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

[nirvana]

take a guess at this tweet...

The stock market is poised for new highs & a parabolic run into a secular top. Even the small cap & mid cap indexes look good. Tech, especially semis, industrials, miners & energy stocks should be among the leaders in this final stage of the bull market. Still lots of skepticism

Markets on their arse again today......dodgy business this 'predicting the future'

But maybe, just maybe this is the pullback before the rocket takes off! 

[Loki]

Just now, 5min OCD speculator said:

take a guess at this tweet...

The stock market is poised for new highs & a parabolic run into a secular top. Even the small cap & mid cap indexes look good. Tech, especially semis, industrials, miners & energy stocks should be among the leaders in this final stage of the bull market. Still lots of skepticism

Markets on their arse again today......dodgy business this 'predicting the future'

But maybe, just maybe this is the pullback before the rocket takes off! 

That is Mr Hunter 

[Castlevania]

Very interesting article on big oil; carbon capture and storage; and hydrogen in the Torygraph. 

https://www.telegraph.co.uk/business/2020/10/19/fossil-fuel-dinosaurs-may-still-have-life-yet/

I found this quote with regards to the U.K. government promising for the future 

NET Power founder Bill Brown told this journalist in 2016 that he was running into a wall of incredulity because the technology “sounded too good to be true”.

Four years on, his natural gas pilot plant in Texas - developed with Toshiba and Exelon - has hit the jackpot and led to a pipeline of planned projects in the US, the Middle East, and in Europe - including Teesside, home to Britain’s chemical companies and on its way to becoming the Europe’s first zero-carbon industrial cluster.

“We proved what we set out to prove, that the entire cycle works. We are now convinced that we make the cheapest clean hydrogen in the world at 0.57 cents a kilo,” he said.

That is roughly half the cost of other forms of blue hydrogen using fossil fuels with carbon capture, and far lower than ‘green hydrogen’ from wind and solar using electrolysis - rapidly falling in cost. But is still a decade away from plausible parity.

“We can make clean ammonia that can be transported anywhere (like crude oil). We can go totally carbon negative and suck out 1.8 tonnes of carbon for every ton of biomass we burn,” he said.

Britain out in front in race to remove carbon

Mr Brown said it is not good enough if CCUS is viable only with an exorbitant carbon price. It must be competitive on its own terms. “We have to produce energy that the entire world can afford, not just rich people in California, and we can,” he said.

He said British support for the Teesside project kept him going when times were rough. “When the history of all this is told, the role of the British Government will loom large,” he said.

“I could feel that they wanted to be more proactive on climate change but kept running into EU state aid rules. People can say what they want about Brexit but it is the Brits who are going to move faster on this than Europe,” he said.

[nirvana]

7 minutes ago, Loki said:

That is Mr Hunter 

there's another geezer on twitter called 'biPolar bear' who's trolled him with

3500 will not be visited again for years The only thing poised to make new highs is the level of bullshit in this tweet

BUT to be fair to the geezer, he said on Saturday

All night I could smell the sell coming

[Loki]

6 minutes ago, 5min OCD speculator said:

there's another geezer on twitter called 'biPolar bear' who's trolled him with

3500 will not be visited again for years The only thing poised to make new highs is the level of bullshit in this tweet

BUT to be fair to the geezer, he said on Saturday

All night I could smell the sell coming

There's about a million accounts that came up when I tried searching, any chance of a link?

I think DH is right but his timing is atrocious...but then timing AND destination is a hard call.

There's still two weeks to go till October is over...and a blue moon on the 31st! 

[nirvana]

I've just realised biPolar bear is tweeting from an iphone so he's defo a knob 

[sancho panza]

1 hour ago, Democorruptcy said:

Bit I read about BT last week, when the share price dipped on a market up day.
 

 

I think BT are playing a political game.Divi cut followed by excuses about getting fast broadband to remote areas.Reality is that I suspect it'll be cheaper to use mobile technology for some of thsoe areas.

