Credit deflation and the reflation cycle to come (part 5)

[Stuey]

1 minute ago, nirvana said:

 

Last weekend broski:

 

[Long time lurking]

It`s not a bailout 

#moneyshuffeling

[Axeman123]

Yellen worried credit will tighten, while simultaneously wanting to lower inflation. Not at all schizophrenic

 

[Long time lurking]

1 minute ago, Axeman123 said:

Yellen worried credit will tighten, while simultaneously wanting to lower inflation. Not at all schizophrenic

 

Rock and a hard place ,IMO it`s all going to be smoke an mirrors from here on in ,in an attempt to foll the markets ,basically a confidence trick,as they have to raise rates to try and contain inflation,which IMO is originating from outside their economy 

[Long time lurking]

 

[sancho panza]

2 hours ago, DurhamBorn said:

CBs will backstop western economies until the re-tool and onshore.The currencies might have to go down 50% yet to ensure that plays out.

DB jsut for c;arity,you expecting sterling/euro down 50%?Also agaisnt what? the dollar? or do you see the dollar losing 50% as well versus say a basket of EM currncies or gold?

 

I don't think that calls that far out there but it'll be an absolute shock for the polos and the many outsdie the basement.

We have some sterling cash for living costs but the rest of the sterling is in the BP/Shell/BATs etc that we're going to hold indefinteily.

Also I've said variously that I think the UK banking sector is fubar unless EM orientated eg Standard.Hvae you modeled much on it and the repercussions for sterlling if the solvency of teh likes of Barclays comes into question?

No pressure.Just intrgiued if you have a take given teh last week.

Posting a Luke Groemn vid where he says he thinks the US banks aren't in too bad a postion(I'd agree if your comparison is UK/EU )

Groemn takes your stance,powell has a chocie between deflationary depression or sustained inflation.Tlaks about the lack of buyers for USTs with low rates/hobsons choice facing powell

 

2 hours ago, Axeman123 said:

I personally also think Credit Suise is the Bear Stearns(BS) moment of this cycle, but the whole point IMO is that BS failed first and was bailed out, whereas Lehman Brothers(LB) failed second and at that point it was decided to make an example of them to prevent moral hazard. BS failed in March 2008, and intially this was seen by many as a problem solved, whereas LB didn't fail until the September of that year. The BS moment therefore won't be widely recognised as such until several months later when the LB moment occurrs. Eyes on September for that LB moment and the trap door opening IMO.

The counterpoint to all that is the S&P actually peaking in late 2007, well before BS or LB, although I would argue that this time around the fed injecting up to 2 billion in liquidity is going to shift that peak much later in the economic cycle. All of this actually fits with the Dave Hunter melt-up idea, at least to me as a layman.

I think the difference between Bear and Lehman was the quality of assets and timing.When Lehman went AIG got into trouble.ALso as I understand it lehman had an inferior asset base.It's by the by though really.

Im not too fussed on whrther S&P top is in or coming.Big thing for me was the hotmoney sector rolling voer late 21/early 22 that was my tell .Move to value generally precedes the shroting moment.Im still not short but will start pricing QQQ puts next week with a view to laying bets JUne time.we'll see.

I alsow wodner if we'll get a decent weak dollar pahse now the Fed has been focred to stop QT/hiking.

Im expecting a much broader credit crisis that takes out the sub BBB credit market some time in the not too distant.That's my BK.Thats when we'll see a banking crisis in UK/EU that they jsut can't bail without haricutting bond/equity holders at 100%

 

back in 2000 the time too short wasnt the top but the lower high of sep 2000.besuatiful simple chart below.

[Stuey]

19 minutes ago, Axeman123 said:

Yellen worried credit will tighten, while simultaneously wanting to lower inflation. Not at all schizophrenic

 

Surprised I've not heard Whack A Mole for a while as it did just spring to mind ...

[Pip321]

1 hour ago, nirvana said:

where?

 

You blinked and you missed it. The Bloomberg guys were all over it for the few minutes it lasted.😆😆

That was my point is Lloyds nudges up 1p and CS rises a bit from huge falls and they call it as panic all over. They seemingly have no clue about direction or the big picture

1 hour ago, Stuey said:

Everywhere brosif 

Predicted here by absolutely everyone noone.

But roll up roll up, great tips to be found here lolz.

I'd rather bet on Cas v Leeds Rhinos ce soir 

Agree…see above.

The Bloomberg mentality seems really limited and ‘wrong’ until it dawns on me that these guys trade the daily sentiment and make money from the amateur investors who are just behind these traders and are 30 minutes too late.

I am happy with the longer term bets.

In the meantime £5 on classy Cas.😉

Edited March 16, 2023 by Pip321

[Sasquatch]

1 hour ago, DurhamBorn said:

I bought some N91,i had sold some just over £2,but got them back,also bought some more TEF Brazil,SK Telecom,Latin America etc even though they arent down much.CBs sent the signal more inflation and higher rates for longer.It hasnt worked through yet,but massive transfer to EMs from bubble growth stocks will be the cycle.Bonds will likely flatline,but 2% to 3%pa loss to inflation i suspect.I suspect silver is very close to taking off as well.Printing with tight rates is new territory.I suspect it will cement an equity,over a debt cycle.

