UK
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Posts posted by UK
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5 minutes ago, Dinar said:
How do you figure? KO is at more than 22x EPS, while LVMH is probably closer to 13, KO has debt while LVMH will have zero net debt by 12/31/2022.
I see LVMH 2023 EPS estimate 31 EUR?
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43 minutes ago, changegonnacome said:
Right the P/E is low and then think about European stocks on purchasing power parity basis for a USD investor entering into the position unhedged........you've got two ways to win (potentially)........and obviously one big way to lose if the BIG ONE gets dropped in Europe.
It should also be noted and its lost on some people as they think about 8% inflation prints in Europe and 8% inflation prints in the USA as everyone being in the same boat........they aren't............the US has monetary inflation mixed with some modest remaining supply chain/energy inflation but its predominately monetary domestic inflation bedeviling the USA .........Europe didn't print trillions and send it to people..... if the Ukraine/energy crisis were to be resolved it would see its inflation problem resolve rather quickly........what would remain would be the inflation that the USA is effectively exporting to Europe via the strong dollar........'our currency, your problem' as the fella once said.
As I've said for months Europe remains an interesting risk/reward relative to the structural beta problem thats likely to remain in US markets for the next 6 - 12 months.
I do agree, that EU is much more like Japan, than US, however during covid episode, they also printed a lot and fiscal spending was huge, including Hamilton moment and actually these rescue funds from joint borrowing only now are reaching the countries. Spending was mainly done to business, instead of people though. Meanwhile EU has some other big problems and if markets are going crazy about GB, I am not sure how things will go for Italy. If you think that raising rates is crazy or going to fast in US, than it is madness to do the same in Europe, which it seems they will try anyway:). Will be interesting to see how it plays out. And this 10 vs 15 PE, actually if you look more closely it mostly because SNP includes better companies/industries. Nestles or LHVMs are not much cheaper than KO or Apple, and you do not want to touch DB or CS.
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Last hope standing for team transitory:)?
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Today, with its tough talk and a series of supersize interest rate hikes, Powell’s Fed seems to be trying to show that it, too, is prepared to do whatever is necessary to bring down inflation. But the legend of Volcker, the superhero inflation fighter, often overlooks just how costly that battle was. Years later, in his conversations with me as I helped him write his memoir, Volcker still wrestled with the question of whether he could have done anything differently and caused less harm to American workers and the economy. “Did I realize at the time how high interest rates might go before we could claim success? No,” Volcker wrote in his memoir. “From today’s vantage point, was there a better path? Not to my knowledge—not then or now.” The real test for Powell and his colleagues will be whether they can also persist if the economy and the financial system start to show serious signs of strain. Volcker told me he supported Powell’s nomination as Fed chairman because he liked that his background was in the financial industry and the Treasury Department—experience that Volcker believed would help him better understand the practical effects of monetary policies.
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FED and treasury to the rest of the world: drop dead.
The dollar has been virtually unstoppable this year, and Janet Yellen just said it’s in the US interest for the currency to be driven by markets. Central banks from Japan to Chile have stepped in to try shield their currencies from the worst of the dollar’s onslaught, but the efforts have yielded limited results. Yellen, who said a “market determined value of the dollar is in America’s interest,” is giving investors little reason to bet against the greenback for now.
“I don’t see any imbalances yet that would cause a pivot from the Fed,” Citigroup Inc. economist Veronica Clark said on Bloomberg Television. “The Fed will pay attention to global financial stability concerns, a strong dollar is part of that, but it’s ultimately going to be domestic conditions and what the Fed is seeing on inflation.”
Kristina Hooper, chief global market strategist for Invesco, said in a note that while world economy is slowing after rate hikes, there is yet to be a meaningful decline in inflation. “This is an extraordinary monetary policy tightening environment and we are waiting to see if something breaks globally,” she said. “The UK has come close.”
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I think this GB case evolving in real time is really interesting and could provide some ques of what to expect:
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46 minutes ago, Gregmal said:
Math is the same. We have one and a half years of whacky stuff going on from COVID. And the response has been to so far, wipe our years of savings. Someone with $60k annual income and a $200k 401 has lost $50k over what? $800 in annual expenses?
How it could be the same if you earn 100, spend 97 and currently the first increases by 5%, while the later by 8%? But at the end who cares if FED is making mistake again or not. It just more opportunities I think. This "morelike 2008" environment with all that fear, higher yields and lower valuations, isnt it better for active investor?
