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

[Noallegiance]

7 minutes ago, Yellow_Reduced_Sticker said:

 

YES, However doesn't come as CHEAP as me back yard... 5 minutes away!

 

 

BUMPER free harvest this year lol!

 

Any chance of ya naming those 3 year fixed energy deal big companies   -  as i could only get 1 year with avro energy, then it went bust now i'm with octopus energy but still paying to avro!

 

I got 2 years fixed with Octopus. Hoping they last!

[HousePriceMania]

3 hours ago, ThoughtCriminal said:

This looks ominous.

I do like a chart with a large fall in it.

[JMD]

4 hours ago, Long time lurking said:

 

Then factor in why is it the most leveraged countries in the world are the ones with the greatest covid problem , and the inverse regarding the poorest hows property prices in Australia ? sustainable ?

Hmm, good point... I wonder if anyone done a 'lockdown-days vs financial stimulus' by country chart? I assume it would look both revealing and terrifying!!

[DurhamBorn]

12 minutes ago, Cattle Prod said:

That first chart is astonishing. Hard working Hans was able to get 2-3% above inflation from the early 90s up to the GFC, even when inflation was 6%! Since the GFC Hans has been financially repressed, at times severely, with rates pinned below inflation. Currently 5% below inflation!! Why on earth are the Germans putting up with this? How long more is this going to continue? If and when they decide they want a return on their money, the dollar is going down, big time, or the Euro breaks up. I lived there for a while in the late 90s, and I had no idea that interest rates were higher than inflation, I was far more interested in beer and frauleins. But I got paid in cash, thousands of marks a month, by a large agency who had hired me into Siemens. My coworkers all used cash, there were next to no credit cards. Notes were large denomination. I thought it was a little odd, but little did I know that their cash actually grew. Can you imagine that??

Again, why are they putting up with this? Exports? Fragile banking system? ECB balance sheet??

Exports and jobs.Their economy is hugely exposed to a higher currency.Id expect a 45% jump if they went to their own currency again destroying their economy.In a way Germany is like half the UK.Here half work to pay for half not to,or very little,Germany all work so half of southern Europe doesnt have to work.

The western world is now full on socialist and at tipping points.Public sector and bennies feasting on a smaller and smaller private sector.My roadmap says inflation is the first result,next comes dislocation where people jump ship,join the bennies etc.The end of QE will be the result,and thats when it gets interesting.Lots of dislocation bursting out everywhere.

[DurhamBorn]

M2 is all about when it enters M3,thats the key and wont be long.Thats when people and business bring spending forward.

[Long time lurking]

6 minutes ago, JMD said:

Hmm, good point... I wonder if anyone done a 'lockdown-days vs financial stimulus' by country chart? I assume it would look both revealing and terrifying!!

Commodity prices getting out of hand ? 

This is how they are controlling them (BBC headline) ,fears of lockdowns are the off switch ,how much was petrol in the summer of 2020 how much is it now and why have oil prices just fell through the floor 

They have printed 10`s if not 100`s of trillions this is how they are controlling inflation as the liquidity escapes into the economy 

The best explanation i have seen regarding whats going on is here ,i know fuck all about trading but it`s quite clear whats going on and how they are controlling it 

https://thephilosophicalsalon.com/a-self-fulfilling-prophecy-systemic-collapse-and-pandemic-simulation/

 

[janch]

5 hours ago, sleepwello'nights said:

https://thephilosophicalsalon.com/a-self-fulfilling-prophecy-systemic-collapse-and-pandemic-simulation/

This article was posted in the Australia thread by @Long time lurking. I can't recall whether it is in this thread as well.

I need to read it more slowly to fully digest it as I don't understand the mechanisms it describes and the full implications if the current financial system collapsed. 

Anyway it explains the reason why world wide governments have leapt on the covid crisis forced by weight of the leading economic nations. 

I'm particularly intrigued with the article reinforcing @DurhamBorn's prediction that central banks would helicopter money to the general public. I still don't understand how DB came to that prediction.  