I like them at a £1 much more than I liked them at £4.Jsut hope they stop trying to compete with Sky for sports.

[sancho panza]

Some interesting Luke Gromen/Lyn Alden tweets of late.

and the coup de grace

[nirvana]

@sancho panzaI thought that 2/3rds looked low to me! Thinking the FED needs to buy 'everything' 

So I checked her twitter feed and she also tweeted

YTD through August, the foreign sector only bought about 5% of net new Treasury issuance.

 

[UnconventionalWisdom]

3 hours ago, sancho panza said:

like I'd be selling RR now if I'd piled in.There'll hopegfully be otehr opportunities with that one.

What are your long term views on RR, SP? I work at an sme developing tech for various industries. We were part of an aerospace project and the aerospace sme went under post covid. There were in a great position but were focussed on aerospace. A lot of the supply-chain is buggered but I can see RR returning strong. They are getting involved with R&D projects so are looking towards the future. I'm not sure it's a good buy or not as they will return but it won't be easy for a couple of years.

[DurhamBorn]

50 minutes ago, sancho panza said:

I think BT are playing a political game.Divi cut followed by excuses about getting fast broadband to remote areas.Reality is that I suspect it'll be cheaper to use mobile technology for some of thsoe areas.

I like them at a £1 much more than I liked them at £4.Jsut hope they stop trying to compete with Sky for sports.

They are after business rates being cut or removed for fiber and an inflation linked uplift from the regulator for the life of the fiber.At 1% inflation regulator will probably shrug shoulders.At 6% inflation free cash will explode given its mostly being paid for from cash flow.Divi cut hurts for investors,but was the right thing to do.They should manage the 7.7p and then move it up over the cycle,once they have the things they want signed and sealed.Should be £3 by cycle end minimum.

[DurhamBorn]

Dollar falling against the Yuan is a prime example of the dis-inflation being printed back.Each notch down is another factory built back in the US,and another push by the Chinese to make up for it.

[Loki]

 

6 minutes ago, DurhamBorn said:

Dollar falling against the Yuan is a prime example of the dis-inflation being printed back.Each notch down is another factory built back in the US,and another push by the Chinese to make up for it.

It sounds so simple/obvious when you put it like that 

How long did it take you to create your macro system initially? I assume you still have to tweak it to account for new procedures or financial 'products'?

[JMD]

6 hours ago, Heart's Ease said:

Quite, quite charming, XOM in particular.

😁

Well done 'Gladys'!?                                                                                                                                                                   I never knew global finance could be so beautiful... The symbolism of the full moon - (obviously?) representing the omnipotent tidal effect of the US plunge-protection-team - is so awe inspiring. The artist certainly knows her subject matter, positioning the ever-present 'moon' strategically over those nasty looking market dips!!

[DurhamBorn]

7 hours ago, Loki said:

 

It sounds so simple/obvious when you put it like that 

How long did it take you to create your macro system initially? I assume you still have to tweak it to account for new procedures or financial 'products'?

I didnt,they are the legacy ones used by Fidelity Investments back in the 80s,developed over the 70s and 80s.Iv added cross market things along the way,but the main drivers are the same.Liquidity drives everything in market style economies.The rest is cross market work.Fed prints,market allocates the capital.Difference this time is its going to be Fed prints market allocates some of the capital,government allocates the rest.Its that key cycle that matters.Governments build backbones of economies,then for around 40 years people live off the profits until it repeats.

[Erewhon888]

Seems there is a major push starting on Bitcoin with Raoul Pal and Mike Saylor leading the way. Who has the best counter arguments or what are the best counter arguments especially against Saylor's denunciation of gold.

