Credit deflation and the reflation cycle to come (part 3)

[Bobthebuilder]

20 minutes ago, HousePriceMania said:

I think the question is only how long we have before we all start buying physical assets, food supplies and baseball bats 

[feed]

HOC impact? 

https://sg.news.yahoo.com/peruvian-truckers-strike-state-emergency-104920199.html

Peruvian truckers strike, state of emergency declared
Tue, 28 June 2022, 11:49 am

STORY: Honking horns, truckers filled a highway around the port city of Callao demanding authorities to step in. The freight transport union leader, Ivan Valencia, said truckers are broken due to the country's economic woes.

High global fuel prices linked to Russia's invasion of Ukraine have stoked unrest in Peru. President Pedro Castillo's government has taken measures to curb the rising cost of living, but the annual inflation rate remains at around 8%, its highest level in 24 years.

Under the state of emergency, the police and the army will be deployed throughout the country's roads to avoid blockages and the freedom of movement and reunion are suspended.

[HousePriceMania]

41 minutes ago, Axeman123 said:

I might have said your first line myself a few weeks ago, but it seems hard to say the fed aren't serious about fighting inflation this time. They just keep going in spite of some very ominous signs. That doesn't mean they won't pivot soon, but I think they will wait for a real crisis first. The dramatic speed of the slow-down emerging certainly implies it won't be long until we find out.

If do get pivot=>melt-up=>tighten=>BK, I would expect far better prices for most things post-BK at least for a while. The decade after would be a very bad time to hold fiat though.

Totally agree. 

Watch for the pivot. 

Their actions on 2008 was to saving the banks...theyre not going to save anyone else. 

The question is...are the banks finally bailed out ready for the 2008 crash? 

 

I don't think we'll have to wait long to find out.

[Innkeeper]

1 hour ago, sancho panza said:

and no doubt SLeepy Joe will be wlaking round the old folks home in a year or two wondering why the workd ditched the USD as its reserve currency of choice.

Mrs P has a Kia Sorrento that does 30 to the gallon.We now live in the boonies,so I'm pondering changing her 7 year old(jsut out of warranty for a 3 year old which does better mileage(47 mpg mixed).Middle class problem I know.

ALos my 11 plate Saab will need replacing and am wondering about what cars you've heard are relaible/good on fuel/cheap to repair?Ideally an estate or kia sportage type size.I normally buy 3-4 years old at point of max steepness in depreciation curve and then run it for to 200,000 miles.

I know nothing about cars except that the mechanic I know is hoenst but not cheap,but all he sells are saabs.

Any ideas/reccomendatiosn gratefully received TC but no pressure.

What's your view on these hybrids? Are they worth the bother?Or is ti best to get hte latest

I’m sticking with my 55 plate SAAB Aero.  105K miles and the little garage I use specialises in Saabs and they know their stuff.  Not particularly cheap or expensive but then nothing expensive has ever needed fixing.  It’s cheap quality motoring really and cost me £2500 in 2015 

[Noallegiance]

Huge £341 million deal for gas-fired power station at Saltend agreed (msn.com)

[sancho panza]

16 minutes ago, Innkeeper said:

I’m sticking with my 55 plate SAAB Aero.  105K miles and the little garage I use specialises in Saabs and they know their stuff.  Not particularly cheap or expensive but then nothing expensive has ever needed fixing.  It’s cheap quality motoring really and cost me £2500 in 2015 

Mine's got 190k on the clock.purrs away still .Paid £5200k back in 2015 when it had 110k on the clock.Brand new about £27k.I got it jsut as Saabs were struggling to be given away.Now they're getting colectors status according to the  mechanic,mine is still worth bugger all tho but it owes me nothing

 

[M S E Refugee]

China mocks G7 https://www.rt.com/news/558031-china-g7-brics-tweet/

[Lightly Toasted]

11 minutes ago, Noallegiance said:

Huge £341 million deal for gas-fired power station at Saltend agreed (msn.com)

The really interesting question for a hydrogen-fuelled power station (once all the technical problems have been solved!) is, where does the hydrogen come from?

