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

[Sasquatch]

Still bargains out there. Grabbed a box of coffee from Lidl this morning. Down from £2.59 to £1.39 a bag. 

 

[Plan-b]

5 minutes ago, Cattle Prod said:

I don't think it's smart at all. I get what they are trying to do, and it'll accelerate short term investments companies were kind of thinking of doing anyway, like infill wells, and no doubt everyone will clap themselves on the back. But it will severely reduce oil and gas investment in the UK overall, I think. Main reason is because a large investment, like a field development, is a commitment for 20 years minimum for which your capital is sunk and essentially captive. To risk that, you need a stable fiscal regime. Number 1, above all else. I'm not allowed to look for stuff in a new area till the country's fiscal regimes and taxation histories are scrutinised. I could name you a list of third world countries that have more stable fiscal regimes than the UK, and so are more investable. That's completely gone now for the UK, and can't be regained.

Second, if you wanted to invest in an unstable country like the UK, the investment hurdles have all gone up as of yesterday. This will immediately render a bunch of marginal projects in the UK unprofitable. The industry does not use current oil prices to run economic models, they use a long term average. The prices differ from company to company bank to bank, but think something like $60. It creeps up slowly, with the average. So you run your economics on $60 oil, and now 25% more tax taken. Projects slip under investment thresholds, bye bye investment, jobs and energy security. But what about the investment tax relief? Well you can't plan on that either as its only for the next couple of years, and so will only help small projects that can be turned around in that time. i.e. wells here and there. It might incentivise a flurry of drilling, I can think of some risky wells I'd like to drill if I was getting 90% back, but most of them will be junk and then the sugar rush is over. If I went out an made a big discovery tomorrow with my new tax incentive, I still wouldn't be triggering major investment for around 4 years minimum. What am I going to do, make a guess as to how long they might extend the investment relief, or what new taxes they might dream up by then? No, not without a track record of stability I'm not. What does historically normal levels of price mean? Why choose to be so woolly and ill defined about that? Why are you looking backwards for price guide on a finite resource?! Seriously, this is banana republic stuff. But that's not fair either, banana republics understand this quite clearly and generally stick to the deal struck at the time of investment.

You just said it - if you invest quickly, you'll get tax relief (translation: we need a sugar high). But this kind of stuff can't be done quickly, I'm afraid. They seem to have missed this entirely, though we have told them. They seem to think you can plan and build this stuff like a block of flats in a couple of years, they need to get their arses out there and see what is really involved. And it's a big wide world out there beyond the UK.

Thanks for that very interesting! So for the UK based investor are UK based O&G companies (like BP - Shell) now partially uninvestable?

[Libspero]

4 minutes ago, Cattle Prod said:

You just said it - if you invest quickly, you'll get tax relief (translation: we need a sugar high). But this kind of stuff can't be done quickly, I'm afraid. They seem to have missed this entirely, though we have told them. They seem to think you can plan and build this stuff like a block of flats in a couple of years, they need to get their arses out there and see what is really involved. And it's a big wide world out there beyond the UK.

I'm not qualified to comment on the commercial/engineering aspects of your post,  it's clearly a field you are far more familiar with. 

I imagine discussions between government and oil majors to define exactly what everything means are currently going on behind closed doors..  and I think the government would be happy with short term investment (depending on the definition of short term).   The direction of travel is clearly towards renewables so I expect they are looking for a sticking plaster to cover them for a decade at most.   If throwing incentives at it can get some quick fracking gas or oil out..  then so be it. If it puts companies off long term projects,  that's probably not bad either (arguably),  because hopefully long term there won't actually be a need.   

I guess the other alternative open to them is to invest heavily abroad as you mentioned (or in renewables) so as not to make a profit to tax.   The only thing it does guarantee is that companies are going to invest something somewhere and not simply sit on the cash or pass it immediately to shareholders.

[feed]

They still think OPEC is coming to the rescue 

https://www.teletrader.com/g7-wants-opec-to-up-oil-production/news/details/57963389?internal=1

Energy ministers from the Group of Seven called on the Organization of the Petroleum Exporting Countries to increase OPEC's oil production.

