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

[Loki]

Makes sense, there can't be any inflation at the moment because there's barely any velocity economy but when it gets going again...

[sancho panza]

5 hours ago, Barnsey said:

He might be right of course, but remember he completely missed that huge decline in March, and I just fear (as he thinks in extremes) that he might miss the next. I hope I’m wrong, but I’m happily sitting this one out.

It would ahve takena psychic to see the March crash coming,imho.

For thsoe of us who understand how leveraged the market is,it wasn't shock,more a surprise in terms of severity and timing.

Key ting is to develop an investment thesis that goes through 5 years from now and then weave your invesments through it.

I ahve a plan for if we can see a collapse coming but I'm in stocks I can sit in if I msiss it.

6 hours ago, MrXxxx said:

I think it depends on what sort of gambler/person you are...I read a book last year that looked at a whole group of professional stock traders (think I put it in The Library thread) and what defined the most successful...at the bottom was those who were FOMO but `choked` when the market turned, in the middle were the ones who were happy to take profit early, and the few at the top were those who `held out` for maximum gain regardless of what they had paid.

I know what camp I am in, but alongside this study of approaches it also has to be remembered how close you are to retirement/how much you can afford to lose...a @Loki intimated if you have money it's easy to make money as the consequences of taking financial risks are less severe on your lifestyle.

I could bore for hours about trading history.Lots of good stories have been told of big wins and big losses.

My take home is to have a buying/selling plan and a structured thesis......................and always be ready to change it as the news flows

[JMD]

On 06/06/2020 at 13:48, Wheeler said:

I'm assuming that I'll never qualify for any assistance from the state, unless the state pension is still available in 2030 and isn't means tested. I just try to make sure I'm not stuck with the bill. 

I'm wanting to move to a better house than my current hovel; somewhere with a garden to grow a bit of food. I'd be aiming to do that in the next 2 to 5 years so I can prepare for the end of the cycle. That would leave me with maybe 20 to 25 years of hopefully good health to see out my days.

As a bonus, my asset allocation is as follows with the planned percentage in brackets:

• Cash   21.8% (12%)
• Gold    8.2% (10%)
• Silver  9.0% (10%)
• Oil stocks   6.9% (9%)
• Energy stocks   3.4% (7%)
• Telco  3.2% (4%)
• Transport  3.2% (7%)
• Consumer  2.5% (4%)
• Finance  1.6% (2%)
• UK fund  2.2% (2%)
• Gold miners  19.5% (12%)
• Silver miners  17.9% (18%)
• Commodity stocks  0.7% (3%)

Wheeler, Very interested to see your aim of 7% transport, are you able to give any more detail? I find this sector particularly difficult to navigate. I suppose I'm asking if you are mainly looking at train/bus cos, maybe waiting for airlines to get cheaper still? As I say I find the transport sector difficult so very interested in your strategy if you are able to share.                                                                                                                                                                                  For what it's worth I think yours and my state pensions will be safe, although I think this is because UBI will be implemented before end of this decade, so in effect every adult will be receiving say £200/week or equivalent. 

[sancho panza]

10 hours ago, DurhamBorn said:

One of the key drivers of the cycle we are entering in a dash for assets.Some high tech,some as simple as potash.Whenever the political cycles reach this stage over the millennia inflation isnt far behind.Im more interested in the cycle now than if another shoe drops later in the year.Mainly because i have no idea on the structure of any falls now due to liquidity flowing,but i do have a very good idea of how the cycle is going to unfold.Cross market work is now more important for instance because i dont think big oil will go lower than it did because i dont think oil is going lower than it did,even if it got close in a sell off.Giving up profits short term doesnt bother me,if it happens.As far as im concerned i bought all my oil/energy sector investments in March and apart from some top trimming for portfolio structure 2028ish is the next selling area.Im spending zero energy on if Repsol goes up or down next week,month etc.Im not selling it and am very happy with the entry prices.

The main risk to us now is if companies we own go under,solvency is key to get through the bottleneck.Rather than concentrate on price,removing companies that have ran up that might have solvency issues is probably better,and re-deploy in other areas.Things like below i expect to allow more mergers in telcos and governments to allow higher profits in exchange for investment and toeing the political line.BT has clearly stopped its divi in the shor term to provide political cover for a better deal and to ramp up spending to help government.Government needs reflation areas to invest,and they will,in exchange for better terms.Western governments are going to work together,that is certain now.The cycle is underway,the first stages will see continued shakeouts and jolts.

