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

[Axeman123]

This has to be deliberate sabotage:

 

[Loki]

15 minutes ago, Axeman123 said:

This has to be deliberate sabotage:

 

 

Looks like @DurhamBorn won't have to worry about nuke vs oil any more

[Majorpain]

3 hours ago, Axeman123 said:

This has to be deliberate sabotage:

 

Loonies are in charge in Germany ATM, the big question is are they going to keep the maintenance up for the next few months so they can switch them back on with a bit of warning if things get dire?

Probably not.

[Axeman123]

8 minutes ago, Majorpain said:

Loonies are in charge in Germany ATM, the big question is are they going to keep the maintenance up for the next few months so they can switch them back on with a bit of warning if things get dire?

Probably not.

More likely they will start demolition/sabotage ASAP, to permanently keep them offline.

[Democorruptcy]

4 hours ago, Axeman123 said:

This has to be deliberate sabotage:

 

I watched a Simon Reeve in The Lakes (iplayer maybe 3rd of 3 episodes) and a good portion was at Sellafield. He said how nuclear could be the future because it was low carbon. Also that some of the nuclear waste might need a huge underground cavern building to store it, that would be a great engineering feat but didn't mention that it would need lots of energy to do it.

[Yellow_Reduced_Sticker]

"Gas price falls as cargo ships divert to UK"

Huge cargo ships carrying liquid gas that were destined for China have changed course and are now heading towards the UK, as Europe remains trapped in a major supply crunch.

Paging @ThoughtCriminal Hope ya mates closed out there LONG gas postions?!

https://www.telegraph.co.uk/business/2021/12/28/cargo-ships-divert-gas-china-britain/

 

Meanwhile back at the ranch, our macbeth is at an ALL TIME YEAR HIGH!

 

[sancho panza]

This trend really does bode ill for social cohesion,historicallyalso portends the rise of extremist politicians

https://wolfstreet.com/2021/12/27/my-wealth-effect-monitor-wealth-disparity-monitor-for-the-feds-money-printer-economy-december-update/

The Fed makes the rich richer, the bottom 50% pay for it via inflation.

The Fed’s policies are designed to create asset price inflation. Asset holders get richer. That’s the purpose. The more they have, the more they get from this asset price inflation.

The bottom 50% have nearly nothing in terms of assets – for example, they held on average only $4,077 in stocks per household in Q3 – and they get shafted. This has been the case for decades, but during the pandemic, the Fed embarked on a historic money printing binge, and the results in terms of this ridiculous wealth disparity are now everywhere.

But for the bottom 50%, this historic money-printing binge has now created the worst inflation in 40 years. Inflation means the dollar loses purchasing power. But for the bottom 50%, their labor, which is denominated in dollars, loses purchasing power in terms of housing, food, cars, etc. And so the bottom 50% get to tighten their belt to pay for the Wealth Effect.

[Hancock]

Is that the BK the World Bank sees on the horizon.

https://www.telegraph.co.uk/business/2021/12/29/risk-double-dip-recessions-inflation-covid-restrictions-bite/

Risk of double dip recessions as inflation and Covid restrictions bite, World Bank warns

Countries are imposing new restrictions on economic activity amid fears omicron could force lockdowns even if less severe

By Tom Rees 29 December 2021 • 12:10pm

Soaring inflation and tough Covid restrictions risk triggering double dip recessions, the World Bank has warned, as countries run out of economic ammunition after two years fighting the pandemic. 

Carmen Reinhart, chief economist at the international financial institution, sounded the alarm on the ability of countries to tackle the twin threats of omicron and a cost of living crisis as tougher Covid rules are put in place.

Forecasters had predicted another strong year of recovery for the global economy in 2022. However, the economic outlook has darkened considerably in recent weeks as fresh lockdown restrictions imposed to curb the spread of omicron also threaten to stoke already high inflation.

Ms Reinhart told the Telegraph the variant is a “setback” for the global recovery as she warned “the longer this goes on the more the ammunition supplies go down”, limiting the firepower of economic aid.

She said: “There’s a lot of downside risks: I think for Europe, they are already more manifest, but they’re there for everyone.

“The combination of omicron and rising inflation and a lot of uncertainty about inflation is also a global concern, and it’s important in having any confidence about recovery. In other words… we’re in for more disappointments.”

Countries are imposing new restrictions on economic activity amid fears the rapid spread could force lockdowns even if omicron is less severe. England has held off on imposing fresh restrictions over Christmas and New Year’s Eve, but fresh curbs are still being considered for the new year.

Ms Reinhart said: “We’ve had less draconian measures taken than of course when Covid erupted, but certainly in that direction… it makes for a more halting double dip-like process. I think the concerns of double dips are very real.”

A double dip recession is when output falls for two consecutive quarters for a second time. Before omicron, the global economy was expected to continue a brisk recovery from the initial Covid slump with the UK and Europe previously set to claw back to pre-Covid GDP levels in early 2022.

Ms Reinhart also warned that worries over heavily indebted companies and stock markets risk tying the hands of central banks in their bid to fight rising inflation, another building pressure on economies.

