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

[Errol]

7 hours ago, jamtomorrow said:

I thought Russia famously honoured its contractual obligations e.g. delivering oil/gas to the West all through the Cold War? 

It does. Russia is Europe's most reliable gas supplier and has been for decades now.

Supply to Hungary has merely been changed due to a new deal that Russia agreed with Hungary. Ukraine is irrelevant to that deal and has no god-given right to Russian gas transit. The Ukrainians will slowly lose virtually all transit of Russian gas - but then surely they expected that?

 

Hungarian Prime Minister Viktor Orban on Friday dismissed neighbouring Ukraine's criticism of a long-term gas supply agreement signed with Russia's Gazprom (GAZP.MM), saying he could not take Kyiv's viewpoint into account.

Under the terms of a long-term supply deal with Budapest that kicked in on Friday, Gazprom will no longer ship its gas to Hungary via Ukraine, but will send it via Serbia and Austria instead.

https://www.reuters.com/business/energy/hungary-pm-dismisses-ukraine-criticism-russian-gas-deal-2021-10-01/

[sancho panza]

10 hours ago, ThoughtCriminal said:

Probably a lot closer to the truth than the official number. 

This thread is one of the few places I've read where there's any real assessment of the effectiveness of the inflation measures that are used.The other two that spring to mind are Shaun Richards and Wolf Richter.

Aside from the obvious exclusions such as house prices,pensions( ie cost of buying a pounds worth of pension income),the one size fits all measures like CPIH/RPI also fail to highlight the differences betwen different socio/income groups.On that latter point,food and fuel form a much larger part of hosuehold spending for lower income groups.

It wouldn't surprise me if 14% were about right for those.CPI doesn't include asset prices but msot likely in Volcker's time,owner's equivalent rent(one of the biggest distortive factors) was likely much lower.

 

9 hours ago, DurhamBorn said:

I think inflation in lifes essentials is running at about that level.Interesting though some food is seeing no increases,mostly fresh veg etc and things people use to cook themselves.Im pleased about that.The inflation seems to be more in imported items and more labour intensive.I think housing is going to take the hit here,both rents and prices.Usually very sticky,but looking at the structure of things i think more people will live per house to save money.

I do wonder how long that will last.As you may know I go to Leicester market most weeks to teach the kids to weigh quantity/quality in soft commodities and to learn how to live cheaply.I've been surpirsed we've not seen more food inflation tbh.Especially given the below.

It's interesting that some farmer's have held off ordering in the hope prices will drop before 2022.........a strategy which could come back on them.

as ever thanks for steering some of us into bottom ladders on Mosaic with single digits DB...my thanks(and from my kids too)

https://www.fwi.co.uk/business/markets-and-trends/input-prices/fertiliser-prices-still-climbing-in-tricky-market

 

Nitrogen prices are continuing to climb due to tight supply, rising gas prices and some panic-buying, say traders.

Urea is available in small amounts, but the price has increased by £100/t in 10 days, to £540-£560/t for October/November delivery on farm, depending on location and proximity to ports.

Imported ammonium nitrate supply is extremely limited as more plants in Europe continue to either close or curtail ammonia production. Values are at £465-£490/t for October/November on farm where tonnage is available.

The closure, due to record gas costs, sent shockwaves through the food supply chain, which is dependent on the carbon dioxide by-product for many uses.

The government’s three-week intervention is about halfway through and there are some concerns that the same problems will exist once this period ends.

The implications of the substantial hike in fertiliser prices are likely to last well into next season, but actions can be taken on farm to minimise the effect on a business, said consultant Promar International.

Emma Thompson, information and insights manager, said: “[Defra secretary] George Eustice suggests carbon dioxide prices need to rise by 500%, so a question mark remains about CF remaining open. Even if they do, fertiliser prices are unlikely to fall back.”

Some farmers had postponed ordering fertiliser due to higher prices in the summer, meaning only about 50% of orders have been placed for 2022 crops compared with normal levels, she said.

For the average business, the spend on fertiliser could be more than double last year’s at the same usage rates.

Ms Thompson advised farmers to get soil analysed and recalculate fertiliser requirements based on soil indices, as well as taking a phosphorus and potassium  holiday on some fields, particularly those that have previously had high applications of slurry or muck.