 

... Equinor and SSE say they aim to convert the Saltend power station to use up to 30 percent hydrogen by 2027. Their long-term ambition is to eventually switch to an all-hydrogen system.

The idea is for hydrogen to be supplied to the power station from Equinor's existing H2H Saltend project, which aims to reform natural gas into hydrogen by carbon capture and storage. By making the power station an anchor customer, the companies would then roll out low-carbon hydrogen as an alternative to coal as an energy supply for industrial use elsewhere while producing greener power for the National Grid...

 

... sounds more like a climate-driven project, than an energy-security-driven project.

[Loki]

5 minutes ago, Lightly Toasted said:

The really interesting question for a hydrogen-fuelled power station (once all the technical problems have been solved!) is, where does the hydrogen come from?

 

... Equinor and SSE say they aim to convert the Saltend power station to use up to 30 percent hydrogen by 2027. Their long-term ambition is to eventually switch to an all-hydrogen system.

The idea is for hydrogen to be supplied to the power station from Equinor's existing H2H Saltend project, which aims to reform natural gas into hydrogen by carbon capture and storage. By making the power station an anchor customer, the companies would then roll out low-carbon hydrogen as an alternative to coal as an energy supply for industrial use elsewhere while producing greener power for the National Grid...

 

... sounds more like a climate-driven project, than an energy-security-driven project.

It's all bollocks.  The carbon atom is what makes hydrocarbons work as well as they do in general (Storage, energy density etc)

[HousePriceMania]

23 minutes ago, Cattle Prod said:

I've had an Outlander hybrid for three years. 6 years old now, 65k miles, hasn't missed a beat. Love the extra torque the electric motor adds, and is a great hedge against fuel prices. We are somewhat in the boonies too so most of our drives are local around 15 miles a day. Can do all that on electric from my fixed priced tariff till late 2023. For these reasons, I suspect, it's still pretty much worth the 15k I paid for it three years ago.

Can't lose on cars

[mcdongle]

12 hours ago, DurhamBorn said:

 

 

Henderson Asian Income Investment Trust.I love their top 10,oil,materials telcos in Asia

	% of Fund
Sinopec	4.34
China National Building Material	3.82
Rio Tinto	3.82
Macquarie Group	3.75
BHP Group	3.63
Samsung Electronics	3.49
Santos	3.44
Macquarie Korea Infrastructure Fund	3.43
Telkom Indonesia Persero	3.26
Digital Telecommunications Infrastructure Fund Inc THB

This is quoted on the NZX.. Will have to take a look

[wherebee]

This will pass below the radar for most, I think.  But it's a great example of the change in the landscape - this bank elimination seems ordered (and well done to those involved for being well prepared).  How many upcoming collapses will not be?

"Australia’s first consumer online-only bank, Volt, will shut down and return $100m funds to 6000 customers.

The neobank has told customers to withdraw their savings by July 5. It intends to hand back its license, granted by the Australian Prudential Regulation Authority citing a lack of available funding for continued operations

In a statement, Volt said the decision was taken by its board “having reviewed recent progress in capital raising initiatives globally which have been unsuccessful in raising sufficient additional funds to support the business”.

[tank]

4 hours ago, HousePriceMania said:

Look at the actions of the FED, Bow and ECB since 2008.

Chances are they're going to go -ve and QE ASAP. 

That does signal the end of the dollar and most likely the £. 

The central bankers could of course have a different plan, 1930s style depression, but their actions, their history, their response at every turn, their lies all point to more of the same. 

Once you pop you can't stop. 

I think the question is only how long we have before we all start buying physical assets, food supplies and baseball bats 

 

I've got no doubt the Federal Reserve will QE again and shortly if the S&P 500 starts really tanking, but every other major CB will do the same thing and to a greater degree, so the effect will be minimal.

The world will continue to need a reserve currency and I can't see anything replacing the US$. 

The US still has the biggest and most technologically advanced military in the world, a stable legal system and a developed economy. Only a complete fool would write them off, imo. They've had a dribbling, dementia ridden, old man in the WH before and survived. The US President is just a political figurehead and isn't really in charge.

