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

[NogintheNog]

34 minutes ago, Democorruptcy said:

Re holding cash, as I said last week, I tried to get the Treasury to up the ISA limit. It makes sense with savers penalised again by lower rates and the FTSE falling. The chap I phoned seemed to think it was a good idea but told me to email it in as they could only act on something written.

You and others could take 5 mins to give it a go, for extra in a tax shelter? Pick a name!

[email protected]

[email protected]

[email protected]

https://www.gov.uk/government/organisations/hm-treasury

I admire your optimism Democorruptcy, but the PTB don't care about savers, they never have. They'll always agree with you, but it's gone in one ear and straight out of the other.

Fact is they are not gonna give away too much future tax revenue, period. They are running deficits and can't balance the books now.

After watching that live weblink of the BofE emergency meeting when they cut interest rates, I'd rather piss on them than email them!

[NogintheNog]

On 08/03/2020 at 15:01, Cattle Prod said:

On 08/03/2020 at 11:33, NogintheNog said:

I'm starting to wonder whether this is the pin that pricks multiple bubbles (to quote Peter Schiff), and that we do get a much lower oil price. I'm convinced that the future price of oil is way above $43 just as I'm convinced the future price of Gold is way above $1000/ounce. The question is what is the path to those future prices. I'm now down on BP, RDSB, evens on TOT. But I've just reset my ladders for lower prices still.

There is also the possibility that using the "never let a good crisis go to waste" that these companies will cut their dividends in such extraordinary times! Is an 8-10 yield justified with the US 10 year at less than 1%?

Shell hasn't cut dividend since world war 2. So that includes the Cold War, Cuban Missile Crisis, oil at $9.55 etc etc. This is nothing. Some other companies might, but I don't think Shell will. BP only cut theirs during Macondo when it looked like they might go bust, and reinstated it shortly afterwards. 

CP, are you sure this is nothing? I appreciate you are much closer to the machinery of the oil industry but those examples were all in a much less connected world with oil used maybe more for direct energy generation and less so for consumer consumption of goods and air travel which has ballooned over the last 30 years. That huge consumption tap is being turned off as we speak.

IAG openly talking to their staff about BA's survival??? Not sure if any of them are actually solvent with the cuts they are all making

[Ellandback]

19 hours ago, Errol said:

Many dealers now reporting near record demand for physical gold and silver. They can't keep up with it!

Chards in Blackpool certainly can't! 

I was beating myself up after having a goldsilver.be delivery just prior to the silver smash - but feeling better about it now.

[DurhamBorn]

1 hour ago, Castlevania said:

Who’s going to build these houses? Actually who built council houses? Were the builders privately contracted or were they on the council payroll?

Mostly council payroll,they had direct works departments.Likely they will contract this time though.They will have teams to design and project manage probably.Its certain this is going to happen.The government might as well inject housing benefit into local councils,instead of BTL landlords.

[DurhamBorn]

13 minutes ago, NogintheNog said:

CP, are you sure this is nothing? I appreciate you are much closer to the machinery of the oil industry but those examples were all in a much less connected world with oil used maybe more for direct energy generation and less so for consumer consumption of goods and air travel which has ballooned over the last 30 years. That huge consumption tap is being turned off as we speak.

IAG openly talking to their staff about BA's survival??? Not sure if any of them are actually solvent with the cuts they are all making

Nasty short term shock no doubt.The big guys make a lot downstream as well though,and they increase margins when prices fall,it covers maybe 30% of the loss upstream.Big oil also is very big in gas.Repsol is 60% gas for instance and longer term demand is going up.I reckon demand will double by 2035.

The future is greener energy,but the way to play that is buy big oil,the forward looking ones.The likes of Shell can invest in the below.Slowly getting into position to then control hydrogen.I dont think anyone outside of big oil will have the capital to invest at the scale needed.

This is from Shell's annual report.