I'll give you a big sloppy kiss if that happens @DurhamBorn 

[baffledbyzirp]

3 hours ago, sancho panza said:

Physical gold.

I say that as someone who didn't used to be a goldbug until 2018.Lesson learned.

I also think the Western alliance will crumble under sustained pressure from declining dipsoable incomes.

The West has really shot itself in the foot with it's geopolitical moves over the last year.

 

Spot on preditcion DB.

ref that second bit,over last few days,I've sold up rolls royce,Wood group,Petrofac and newcrest and been buying EM's eg HBRL(thank you @honkydonkey), more SEDY(£11BRLA and BAT's.

Jsutnoticed the oilies are 15% down.BP at 475...Harbour 240.....petrobas$9.81

Was hoping for a down few days to get the newcrest moeny back in that market,so fingers crossed.

SP check out Woodside Energy Group (NPV), down over 25% and about as popular as a turd at a picnic. PE under 5 and dividend yield approaching 13%. Exposure to China and decent domestic demand. I am in heavily and will go again if there are any further falls. However, I went for Glencore last week and look what happened in the meantime! Real stuff that pays a decent dividend, strong free cashflow, in established markets, benefitting from developed infrastructure scream value to me. Then again markets move on whispers and fear rather than reason. GLA 

[Stuey]

13 minutes ago, Pip321 said:

 

I am happy with the longer term bets.

In the meantime £5 on classy Cas.😉

It's not usually my modus to go with form, I always try to pick the reversion. But gone with Leeds heavy today with a cover from a Free Bet 

 

[stoobs]

From https://news.sky.com/story/coal-power-stations-unlikely-to-provide-emergency-energy-top-up-next-winter-12834638

Quote

Companies running the UK's three remaining coal-fired power stations have told Sky News that they will not be able to commit to new emergency power contracts next winter, despite a government request to do so.

At the moment five coal units in three power stations are on standby to help avoid blackouts on very cold, very still days where wind power is limited; Drax, EDF's West Burton A and Uniper's Ratcliffe.

In a statement, a Drax spokesperson said: "At the request of the UK government, Drax agreed to temporarily delay the planned closure of its two coal-fired units to help bolster the UK's energy security this winter. Our coal units will close in March 2023 when this agreement comes to an end.

"The extension was a complex staffing, logistical and engineering project after a significant reorganisation of the power station was already completed to bring almost 50 years of coal-fired generation to an end.

"With two major maintenance outages planned on our biomass units this summer, and a number of certifications expiring on the coal-fired units, the units would not be able to operate compliantly for winter 2023."

A spokesperson for EDF said: "The two remaining units at West Burton A coal-fired power station in Nottinghamshire will close as planned on 31 March 2023, in line with the agreement signed last year. The station and its workforce have fulfilled the request to have 400MW available through winter '22/23 as an emergency standby option.

"There are a number of workforce and operational reasons that mean extending the life of West Burton A again is very challenging.

"For example, retaining suitably qualified and local personnel to ensure safe operation was a major challenge last year and, looking forward, becomes untenable as many of the workforce have stayed on well beyond planned retirement dates already."

Basically they did as instructed and ran coal generation down. Then the government realised they'd cocked-up the baseload and ask them to keep a few units going. Now they've run out of road as it would need significant investment to extend again.

The comments around natural loss of experienced workforce are telling and will also apply as we restart industries requiring skills we abandoned long ago.

[Loki]

9 minutes ago, stoobs said:

From https://news.sky.com/story/coal-power-stations-unlikely-to-provide-emergency-energy-top-up-next-winter-12834638

Basically they did as instructed and ran coal generation down. Then the government realised they'd cocked-up the baseload and ask them to keep a few units going. Now they've run out of road as it would need significant investment to extend again.

The comments around natural loss of experienced workforce are telling and will also apply as we restart industries requiring skills we abandoned long ago.

Hey they just "sleepwalked" into the problem, easily done, no one could have known, I'm sure the Climate change and energy correspondent who wrote the piece understands 

[Democorruptcy]

2 hours ago, DurhamBorn said:

I bought some N91,i had sold some just over £2,but got them back,also bought some more TEF Brazil,SK Telecom,Latin America etc even though they arent down much.CBs sent the signal more inflation and higher rates for longer.It hasnt worked through yet,but massive transfer to EMs from bubble growth stocks will be the cycle.Bonds will likely flatline,but 2% to 3%pa loss to inflation i suspect.I suspect silver is very close to taking off as well.Printing with tight rates is new territory.I suspect it will cement an equity,over a debt cycle.

Happy case of a macrostrategist becoming a lowly gambler.

[DurhamBorn]

47 minutes ago, sancho panza said:

DB jsut for c;arity,you expecting sterling/euro down 50%?Also agaisnt what? the dollar? or do you see the dollar losing 50% as well versus say a basket of EM currncies or gold?

 

I don't think that calls that far out there but it'll be an absolute shock for the polos and the many outsdie the basement.

