UK

I donnt want to get ahead also, but recently they also toned down nukes speech a lot. Much more now they are talking about "national unity" etc and about "openess to negotiation". Just look: https://tass.com/politics/1534305. It it almost impossible to believe (so I still dont), or maybe China or/and India did something, after recent dirty bomb information campaign by Shoigu:)

Russian workers have made progress repairing a key bridge to Crimea that was severely damaged in a blast that Moscow blamed on Ukraine, officials said, but the span is not expected to be fully operational before next year. The structure — the 12-mile Kerch Strait Bridge that connects Crimea to Russia — holds symbolic and strategic value for Moscow, serving as a key logistics link that has been vital for the Kremlin’s war effort in Ukraine. Marat Khusnullin, a Russian deputy prime minister in charge of the country’s infrastructure, said on Tuesday that the first of four replacement spans of the bridge had been installed. The full restoration will not be completed before next September, Mr. Khusnillin told President Vladimir V. Putin last week. The bridge was damaged by a vast explosion in October that sent two spans of the bridge tumbling into the water. Several other spans, including railway tracks, were severely damaged by a resulting fire. The incident dealt an embarrassing blow to the Kremlin, not just because the bridge had served as the primary supply route for Moscow’s forces fighting in southern Ukraine amid a Ukrainian counteroffensive, but also because the bridge holds deep symbolism for Mr. Putin as a pillar of his disputed claim to the Crimean Peninsula since the structure’s completion in 2018. Although one railway track and one roadway were still operational after the blast, the explosion reduced Moscow’s ability to move equipment and troops to Crimea and Ukraine’s south.

https://www.bloomberg.com/news/articles/2022-11-08/rise-of-russia-hardliner-yevgeny-prigozhin-fuels-fear-in-putin-s-elite Now that would be quite a succesor...

https://www.barrons.com/articles/warren-buffett-bets-big-on-energy-51667929870 Buffett was asked at the Berkshire shareholder meeting last year about the Chevron investment and whether he was comfortable owning an oil stock given the role of fossil fuels in warming the planet. “If you expect perfection in your spouse or your friends or in company, you’re not going to find it,” Buffett responded. “Chevron is not an evil company in the least. And I have no compunction in the least about owning Chevron. And if we own the entire business, I would not feel uncomfortable about being in that business.” Buffett then asked Berkshire Vice Chairman Charlie Munger for his view, and Munger said: “Well, I agree. You can imagine two things. A young man marries into your family. He’s an English professor at, say, Swarthmore, or he works for Chevron. Which would you pick? I’d take the guy from Chevron.”

https://www.bloomberg.com/news/articles/2022-11-08/crypto-exchange-binance-to-buy-rival-ftx-com-terms-undisclosed?srnd=premium-europe&leadSource=uverify wall Billionaire Changpeng “CZ” Zhao consolidated his position atop the crypto world on Tuesday with a stunning move to take over FTX.com, the suddenly troubled firm led by his chief rival and one-time disciple, Sam Bankman-Fried. The letter of acquisition intent by Zhao’s Binance Holdings came after a bitter feud between the two men spilled into the open, with Zhao actively undermining confidence in FTX’s finances and helping spark an exodus of users from the three-year-old FTX.com exchange. A day before reaching a deal, Bankman-Fried said on Twitter that assets on FTX were “fine.” Such moves would be prohibited on Wall Street but aren’t uncommon in this rough-and-tumble corner of finance, which remains largely devoid of regulation about a decade year after its founding. Ironically, it was Bankman-Fried who was pushing for greater regulation, something that Zhao has largely opposed. https://www.bloomberg.com/news/articles/2022-11-09/ftx-binance-deal-sam-bankman-fried-s-downfall-stuns-crypto-world?srnd=premium-europe Some of FTX’s investors found out about the deal on Twitter, according to people familiar with the matter. These investors are uncertain whether they will receive any money if the agreement with Binance goes through. The list of losers in the collapse includes investors in Bankman-Fried’s exchange, valued at nearly $32 billion in a January financing. Those include blue-chip names like the SoftBank Group Corp.’s Vision Fund, the Ontario Teachers’ Pension Plan, the Singapore wealth fund Temasek Holdings Pte., hedge fund Tiger Global Management and Lightspeed Venture Partners. Following the January fund-raising, Bankman-Fried told Bloomberg the funds would likely go toward mergers and acquisitions, with possible targets including payments businesses, NFT-centric firms and the metaverse.