Raoul Pal's push on Bitcoin

Michael Saylor's arguments against gold and in favour of Bitcoin specifically rather than any other crypto

[Noallegiance]

12 minutes ago, Erewhon888 said:

Seems there is a major push starting on Bitcoin with Raoul Pal and Mike Saylor leading the way. Who has the best counter arguments or what are the best counter arguments especially against Saylor's denunciation of gold.

Raoul Pal's push on Bitcoin

Michael Saylor's arguments against gold and in favour of Bitcoin specifically rather than any other crypto

Please let's not go gold v crypto here.

New thread if necessary.

[Loki]

9 minutes ago, Noallegiance said:

Please let's not go gold v crypto here.

New thread if necessary.

I'd say this is the thread for to discuss FED digital dollar though, as/when we hear more.  Even if it just helps show where we might be on the timeline.

[jamtomorrow]

22 minutes ago, Loki said:

I'd say this is the thread for to discuss FED digital dollar though, as/when we hear more.  Even if it just helps show where we might be on the timeline.

Makes me happy every time a central banker talks about CBDC, because it further legitimises crypto generally. It's noticeable that BTC has decoupled from gold and gone on a bit of a tear these last few weeks, just as the CBDC kites have started flying.

I do think this will go full circle and end up the same as meatspace: BTC is non-debasable digital gold, and CBDCs are the fiat.

Btw, I notice the CB in CBDC is supposedly "cross border", but I think we all know what it really stands for ...

Edit to add: interesting to consider whether (or: for how long) central banks will be able to run CBDCs without holding BTC reserves. If the meatspace analogy holds, they'll need BTC at some point.

[NogintheNog]

https://www.bullionvault.com/gold-news/esg-oil-101420201

More thoughts on the future of big oil from moneyweek, posted on the bullionvault gold news page.

Funny, because many of the quotes will look very familiar to most on here

Quote

EVERYBODY hates the oil majors

Quote

Right now we have a bit of a bull market in "green" tech and ESG investing (that is, investing with environmental, social and governance issues in mind). Everyone is talking about an electric vehicle led, low carbon future. So your old school fossil fuel stocks are out on their ears, and the hot young solar and hydrogen stocks are having a ball.

Quote

Oil prices collapsed in March and April for the same reason that everything else collapsed: everyone and everything stopped moving. You don't need oil if you're not driving and you're not flying. It's that simple.

Quote

And this is where the "green" bubble side of things comes back in. It's easy to be cynical about ESG, because many companies use it in a cynical manner. "Greenwashing" – talking up your environmental commitments purely for PR purposes – is rife.

BP????

Quote

Now, ESG might just be a good excuse to pull loans to companies that have never and will never make a profit. But whatever the reason, if shale producers have their credit lifelines yanked away from them, then US oil production can't help but fall. And if that happens then supply could take a big hit.

 

Will it happen soon enough to drive oil prices higher? I don't know. But what I do know is that the sector is deeply disliked, which suggests that the market is overly gloomy rather than overly upbeat. In turn, that means it'll be easier for expectations to be beaten to the upside rather than the downside.

 

In short, I'd rather be long the oil companies than short them right now.

 

[NogintheNog]

32 minutes ago, jamtomorrow said:

Btw, I notice the CB in CBDC is supposedly "cross border", but I think we all know what it really stands for ...

Anything but cross border! They want you trapped in their biosphere, so they can extract wealth via taxation and the hidden inflation taxes....

It might even be difficult to move wealth from overseas investment like Gold back into UK sterling...

Meanwhile if I want to pay my mate in Oz via a Crypto, via a video link or a WhatsApp link, there is absolutely nothing the Bank of England can do to stop me

At the moment the most I can give him is a pint

[JMD]

16 hours ago, sancho panza said:

I think the thing with PR of most forms is that authoritarian leaning people would struggle to get 50% of the vote except on rare opccasions. With FPTP, you only need 30-35% in the right places.

Like you, I've been shocked and worried by how quickly the British public has taken to having it's basic liberties suspended. I'd love a constitution to protect our rights. Particualrly in light of the way Big Tech has been the forcing hand of authoritarianism.