TAPPING THE POTENTIAL OF HYDROGEN Hydrogen, for example, could play a vital role in helping the move towards a lower-carbon world. Hydrogen can be extracted using the electricity generated by wind and solar power. It can then be stored, ready to be converted back to electricity with only one by-product, water. Shell is already working to increase the use of hydrogen, for example with refuelling sites for hydrogen-powered vehicles in Europe and North America. But we would like to open up more possibilities for using hydrogen, across heating, power and transport, helping it to become a significant fuel of the future. We are contributing to the development of a ship called the Suiso Frontier, which launched in December 2019, in Kobe, Japan. By 2021 it is expected to be the world’s first vessel to transport liquefied hydrogen across oceans, at temperatures of minus-253 Celsius. Shell is working with Kawasaki Heavy Industries and others to design the tank holding the liquefied hydrogen and develop further novel technologies for the ship. Those we have consulted include the USA’s National Aeronautics and Space Administration (NASA). They know how to handle liquefied hydrogen. They use it as rocket fuel. The Suiso Frontier is expected to allow us to develop and demonstrate the technologies needed for a commercial-scale hydrogen supply chain by around 2030. It shows the critical importance of technology – one of Shell’s core strengths – in the energy transition. By building on our strengths while embracing change as “the law of life”, we can help address those calls for more urgent action on climate change. With more and cleaner energy, we can make a better future.

[sleepwello'nights]

1 hour ago, Castlevania said:

Who’s going to build these houses? Actually who built council houses? Were the builders privately contracted or were they on the council payroll?

Houses?. One of the legacies of council housing in the 1960s and 1970s were the tower block estates.

Construction was financed by local authorities and constructed by civil engineering organisations. 

https://www.youtube.com/watch?v=WVGMyo40SyE

[Barnsey]

6 minutes ago, NogintheNog said:

I admire your optimism Democorruptcy, but the PTB don't care about savers, they never have. They'll always agree with you, but it's gone in one ear and straight out of the other.

Fact is they are not gonna give away too much future tax revenue, period. They are running deficits and can't balance the books now.

After watching that live weblink of the BofE emergency meeting when they cut interest rates, I'd rather piss on them than email them!

100% this, it’ll be very much about getting you to spend your savings and get further into debt, wishing to reverse FIRE culture best they can. We ain’t seen nothing yet with printy printy, the suggestion of helicopter money now being quite a publicy wide held expectation virus or not. It’ll be about getting folks to spend helicopter money and not hoard, so I’d imagine direct funds will be for sustaining bills/mortgage/rent, and then targeted VAT cuts and generous scrappage schemes/green energy subsidies with 0% long term loans (which will also meet the needs of an easier transition to electric cars etc). Mortgage rates ARE going lower, if Denmark can pay YOU for having a mortgage I reckon we could easily see 1% rates for 10 year fixes. I don’t think we’ll go full on NIRP (along with U.S.) but they certainly could do NIRP rates for certain sectors.

If the stock market largely stays on its arse for years (bar hopefully many of the commodity/infrastructure related stocks), last thing they want is for everyone to pile MORE of their savings in now (generally the already wealthy), see their investment stagnate, and not get that all important “wealth effect” over coming years to improve wider sentiment and spending. I really admire your efforts @Democorruptcy but would with the best of intentions maybe ask you to have realistic expectations. We must try to read the path ahead no matter how much we disagree morally with it, and also consider the wacky side swipes that are simply impossible to predict.

As consumer spending won’t be nearly enough to aid recovery in a sizeable way (as folks will still be picking themselves up off the floor after job losses, IMPOSSIBLE for monetary policy to prevent this despite all the talk of temporary biz loans, zombies will go under on a large scale), I’m very sure of something playing out akin to many of the fine predictions on here. Won’t be a straight line of course, and we could have further waves of this virus over the next year or two, or even China-US tensions escalate into some kind of South China Sea conflict. Many have suggested this is certainly the beginning of a fourth turning period, however this could in fact have acted as the accelerant and brought it forward. Nothing like a good old black swan or clash of cultures to f**k up a good plan.