 

Really interesting so thanks for posting.

[JMD]

3 hours ago, belfastchild said:

I used to design national fibre networks. Some of my friends still do.

Thats the reason (until @DurhamBorn s posts made me look at it again) I wouldnt invest in BT or any of the old legacy carriers. The new upstarts were just installing FTTC as part of the course whilst BT et al were still talking about ADSL.

The BT line to my house is an overhead line, the Virgin line is FTTC then coax to my house. With BT I would struggle to get 35Mb/s whereas Im typing this on 100 Mb/s for the same money (or less for the majority of my 20 odd years with cable suppliers). BT was always hampered with having to supply everyone with a phone line for a fixed price. New entrants were not.
The difference now is (as pointed out by DB) that the vast new fibre rollout is different to the sprawling legacy networks which were organic rather than designed from a top down national perspective. Also they have got the govt and with inflation the customers to pay for it.

You only have to look at Ireland as an example, the amount of fibre installed over the last decade or so has been phenomenal. Its not hyperbole to say its possibly more than ever is needed. I can build an entire telco network in Ireland in a short period of time leasing dark fibre. The main rings arent the problem, its the end connections but with newbuild estates etc thats all installed as a matter of course.

The working from home has put a lot of previous network design (from BTs perspective) into a cocked hat, although saying that the bandwidth requirements are changing as people move to smaller streaming devices needing smaller bandwidth (although multiplied by members of the family). That also carries income problems, companies wont be paying for large pipes to buildings people dont inhabit any more and you dont need the traffic managment concentrated in key cbd areas any more as its been dispersed (somewhat, still need server access) to residential areas (for no extra revenue, maybe less as companies downgrade and pass on the costs to their employees).

I remember a presentation in BT (who are massive landowners) about filling the old strowger exchange buildings with rows and rows of laserdisc players for movies, that you could dial up and play and pause and stop etc from your phone line. A lot of netflix etc are co-located in the nearest node to save bandwidth (why some suppliers supply it for free) on the main networks. Right idea, just wrong time and wrong technology. If it hadve been rolled out, it would have been obsolete by the time it went operational (or shortly after).
Just look at the eff up BT made of sport, I know some of the people involved and right from the start (as a nowtv sport user) I knew they were on a hiding to nothing. That could have killed them.

The US is worse (branding things 4g that were 3g elsewhere in the world etc because they couldnt/wouldnt upgrade). Other parts of the world with fibre networks were just installing latest end kit and telling people to go on and do what they want with it, in the US they try to milk as much as they can from the legacy stuff and patch things up/fob things off.
Thats why Id never invest in legacy US telcos, but as Ive mentioned before I worked with a lot of them too closely and am perhaps jaded by that. Lot of the '3rd world' carriers went straight to 3g/fibre etc so dont have the legacy hangups.

Sorry, maybe I am being a bit thick, and am not asking in terms of investment advice - but are you saying BT (inc. its openreach infrastructure) is now a potential buy for you after re-evaluating its potential, or are all legacy companies a no go for you?

[spygirl]

1 hour ago, Cattle Prod said:

That first chart is astonishing. Hard working Hans was able to get 2-3% above inflation from the early 90s up to the GFC, even when inflation was 6%! Since the GFC Hans has been financially repressed, at times severely, with rates pinned below inflation. Currently 5% below inflation!! Why on earth are the Germans putting up with this? How long more is this going to continue? If and when they decide they want a return on their money, the dollar is going down, big time, or the Euro breaks up. I lived there for a while in the late 90s, and I had no idea that interest rates were higher than inflation, I was far more interested in beer and frauleins. But I got paid in cash, thousands of marks a month, by a large agency who had hired me into Siemens. My coworkers all used cash, there were next to no credit cards. Notes were large denomination. I thought it was a little odd, but little did I know that their cash actually grew. Can you imagine that??