We have some sterling cash for living costs but the rest of the sterling is in the BP/Shell/BATs etc that we're going to hold indefinteily.

Also I've said variously that I think the UK banking sector is fubar unless EM orientated eg Standard.Hvae you modeled much on it and the repercussions for sterlling if the solvency of teh likes of Barclays comes into question?

No pressure.Just intrgiued if you have a take given teh last week.

Posting a Luke Groemn vid where he says he thinks the US banks aren't in too bad a postion(I'd agree if your comparison is UK/EU )

Groemn takes your stance,powell has a chocie between deflationary depression or sustained inflation.Tlaks about the lack of buyers for USTs with low rates/hobsons choice facing powell

 

I think the difference between Bear and Lehman was the quality of assets and timing.When Lehman went AIG got into trouble.ALso as I understand it lehman had an inferior asset base.It's by the by though really.

Im not too fussed on whrther S&P top is in or coming.Big thing for me was the hotmoney sector rolling voer late 21/early 22 that was my tell .Move to value generally precedes the shroting moment.Im still not short but will start pricing QQQ puts next week with a view to laying bets JUne time.we'll see.

I alsow wodner if we'll get a decent weak dollar pahse now the Fed has been focred to stop QT/hiking.

Im expecting a much broader credit crisis that takes out the sub BBB credit market some time in the not too distant.That's my BK.Thats when we'll see a banking crisis in UK/EU that they jsut can't bail without haricutting bond/equity holders at 100%

 

back in 2000 the time too short wasnt the top but the lower high of sep 2000.besuatiful simple chart below.

Against EM currencies as a basket.Western currencies will experience different sized falls.I think this will be what shocks people later in the cycle.For a few decades EM currencies have always fallen and so have negated the gains in their equities etc.I think we are going to get the opposite now,their currencies going up against western and their companies earnings expanding.Its going to be a transfer of wealth from western to them.In simple terms something like TEF Brazil might see 7% divs expanding at 10%pa plus 6%pa currency gains,so maybe 23% compounding minimum for sterling buyers.

The cycle end could be collapse of western economies,or,more likely we re-tool enough and built new energy enough to start to slowly recover,from a much lower living standard.Its still fuzzy,but its looking very likely the west will be printing and the EMs wont be,or at the least will be less.I wouldnt go all in of course,there are still many companies here who should manage to keep up with inflation,but i think the cycle is very clear now.The CBs will bail out through QE and accept higher inflation,they have no choice of course.

 

[DurhamBorn]

13 minutes ago, Democorruptcy said:

Happy case of a macrostrategist becoming a lowly gambler.

You ruined my night saying BAT might bugger off to the US 

[CannonFodder]

Reshoring will be difficult as western currencies too high to be competitive - they need to drop

China also starting to starve western manufacturing of customers by not buying themselves and undercutting sales to other countries.

With cheaper wages and cheaper russian energy - they in good position

They switching imports from western goods to food which masks the decoupling. Thread below for those interested.

 

 

[DurhamBorn]

Just now, CannonFodder said:

Reshoring will be difficult as western currencies too high to be competitive - they need to drop

China also starting to starve western manufacturing of customers by not buying themselves and undercutting sales to other countries.

With cheaper wages and cheaper russian energy - they in good position

They switching imports from western goods to food which masks the decoupling. Thread below for those interested.

 

 

Exactly,hence why i think 50% might be on target as everything is turned on its head.

[Chewing Grass]

39 minutes ago, stoobs said:

From https://news.sky.com/story/coal-power-stations-unlikely-to-provide-emergency-energy-top-up-next-winter-12834638

Basically they did as instructed and ran coal generation down. Then the government realised they'd cocked-up the baseload and ask them to keep a few units going. Now they've run out of road as it would need significant investment to extend again.

The comments around natural loss of experienced workforce are telling and will also apply as we restart industries requiring skills we abandoned long ago.

Done the same with Nuclear, could have built some more of our own very successful AGR design which unlike PWR was intrinsically safe with years of experience but no.

Forced into buying a shit French design that is so expensive to build they used the Chinkies to finance it and now fucking about with Rolls Royce which will end badly.

Politicians of all flavours historically should be rounded up and put against a wall blindfolded.

[Democorruptcy]

1 minute ago, DurhamBorn said:

You ruined my night saying BAT might bugger off to the US 

It's only a maybe but the 30% US dividend tax is a worry.

[CannonFodder]

2 minutes ago, DurhamBorn said:

You ruined my night saying BAT might bugger off to the US 

Chelts will cheer you up! 

Take your mind off inflation and stuff

[Long time lurking]

 

[belfastchild]

16 minutes ago, CannonFodder said:

Chelts will cheer you up! 

Take your mind off inflation and stuff

'a cocktail of stout and english sparkling wine'

You absolute fucking heathens!
I would ask for that for my St Patricks Day pint tomorrow but I know NHS waiting lists are long and getting two kneecaps fixed might take a while.

[F150]

17 minutes ago, CannonFodder said:

Chelts will cheer you up! 

Take your mind off inflation and stuff

Trying to recreate cask

just make CASK

[Long time lurking]

Do we have a winner