In a joint statement on Friday, the G7 ministers stressed that the OPEC "has a key role to play" in light of the volatility and high prices in global energy markets and the supply issues they are facing, according to the Financial Times.

G7 energy, climate and environment ministers held a meeting in Germany to discuss the situation in the sector earlier this week.

[Democorruptcy]

7 hours ago, Yadda yadda yadda said:

Effectively everyone is now a benefits recipient. £400 for utilities and £150 for council tax (latter is 'only' around 80% of the population). They're not reducing taxes on utilities. They're taking your money and giving it back to you. Of course they can easily stop giving it back to people they don't like.

Excuse me but I'm not benefit scum like you lot. I won't be getting anything from RichHe because I don't have a utility or council tax bill.

[M S E Refugee]

38 minutes ago, Sasquatch said:

Still bargains out there. Grabbed a box of coffee from Lidl this morning. Down from £2.59 to £1.39 a bag. 

 

I have been hoarding Coffee from Lidl and Aldi but they seem to be rationing it, there only ever seems to be 2 or 3 packets on the shelf.

[Plan-b]

4 minutes ago, Democorruptcy said:

Excuse me but I'm not benefit scum like you lot. I won't be getting anything from RichHe because I don't have a utility or council tax bill.

Best place to be I regret leaving the parents house, life of riley.. 

[Democorruptcy]

2 hours ago, leonardratso said:

wow real anger last few days at the govt and its great plans.

got to agree, i see my gross and net figures on my payslip and ive got to wonder wtf, why do i bother.

Ah hang on, i know why;

Sorry to repost that picture, i read that story on DM yesterday before it was posted here, but i just cant get over how fat that bloke is, i wonder how many customers will now go back to the mrs's business having seen that, lets be honest here, that fat fucker has no participation in her business, apart from  maybe eating pies in support, i mean come on who in their right mind would let him be seen as part of a beauty business.

I've seen fatter.

[Axeman123]

28 minutes ago, Cattle Prod said:

I'm genuinely struggling to see any other reason to do this.

I read a thread on twitter recently (can't find the link) sugesting failure is a superpower for the left. Briefly, various examples of policy in California that cause electric power shortages, which then give the state power to ration energy and/or exempt big tech. Maybe that is the end goal here.

The only other explanation IMO is that we are ruled by exremely un-serious people: The immense gravity of this decision completely passing them by.

4 minutes ago, M S E Refugee said:

I have been hoarding Coffee from Lidl and Aldi but they seem to be rationing it, there only ever seems to be 2 or 3 packets on the shelf.

I have been seeing a lot of that recently, loss leader products all or nearly gone but a full shelf of the next range up .

On the subject of coffee I hope you are hoarding whole beans rather than ground if you want it to keep a while.

[leonardratso]

24 minutes ago, feed said:

They still think OPEC is coming to the rescue 

https://www.teletrader.com/g7-wants-opec-to-up-oil-production/news/details/57963389?internal=1

Energy ministers from the Group of Seven called on the Organization of the Petroleum Exporting Countries to increase OPEC's oil production.

In a joint statement on Friday, the G7 ministers stressed that the OPEC "has a key role to play" in light of the volatility and high prices in global energy markets and the supply issues they are facing, according to the Financial Times.

G7 energy, climate and environment ministers held a meeting in Germany to discuss the situation in the sector earlier this week.

This reminds me of stuff that happens at a micro level at work, where a bunch of people get together to discuss big changes (or small ones) to well embedded systems but they exclude the people or person that is the real expert in that system or has a big knowledge of it, they then sign off said changes and the people/person of expertise find out about it 3rd hand eventually, the experts then explain  why that cannot or will not work and kybosh the entire thing after all that time/money was wasted on it, or have to substantially rework the changes to actually get whats desired, or in my case i just tell them to fuck off (in not so few words) and leave, or totally ignore it and watch it burn and fail with my feet up and some old laurel and hardy movies to watch. Its usually a useless upper management or promoted beyond their merit people that do the initial discussion.

I suspect the quoted situation is similar in being tone deaf to the situation. Eventually reality catches up with them, but wont actually stop the same process happening again and again, like uncle adolf issuing orders to a no longer existing army.