 

https://www.telegraph.co.uk/business/2020/06/03/chinas-drive-digital-supremacy-likely-fail-huawei-going-nowhere/

Here to read,

https://outline.com/

We should not be distracted by Donald Trump’s idée fixe on trade tariffs, cars, and soybeans. The actual fight is going at a more sophisticated level, managed by the professionals of the Washington establishment. Trump is best understood as a bellwether. As Henry Kissinger so tellingly put it, he is “one of those figures in history who appears from time to time to mark the end of an era and force it to give up its old pretences”.

Must say DB ,you're packing the paragraphs with wise thoughts/observations at the moment.

I've reread that a few times and jsut keep thinking, 'yep,yep,yep......'

Much as we're overwieght oilies,I think theyre going to do a BHP and go up during the 2000 bear market.

14 hours ago, ThoughtCriminal said:

Can I ask what percentage of cash people are holding? 

 

I just can’t see how sterling isn’t going to get trashed in the years ahead and my overriding thought is I need to be down to the bare minimum for living costs etc. 

 

Interested in hearing what the consensus is.

20% cash at the mo,45% big oilies,20% PM miners,15% potash and assorted smaller holdings.This was nothing like the plan from two years back.

 

[sancho panza]

Huge drop in revolving credit in the US

https://www.thestreet.com/mishtalk/economics/consumer-credit-declines-an-amazing-68-7-billion

A Bloomberg chart shows consumer credit is down month-over-month by the largest amout ever.

The number comes from the Fed's Consumer Credit Report released today.

The above chart provides a needed perspective on the Fed report which shows revolving credit fell an annualized 64.9%. 

Clearly, consumers have a lot more rebalancing to do. Equally clearly, the Fed wants to prevent just that.

$68.7 billion is an unprecedented decline, but what's coming (or doesn't) is more important.

[Talking Monkey]

4 minutes ago, sancho panza said:

Must say DB ,you're packing the paragraphs with wise thoughts/observations at the moment.

I've reread that a few times and jsut keep thinking, 'yep,yep,yep......'

Much as we're overwieght oilies,I think theyre going to do a BHP and go up during the 2000 bear market.

20% cash at the mo,45% big oilies,20% PM miners,15% potash and assorted smaller holdings.This was nothing like the plan from two years back.

 

I just had a look at BHP interesting one. I hear you on big oil though my take on the big kahuna is its going to be epic and big oil may hold its ground, but to rise during that might be difficult

[Loki]

Futures look healthy

[TheCountOfNowhere]

10 hours ago, DurhamBorn said:

https://www.telegraph.co.uk/business/2020/06/07/germans-fear-ecb-following-weimar-reichsbank-inflation-trap2/?li_source=LI&li_medium=liftigniter-rhr

“We could be heading for 1970s inflation. The ECB is creating all this money but at the same time the supply side of the economy is being constrained (by deglobalisation). If the German people wake up to 5pc inflation when this is over, they’ll conclude that the euro is out of control."

"Pandemic QE is different from post-Lehman QE. Banks were crippled after 2008 and drastic central bank stimulus was needed to offset monetary contraction. This time M3 is turbocharged. Monetarists say it will catch fire as Covid-19 recedes and “velocity” returns to normal."

No Shit Sherlock.

Did they say this was goign to happen ?

 

The talk about the ECB when the Banksters of England are doing the same 

 

[spygirl]

10 hours ago, DurhamBorn said:

https://www.telegraph.co.uk/business/2020/06/07/germans-fear-ecb-following-weimar-reichsbank-inflation-trap2/?li_source=LI&li_medium=liftigniter-rhr

“We could be heading for 1970s inflation. The ECB is creating all this money but at the same time the supply side of the economy is being constrained (by deglobalisation). If the German people wake up to 5pc inflation when this is over, they’ll conclude that the euro is out of control."

"Pandemic QE is different from post-Lehman QE. Banks were crippled after 2008 and drastic central bank stimulus was needed to offset monetary contraction. This time M3 is turbocharged. Monetarists say it will catch fire as Covid-19 recedes and “velocity” returns to normal."

Id guess the U area is going to see nuts stuff - massive wage inflation in the south and no economic or employment growth.

At the moment, with all these pledges, the idiots are assuming that ECB has discovered some magic solution.

The issue is that the Southern economies are hide bound by restrictive practises and bent public sector.