For some people it just happened to be very unfortunate, especially because of bonds this year e.g.in our country, pension funds put you automatically into fixed income, almost like 80 per cent, when you just to about to retire, so they have not earned anything like for 3 year now to begin and this year are about to know what "conservative fund" really means while yields go like that.
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5 hours ago, Gregmal said:
We must stop inflation!
middle class dude 55 years old
annual salary $130k
Expenses yearly $60k
401k $550k
5% inflation
Costs $3000 in added living expenses
solving 5% inflation?
costs his retirement account $150kmore genius
US saving rate is 3 per cent (and average 401k perhaps much lower)
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UMG, GOOGL, some META and some TSLA puts, to offset possible premature accumulation:)
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But a businessman describes a growing sense of his vulnerability by quoting from “The Jungle Book”, a classic British children’s novel that is apparently a favourite of Mr Putin: “When a leader of the Pack has missed his kill, he is called the Dead Wolf as long as he lives, which is not long.” Even if that proves wishful thinking, no one would have said it a few months ago.
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More about posible implications: https://www.ft.com/content/e950f58c-0d8f-4121-b4f2-ece71d2cb267
Two years after the US hit Huawei with harsh sanctions, the Chinese technology group’s revenue has dropped, it has lost its leadership position in network equipment and smartphones, and its founder has told staff that the company’s survival is at stake. Now, China’s entire chip industry is bracing for similar pain as Washington applies the tools tested on Huawei much more broadly. Under new export controls announced on Friday, semiconductors made with US technology for use in AI, high performance computing and supercomputers can only be sold to China with an export licence — which will be very difficult to obtain. Moreover, Washington is barring US citizens or entities from working with Chinese chip producers except with specific approval. The package also strictly limits the export to China of chip manufacturing tools and technology China could use to develop its own equipment. “To put it mildly, [Chinese companies] are basically going back to the Stone Age,” said Szeho Ng, Managing Director at China Renaissance. Paul Triolo, a China and technology expert at the Albright Stonebridge consultancy, said: “There will be many losers as the tsunami of change unleashed by the new rules washes over the semiconductor and associated industries.” The new controls on semiconductor equipment are also a potent weapon, set to hit mainstream manufacturers and leading-edge chip producers. According to analysts at the Bank of America, the equipment restrictions will affect logic chips designed in the past four to five years, and Dram chips designed after 2017. “It’s their sweet spot right now — they’re a laggard in technology and are relying on older tools and technology,” said Wayne Lam, an analyst at CCS Insight. Chinese chip companies are even more concerned about Washington’s attempts to bar US citizens from supporting them. “That is a bigger bombshell than stopping us from buying equipment,” said a human resources executive at a state-backed semiconductor plant.
Since many of Intel’s high-end processors go into Chinese supercomputers, BofA expects that the restrictions could hit up to 10 per cent of Intel’s sales. But some analysts believe that the measures will favour foreign chipmakers. As the US’s main motive was to slow down China’s development in the most advanced semiconductor technology, leading foreign chipmakers such as Taiwan Semiconductor Manufacturing Company (TSMC) or Intel would benefit, said Akira Minamikawa, a semiconductor analyst at research firm Omdia. He said flash memory makers that compete directly with YMTC, such as Japan’s Kioxia, might “get some benefit” from the new US measures, but the gains would probably be small. Kim Young-woo, head of research at SK Securities, said the fact that Washington had not imposed a blanket ban on equipment supplies for foreign chipmakers operating in China would come as a relief for Korean semiconductor companies, but the need for export licences could still be a hassle. The biggest question is how China responds. “We’re in a negative cycle where the US continues to push for restrictions, which pushes the Chinese to strive for technological independence, which in turn pushes the US towards harsher restrictions,” said an industry insider in Beijing. But Beijing’s levers are limited. “This will propel the Chinese to look for alternatives but with the acknowledgment that alternatives to US technology are decades away,” the person said. This dire situation could lead to more intellectual property theft. As some equipment now under export controls is already used in China, Beijing could ignore intellectual property rights and reverse-engineer the machinery to strengthen local equipment makers, said Lam at CCS. He added: “We may be shooting ourselves in the foot.”