[afly]

£1700 on top of salaries. Their energy will actually be cheaper than it has been for years (assuming they spend it on energy that is)

 

[Democorruptcy]

1 hour ago, belfastchild said:

Bought a load of reduced price boxes of good quality sausages. The reduced price is what they were pre covid. (4.70 odds when they were 4.99 beforehand).

I knew it! The truth has come out now. All that about reduced stuff might have been left out in the sun, was so that it put other people off buying the reduced stuff and now you have stepped in and bought it yourself.

@Yellow_Reduced_StickerNo need to worry about his earlier post, it was purely tactical, keep buying the yellow ticket reductions!

[Democorruptcy]

28 minutes ago, M S E Refugee said:

I have been hoarding Coffee from Lidl and Aldi but they seem to be rationing it, there only ever seems to be 2 or 3 packets on the shelf.

Lidl coffee is half price this weekend. If ever they don't have stuff on the shelves I always ask a member of staff if they have more in the back and they often do. They seem to drip feed the on offer stuff to the shelves, to make it last longer. That coffee is a maximum of 6 per person and partly explains why people are still wearing covid masks.

[belfastchild]

13 minutes ago, Democorruptcy said:

I knew it! The truth has come out now. All that about reduced stuff might have been left out in the sun, was so that it put other people off buying the reduced stuff and now you have stepped in and bought it yourself.

@Yellow_Reduced_StickerNo need to worry about his earlier post, it was purely tactical, keep buying the yellow ticket reductions!

Point of order, he/she/it Mr Democorrupty.
My original point was the reduced items that had longer dates on them than a day or two.
As you were.

[Starsend]

1 hour ago, Cattle Prod said:

No, again you need to look at where BP and Shell make most of their profit (not the UK), they're truly multinational. More UK centric companies don't look attractive to me now.

Do they not pay their taxes in the UK though?

[Axeman123]

2 minutes ago, Cattle Prod said:

So I was wondering where Biden would get the money to jazz up the stock markets before November, as he can't get spending bills through the Senate. Well, here's a way:

Firstly removing a debt doesn't put a lump of money directly into the economy, it just eases peoples' monthly outgoings. This might be a hit with his base, but I doubt it will be highly stimulative unless it unlocks additional personal borrowing by formerly indebted persons.

Secondly, assuming this is just an executive order, I suspect he can only suspend collections and dare a successor to reinstate them.

[JMD]

8 hours ago, invalid said:

 

For those of us who work to pay for all this it does rather feel like they are trolling us. Ok, we all get the £400 but for workers its going to be a close to zero sum game as we will have to pay for it one way or another.

These people are just never happy and always want more.

Some great stereotypes in the examples below from todays online DM.

57 year old woman claiming sick for depression and anxiety (not to belittle that as its a real difficulty for many). Article says she is retired - no mention of if she gets a pension. Assume if she does it not much as she gets UC.

Fat dad for a change in the next one. They essentially run a nail bar with hairdressing and massages with fancy stones. I'm afraid they are going to get hit hard over the next couple of years, especially in a town like Wisbech.

 

Then there are some others which sound like hobby jobs - a magician, a lifestyle expert, a coffee expert (really?), a personal trainer. A couple seemed to have real jobs.

 

Carole Anne Wilson, 57, who lives in Wrexham, Wales, is retired with a series of illnesses and lives alone on Universal Credit She said: 'There's just not enough being done ... there's nowhere for me to turn 'In January (2022) after all my bills I had something like £200 a month left to get food and fuel or whatever,' she said.

'Now I've got £12.36 left and I don't get my money until June 18.

'My anxiety has gone through the roof. I just can't cope with the anxiety and the depression, it just gets worse and worse.

 

 

 

 

 

 

Are those stories for real? Unfortunately kinda yes, which means we really are in a death spiral aren't we?!..    But on a lighter note, reminds me of the satirical newspaper 'The Daily Mash'...                                                                    https://www.thedailymash.co.uk/politics/magic-money-tree-provides-unexpected-bumper-crop-20220526221462                             

[Loki]

Just now, Axeman123 said:

I doubt it will be highly stimulative unless it unlocks additional personal borrowing by formerly indebted persons.

