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

[DurhamBorn]

2 hours ago, Hardhat said:

Just a quick one on the Covid-19 vaccines, I have a friend who works in Medical comms, there are currently ~5 vaccines being trialled that he knows of, and all of them have been trials have been done in 1/5 of the time they would usually take. I.e., they're being completely rushed. He personally doesn't believe the vaccine will work, and also says there's almost no legal way (at least in the UK) that Government or employers could force anyone to be vaccinated.

I was offered a job to make one of them near Liverpool a few weeks ago (i used to work for Glaxosmithkline in liquid manufacture),i turned it down of course as i dont like taking my 05 pug any further than 15 miles  ,very unlikely the vaccines will have much side affects,they arent that kind of drug though how affective they will be is anyones guess.I do know Glaxo think theirs with Sanofi will work and a couple of my old work mate technicians have been setting up the production machines at Barnard Castle to make the adjuvants that mean you need much less vaccine and it works much better with less.Glaxo already has massive experience in working adjuvants with vaccines,time will tell.

[leonardratso]

1 minute ago, DurhamBorn said:

I was offered a job to make one of them near Liverpool a few weeks ago (i used to work for Glaxosmithkline in liquid manufacture),i turned it down of course as i dont like taking my 05 pug any further than 15 miles  ,very unlikely the vaccines will have much side affects,they arent that kind of drug though how affective they will be is anyones guess.I do know Glaxo think theirs with Sanofi will work and a couple of my old work mate technicians have been setting up the production machines at Barnard Castle to make the adjuvants that mean you need much less vaccine and it works much better with less.Glaxo already has massive experience in working adjuvants with vaccines,time will tell.

hmm interesting, ill go and read about helpers now.

[Loki]

2 minutes ago, DurhamBorn said:

I was offered a job to make one of them near Liverpool a few weeks ago (i used to work for Glaxosmithkline in liquid manufacture),i turned it down of course as i dont like taking my 05 pug any further than 15 miles  ,very unlikely the vaccines will have much side affects,they arent that kind of drug though how affective they will be is anyones guess.I do know Glaxo think theirs with Sanofi will work and a couple of my old work mate technicians have been setting up the production machines at Barnard Castle to make the adjuvants that mean you need much less vaccine and it works much better with less.Glaxo already has massive experience in working adjuvants with vaccines,time will tell.

Aren't they mRNA vaccines?  Someone already developed Transverse Myelitis in a trial here in the UK.

[jamtomorrow]

36 minutes ago, Option5 said:

Conversion kits for existing cars?

I don't know how feasible that would be (suspect hydrogen might need a rather different compression ratio?), but I'd say we already know from LPG how that looks in terms of the sustainable infrastructure arising from that kind of demand i.e. not much

[Bobthebuilder]

From this months gas industry magazine. Article on Hydrogen every month now.

Says no conversion required for existing gas appliances at a 80% to 20% mix.

 

[JMD]

19 hours ago, Bobthebuilder said:

Unvented cylinder incorrectly installed, no gas or Hydrogen just water.

 

Personally I think that is a highly inappropriate use of a test crash dummy! Don't they after all also have rights? In the words of the Hindenberg reporter, 'oh, the humanity...'!!

[nirvana]

shite, I've got a hot water cylinder that I installed myself.....gonna have a few sleepless nights now....

I'll go check there's no dynamite left underneath it 

<ponders what causes them to explode like that> 

Edit: just checked, no gas pipe dynamite in my pad 

[leonardratso]

10 minutes ago, 5min OCD speculator said:

shite, I've got a hot water cylinder that I installed myself.....gonna have a few sleepless nights now....

I'll go check there's no dynamite left underneath it 

<ponders what causes them to explode like that> 

think it was on mythbusters a few years back, they must have stoppered it and just heated it so that the valve couldntblow and vent it. not very likely, must have been noisy as hell before it blew.

[JMD]

17 hours ago, sancho panza said:

I've jsut listened and as ever,Art was super.So please take what I'm going to say in that context.The slide deck as @MrXxxx says, is brilliant and well worth a deep dive.