[tank]

13 hours ago, Yadda yadda yadda said:

Interesting to read that. My colleagues are all older than that. Quite typical, I think, of large swathes of industry where technology has continually reduced the requirement for workers and therefore eliminated recruitment. Most own their own homes and those that don't have secure, cheap tenancies.

These people have no empathy for younger workers. This might change as some have kids coming up to working age. I have to bite my tongue when told some of the subjects chosen for university. They all have lefty views about more spending on welfare. Largely because they, through owning property for 15 years plus, have low fixed costs and therefore more spare income than most doleys.

I'm going to rephrase that last paragraph. They do have empathy. They see that house prices are too high and that student debt is a curse. What they don't do is see the bigger picture and how all these policies are linked. You can't give underemployed people a good standard of living over the long term without removing quality of life from at least some of the workers. They don't even realise that their standards of living would be higher if there was less welfare. There is no depth of thought. All they do is see a problem and say "fix it". No consideration of the effects of that action.

The biggest beneficiaries of large scale welfare spending are not the tax credit Karens and Shazzas, certainly not the £75 a week doleys.

It's those who own and rent property, plus all manner corporate rentiers from media to fast food. Shazza rents using HB, she then spends every penny she gets getting daily food deliveries, her Sky, Netflix etc and so on. She saves nothing. No wonder the government are keen to hand her more. Despite what Johnson and Sunak say in public, what they really want is to inflate the debt away.

Not a popular view on here, but a lot of the older folk you refer to are very aware that they benefit from the welfare spend as a large chunk of it is funneled into the property market via HB. It sets a floor under rents and, in turn, pushes up the value of property across the board. Most people over 50 who work and own property have benefited from HB even if they don't BTL. Many will own housing that is now x2/3/4+ what they paid. Remove the bennie prop and the housing market collapses.

[Virgil Caine]

7 hours ago, CannonFodder said:

I think now is the fed's choice to protect the economy (pivot) or protect the dollar's rep (dont ease into an inflating dollar). As reputation is faith and dollar is fiat - this is really protecting the dollar

On top of freezing russia afganistan and Venezuelan reserves, inflating away dollar debt would kill off foreign buyers of the debt. It is just too much.

I think fed want to protect dollar but midterms in november and pressure will be immense. To protect dollar is to cause domestic recession.

We shall see. I may be wrong. My bets are on them pivotting

 

The USA most powerful weapon is not their army, navy or airforce but the dollar. It was famously described by one American diplomat as “their currency and your (ie the rest of the world’s problem”. Protecting its value and status is much more important to the US than the S&P.

While I can see the Fed passing interest rates rises later this year I don’t see them dropping back to the levels seen after the GFC or during the pandemic. Historically interest rates operated mainly in a 2-6% band and that is where they are probably going to go eventually and stay so those dreaming of helicopter money rescuing them are likely to be disappointed.

As for a recession that is happening already due to the hike in the price of energy causing demand destruction. I don’t think the recent rise in US interest rates has yet fed through to most real world business decisions outside the stock market.

[ThoughtCriminal]

9 hours ago, sancho panza said:

 

Mrs P has a Kia Sorrento that does 30 to the gallon.We now live in the boonies,so I'm pondering changing her 7 year old(jsut out of warranty for a 3 year old which does better mileage(47 mpg mixed).Middle class problem I know.

ALos my 11 plate Saab will need replacing and am wondering about what cars you've heard are relaible/good on fuel/cheap to repair?Ideally an estate or kia sportage type size.I normally buy 3-4 years old at point of max steepness in depreciation curve and then run it for to 200,000 miles.

I know nothing about cars except that the mechanic I know is hoenst but not cheap,but all he sells are saabs.

Any ideas/reccomendatiosn gratefully received TC but no pressure.

What's your view on these hybrids? Are they worth the bother?Or is ti best to get hte latest

You really can't go wrong with a Kia. My mother has had her Kia Soul for 9 years and literally not one problem. I know loads of people with Sorrentos and they're the same, nothing but good things to say. 

 

Hybrids are very much a mixed bag. Some are genuinely clever and worth the money: range rover getting almost 50mpg out of theirs is nothing short of miraculous, but for the most part they're just hype.

