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

[Errol]

19 minutes ago, feed said:

Whilst there is definitely a shift away from the USD.  It's far from over.   

But obviously that chart doesn't show 2022 or the future acceleration of the situation due to the Western response to the Russian special military operation.

[feed]

20 minutes ago, Errol said:

But obviously that chart doesn't show 2022 or the future acceleration of the situation due to the Western response to the Russian special military operation.

Sure.  Dollar decline over the next decade, no doubt.  But being realistic, there is no chance China is walking away from this anytime soon. 

 

 

[DurhamBorn]

2 hours ago, Yellow_Reduced_Sticker said:

PM and Chancellor unified in announcing ‘single biggest tax cut in a decade’ 

https://uk.yahoo.com/finance/news/pm-chancellor-unified-announcing-single-055812812.html

 

Tight labour market but £140 billion on working age welfare.Notice the NI allowance is now the same as Income Tax,merge them together and suddenly all pension income is taxed an extra 12%.

 

[ThoughtCriminal]

1 hour ago, JMD said:

(If not too late) Well you gave us a clue and wrote 'astonishingly cheap'... so basing my answer on that info. I will guess £100k?

You missed the boat J! lol 

 

Was £27k, unbelievably enough

 

 

 

 

 

[Pip321]

3 hours ago, Axeman123 said:

@Pip321 exactly, his advice is fine for people like him but deadly to 20 year olds flipping burgers. An intelligent man like him must know his crypto content is overwhelmingly reaching the latter group, and it isn't even like he needs the money. A quick google tells us he is ex-Goldman Sachs, retired at 36, and lives on Grand Cayman (famous for having no income taxes!).

As an example of the disconnect: I saw one of his 1 hour+ interviews on another channel* a while ago, where he was breezily mentioning most people he knows on Grand Cayman have ten million dollars or more in assets and that, regardless of whether they are primarily real estate or hedge fund guys, they are all building cash positions but not liquidating wholesale. This was the kid interviewing him, and presumably a good proxy for the typical audience member:

*https://www.youtube.com/watch?v=qS7Q1wTuS_Y

 

Thanks for posting. Interesting.

Having listened to this (on my nice long walk through the countryside) I would probably tone down my glowing assessment of his macro understanding. He understands the retrospective but looking forward probably still too focussed on BTC and tech. I still think fundamental digital will succeed…just for me the main issue is  it i think it’s more likely to be another (as yet created) digital currency/currencies. 

Too much wooo, ahhhhh (false awe) from the interviewer on things that are quite basic  

Interestingly though towards the end of the long interview he confirms he isn’t a geopolitical expert…but I think he got the assessment of the East West split, the desire to not use the US dollar in the East and China sitting in the wings and watch Taiwan fairly spot on. Better than his macro forward assessments. 😉

[DurhamBorn]

Here we go again,Telegraph with an article they likely got from us on here.

https://www.telegraph.co.uk/business/2022/07/03/public-sector-pensioners-will-winners-inflation-disaster/

Massive transfer of wealth.As i say coppers in my close will see the INCREASE in their pensions in 3 years equal a median private sector workers pension over a LIFETIME.So coppers get 10x the retirement benefit of those paying for it on the precept.Of course it includes all other state workers,incredible really.Of course with bennies the same the loss of spending power on everyone else will be their own PLUS all the retired public sector and bennies.Of course this cant go on,systemic collapse would happen first.

[Pip321]

22 hours ago, Underwhelmed said:

Uncle Dave's latest output, think  at this stage he's just winging it

 

I try to listen to this guy but like most YouTubers it takes an hour to make 3 points.

Basically does this guy believe we are going to have a massive melt up (because sentiment is currently low and the fed will pivot) and only then we will see a huge crash.

If , he may be right (if people can forget about Russia, China, sanctions etc) but I think that’s a market sentiment/trader type call. 

[Axeman123]

1 minute ago, Pip321 said:

...but I think that’s a market sentiment/trader type call. 

