Regarding inflation, we've been having it already, just it's been largely hidden.  But this is a chance for the previously smarter companies who have secured their supply chains, or who inherently lack exposure, to shore up margins.  More likely to get price inflation with a false cover of fake cost inflation.  Many low paid workers around the globe, in the absence of any MMT, sadly have little choice but to turn up for work.  That said, that recent post about that Fed(?) lady saying we need inflation is ringing loud in my ears.  Another reason for MMT.  The difference between MMT and QE is that QE is asset price inflationary while MMT is living price inflationary.

One thing for certain, TPTB will not let this "godsend" of a crises, real or imagined, go to waste.  And that will be, as usual, bad for most.

PS: I recommend the Napier podcast from MoneyWeek, especially his bit about Lagard.  If we do see a move to public infrastructure investment, etc I would expect to see the forced purchase of supporting bonds as a continuing form of financial repression.  It would also explain why the recent XR and other climate activities appear to have the tacit support of the Administration.  Trying not to be too political but most supporters seem like useful fools (i.e. unquestioning and gullible to techniques) and may rue the day they got on board, but by which time it will probably be somebody else's fault.  

[nirvana]

24 minutes ago, Democorruptcy said:

If you are going 60% infected, you could probably squeeze some extra deaths in via collateral damage. Lots of people with existing conditions that need treatment, won't be able to get it because the NHS would be falling apart. No doubt the PFI payments, that reduce front line services, will still be made though.

Yes 60% might sound like a crazy number but when you look at the obesity stats and the general malaise amongst the UK populous I don't think it's unreasonable......

Anyway onlookers, nothing to see at the moment, carry on stuffing yourself with 'sunday lunch' 

[NogintheNog]

12 hours ago, Innkeeper said:

13 hours ago, onlyme said:

Wouldn't frame it as Tesla vs Hydrogen (or oil co's), Tesla (together with most car manufacturers) are obviously keen on the model revolving around the distribution of electricity and oil companies are used to shifting a physical product in tanks and have their eggs in that model

If you go back to the very beginning of cars as transport it was a close run thing between electric and gas, far closer than history would lead anyone to believe, it was only cheap and plentiful oil supply that allowed the ICE engine car to dominate. The likes of Shell certainly don't want to be squeezed out but there's a hell of a battle ahead for them.

Electricity distribution is well proven tech and is cheap, not that difficult to expand either - for a start the system is only running at peak load a small part of the day, you could up the utilisation factor and much around a lot more energy overnight and during the other non peak periods, you'd need cheap storage though.

Which gets to the batteries, they are improving in single digit percentages every year. Moreover the tech around them is beginning to mature - how to warm/coll those batteries to get the maximum lifetime out of them - life of car is the goal. life of drivetrain which is already 100,00's miles (or should be as very simple mechanics and tech really) - this wold also apply to fuel cell driven cars as the motors would be the same. There is so much money going into battery tech and so many different avenues to remove the most expensive elements used in them or new solid state type batteries that sooner or later it is most lily there will be a step change in price/supply and this will tilt the market so heavily in favour of all electric - from the point of generation to the local storage/charging point/car/home that I think it will be a slam dunk that hydrogen will really struggle to compete against.

Hydrogen is going to be cumbersome to pipe / ship around, embrittlement is a persistent problem and you are looking at another step in the generation cycle - generate the electricity, electrolysis to create the hydrogen, then compress, chill  and liquify it to thanker it, or pump it raw and then do the same. So much easier just to shunt the current down the transmission lines.

Electric may be the answer for personal transport but moving the commercial fleet off fossil fuels is never discussed and remains unanswered.  Hydrogen provides a potential solution so I see both electric and hydrogen in the future servicing separate sectors.

I agree totally. How about a fuel cell hybrid? Everything in a current fuel cell car is there ready, just needs a plug to charge the battery.

Local journeys could be done on the battery via an overnight charge (most people!). Longer journeys using the fuel cell to charge the battery.

https://youtu.be/LSxPkyZOU7E

Of course this does require governments to be serious about going carbon net zero, and will also require a much higher oil price. So one last period in the sun for the oil industry. This infrastructure ain't gonna build itself....

[nirvana]

48 minutes ago, Democorruptcy said:

That Chinese PMI was worse than expected. Though I think next week will see one of those CB co-ordinated rate cuts. The DOW has dropped about 10% after rising 150% in 10 years, so panic must be setting in.

Of the talking heads, this one seems quite well informed.

https://twitter.com/elerianm

 

I'd take what Mohammed says with a pinch of salt, I recall when he was head of Pimco and he left suddenly after 'disagreeing with somebody'

Edit: I remember now why I used to follow him, he is reputed to be a 'top economist'

Economics sucks cos they keep making it up as they go along...

Milton Friedman got a Nobel Prize for claiming that the 'money supply' is the only thing that causes inflation

Then somebody comes along and says ah but what happens if there is a blockage in the system which causes 'zero velocity of money'

Then some government advisers come along and say ah but now we have MMT - that's Modern Money Theory....

Bullshitters the lot of them, nearly as bad as bankers and weather forecasters 

Ps that's why eCONomics is a CON!!! boom boom

[sleepwello'nights]

23 minutes ago, Harley said:

As usual, a fair few conflicting cross currents to contend with.  I expect a bit of a bounce some time next week just as a natural reaction to the recent falls.  But things were weakening before all this so that to me is the underlying trend.  Part of that weakening is sector rotation so that's my only hope if I want to stay invested. 