T

 

 

[Harley]

On 05/06/2020 at 20:51, DurhamBorn said:

I bought more between March 10th and 16th than at any other time since i was 14 years old

Balls of steel!

[Wheeler]

9 hours ago, JMD said:

Wheeler, Very interested to see your aim of 7% transport, are you able to give any more detail? I find this sector particularly difficult to navigate. I suppose I'm asking if you are mainly looking at train/bus cos, maybe waiting for airlines to get cheaper still? As I say I find the transport sector difficult so very interested in your strategy if you are able to share.                                                                                                                                                                                  For what it's worth I think yours and my state pensions will be safe, although I think this is because UBI will be implemented before end of this decade, so in effect every adult will be receiving say £200/week or equivalent. 

I'm more than willing to give more detail but I think you might be disappointed! 

I've used a bottom up approach and picked a few companies I'm interested in for the cycle, allocated either 1% or 2% limit to each and then grouped in a rough category. The percentage for a category just depends on the companies of interest and doesn't reflect what I think of a particular category. This means that the 7% was the original plan but isn't necessarily an aim. 

For transport I have 4 companies that I've categorised as transport, only because they seem to fit that rather than any of the others:

• BAE Systems - fighter jets and missiles are transport after all. I expect infrastructure spending to go towards defence, and the global political climate this cycle will not be more peaceful.
• Royal Mail - letters and packets are transported. A bit of a dog this one.
• GoAhead and Stagecoach - the only genuine public transport ones in my list. Originally thought that higher oil prices would drive more people to public transport (no pun intended) but CV has put a bit of a spanner in the works. 

I've no interest in airlines. I don't see them as a substitute mode of transport for private car usage.

UBI would be of benefit personally, it's £200/week more than I get from the state currently after all, but I think it will be highly inflationary. This will be for two reasons:

• The increase in consumers money supply will push up CPI. I don't see them implementing it in a way that cancels out benefit payments and state pensions to be cost neutral. There will be additions for "deserving" cases and a transitional scheme.
• The bit they never consider, it will reduce the amount of goods and services produced and reduced supply leads to inflation. This is because some people will cut back on the amount of work they do - no need for overtime for instance - due to the UBI. Also some small businesses that don't make a lot of money for the proprietor will close - no point working 60-70 hours for £100 profit if you can get £200 for nothing.

 

 

[sancho panza]

Some light reading for a MOnday morning hattip @Democorruptcy This one might even have hardened bears pooping themselves. Irving Fisher lives ..........................

#debtdeflationcometh

Interesting distinction between GDP and household prosperity(that which is left for discretionary spending).Also in terms of investmetns steering towrds that which consumers need rather than want...............very much the decomplex trade.

 

Really,really insightful imho.

https://surplusenergyeconomics.wordpress.com/2020/06/07/173-the-affordability-crisis/

#173. The affordability crisis

Posted on June 7, 2020

THE SCALE AND IMPLICATIONS OF TUMBLING PROSPERITY

In the previous article, we looked at what our handling of the Wuhan coronavirus crisis might tell us about our ability to tackle the looming, even greater challenges of de-growth and environmental risk.

The focus now shifts to the nearer-term, and to the nuts and bolts of economies trying to emerge from crisis. Though faith in a rapid ‘V-shaped recovery’ may have faded, it seems that governments, and many businesses and investors, are still pinning their hopes on over-optimistic expectations. If there’s a consensus now, it might be ‘flatter and longer than it used to be, but it’s still a V’ – and which still places unswerving belief in an eventual return to pre-crisis levels of output and “growth”.

In particular, it seems still to be an article of faith that monetary stimulus can boost economic activity, through and after the pandemic. Though monetary largesse can, of course, be used to inflate capital markets, its effectiveness at the level of the ‘real’ economy is falling ever further into question. Specifically, any realistic appraisal of the probable circumstances of households and businesses in the aftermath of the crisis ought to highlight the nearing of ‘credit exhaustion’, after which point further monetary stimulus becomes tantamount to ‘pushing on a string’.

As you’d expect, the investigation summarised here is conducted from the radically different interpretation that the economy is an energy system, not a financial one. This provides a much more realistic basis of appraisal, not least because it looks beyond the cosmetic “growth” manufactured by compounding monetary gimmickry.