 

https://www.thetimes.co.uk/article/fertiliser-shortage-will-send-food-prices-shooting-up-hx73b3ssc

Fertiliser shortage ‘will send food prices shooting up’

Food prices are likely to soar next year after record-high gas prices forced fertiliser manufacturers to halt production, experts have warned.

Farmers face paying sky-high prices for fertiliser and may struggle to secure supplies at all, raising the prospect of weak crop yields that will affect food supplies, according to industry specialists.

[sancho panza]

44 minutes ago, Errol said:

It does. Russia is Europe's most reliable gas supplier and has been for decades now.

Supply to Hungary has merely been changed due to a new deal that Russia agreed with Hungary. Ukraine is irrelevant to that deal and has no god-given right to Russian gas transit. The Ukrainians will slowly lose virtually all transit of Russian gas - but then surely they expected that?

 

Hungarian Prime Minister Viktor Orban on Friday dismissed neighbouring Ukraine's criticism of a long-term gas supply agreement signed with Russia's Gazprom (GAZP.MM), saying he could not take Kyiv's viewpoint into account.

Under the terms of a long-term supply deal with Budapest that kicked in on Friday, Gazprom will no longer ship its gas to Hungary via Ukraine, but will send it via Serbia and Austria instead.

https://www.reuters.com/business/energy/hungary-pm-dismisses-ukraine-criticism-russian-gas-deal-2021-10-01/

Do you think orban is getting ready to heave the EU over the side Errol?Seems to have a lot more common interests with Putin than Macron/german centre left etc?

 

In other news-Holger is on it.Quite how German real yields isn't bullish for gold I don't know? It feels like the end is nigh for the eurozone.If not soon,then quite soon.

[MrXxxx]

8 hours ago, HousePriceMania said:

Putin, not a man to mess with...

https://www.boston.com/sports/new-england-patriots/2020/09/10/robert-kraft-putin-super-bowl-ring/

I don't care how powerful the politician/world leader, there is no way they are `stealing` my ring! :-o

[planit]

We have had the S&P500 being jittery with some people calling a rolling over (tech stocks probably have)

We have had an 'earthquake' hit the energy markets which have sent things ricocheting into next year (inflation, fertilizer prices, gas/coal shortage, winter heating problems etc).

 

This was an inflection point which has now been absorbed to some extent (ie we have seen a move in oil and other stocks).

The question is where this takes us in the next 2 months (Oct/Nov).

Interest rates? -> Bonds? -> Gold? / Oil? / Commodities?

 

I want to come up with an investment plan over the next week, does anyone have any ideas or input and I will incorporate them into my thinking and post when I have come up with something?  If it can benefit someone then great.

 

I realise my outlook is uber-short-term for some people on here (or glacially slow for @nirvana) but I like to have a background against which I can make investment decisions.

Thanks 

[Harley]

9 hours ago, Cattle Prod said:

I have to disagree there, your flow chart correctly shows domestic production meeting less than half of demand, no matter how you slice it the UK is massively dependent on imports. With no stored reserves. It's beyond idiotic, and strategically dangerous imo.

Also, domestic production has declined since 2020, and will continue to do so.

Doesn't most come grom the tankers in Milford Haven by pipeline?  I understood that was the strategy, to go big on LNG tanker imports from the Middle East.

[Harley]

9 hours ago, reformed nice guy said:

They used to say that Italians believe in God, the Germans believed in the Deutchmark.

The Euro was just a mechanism by Mitterand to force the Germans to submit to Euro Federalism. What can the rest of the Eurozone do if Germany stops playing along?

Germany might be getting a bit uncomfortable now the UK's gone.  Not only the finance stuff but also France wants the EU to classify nuclear as renewable (of course!) in the latest EU edict due out any time now but Germany doesn't.

[Harley]

9 hours ago, DurhamBorn said:

.....our political and administrative classes .

Correction, goes deeper than the polos, to the guys behind the curtain.  Polos are off on one of their own while the rest work away on their agendas, badly.  And that cohort goes well beyond the civil service.

[Hancock]

2 hours ago, Errol said:

It does. Russia is Europe's most reliable gas supplier and has been for decades now.

