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

[Hancock]

17 minutes ago, No One said:

I just read a headline that Evergrande is about to pop for real this time

 

Anyone got more info?

Owner sold 9% of his shares in Evergrande for $344 million the other day. Someone must think its going to survive.

[DurhamBorn]

A sector i think might be in play are the asset managers.Abrdn,M+G etc.They tend to get slammed in market sell offs,but its highly likely the sector in the UK will consolidate.The cycle also favours real assets and these companies have a toe hold in that,M+G is already quite big in this area,the likes of Vanguard etc have no experience or route to market for such things.They arent for people who are scared of drawdowns and maybe violent falls,but there is a good chance the sector could deliver 150%+ including divs over the cycle.Perhaps suited to big portfolios who are happy to accept the risk.DYOR etc.

[macca]

On 26/11/2021 at 13:12, Castlevania said:

HMRC don’t count it as a disposal for CGT purposes if you sell and then buy back the same asset within 30 days. It’s to stop people from crystallising CGT losses a day before the end of the tax year and then buying the same stock back the next day in the new tax year.

HMRC YOU SAY.. Those tax dodgers.. 

HMRC buildings sold to Tory donors in Tax haven.. All rent paid by HMRC is tax free.. You can't make it up! 

 

[DurhamBorn]

As @Cattle Prod shows above those JPM timings are coming closer to mine now.I see 2023 as when the natural gas squeeze gets going and into 24.That then puts even more pressure on nitrogen prices for ferts.I still think that $80 average for Brent is too low for the cycle,$110 more likely as a base.

The higher prices will force onshoring to quicken as transporting goods becomes one of the biggest costs.Of course that increases energy use in the short to medium term.

In most cycles almost all of the liquidity ends up in houses/land etc,but not this time.This time it is going to go to energy and all the basics and into extra production.

Maybe we should buy a unit and start producing fuel bricks from compressed sawdust ect.

[ThoughtCriminal]

Transitory narrative just got hit by a train

[planit]

1 hour ago, Cattle Prod said:

JPM has done a "bottoms up field by field" analysis of OPEC+ spare capacity. About time someone did, I did that three years ago, it's not very difficult. Anyway they see about 2.8m bbl spare capacity, about 40% below consensus. Now I'm sure they're talking their book, but they are the biggest bank in the world and are particularly influential in commodities. But this estimate looks accurate to me, and would mean 2022 is going to be a fun year, once we get past peak government stupidity that is. 

Omicron is a total red herring imo, but I'm beyond trying to predict how knee jerk governments are going to be about such things.

Edit:

They even mentioned how OPEC likes to cycle production to rest their reservoirs, they must have hired a geologist.

Also if they see a shortfall of 3mbbl/day by 2024, that would drain world inventories and cause price to rise into the hundreds of dollars and stay there till demand gets destroyed. Unfortunately, that means people starving too, it's disgrace how we've been cut off from investment capital by a) having loss making shale flood the market, a consequence of QE, and b) idiotic virtue signalling governments, pension funds and boards.

 

Nice find CP, thanks for posting. Really good to see evidence from other sources of your theory. They have taken on EIA's surplus supply figures* for early next year by the looks of it. When I analysed these I found they rely on US production increases to double from their current rate over the last 6 months (from 25kbpd/m to 50kbpd/m). I haven't seen any reason why this should suddenly happen so I feel the under-supply will last for the first 6 months of next year too unless prices rise to curtail demand.

* The OPEC surplus figures were comical so I consigned them to the bin.

 

 

12 minutes ago, DurhamBorn said:

As @Cattle Prod shows above those JPM timings are coming closer to mine now.I see 2023 as when the natural gas squeeze gets going and into 24.That then puts even more pressure on nitrogen prices for ferts.I still think that $80 average for Brent is too low for the cycle,$110 more likely as a base.

The higher prices will force onshoring to quicken as transporting goods becomes one of the biggest costs.Of course that increases energy use in the short to medium term.

In most cycles almost all of the liquidity ends up in houses/land etc,but not this time.This time it is going to go to energy and all the basics and into extra production.

Maybe we should buy a unit and start producing fuel bricks from compressed sawdust ect.

The markets should start to smell the supply squeeze a year before they happen so we could see the first signs earlier.

