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

[DurhamBorn]

49 minutes ago, sancho panza said:

it's the old velocity discussion we had with @Harley.The assumption of CBers was that driving rates lower would force spending,a total lack of udnerstanding of behavioural economics and the psychology of savers.Lower rates have pushed velocity down and possibly savings up.

Its amaing how the ECB/BoE can look at lots of coutnries where negatvie rates have had the unintended consequence of doing the exact opposite of wht was hoped,and yet they're prepping for another attempt.Encroyable....

 

Assumption is the mother of all f*** ups.

M2 velocity tends to move between the attractiveness of money over other risk/commod assets.Opportunity costs along the curve of the treasury yields play a big part.Money demand is high,but around 5% at the moment is simply due to disinflation pulls.Velocity will increase fast when the flight to money slows or turns.If the Fed is still engaged then even better.During most downturns the Fed simply increases liquidity,but the stock of M2 tends to creep higher pretty much the same as always.The recovery is the economy catching up with the stock of money.

This time however already the CB have injected massive amounts of money.M2.Once the demand for money falls there will by far higher amounts of liquidity as shown by M2 and that liquidity will start to price opportunity cost over 0.5% bonds.

Its then it looks for a new home.People make the mistake of thinking the economy drives the market,but it doesnt.The market drives the economy.The Fed has decided the usual route of creating credit and money through the formal banking system isnt enough.That was the mistake after 09 with the Dodd Frank Act.Thats why the Fed is buying lots of different assets so its not just the formal banks who can issue credit to get things moving.They dont want to.Most people are missing that the demand for money will fall,but the demand for assets will increase as governments increase spending.

https://fred.stlouisfed.org/series/M2#0

[nirvana]

First, since the Fed stopped reporting the M3 money supply measure in March of 2006, one is left with M2 as the broadest measure reported by the Fed. And, M2 is not very broad.

source 'https://www.forbes.com/sites/stevehanke/2018/10/29/the-feds-misleading-money-supply-measures/'

I'll stick with my POV that the FED needs to buy 'everything in town' to stop the ponzi collapsing......but it can't....

NB: About the author of that article, he's not your usual 'youtube knobber' he's now an 'order of the flag knobber' 

Prof. Dr. Steve H. Hanke will hereby become a Knight of the Order of the Flag. Prof. Hanke is one of the world’s most outstanding scholars and distinguished experts in the field of economics

[nirvana]

@DurhamBornI had some thoughts yesterday.....I'm gonna start calling your 'laddering' 'tranches' if I may?

It's got more of a financial feel to it methinks and it sounds better if you can say 'I just sold that last tranche for a 2k profit' but I'm HODLing the other buys for 5-10 years......it's got a sort of 'modern twitter feel' to it too 

 

[leonardratso]

ladders, tranches, whast the difference

sounds like bullshit to me

[DurhamBorn]

48 minutes ago, 5min OCD speculator said:

First, since the Fed stopped reporting the M3 money supply measure in March of 2006, one is left with M2 as the broadest measure reported by the Fed. And, M2 is not very broad.

source 'https://www.forbes.com/sites/stevehanke/2018/10/29/the-feds-misleading-money-supply-measures/'

I'll stick with my POV that the FED needs to buy 'everything in town' to stop the ponzi collapsing......but it can't....

NB: About the author of that article, he's not your usual 'youtube knobber' he's now an 'order of the flag knobber' 

Prof. Dr. Steve H. Hanke will hereby become a Knight of the Order of the Flag. Prof. Hanke is one of the world’s most outstanding scholars and distinguished experts in the field of economics

Agree M2 isnt very broad,but its still a good indicator of money in the system.