Works the other way also, in that if Russia tries to be too clever it'll push EU nations into alternatives  (i.e. nuclear)

47 minutes ago, Harley said:

Germany might be getting a bit uncomfortable now the UK's gone.  Not only the finance stuff but also France wants the EU to classify nuclear as renewable (of course!) in the latest EU edict due out any time now but Germany doesn't.

Sounds like a good plan if it shuts up the eco warriors.

[AWW]

10 hours ago, Cattle Prod said:

I have to disagree there, your flow chart correctly shows domestic production meeting less than half of demand, no matter how you slice it the UK is massively dependent on imports. With no stored reserves. It's beyond idiotic, and strategically dangerous imo.

I'm starting to think that a couple of hundred quid on a Calor gas fire and a 15L bottle of butane would be a rather wise insurance policy for the coming winter. And I'm not into the "prepper" scene at all.

[reformed nice guy]

From Dominic Cummings newsletter:

Quote

People I know who were ahead of the game on covid, including some who work(ed) in or around No10 and worked on contingency plans in 2020, stockpiled some meat, bought oil for generators, petrol etc in the week of 13/9. I advised family and friends to do the same after checking with some people in government who said things like ‘usual nightmare PM farce’. I sold all my shares on Sunday 19/9. (I’ll write about why shortly, it’s partly connected to this issue but only partly.)

 

[Harley]

1 hour ago, AWW said:

I'm starting to think that a couple of hundred quid on a Calor gas fire and a 15L bottle of butane would be a rather wise insurance policy for the coming winter. And I'm not into the "prepper" scene at all.

I remember rushing around getting propane, etc over a year ago.  It seems I'm often early.  And I'm still prepping.  It's never over!

[JMD]

2 hours ago, sancho panza said:

It's interesting that some farmer's have held off ordering in the hope prices will drop before 2022.........a strategy which could come back on them.

as ever thanks for steering some of us into bottom ladders on Mosaic with single digits DB...my thanks(and from my kids too)

https://www.fwi.co.uk/business/markets-and-trends/input-prices/fertiliser-prices-still-climbing-in-tricky-market

 

Nitrogen prices are continuing to climb due to tight supply, rising gas prices and some panic-buying, say traders.

Urea is available in small amounts, but the price has increased by £100/t in 10 days, to £540-£560/t for October/November delivery on farm, depending on location and proximity to ports.

Imported ammonium nitrate supply is extremely limited as more plants in Europe continue to either close or curtail ammonia production. Values are at £465-£490/t for October/November on farm where tonnage is available.

The closure, due to record gas costs, sent shockwaves through the food supply chain, which is dependent on the carbon dioxide by-product for many uses.

The government’s three-week intervention is about halfway through and there are some concerns that the same problems will exist once this period ends.

The implications of the substantial hike in fertiliser prices are likely to last well into next season, but actions can be taken on farm to minimise the effect on a business, said consultant Promar International.

Emma Thompson, information and insights manager, said: “[Defra secretary] George Eustice suggests carbon dioxide prices need to rise by 500%, so a question mark remains about CF remaining open. Even if they do, fertiliser prices are unlikely to fall back.”

Some farmers had postponed ordering fertiliser due to higher prices in the summer, meaning only about 50% of orders have been placed for 2022 crops compared with normal levels, she said.

For the average business, the spend on fertiliser could be more than double last year’s at the same usage rates.

Ms Thompson advised farmers to get soil analysed and recalculate fertiliser requirements based on soil indices, as well as taking a phosphorus and potassium  holiday on some fields, particularly those that have previously had high applications of slurry or muck.

 

https://www.thetimes.co.uk/article/fertiliser-shortage-will-send-food-prices-shooting-up-hx73b3ssc

Fertiliser shortage ‘will send food prices shooting up’

Food prices are likely to soar next year after record-high gas prices forced fertiliser manufacturers to halt production, experts have warned.

Farmers face paying sky-high prices for fertiliser and may struggle to secure supplies at all, raising the prospect of weak crop yields that will affect food supplies, according to industry specialists.