Set out here are the interim conclusions of an analysis undertaken using SEEDS (the Surplus Energy Economics Data System). After addressing the critical issue of prosperity, we look at some regional variations, macroeconomic trends, and some of the implications for households, businesses and governments.

Conclusions

Here are the chief conclusions reached in this analysis:

1. Average prosperity per person is poised to fall very sharply, and to remain at depressed and worsening levels.
2. Despite a sharp fall in governments’ current-year tax ‘take’, the medium-term outlook is that discretionary (‘left in your pocket’) prosperity will fall even more rapidly than top-line prosperity.
3. Households’ financial circumstances will be worsened further by increases in debt, erosion of savings, and falls in asset values.
4. Consumer ‘discretionary’ (non-essential) purchases can be expected to decrease very sharply, and are unlikely to stage any meaningful recovery.
5. Popular demands for lower overall taxation are likely to be accompanied by intensifying calls for much more redistribution.
6. Governments will struggle to match diminished revenues with popular demands for greater spending on essential public services.
7. Further challenges for governments will include pensions affordability and the need to address worsening impoverishment.
8. Leadership in government and business may have no real idea of what the post-crisis world is going to look like.

It should be added that what follows assumes that there’s no serious “second wave” of coronavirus infections, not least because any such outcome could have devastating economic and broader consequences. In those countries which have handled the initial wave particularly badly, this may turn out to have been an over-optimistic assumption.

Prosperity

As the first set of charts illustrates, the most important conclusion of the lot is that people are going to have experienced a sharp fall in their prosperity this year, and it’s not really going to get any better after that. Despite relentless voter pressure for reductions in taxation, global average discretionary prosperity is set to fall even more rapidly in the medium-term.

In short, what we’re facing is a full-blown affordability crisis, for households and governments alike.

Additionally, though this is not shown in these charts, people are going to emerge from the crisis with their savings reduced and the value of their assets seriously impaired, and with average levels of indebtedness a great deal higher than they were before the pandemic.

Summary global prosperity numbers, stated in thousands of PPP dollars per person at constant values, are set out in the table accompanying the charts.

Fig. 1

Fig. 1A

Regional prosperity

The next set of charts sets out some regional comparisons, at both the total and the discretionary levels of prosperity per capita.

During 2020, top-line prosperity is projected to fall by between -10% (China) and -18% (United Kingdom). By 2024, the average person is expected to remain poorer than in 2019 by 11% in China, 16% in Germany, 17% in America and 18% in Britain.

At the discretionary level, rapid falls in tax collection are expected to cushion this year’s slump in prosperity. By 2024, though, and, in comparison with 2019, the ‘left in your pocket’ prosperity of the average person is projected to be lower by 19% in the United States, 20% in Germany, 22% in Britain and – perhaps surprisingly – by 23% in China. Again, supplementary data is summarised in the accompanying tables.

Fig. 2

Fig. 2A

Fig. 2B

Broad economic trends

From a macroeconomic perspective, the current SEEDS working scenario equates to a fall of 18% in world GDP this year, followed by recoveries of about 4% in subsequent years, leaving the number for 2024 still some 5% lower than it was in 2019.

Even this, though, would mean that GDP had become a still less meaningful metric than it already is, because the only way in which even this kind of modest rebound could be engineered would be via enormous exercises in monetary stimulus. In other words, it’s possible to massage reported GDP using monetary adventurism, but this simply piles up forward commitments, and inflates nominal wealth, without boosting underlying conditions.

At the much more meaningful level of prosperity – a measure which excludes monetary manipulation, and is stated net of the trend energy cost of energy (ECoE) – global aggregate real economic output is projected to fall by 14% this year, and to remain 13% below the 2019 level in 2024 (by which time the world’s population is likely to have grown by a further 5%).

Although levels of private sector borrowing (and defaults) are almost impossible to quantify at present, surges in government borrowing (and in state underwriting of private debts) imply that debt aggregates are set to go on escalating at least as rapidly as they have in the recent past.

By 2024, world debt stated as a percentage of GDP is projected to have risen to 300%, compared with a provisional 217% at the end of 2019. Critically, though, global debt as a multiple of prosperity is projected to soar from 350% now to a frightening 540% over the same short period.

Since prosperity is the most appropriate measure of the economy’s ability to carry its debt burden, this projection implies financial stresses far exceeding anything in our previous experience.

