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

[Chewing Grass]

9 minutes ago, Errol said:

Bundesbank vault:

 

Those shelves don't look strong enough (too long & too slender) to hold that amount of gold up.

That's either fake gold or a fake photo.

[sancho panza]

9 minutes ago, Cattle Prod said:

 

- Supply gap in the meantime, causing high prices, possible spike

- BK triggered by high oil prices

- Oil price craters as new shale oil comes onstream in middle of BK

- EMs hoover up cheap oil, price crash quick down and up like 2008/2009 and then slow grind up to the late 2020s.

I saw david hunter talking about $10 WTI in the BK.......I think thats a compelling logic.

I'm starting to look at a range of indicators for the sell signal,that are reciprocal to each other eg dollar bottom/oil high.

[JREWING]

29 minutes ago, sancho panza said:

Fair play there pansda.That's great trading imho.I jsut couldn't resist buying as it dropped.

I'm a poor market timer generally.My dear old Mum holds all our BP certificated and last time she checked a dividend or tow back,our ave price was circa 330.So we're currently down 50%.If you had offered me that two years back I'd have taken it.I jsut plain wouldn';t have believed we'd see a 2 handle on BP or a sub 10 on RDSB.

The great traders have that patience to wait for the bottom.

 

29 minutes ago, sancho panza said:

Cheers SP..

To be honest. I'd watch you lot talk about laddering.

Never had a clue. Heard DB go on about SIPP's. Lost me.

Anyway. I decided to look into moving my two pension pots into a HL SIPP. It then sat there doing nothing. £29k. I thought sod it I'll move the lot into RDSB. It's still in there at 10.30....

Then I just thought f**k it, in for a penny in for a pound. So I laddered all our savings into RDSB.

Seems no brainer. Divis are 4.8% compared to 0.7% in cash. 

Just got to stop watching price swings. 

But if it were not for DB and this thread. Well I'd be well f**ked by inflationary forces in the coming year's.

[DurhamBorn]

3 minutes ago, sancho panza said:

60% is a real turn around and that last stat in bold is one for me to remember.Incredible.

My long term thesis(one of many) is that Western middle classes are destined for the biggest shock in the next ten years.Lower socio demographics probably have lower expectations.

They've been lulled into a false sense of security by the fact that despite years of reckless fiscal deficit spending they've not been forced to suffer a reciprocal loss of purchasing power for their £/E/$

Gravity,always,always wins.

Western currencies have been held up by emerging markets storing savings in said currencies which has just served to reinforce Western citizens in their sense of entitlement and their willingness to spend it on funding vanity welfare projects at home and abroad.

At some point the piper will want paying, and offering them the promise of the sweat of future generations will no longer wash as the emerging market players will want to spend now.

 

The other night,I went to a guy who'd barely ever worked(gave me his life story),sat with a 20 plate Skoda on his drive paid for with his mobility allowance.The idea that emerging market societies will keep living in penury so that we can idle in luxury is utterly unrealistic.The day they wake up and realsie their power,we're in deep trouble.

Its incredible how exposed we are in the UK.China sent us containers and we exchanged them for a terraced house in London.Most people will feel the pain when rates move higher and that will remove the house is my pension option.That will whack huge swathes of people in the south.Then inflation and fees will see pensions only provide 10 years of draw down instead of 25.That will mean people having to work right up to state pension age.Its a pincer movement.

Interesting,but i was watching the Card Factory results,and they mentioned they had trialled putting up their 59p cards to 69p without any loss in sales.Thats a 17% increase.They were going to expand that to other price points.A classic case of elasticity of demand.Some areas will see consumers swallow prices increases without much loss in demand (that then temps companies,then the industry to keep pushing) where other areas simply wont be able to push through increases.Inflation is in the system now and will show itself over time.Its been brutal getting to this cycle turn,but i think its upon us now.

