UK

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:)

https://www.bloomberg.com/opinion/articles/2023-01-12/ukraine-war-is-still-low-tech-for-now?srnd=premium-europe

https://www.bloomberg.com/news/features/2023-01-12/mike-novogratz-wants-to-punch-crypto-titans-sam-bankman-fried-barry-silbert?srnd=premium-europe

https://news.yahoo.com/eric-adams-defends-wealthy-yorkers-185822963.html And: https://www.wsj.com/articles/californians-arent-the-only-tax-refugees-newsom-net-migration-negative-outflows-vote-feet-florida-11673447921?mod=hp_opin_pos_6 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.

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.

https://www.bloomberg.com/news/articles/2023-01-11/fed-s-no-rate-cut-mantra-rejected-by-markets-seeing-recession 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.” https://www.bloomberg.com/news/articles/2023-01-10/gundlach-says-listen-to-the-bond-market-rather-than-fed-on-rates “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.”

https://www.wsj.com/articles/russia-claims-success-in-ukraines-soledar-its-first-advance-in-months-11673429457 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.”

I like your value now/value tomorrow labels, both still value:), sounds better than value/growth, will copy that from you:)

https://www.politico.eu/article/france-and-poland-push-germany-to-send-leopard-tanks-to-ukraine/

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.

https://stratechery.com/2023/ai-and-the-big-five/?access_token=ZGaKAsqRpV3yTViyWXb5H

https://www.bloomberg.com/news/articles/2023-01-09/russia-s-flagship-oil-is-trading-at-half-global-prices-with-tiny-pool-of-buyers?srnd=premium-europe 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.

https://www.economist.com/business/2023/01/01/can-the-north-sea-become-europes-new-economic-powerhouse

https://www.economist.com/europe/2023/01/04/a-russian-warlords-savagery-is-sending-a-loud-message-to-moscow

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?

https://www.wsj.com/articles/inflation-sudden-drop-12-5-month-cpi-pce-energy-food-new-year-price-federal-reserve-11672914903?mod=opinion_lead_pos6 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.

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.

https://www.wsj.com/articles/chatgpt-creator-openai-is-in-talks-for-tender-offer-that-would-value-it-at-29-billion-11672949279?mod=hp_lead_pos6 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.

https://www.wsj.com/articles/silvergate-raced-to-cover-8-1-billion-in-withdrawals-during-crypto-meltdown-11672895207 Crypto-related deposits plunged 68% in the fourth quarter, the bank said in an early release of some quarterly results. To satisfy the withdrawals, Silvergate liquidated debt it was holding on its balance sheet. The $718 million it lost selling the debt far exceeds the bank’s total profit since at least 2013. Silvergate was able to survive such a steep decline in deposits because it isn’t structured like most banks. It sold off much of its traditional banking operations and branches to focus on providing bank accounts to crypto exchanges and investors. Crypto-related deposits account for some 90% of the bank’s total, and it keeps almost all of its deposits in cash or easy-to-sell securities. At the end of the fourth quarter, Silvergate said it had more cash on hand, $4.6 billion, than its $3.8 billion in remaining deposits. And it held another $5.6 billion in debt securities such as U.S. Treasurys that could be sold quickly. Daily average volume on Silvergate’s network rose in the fourth quarter, the bank said. On a call with analysts Thursday morning, Silvergate executives said customers didn’t simply close out their accounts; rather, they told the bank they were moving their money out of crypto and thus didn’t need to keep so much of it with Silvergate. Even customers who are focused on digital currencies pulled their cash to invest in supersafe assets like Treasurys, executives said. “Our customers have taken a huge pause,” Chief Executive Alan Lane said.

https://archive.is/u7UkM/again?url=https://www.bloomberg.com/opinion/articles/2023-01-04/ukraine-peace-talks-lessons-in-war-and-diplomacy-from-frederick-the-great%3Fsrnd=premium-europe “Diplomacy without arms is like music without instruments.”

https://www.bloomberg.com/news/articles/2023-01-04/piper-sandler-bear-kantrowitz-sees-another-big-down-year-for-s-p-500 Equity investors hoping for a reprieve in the new year after a brutal 2022 are likely to be disappointed, according to Michael Kantrowitz at Piper Sandler & Co. The strategist, ranked No. 3 in the last year’s Institutional Investor survey, predicts that the S&P 500 will fall 16% to 3,225. The price target is the lowest among Wall Street prognosticators tracked by Bloomberg. Should that call come true, it’d be the first time since 2002 — and only the fifth time in almost a century — that the benchmark index suffered at least two consecutive years of double-digit declines.