 

Normally when you analyse something you get some pluses and minuses but every time I have looked at energy it is all on the upside. Even Covid, that the market has seen as a negative, hides the shortfalls and masks the problems we are heading into pushing prices higher in the medium term. I can see a cascade coming down the line when airline travel comes back on line, oil prices shoot up, this knocks on to the next thing, increases electric car take-up, even bigger increases in electricity prices etc. 

 

 

 

[Majorpain]

15 minutes ago, ThoughtCriminal said:

Transitory narrative just got hit by a train

I wonder what's causing that? 

[HousePriceMania]

I know it's the daily express, but talk about scaring people.

https://www.express.co.uk/finance/city/1527443/global-financial-crisis-china-evergrande-global-collapse-china-news/amp

 

Global bubble BURSTS: Evergrande set for collapse causing 'great reset' worse than 2008

 

I more and more convinced that CV19 is all about the financial system. 

[HousePriceMania]

And, just for balance...

 

 

[Loki]

22 minutes ago, HousePriceMania said:

I more and more convinced that CV19 is all about the financial system. 

 

[JMD]

11 hours ago, Boon said:

With nothing happening I can see the indices up by 1% or so - there hasn't been anything new that is bad about Omicron and we could revert to a default case that orthodox science says that viruses mutate themselves to become more tranmissable but less deadly at the same time.

There is even one hiding in plain sight: the flu was the cause of multiple very bad pandemics in the past, but in recent years simply downgraded to 'one of those things' and most normal people certainly didn't bother with a vaccine. I don't see why covid should not eventually end up going the same way.

However I don't think this is satisfactory for governments, I just wouldn't be surprised if the news flow turns bad again in the week.

 

Omicron is an acronym of (plus surely a 'leading indicator of' !?!) --- Moronic!!!   ...just saying!

[JMD]

11 hours ago, Viceroy said:

https://www.armstrongeconomics.com/armstrongeconomics101/socialist/final-battle-with-socialism/
watch the video

He's mentioned in the past that SE Asia will be the least authoritarian and obviously he moved south to Florida 6 years ago cos his crystal ball computer forecast a shit show for the blue states (he's from New Jersey), plus much colder weather coming from global cooling. He says Republics are the worst form of Government as they always turn into oligarchies. The Roman Empire lasted 1000 yrs he puts down to them having no debt and no central bank.

I couldn't stand Armstrong the first time I started reading him.  He warned to stay away from Gold just as I had bought a chunk. Turned out he was right. He's not gonna be everyone's cup of tea but his macro is definitely playing out.

Today's ode to joy = 'This is a power play to prepare the world for this Great Reset where they get to default on all their debt while pretending, of course, they are doing this for you. Schwab's claim you will own nothing and be happy is a ploy. It is the government that needs to default on all its debt and to hide that objective, they will cancel all debt and pretend this is all for you - not them. The markets are taking notice and you can see that at the first hint of another mutation and Pfizer saying will have a new vaccine out in a matter of weeks forgetting long-term testing ensuring that they too will expire in 6 months necessitating a new vaccine for every mutation until our arms look like Swiss Cheese, is not going to be the future, Enough is enough and I have already warned that Pfizer stock will peak out in 2022 and will become a major short'

For sure Armstrong says some very interesting things and it's important to be aware of this thesis, especially now that we are nearing the end-game/reset stage.                                                                                                                              Viceroy, do you still stay away from the  precious metal sector? If I recall correctly you are mostly/exclusively (as a store of value?) into BTC/crypto I think?

11 hours ago, Viceroy said:

https://www.armstrongeconomics.com/armstrongeconomics101/socialist/final-battle-with-socialism/
watch the video

He's mentioned in the past that SE Asia will be the least authoritarian and obviously he moved south to Florida 6 years ago cos his crystal ball computer forecast a shit show for the blue states (he's from New Jersey), plus much colder weather coming from global cooling. He says Republics are the worst form of Government as they always turn into oligarchies. The Roman Empire lasted 1000 yrs he puts down to them having no debt and no central bank.

I couldn't stand Armstrong the first time I started reading him.  He warned to stay away from Gold just as I had bought a chunk. Turned out he was right. He's not gonna be everyone's cup of tea but his macro is definitely playing out.

