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

[JimmyTheBruce]

13 hours ago, sancho panza said:

Yeah they're very specualtive to me.type of trade I'd sell a few mosiac and put us in for free etc.

https://www.voxmarkets.co.uk/rns/announcement/814387d8-1209-4e65-aff8-9bc0b87e0561

I've got some Salt Lake.  If you have a quick skim through the attached it seems their new processing plant has actually been built and handed over to them, but they're having trouble getting it working as per spec.  They've done 6 separate equity issues in the last year to raise cash, which means they've got cash in the bank and a quite hefty asset in the form of the processing plant, but they've murdered their share price in the process and aren't actually producing anything.

The concerning thing for me is that they don't rule out the possibility of needing to ask for more cash.  You'd like to think they'd have a rough idea of what it'll take to start fulfilling the off take agreements that have apparently already been agreed.

On the other hand, the share price couldn't get much lower, and they've got a bloody great plant built that will presumably start producing at some point.

All of which leaves me in exactly the same position as SP.... I might bung a few quid more their way for shits and giggles, but not enough to bother me if they go bust.

[sancho panza]

53 minutes ago, Majorpain said:

The commodity traders are sitting on the other side of the trade to utilities, they are essentially bankrolling consumers getting cheap price capped gas.  Problem is that they wont be able to go on forever, multimillion margin calls wont be fun, and we are only in October with no sign of prices coming down.  Time to take bets on first leader to go begging to Putin for gas?

"Two of the sources said trading houses and other players had together accumulated $30 billion worth of short positions in the TTF market, with European utilities taking the opposite long side of the play."

This price action has epic short squeeze wrriten all over it.I wouldn't want to be the wrong side of it.Traders are forgetting how undervalued oil is compared to the dollars that have been printed over the last 18 months

12 minutes ago, ThoughtCriminal said:

Uh oh.......... 

I'll dig out the old oil price spike recession post.I think we're getting nearer to confirming a BK deflationary event is in bound

[Harley]

15 minutes ago, sancho panza said:

I'll dig out the old oil price spike recession post.I think we're getting nearer to confirming a BK deflationary event is in bound

Do what yer saying is....

[desertorchid]

30 minutes ago, ThoughtCriminal said:

Uh oh.......... 

I would say it was the monetary policy response to those cost pressures that fuelled any financial crisis. This time around I doubt they will raise rates in any meaningful way.

[sancho panza]

anotehr BK red flag on the road .

hattip kapaln

I think we're going to ahve are run of the 2000 sell off led by tech.

Decl:we're still long.

https://www.cnbc.com/2021/10/01/stocks-are-at-a-70-year-high-as-a-share-of-household-financial-wealth.html

Overall U.S. household wealth has never been this high, thanks largely to gains in the stock market that are a bigger share of that prosperity than ever before.

In fact, equity holdings now make up about half of the $109.2 trillion of financial assets that households owned through the second quarter of 2021, according to Bank of America. Other than stocks, financial assets also include bonds, cash, certificates of deposit and bank deposits.

 

The equity share of assets is a 70-year high, Bank of America said.

 

 

 

 

 

[Harley]

9 minutes ago, desertorchid said:

I would say it was the monetary policy response to those cost pressures that fuelled any financial crisis. This time around I doubt they will raise rates in any meaningful way.

The effect of monetary policy, relatively speaking....

Then:

Now:

It's now an unstable, top heavy, topsy turvey world.  Won't take much from an obscure somewhere.

[Harley]

13 minutes ago, sancho panza said:

The equity share of assets is a 70-year high, Bank of America said.

Remember, Mr Market likes to patiently wait to hurt the most the most....

 

[sancho panza]

chart of Brent versus big oilies since Oct low.Total has replaced RDSB/BP at the bottom of the value range after their recent run up

Repsol -yellow running well.

purple ENI,pink total,orange rdsb,green bp,blue eqnr,black brent

and from the April 20 bottom in Brent

Looks like RDSB and BOP have some running to do to catch up

[AlfredTheLittle]

2 hours ago, Majorpain said:

Thoughts @Cattle Prod?  I would have thought that with depletion keeping their current production rate going would be a challenge by 2027.