Central banks are concerned the new variant could also increase inflationary pressures battering households as supply chains face more disruption. After taking on huge amounts of debt to endure lockdown, a hike in interest rates by central banks to fight inflation could ramp up the pressure on indebted firms.

Ms Reinhart said corporate indebtedness means the hands of central banks are “a lot more tied than is perhaps widely appreciated”, while inflation will be “more persistent”.

She said: “[Central banks] are also afraid of financial fragility concerns. We have a very leveraged corporate sector that has taken on a lot of high risk debt. A lot of the debt is really junk bond variety with very poor covenants. And so you have a lot of outstanding debt that is corporate debt that’s very sensitive to rate hikes.

“Also tying their [central banks] hands are concerns about what may happen with the equity market.”

The Bank of England and US Federal Reserve have started to unwind Covid stimulus to rein in price pressures. Earlier this month, the Bank hiked interest rates from a record low of 0.1pc to 0.25pc, while Fed rate-setters expect to vote for six rises in borrowing costs over the next two years.

On fighting the economic effects of omicron, Ms Reinhart said many low and middle income countries that already “didn’t have a lot of gunpowder” for stimulus are facing even greater strains if economies are hit. A number of countries are “entering a phase where doing fiscal stimulus is going to be much more challenging”.

[Hancock]

3 minutes ago, sancho panza said:

This trend really does bode ill for social cohesion,historicallyalso portends the rise of extremist politicians

https://wolfstreet.com/2021/12/27/my-wealth-effect-monitor-wealth-disparity-monitor-for-the-feds-money-printer-economy-december-update/

 

I thought it was great watching our billionaire overlords fly off into space whilst us plebs on earth were locked down! (only playing)

Only have to see my love of landlords to see where we currently are ... and i'm almost rich enough to be a global 1%er! 

 

[sancho panza]

A great piece by Shedlock discussing the glaring inaccuracy/fraud of using Owner's equivalent rent rather than hosue prices in CPI,amongst other things.

It really is a shame that you have to read relatively unread blogs like Shedlock/Shaun Richards/Wolf St to get this sort of level headed analysis.You won't read it anywhere in the MSM.

 

https://mishtalk.com/economics/every-measure-of-real-interest-rates-shows-the-fed-is-out-of-control

 

[Sugarlips]

Turkey should be fine then 🙄

 

[JMD]

3 hours ago, Cattle Prod said:

Hey JMD, where'd you get that number, I'd like to check it out! You have to be very careful with unconventional gas reserves, they can die on their arse so to speak.

Edit

It is a very hard sector to leverage as @DurhamBorn says, as pure play gas is expensive to do unless you're in shale. I mentioned Antero resources on here which has 22x, but I wouldn't worry too much about it as it'll all filter through the big companies as hedges roll off and they see the benefits of the new price regime. Many are hedged at ~50p a therm which was reasonable a year ago but could have got 10x that last week. 

Unfortunately I only have the notes I made from 2/3 years back. Figures were taken from a reputable site, which I did also sanity check, but I can't recall which site it was. Exxon gas reserves were 85trillion cubic feet, BP 45trillion, Ovintiv 14trillion. Gazprom was in amongst the top ones also but at that time I wasn't interested in buying Russia, though since then I changed tack and Gazprom is now one of my biggest holdings. I accept what your saying and that 'gas reserves' can mean many different/misleading things. I think - but can't be certain - that the figures I've referenced were perhaps proven+'potential' reserves, I say this because recent report below (p24) lists the proven natural gas/natural gas liguids at approx 6trilliion...       (anyway happy to be corrected on any of this; plus for context I mainly buy the large integrated divi paying oilies but whatever the sector I also allocate 10% to small/speculative plays)                                                                                                                                                                                                                                                                          https://www.google.com/url?sa=t&source=web&rct=j&url=https://www.ovintiv.com/wp-content/uploads/2021/03/ovintiv-2020-annual-report.pdf&ved=2ahUKEwjrxtaUnYr1AhUHYsAKHZCFB-oQFnoECBQQAQ&usg=AOvVaw2LOnLMrIo4JNc6DQT2cPlc

[Froggy2000]

9 hours ago, Axeman123 said:

More likely they will start demolition/sabotage ASAP, to permanently keep them offline.

Agree.  They'll cut all the critical cabling / rip out the electronics as soon as they can so the decision is irreversible.

[ThoughtCriminal]

10 hours ago, Yellow_Reduced_Sticker said:

"Gas price falls as cargo ships divert to UK"

Huge cargo ships carrying liquid gas that were destined for China have changed course and are now heading towards the UK, as Europe remains trapped in a major supply crunch.

Paging @ThoughtCriminal Hope ya mates closed out there LONG gas postions?!

https://www.telegraph.co.uk/business/2021/12/28/cargo-ships-divert-gas-china-britain/

 

Meanwhile back at the ranch, our macbeth is at an ALL TIME YEAR HIGH!

 

He seems to still make money even when it falls, just not "fuck you" money. 😂

[Noallegiance]

16 hours ago, Axeman123 said:

This has to be deliberate sabotage:

 

It feels like governments have gone to war with the populous.