(I haven't watched that vid, as DH said on Twit Tw@ his forecast hasn't changed so why bother IMO)

I can see the massive market over-reaction to the upside upon an innevitable pivot, in response to the rapidly growing recessionary signs in the braoder economy, as part of the same macro call about "feeble" tightening and deeply-negative real rates being enough to rapidly induce recession.

He has in the past pointed out his "crazy" calls becoming consensus or dismissed as just sentiment eventually. If he actually nails it this time it will be quite something.

[M S E Refugee]

3 minutes ago, Axeman123 said:

(I haven't watched that vid, as DH said on Twit Tw@ his forecast hasn't changed so why bother IMO)

I can see the massive market over-reaction to the upside upon an innevitable pivot, in response to the rapidly growing recessionary signs in the braoder economy, as part of the same macro call about "feeble" tightening and deeply-negative real rates being enough to rapidly induce recession.

He has in the past pointed out his "crazy" calls becoming consensus or dismissed as just sentiment eventually. If he actually nails it this time it will be quite something.

Francis Hunt contends that Hunter's melt up has already occurred.

[Castlevania]

19 minutes ago, M S E Refugee said:

Francis Hunt contends that Hunter's melt up has already occurred.

So does Mish Shedlock

[Lightscribe]

44 minutes ago, DurhamBorn said:

Here we go again,Telegraph with an article they likely got from us on here.

https://www.telegraph.co.uk/business/2022/07/03/public-sector-pensioners-will-winners-inflation-disaster/

Massive transfer of wealth.As i say coppers in my close will see the INCREASE in their pensions in 3 years equal a median private sector workers pension over a LIFETIME.So coppers get 10x the retirement benefit of those paying for it on the precept.Of course it includes all other state workers,incredible really.Of course with bennies the same the loss of spending power on everyone else will be their own PLUS all the retired public sector and bennies.Of course this cant go on,systemic collapse would happen first.

Which is exactly what I’ve been saying since I first started working in the emergency services 15 years ago. The gold plated  pensions legacy was always unsustainable, something dreamt up for the benefit of one or two generations.

I used to read the work obituaries, one guy retired in the late 60’s. 2015 he died, claimed pension over 45 years.  

Boy I used to walk to school with, could never work out why his dad didn’t have a job. He used to be an actuary for Legal & General, retired early doors at the height of index linked annuities. Inherited his mums house in the same road, still alive well into his late 80’s getting a new car every 2-3 years.

Someone has to support that and the younger generation can barely support themselves.

[Shamone]

1 hour ago, DurhamBorn said:

Here we go again,Telegraph with an article they likely got from us on here.

https://www.telegraph.co.uk/business/2022/07/03/public-sector-pensioners-will-winners-inflation-disaster/

Massive transfer of wealth.As i say coppers in my close will see the INCREASE in their pensions in 3 years equal a median private sector workers pension over a LIFETIME.So coppers get 10x the retirement benefit of those paying for it on the precept.Of course it includes all other state workers,incredible really.Of course with bennies the same the loss of spending power on everyone else will be their own PLUS all the retired public sector and bennies.Of course this cant go on,systemic collapse would happen first.

Incredible how we got in this state. So few people are aware of just how unfair it is. It made me go to the dark side and get a pubic sector job.

[Calcutta]

1 hour ago, DurhamBorn said:

Here we go again,Telegraph with an article they likely got from us on here.

https://www.telegraph.co.uk/business/2022/07/03/public-sector-pensioners-will-winners-inflation-disaster/

Massive transfer of wealth.As i say coppers in my close will see the INCREASE in their pensions in 3 years equal a median private sector workers pension over a LIFETIME.So coppers get 10x the retirement benefit of those paying for it on the precept.Of course it includes all other state workers,incredible really.Of course with bennies the same the loss of spending power on everyone else will be their own PLUS all the retired public sector and bennies.Of course this cant go on,systemic collapse would happen first.

We need to put this in stealth and charge the pricks to see it. 

[ThoughtCriminal]

Fair assessment?