When it comes to supply,I think noone really beats Art(except CP) as it's what he does.So generally,his point about the oil rig count being current 143 versus 730 Nov 2019 really hits home hard and back this up with other stuff hes published regarding 83% of new oil 2009-2019  being US shale and anyone can see the problem.

He aslo makes a good point about diesel being at 60% of previosu demand as an indicator.

Where I start to be more cuatious with Art is when he strays from what he's good at and well respected for and delves into other areas where maybe he doesn't have the depth of understadning that he does on oil supply.

Having lsitened to the podcast,I feel that Art isn't necessarily looking at the whole picture when it comes to the demand side.The following points are made with the greatest respect.

1) In that forty minute interview,he never mentioned the value of the dollar once(unless I missed it).He never mentioned Fed policy either and I think you're playing with fire if you proceed on the basis that the value of the dollar and the direction of Fed policy will have no effect on the demand for oil internaitonally.

2) On a similar vein he talks about the end of a long debt cycle(50 yr).Now I'm with him there but timing is everything.On macro matters,I think it best to stick with people who've been right on macro matters before eg David Hunter,DB and that lay out the logic of their prediction.Given how he talks about a ramp up in Q3Q4 2021 oil price,you'll come unstuck if we get a weak dollar phase,huge rise in oil price then credit deflation end Q2 2021(which is my best guess for the BK at the mo)

3) Whilst he mentioned demand for diesel being 63% showing industrial and trade demand was low,he failed to reference some evidence that might undermine his conclusions.Now I'm not saying copper and oil demand are a function of each otehr,but what I am saying if industry is on it's back side then the price for iron ore and copper will be low

Looking at these cahrts,they're telling us something different to Art's 60% diesel usage,could be that we see a big upswing once all the copper,aluminium and iron ore get made into something.

4) He also takes little real account of stimulus measures that other countires-particualrly CHina- could introduce espcially in a weak dollar environement.But then we're Western centrics on here too.It's human to not see/want to see the rise of a new world order without us in it..

6) AB also doesn't really have a clinicians understanding of covid.My Dad was in the oil industry for years with Exxon(scientist/lawyer) but he's the same age as Art and has been scared into hiding at home.AB seems to think that the population will wait for a vaccine before resuming normal behaviour.Again a dangerous assumption if the roads in Leicester are anything to go by and/or the amount of people shopping at the local coop without masks is a sign.I think there's a chance that many lockdown govts have jsut got this plain worng and whilst it's possible to fool some of the people some of the time,you can't fool all of them.People are jsut waking up to what a dog poo sandwich many govts have made of it.

7) this leads me onto a broader point.AB sees covid as antoher event  and that consumer behaviour will return to normal once a vaccine is found.WHat if he's wrong? What if consumers jsut adapt their behaviour.For example he talks about people not flying till there's a vaccine.But what if they jsut drive more and do more local trips..?

 

ALl in all,the podcast really made me reassess my postion on where I see demand and the suppy side stuff was bang on as ever.

 

Decl.,I hold a good few April calls on big oil and also copper plays.We also have a large chunk of portfolio value in oilies.

SP, your macro-economics observation about Art Berman (point 2?) Is interesting. I'm no expert about those things, but when I visited Art's webpage a while back I did notice he had articles from economists he 'greatly admired'. Each to their own of course, but when I read the articles, let's just say they were not from the 'Dave Hunter/pragmatic school'. That may perhaps explain some bias going on and useful to know I think. Easy to find on his website, but if not let me know and I'll provide a link.

[DurhamBorn]

1 hour ago, Loki said:

Aren't they mRNA vaccines?  Someone already developed Transverse Myelitis in a trial here in the UK.

not all,but a lot are for infectious disease because they work by highlighting antigens,lighting them up so to speak.Its the immune system that kills them still,but its a bit like walking across no mans land at night with a torch.Adjuvant makes a massive difference though hence GSK just putting machine in to mass produce more at Barnie

Of course the way they work means if someones immune system is shot already the vaccines might not work,but it might reduce deaths by 95% etc.It also of course means it can infect healthy younger people so you cut off its way to transmit a lot.