I will both be investing wisely AND become a debt whore where appropriate in this next cycle.

 

[Democorruptcy]

22 minutes ago, Barnsey said:

100% this, it’ll be very much about getting you to spend your savings and get further into debt, wishing to reverse FIRE culture best they can. We ain’t seen nothing yet with printy printy, the suggestion of helicopter money now being quite a publicy wide held expectation virus or not. It’ll be about getting folks to spend helicopter money and not hoard, so I’d imagine direct funds will be for sustaining bills/mortgage/rent, and then targeted VAT cuts and generous scrappage schemes/green energy subsidies with 0% long term loans (which will also meet the needs of an easier transition to electric cars etc). Mortgage rates ARE going lower, if Denmark can pay YOU for having a mortgage I reckon we could easily see 1% rates for 10 year fixes. I don’t think we’ll go full on NIRP (along with U.S.) but they certainly could do NIRP rates for certain sectors.

If the stock market largely stays on its arse for years (bar hopefully many of the commodity/infrastructure related stocks), last thing they want is for everyone to pile MORE of their savings in now (generally the already wealthy), see their investment stagnate, and not get that all important “wealth effect” over coming years to improve wider sentiment and spending. I really admire your efforts @Democorruptcy but would with the best of intentions maybe ask you to have realistic expectations. We must try to read the path ahead no matter how much we disagree morally with it, and also consider the wacky side swipes that are simply impossible to predict.

As consumer spending won’t be nearly enough to aid recovery in a sizeable way (as folks will still be picking themselves up off the floor after job losses, IMPOSSIBLE for monetary policy to prevent this despite all the talk of temporary biz loans, zombies will go under on a large scale), I’m very sure of something playing out akin to many of the fine predictions on here. Won’t be a straight line of course, and we could have further waves of this virus over the next year or two, or even China-US tensions escalate into some kind of South China Sea conflict. Many have suggested this is certainly the beginning of a fourth turning period, however this could in fact have acted as the accelerant and brought it forward. Nothing like a good old black swan or clash of cultures to f**k up a good plan.

I will both be investing wisely AND become a debt whore where appropriate in this next cycle.

 

It's not just about savers is it though? It's about moving money from bank accounts to invest in businesses creating jobs. The financial sector would love it with more fees on larger portfolios. The banks don't care about deposits, they have lots of cheap cash anyway. In fact they could get charged for it if rates go negative for them. Makes sense to me but each to their own. 5 mins for more tax shelter, you can lead a horse to water but you cannot make it drink.

[Bricormortis]

 Interesting times or what.....Just been googling a bit of this and that.  On the HL site I  noticed Telefonica Brazil divi yield being quoted as 17.7%. ?

I will be allocating in various sectors to my ISA over the next week, I don't think this is the bottom of a big Kahuna, I think there is plenty of carnage to come eventually so I am just going to take modest positions in divi payers  for now to make best use of the ISA.

I sold all my PM stock  just before it got a real kicking. I think my 'physical' silver in BV could get whacked down, but I bought on a 10 year time frame so I will just let it be and chill.

 

 

 

[Talking Monkey]

12 minutes ago, Bricormortis said:

 Interesting times or what.....Just been googling a bit of this and that.  On the HL site I  noticed Telefonica Brazil divi yield being quoted as 17.7%. ?

I will be allocating in various sectors to my ISA over the next week, I don't think this is the bottom of a big Kahuna, I think there is plenty of carnage to come eventually so I am just going to take modest positions in divi payers  for now to make best use of the ISA.

I sold all my PM stock  just before it got a real kicking. I think my 'physical' silver in BV could get whacked down, but I bought on a 10 year time frame so I will just let it be and chill.

 

 

 

With the Dow only 20ish % down from its peak I think there is a lot of carnage still to come, the question is over how long a timeframe and what will the final magnitude of the falls be. Would the huge printing limit the magnitude of the fall or just slow the rate of decline

[Loki]

Little anecdotal for you all

Walking down Cobham high street I heard a female plummy type say

"We took our house off the market because we were getting silly offers"

 

[NogintheNog]

14 minutes ago, Democorruptcy said:

It's about moving money from bank accounts to invest in businesses creating jobs.