The aggregate of governments’ estimated tax revenues is projected to fall by 21% ($9tn) this year, and to remain 6% lower in 2024 than it was in 2019. Historic and projected debt, GDP and prosperity aggregates are summarised in fig. 3, with supplementary data again provided.

Fig. 3

Fig. 3A

Households

The single most important macroeconomic conclusion to emerge from this analysis is that households are going to be much poorer than they used to be, both in 2020 and in subsequent years. Falls in prosperity are likely to have been accompanied by a severe erosion of savings and, in the absence of quite extraordinary levels of monetary intervention, it should be assumed that most countries will experience a sharp correction in property prices, where affordability issues are likely to outweigh efforts at monetary support.

Additionally, of course, the behaviour of consumers is going to be affected by fears and uncertainties. At the basic level, and even if the coronavirus recedes without a “second wave” of infections, people have now encountered a crisis of which most, in the West at least, had no prior experience. The severe deterioration in their financial circumstances will be exacerbated by broader feelings of insecurity. We should therefore assume that the numerical deterioration in prosperity will be fully reflected in new levels of consumer caution.

Moreover, it’s likely that we have reached the point of ‘credit exhaustion, after which households are unwilling to go even further into debt, almost irrespective of how cheap (and how accessible) credit has become.

This would mean that further efforts at monetary stimulus would equate to ‘pushing on a string’.

These trends indicate sharp falls in households’ discretionary (non-essential) expenditures. It also suggests that affordability issues will start to exert downwards pressures on variable expenses such as rents.

Businesses

To the extent that they continue to anticipate some kind of ‘flattened V’ recovery, businesses could be in for some very unpleasant surprises in the aftermath of the coronavirus hiatus. This said, some sectors are implementing capacity cuts which seem consistent with assumptions of long-lasting impairment in their markets.

A major new reality for businesses is likely to be a sharp downturn in consumer discretionary spending. Sectors which supply consumers with things that are ‘wants, but not needs’ may find themselves waiting for demand improvements which fail to materialise.

Like households, many businesses will emerge from this crisis forced into more conservative behaviour by impaired cash flows, increased debts and changed perceptions of risk. Many are likely, in any case, to try to prolong cost savings implemented during lockdowns.

This suggests that B2B (business to business) expenditures may remain much lower than they were before the crisis, and that companies will be reluctant to return capital investment programmes to pre-crisis levels.

Government

As remarked earlier, governments’ estimated tax revenues are projected to have fallen by $9bn (21%) this year, whilst expenditures will have soared. In many instances, fiscal deficits could be in excess of 20% of countries’ (reduced) GDPs, dwarfing the deficits incurred during the 2008-09 global financial crisis (GFC).

Unfortunately, the protracted divergence between GDP and prosperity has led governments to underestimate the true burden of taxation as it is experienced by the average person.

As the following charts show, global taxation has remained at around 31% of GDP over a very lengthy period, leading governments to assume that the fiscal burden on the public has not increased. But tax has increased relentlessly as a proportion of prosperity, reaching an estimated 50% worldwide by this measure in 2019, compared with 41% in 2010, and 33% in 2000. In countries (such as France), where the incidence of taxation as a fraction of prosperity is far above global averages, this has already given rise to significant popular discontent.

During 2020, most governments will experience a sharp fall in tax revenues, but are likely to endeavour to push their incomes back upwards in subsequent years. This is likely to encounter popular opposition to an extent which governments may fail to understand, for so long as they persist in the mistaken belief that GDP is an accurate reflection of public prosperity, and hence of the real burden of taxation on individuals.

Fig. 4

Fig. 4A

Voters are, of course, at liberty to act inconsistently – demanding higher expenditure on health care and other public services at the same time as they call for a lower burden of taxation – and this divergence might well characterise public opinion in the coming years.

It will, moreover, be assumed by many taxpayers that their tax burden would be lower if “the rich” and “big business” paid a larger proportion of the total. It will not have helped public perceptions that governments have appeared able to conjure huge sums out of thin air, particularly where investors and large corporates have required (or requested) taxpayer or central bank support.

As we’ve seen, the public are likely to have been shocked, not just by the coronavirus itself but by what has happened to their financial circumstances, and to their sense of economic security. This is likely to mean that the public’s order of priorities undergoes major change, lifting issues of economic concern to, or near, the top of voters’ agendas. Rightly or wrongly, the popular narrative of 2008-09 has become one of ‘bail-outs for the few, and austerity for everyone else’, making the public preternaturally sensitive to any apparent signs of a repetition of this narrative.