[Virgil Caine]

48 minutes ago, Castlevania said:

So does Mish Shedlock

I like Mish Shedlock’s site mainly because he keeps his articles short and to the point.

[Boon]

24 minutes ago, ThoughtCriminal said:

Fair assessment?

I think these choices have been presented by a few people although in different parameters.... basically between a rock and a hard place.

However I dunno why there is even a contest for it being a choice? The first option will lead to riots and crime which politically is bad. The second option will not in the short run, not least because you can simply print your way over a lot of the problems. The rest can be blamed on Putin, much like Emmanuel Goldstein in 1984, he is hated so much people will accept any old crap.

The short run is all the Dems need really, to get re-elected. After that if shit falls apart which it probably does, the Republicans inherit the shittiest of sticks.

From the view of the average joe who votes:

QE = good, asset prices go up, stimmies for the poor
0% rates = ditto, zombie companies can keep providing jobs
20% inflation = can be tried to be maintained in short term with token wage rises, rest blamed on the Putin price hike
Destroy US dollar = effect less noticeable as other Western currencies may depreciate more if the US Treasury is still seen as safe. $3000 gold would be meaningless to the average person who doesn't have any.

[Virgil Caine]

1 minute ago, Boon said:

I think these choices have been presented by a few people although in different parameters.... basically between a rock and a hard place.

However I dunno why there is even a contest for it being a choice? The first option will lead to riots and crime which politically is bad. The second option will not in the short run, not least because you can simply print your way over a lot of the problems. The rest can be blamed on Putin, much like Emmanuel Goldstein in 1984, he is hated so much people will accept any old crap.

The short run is all the Dems need really, to get re-elected. After that if shit falls apart which it probably does, the Republicans inherit the shittiest of sticks.

From the view of the average joe who votes:

QE = good, asset prices go up, stimmies for the poor
0% rates = ditto, zombie companies can keep providing jobs
20% inflation = can be tried to be maintained in short term with token wage rises, rest blamed on the Putin price hike
Destroy US dollar = effect less noticeable as other Western currencies may depreciate more if the US Treasury is still seen as safe. $3000 gold would be meaningless to the average person who doesn't have any.

All roads lead back to Option A.

[Ash4781b]

2 hours ago, DurhamBorn said:

Here we go again,Telegraph with an article they likely got from us on here.

https://www.telegraph.co.uk/business/2022/07/03/public-sector-pensioners-will-winners-inflation-disaster/

Massive transfer of wealth.As i say coppers in my close will see the INCREASE in their pensions in 3 years equal a median private sector workers pension over a LIFETIME.So coppers get 10x the retirement benefit of those paying for it on the precept.Of course it includes all other state workers,incredible really.Of course with bennies the same the loss of spending power on everyone else will be their own PLUS all the retired public sector and bennies.Of course this cant go on,systemic collapse would happen first.

A number of the councils are skirting close. Heard a few recruiters talking about s151 officer roles. Difficult jobs with Huge pressures on special educational needs funding, adult social care, vacant town centre units and huge pension costs, staff all working from home etc. Central gov’ is likely to bailout to stop huge increases in council tax . Business rates is also in a total mess. Those that are left will have to pay more business rates . I don’t seem how local gov’ financing really works anymore but they can’t have it fail uncontrollably.

[DurhamBorn]

43 minutes ago, ThoughtCriminal said:

Fair assessment?

How about increase rates but still do some QE like i predicted might be an outlier  .Also,the amounts matter,they can tighten be printing less money over the next 5 years than the last 5.I think they will aim for 6% inflation next year.

[M S E Refugee]

I wish we could go back to the days when I could just put my money in a high interest account and not worry about it.

If somebody had told me 20 years ago that by 2022 savings accounts would be losing you money due to rampant inflation and it would be far safer to put my money into Sterling Silver Medals depicting the life of Jesus, I would have thought you were fucking crackers, but here I am.

[Axeman123]

1 hour ago, ThoughtCriminal said:

Fair assessment?

