UK
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Posts posted by UK
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16 hours ago, Spekulatius said:
A cording to Ukrainian sources, the Russians are losing 500-600 soldiers on average/ day. That estimate of combat count casualties may be a tad optimistic, but I think Russia also loses people where Ukraine does see them (thickness, accidents, weather related and other attrition losses etc). If the losses are about correct, and we take a 550 average loss number per day, then Russia is going to lose 200k soldiers/ year and will need to new recruitment drive every year to keep this up. The 300k they raised in fall 2022 will be spent next fall.
We probably need to give Ukraine more decisive weapons that allow for deceive wins in addition to the ability to strike these drone bases that continue to bash the Ukraine infrastructure.
Europe is a relatively good shape. My brother is telling me that energy prices even for consumers are now rapidly dropping and the economy isn’t too bad. The meltdown from an energy crisis has been avoided for sure. Gas is at 64 Euros/MWH down from a peak of over 300 Euros, but still tripple the price from 2020. It’s won’t get all the way back to 2020, but I think it could go to 30-40 Euro pretty quickly. Storage in Germany is still 90.7% full and 83% in Europe overall.
Further ore, the discounts on Russian crude keep increases as they have to dump this on fewer and fewer buyers apperntly.
Those same sources are saying, that Russia is preparing at least 500-600 K additional mobilization for this spring offences. Even yet there is >400 K prisoners left (they also stared to use them for war production, if not for meat grinder). Still no martial law officially, but they are starting to seriously subjugate economy and oligarchs for war effort (those not on board could loose their influence, or live, or both). Also they increased social spending for low income people (common prosperity anyone?) substantially. This is the same disillusioned group they are targeting to voluntary join war, by offering quite generous money for service or for family, if participant dies (https://youtu.be/Jn6jOlpMg1Y). Most importantly it seems there is still quite high support fir war in general public, they are not happy about the war progress and direction, but even more not prepared or willing to accept defeat. Such current situation is not very favorable or even sustainable for Ukraine, math is not on their side. So now it is almost sure, that more serious equipment, like heavy tanks, is coming from the west soon. This probably will be seen as an escalation by Russia.
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19 minutes ago, Jaygo said:
Gimmicky title eh! I should really write a book.
IN the event we enter into a period of falling prices over and above the stop in prices rising. Is there an asset class other than bonds/cash that will perform well?
Everyone is talking inflation and I just dont see the causes lasting too long. The main causes have pretty much stopped.
1. The money supply was increased so prices should rise in tandem with those increases. Stopped
2. Workers were paid to not produce, that is extremely inflationary and has stopped for now.
3. People who were not getting paid or working before got a nice little boost of payments, this was inflationary in common goods like food and drinks, smokes and small discretionary. Stopped but could start again with UBI (god i feel like an asshole saying it, but Sin stocks here we come if we get UBI)
4. Assets inflated quickly due to interest rate policy taking even more people out of the workforce.
5. China and supply chain issues are healing slowly it seems.
I'm not saying outright deflation is very likely but i could definitely see a period of a year or two where prices stop increasing and recede at the same time as interest rates remain above what the economy should bare. Why? Well an economy if left to its own devices is actually pretty simple. The more we produce the more there is for everyone and prices trend down as life improves. This was interrupted but that interruption is ending.
1. If we go back to pre-covid times the economy in north America was robust but certainly not a runaway train, healthy 2 % growth with interest rates probably belong in the 1-3 % range for our demographics.
2. All the talk of deglobalization is probably BS. If china doesn't want to play ball what are the population going to do? China has not shown much global aggression and has stayed regional in their ambitions. Chances are they would like to continue on their modernization and not upset the apple cart. They main concern for the CCP is the billion people who refuse to consume on our level, thus eliminating a internally funded economy, To keep the populace happy ( docile ) the people must be occupied and feel the wealth effect. (just like us) so my guess is Globalization is back and running in no time.
My thinking is Continental North American focused growth stocks take back the drivers seat and we see a serious resurgence in TINA. In the interim I would expect a hell of a bumpy 9 months between the yay inflation is dead to TINA.