Today's ode to joy = 'This is a power play to prepare the world for this Great Reset where they get to default on all their debt while pretending, of course, they are doing this for you. Schwab's claim you will own nothing and be happy is a ploy. It is the government that needs to default on all its debt and to hide that objective, they will cancel all debt and pretend this is all for you - not them. The markets are taking notice and you can see that at the first hint of another mutation and Pfizer saying will have a new vaccine out in a matter of weeks forgetting long-term testing ensuring that they too will expire in 6 months necessitating a new vaccine for every mutation until our arms look like Swiss Cheese, is not going to be the future, Enough is enough and I have already warned that Pfizer stock will peak out in 2022 and will become a major short'

For sure Armstrong says some very interesting things and it's important to be aware of this thesis, especially now that we are nearing the end-game/reset stage.                                                                                                                              Viceroy, do you still stay away from the  precious metal sector? If I recall correctly you are mostly/exclusively (as a store of value?) into BTC/crypto I think?

[Yellow_Reduced_Sticker]

12 hours ago, Viceroy said:

.....I couldn't stand Armstrong the first time I started reading him.  He warned to stay away from Gold just as I had bought a chunk. Turned out he was right. He's not gonna be everyone's cup of tea but his macro is definitely playing out.

 

Hmm...don't get this on gold, i bought my 1st physical gold in 2011 (at the time near the TOP what do ya expect with my timing!) then bought my final gold in 2017 as it started to go up again, so even today i'm in profit with 'em AND don't ever intend to sell other than for an emergency.

 

unless you bought gold at the peak last July can't see how you lost money?

 

 

 

@DurhamBornThe copper BT are sitting on is worth more than 40 billion alone, is that true?

 

 

[ThoughtCriminal]

https://lngprime.com/europe/gazproms-q3-profit-jumps-on-high-gas-prices/35152/

 

Break out the vodka!

[Axeman123]

Potential melt-up fuel?

"Could Omicron be GOOD news? Variant 'might speed up end of pandemic if it causes mild illness' as South Africa records NO hospital admissions or deaths from super strain - but scientists won't know for at least two weeks"

https://www.dailymail.co.uk/news/article-10253611/Could-Omicron-GOOD-news-Variant-speed-end-pandemic-causes-mild-illness.html

[CannonFodder]

43 minutes ago, Axeman123 said:

Potential melt-up fuel?

"Could Omicron be GOOD news? Variant 'might speed up end of pandemic if it causes mild illness' as South Africa records NO hospital admissions or deaths from super strain - but scientists won't know for at least two weeks"

https://www.dailymail.co.uk/news/article-10253611/Could-Omicron-GOOD-news-Variant-speed-end-pandemic-causes-mild-illness.html

Melt up ahoy indeed if this catches on regardless of truthfulness or not.

This is increasingly bonkers world, like a carry on movir, carry on covid.

Lockdown, oh its harmless, oh Matron.

[Transistor Man]

3 hours ago, Yellow_Reduced_Sticker said:

 

@DurhamBornThe copper BT are sitting on is worth more than 40 billion alone, is that true?

 

I understand it's true. Millions of miles worth, apparently.

 

Whenever I see pictures of the early transatlantic cables, I always think:

"The sand! The sand. Melt the sand!!!"

(I guess the lasers/ LEDs would have been a problem.)

 

 

 

 

[JMD]

Jim Chanos, legendary short seller who made fortune shorting Enron. Worth listening to all 50mins (it's a two parter with 2nd part subscription only)... This part discusses mechanics of short selling, but is also instructive and entertaining - showing how dire the regulators are, Chanos says that most company accounting fraud is more 'Ponzi scheme' than outright stealing, he comments on Uber and that Tesla is a 30dollar stock if priced similar to its competitors!!                                                                                                                                https://m.youtube.com/watch?v=onXHpmOzZZk

[belfastchild]

5 hours ago, Yellow_Reduced_Sticker said:

 

 

@DurhamBornThe copper BT are sitting on is worth more than 40 billion alone, is that true?

 

 

That number just keeps on getting bigger and bigger. Every smug presentation I went to when I worked there had the quote that the copper in the ground was worth more than BTs valuation.

That may very well be true but you have to get it out of the ground (if you can). It carries stuff. It will carry stuff even when copper is switched off by the nature of BT fucking lots of stuff up. Many years ago most of the UK internet went down because BT had put the main north/south line and its backup in the same pipe. The network diagram showed them in two different places but contractor thought fuck it and put them in the same pipe which was cut by a jcb.

Think about what it would require (time, manpower, energy) to get the lines up from under central london (if they knew where all the redundant ones were). When I worked there they were very risk adverse, would fund projects that would save millions and then pull at the last minute in case it fucked up (despite testing etc).

