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

[JMD]

3 hours ago, ThoughtCriminal said:

That's what my initial post that started the conversation was asking.

 

It was long pushed as being the new gold, an inflation hedge etc. We now have enough data to know that isn't true.

 

So it becomes interesting to ask "What is it? What isn't it?".

 

To whomever mentioned that we don't usually mention crypto:  that's because in the past it's descended into "This shit coin is going to the moon, you're all idiots if you can't see that! Blah, blah, blah". 

 

I personally think it's worth re-examining our assumptions about things every now and then in an intelligent way.

 

But if the consensus was that this should be a permanently crypto free thread then that's ok. 

 

 

It also depends on what type of investor you are. However having said that my portfolio is mainly low risk divi stocks, but I do look to allocate a small % to high risk, eg junior pm miners, cryptos.                                                                                       My general thoughts are that I do agree with @jamtomorrow in that Crypto is an emerging new technology, allowing the prospect for decentralised, direct, trustless, peer-to-peer transactions (financial, legal, etc) to happen. The risk is that TPTB close Crypto down via regulation/tax due to it being a threat to them. Cryptos like BTC or others might become stores of value, and other cryptos could become money. Many cryptos have teams of developers trying to create applications for things like NFTs, which despite the 'art world hype', do also offer the prospect of fractional asset ownership, or for example artists to monitise/license their music, etc. Gaming is another increasingly important use-case area of activity. However I do agree that most of the 15000 cryptos will go to zero. I accept deciding on which cryptos is difficult. So I bought only BTC and some Crypto miners last year, but withdrew my original stake as soon as able in order to derisk what I still do view as a big speculation on my part - however, it's the potential rewards (if not greedy/and you ladder out over time) that imo make it worth it.                                                                                                                                                                      I think there might be another chance of getting in when/after the BK(?) hits, but I admit current prices would put me off. However I personally will attempt to use that opportunity, if a BK does happen, to also buy some other cryptos, apart from only BTC, and am using the time to research which ones. I've read up on lots of info., but finding a level headed crypto commentator is difficult. As I don't trade crypto I like 'The Financial Thing' podcast which is good for highlighting new crypto trends, and buy and hold type crypto opportunities. Its weekly and 1hr long but only a small segment is dedicated to crypto. There will be better qualified Crypto commentators out there but I've followed Lawrence's podcast since he only did P2P investing (I have now sold all my P2P investments except for Unbolted which is a gold pawnbroker one that I do still like, and earns me 8%/annum so better than the bank!). Anyway just saying because the podcast might not be for everyone - it is quiet basic tbh, and I've learned so much since reading this thread - and as I say is still in the process of pivoting away from its original focus on P2P (so that might turn many off), but the host is very grounded (he grew up in UK but is now based in US) and tells you what he's buying/holding which is always a big plus.... Anyway I've droned on enough, hope some of this helps.    (If there are some good crypto podcasts, though not the hyped-up 'crypto maximalist to the moon' type ones, could people recommend them please?)

[Hancock]

Look as if they're going to have to come up with a new variant.

If not it seems Covid is over!

So those of us hoping for a crash, will have to wait for another taper tantrum.

[Hancock]

Old Davey wouldn't get a job as a fortune teller at the funfair.

And in one of the comments he has a whine at a day trader!

[BadAlchemy]

Hochschild Mining demerges Aclara Resources rare earth mineral subsidiary....

https://hocplc.gcs-web.com/news-releases/news-release-details/hochschild-miningplc-demerger-and-listing-aclara-resources-tsx

and from email received from HL today...

"Hochschild Mining plc is proposing to demerge 80% of the entire issued share capital of the Company’s subsidiary, Aclara Resources Inc, by way of a Distribution. Shareholders as at close of business on 6 December 2021 are due to receive 0.1374 of a Aclara Resources Inc share for each Hochschild Mining plc share held. After the distribution, you will hold both Hochschild Mining plc and Aclara Resources Inc shares. 

Your Aclara Resources Inc shares will be credited to your portfolio once we’ve been issued with them - we expect this to be around 15 December 2021 but, as the shares have to be issued into the UK settlement system, this cannot be guaranteed. The Aclara Resources shares are expected to trade on the Toronto Stock Exchange under the ticker 'ARA'."