One of my main thoughts on why we were heading for a big cycle turn was the fact CBs would have to print back all the dis-inflation of the last near 40 years.Whats really interesting is if you look at the M2vCPIvGDP here you can see M2 is on its way to doing that,jumping across GDP.

https://www.longtermtrends.net/m2-money-supply-vs-inflation/

Most of the dis-inflation was from China entering the global supply chain,but they are facing increasing costs themselves now.In simple terms,once people stop being scared and move from money,there is a huge amount of it wiating to find a home.In dis-inflation there was a broad spread of assets to choose from,but if we do now see inflation move (might be one last down leg first) then then is going to be a much smaller pool of areas suitable.

 

[Bricormortis]

11 hours ago, Ellandback said:

Bit o' Metals & Miner chat with Jake Ducey & Don Durant for anyone interested.

Yes I saw that yesterday and thought it interesting,      points covered include Biden "good for gold "    and sell signals, including the Dow Gold ratio and risks around silver being declared a strategic metal.

[wherebee]

Just bought some TELSTRA here in Australia at 2.89.  Hitting 5 year lows against a high of just under 4 bucks, and Australia is a near-monopoly; that coupled with the large infrastructure budgets announced by the government which will include lots of splurging on telco services for all the new buildings means I could not resist.  add in the fact that they have confirmed an 8% dividend level for the foreseeable, and it was too nice to miss.

Only have 5k cash left now for future investment opportunities.  Betcha now the big KH hits and I curse my lack of patience.

[sleepwello'nights]

13 hours ago, spygirl said:

One child was enforced from 1980, starting restricting kids for people mainly born in 50s n 60s.

 

 

And yet despite the harsh regime people found ways to circumvent the one child rule. We discussed this with our Chinese guide when we visited China (Hi @The XYY Man)a few years ago. 

She wasn't a government stooge judging by her attitude to the communist regime. Although the government try to gag the internet there are so many VPN's. If one is shut down then others pop up.

Whilst the general thrust of @DurhamBorn's thesis may be correct I doubt it will be all doom and gloom as many fear. I'm reminded of the predictions at the turn of the 20th Century that New York would be knee high in horse dung in a few years if the rate of horse travel continued to increase.

[nirvana]

1 hour ago, leonardratso said:

ladders, tranches, whast the difference

sounds like bullshit to me

now now Leonard, just cos you can invest while sitting on the crapper doesn't mean the rest of us can...

I haven't had a shit for about 3 days!

[spygirl]

18 minutes ago, sleepwello'nights said:

And yet despite the harsh regime people found ways to circumvent the one child rule. We discussed this with our Chinese guide when we visited China (Hi @The XYY Man)a few years ago. 

She wasn't a government stooge judging by her attitude to the communist regime. Although the government try to gag the internet there are so many VPN's. If one is shut down then others pop up.

Whilst the general thrust of @DurhamBorn's thesis may be correct I doubt it will be all doom and gloom as many fear. I'm reminded of the predictions at the turn of the 20th Century that New York would be knee high in horse dung in a few years if the rate of horse travel continued to increase.

Thats true. NY would have been covred in shit if horse travel ha increased.

Ditto China would have lurched from famine and riot if the horse population kept expanding.

Demographics are not instant - waking up one day to find 30% of population has gone.

Its gradual.

What youll see in the uK is more n more probates pile up as OAPS die and theres too few working people to buy them.

You can see this in loads of times.

Things change. But the rate of change tends to be slow but unwavering.

 

 

[nirvana]

Any solar experts here? I was wanting to use the 'coming ice age' as another pro for the 'oil bull' but instead I came across this that reckons the Sun is about to wake up again 

strangely another forbes article; must be something wrong with my duckduckgo

https://www.forbes.com/sites/jamiecartereurope/2020/09/15/the-sun-just-woke-up-space-weather-feared-after-weakest-cycle-in-100-years-ends-says-nasa/

[DurhamBorn]

2 minutes ago, spygirl said:

Thats true. NY would have been covred in shit if horse travel ha increased.

Ditto China would have lurched from famine and riot if the horse population kept expanding.

Demographics are not instant - waking up one day to find 30% of population has gone.

Its gradual.

What youll see in the uK is more n more probates pile up as OAPS die and theres too few working people to buy them.