 

[sancho panza]

Hoedges with some prescient words.I think young people are starting to get angry about Covid response/lockdown.Jsut wait tiull they realise how they've been given the bill for it as well..

https://www.icis.com/chemicals-and-the-economy/2020/09/covid-fears-risk-a-great-depression-and-major-social-unrest/

 

Governments spent most of February/March ignoring my warnings here on the dangers posed by the Covid pandemic. Now many are moving in the opposite direction. Unintentionally, they are helping to create fear and panic, which could well lead to another Great Depression and major social unrest.

HOW DID WE GET HERE?

I began warning of the risks on 9 February, arguing that Coronavirus disruptions made global recession almost certain. And I continued to warn every week through the rest of February and March. All my warnings came true, most notably those about a likely financial market crash and an oil market crash. 

The cause of the problem was obvious – incompetent governments and lack of credible information for the general public as I noted in early June:

• Governments had long known that a pandemic was a serious risk and was highly likely
• But they failed to maintain their stocks of essential equipment, and didn’t activate the emergency response mechanisms in time
• The population was given misleading and often contradictory information – “this is only flu and will go away“, “millions of people will die if we do nothing“

Inevitably, of course, most governments then pivoted from complacency to panic – from one extreme to another.

Governments panicked as they suddenly realised health services could be over-whelmed by Covid cases. So the world moved into lockdown, region by region. But unfortunately, government incompetence didn’t stop there. In many countries they simply discharged elderly patients into care homes, to create space for the expected wave of hospitalisations.

World-wide, this completely avoidable mistake has cost around half the lives lost so far. And too many governments are still failing to face up to their responsibilities, claiming that a vaccine will solve everything. Vaccines have done wonders for public health, but they are very difficult to develop:

• We haven’t even got one for the common cold, let alone HIV/Aids and malaria, after decades of research
• The risk of side-effects from rushed Phase 3 trials could easily be higher than the Covid risk itself – as thalidomide reminds us

All the efforts now underway will no doubt mean that vaccines do become available. But most specialists believe they are unlikely to protect those most at risk, as the World Health Organisation has warned:

“Up until very recently most of the focus of the vaccine community has been on saving lives of young children. The people who need the vaccine the most may actually be the people in whom the vaccine might not work.”

A GREAT DEPRESSION AND MAJOR SOCIAL UNREST ARE NOW THE KEY RISKS

Unfortunately, most governments do not seem to have learnt from their mistakes.  One exception is Portugal, where premier Antonio Costa made clear earlier this month:

“We have to avoid at all costs the solutions we had to adopt in March and April because from the social and economic point of view they are obviously not sustainable.” 

This doesn’t mean doing nothing, or doing absurd things like politicising the wearing of face masks.  It means asking people to be responsible, and to show solidarity with those who are most at risk.

Every death is a cause for sadness. But we also all know that “only death and taxes are certain in this life”.  And as the chart from the Financial Times shows, the key metric for the Covid-19 pandemic is not infections, or hospitalisations – it is “excess deaths“:

• Peru and Ecuador are in urgent need of help from the international community
• Italy, the UK, Spain, Belgium, Chile, S Africa and the USA need to ask themselves serious questions about the effectiveness of their policies
• Sweden, the Netherlands, Iceland, Israel, France, Portugal and Switzerland shouldn’t be satisfied with current results

Of course, some governments are so incompetent that this key data is not even available.

But that doesn’t mean we should instead focus on misleading data, just because it is available.  In soccer, for example, we don’t focus on the level of chanting in the crowd because we can easily measure decibels.  We focus on goals scored.

The same has to be true with the pandemic. We now know that most Covid deaths are in people over the age of 70, and that young people are at far more risk of dying in a road accident. So governments should take measures to protect those over-70, and allow everyone else to get on with their daily lives.

Otherwise, we will all wake up during the winter and suddenly start to realise that lockdowns don’t just suppress rates of Covid infections. They also mean that:

• Millions of people with other diseases and illnesses are not getting the treatment they need
• The economy is grinding to a halt, with unemployment rising rapidly – particularly amongst young people

If there was a competition to devise a plan to create a Great Depression and major social unrest, then I would back current policies to win. And young people are starting to realise they are the innocent victims of government incompetence. So the risk of major social unrest is rising every day.