A prediction worth the paper it written on is that we get back around all time highs by may, then the deflation creeps in and everyone panics until the rates get back to the 0 range. At that point any company that can show growth will be the place to be and we will have another decade like the 2009 - 2019 period of low rates and low to no inflation.
As Mr. Dealraker would say "ramblings over coffee"
Any ideas on what would perform best in a disinflation , short burst of deflation scenario?
Put at least 1/2 portfolio into growth or value tomorow or long duration companies such as AMZN, GOOGL, META, UMG and even JOE, which went down from 30 to 70 per cent last year. Keep other 1/2 in BRK, FFH and other (financials, energy etc) short duration or value names in case your thesis on deflation is incorrect:)
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https://news.yahoo.com/eric-adams-defends-wealthy-yorkers-185822963.html
The 10 states with the lowest taxes gained an average of 948 per 100,000 total population. For states that ranked 11th through 20th on taxes, the average was 457. For states ranking 21st to 30th, the gain was only 97. Net domestic migration turned negative for states ranking 31st to 40th with a loss of 141. And for the 10 states with the highest taxes, the average loss was 809 per 100,000.
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I think that this difference between starting to change market view and FED seems too hawkish talk is because higher markets just makes financial conditions less tight, which is still against interest of FED at this point. And perhaps it is better for them to have markets lower, than to increase rates more (with much more impact to real economy). But I would still bet, the real longer term (more than 6 month) driver for FED decisions will be real time economy inflation etc and they will be very flexible to change their minds if conditions change. After last 20 or more years I just cannot imagine FED holding rates at some arbitrary number, say 5 per cent, just because they said so 6 month ago, especially if economy/inflation or jobs by then slows down. Now, inflation could stay above 2 per cent for longer term and rates are not going back to 0 or even below 3 per cent soon, but maybe this would only be for the better. At least for me, that zero to negative rates era was very bizzare and unconfortable and I was constantly in a more defensive position because of that (and to early defensive and wrong because of this for most of the period:)).
And to fix this inflation and tight labour market (because of reshoring, green investments etc) problem, instead of trying to kill economy, probably it would be much better to focus on getting imigration in order. I think there are good odds that sooner or later (probably later) it will be done, because at least it could be done in US. Not every other country even has such an option.
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Federal Reserve officials are making a full-court-press effort to convince investors they won’t be slashing their benchmark interest rate before year’s end. It’s not working. Money markets are pricing a rate peak around 4.9%, followed by nearly half a percentage point of rate cuts by the end of 2023. That’s despite multiple officials in recent days delivering a sharply contrasting message: Rates are heading above 5% and will stay there all year. Just last month, Chair Jerome Powell highlighted that history warns against “prematurely loosening policy.” With traders effectively rejecting his narrative, the risk is that exuberance over monetary easing causes Fed officials to tighten even more — if falling market rates undercut their efforts to cool the economy. “The market thinks the Fed is playing without a playbook, since their forecasts have been wrong before and they’ve downplayed them in the past,”’ said Marc Chandler, chief market strategist at Bannockburn Global, who’s been working in financial markets since 1986. Investors judge that the US is “headed for a recession, and that the Fed doesn’t quite yet get it.”
“Fed officials have turned more hawkish because investors aren’t listening to their warnings,” Ed Yardeni, the veteran watcher of the bond market who heads his namesake research firm, wrote in a note to clients. “Perhaps, Fed officials should listen to the bond market.”
“The Fed is often wrong at turning points, said Tengler, who’s worked in markets for several decades and helps manage $1 billion. “One thing I keep in mind is that the dot plot in September of 2021 didn’t even show the Fed getting to 2% until 2024,” she said, referring to the policy-rate forecast. Economic data such as Friday’s surprise contraction in the Institute for Supply Management’s services gauge back the view that a recession in the offing and inflation has peaked, she says. “The Fed’s ultimately going to have to catch up.”