You can see this in loads of times.

Things change. But the rate of change tends to be slow but unwavering.

 

 

The probate thing will be big i think.Family houses owned by people on good pensions to be sold to people with no money or pensions.Long Redcar spy short Scabby 

[JREWING]

 

1 hour ago, wherebee said:

Just bought some TELSTRA here in Australia at 2.89.  Hitting 5 year lows against a high of just under 4 bucks, and Australia is a near-monopoly; that coupled with the large infrastructure budgets announced by the government which will include lots of splurging on telco services for all the new buildings means I could not resist.  add in the fact that they have confirmed an 8% dividend level for the foreseeable, and it was too nice to miss.

Only have 5k cash left now for future investment opportunities.  Betcha now the big KH hits and I curse my lack of patience.

Cheers for the heads up.

On Tuesday Telstra chairman John Mullen made a fair fist of calming fractious shareholders by assuring them the company was committed (within reason) to maintaining the 16 cent dividend payment.

 

https://www.smh.com.au/business/companies/telstra-calms-fractious-shareholders-with-payout-plan-20201013-p564o5.html

[DurhamBorn]

1 minute ago, 5min OCD speculator said:

Any solar experts here? I was wanting to use the 'coming ice age' as another pro for the 'oil bull' but instead I came across this that reckons the Sun is about to wake up again 

strangely another forbes article; must be something wrong with my duckduckgo

https://www.forbes.com/sites/jamiecartereurope/2020/09/15/the-sun-just-woke-up-space-weather-feared-after-weakest-cycle-in-100-years-ends-says-nasa/

I think a huge market about to open up is carbon offset through trees etc.Once companies and countries see renewables can only go so far for a long time offsetting will become an option.Offsetting with tree planting is about the cheapest way to do it and i think it will become huge.Not only taking carbon,but helping bio-diversity.Its already starting here in the UK,and there is huge potential in Africa etc.The problem is im struggling to find a way to invest in it because most of the people doing it so far are charities.

https://treesforlife.org.uk/support/for-businesses/carbon-offsetting/

These people are just up the road from me and doing really well.

http://www.forestcarbon.co.uk/

 

[leonardratso]

46 minutes ago, 5min OCD speculator said:

now now Leonard, just cos you can invest while sitting on the crapper doesn't mean the rest of us can...

I haven't had a shit for about 3 days!

you can work it out with a pencil.

[nirvana]

5 minutes ago, leonardratso said:

you can work it out with a pencil.

my graphing skills ain't what they used to be....

I'm eating some meat; I know it's killing the planet and gives you cancer but needs must....

[spygirl]

3 minutes ago, DurhamBorn said:

The probate thing will be big i think.Family houses owned by people on good pensions to be sold to people with no money or pensions.Long Redcar spy short Scabby 

Oversimplifying housing lifestyle:

Flat or 1brd -> 3 or 4 bedroom -> Bungalow

The people downsizing today will be in their 60s/70s.

This cohort would have been the first lot to have access to mass market mortgages in the 70s - a 70yo today would have been 20 in 1970.

As a rule these people getting mortgages would have earned more, had more work benefits and benefited from wage inflation being higher than price/house inflation, and werent getting their wages supressed by ~10m migrants.

They have also started work at 16 or 18.

Todays mortgageable- and its only mortgageable Im interested, fat shazza on UC/TC has no influence of the mortgage market.-  tend to have entered work a lot later - 22 / 23, carry more debt from the get go - student loans and various credit card, car etc. 

Also these people tend to move asway from where they live, having to rent, which sucks up even more of their income/savings.

Pople leaving London in their 30s/40s with young kids are leaving with fuckall - no equity, London boom.

 

 

 

 

[Democorruptcy]

2 hours ago, 5min OCD speculator said:

@DurhamBornI had some thoughts yesterday.....I'm gonna start calling your 'laddering' 'tranches' if I may?