Again, why are they putting up with this? Exports? Fragile banking system? ECB balance sheet??

https://www.ft.com/content/e2b6a4d2-5c3c-4fea-b7b2-8b261697e74b

[JMD]

3 hours ago, DurhamBorn said:

Lots are drawn to the thread to multiply capital,but the aim of starting it was to simply offer a roadmap to what the cycle would bring and try to help people protect their saved labour.My no 1 aim was to try to produce a return that matched inflation and that number was 65% over the cycle.More is a bonus.The other side is to cut costs.In the supermarket the price of most food is shooting up,but if you can cook its still very cheap,veg for instance is still cheap and i can get 4 nights meals from one chicken etc.

My whole family has 3 year fixed energy deals with big companies,iv even bought up 4 years worth of vitamins,toiletries etc.One vice i have is using quality skincare/haircare etc and iv bought 3 years worth on Blackfriday 30% reductions down to prices il not see again i doubt.

During an inflation buying a quality pair of ladders and fixing your own gutters etc can save a fortune.Iv several neighbours with tiles/pointing out after the storm,mine stood up because i re pointed over summer myself.

I even buy my lager from Tesco timing around xmas and big sporting events as thats  when they reduce,£10 this week for 18 so il buy 10 months worth.

Wow, I think you've told us before that you have 2 large freezers in your garage... And now we know what you have stacked against the opposite wall... jumbo packs of toilette rolls and Newcastle brown ale! (but Lager you say?, me thinks that's a likely (lads?!) story!!)

[spygirl]

27 minutes ago, JMD said:

Sorry, maybe I am being a bit thick, and am not asking in terms of investment advice - but are you saying BT (inc. its openreach infrastructure) is now a potential buy for you after re-evaluating its potential, or are all legacy companies a no go for you?

BT has good assets but lousy people.

Upper management is still like an Oxbridge college dining room.

Plebs on pensions are like Arthur Scargill.

 

[RJT1979]

Nasdaq 100 to 20k by Xmas?

[belfastchild]

3 minutes ago, JMD said:

Sorry, maybe I am being a bit thick, and am not asking in terms of investment advice - but are you saying BT (inc. its openreach infrastructure) is now a potential buy for you after re-evaluating its potential, or are all legacy companies a no go for you?

I sort of mentioned it earlier but Ive only got investing again in the last 2 years. I do have some legacy BT shares as part of freebies/sharesaves when I worked there but a few hundred quids worth in something that takes something like 40 quid to trade out of so I just kept and collected the 3 or 4 quid dividend every so often.

I only started a SIPP and s+s isa when I took my fixed sum pension when I hit 50, primarily as some of the thread has gone in to, to reduce my tax exposure from now being semi retired (everything above tax threshold I cant expense away gets bunged into sipp - not a lot really in the scheme of things, but for the last 2 years Ive not been able to travel anywhere and I havent bought any business kit or vehicles in about 5 years, so nothing to expense there). I maxed out my premium bonds and same in a cash isa, about the same in physical silver/gold. House paid off, extensions done, outbuildings built, garage built, garden completed, internals redone and kitted out, solar and battery and ashp etc etc. After Brexit decided to put all my spare investment cash into food (4 freezers), beer making equipment and supplies, fully kitting out my garage, 2 is one and all that stuff. Pretty much set myself up for whatever time I have left without 'gambling' on shares. I only need about 8k to get by and get half that from my pension (which is fixed so is being eroded away daily - thats what I need to now replace, so will be building the sipp to 55 and from the next tax year will be piling the entire business profits into it - if there are any).