[Loki]

36 minutes ago, Cattle Prod said:

demand depending

If you ignore our maritime climate, it looks like there will be demand for heating from the continents 

https://electroverse.net/category/extreme-weather/

[Bear Hug]

https://www.dailymail.co.uk/news/article-8790419/BP-vice-president-61-hanged-2million-home-inquest-hears.html

VP of BP (age 61) made redundant after 10y and hanged himself on financial worries. 

How do you work as VP and not save any money?  Probably for the best they got rid if him, good for pension scheme funding too potentially. 

[Lightscribe]

2 hours ago, Democorruptcy said:

His plan wasn't to ignore financial cycles it was to build a portfolio to withstand them and keep enough cash aside to not have to sell at lows. He didn't have all his money in cyclical equities, so might still be doing OK. One thing is for sure, I'd rather have £1m in under water equities that have no money!

He moved to Cyprus and rented a place with a view to buying but very quickly gave up on Cyprus, came back to the UK and got a job. I think he was considering moving abroad somewhere else but not sure where.

 

What’s the deal with all the tos members (count of nowhere, WICAO etc) murmur loudly about moving abroad and then move back (if ever they actually did) when it doesn’t quite work out. I’ve travelled the world and lived in a few countries but at least I can admit I’ve navigated like a homing pigeon back to this politically mismanaged shithole for no other reason than family at least.

[dgul]

2 hours ago, Errol said:

Bundesbank vault:

 

And all done using trompe l'oeil and mirrors.

[Popuplights]

51 minutes ago, Bear Hug said:

VP of BP (age 61) made redundant after 10y and hanged himself on financial worries.

Very sad. But this is what happens when you define yourself by your job. He obviously thought he was indespensible. I tell the new grad engineers this

 The company is a wanker, and will shit on you any time it sees fit. 

I'm not sure they believed me at first, then one of their girlfriends was binned off after 2 years as a grad. 

They believe me now.

And yes, I agree, after 10 years as a VP, he should have saved enough money to walk away a rich and happy man.

 

 

[leonardratso]

32 minutes ago, dgul said:

And all done using trompe l'oeil and mirrors.

i dont think its gold, i think its readymade currys in goldy looking packaging.

[leonardratso]

50 minutes ago, Sideysid said:

What’s the deal with all the tos members (count of nowhere, WICAO etc) murmur loudly about moving abroad and then move back (if ever they actually did) when it doesn’t quite work out. I’ve travelled the world and lived in a few countries but at least I can admit I’ve navigated like a homing pigeon back to this politically mismanaged shithole for no other reason than family at least.

i wouldnt worry about it, anyone can make a mistake, you dont know until you try it really i suppose. Its like an admission that the grass isnt greener (for them at least i guess).

[leonardratso]

9 minutes ago, Popuplights said:

Very sad. But this is what happens when you define yourself by your job. He obviously thought he was indespensible. I tell the new grad engineers this

 The company is a wanker, and will shit on you any time it sees fit. 

I'm not sure they believed me at first, then one of their girlfriends was binned off after 2 years as a grad. 

They believe me now.

And yes, I agree, after 10 years as a VP, he should have saved enough money to walk away a rich and happy man.

 

 

i had that tab open ready to read but havent got round to it yet, the only reason i opened it was because i read the (clickbaited) headline and thought exactly the same thing. Ill go off an read it now, obviously coming away knowing even less than before i started and forgetting about it 89 seconds after i close the tab - in true clickbait dailymail fashion.

 

[Barnsey]

1 hour ago, Bear Hug said:

https://www.dailymail.co.uk/news/article-8790419/BP-vice-president-61-hanged-2million-home-inquest-hears.html

VP of BP (age 61) made redundant after 10y and hanged himself on financial worries. 

How do you work as VP and not save any money?  Probably for the best they got rid if him, good for pension scheme funding too potentially. 

Gotta love the DM always placing great focus on how much the house was worth.