First break them down.

Then take out their energy supply.

Next is food.

We're under seige.

[jamtomorrow]

8 hours ago, Cattle Prod said:

this is all wrapped up in Russia geopolitical tension imho

I've come to the same conclusion. Russia are starting to look/sound cornered/desperate on energy policy, which is how "accidents" happen.

Have a look over Lavrov's recent rant, dredging up years of pent-up grievances which - whilst they are on the whole true and justified - also represents a significant breakdown in the usual facade of insouciance. Something's up this time.

Hard to know what's going on inside the oligarchy, but don't assume Putin is as all-powerful as he seems - Putin has free reign only for as long as he delivers.

Maybe he was supposed to "deliver" those long term gas contracts with the EU that have been talked about here? There's a definite feel of "now or never" around all of it: the West is at its weakest but Putin is suddenly looking and sounding old, Ukraine has "last throw of the dice" written all over it, and if the EU get through a winter without caving ... 2022 could be very "interesting" indeed when it comes to internal politics in Russia - Abramovich doesn't usually hang around when his managers stop winning.

[spygirl]

38 minutes ago, jamtomorrow said:

I've come to the same conclusion. Russia are starting to look/sound cornered/desperate on energy policy, which is how "accidents" happen.

Have a look over Lavrov's recent rant, dredging up years of pent-up grievances which - whilst they are on the whole true and justified - also represents a significant breakdown in the usual facade of insouciance. Something's up this time.

Hard to know what's going on inside the oligarchy, but don't assume Putin is as all-powerful as he seems - Putin has free reign only for as long as he delivers.

Maybe he was supposed to "deliver" those long term gas contracts with the EU that have been talked about here? There's a definite feel of "now or never" around all of it: the West is at its weakest but Putin is suddenly looking and sounding old, Ukraine has "last throw of the dice" written all over it, and if the EU get through a winter without caving ... 2022 could be very "interesting" indeed when it comes to internal politics in Russia - Abramovich doesn't usually hang around when his managers stop winning.

Putin is 69.

Russian life exp is 73.

Since covid Putin has been kept in a virtual  plastic bubble.

[jamtomorrow]

24 minutes ago, spygirl said:

Putin is 69.

Russian life exp is 73.

Since covid Putin has been kept in a virtual  plastic bubble.

Now *that* would be one hell of a Black Swan. I wonder how the succession would play out. Is there any case to be made for "orderly"? Whoever comes through needs to have the backing of the oligarchs *and* the strength to keep them in line.

[Loki]

1 hour ago, Noallegiance said:

Next is food.

 

Plenty of culling going on now due to unavailability of sufficient feed, or "Bird flu"

So the former means cheaper meat for a while (Glut), then.....

[Axeman123]

43 minutes ago, spygirl said:

Putin is 69.

Russian life exp is 73.

Since covid Putin has been kept in a virtual plastic bubble.

For balance though: Trump is 75 and virile, Biden 79 and retarded, and oldest serving US Senator Diane Feinstein is 88. US life expectancy is 79.

I don't think an unusually fit and active for his age billionaire like Putin will die at his countries average life expectancy.

[Loki]

3 minutes ago, Axeman123 said:

For balance though: Trump is 75 and virile, Biden 79 and retarded, and oldest serving US Senator Diane Feinstein is 88. US life expectancy is 79.

I don't think an unusually fit and active for his age billionaire like Putin will die at his countries average life expectancy.

Me neither it was a daft comparison. Look at Queenie

[M S E Refugee]

3 minutes ago, Loki said:

Me neither it was a daft comparison. Look at Queenie

She is still only a young Pup with her being a Lizard person.

 

This extremely unique Lizard-like creature is found only in New Zealand,  and grows at the slowest rates among all reptiles. Its lifespan averages approximately 60 years, but the Tuatara Lizard-like can easily surpass 100 years of age. Some scientists even claim that captive Tuataras could live to be 200 years of age!

[DurhamBorn]

On gas Repsol still looks very cheap longer term.Iv got a big holding so dont really want to add more,but if i didnt i would gladly buy them now.BP is going to £9 maybe before divs in the cycle,so still lots of profit on the table there as well.

This cycle outside of finance will reward those who do more for themselves.Just the ability to cook healthy cheap meals etc and do DIY.Inflation will introduce cost into all stages of production and anyone who does something for you your also paying their increased wages and increased taxes.

 

 

[Axeman123]

3 hours ago, Noallegiance said:

It feels like governments have gone to war with the populous.

The green agenda has always been to make energy expensive. Doing so through taxes is deeply unpopular. Destroying supply for years ahead is just the same play through deception. Even the silly windmills can be seen as just a bonfire of taxpayers cash, so they can say "lookhow much we have invested in energy!".

Imagine if all money wasted on renewables had gone into new nukes instead, we could have zero fossil fuels in our electric grid by now. With enough nuclear generation capacity electric central heating could even be viable.

[leonardratso]

hmm, yes ZH, but i had a god larf at this;

https://www.zerohedge.com/markets/investors-abandon-underperforming-esg-fund-aum-collapses-91-overnight