“My 40 plus years of experience in finance strongly recommends that investors should look at what the market says over what the Fed says,” the DoubleLine Capital LP Chief Investment Officer told listeners on a webcast Tuesday. A number of Fed officials have indicated that they expect to lift their policy target — currently a range of 4.25% to 4.5% — to more than 5% and keep it there for some time. But markets appear much more skeptical. Swaps are currently pricing in a peak of less than 5% and suggest that policy makers will in fact begin cutting again before the year is out as US recessionary pressures bite.
Gundlach’s comments on the Fed echo remarks he made late last week on Twitter in which he said “There is no way the Fed is going to 5%. The Fed is not in control. The Bond Market is in control.”
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In May and June, Ukraine made a similar stand in nearby Severodonetsk and Lysychansk, grinding down Russian forces in heavy street battles before eventually retreating to escape encirclement. That neutralized, for a while, Russia’s offensive abilities. At the time, however, Russia was mostly waging the war with professional contract troops, and suffered from severe manpower shortages. Mr. Putin’s October mobilization of 300,000 reservists, coupled with Wagner’s prison recruitment drive that started in earnest in August, have changed the arithmetic of attrition to be in Russia’s favor. Mr. Prigozhin has said that his goal in the Bakhmut area isn’t so much to seize the city itself as to destroy Ukraine’s most combat-capable forces. Western—and some Ukrainian—officials, soldiers and analysts increasingly worry that Kyiv has allowed itself to be sucked into the battle for Bakhmut on Russian terms, losing the forces it needs for a planned spring offensive as it stubbornly clings to a town of limited strategic relevance. Some of them say that it would make sense to retreat to a new defensive line on the heights west of Bakhmut while such a pullback can still be organized in a coordinated fashion, preserving the Ukrainian military’s combat strength. “It’s not me, it’s King Leonidas who figured out that you should fight the enemy on the terrain that is advantageous to you,” said one Ukrainian commander in Bakhmut, referring to the ruler of Sparta who battled the Persian Empire at Thermopylae. “So far, the exchange rate of trading our lives for theirs favors the Russians. If this goes on like this, we could run out.”
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I like your value now/value tomorrow labels, both still value:), sounds better than value/growth, will copy that from you:)
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This discussion reminded me one good book on this short vs long or market vs companies aproach subject. He tried a lot of ways untill basically discovering this system of dealraker, which is also a system of WB, which is also maybe the ultimate way to make money long term:)
https://www.amazon.com/Keynes-Market-Economist-Overturned-Conventional/dp/047028496X
This book traces his evolution from "momentum trader" and a speculator in currencies to his post-crash persona as a "value investor." As a trader, Keynes had great success but came to disaster in the Depression, where he transformed to an investor in common stocks of "intrinsic" value very similar to the Graham-Buffett approach to the market. When he died in 1946, Keynes estate totaled about $30 million in today's dollars. Along the way, he managed his college's endowment into a five-fold increase and participated in the affairs of several insurance companies and investment trusts - all this while serving his country in a variety of economic posts such as negotiating loans from the U.S. to Britain and providing significant guidance at the Bretton Woods monetary accord. While it is not a "how to" book, Keynes and the Market clearly shows the way Keynes developed his investment technique and succinctly states a number of principles and guidelines useful for today's investor.
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Russia’s flagship oil is selling at less than half international prices — and way below a Group of Seven imposed cap — following sanctions targeting the Kremlin’s revenue from petroleum sales. The nation’s Urals grade, a far bigger export stream than any other crude that Russia sells, was $37.80 a barrel at the Baltic Sea port of Primorsk on Friday, according to data provided by Argus Media. Global benchmark Brent settled at $78.57 on the same day.
A key driver of prices has probably been the lost European market, because it put Russia at the mercy of a tiny pool of large buyers, most notably China and India. And with tankers having to sail thousands of miles further to get cargoes from western Russian ports to those buyers, freight costs soared. That forced barrels to be discounted to compete with shipments from the Middle East.
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It probably means their GAAP earnings and BV would remain almost the same, but tax float would be gone. But would this apply to all accumulated unrealized profits or only for profit made in the future?