https://www.bloomberg.com/news/articles/2023-01-04/pioneering-yield-curve-economist-sees-us-able-to-dodge-recession?srnd=premium-europe “My yield-curve indicator has gone code red, and it’s 8 for 8 in forecasting recessions since 1968 — with no false alarms,” Harvey, now a professor at Duke University’s Fuqua School of Business, said in a interview Tuesday. “I have reasons to believe, however, that it is flashing a false signal.” One of the reasons is the fact the yield curve-growth relation has become so well known and widely covered in popular media that now it impacts behavior, he said. The awareness induces companies and consumers to take risk-mitigating actions, such as increasing savings and avoiding major investment projects — which bode well for the economy. Another boost to the economy is coming from the job markets, where the current excess demand for labor means laid-off workers will likely find new positions more quickly than usual. In addition, he said, given the largest job cuts so far have been in the tech sector, those highly skilled recently fired workers are also not apt to be unemployed for very long. Harvey’s model was linked to inflation-adjusted yields and he said the fact inflation expectations are inverted — meaning traders see price pressures easing through time — also eases odds for a recession ahead. “When you put all this together it suggests we could dodge the bullet,” Harvey said. “Avoiding the hard-landing — recession — and realizing slow growth or minor negative growth. If a recession arrives, it will be mild.”

Did not find MCD thread, so will post it here, long but interesting story: https://www.bloomberg.com/news/features/2023-01-04/mcdonald-s-won-big-in-russia-until-the-ukraine-invasion?srnd=premium-europe Why did McDonald’s thrive where other fast-food businesses failed? I asked Andrey Dellos, a renowned Russian restaurateur whose holdings include Mu-Mu, a downscale Russo-centric chain, and Café Pushkin, located in a Baroque-style mansion across from the flagship Golden Arches. “McDonald’s success in 1990 was not a question of taste. It was not a question even of food,” he said over espresso at his cafe. “Communists made a fantastic mistake when they closed the doors. They made the United States a dream. For practically all the Soviet people, the United States was a real paradise.” Dellos gestured out the window across Pushkin Square. “And now, can you imagine—a piece, a sample, of that paradise appears just over there?” The Wild Nineties came to an emphatic end in Russia with the 1998 ruble crisis, which saw the near-collapse of its banking system and an exodus of foreign capital from its markets. With imports now a major financial gamble, McDonald’s began what would become a multidecade push to increase its share of locally sourced ingredients from just a quarter. The Russian economy eventually rebounded, and by the late aughts, other chains’ boards were dusting off their strategic plans. Burger King arrived in 2010. Dunkin’ Donuts returned the same year. Cinnabon International Inc. and Wendy’s Co. entered, too. All the while, Russia’s oligarchs looked on with frustration and a desire to domesticate fast food—so the experience would be nash (“ours”), according to Melissa Caldwell, a professor at the University of California at Santa Cruz, who studies food in post-Soviet Russia. They spent fortunes attempting to siphon away customers by shamelessly emulating McDonald’s, echoing a dubious Russian tradition. (Caldwell notes that the Kremlin under Nikita Khrushchev marketed kvass, a fermented-bread drink, as Communist Coca-Cola.) One, Blin! Donalt’s, opened in 2002, attempting to turn Russia’s blini pancake into a Big Mac-killer. Owned by Yevgeny Prigozhin, the billionaire food baron who later became notorious for controlling the Internet Research Agency troll factory, it had red and yellow colors as well. Blin! Donalt’s dissolved in 2012. Far more successful was Mikhail Goncharov. After going bankrupt during the 1998 ruble crisis, he took his mother’s blini recipes and started a street stall in St. Petersburg that became the ubiquitous chain Teremok. Goncharov told me that the banks would loan McDonald’s money, but not Teremok at first. He’s complained to Russian media that this shortage of funds forced him to learn which authorities to pay off and which oligarchs to offer stakes in the company. Seeking to grow, Goncharov conducted a hypertargeted competitor analysis. “At the beginning, I went and found a McDonald’s training manual,” he said as I tried the cheese blini, chicken noodle soup and Teremok-brand kvass that he ordered for me at a north Moscow outlet, pre-pandemic. These manuals were near-encyclopedic restaurant management guides, a 3-inch binder filled with strategy that had been translated into Russian. Goncharov said Teremok followed their instructions carefully. Workers learned to prep toppings in advance and to deploy what he called the “psychological tactic” of smiling to disarm upset customers. Goncharov also became a public thorn in McDonald’s side, seeking to appeal to Russian patriotism. Even as he was expanding his chain to 100 locations by 2010 and more than 300 today, he blasted the rival’s executives as a bunch of “bastards,” demanded regulations that benefited smaller domestic competitors such as Teremok and released a blini that he said “tastes like a Big Mac” on McDonald’s 30th anniversary. For a time, McDonald’s could mostly shrug at the competition. In 2010 it had hundreds of locations spanning from the Baltic Sea to southwest Siberia. Per-store traffic was two times greater than its next-busiest international market’s. It had bought out the Russian government’s half of the joint venture and ranked among the country’s largest corporate landowners. It also boasted of selling the most ice cream there and pouring 1 in every 3 cups of coffee.

This is much better than just words, of which we have plenty:) Also: https://www.bloomberg.com/news/articles/2023-01-04/alibaba-tencent-brace-for-slowdown-after-beijing-truce?srnd=premium-europe And: https://www.bloomberg.com/news/articles/2023-01-05/hk-brokers-reopening-euphoria-is-dealt-blow-by-china-clampdown?srnd=premium-europe But perhaps fundamentals/growth will be a driver soon.