It's got more of a financial feel to it methinks and it sounds better if you can say 'I just sold that last tranche for a 2k profit' but I'm HODLing the other buys for 5-10 years......it's got a sort of 'modern twitter feel' to it too 

 

I call mine 'snakes'

[working woman]

Hi, I regularly read Dosbods and this thread in particular and occassionally comment.

 

Several posters talk about laddering in and hoping  to invest at the bottom of the Oil shares before they start the long term (10 years) uptrend that you all think will happen.

I have been following the share prices of oil companies  RDSB and BP. I also look at their moving averages.  I don't think now is the time to buy if you want to buy the bottom in those two.

In March, like other shares, they dropped, rose rapidly and are now going down again - a "Dead Cat Bounce".

(Hats of to Durham Born - I believe he was buying at the bottom of that crash and then decided to sell at the top of the bounce? DB what made you sell, did you have/use sell signals?)

Using Moving Averages, both RDSB and BP are still on a short-term downward trend based on their 20 and 50 day moving averages and still on a longer term down trend based on their 200 day moving average. So I wouldn't buy yet if you are wanting to catch a long term bottom.  

I read a book by a famous UK Investor Bernice Cohen. For long term trading/investing she uses the 100 and 200 day Moving averages. She buys in ladders/tranches just after the share price starts to rise and it goes up through it's moving averages.

1st ladder- when the share price crosses it's 100 day moving average

2nd ladder - when the share price crosses it's 200 day moving average

3rd ladder- when a Golden Cross forms, this is when the 100 and 200 cross each other and a good indicator of a long uptrend to follow.

This is her belts and braces, cautious approach. I'm sure she sleeps well at night.

She didn't say when she sells, but I imagine she probably sells in ladders when the prices drops below their moving averages or uses a Stop Loss.

She kept a daily hand written record of the FTSE 100 share prices and calculated their 100 and 200 day moving averages every day, to find the buy signals. Nowadays, the internet can do it for you.

I'm waiting for a 20 and 50 day Golden Cross which is a short term indicator that the share price has hit a short-term bottom and is starting to rise, and then follow Bernice's 3 ladder plan above.

If DB is correct and there will be a long-term uptrend over the next 10 years, with lots of ups and downs within it, you could also make money doing short term trades using the 20, 50 and 100 day moving averages.

I'm looking forward to seeing how this develops.

 

 

                                                                                         

 

[nirvana]

13 minutes ago, Democorruptcy said:

I call mine 'snakes'

that's a new one on me, why?

 

[JREWING]