It's a point. But with what's going on at the moment, most people are gonna hoard what has been by far the best investment over the last month. Cash.

Sure if the ISA limit was raised to £40,000 a few rich people might bung in some extra, but the rates on cash ISA's are punitive. We don't have a society with much savings, only debt!

The only people who have the necessary spending power are the people who created those savings in the first place! You know, the BofE counterfeiters!

19 minutes ago, Democorruptcy said:

Makes sense to me but each to their own. 5 mins for more tax shelter, you can lead a horse to water but you cannot make it drink

I've written loads of emails to my MP's in the past, but it has made not a jot of difference. Like Barnsey said "We must try to read the path ahead no matter how much we disagree morally with it, and also consider the wacky side swipes that are simply impossible to predict"

Personally I'd rather spend the time trying to analyze at what point the gold price settles at in this current meltdown. And oil too!

[NogintheNog]

5 minutes ago, Loki said:

Walking down Cobham high street I heard a female plummy type say

"We took our house off the market because we were getting silly offers"

A year later'

"we've had to put our house on the market because my Husband lost his job six months ago"

[Noallegiance]

7 minutes ago, Loki said:

Little anecdotal for you all

Walking down Cobham high street I heard a female plummy type say

"We took our house off the market because we were getting silly offers"

 

You're asking price is what's silly, love.

[DurhamBorn]

19 minutes ago, Talking Monkey said:

With the Dow only 20ish % down from its peak I think there is a lot of carnage still to come, the question is over how long a timeframe and what will the final magnitude of the falls be. Would the huge printing limit the magnitude of the fall or just slow the rate of decline

Probably,the question is of course is it every sector,or have some already bottomed?.A lot will depend on the printing now coming.Most UK cyclical stocks are on PE ratios of under 5.So are some telcos,and so are the big oilies.Of course profits might shoot lower,and will in many cases.Not all though,my son works in an Aldi warehouse,they have never been as busy,20% up on even the few days before xmas.He is having to work 12 hour shifts instead of 6 hour,its a shock to the system for him 

[Talking Monkey]

2 minutes ago, DurhamBorn said:

Probably,the question is of course is it every sector,or have some already bottomed?.A lot will depend on the printing now coming.Most UK cyclical stocks are on PE ratios of under 5.So are some telcos,and so are the big oilies.Of course profits might shoot lower,and will in many cases.Not all though,my son works in an Aldi warehouse,they have never been as busy,20% up on even the few days before xmas.He is having to work 12 hour shifts instead of 6 hour,its a shock to the system for him 

Looking at the oilies and telcos they can't be that far from the bottom if they haven't already. 

[DurhamBorn]

4 minutes ago, Talking Monkey said:

Looking at the oilies and telcos they can't be that far from the bottom if they haven't already. 

0 is bottom ,the bond holders could end up owning every listed stock.Of course very unlikely.A lot will depend on the Fed on Weds evening.If they dont print we might see more falls,if they do maybe a strong rally.Markets look 6 months ahead,right now they see GDP down 5%,with printing they might see it at minus 3% .

[Barnsey]

Thinking out loud here but surely some of oilies/telcos being dragged down disproportionately must be due to prevalence of inclusion in index passive investing? Just like we’re seeing GDXJ plummet thanks to the 3x leveraged funds selling off in the past week.

17 minutes ago, DurhamBorn said:

Probably,the question is of course is it every sector,or have some already bottomed?.A lot will depend on the printing now coming.Most UK cyclical stocks are on PE ratios of under 5.So are some telcos,and so are the big oilies.Of course profits might shoot lower,and will in many cases.Not all though,my son works in an Aldi warehouse,they have never been as busy,20% up on even the few days before xmas.He is having to work 12 hour shifts instead of 6 hour,its a shock to the system for him 

Can you foresee the supermarkets taking quite a hit as folks run down their stockpiles in weeks and months ahead?