6 years to raise production by one twelfth - surely shows how inelastic production is, and backs up what @Cattle Prod has been saying for a while.

[sancho panza]

This a repost from Thread 2 Aprill 22 21.Discussion of oil price rises preceding recessions and stock market drops.It really feels like we're in the oil run up phase before the crash

Belwo is a repost of the link above.Key thing here is that oil prices are moving higher which to my mind means we're getting nearer to the BK sell signal that I'm looking for.Dyor natch.

Personally I think we're headed higher on oil price now.Gas price rises recently point to a higher oil price.Historical precedent indicates that a 226% rise into the recession is previous high.

Allowing some leeway for the freakish nature of the march bottom,$30 gives a peak oil price at a rise of 226% of $100.8,$40 gives peak at $130.40.

 

 

 

 

'Here are some charts for the recessions concerned using Real GDP measures.You can see that sometimes a quarter or two before the technical recession begins,the weakness is apparent.The crucial aspect in terms of Real GDP is that the implied price deflator used excludes imports which means that it's not particualrly reliable

https://www.bea.gov/data/prices-inflation/gdp-price-deflator

A lot of the following is from a previous post

1990

You can see that in Q4 1989,there was already a likely negative GDP print in real terms or at least sever weakness economically.

Oct 1988 Oil bottoms monthly close $13.58,intraday $12.28

Jan 1990 WTI at $24.20 intraday peak a 78% rise from Oct 1988

Jan 90 S&P 500 first attempt at 360 intraday

May 90 S&P 500 peaks around 360

July 1990  US recession starts with oil at $20.69

Sept 1990 oil peaks at monthly close $39.51 a 190% rise from bottom

Oct 1990 oil intraday peak $41.15

Oct 1990 S&P 500 bottoms

March 1991 US recession ends with oil at $19.63

https://www.macrotrends.net/countries/USA/united-states/gdp-gross-domestic-product

 

2000

Dec 1998  Oil bottoms at $10.35,turns up

Mar 2000 S&P 500 Intraday peak

Aug 2000 S&P500 monthly peak

Sep 2000 Intraday oil peak at $37.80

Jul-Sept 2000 Real GDP 0.53%-possible start of US recession not using real world view of economy.

Nov 2000 Oil peaks on monthlies at $33.82 a 226% rise from bottom

Mar 2001 US recession begins

Nov 2001 US recession ends.

Aug 2002 S&P bottoms on the monthlies

 

2008

Jan 2007 Oil bottoms on the monthlies at $58.14

Oct 2007 S&P peaks on monthlies at 1550

Dec 2007 US enters recession with Oil at $95.98

June 2008 Oil peaks at $140-monthlies a 140% rise from bottom

Feb 2009 S&P bottoms around 730 on the monthlies

June 2009 US recession ends with oil at $69.89

 

 

Obviously with any of this you have to apply your own judgement.It's been interesting for me to run back over this stuff from last year.There are obviously many other factors involved in the deciosn to move to cash,UST's or go short.'

[Hancock]

46 minutes ago, sancho panza said:

 

Belwo is a repost of the link above.Key thing here is that oil prices are moving higher which to my mind means we're getting nearer to the BK sell signal that I'm looking for.Dyor natch.

 

You still looking to sell before you believe a BK happens? seem to remember that being your plan last year.

Just curious about the psychology of it all as a BK "might" be getting nearer.

I'm going to have to accept i lacked the balls the other week to buy 70 odd grands worth of BP at 295p and do a months work to cover the would have been gains.

If a BK happens there'll be another chance at getting such prices, though obviously will spread it out in such a scenario into other sectors.

[HousePriceMania]

58 minutes ago, Hancock said:

You still looking to sell before you believe a BK happens? seem to remember that being your plan last year.

Just curious about the psychology of it all as a BK "might" be getting nearer.

I'm going to have to accept i lacked the balls the other week to buy 70 odd grands worth of BP at 295p and do a months work to cover the would have been gains.

If a BK happens there'll be another chance at getting such prices, though obviously will spread it out in such a scenario into other sectors.