So, thats all the caveats to my approach.
Ive read this thread for years and my working history put me off some companies (BT, VOD etc because my mates are senior in them, tell stories of diversity hire and since covid every single one has been looking to retire early as soon as the kids leave uni). I see that as my personal red flags and I will admit I do nothing on these companies on valuations etc etc, Im basing it all on brain drain. Strangely enough Ive put about 3k into BT shares and gone up 50% since, twice that in telefonica and three times that in vod and they have gone nowhere. However, as DB pointed out all the debt is at reasonably low values and will be a license to print money going forward even if the brain drain occurs, a crash occurs, people downgrade, companies downgrade and net neutrality goes/doesnt go through. You also have to bear in mind that my mates (like I did when I worked in these places) bitch about the shit things going on and they/I dont/didnt talk about the good things. In a lot of examples in the larger telcos the research end was just a sink for profits, but seeing the parallels in other industries (cp particularly with oil) there has been an under development/investment cycle due to regulations and covid has lifted a lot of that. Turns out we cant do without telcos and they arent just for nerds playing fortnite or whatever. Conversely that has put an increased load on that most of them arent getting paid for and the likes of amazon, netflix etc are piggybacking on the fibre infrastructure and relatively paying nowt towards it.
Ive put more money into oil companies as green energy has been the focus of my research for about 3-5 years now and I cant see a way forward without it.
CP I think mentioned Siemens today. Ive uni mates who went to germany in the early/mid nineties to work for them and never came back. Other than office politics they havent a bad thing to say about their various divisions. I only put 900 quid in during the crash and they have doubled as well as spinning off their green energy company so I got free shares in that as well.
I bailed out of K+S for no loss (and no profit) when the regulator started sniffing but mosaic has went from a grand to three in a year and a bit. I have also worked quite closely with potashcorp (nutrien) and they were a license to print money 10 years ago, never mind now. I saw what they did in the local community and reminds me of my time working in telcos where a lot of charities benefitted because the companies didnt know what to do with the money. I couldnt them them with ajbell so put a grand in with freetrade but pulled that recently as I can see red flags with freetrade.
I had about 15 grand in various p2p at previous points but also saw them as a ponzi scheme. Currently sitting on about 350 quid I;'ll never recover (didnt get it out quick enough) but at one point that was a months interest.

To answer the original question about legacy companies. I wouldnt have touched anything 2 years ago but Ive given my thinking why above. I didnt see the return in putting 10k in BT when I could put the same in solar, batteries, ashp and get paid net 500 quid a year for my home energy use. I wish Id put more in this time last year but didnt want to take the risk. I have about 90k in shares across isa/sipp from a 75k investment with 10k sitting waiting. On Friday I put 10k across VOD, BP, BAT with smaller amounts in horizonte and hemo as punts and Id taken profits out of them closing my freetrade account. I dont expect to be driving a lambo soon. Im up 50% on BT so unless it dips again I probably wont bother (or unless they reinstate dividends or lots of other stuff but thats ignoring DBs analysis and Ive been putting money into companies in slightly less favourable conditions that I havent worked for ;-))
I get a lot of my telco stuff from friends so sometimes they tell me they have gone balls deep into sharesaves and sometimes the same people tell me 'fuck no, you should see the shite coming down the line'.

Not sure if any of that makes sense, but it sort of does to me in my position. Still wouldnt touch at+t with a barge pole but they were wankers to me ;-)

[DurhamBorn]

47 minutes ago, Cattle Prod said:

So do you see inflation accelerating when that kicks off?

I think inflation might stay high rather than speed up.I do think we might get a fall back though first to fake everyone.I think roughly 6.7% then 3.8% then back up over 5% sustaining.65%ish for cycle compounded.Interest rate increases with QE are key.

[DurhamBorn]

12 minutes ago, JMD said:

Wow, I think you've told us before that you have 2 large freezers in your garage... And now we know what you have stacked against the opposite wall... jumbo packs of toilette rolls and Newcastle brown ale! (but Lager you say?, me thinks that's a likely (lads?!) story!!)

Carling it is £10 for 18 never more 

[JMD]

2 hours ago, Cattle Prod said:

Most people I work with are herd followers, you need to have the technical skills and be a contrary bollix at the same time. I'd have been long fired had I worked in a bank, I think. 