Great snippet from Jesse Felder the other day basically suggesting now is the time to get greedy with oil stocks given "death of oil" headlines ala 2003 etc.

On the housing front, previous forecasts from various vested sources suggested falls of 7.5 - 10% now revising up their expectations given positivity vortex of the moment, now seeing rises this year followed by flat for 2021 then off to the races thereafter.

Having had a relentless micro focus on local markets I'm interested in here in the West Midlands, I'm seeing properties coming back to market after going Sold STC at quite a surprising rate. Don't believe the headlines and follow your areas VERY closely would be my advice. This is a frenzy amongst the higher end of the market. FTBs now effectively locked out unless they go for HTB. I'm continuing to sit this out until April.

Oh, and contemplating if now is a good time to buy back into Card Factory, they seem to be holding up pretty well.

[JREWING]

1 hour ago, Popuplights said:

 I tell the new grad engineers this

 The company is a wanker, and will shit on you any time it sees fit. 

 

 

 

Very true...

Good advice.

My experience. It's the wanker people rather than the wanker company.

Love engineering, but just can't stand the company of certain so called engineering people..

[wherebee]

3 hours ago, Chewing Grass said:

Those shelves don't look strong enough (too long & too slender) to hold that amount of gold up.

That's either fake gold or a fake photo.

that's exactly my first reaction to that photo.

that's either not real gold, or not a real photo.  

[wherebee]

On 30/09/2020 at 07:55, Popuplights said:

Who the hell knows.? XOM down another 3% today, now 34.3 dollars.  Will we see sub 30? My sharesave portfolio fucking hopes not.....

 

So I set an order last night and went to sleep.  Got 13,000 extra BP at around 17.5 (I have to get ADRs as am in Oz and broker covers US mkts more).  That's brought my average price down a lot.  Living in Asia, I just do not believe the story of 'end of oil' that is being pushed, not least because China is beating the war drums and modern warfare needs a LOT of energy.

[DurhamBorn]

Remember as well on India they hate China and there is a big risk of a hot war between them.India is going to push growth this decade and i doubt they care much about autistic Swedish schoolgirls.BP for all their talk about renewables etc are also investing hugely in growing their petrol station business in India.Its likely they see a lot of their oil going that way over the cycle.

@Barnsey i actually bought a few Card Factory today ,i admit a gamble but i already had some down 65% and now im down 18%, maybe a bust or 4x .If it works out they might be on a 25% dividend yield in 4 years.Very few outside of inflation sectors,but you have to have the odd punt dont you.They need to keep off divis until that debts down below £100 mill though.

[wherebee]

the Australian today arguing for more oil and gas exploration in oz, not less:

"In light of Australia’s looming gas shortages and the threat they pose to manufacturing and jobs, especially in the current parlous economic climate, it makes more sense that a gas superpower such as Australia use its reserves to cut power prices and industry costs and play a role in the transition to cleaner energy. This is why The Australian has argued consistently in favour of the states unlocking their restrictions on gas exploration and production. A move by the Victorian government earlier this year to lift a ban on onshore exploration, while welcome, will not come into effect until July next year, meaning any supply from sources such as the Otway Basin are unlikely to be developed in time to ease the looming crisis."

[Lightscribe]

3 hours ago, Barnsey said:

Gotta love the DM always placing great focus on how much the house was worth.

Great snippet from Jesse Felder the other day basically suggesting now is the time to get greedy with oil stocks given "death of oil" headlines ala 2003 etc.

On the housing front, previous forecasts from various vested sources suggested falls of 7.5 - 10% now revising up their expectations given positivity vortex of the moment, now seeing rises this year followed by flat for 2021 then off to the races thereafter.

Having had a relentless micro focus on local markets I'm interested in here in the West Midlands, I'm seeing properties coming back to market after going Sold STC at quite a surprising rate. Don't believe the headlines and follow your areas VERY closely would be my advice. This is a frenzy amongst the higher end of the market. FTBs now effectively locked out unless they go for HTB. I'm continuing to sit this out until April.