SP - I notice AMN and S04 are on your list, are they still considered purely speculative, re ongoing problems, share dilutions/refinancing etc? I don't own them (I do own some of the other established ones), but am thinking they might now start to attract investor attention given the global fertiliser sector disruptions? If so perhaps now might be opportune to have a punt while at low low price? 

[King Penda]

7 hours ago, ThoughtCriminal said:

Was someone on here singing the praises of CNOOC recently? 

 

Im seeing lots of people recommending it on twitter. Zero debt, good dividend, undervalued etc. 

Shoeshine moment 

[Sugarlips]

15 hours ago, DurhamBorn said:

I got my dad on a three year fixed last year,he yarped a bit it was a tenner a month more,but he is happy now.

Would you do the same today with a fixed rate mtg?

[Harley]

5 hours ago, reformed nice guy said:

From Dominic Cummings newsletter:

 

"I sold all my shares on Sunday 19/9. (I’ll write about why shortly, it’s partly connected to this issue but only partly.)".

I'm intrigued to know more.  So he sold his stocks last month (obviously not actually on a Sunday!).  I wonder what he's thinking or has been told.  Or if he's full of shite.  I could never decide in the past.

PS:  Is that quote part of his paid for newsletter?

[MrXxxx]

8 hours ago, Hancock said:

Works the other way also, in that if Russia tries to be too clever it'll push EU nations into alternatives  (i.e. nuclear)

Sounds like a good plan if it shuts up the eco warriors.

The problem here is that nuclear energy provision needs long term planning, and most governments are bereft of that/it doesn't fit with their short term tenure...by the time the nuclear is online they or the issue has moved on.

[nirvana]

15 hours ago, stoobs said:

Then the pound stops working and is replaced by a new currency, the Johnson Independent Zloty.

Now you sell your asset for 10 JIZ

don't get involved with the JIZ or anything to do with the cnuts in the guvment...convert to other crypto and make it disappear 

[MrXxxx]

35 minutes ago, nirvana said:

don't get involved with the JIZ or anything to do with the cnuts in the guvment...convert to other crypto and make it disappear 

or silver? :-))))

[jamtomorrow]

12 hours ago, Errol said:

Russia is Europe's most reliable gas supplier and has been for decades now.

Agree with that, but that doesn't mean it should be used as the sole basis for decision-making by Europe/UK when it comes to energy security.

10 out of 10 inductivist Turkeys would vote for Christmas based on extrapolating prior observations.

Policy makers need to look at the intetests and incentives that have driven that approach, because we're about to go through the kind of structural change that only happens once every few generations.

[nirvana]

14 minutes ago, MrXxxx said:

or silver? :-))))

 

[Transistor Man]

51 minutes ago, MrXxxx said:

The problem here is that nuclear energy provision needs long term planning, and most governments are bereft of that/it doesn't fit with their short term tenure...by the time the nuclear is online they or the issue has moved on.

100%.

France are the only country to ever fully commit to nuclear power.

Facing the 1973 Oil Crisis, the decision was made to go full nuclear for electricity generation, with no public or parliamentary debate. 

France had considerable domestic heavy industry, and they built 56 reactors over the next 15 years. 

The construction of the latest reactor, Flamanville 3, hasn’t been going too well though. Started in 2006, EDF are hoping to turn it on in 2023. 

I think you have to really commit to building these things, that’s how you get good at it.

The mistake the UK made was not commissioning the consortium that built Sizewell B, to build another 4 immediately. They’d finally got everything right, by that point. 

 

 

 

[ThoughtCriminal]

15 hours ago, sancho panza said:

I suggested it on about page 500 of the first thread and was rapidly brought to my senses by @Cattle Prod who said you couldn't trust the Chinese accounts/asset values/stated reserves etc and jsut to stick to the big US/EU oilies.

Evergrande suggests he was probably right to be so circumspect.

 

Ok, but when it 100 bags i insist we all remind CP of it with that annoying air of "We'd all be gazillionaires if it wasnt for Mr Oil expert over there". 😆

 

Only joking of course, CP 😉

[ThoughtCriminal]

"So we ran out of coal. For our coal fired power station. Why you gotta make a big fucking deal out of it!" 🤡🤡🤡

[ThoughtCriminal]

At some point the west is going to have to have this moment. Or just burn.