[ThoughtCriminal]

What a madhouse. 🤦

[Castlevania]

Vodafone and Orange discussed a merger last year. Vetoed by the French government.

https://uk.news.yahoo.com/orange-vodafone-discussed-abandoned-merger-093848220.html?guce_referrer=aHR0cHM6Ly93d3cuYmluZy5jb20v&guce_referrer_sig=AQAAAF0OeD94y2NHTu9_A0jwxARxOe569O9bqARawRdpbzE5CP5KGtfCH7Q40-giKiSvNFtn9yzt0_hpVuG8rP3f1YqqMz6lQRnDJxRrqvixRgij16-9Pwj-wBv2FWcYmSd_hDh-BdjJQShdfXRqfS0uctfvcRSRgHp8wQRHoHgQfPtV

[CannonFodder]

50 minutes ago, BadAlchemy said:

Hochschild Mining demerges Aclara Resources rare earth mineral subsidiary....

https://hocplc.gcs-web.com/news-releases/news-release-details/hochschild-miningplc-demerger-and-listing-aclara-resources-tsx

and from email received from HL today...

"Hochschild Mining plc is proposing to demerge 80% of the entire issued share capital of the Company’s subsidiary, Aclara Resources Inc, by way of a Distribution. Shareholders as at close of business on 6 December 2021 are due to receive 0.1374 of a Aclara Resources Inc share for each Hochschild Mining plc share held. After the distribution, you will hold both Hochschild Mining plc and Aclara Resources Inc shares. 

Your Aclara Resources Inc shares will be credited to your portfolio once we’ve been issued with them - we expect this to be around 15 December 2021 but, as the shares have to be issued into the UK settlement system, this cannot be guaranteed. The Aclara Resources shares are expected to trade on the Toronto Stock Exchange under the ticker 'ARA'."

Interesting, the question is why would they do this? ARA needs funding perhaps and will have its own rights issue in time. I would have thought Hochschild could fund it.

[ONC]

Tesco warehouse and delivery drivers to strike in week before Christmas. That should give them lots of leverage.

https://metro.co.uk/2021/12/06/tesco-workers-to-strike-just-days-before-christmas-15727137/

I liked this part

”The union said that the 4% pay rise was well below the current RPI inflation rate of 6%”

 

[DurhamBorn]

34 minutes ago, Castlevania said:

Vodafone and Orange discussed a merger last year. Vetoed by the French government.

https://uk.news.yahoo.com/orange-vodafone-discussed-abandoned-merger-093848220.html?guce_referrer=aHR0cHM6Ly93d3cuYmluZy5jb20v&guce_referrer_sig=AQAAAF0OeD94y2NHTu9_A0jwxARxOe569O9bqARawRdpbzE5CP5KGtfCH7Q40-giKiSvNFtn9yzt0_hpVuG8rP3f1YqqMz6lQRnDJxRrqvixRgij16-9Pwj-wBv2FWcYmSd_hDh-BdjJQShdfXRqfS0uctfvcRSRgHp8wQRHoHgQfPtV

Sector is in play,but hard to merge,likely they will share towers etc and work together more,forcing up prices for themselves without looking like they are.

[BadAlchemy]

25 minutes ago, CannonFodder said:

Interesting, the question is why would they do this? ARA needs funding perhaps and will have its own rights issue in time. I would have thought Hochschild could fund it.

I wondered if it might be in response to the recent government threat to close Peru mines... to free up the main company to develop a mine in another, 'safer' area (they have something in Chile), but the demerger appears to have been in the works since before all that. I don't know, haven't a clue. I came for the PMs... now I have some 'rare earth' !

[Loki]

2 hours ago, Hancock said:

Old Davey wouldn't get a job as a fortune teller at the funfair.

And in one of the comments he has a whine at a day trader!

Can't have it both ways 

[BurntBread]

38 minutes ago, Loki said:

Can't have it both ways 

He gives a destination (which he sticks to, and repeats every so often), and then he makes short-term calls about the way the market will get there (never in a straight line), based largely on his reading of sentiment. It's the destination that we should take seriously; and even for that, he always gives caveats when he mentions timings.

Is twitter the right platform for him? I would argue that it is. If you listen to what he says, he is not using his short-term predictions to inform people; but instead, he is using the reactions he gets as a measure of sentiment. He's generous in putting out his predictions (and for the couple of years we have been following him, the destination predictions seem to be very surprising, and ultimately accurate); but he's getting at least as much information from his twitter account as his readers are.