I am broadly with Len Alden on this one, 1940s not 1970s. We will see (relatively speaking) rapid on/off alternating loosening and tightening to keep the economy swinging back and forth from boom to bust over the coming cycle. Inflation will be allowed to run a bit but reined in with tightening when it looks to be running away, and then reignited with loosening and the cycle repeats. As DB predicted that may even at points involve feet on the gas and brake pedals at the same time, ie QE + rising rates. Presumably the end of the decade calamity will be when that finally loses effectiveness.

TL:DR: Option C, aka ABABABABABAB

2 hours ago, M S E Refugee said:

Francis Hunt contends that Hunter's melt up has already occurred.

2 hours ago, Castlevania said:

So does Mish Shedlock

Maybe, Covid etc would certainly throw any model into disaray.

This would be the first ever relief rally that everyone accurately called though.

That would also imply an asymetric market response, where deeply negative real interest rates have crashed it but pausing rate hikes has no real effect.

[Virgil Caine]

1 hour ago, DurhamBorn said:

How about increase rates but still do some QE like i predicted might be an outlier  .Also,the amounts matter,they can tighten be printing less money over the next 5 years than the last 5.I think they will aim for 6% inflation next year.

Given the choices are not pleasant it is almost nailed on they will try to follow something like this course. The unwritten part of the Feds job description is to protect the capital market system. That requires avoiding systemic failures. A second Great Depression or a collapse in the value of the dollar probably both come in that category.  They are not going to be to be concerned about higher unemployment as long as it does not go above a certain level or letting certain over leveraged sections of the economy getting caned so long as that does not undermine the wider system.

At the moment the Fed is still active in the Reverse Repo market so it is still unwinding the QE undertaken in the pandemic. The commercial  banks are also benefiting from the trade as they have surplus cash which they can unload at a guaranteed profit

https://talkmarkets.com/content/us-markets/reverse-repos-hit-a-new-record-high-of-233-trillion-plus-a-qa-on-free-money?post=359586

 

 

[Talking Monkey]

2 hours ago, Shamone said:

Incredible how we got in this state. So few people are aware of just how unfair it is. It made me go to the dark side and get a pubic sector job.

Will the public sector pensions be there in 20 years time in the form that say a 45 year old public sector worker currently expects

[Talking Monkey]

1 hour ago, DurhamBorn said:

How about increase rates but still do some QE like i predicted might be an outlier  .Also,the amounts matter,they can tighten be printing less money over the next 5 years than the last 5.I think they will aim for 6% inflation next year.

DB what's your view on 10 years out, do you see it going to total shit globally like Hunter and Dr Tim forecast. You've mentioned several times the UK could run aground due to the idiotic policies being executed by the tories, but could there be a global depression in the 2030s where it all falls over

[sancho panza]

On 02/07/2022 at 11:49, Pip321 said:

I could do with an opinion…hope people don’t mind.

I tried to summarise the context of my other investment choices (eg why I am staying with my Pru SIPP which has limited fund choices, my temporary shift to about 45% cash within the SIPP due to long switch notice periods, but mitigated with direct investment in the ISA some stocks etc) but I end up reeling on and on… so I will just get to the question. 

I have spotted a fund in the SIPP “BlackRock Gold and General Class D Acc” 1.17% charge. Top 10 companies listed below…the usual suspects. Also the price has dipped a bit.

The main context here is my limited choice of juicy macro funds in the Pru and the investment would be only a small proportion….better than nothing? 

Interested to know if anyone uses this fund or similar as a hedge.

A HL version is also offered in similar terms.

https://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/b/blackrock-gold-and-general-class-d1-accumulation

Quite a few expensive stocks in there. 

Personally at todays prices I'd pick up newcrest, Kinross, b2g and barrick in that order. Ie newcrest better value than barrick. 

Dyor

On 02/07/2022 at 14:48, M S E Refugee said:

JP Morgan sounds alarm over oil price prospects https://www.rt.com/business/558256-jp-morgan-alarm-oil-prices/

JP Morgan says Oil may reach $380 a barrel.

 

Much as your average basement dweller is well ready for such a scenario,  the demand destruction that will accompany $380 oil