BP starts production at Ghazeer gas field in Oman Oil & GasUpstream By Andrew Fawthrop 12 Oct 2020 The Ghazeer field is the second development phase of the substantial Block 61 resource in Oman, which BP says can supply 35% of the country's gas demand BP Khazzan gas field Oman A drilling rig at the Khazzan field in Oman - the first phase of development at Block 61 (Credit: BP) BP has started production at the Ghazeer gas field in Oman, four months ahead of schedule. It is the second phase of development at Block 61 – one of the Middle East’s largest tight-gas accumulations – expanding on the Khazzan venture, which delivered first production in 2017. The project has been developed in partnership PC Oman Ventures, a subsidiary of Malaysian oil and gas firm Petronas, as well as Oman’s state-backed Makarim Gas Development. In tandem with the Khazzan field, BP says Ghazeer has the potential to supply around 35% of the country’s entire natural gas demand. Block 61 has an overall expected production capacity of 1.5 billion cubic feet (bcf) per day, as well as daily output of 65,000 barrels of associated condensate. The total recoverable resource is estimated at 10.5 trillion cubic feet (tcf) of natural gas. “The start-up of Ghazeer is an important milestone in our strategic partnership with Oman, delivering critical national infrastructure for the Sultanate,” said BP chief executive Bernard Looney. Oman’s energy minister Dr Mohammed Al Rumhy added: “The gas from Ghazeer will contribute towards Oman’s 2040 vision in terms of providing additional energy to local industries, as well as diversifying the economy.” BP has had an upstream presence in Oman since 2007. Start-up of Ghazeer gas field underlines BP commitment to hydrocarbons, despite clean-energy shift Recent focus on BP has centred on its new strategy to diversify away from traditional oil and gas businesses as it targets net-zero emissions by 2050, and to establish a bigger presence in renewable energy sectors. But the expansion of activity at Block 61 is a reminder that hydrocarbons will still play a major role in the UK oil major’s strategy in the near term. Last year, BP signed an agreement with Italian oil firm Eni and the Omani government for a “significant new exploration opportunity” at Block 77, located around 30km east of Block 61. Looney said: “When we introduced our plans to reinvent BP, we were clear that to deliver them we have to perform as we transform. There are few better examples of how we are doing just that than Ghazeer. “This project has been delivered with capital discipline four months early, wells are being drilled in record times and safety performance has been excellent. It exemplifies what a strong and resilient hydrocarbons business looks like – a core part of our strategy.” The development of Ghazeer has been a major infrastructure project in Oman, and BP says Omani-registered companies were used for more than 85% of all project spend. Block 61 comprises a three-train central gas-processing facility; a water treatment plant; 400km of gas and condensate export pipelines; a waste-management area; an electricity substation; almost 500km of roads; and more than 60km of water pipelines. More than 130 wells have already been drilled at the gas field, with more planned over the lifetime of the project. BP added that wells at Ghazeer were tested and completed using a “green completions” process, by which the gas produced while testing is routed directly to the production facility – rather than flared at source which has been the historical norm. The company says this process has prevented more than 200,000 tonnes of carbon dioxide emissions from its operations since introduced in 2019 – the equivalent of removing 44,000 combustion-engine vehicles from the road each year.

[AWW]

1 hour ago, spygirl said:

more n more probates pile up as OAPS die and theres too few working people to buy them.

You can see this in loads of times.

Things change. But the rate of change tends to be slow but unwavering.

It's going to take another ten years for this to be a factor IMHO. Houses are currently being inherited by people old enough to not need the money. My in laws have inherited two houses, neither has been sold as they don't need to and seemingly just CBA, both houses have gone to shit as they are uninhabited. It's the neighbours I feel sorry for. Meanwhile their kids who have kids themselves are stuck in private rented while their own parents sit on a few hundred grand's worth of derelict house.

[Castlevania]

1 hour ago, sleepwello'nights said:

And yet despite the harsh regime people found ways to circumvent the one child rule. We discussed this with our Chinese guide when we visited China (Hi @The XYY Man)a few years ago. 

She wasn't a government stooge judging by her attitude to the communist regime. Although the government try to gag the internet there are so many VPN's. If one is shut down then others pop up.

Whilst the general thrust of @DurhamBorn's thesis may be correct I doubt it will be all doom and gloom as many fear. I'm reminded of the predictions at the turn of the 20th Century that New York would be knee high in horse dung in a few years if the rate of horse travel continued to increase.

I believe you could have more than one child as long as you paid a fine.

[nirvana]

@working womancongrats on your post and it's good to see more women in here; especially after my terrible post last week 

BUT I will point out that an MA is a historic indicator and gives no prediction of where price is going to go 

I know 'they work' if enough people follow them but not for me thanks

'see line, trade line' 

Get some graphs up though, me likey graphs 

[spygirl]

1 minute ago, AWW said:

It's going to take another ten years for this to be a factor IMHO. Houses are currently being inherited by people old enough to not need the money. My in laws have inherited two houses, neither has been sold as they don't need to and seemingly just CBA, both houses have gone to shit as they are uninhabited. It's the neighbours I feel sorry for. Meanwhile their kids who have kids themselves are stuck in private rented while their own parents sit on a few hundred grand's worth of derelict house.

No, its factor now i the North.

Itll be a factor in South, in traditional OAPs places as OAPs are staying put, opting for a smaller place and goign abroad when tis cold.