I'm watching for the BKK but I'm not convinced it's going to be that bad, relatively speaking, for the UK if and when it happens, look at the S&P/Dow/NASDAQ and the FTSE 

two reference lines, the 2008 bank collapse and the 2020 pandemic

It doesn't take a genius to work out where the real bubble is.

Don't get me wrong, you could be looking at a 50% collapse in the UK, but the US will  be toast, esp when you consider their investment culture.   No wonder the spiv bankers refuse to raise IRs.

If you are holding sensible shares in the UK, which right now look like energy, you might be better off not trying to time the BKK but instead get read to take advantage of it, even if that means selling out XX % of your holdings in anticipation.

That's some party the US are having.

[sancho panza]

Nasdaq and S&P peaked in March 2000 but proper sell off only began in Sept 2000

Big tech warnings

MSFT had dropped nearly 40% by April 2000

QCOM was down 65% by June 2000

Cisco was down 25% off monthly peak

Telefonica off 30%

 

[sancho panza]

46 minutes ago, Hancock said:

You still looking to sell before you believe a BK happens? seem to remember that being your plan last year.

Just curious about the psychology of it all as a BK "might" be getting nearer.

I'm going to have to accept i lacked the balls the other week to buy 70 odd grands worth of BP at 295p and do a months work to cover the would have been gains.

If a BK happens there'll be another chance at getting such prices, though obviously will spread it out in such a scenario into other sectors.

I don't trade off anyone else necessarily,I take my decisions for us as a family.What I mean by that is that I lsiten to DH,DB,CP and otehrs but ultimately,decision is mine.We've stayed long this market from bitter experience of exiting too soon,hence why I built up a little checklist to tick off that might warn a top is imminent.

I think we've alreayd had signs a top is nearing in rise of copper price,spell of weakness i DXY(which I don't think is over),run up in cable.But my big indicator remains the oil price whcih I don't think has topped out(poosibly copper hasn't eitehr).Once those two are in I'll be reassessing to decide if we sell oilies/hedge via puts/sit tight.

We could see a stock market drop that doesn't afftect big oil.it's happened before-see BATS/Gallaher/Billiton in 2000

I've made laods of msitakes investing,key thing to reflect and learn.Psychology is the big issue.I remember you debating buying and couldn't work out whether greed or fear was driving you at that time.I tend to jsut say to myself 'if I'd been offred these shares at thsi price three years ago,would I have taken them?' If the answers yes,then I buy some.

My Mum who's in her 70's taught me to buy a FOMO bloc if I was wavering.ie a small bloc that means that at least if they rise I won't get regret.

When teh BK comes,the value won't be in the oilies I suspect but elsewhere.

[janch]

3 hours ago, M S E Refugee said:

Apparently Citi have raised their price target on Thungela to £7.50.

Long may its rise continue......................it's been one of my better purchases so far

[Noallegiance]

3 hours ago, sancho panza said:

This a repost from Thread 2 Aprill 22 21.Discussion of oil price rises preceding recessions and stock market drops.It really feels like we're in the oil run up phase before the crash

Belwo is a repost of the link above.Key thing here is that oil prices are moving higher which to my mind means we're getting nearer to the BK sell signal that I'm looking for.Dyor natch.

Personally I think we're headed higher on oil price now.Gas price rises recently point to a higher oil price.Historical precedent indicates that a 226% rise into the recession is previous high.

Allowing some leeway for the freakish nature of the march bottom,$30 gives a peak oil price at a rise of 226% of $100.8,$40 gives peak at $130.40.

 

 

 

 

'Here are some charts for the recessions concerned using Real GDP measures.You can see that sometimes a quarter or two before the technical recession begins,the weakness is apparent.The crucial aspect in terms of Real GDP is that the implied price deflator used excludes imports which means that it's not particualrly reliable

https://www.bea.gov/data/prices-inflation/gdp-price-deflator

A lot of the following is from a previous post

1990

You can see that in Q4 1989,there was already a likely negative GDP print in real terms or at least sever weakness economically.