Enter leveraged trading, stage left 

[Pip321]

49 minutes ago, afly said:

£1700 on top of salaries. Their energy will actually be cheaper than it has been for years (assuming they spend it on energy that is)

 

That can’t be right. There must be a cap per household.

If multiple claims per household are made then I will ensure my tax bill is legally £0 for 22/23. 

Indeed I will also consider paying into 2 x SIPPs (Mr & Mrs) and get the £720 (£1440) tax relief.

And then I will take a dump on the door step of the Houses of Parliament.

Well 2 out of 3 ain’t bad….I will probably not bother loading up the SIPPs.😉

[Pip321]

16 minutes ago, Cattle Prod said:

So I was wondering where Biden would get the money to jazz up the stock markets before November, as he can't get spending bills through the Senate. Well, here's a way:

 

10,000 relief to 46 million borrowers who are also most likely to dabble in the stock market would do it. I wonder can the Senate block this? It's not actually spending, it's already spent.

Massive vote winner in the UK….students, parents of students and anyone under 30. Redresses the whole ‘triple lock, splash money on the unproductive old wrinklies, 40% of welfare is pensions’ slant. 

So in total it would move about 47 votes…because those spotty lazy arsed youngsters don’t think it’s cool to vote and then are surprised when they get pissed on 😆😆😆

Ps….it’s Friday afternoon, sunny in Yorkshire. Time for beer.😉👍🏻

[Democorruptcy]

3 hours ago, sancho panza said:

Weak dollar phase beginnign?

Dailies ..yes

weeklies ....looks like a lonely red candelstick on the right

monthlies.... yet to confirm
 

Could be the exponential phase for oil/gold inbound.We'll see I guess.

I was looking at Point & Figure charts for PMs last night. $Gold has given a 'Low Pole Reversal' this week but only on the Daily not Weekly. $Silver Daily or Weekly has nothing positive at the moment.

https://stockcharts.com/freecharts/pnf.php?c=%24GOLD,P&listNum=

[feed]

1 hour ago, leonardratso said:

This reminds me of stuff that happens at a micro level at work, where a bunch of people get together to discuss big changes (or small ones) to well embedded systems but they exclude the people or person that is the real expert in that system or has a big knowledge of it, they then sign off said changes and the people/person of expertise find out about it 3rd hand eventually, the experts then explain  why that cannot or will not work and kybosh the entire thing after all that time/money was wasted on it, or have to substantially rework the changes to actually get whats desired, or in my case i just tell them to fuck off (in not so few words) and leave, or totally ignore it and watch it burn and fail with my feet up and some old laurel and hardy movies to watch. Its usually a useless upper management or promoted beyond their merit people that do the initial discussion.

I suspect the quoted situation is similar in being tone deaf to the situation. Eventually reality catches up with them, but wont actually stop the same process happening again and again, like uncle adolf issuing orders to a no longer existing army.

Probably something along those lines.  I imagine it's inconceivable to them, that they could be wrong.  

But if your assessment of a problem is wrong, then everything you do to try to fix it, will make it worse.  

 

[Sasquatch]

1 hour ago, Democorruptcy said:

Lidl coffee is half price this weekend. If ever they don't have stuff on the shelves I always ask a member of staff if they have more in the back and they often do. They seem to drip feed the on offer stuff to the shelves, to make it last longer. That coffee is a maximum of 6 per person and partly explains why people are still wearing covid masks.

Not at all bothered at our Lidl. I took 14 bags. The bloke on the checkout said he was going to grab a box as well after seeing our haul!

[Pip321]

44 minutes ago, Sasquatch said:

Not at all bothered at our Lidl. I took 14 bags. The bloke on the checkout said he was going to grab a box as well after seeing our haul!

I now understand the difference between investor and trader. 

An ‘investor’ would have agreed with him and wished him well…..

A ‘trader’ would have bought the rest on the shelf and sold the checkout guy one at a premium. 😉

[Bobthebuilder]

Once again I would like to say thanks to all the great posters on this thread.

I have not traded anything for a while as I got a bit confused a while ago and decided to just sit on my hands.

My portfolio is the highest its ever been also, this month of May has been the best divi month I have had by some margin.

Going to celebrate tonight with some Lidl lager and a cheese and bacon toastie.

Cheers all.