I agree. And those very big themes should have been sorted back in the 90's when we had the political head room (post USSR) to at least begin addressing such things.   

Unfortunately no government will bother with constitutional matters whilst fighting (re shadow boxing?) the economy, oh and waging it's disingenuos 'dirty war' on Covid. It's one of those hard-political-problems that will get delayed and delayed. The thing is we have most/all of what we need already in place - just re-assert the common law, our rights and first principles are all there. (warning: i note that the following site has gone full tin-foil conspiracy, but many years ago this was where i first learned about the power of our common law; the site now makes for a very whacky/entertaining read if you have the time, but to be clear, i shan't be re-visiting it: https://www.britishconstitutiongroup.com/)

Tech definitely has the potential of becoming our saviour (i sometimes mention blockchain in this regard) or our enslaver - but i'm glad the debate has (belatedly) begun. Unfortunately many discussions are being framed in terms of the dubious security vs freedom question. Peter Thiel, himself a techy (Paypal founder), i find interesting on the subject. He thinks freedom and democracy have become incompatible; that the fundamental principles and values of democracy have become irretrievably subverted, by big-government, unsustainable economics, concentrated institutional power. Plus we now have the emergence of radical competing groups that appear will never agree to be governed again.

Perhaps these are the type of problem that eventually get resolved after a 'Fourth Turning' (re Neil Howe's book)? I thought a new edition of that book was being written?, but dissapointingly no sign of it yet.

...oh How i long for the simpler days when i could just vote SDP and feel that i had done my bit, how naive i was! 

[JMD]

2 hours ago, Erewhon888 said:

Seems there is a major push starting on Bitcoin with Raoul Pal and Mike Saylor leading the way. Who has the best counter arguments or what are the best counter arguments especially against Saylor's denunciation of gold.

Raoul Pal's push on Bitcoin

Michael Saylor's arguments against gold and in favour of Bitcoin specifically rather than any other crypto

Thanks, I shall watch the videos as i have commented on those guys myself recently. I also heard recently that Raoul Pal sold his gold in the summer (surely a sacrilage against this forum!) to buy BTC - and is now over 50% in BTC! 

[JMD]

1 hour ago, Noallegiance said:

Please let's not go gold v crypto here.

New thread if necessary.

But does it have to be an either/or debate? i.e. choice of BTC or Gold as investment/store of value proposition? Why not use both?

A genuine question as others here will undoubtedly have their own considered views on this - i believe - crucial topic.

[NogintheNog]

So, another member of the MPC at the BofE calls out for negative rates;

https://uk.finance.yahoo.com/news/bank-policymaker-adds-support-negative-110255965.html

Monetary Policy Committee (MPC) member Gertjan Vlieghe said below-zero rates would offer some vital “headroom” for policymakers as quantitative easing (QE) becomes a less powerful tool to help the economy through the pandemic.

So negative rates inbound....

You can see his actual speech here;

https://www.bankofengland.co.uk/-/media/boe/files/speech/2020/assessing-the-health-of-the-economy-speech-by-gertjan-vlieghe.pdf?la=en&hash=6F764B4A74358C059E7BCE6C322C3DDE7746AC77

Quote

My own view is that the risk that negative rates end up being counter productive to the aims of monetary policy is low. Since it has not been tried in the UK, there is uncertainty about this judgement, and the MPC is not at a point yet when it can reach a conclusion on this issue. But given how low short term and long term interest rates already are,headroom for monetary policy is limited,and we must consider ways to extend that headroom.

So basically, were not sure if it will work but we have tried everything else, so lets give it a go Where do they get these people from? In the case of this Belgian twat, the London School of Economics, and Deutsche Bank for starters!

Quote

In my view, the outlook for monetary policy is skewed towards adding further stimulus.

So negative rates and more QE?????

We really are in the twilight zone....