I think OPEC, particularly KSA, loses power when the myth of spare capacity is revealed. I've long said that there is no risk premium in the oil price because of shale 'spare capacity' ontop of OPEC spare capacity. I suspect it's going to go back into the price, and be very volatile. $10 swings will become routine, great if you're a trader, you need to learn to stomach it if you're an investor.

CP, excuse me asking a specific question, I think you have discussed this before but I cant now find that post. Am I right in thinking that in terms of energy security, the US is very nearly self sufficient in natural gas. And would only be 'reliant' say on Canada and Mexico for its oil, if/when It can sort out an agreement on bigger oil supply coming from Canada?                                                                                              Only I am just trying to figure out how energy independent (in terms of North/Central America at least) the US will become once it has sorted out its oil pipeline problems with Canada. I'm thinking once that aspect is sorted, and once a critical mass of those currently Taiwanese manufactured chips have been on-shored back to America, the US  might begin to develop a different/more robust policy in the South China sea area. Unless of course, the US becomes truly isolationist, which I dought, as the 'rise of China problem' will need to be addressed sooner or later.

[MrXxxx]

On 29/11/2021 at 14:26, 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

It won't be allowed to happen as it is the 'get out of jail free card' for many governments and their poor economic policy...expect to see other variants arise on a regular basis [as per evolution] with the same alarmist/inaccurate headlines provided by their 'friends' in the media and selected scientific 'experts'.

[Transistor Man]

19 minutes ago, JMD said:

 I'm thinking once that aspect is sorted, and once a critical mass of those currently Taiwanese manufactured chips have been on-shored back to America, the US  might begin to develop a different/more robust policy in the South China sea area. 

https://news.samsung.com/us/samsung-new-advanced-semiconductor-fab-site-taylor-texas/

 

[MrXxxx]

21 hours ago, DurhamBorn said:

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.

Its all about 'moats'!

[Axeman123]

Just now, MrXxxx said:

It won't be allowed to happen as it is the 'get out of jail free card' for many governments and their poor economic policy...expect to see other variants arise on a regular basis [as per evolution] with the same alarmist/inaccurate headlines provided by their 'friends' in the media and selected scientific 'experts'.

Mainstream news was already talking about Omicron as a nothing burger within days, "official narratives" seem to have a declining half-life compared to the start of the pandemic. Our own government have acknowledged people simply won't lock down again. People are waking up, fantasy variants just won't work anymore.

[Long time lurking]

7 hours ago, geordie_lurch said:

Well as per your signature... "it`s easier to fool people than it is to convince them that they have been fooled" ,,,Mark Twain 

You posted the following video in one of the Covid threads making a very good case for this very thing

 

Yep i did for the bailing out the banks part not so much the social credit system (which i would not fully dimiss) what she say about the former i think she is spot on 

My own view is very much along the lines of this 

https://thephilosophicalsalon.com/a-self-fulfilling-prophecy-systemic-collapse-and-pandemic-simulation/

[MrXxxx]

5 hours ago, DurhamBorn said:

I even buy my lager from Tesco timing around xmas and big sporting events as thats  when they reduce,£10 this week for 18 so il buy 10 months worth.

Well you must have greater will power than me, as if I do such a thing its gone within a week! :-)))

[Axeman123]

Without trying to derail this thread, did anyone else think the BJ press conference just now had an end of school term vibe to it? Implementing Plan B was casually dismissed and a journo even outright asked if it will all be over by easter (these people all talk/shag, so they will know). My prediction is that Omicron is effectively a natural vaccine strain, and the current third wave will follow the Spanish flu precedent. 

[ThoughtCriminal]

FinTwit chatter is that the fall in WTI is part of the the signal that a credit event is imminent.

 

Any thoughts?

[Phil]

6 minutes ago, ThoughtCriminal said:

FinTwit chatter is that the fall in WTI is part of the the signal that a credit event is imminent.

 

Any thoughts?

I’m thinking I hope so.