 

[JMD]

17 hours ago, Bobthebuilder said:

Yes, to go all electric we have to re wire the country and every house. Hydrogen will go down the same pipes, meters, regulators and appliances we already have with a lot less modification, none for most modern stuff.

Its so in your face its a no brainer to me.

Bobthebuilder, that's really interesting. I remember you mentioning this previously and at the time I meant to ask if you had any links etc to more info/articles about the domestic electrical capacity/national grid stuff? Only I would like to get more insight into this facinating topic.

[Bobthebuilder]

6 minutes ago, JMD said:

Bobthebuilder, that's really interesting. I remember you saying this previously and at the time I meant to ask if you had any links etc to more info/articles about this? Only I would like to get more insight into this facinating topic.

Not sure of any to be honest, its just what you learn in the trade over the years.

You can heat everything with electric now, vented, unvented electric water cylinders, elec boilers for heating but its all low power and you need to store the hot water as it takes a long time to heat up (recharge). You have to allow 70 litres per person or bathroom, a typical leccy hot water cylinder would be 140 / 180 litres. Thats only really good for a 2/3 bed house or flat. I have had customers saying leccy heating is expensive.

With the smallest gas combi 24kw, you will get 90,000 btus thats enough to heat about 2 houses and hot water instantly at around 12 litres per minute. Combis have become popular due to the space saving from not having to store the hot water.

Its when you step up a gear to large houses, blocks of flats or commercial that its gets really gas dependant. A 500 litre gas fired water cylinder for a hotel can recharge in 15 minutes and a typical hotel might have 4 to 8 of these.

Factories are off the scale.

[JMD]

12 hours ago, Harley said:

So the oil price/energy sector discussion seems mainly one of timing.  And not that long either way.  Really not relevant for me as a investor, especially as where we are equity price wise.  And given the possibility of a quick and sharp reversal followed by a painful wall of worry to buy into later.

PS: My only concern is that we are indeed in a WEF/Davos conspiracy and things will stay locked down until we reach a new green based normal, amongst many other things, under the less than "benevolent" guide of "them".  That's becoming a less extreme hypothesis as each month of government/administrative "nonsense" passes and I struggle to make sense of it all.

Harley, I think you have introduced a whole new 'wall of worry' there, well for me at least you have! But maybe I shouldn't really start worrying, not until that is, the US Democrat slogan becomes... 'Make America Green Again'!!                       (Btw I think government 'nonsense' policies or in my opinion deaf/dumb/blind technocratic leadership and pure ineptitude has been growing for years)

[Harley]

4 hours ago, leonardratso said:

cineworld closing up shop in uk/ireland, dont fancy them shares tomorrow

Yep, I read that and thought how I dodged a bullet as I was tempted to buy into the sector pre covid after the acquisition stuff.  Glad I had decided I had already gone too far off piste from the decompex/close to the source idea in my search for yield! 

[Harley]

2 hours ago, DurhamBorn said:

Exactly and its a massive point isnt it.People miss that sort of thing but its almost a retailers wet dream.10 minutes to kill charging up.Of course supermarkets will be in on that in a big way and likely things like Mcdonalds etc will be as well but you would think the massive garage chains would have an edge.

Issa brothers, EG Group, TDR Capital, ASDA.

[Popuplights]

10 hours ago, 5min OCD speculator said:

When the oilies come IN Rodders, when the oilies come in 

 

I thought we were getting Lear jets?

[Hardhat]

24 minutes ago, Popuplights said:

I thought we were getting Lear jets?

That's when HZM comes in 

[leonardratso]

HZM has already been in hasnt it?

tell a lie it has been as high as 30p for about 20-30 seconds back in 2011.