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Maybe we should start the new year with some good news: Inflation has fallen dramatically. No, that’s not a prediction; it’s a fact. With one month remaining in 2022 (in terms of available data), inflation in the second half of the year has run vastly lower than in the first half. In fact—and this is astonishing—it’s almost back down to the Federal Reserve’s 2% target. Even more astonishing, hardly anyone seems to have noticed. Yes, there’s a catch or two or three, to which I’ll come back. But first the good news: Over the past five months (June to November 2022), inflation has slowed to a crawl. Whether measured by the consumer-price index, or CPI, which most people watch, or the price index for personal consumption expenditures, or PCE, which the Federal Reserve prefers, the annualized inflation rate has been around 2.5% over these five months. Yes, you read that right. Yet hardly anyone has noticed this stunning development because of the near-universal concentration on price changes measured over 12-month periods, which are still 7.1% for CPI inflation and 5.5% for PCE inflation. Normally, focusing on 12-month inflation rates is the right thing to do, for two main reasons. First, it guards against hyperventilation over “blips” in the inflation data, whether up or down. Second, it obviates the need for seasonal adjustment, since, for example, you are comparing prices in November 2022 with those in November 2021. But when the inflation rate changes abruptly, 12-month averages can leave you watching recent history rather than current events. Today is one of those times. As mentioned, the CPI inflation rate over the past 12 months has been an alarming 7.1%. But the U.S. economy got there by averaging an appalling 10.6% annualized inflation rate over the first seven months and a mere 2.5% over the last five. The PCE price index tells a similar story, though a somewhat less dramatic one. The 5.5% inflation rate over the past 12 months came from a 7.8% rate over the first seven months followed by a 2.4% rate over the last five.
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1 hour ago, Parsad said:
This probably belongs in the crypto thread but still a very good example of how institutions (old and new) forget or underestimate correlated risk.
https://finance.yahoo.com/news/winklevoss-twins-big-mess-crypto-205838099.html
I think Buffett and Ajit Jain's greatest strengths compared to virtually all other investment managers or insurance managers is this complete understanding around, and conviction to avoid, excessive correlated risk.
One of the most amazing things I've ever seen was when Berkshire acquired GenRe, Buffett instantly began dismantling thousands and thousands of derivatives contracts...avoiding the blowups seen in 2008.
He also unwound their position in Fannie Mae and Freddie Mac years ahead of everyone else as well, after they watched Fannie and Freddie start to do things where they had forgotten about correlated risk and excessive leverage.
In 70 years of investing, I don't think Buffett has ever underestimated this one thing! Thus the reason why there are very few down years and those are usually insignificant. Cheers!
https://www.wsj.com/articles/crypto-lender-genesis-lays-off-30-of-staff-11672939434?mod=hp_lead_pos4
Massive crypto lender Genesis Global Trading Inc. laid off 30% of its staff and is considering filing for bankruptcy, according to people familiar with the matter, the latest sign of financial turmoil at the crypto lender. The layoffs weren’t confined to one department and were across the company, some of the people said. Genesis has 145 employees left after Thursday’s layoffs.
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OpenAI, the research lab behind the viral ChatGPT chatbot, is in talks to sell existing shares in a tender offer that would value the company at around $29 billion, according to people familiar with the matter, making it one of the most valuable U.S. startups on paper despite generating little revenue. Venture-capital firms Thrive Capital and Founders Fund are in talks to invest in the deal, which would total at least $300 million in share sales, the people said. The deal is structured as a tender offer, with the investors buying shares from existing shareholders such as employees, the people said. The new deal would roughly double OpenAI’s valuation from a prior tender offer completed in 2021, when OpenAI was valued at about $14 billion, The Wall Street Journal reported. OpenAI has generated tens of millions of dollars in revenue, in part from selling its AI software to developers, but some investors have expressed skepticism that the company can generate meaningful revenue from the technology.
ChatGPT
in General Discussion
Posted
https://www.bloomberg.com/news/articles/2023-01-17/microsoft-azure-to-add-chatgpt-to-cloud-services?srnd=premium-europe