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https://www.ft.com/content/6825bee4-52a7-4c86-b1aa-31c100708c3e
“The US has essentially declared war on China’s ability to advance the country’s use of high-performance computing for economic and security gains,” said Triolo. The controls will hit Chinese companies in multiple ways. They will bar US companies from exporting critical chip manufacturing tools to China, which will affect groups such as Semiconductor Manufacturing International Corp, Yangtze Memory Technologies Co and ChangXin Memory. They will also prohibit US citizens and companies from providing any kind of direct or indirect support for semiconductor fabrication plants in China. The US also put YMTC — along with 30 other Chinese entities — on a list of “unverified” companies, paving the way for possible inclusion on a separate blacklist called the “entity list” that would effectively bar US companies from supplying them with technology. “The administration’s strategy is to deny China the capability to indigenise its semiconductor industry. If the US is successful, this causes a huge problem for Beijing’s strategy to be a world-class player,” said Martijn Rasser, a security and technology expert at the Center for a New American Security, a think-tank. Underscoring the scope of the controls, the US is using a far-reaching mechanism called the “foreign direct product rule” to make it harder for China to develop and maintain supercomputers and AI technology. The rule — which was first used by the Trump administration against Chinese technology group Huawei — in effect bars any US or non-US company from supplying targeted Chinese entities with hardware or software that contains, or has been manufactured with, American technology.
Analysts said China’s memory chipmakers, including YMTC and ChangXin Memory, would feel the most immediate blow. “They are basically doomed,” said Mark Li, a semiconductor analyst at Bernstein in Hong Kong. “It will be very difficult for them to get the equipment they need. But the ban on the export of semiconductor tools could significantly hurt Chinese chipmakers more broadly because US equipment makers have a stranglehold in a few key niches. Triolo said there would be “many losers”, including US chip design leaders such as Nvidia and AMD, and tool makers including Applied Materials and Lam Research. He said the rules would also hit non-US players, including ASML, the Dutch company that produces the most advanced semiconductor tools, and TSMC, the Taiwanese contract foundry company. One chip industry executive said the US was attacking China “from all angles”. “The stunning thing about this move is that they have assembled a whole array of tools,” the executive said. “They are not just targeting military applications, they are trying to block the development of China’s technology power by any means.”
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12 minutes ago, changegonnacome said:
Yeah its an easy one to throw around. VIX solidly above 40+ touching 50 for a time is kind of my base case and in lots of ways one should think of the stock market now as just another version of interest rates, another brick in the wall of "financial conditions" that the Fed is using to cool the US economy.......cause it kind of is just that.....its the cost of equity capital for companies, the interest rate....the Fed is raising Fed funds, which feeds the cost of credit for consumer/enterprises and to the extent that Fed 'controls' stock prices it is driving the cost of equity financing up too........I think if you put a few whiskeys in Jay Powell he'd tell you SPY @ 2800 for a while would work very well for what he's trying to do with inflation.........its whether you can smoothly and in orderly fashion move SPY down to 2800 from 4800 or whatever.......the something breaking in some sense is things becoming disorderly which is just another word for market panics/blowups....VIX is kind of the best proxy.....
I agree that this time fed does not care for the stock market at all and even tries to talk it down. It is perhaps much preferable for them to tighted financial conditions that way, instead of more rate hikes, which hurts real economy more. However the risk for this thesis is that thay probably cares much much more about bond market, and as with GB case, if this market "goes banana" (i am trying not to use "something brakes" there:)), pivot could happen very quickly, without waiting for the next meeting:). They have very good skills for saving the system. That is why I am not sure thera are high odds we will see these extreme/really cheap levels in the market.
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https://www.reuters.com/breakingviews/global-markets-breakingviews-2022-10-06/
The great “unknown unknown” is how the broad derivatives complex, which has notional positions measured in the hundreds of trillions of dollars and incorporates unfathomable leverage, with the vast majority linked to interest rates, will react as borrowing costs rise from their lowest levels in history.One more ghost from GFC is beeing called:)
And no pivot for today: Federal Reserve Bank of New York President John Williams said on Friday that the United States central bank needs to continue hiking interest rates and, over time, bring them to around 4.5%. Williams stressed that inflation in the country is "very high" and the Fed is "far from where it needs to be." However, he remained confident that inflation will fall "significantly" in 2023 and the US economy will see positive growth.
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53 minutes ago, Gregmal said:
I’d love to ban the term “something breaks”. Force folks to actually make sense of their communications because it’s by far the cliche buzz word of 2022. Just saying “until something breaks” is like the lowest IQ sound-byte putforthable. Not at all directed at you UK.