[Inigo]

9 hours ago, jamtomorrow said:

I don't know how feasible that would be (suspect hydrogen might need a rather different compression ratio?), but I'd say we already know from LPG how that looks in terms of the sustainable infrastructure arising from that kind of demand i.e. not much

Was at Shell Cobham today and noticed their new Hydrogen supply point installation, with lots of billboards.

If it is anything like their LPG tanks though, it will always be empty.

 

[mcdongle]

Aussie perspective on oil prices..

 

https://www.livewiremarkets.com/wires/if-you-aren-t-long-energy-now-you-probably-never-will-be

[BurntBread]

"Business matters" on the world service this morning was saying that China has major car manufacturing facilities in its biggest cities. The government has therefore introduced a large stimulus package, consisting of incentives for citizens to buy more cars.

One thing that struck me about the recent Art Berman interview was how US-centric he was on the demand side. This news from China points back to something @Cattle Prod linked to recently: for the first time, most of global demand is now from emerging markets; and history shows that in previous recessions, compared to the developed world, emerging market demand hasn't declined much and has bounced back much more quickly. 

[Castlevania]

Some rare good news from K&S. Shares are up nicely.

https://www.bloomberg.com/news/articles/2020-10-04/k-s-said-to-near-3-billion-sale-of-morton-salt-unit-to-kissner

[StrugglingMillennial]

1 hour ago, BurntBread said:

"Business matters" on the world service this morning was saying that China has major car manufacturing facilities in its biggest cities. The government has therefore introduced a large stimulus package, consisting of incentives for citizens to buy more cars.

One thing that struck me about the recent Art Berman interview was how US-centric he was on the demand side. This news from China points back to something @Cattle Prod linked to recently: for the first time, most of global demand is now from emerging markets; and history shows that in previous recessions, compared to the developed world, emerging market demand hasn't declined much and has bounced back much more quickly. 

Time to buy stocks in some chinese car companies then 😄

[MrXxxx]

21 hours ago, Hardhat said:

says there's almost no legal way (at least in the UK) that Government or employers could force anyone to be vaccinated.

Beg to disagree. The government won't make it compulsory but will leave it to the individuals choice.

However, employers are obliged under the Health & safety Act 1981 to be responsible for every employees well being in the work place, and if they are seen wanting are subject to unlimited fine and potentially corporate manslaughter in the worst case; directors going to prison. This is why companies have been so proactive on Covid measures so far. as a result employers will say to employees you can work here on the condition of vaccination. In addition, to enter other countries the host nation will insist on proof of vaccination; there is a precedent for this already with Yellow Fever vaccination certificates for some countries and/or when pilgrims want to go to the Haj at Mecca.

The choice will be 'on' the individual, you want employment/travel/a life that resembles normality you have the vaccine, you don't and life will be a PITA. As a result, many will 'buckle' and have it unwillingly to conform to society and/or support their families/lifestyles.

[wherebee]

11 minutes ago, MrXxxx said:

Beg to disagree. The government won't make it compulsory but will leave it to the individuals choice.

However, employers are obliged under the Health & safety Act 1981 to be responsible for every employees well being in the work place, and if they are seen wanting are subject to unlimited fine and potentially corporate manslaughter in the worst case; directors going to prison. This is why companies have been so proactive on Covid measures so far. as a result employers will say to employees you can work here on the condition of vaccination. In addition, to enter other countries the host nation will insist on proof of vaccination; there is a precedent for this already with Yellow Fever vaccination certificates for some countries and/or when pilgrims want to go to the Haj at Mecca.

The choice will be 'on' the individual, you want employment/travel/a life that resembles normality you have the vaccine, you don't and life will be a PITA. As a result, many will 'buckle' and have it unwillingly to conform to society and/or support their families/lifestyles.

quite possibly.

But our role is to delay, delay, delay for ourselves and our families until the negative impacts start occurring and public outrage grows.  I would bet good money within 5 years there will be horror stories all over the place.  Remember the blood transfusion/AIDS fuckups?  Or the BSE fuckups?