 

Another thread within a thread; EV vs Hydrogen. Fascinating, anyway...….

Watching the fall in equities world wide last week my timing was too early as is normal for me, I topped up. Later in the week gold and silver fell as well with many pundits recommending holding cash. Why. I would have thought if the financial crash was upon us then precious metals would be the safe haven. But cash?

Is it because the precipitous stock market crash like 1929 is not thought to be upon us and cash is preferred as it is then quick and easy to buy back in? 

 

 

 

[NogintheNog]

11 hours ago, Cattle Prod said:

12 hours ago, sancho panza said:

On 29/02/2020 at 07:54, Majorpain said:

This will be what makes pumping more QE a difficult decision, Lack of goods + Money printing = inflation.

Obviously government spending at infrastructure etc. is less of an issue, targeting consumer spending is a big no no when there are less goods to buy.

This post been playing on my mind for the last 24 hrs.Whislt I;ve always beena confiremd debt deflationista,I've been relatively agnostic on price inflation.

I don't think QE will be a difficult decision at all, because they want and need inflation. It's the only solution to the debt. In fact, I think they must be delighted to finally have cover to do it.

Yes, did some CIA agents release Covid-19 in China? FED response, "external factors, must support the market, whatever it takes" Blah, blah, blah...

[NogintheNog]

1 minute ago, sleepwello'nights said:

Another thread within a thread; EV vs Hydrogen. Fascinating, anyway...….

When you look at it logically, they are really just the same thing. Just powered from different directions.

[onlyme]

7 minutes ago, NogintheNog said:

I agree totally. How about a fuel cell hybrid? Everything in a current fuel cell car is there ready, just needs a plug to charge the battery.

Local journeys could be done on the battery via an overnight charge (most people!). Longer journeys using the fuel cell to charge the battery.

https://youtu.be/LSxPkyZOU7E

Of course this does require governments to be serious about going carbon net zero, and will also require a much higher oil price. So one last period in the sun for the oil industry. This infrastructure ain't gonna build itself....

You could do but see the same disdvanatages as PHEV vehicles - you end up with all the additional complication and a compromised battery car with little range, you are carrying around the battery and the fuel cell (and possibly hydrogen supply tank if not integrated)., you still need the charging /infrastructure of the battery and whatever kit you need  to operate the fuel cell. There is one use case - not sure whether a fuel cell can regen power back into the fuel cell for braking - in which case you probably have a tiny but efficient ultra cap based solution where the braking energy is tempororaily stored for the next time the throttle is pressed (or a few times). I wish they would drop the carbon net zero bollocks, this should all be done on the merits of the tech with a little soft push from limited tax breaks.

[Harley]

16 minutes ago, confused said:

Economics sucks cos they keep making it up as they go along

The rubbish do, the rest seem to say what they're paid to say!  Trust no one!

[NogintheNog]

11 minutes ago, onlyme said:

not sure whether a fuel cell can regen power back into the fuel cell for braking

In the video, it clearly does Regen to recover kinetic energy.

11 minutes ago, onlyme said:

You could do but see the same disdvanatages as PHEV vehicles - you end up with all the additional complication and a compromised battery car with little range

I think there is a difference, you are not carrying the complicated ICE with you and the fuel to power it. Yes there is the fuel cell stack and  boost converter. Not sure how much that lot weighs up, and what sort of maintenance it might need, but I very much doubt it would be more than an Internal Combustion Engine and all the associated gubbins.

And as said by another poster, battery tech is improving every year. It's a long way to 2035!

[Harley]

22 minutes ago, confused said:

Ps that's why eCONomics is a CON!!! boom boom

I thought the Conservatives had claimed that space (for the sake of balance, and accuracy, similar for the others!).  But if Shakespeare was alive today would he not pen "all the world is a con" instead of "play", or maybe he was right then, but now it's more of a malevolent form of Kabuki theatre!

[sleepwello'nights]

16 minutes ago, NogintheNog said:

When you look at it logically, they are really just the same thing. Just powered from different directions.

Well yes in the big picture but different from my perspective as a driver point of view.

Thinking about it though the reality is a difference in refuelling times, with present technology, for the occasional long distance journeys I may make. So yes you're right it won't make much difference to me as a driver form the type of fuel perspective.

[onlyme]

6 minutes ago, NogintheNog said:

In the video, it clearly does Regen to recover kinetic energy.

I think there is a difference, you are not carrying the complicated ICE with you and the fuel to power it. Yes there is the fuel cell stack and  boost converter. Not sure how much that lot weighs up, and what sort of maintenance it might need, but I very much doubt it would be more than an Internal Combustion Engine and all the associated gubbins.

And as said by another poster, battery tech is improving every year. It's a long way to 2035!

Was having a dumb moment, of course can regen into small onboard battery. Worth looking at the current fuel cell cars - think there are 3 or more main production models at the moment from the big manufacturers - particularly pricing vs all battery, think there is more scope of pull battery price down from here vs fuel cell.

Apologies to all for thread deviation.

[Harley]

5 minutes ago, onlyme said:

Apologies to all for thread deviation

The hydrogen v electric question is very relevant to me as it may determine if "big oil" remains "big something".  And that is what I need to know.  Plus who doesn't like talking about cars and engines?  I'll miss the oil on me hands but I have a multimeter and I know how to use it!