Problems don’t, unfortunately, end there for governments. The current crisis will have exacerbated longer-term issues (such as pensions affordability), and shone a new spotlight on topics such as employment insecurity and the plight of the poorest.

Governments might well, of course, be tempted to ask central banks to monetise their debt, a policy which could have catastrophic financial consequences.

In theory, these conditions could be fertile territory for politicians of the traditional ‘Left’, so long as they re-order their policy agendas onto economic affairs, promising greater redistribution and, quite possibly, the taking of important sectors into public ownership. This, though, would mean reversing the main thrust of centre-left policy over an extended period in which they have, to a large extent, accepted the ‘liberal’ ideology of economics.

This makes it quite conceivable that new insurgent (“populist”) parties will make inroads, this time promising left-leaning policy agendas which include redistribution and nationalisation.

 

[Chewing Grass]

4 minutes ago, sancho panza said:

• Average prosperity per person is poised to fall very sharply, and to remain at depressed and worsening levels.
• Despite a sharp fall in governments’ current-year tax ‘take’, the medium-term outlook is that discretionary (‘left in your pocket’) prosperity will fall even more rapidly than top-line prosperity.
• Households’ financial circumstances will be worsened further by increases in debt, erosion of savings, and falls in asset values.
• Consumer ‘discretionary’ (non-essential) purchases can be expected to decrease very sharply, and are unlikely to stage any meaningful recovery.
• Popular demands for lower overall taxation are likely to be accompanied by intensifying calls for much more redistribution.
• Governments will struggle to match diminished revenues with popular demands for greater spending on essential public services.
• Further challenges for governments will include pensions affordability and the need to address worsening impoverishment.
• Leadership in government and business may have no real idea of what the post-crisis world is going to look like.

Can't argue with any of those points, sums everything in my life up to a tee.

[sancho panza]

6 minutes ago, Cattle Prod said:

Fwiw, I bought call options on WTI and XOP in March to provide optionality on this scenario. Specifically, 60, 65, 70, 75 options for Q4 and Q1 2021. I think I mentioned it on here. My basis for it was that things tend to overshoot in both directions, and if demand recovers to within 5% of previous (~95mbbl/day), the production cuts and shale decline will result in a price spike. It was a punt, the options were reasonably cheap, and it curbs my high tolerance for risk so stops me arsing around with my shares.

However, I am a bit less excited about it than I was. As I said a few days ago, I don't like recent price action in WTI, it really needs a pullback to be healthy, and keep manners on the shale boys. There is also increasing evidence of a sustained uptick in corona in the US. If people run for the hills again, oil will no doubt overreact to the downside, again. But I'm starting to think people are just as likely to completely ignore lockdown a second time.

IMO all the social unrest currently going on is a function of the lockdown, and the killing of George Floyd was just a catalyst for simmering anger. I pointed out to Mrs there was an almost identical killing a few years ago, black man knelt on neck till he died (how stupid was that cop to do it again????). There were protests at the time, but they were protests and largely peaacful. Now we have riots, vandalism, and a castration of the police force. What is the difference? Lockdown, to me. People are fearful and resentful of government at the moment, and it is being stoked up but those who don't like the current governments (i.e. Trump and Boris).

To be fair,US cops kill people on a relatively even weighted basis across white/hispanic/black ethnicities and do so on a regular basis.The data is pretty scary for everyone not just one section of society. As you say,that makes the riots/looting far more likely to be about lockdown than anything else.There's even been killings of black people protecting property/people during the riots which don't get any attention.

The feeling I'm getting in my middle class circles is that even the hardcore lockdown types (and there are many)are beginning to question it when they see Dominic going up to vist DB and get econ advice and 1000's marching around London.The truth will come out over the next year and I suspect Bojo will realise he's been played by the hard left.

As per the surplus energy post,the real pain is yet to hit.I suspect a lot of lockdown proponents will live to regret it.

[TheCountOfNowhere]

I'm well in the green now ( thanks DB ) and it's heading up quickly.

This recovery is all to easy for my liking.

 

[sancho panza]

8 minutes ago, Chewing Grass said:

Can't argue with any of those points, sums everything in my life up to a tee.

