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

[planit]

1 hour ago, Harley said:

I was bought birthday cards with this on the front three times, twice one year and once the following year, not sure why 

 

[ThoughtCriminal]

Just to lighten the mood. 

 

Have to laugh or you'd cry.

[Noallegiance]

8 minutes ago, ThoughtCriminal said:

Just to lighten the mood. 

 

Have to laugh or you'd cry.

Tear in my eye thinking that this is not the country my Grandad flew in planes and lost friends to protect.

[Hancock]

12 minutes ago, Noallegiance said:

Tear in my eye thinking that this is not the country my Grandad flew in planes and lost friends to protect.

Should have left France to the Germans.

[stoobs]

3 hours ago, AWW said:

I agree - give them the choice. When we can get at the cash in the LISAs we've opened for the kids, it'll be up to them what they use it for. If they wanted to, they could even put it in a SIPP at that point, so they'll have had a 25% top up on the way into the LISA and can then have another 20% (or 40, or 45, depending on their tax band) when it hits their SIPP.

I thought you had to be 18 to open a LISA?

Anyway, regarding kids and money we've done a combo of Child Trust Fund and Junior SIPPs, I'm aiming for about half in each.

Then at least they can only piss half of it up the wall when they hit 18 and get control.

[Harley]

39 minutes ago, planit said:

I was bought birthday cards with this on the front three times, twice one year and once the following year, not sure why 

 

  It's my favourite cartoon.  I just go through life being reminded of it.  Gives me a useful chuckle.

[JMD]

6 hours ago, Cattle Prod said:

I listened to his interview carefully (thanks all for posting and highlighting), and he said the same thing I noted here before: the price of oil reflects all the information in the market, it's a discounting mechanism. So his call on high for the cycle is based on that information. Two things on that, he doesn't mention what time period the cycle is he's referring to, which is annoying. And second, his call at $85 was actually about $15 over his original call. And that extra $15 to me was due to information that wasn't in the price coming into it (gas to oil substitution, doubts on OPEC+ spare capacity, underperformance by OPEC members). He's absolutely right that there is no point using today's fundamentals to make decisions on where the price is going, which is why reading oilprice.com etc etc is pointless. All my work has been to try and get ahead of the bow wave of information. FWIW, I've not shared anything insider here, I've used public sources of information. A good analyst at an investment firm with all that Bloomberg data should be making tens of millions off this.

He even said to paraphrase "if fundamentals are impacted, and supply stays tight, I could be wrong, it could go higher. But from what I see now odds see this thing working lower".

I have to say I was very, very pleased to hear this snippet of information. I have been very uncomfortable being on the other side of this trade to him, as I take what he says seriously. I don't have the tools and roadmaps that he or @DurhamBorn does, so I'm somewhat in the dark on macro trends. So it was great to hear that his oil calls are to do with supply and demand information as presently available, and I'm fairly confident I've a better handle than most people on supply information not currently in the price. 

For the information as is prsently available, I'd be very happy to see it work lower for another 15% pullback, as DH suggests, and I'd reevaluate what information I think is not in the price at that point. But like @sancho panza, I'm still currently long, and 10%-15% pullbacks backtests well in bull markets. And as Sancho often points out, oil tends to spike into crashes, not pull back slowly into them. If there is a bust next year, I suspect oil will play a part in busting it. If there is a bust with oil back to $25, it'll be a generational buying opportunity. If the crap gets cleaned out of the financial system, there will be no more impediment to a long bull run, because the supply/demand problems we are getting a taste of now aren't going to go away because of a financial deleveraging event. 

In other recent interviews I've heard DH make same oil price calls but he was more explicit on his time frames. He is talking about between now and the BK. He thinks most other commodities will spike before the BK and so will be participating in the general market meltup. 

[Bricormortis]

21 minutes ago, Hancock said:

Should have left France to the Germans.

Lets send Macron the bill.

[Harley]

31 minutes ago, Noallegiance said:

Tear in my eye thinking that this is not the country my Grandad flew in planes and lost friends to protect.

No need to go too far back in time.  A lot of shite has happened, and continues to happen, since the war to protect the good folk as they dance away.

[BurntBread]

I thought it was interesting (if my memory serves aright) that DH has upped his oil target for later in the decade from $300 to $400. He also still has an inflation target for later in the decade quite a lot higher than DB's, which is worrying.

I think he considers we are still in the "old" cycle, and will be until the top of the melt-up, while DB typically talks about us having started the new distribution cycle, which means that I have to think twice when Hunter talks about "highs for this cycle" in a certain sector. That or he is using "cycle" to refer to both decadal changes and some shorter, unspecified (business?) cycle. He has always been clear that when he is talking about the 40 year disinflation, it's a "super-cycle".

Anyway, it's generally pretty clear from the context when he means "end of the decade" versus "next year", but I still have to pay attention!

[AWW]

1 hour ago, stoobs said:

I thought you had to be 18 to open a LISA?

Anyway, regarding kids and money we've done a combo of Child Trust Fund and Junior SIPPs, I'm aiming for about half in each.

Then at least they can only piss half of it up the wall when they hit 18 and get control.

You do. They're in mine and my mrs' names. We can access at 60. Kids will be the right age to need some cash and old enough not to spunk it.

[ThoughtCriminal]

 

 

Well that's........."interesting".

 

That must be over a fifth of the workforce.

[AWW]

Westerners realising there's no point working.

[JMD]

2 hours ago, Harley said:

 

Harley, please stick to posting the Glen Larson cartoons... These days I find i no longer think Nazi references funny, ironic, nor paradoxical!!!

[Hancock]

1 hour ago, Bricormortis said:

Lets send Macron the bill.