 

What about a Kia Sportage? 55 mpg if you go front wheel drive version.

 

https://www.copart.co.uk/lot/46260242/clean-title-2020-kia-sportage-2-sandwich

[Virgil Caine]

19 minutes ago, Cattle Prod said:

The Americans have had no problems letting the DXY drop to 80 in the past. It's good for exports, and will be particularly attractive as they reshore industry. I agree with you that it's a powerful weapon that they will defend at the point of a gun barrel, but that is for the use of it rather than the value. The relative value of it is easy to control, keeping rebellious EM countries using it is much more difficult.

Their number 1 ally in Asia is about to merrily bankrupt itself too I suspect, without some help from a weaker dollar. Dollar down for me, and the Fed has no dollar mandate.

We shall see. The strong dollar was a key factor in bankrupting the Soviet Union in the 1980s when DXY went to 160. Given the current geopolitical situation I think the US administration will want the DXY rate higher.  The Feds political mandate is to fight inflation while keeping as near full employment as possible.  I suspect US interest rates are going over 2% and they won’t be coming back down below that level again for a long time.

[Axeman123]

8 hours ago, HousePriceMania said:

The question is...are the banks finally bailed out ready for the 2008 crash? 

My limited understanding is that banks are shrivelled to a nub of thier former selves, having been regulated out of all the lucrative risky stuff that got them in trouble in 2008, and no longer represent a systemic risk. Non-bank entitites are now doing all the systemically risky stuff that banks used to, and are completely unregulated.

Whether that means these non-bank entities are not systemically important and can be allowed to implode or alternatly that governments will have to bail-out hedge funds etc remains to be seen.

[AWW]

4 hours ago, tank said:

Not a popular view on here, but a lot of the older folk you refer to are very aware that they benefit from the welfare spend as a large chunk of it is funneled into the property market via HB. It sets a floor under rents and, in turn, pushes up the value of property across the board.

I don't think property values bear any relation to rental values. Flats in London/SE yield 2-3%.

Plenty of other government interventions have pushed up prices, but HB isn't one of them.

IMHO of course.

[ThoughtCriminal]

Someone's bluff is going to get called very soon. And I dont think Putin will blink.

[Errol]

Putin doesn't bluff. 

Why should Russia supply unfriendly nations with anything? 

Let's hope that the West can survive without any of Russias natural resources ...

[Axeman123]

46 minutes ago, Virgil Caine said:

We shall see. The strong dollar was a key factor in bankrupting the Soviet Union in the 1980s when DXY went to 160. Given the current geopolitical situation I think the US administration will want the DXY rate higher.  The Feds political mandate is to fight inflation while keeping as near full employment as possible.  I suspect US interest rates are going over 2% and they won’t be coming back down below that level again for a long time.

The strong dollar is crippling allies, and making them vulnerable to Russian influence. Nations using the Rouble are getting discounted oil and gas, and Putin can merrily dispense that almost without limit. The US administration might want all sorts of things, but I imagine the military industrial complex will want a lower dollar.

0.75% rise to 2.5% at the June fed meeting is locked on IMO, but then for "political calendar" reasons we will see a pause until 2023. Powell is talking about raising rates past the "2.5% neutral rate", which seems to me to be setting the scene for a pause at that level to reassess. Powell is getting his rises in while he can, knowing he will be in metaphorical handcuffs for six months after.

[geordie_lurch]

For those worrying that you aren't able to time or get ahead in these markets

 

[HousePriceMania]

1 hour ago, Virgil Caine said:

We shall see. The strong dollar was a key factor in bankrupting the Soviet Union in the 1980s when DXY went to 160. Given the current geopolitical situation I think the US administration will want the DXY rate higher.  The Feds political mandate is to fight inflation while keeping as near full employment as possible.  I suspect US interest rates are going over 2% and they won’t be coming back down below that level again for a long time.

Its going to be one or the other... Like I said, we'll find our soon, by end of year. If they keep hiking 0.5%, 4% is coming... Or 0.

[Bricormortis]

10 hours ago, Bobthebuilder said:

Invest in a vacuum cleaner while you're at it.