On another subject, I have been thinking a bit about crypto, and what the value is. I'm wondering whether we should think about it as another country, which has a rather closed economy. The goods and services in that country are roughly speaking the things that used to be on sale on DPR's "The Silk Road", plus services like getting your wealth out of authoritarian regimes, or hiding it from spouses or tax authorities. Anyway, some kind of mostly nefarious economy of goods and services: not physically in one geographic location, but spread all over the place. This country uses crypto as its domestic currency, but you can also buy these goods and services from other places; it's just that we've defined Cryptoland as the real economy that uses crypto.

In this case, there is a real market value for cryptocurrencies, in terms of the resale value of dodgy things, once you have exported them out of Cryptoland, and so you can take the market value of bitcoin (or whatever) as, in some sense, "real".

That's all trivial, of course, but there's a couple of equally obvious things to add which give me pause. The first is that in Cryptoland, the velocity of money is frighteningly small. Most of the currency doesn't circulate: it just sits in the wallets of whales and other "hoddlers", while the money supply is growing all the time (not much, but it's grown hugely compared to when the country first emerged, and I'm guessing has grown hugely more than the goods and services available in Cryptoland.)

You can work out the price level in the usual classical economics level: velocity times money supply, over total amount of goods & services traded; and the velocity is so tiny that the price level is also tiny. That is to say, you can buy a huge amount of stuff with a bitcoin. That velocity terms counteracts everything else. So, my main worry is what happens if the price level starts rise a bit, due to sentiment or whatever? That velocity has a long way to run, and "MC" is so big, that Cryptoland goods and services could inflate massively.

My guess for a floor (or long term value) of crypto would be by assuming a typical velocity of money for other currencies.

Secondly, and it goes without saying, Cryptoland is a massive tax haven, so there is demand for its currency from a lot of non-residents (i.e. non-crims). That obviously creates the sort of economic problems one sees in places like Switzerland, which also has demand for its currency as a safe-haven. It makes it much more difficult to develop domestic industry in Cryptoland, and holds back organic growth of the economy. Normally, one would expect a country to become more and more efficient, and competition to drive the adoption of new technologies. However, the overpriced currency in Cryptoland means that we get a lot less crime and drugs trafficking and whatever, compared to what could be achieved in a modern, high-tech criminal state. Crytpoland will never produce a Pfizer or a Facebook (nor even a BBC), and the world is the poorer for it.

[Loki]

41 minutes ago, BurntBread said:

he is using the reactions he gets as a measure of sentiment

I did think that and was going to start another thread asking how the experts on here gauge something as subjective as sentiment

[Viceroy]

5 hours ago, JMD said:

  (If there are some good crypto podcasts, though not the hyped-up 'crypto maximalist to the moon' type ones, could people recommend them please?)

I won't litter this great thread with any more crypto stuff other than this, but I enjoy learning from this guy James (now retired but was a financial risk manager i think?). His recent chat with Raoul Pal I found v interesting - learned about the Metaverse, forecasts for certain cryptos, will they be banned?..etc

 

I also read Ian King stuff from an old sub that he now heads. He gave the tip for ETH back in Nov '20 when it was under $500. So now I'm all ears lol.  He sees the Metaverse as being the next big advertising platform.. https://banyanhill.com/5-bold-predictions-2022/

[DoINeedOne]

Always think these are interesting monthly email from Degiro most traded stocks

[mcdongle]

8 hours ago, JMD said:

Plus the 'moral case' against coal is running out of steam(!?) - i note that Japan is building coal fired power stations, so giving China and India a easy excuse to continue on their coal path. Interestingly Japan still says it will be carbon neutral by 2050 because of increased use of CCS, sequestration tech, hydrogen, LNG, etc. I think most of their coal and hydrogen might well end up being imported from Australia, so Australian coal companies might be a particularly good bet (especially with Australia no longer looking 'fully engaged' with the green agenda!!), however lots of coal sector divestment happening at the moment so it is far from clear which ones might be best, and Australia has many coalies - Is anyone here buying or looking to buy after say a BK correction?, or maybe just stick with the big boys, eg BHP?                                                                                                                                                                ...As an aside, apparently Toyota will only do hydrogen engines in future, ie no battery tech, so maybe a good hydrogen play (and one in the eye for that Twitter weirdo Musk!)