Oct 1988 Oil bottoms monthly close $13.58,intraday $12.28

Jan 1990 WTI at $24.20 intraday peak a 78% rise from Oct 1988

Jan 90 S&P 500 first attempt at 360 intraday

May 90 S&P 500 peaks around 360

July 1990  US recession starts with oil at $20.69

Sept 1990 oil peaks at monthly close $39.51 a 190% rise from bottom

Oct 1990 oil intraday peak $41.15

Oct 1990 S&P 500 bottoms

March 1991 US recession ends with oil at $19.63

https://www.macrotrends.net/countries/USA/united-states/gdp-gross-domestic-product

 

2000

Dec 1998  Oil bottoms at $10.35,turns up

Mar 2000 S&P 500 Intraday peak

Aug 2000 S&P500 monthly peak

Sep 2000 Intraday oil peak at $37.80

Jul-Sept 2000 Real GDP 0.53%-possible start of US recession not using real world view of economy.

Nov 2000 Oil peaks on monthlies at $33.82 a 226% rise from bottom

Mar 2001 US recession begins

Nov 2001 US recession ends.

Aug 2002 S&P bottoms on the monthlies

 

2008

Jan 2007 Oil bottoms on the monthlies at $58.14

Oct 2007 S&P peaks on monthlies at 1550

Dec 2007 US enters recession with Oil at $95.98

June 2008 Oil peaks at $140-monthlies a 140% rise from bottom

Feb 2009 S&P bottoms around 730 on the monthlies

June 2009 US recession ends with oil at $69.89

 

 

Obviously with any of this you have to apply your own judgement.It's been interesting for me to run back over this stuff from last year.There are obviously many other factors involved in the deciosn to move to cash,UST's or go short.'

It's this kind of stuff that I said a few months back I was waiting for.

I've started selling commodities that are in very good profit. I won't go below initial investment so I'll catch the remaining climb.

But such things at this point in the cycle cannot continue for long.

I've almost taken enough profit now to be happy whenever the correction comes to fill up again ready for the rest of the decade.

One thing I may consider is feeding some profit into gold miners to catch their run.

[ThoughtCriminal]

Ok, im calling it: we're absolutely fucked. 

 

Beginning of October and its mild, what are prices going to look like when it's subzero in December? 

[Noallegiance]

16 minutes ago, ThoughtCriminal said:

Beginning of October and its mild, what are prices going to look like when it's subzero in December? 

In terms of energy stocks, pretty fucking good to me!

[TNS]

So, who's going to sell shell when it hits £20 ? 

[Bobthebuilder]

12 minutes ago, TheNickos said:

So, who's going to sell shell when it hits £20 ? 

Not me, as I have some I bought years ago for £25.

[HousePriceMania]

https://www.bbc.co.uk/news/uk-politics-58800329

 

Boris Johnson: I'm not worried over jobs gap and rising prices

 

They clearly aren't planning on raising IRs.

What a cunt.

[DurhamBorn]

On 04/10/2021 at 14:37, janch said:

This seems to be the reason:

https://www.sharesmagazine.co.uk/news/shares/bt-plunges-7-on-sky-virgin-media-tie-up-speculation

Its why i own the whole sector mostly and top up any laggards with the divs.I think the whole sector is undervalued by a lot,so im happy to own all the big players,and the smaller ones i use the COMA scores.Consolidtion is hugely bullish for the sector because they wont compete very hard once there are three in each market.

[Harley]

1 hour ago, ThoughtCriminal said:

Ok, im calling it: we're absolutely fucked. 

 

Beginning of October and its mild, what are prices going to look like when it's subzero in December? 

I was wondering about the weather, especially as I'm remote and very exposed to it.  Every few years (c.5) we get a winter to remember (note the worst is in the new year, not the run up to it).  It's been a while.  Maybe too soon this year but if........!

[Noallegiance]

23 minutes ago, HousePriceMania said:

https://www.bbc.co.uk/news/uk-politics-58800329

 

Boris Johnson: I'm not worried over jobs gap and rising prices

 

They clearly aren't planning on raising IRs.

What a cunt.

Indeed but I like the chat surrounding allowing markets to do their thing.

They don't have to raise anything. The market can do it for them.

[jamtomorrow]

1 hour ago, ThoughtCriminal said:

Ok, im calling it: we're absolutely fucked. 

 

Beginning of October and its mild, what are prices going to look like when it's subzero in December? 

We're about to find out how elastic demand for gas is.