Oh, and contemplating if now is a good time to buy back into Card Factory, they seem to be holding up pretty well.

Follow the banks and pension funds actions. I have increasingly less attention span to give to MSM articles, even paid for subs like the FT, still churn out politically charged anti-Brexit and anti-Trump articles (I couldn’t give a shit about either) and flip flop daily about house price forecasts going up and down.  

The banks are removing mortgage products left right and centre and the pension funds have suspended their commercial/residential property funds that’s all I need to know. That’s the lead, the lag comes further down the line once the stamp duty froth on the market dies down and already is (which sole purpose was to skew annual sold house price statistics)

The first link in the chain has now been removed (no 5-10% deposits FTBers now) just simply wait until early next year to see the economic damage take effect. No government prop now can reverse what’s coming unless they can actually buy a house for everyone.

[jamtomorrow]

2 hours ago, Sideysid said:

The banks are removing mortgage products left right and centre and the pension funds have suspended their commercial/residential property funds that’s all I need to know.

Have Coventry BS pulled their 10 year fix? Couldn't find it on their site the other day.

Strangest remortgage I've ever been through. They put you through a full 1h psychobabble "financial attitudes" interview. Questions like:

"Why do you think you want this mortgage?"

"How does your previous answer make you feel?"

I was *completely* truthful, which raises all sorts of further questions like: what on earth did the fella actually put on the form? What are the underwriters smoking? Can I have some?

The truth being I'd rather owe them for 10 years at 2% than clear the debt, for all the reasons oft discussed here.

[MrXxxx]

11 hours ago, Democorruptcy said:

His plan wasn't to ignore financial cycles it was to build a portfolio to withstand them and keep enough cash aside to not have to sell at lows. He didn't have all his money in cyclical equities, so might still be doing OK. One thing is for sure, I'd rather have £1m in under water equities that have no money!

He moved to Cyprus and rented a place with a view to buying but very quickly gave up on Cyprus, came back to the UK and got a job. I think he was considering moving abroad somewhere else but not sure where.

 

Malta I think....and lets not forget, there is more than one way to `skin a cat`, and a wrong/right time for any investment approach I.e. passive investing, 60/40 portfolio etc. Falling into the trap of doing likewise is naive and could be expensive!....the guys principles were sound I.e save more than you spend, educate yourself financially (& mentally at a later date), and have a plan.

[MrXxxx]

11 hours ago, Chewing Grass said:

Those shelves don't look strong enough (too long & too slender) to hold that amount of gold up.

That's either fake gold or a fake photo.

No wrong, its ETF gold...always a bit lighter! :-) :-) :-)

[MrXxxx]

10 hours ago, Panda said:

 

Cheers SP..

To be honest. I'd watch you lot talk about laddering.

Never had a clue. Heard DB go on about SIPP's. Lost me.

Anyway. I decided to look into moving my two pension pots into a HL SIPP. It then sat there doing nothing. £29k. I thought sod it I'll move the lot into RDSB. It's still in there at 10.30....

Then I just thought f**k it, in for a penny in for a pound. So I laddered all our savings into RDSB.

Seems no brainer. Divis are 4.8% compared to 0.7% in cash. 

Just got to stop watching price swings. 

But if it were not for DB and this thread. Well I'd be well f**ked by inflationary forces in the coming year's.

None of my business but this seems like putting `everything on black`[excuse pun!] type investing...you may like to investigate `Diversification`, and I don't mean `Buy some BP instead` :-) :-) :-)

[MrXxxx]

11 hours ago, DurhamBorn said:

Thats a 17% increase.They were going to expand that to other price points.A classic case of elasticity of demand.Some areas will see consumers swallow prices increases without much loss in demand (that then temps companies,then the industry to keep pushing) where other areas simply wont be able to

I think  is a really interesting point, and what I call the `Pound shop` approach I.e its far easier to raise your %s on lower value products than higher one as people just say "Oh, its only another 20p" rather than thinking "Christ that's a 20% increase!"