I think BHP is getting out of coal.

https://www.smh.com.au/business/companies/bhp-sells-australian-coking-coal-mines-to-stanmore-resources-20211108-p596ui.html

[mcdongle]

8 minutes ago, mcdongle said:

I think BHP is getting out of coal.

https://www.smh.com.au/business/companies/bhp-sells-australian-coking-coal-mines-to-stanmore-resources-20211108-p596ui.html

Also slowly moving out of oil and gas

https://www.bhp.com/news/media-centre/releases/2021/08/woodside-and-bhp-to-create-a-global-energy-company

 

[Axeman123]

1 hour ago, DoINeedOne said:

Always think these are interesting monthly email from Degiro most traded stocks

NL/Shell is interesting, selling in disgust?

[Mapper]

8 hours ago, DoINeedOne said:

You sell your membership at a premium, the code also sends for example 2.5% royalties for any sales to the golf resorts wallet

Paid directly to you in glorious CBDC.

Spend it before we delete it peasant!

[wherebee]

1 hour ago, mcdongle said:

Also slowly moving out of oil and gas

https://www.bhp.com/news/media-centre/releases/2021/08/woodside-and-bhp-to-create-a-global-energy-company

 

yes and no.  they recently announced they were spinning off part of their business to merge with Woodside, to create a pure oil and gas company.

Lets BHP pretend to be 'green' whilst keeping the profits in the pockets of the execs and connected shareholders.  I have woodside holdings and am quite pissed off at this, as BHP has gone pretty woke in recent years and I sold my BHP because of that - now the fuckers are back

https://www.bhp.com/about/our-businesses/woodside-bhp-merger

[sancho panza]

On 05/12/2021 at 12:16, planit said:

My reaction was 'meh'. Shell is a global company and they probably just looked up the hassle factor and thought they couldn't be bothered with the green pressure.

Weigh up risk/reward, not enough money involved to end up on front page of newspapers. Just another example of actions causing high energy prices in the future.

 

Was thinking about Biden and OPEC again, all this is affected by timescales

long term view - OPEC, this thread, Oil companies

short term view - Biden/politicians, stockmarket

 

The short-termers are like kids, they want icecream now even if they get all their teeth pulled out later. Stupid.

 

I am thinking oil will go to sleep for a month now, there are not going to be any supply or inventory concerns until next year. I am glad I sold down some more on Friday AM.

Risk to the downside next couple of weeks, I still think US hasn't priced in a delta wave of cases which will now be compounded by Omicron.

 

I think that's a perceptive assessment of long and short term interests right there and I think that analogy about the ice cream is very apt.I cannot understadn why politicians are so shrot sighted in the face of job losses but they are not willing to sacrifice the two minute BBC new homage to claimate change agenda rather than heating homes and keeping people working.

It really is beginning to feel to me that the UK will have to hit rock-and I mean ROCK-bottom before the people wake up shivering and realsie the london/edinburgh/cardiff elites are totally out of tocuh with reality.

For me omicron was the buying oppurtnity.For an hour two fridays back you could get BP sub 320,that was the extent of the pullback imho-I missed btw as I was doing school runs and cooking...very Warren Buffet like.

 

 

 

On 05/12/2021 at 15:13, JMD said:

SP, I've owned Rockhopper since 2009, I do like it so am tempted to buy some more at these prices, it would at least bring my average loss down!!                                                                                                                               I'm also looking at Harbour Energy. SP do you have a view on Harbour? It was formed after merger, happened March 2021, between the old Premier Oil and Chrysaor. Premier itself had many energy interests around the world including a 60% licensing deal with Rockhopper. Harbour has better financials than the old Premier, and now holds many oil/gas prospects across the globe.                                                                                                                                      @Cattle Prodo  @Cattle Prod hope you don't mind me asking, but do you know of Harbour Energy (premier/chrysaor)? I know you don't like to comment on the small companies as they are far riskier and in the main probably not worth the hassle of owing, however this is now the largest UK independent so any info on its management/strategy or maybe even it's potential reserves that you are at liberty to share would be great to hear.

A look at their balance sheet woould have me runnign a mile.This could be specific to the industry they're in eg a couple of the US tobacco stocks-Altria/Phil Morris have similarly unsual negative equity,but the fact that it's so rare tells me it's beyond my competence level.

Neg Eq and look at the goodwill/intangibles???