[M.C. UK]

2 minutes ago, DurhamBorn said:

0 is bottom ,the bond holders could end up owning every listed stock.Of course very unlikely.A lot will depend on the Fed on Weds evening.If they dont print we might see more falls,if they do maybe a strong rally.Markets look 6 months ahead,right now they see GDP down 5%,with printing they might see it at minus 3% .

That suggests printing will go ahead for sure If I am reading this correctly DB?
They will throw the kitchen sink to perpetuate the "institutionalized madness" - i.e. "saving the economy" as they like to say.

[Solzhenitsyn]

14 hours ago, sancho panza said:

point to note here is that there's a clear disconnect between the miners and the underlying at the moment.When that reasserts they may well rocket.

strange tosee gold getting sold off during this crisis which is the opposite of what you'd expect but there you go.

I think it’s more of a liquidity issue as to why gold and it’s miners are being sold off. Everything has to get sold, good with bad, to meet margin calls on leveraged traders/investors.

If/When central banks start printing more liquidity I’m sure they will be rebought in anticipation of the ensuing inflation 

[Castlevania]

4 minutes ago, Solzhenitsyn said:

I think it’s more of a liquidity issue as to why gold and it’s miners are being sold off. Everything has to get sold, good with bad, to meet margin calls on leveraged traders/investors.

If/When central banks start printing more liquidity I’m sure they will be rebought in anticipation of the ensuing inflation 

Same with US Treasuries. They even got sold off last week. 

[NogintheNog]

12 minutes ago, Barnsey said:

28 minutes ago, DurhamBorn said:

Probably,the question is of course is it every sector,or have some already bottomed?.A lot will depend on the printing now coming.Most UK cyclical stocks are on PE ratios of under 5.So are some telcos,and so are the big oilies.Of course profits might shoot lower,and will in many cases.Not all though,my son works in an Aldi warehouse,they have never been as busy,20% up on even the few days before xmas.He is having to work 12 hour shifts instead of 6 hour,its a shock to the system for him 

Can you foresee the supermarkets taking quite a hit as folks run down their stockpiles in weeks and months ahead?

I can see the Supermarkets doing well over the next few months. People eating and drinking more at home!

[Loki]

1 hour ago, NogintheNog said:

A year later'

"we've had to put our house on the market because my Husband lost his job six months ago"

 

58 minutes ago, Noallegiance said:

You're asking price is what's silly, love.

It did make this thread pop into my head straight away 

What a ridiculous statement after the last couple of weeks

[Agent ZigZag]

I’m betting on the Fed printing Wednesday that will give what markets require at this moment confidence. No idea how much and I think the fed does not know the amount required. I think the markets will get excited by the amount  that will be Larger than any precedent set before. This sugar rush will boost the market then it will wear out then we are back to crash then more monetary injection etc. I can see the traders amongst us doing very well in this volatility. As an investor I am positioned along the lines of this thread in inflationary asserts and stocks. As long as they come good in 6 years time everything else in between is noise to me. if not then I may invest in a small amount of lead🤪

[Noallegiance]

7 minutes ago, Agent ZigZag said:

I’m betting on the Fed printing Wednesday that will give what markets require at this moment confidence. No idea how much and I think the fed does not know the amount required. I think the markets will get excited by the amount  that will be Larger than any precedent set before. This sugar rush will boost the market then it will wear out then we are back to crash then more monetary injection etc. I can see the traders amongst us doing very well in this volatility. As an investor I am positioned along the lines of this thread in inflationary asserts and stocks. As long as they come good in 6 years time everything else in between is noise to me. if not then I may invest in a small amount of lead🤪

This is what me and the missus were just talking about.

When the sugar rush from Friday runs out they can only do the same again but bigger. It'll run out of effectiveness pretty quickly, IMO.

Uncharted waters.