It's where he explains that the Debt to GDP ratios will be bad but the Debt to Propserity raio's will be off the scale.Persoanlly(and I like a gamble),I wouldn't touch airline stocks for a long long time.Trips abroad will plummet further reinforcing the downturn in places like spain

[Chewing Grass]

2 minutes ago, sancho panza said:

It's where he explains that the Debt to GDP ratios will be bad but the Debt to Propserity raio's will be off the scale.Persoanlly(and I like a gamble),I wouldn't touch airline stocks for a long long time.Trips abroad will plummet further reinforcing the downturn in places like spain

Been watching this graph that they are too embarrassed with to promptly update these days.

Spain Tourism Revenue

https://tradingeconomics.com/spain/tourism-revenues

[DurhamBorn]

https://www.bbc.co.uk/news/business-52954741

It has to be government and fiscal.Page one of the thread.

The only question now is where it goes.If the left got their way it would all be wasted on benefits and the black hole of the NHS etc.Trump getting re-elected could be vital.The narrative is now pretty much 100% that inflation isnt a problem at all and rates are low for decades.Just how we want it,because they will over cook the cakes.

[Majorpain]

16 minutes ago, Chewing Grass said:

Been watching this graph that they are too embarrassed with to promptly update these days.

Spain Tourism Revenue

https://tradingeconomics.com/spain/tourism-revenues

22% of EU GDP is travel and leisure, that's a cherry on the top for Club Med who should take up a large proportion of Tourism take.  Or not at the mo.

"We are going to need a bigger bailout".

[Harley]

10 hours ago, sancho panza said:

A Bloomberg chart shows consumer credit is down month-over-month by the largest amout ever.

As I mentioned, a great time to be studying behavioural economics!  The issue here is the only way to try and stop this so the consumer spends economies back to prosperity(!) is regulation and/or a massive debt jubilee both of which will not only be extremely divisive but will take us over the threshold into a totally new world, as it has always done(?).

PS:  Or, as DB mentions, ignore the consumer and go for direct public investment spending. Pretty clear which option is the least "difficult", that being the sole econ-political criterion these days!

[Castlevania]

So Telefonica is to pay it’s dividend via scrip so as to preserve cash. Does anyone know if there are withholding taxes applied? I assume it will be paid gross and if you sell in theory will be liable for capital gains tax if held outside a SIPP or ISA?

[Harley]

57 minutes ago, Cattle Prod said:

IMO all the social unrest currently going on is a function of the lockdown...

Only this time(?) it's well organised, funded, and timely, as was the eco stuff.  And the left blows smoke about Russian collusion with Trump, etc. 

People with minority views (notably a lot of articulate white people talking on behalf of black people!) sure are getting a lot of air time.  The politics of division to weaken and overcome.

Relevant here? As I've often said it's now "the political economy stupid".  Add that to your models and forecasts.

[Harley]

11 hours ago, DurhamBorn said:

My dad always says the physical is to bribe the guards 

Mine swore by Jonny Walker Red Label, and used it to great effect in some of the sh*tiest places around the world!

[DurhamBorn]

14 minutes ago, Castlevania said:

So Telefonica is to pay it’s dividend via scrip so as to preserve cash. Does anyone know if there are withholding taxes applied? I assume it will be paid gross and if you sell in theory will be liable for capital gains tax if held outside a SIPP or ISA?

I think you get an option of scrip,but its far better to take the stock and sell if you want the income because i dont think you pay the withholding tax,id guess it would count as capital for tax outside of a tax wrapper,mine are all in my ISA and SIPP.Im taking the shares though and keeping them,i think they will 3x over the cycle,shame they have already jumped a lot could of got the scrip cheaper.Repsol do the same where you can choose scrip and again better to take then sell if you want the divi income,on those i will sell as i intend to use all oil divis to buy silver.

[Sugarlips]

any realistic appraisal of the probable circumstances of households and businesses in the aftermath of the crisis ought to highlight the nearing of ‘credit exhaustion’, after which point furthermonetary stimulus becomes tantamount to ‘pushing on a string

Well here comes the stimulus, should prove an interesting litmus test as WA is close to CoVID free and things are quickly getting back to (the new) normal..

https://www.domain.com.au/news/wa-government-announces-444-million-housing-stimulus-961143/?utm_campaign=strap-masthead&utm_source=smh&utm_medium=link

MSM was speculating a 50k grant/bribe but no, $70k (including the stamp duty waivers)!

The average 3 bed 1 bath new first home here is $299k so for believers they get 20% “free” equity upfront if they buy & build this year, I’ll be watching take up closely.