If Bill is a young black boy he'll overjoyed!

[JMD]

28 minutes ago, ThoughtCriminal said:

 

 

Well that's........."interesting".

 

That must be over a fifth of the workforce.

I'd be very interested in knowing what jobs these early US retirees were doing. Does anyone know some details on this? I know the reasoning about people opting out early because work no longer pays but still think an analysis would be very instructive.

[Hancock]

.

[feed]

12 minutes ago, JMD said:

I'd be very interested in knowing what jobs these early US retirees were doing. Does anyone know some details on this? I know the reasoning about people opting out early because work no longer pays but still think an analysis would be very instructive.

https://cointelegraph.com/news/survey-finds-lower-paid-workers-are-quitting-jobs-thanks-to-crypto-profits

Pinch of salt of course.

But if these are low waged / low skilled, the question will be when do they go back to the hospitality industry or driving.   

[Noallegiance]

5 minutes ago, feed said:

https://cointelegraph.com/news/survey-finds-lower-paid-workers-are-quitting-jobs-thanks-to-crypto-profits

Pinch of salt of course.

But if these are low waged / low skilled, the question will be when do they go back to the hospitality industry or driving.   

So vast chunks of these people have won enough to cover the rest of their working lives have they?

None of these people are gonna thing "Shit!" in a few years time when the cash is gone, jobs are fewer and cost of living is well above what it is today only to discover that wailing to the government yields very little return?

Stupid just got a whole lot more stupider.

We surely must be nearing the bust that hurts the most market participants possible.

Of course, it's a wonderful crypto-pump story.

[feed]

Just now, Noallegiance said:

So vast chunks of these people have won enough to cover the rest of their working lives have they?

None of these people are gonna thing "Shit!" in a few years time when the cash is gone, jobs are fewer and cost of living is well above what it is today onlt to discover that wailing to the government yields very little return?

Stupid just got a whole lot more stupider.

We surely must be nearing the bust that hurts the most market participants possible.

These are pay check to pay check people.  

Maybe they got enough for a few months off or a year.  But why would they care, if all they ever worked was min wage, it's not like they put their career on hold.  There is always going to be min wage work.  

[Animal Spirits]

1 hour ago, JMD said:

I'd be very interested in knowing what jobs these early US retirees were doing. Does anyone know some details on this? I mean in the current economic climate i think the answer would be very instructive.

BLS Jolts, but it doesn't provide age bands:

https://www.bls.gov/news.release/jolts.t04.htm

Some probably looked at their 401k's and the value of their property and decided to retire or work less and of course the Robinhood/crypto day traders...for now.

Some woman will have discovered they can earn far more selling videos and images of themselves on Only Fans to thirsty punters who should know better and put some of their spare cash into BATS.

We'll have to see if inflation or a significant correction turns that 401k into a 201k.

[DurhamBorn]

1 hour ago, BurntBread said:

I thought it was interesting (if my memory serves aright) that DH has upped his oil target for later in the decade from $300 to $400. He also still has an inflation target for later in the decade quite a lot higher than DB's, which is worrying.

I think he considers we are still in the "old" cycle, and will be until the top of the melt-up, while DB typically talks about us having started the new distribution cycle, which means that I have to think twice when Hunter talks about "highs for this cycle" in a certain sector. That or he is using "cycle" to refer to both decadal changes and some shorter, unspecified (business?) cycle. He has always been clear that when he is talking about the 40 year disinflation, it's a "super-cycle".

Anyway, it's generally pretty clear from the context when he means "end of the decade" versus "next year", but I still have to pay attention!

I think David is talking like we are still in the old cycle,but i think he is wrong on that.He is trying to say the cycles should be timed from market moves,but i think thats wrong.Cycles should be timed from movement in inflation for me.Its clear we entered the cycle,and i would see a BK or big downturn he expects as the first big head fake and shakeout along the way.How can he say its still the old cycle when the likes of Potash go 300% up.Just because down targets arent reached doesnt mean the cycle isnt underway.If the CBs hadnt monetised the debt the last 18 months we would of seen the biggest financial crash in human history.

David doesnt think a cycle has started until all the debt etc and swimming naked etc has been swept away.My roadmap says RPI in the UK will ping 1991 levels at 7% next.In 2 years inflation will remove 14% of buying power for UK people the same as it took the previous ten years to do.

[Bricormortis]

David Hunter..the rocky road to 400 dollar oil and an epic commodity boom.

 

 

[Axeman123]

41 minutes ago, DurhamBorn said:

I think David is talking like we are still in the old cycle,but i think he is wrong on that.He is trying to say the cycles should be timed from market moves,but i think thats wrong.Cycles should be timed from movement in inflation for me.Its clear we entered the cycle,and i would see a BK or big downturn he expects as the first big head fake and shakeout along the way.How can he say its still the old cycle when the likes of Potash go 300% up.

I totally see your point, however I imagine Dave is trying to be consistent with how the start and end point of historical cycles are normally discussed. The 1929 crash would likely have been a year or two into a new cycle using your framework, which would be very confusing to discuss when other economists would view it as the point of change.

I have also seen commentators claim that the March 2020 lows were it, and we have now started a new 5-7 year bull market with all previous excess purged! Dave certainly wouldn't want cherry picked tweets to appear to support something so out of tune with his own views.

[Harley]

2 hours ago, JMD said:

Harley, please stick to posting the Glen Larson cartoons... These days I find i no longer think Nazi references funny, ironic, nor paradoxical!!!

Fair enough, apologies, I'm certainly not laughing.  Maybe such actions should be called out and ridiculed, especially given the history, but not here.