So yes, in theory its true and its a nice talking point but doesnt really amount to much unless we go mad max.

[CannonFodder]

I think it is more about the cost of a competitor needing 40 billion to enter the market than scrapping existing tbh

Even if fibre was used throughput, the cost of labour to install that is punitive. Lots of faster rural broadband projects doing bits of counties at crazy money and crazy bad quality. 

Copper goes in a plastic pipe and picked up by metal detector, fibre needs a metal sheath, largely undetectable in plastic pipe so gets damaged a lot 8n excavations.

Rambling a bit here but an underground system is super expensive

[belfastchild]

8 minutes ago, CannonFodder said:

I think it is more about the cost of a competitor needing 40 billion to enter the market than scrapping existing tbh

Even if fibre was used throughput, the cost of labour to install that is punitive. Lots of faster rural broadband projects doing bits of counties at crazy money and crazy bad quality. 

Copper goes in a plastic pipe and picked up by metal detector, fibre needs a metal sheath, largely undetectable in plastic pipe so gets damaged a lot 8n excavations.

Rambling a bit here but an underground system is super expensive

Dont need to put new stuff in, just rent off BT/Virgin. Its done that way the world over. The days of new entrants and new kit is long gone (unless its b2b on the more profitable routes).
If you need more throughput, just upgrade the kit at the end of the fibre.

Look at all the cheapo cell providers doing the same thing.

Energy market is fecked for the same reason although dropping customers electricity is different to slowing/cutting their internet or a few dropped calls.

[Bobthebuilder]

Hate Mail piece on BP's Hydrogen plans in the North East.

https://www.thisismoney.co.uk/money/markets/article-10253905/BP-build-second-hydrogen-production-facility-North-East.html

 

 

[spygirl]

Fuck me.

German inflation of 6% adds to pressure on ECB

Annual price rises are highest in three decades but central bank resists calls to tighten monetary policy

https://www.ft.com/content/5933f31b-605b-459a-a221-59ae84685457

Inflation in Germany has surged to its highest level since 1992, increasing the pressure on the European Central Bank to explain why it thinks it would be premature to tighten its ultra-loose monetary policy.

German inflation rose 6 per cent in November from a year earlier, as measured by the harmonised index of consumer prices. The increase exceeded the expectations of most economists. German inflation was last this high shortly after the country’s reunification three decades ago.

[DurhamBorn]

1 hour ago, belfastchild said:

That number just keeps on getting bigger and bigger. Every smug presentation I went to when I worked there had the quote that the copper in the ground was worth more than BTs valuation.

That may very well be true but you have to get it out of the ground (if you can). It carries stuff. It will carry stuff even when copper is switched off by the nature of BT fucking lots of stuff up. Many years ago most of the UK internet went down because BT had put the main north/south line and its backup in the same pipe. The network diagram showed them in two different places but contractor thought fuck it and put them in the same pipe which was cut by a jcb.

Think about what it would require (time, manpower, energy) to get the lines up from under central london (if they knew where all the redundant ones were). When I worked there they were very risk adverse, would fund projects that would save millions and then pull at the last minute in case it fucked up (despite testing etc).

So yes, in theory its true and its a nice talking point but doesnt really amount to much unless we go mad max.

BTs value (and other big telcos) isnt the value of what they have in the ground,its the fact that in an inflation cycle it depreciates much slower than price increases and the cost for new entrants to replicate the network.BT is worth 2.5 times its market cap minimum on my roadmap and i think the sector suffers from structural undervaluation similar to tobacco back in the day.I dont expext 7 to 10 baggers,but 3x + divs might be just in reach.

[DurhamBorn]

1 hour ago, belfastchild said:

Dont need to put new stuff in, just rent off BT/Virgin. Its done that way the world over. The days of new entrants and new kit is long gone (unless its b2b on the more profitable routes).
If you need more throughput, just upgrade the kit at the end of the fibre.

Look at all the cheapo cell providers doing the same thing.

Energy market is fecked for the same reason although dropping customers electricity is different to slowing/cutting their internet or a few dropped calls.

BT got a price of the regulator expecting fibre to be around 30% more expensive than it will be to roll out and assuming 2% inflation.4%+ inflation is like dropping helicopter money on the incumbents.Watch free cash go through the roof mid cycle.These vultures circling are seeing what im seeing.Bastards.