[sancho panza]

On 06/12/2021 at 13:05, Cattle Prod said:

To add to other comments. Sure, there is a hassle factor, and the politicans are being particularly stupid. Shell had a very bad experience in Ireland with huge local opposition with zero political support to a gas field development (which Ireland is now greatly reliant on of course, their only domesitc gas supply. Thanks, Shell). It was delayed and delayed, will never make Shell a penny, and caused them to do no more in Ireland. Ireland was subsequently ranked high risk on a global scale, higher than most tinpot dictatorships, who are easier to deal with! The UK is similarly considered risky because they keep tinkering with the taxes, most countries wouldn't do this. And now there is a greenie/political element too. My guess is that after Sturgeon said what she did (which was completely off the reservation, I've heard, and has pissed off the Scottish establishment no end) Shell got on the phone to Whitehall and said "Look, what's the story, do you want the investment or not" and they got some Mickey Mouse answer. And that was simply the straw that broke the camels back. 

Because Cambo is a tricky, marginal field anyway. It was discovered almost 20 years ago, and is still sitting there for a reason. The low hanging fruit in the North Sea is long gone. It's in deep water in some of the worst metocean conditions in the world, has thin cover (seal issues), heavy-ish oil (sticky, hard to get out), and has volcanic nasties in it that gum up the reservoir. Shell is not the first major to drop out of this project, there is high development risk on it. It might go well for you, and it might not. My gut feel is that that field would break your heart, it's not an easy thing to do. The field investment decison is due, and I don't know how much it would cost, but I'd guess over £3bn. Lots of jobs for Scotland of course...so when you throw in an added above ground risk the Shell FID panel, who have to make the biggest capital decision, just said, nah, pass ...next? Because the reality is that they are a global company, and will just rank this project amongst scores of otheres competing for capital. The remaining partner, Siccar Point, is a north sea focussed private equity company and so doesn't have a global project pool, and so is keen to get it going. I suspect they will need a large partner to do it though.

Thanks for this nuanced reply.I had a feeling it was a marginal project but you've reminded me that jsut because Shell is a UK company(for now),the decisions are finacnial not done to suit Boris.I hadn't realsied how marginal it was and it really does sound like a no brainer.

I always remember that windfall oil tax Brown did and wondered how much it actually cost UK taxpayers in the end when the oilies reduced investment for a year or two.Things like messing around with the tax code are no no's if you want invesment.I think a lot of our elite have drunk too much of Greta's kool aid.

As @planit said,virtually guarantess higher prices.I'm sitting here,bullish as I was at BP 260/280/300...the only thing that changed for the bull market is the mood music .

Obviously the outlook for us Brits is dire on the whole.plus ca change as they say in Berlin.

[Hancock]

19 minutes ago, sancho panza said:

For me omicron was the buying oppurtnity.For an hour two fridays back you could get BP sub 320,that was the extent of the pullback imho-I missed btw as I was doing school runs and cooking...very Warren Buffet like.

Ive still got a feeing it'll go below 300p at some point in the next 12 months.

Mainland Europe seems to be clamping down fairly hard at the moment, and all it'll take is for the UK/US to follow them.

Or on the other hand they use it as the get out clause to end all this insanity by claiming its a weakened strain and is now dominant ... which leads to the FED winding up their printing and raising interest rates far quicker ... which is what is meant to trigger the mythical BK.

[sancho panza]

12 hours ago, harp said:

Most my family smoke. I’ve never smoked and they know I hate it. All now have smoking related illnesses. I used to tell them to give up. I stopped telling them a couple of years back when I bought BAT and IMB. Fuck em. No sympathy if they die from it. 

I say this as an ex smoker but smokers are a demogrpahic/fiscal dream for the west in many ways.

They die young ,generally pay through the nose for the privilege of doing so and thus pay far more in taxes than they take out compared to many non smokers.

We bought a load of BAT's last week and feel pleased to do so.AS you say,jsut getting my moeny back in case it catches up with me.

[sancho panza]

14 minutes ago, Hancock said:

Ive still got a feeing it'll go below 300p at some point in the next 12 months.

Mainland Europe seems to be clamping down fairly hard at the moment, and all it'll take is for the UK/US to follow them.

Or on the other hand they use it as the get out clause to end all this insanity by claiming its a weakened strain and is now dominant ... which leads to the FED winding up their printing and raising interest rates far quicker ... which is what is meant to trigger the mythical BK.

I've been trading the pull backs in the oilies since last july time using calls.I was hoping for antoehr run up.

Agree,if a BK occurs we might see £3 again but then again we might not.

Ref the BK trigger,logic dictates it's the winding in of QE/zirp but it could be caused by something unpredicatble like war.

All we really know is that the banks balance sheet are ready for a clean out.