Waiting for -40% would be what? Wiping out 20 years of savings for the 50-65 crowd? Because last year they did nothing and this year inflation is like 5%, but yea 1970! Come the fuck on.
Take it easy:). It is a thread about market bottom. I think of it more as for entertainment purposes:). Btw not -40%, but something more like -30% and 40+ VIX. If I was constrained to investing in the total market (I do not do that), after that I would be fully invested, be it bottom or not:)
As for possible somethings: " By one measure—how much debt can be traded at a given price—market functioning today is as bad as it was in April 2020, in the depth of pandemic lockdowns, according to JPMorgan. By another measure, this year has seen the worst conditions since 2010, according to Piper Sandler & Co. The morning after the Sept. 21 Fed meeting, Treasury yields shot up. The 10-year yield jumped to more than 3.7% from around 3.55% in less than two hours. Roberto Perli, a central bank expert at Piper Sandler noted a growing gap between the yields on the easily traded Treasurys and others, a sign of more difficult trading conditions. “The capacity of dealers to make orderly markets has diminished,” he said. Treasury officials said they don’t see a reason for alarm, but trading conditions are a problem they are watching. “Reduced market liquidity has served as a daily reminder that we need to be vigilant in monitoring market risks,” Nellie Liang, Treasury undersecretary for domestic finance, said last month. Two once-reliable sources of demand for Treasurys, banks and foreign investors, are pulling back. U.S. commercial banks increased their holdings of Treasury and agency securities other than mortgage bonds by nearly $750 billion over the course of 2020 and 2021, partly to invest a pandemic-induced surge in deposits. This year, as customers have shifted deposits to such alternatives as money-market funds, that figure has shrunk by about $70 billion since June. For years, Treasurys were among the few advanced-economy bond markets with positive yields, making them attractive to foreign investors and a haven during moments of market turmoil. Now, other government bonds’ yields are rising, giving foreign investors more options. Added to these strains, the Fed itself has stopped a bond-buying program launched during the pandemic to support markets and the economy. “We worry that in the Treasury market today, given its fragility, any type of large shock really runs the risk of un-anchoring Treasury yields,” said Mark Cabana, head of U.S. rates strategy at Bank of America.
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On 10/5/2022 at 8:15 PM, changegonnacome said:
I’m afraid this one isn’t - I was right there with you @Gregmal in 2020/21 betting COVID was getting to be a nothing burger….made lots of $$….not everything you read in the paper is nonsense…..and ironically while you think your a contrarian on this, your right smack bang in the middle of the consensus when you look at US index valuations….they display an expectation around BS inflation, a pivot and a return to ZIRP world very soon….but they are Im afraid very wrong.Be careful I get the sense you think your not part of the herd this time but you really are.
I would still guess they will not pivot soon, at least not until something really brakes. Just SnP itself at -20 probably is not enought this time. It would be easier to try to call a bottom if SnP was at least -30, after some heavy selling with VIX above 40:)
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3 hours ago, LearningMachine said:
Thanks @Munger_Disciple for sharing how leverage doesn't add much to BRK's performance. Now, it begs question whether it would add much to MKL's performance? If not, maybe buying quality businesses through BRK and MKL is not as great an idea anymore instead of buying them directly?
You can think and discuss a lot of arguments (asset quality, management, etc) but I would say the main to reasons is a. BRK also owns operating businesses, which constitutes like half or more of its value and b it is still somewhat cheaper than the market, while probably more safer/resilient/etc.
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One Ukrainian battalion, the Carpathian Sich, seized 10 modern T-80 tanks and five 2S5 Giatsint 152-mm self-propelled howitzers after it entered the town of Izyum last month, said its deputy chief of staff, Ruslan Andriyko. “We’ve got so many trophies that we don’t even know what to do with them,” he said. “We started off as an infantry battalion, and now we are sort of becoming a mechanized battalion.” 0The chief of staff of a Ukrainian artillery battalion on the Kharkiv front said his unit now operates four recently captured Russian 2S19 Msta 152-mm self-propelled howitzers, alongside American-made guns, and now has abundant Soviet-caliber ammunition. “The Russians no longer have a firepower advantage. We smashed up all their artillery units before launching the offensive, and then we started to move ahead so fast that they didn’t even have time to fuel up and load their tanks,” said the officer. “They just fled and left everything behind.”
Combined with weapons taken during Russia’s retreat from Kyiv and other parts of northern Ukraine in April, these recent gains have turned Moscow into by far the largest supplier of heavy weapons for Ukraine, well ahead of the U.S. or other allies in sheer numbers, according to open-source intelligence analysts. Western-provided weapons, though, are usually more advanced and precise. Ukraine has captured 460 Russian main battle tanks, 92 self-propelled howitzers, 448 infantry fighting vehicles, 195 armored fighting vehicles and 44 multiple-launch rocket systems, according to visual evidence compiled from social media and news reports from Oryx, an open-source intelligence consulting firm. The real number is likely higher as not every captured piece of equipment gets filmed.
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19 minutes ago, Gregmal said:
There’s nothing wrong with raising rates. There’s something wrong with thinking that destroying the economy and the average workers bargaining power is a resolution to prices going up temporarily. Supply and demand capitalism fixes that on its own. Turkey is a third world country compared to the US or Canada or UK. Same with the South American countries that saw hyperinflation.
What the Fed has done SO FAR, imo, is perfectly fine. Going further would be potentially disastrous. You can’t have the country currently in the most robust shape, being the most aggressive on the rate hike game trying to destroy its own economy. It just hurts others globally to magnitudes greater than here. And if you turn a good economy here into shit, it’ll just further deteriorate things.
Way too much academic bullshit being experimented with here when too much of the problem is political and too much else of it is not terribly effective w/ rates regardless.
i agree. At first they overdid it to one side, now, maybe they are overdoing to another:). Maybe summer rally shocked them and they just wanted financial conditions to tighten, so they started to talk about all this pain in order to bring infliation down, just that markets would get a message. Gee, FED pivoted in 2018 end after just 20 market drop. Maybe they wiil stop soon, before something really brokes, or maybe only after. I think nowbody knows. Perhaps better to turn attention to questions such as FB or GOOG is a better buy:)))
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2 hours ago, Gregmal said:
It’s really funny when you thoroughly think about it and this whole situation. Most of the real inflation occurred through 2021 and early 2022. Screw the rigged and backward looking metrics, use your eyes. The $12 2x4s, steel prices, bidding wars on homes, used cars appreciating, toilet paper price gauging, etc…all that shit. And I don’t think there’s many who wouldn’t say 2021 was a great year for the economy and all. Not even talking about the stock market, the real economy.
So the inflation works it’s way through just like with used cars and 2x4s and even the spac and Ponzi scheme stocks and wouldn’t you know it, corrects itself on its own if given enough times. Capitalism works. But then, out of nowhere, the central banks all decide they need to blow up the economy and potentially causes what I guess you and others are saying may be a “multi year economic crisis”…..this is truly one of the most bizarre events I’ve ever witness in my lifetime. More so even than COVID. Everyone gets together and decides they need to destroy any single positive thing about the economy, globally, to fight this ever changing thing called inflation. Pretty remarkable.
Re rates: but the good news is that more and more of good news, which is bad news:), are turning into bad news, which is good news:)
Re self correction: i am not sure if FED or any other CB, at least if they care about not turning country into some banana style economy (and US has worlds reserve currency, some call this exorbitant privilege or something), can choose not to react to situation. Usually by making mistakes to both directions:)
Again, look at Turkey, they kept rates way lower than inflation for quite some time now, and it seems it is not working very well:
Personally I have no idea if infliation is transitory or not and even if somewhat normal rates is such a bad thing. It is easier perhaps to look on relative basis and it seems US is ina quite good position comparing to almost every place in the world:
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The ministry was responding to a comment on Oct. 1 by the Russian Defense Ministry that Russian troops had successfully redeployed to “more favorable lines of defense.”
The Ukrainian armed forces responded with a mocking post on Twitter.
“We thank the ‘Ministry of Defense’ of Russia for successful cooperation in organizing the ‘Izyum 2.0’ exercise,”
“Almost all russian troops deployed to Lyman were successfully redeployed either into body bags or into Ukrainian captivity. We have one question for you: Would you like a repeat?”
Is The Bottom Almost Here?
in General Discussion
Posted
Well it seems you are much better informed than me, I just looked at the estimates, assuming they are somewhat right for such a large and well known business and cannot argue and hope you are right. Nothing agaist LVHM, seem wonderfull well performing business.