And, give or take, but they are still some 30 per cent cheaper.

Also: https://www.wsj.com/articles/insurers-are-facing-a-steep-rise-in-reinsurance-rates-11667858056?mod=hp_lista_pos2 Insurers are in the middle of negotiations with reinsurers, which are trying to boost rates by 10% to 30%. Nearly two-thirds of U.S. property-catastrophe coverage renews each Jan. 1, including for many large diversified U.S. and European insurers. Allstate Chief Executive Thomas Wilson said the price increases being sought by reinsurers are due to their recent losses, worries about climate change and the dollar’s recent strengthening, which hurts some reinsurers because they sell coverage in U.S. dollars yet hold their capital in another currency. “The combination of those three things will make for a really tight reinsurance market,” Mr. Wilson said. “It seems likely to me that the price will go up next year.” Allstate won’t face the hit all at once because its reinsurance program staggers renewals over three years, he said. Rapidly rising interest rates are also hurting reinsurers. Higher rates reduce the value of the bonds they hold. If the companies face payouts, for example from a quick succession of major hurricanes, they might have to sell some of their bonds at a loss. The inflation being experienced by carriers is driving up reinsurance prices, too. With so many issues stacked up, “this is really the most challenging renewal year probably since Katrina,” said David Flandro, head of analytics of Howden Group, a London-based broker. In the January 2022 renewal period, year-over-year property-catastrophe reinsurance price increases worldwide came in at 9%, according to Howden data. Reinsurers haven’t been shy about the price increases they anticipate. Swiss Re’s Group Chief Financial Officer John Dacey said in an Oct. 28 earnings call that “prices will not show some sort of an evolutionary adjustment, but rather a fairly radical adjustment up.”

These a great points! I also feel similar re FFH vs banks. FFH is as cheap as banks, provides same or better rate upside (banks will not be able to fix much higher rates for next 5-7-10 years as FFH maybe could?) while possible risks are smaller or different. Does anyone has good idea on how FFH could position their bond portfolio in the nearest future? Is it possible for them to go for much longer duration at some point in the future? Have they said anything about this or it will be totaly opportunistic?

I would quess this has more to do with 1. their fees 2. listing place / tax treatment than with trust?

I think their patience and this years massive change in bond yields provides opportunity for FFH for the first time in like 10 years to make their 15 per cent return target actually work without any heroic assumptions? That would lead to a at least 1.5 BV or 10-12 normalised PE and vs current price we have almost 50 MoS? If it is cheap or dirty cheap, I do not now, maybe not dirty cheap but quite cheap or cheap enought for such a company. Now we are discussing linguistic like those analysing fedspeach:)

https://www.understandingwar.org/backgrounder/russian-offensive-campaign-assessment-november-6 Key Kremlin officials began collectively deescalating their rhetoric regarding the use of nuclear weapons in early November. The Russian Ministry of Foreign Affairs (MFA) released a statement on “the prevention of nuclear war” on November 2, stating that Russia “is strictly and consistently guided by the postulate of the inadmissibility of a nuclear war in which there can be no winners, and which must never be unleashed.” The Russian MFA also stated that it is committed to the reduction and limitation of nuclear weapons.[1] Russian President Vladimir Putin stated on October 27 that Russia has no need to use nuclear weapons against Ukraine and claimed Russia has never discussed the possibility of using nuclear weapons, only “hinting at the statements made by leaders of Western countries.”[2] The deputy chairman of the Russian Security Council, Dmitry Medvedev, has similarly increasingly downplayed the fiery nuclear rhetoric he used throughout October and is now focusing on promoting Russian unity in the war in Ukraine. Time for Leopards to show up?

Why such a strong reaction?

https://seekingalpha.com/article/4553507-tesla-working-on-biggest-disruption-ever-humanoid-robots?mailingid=29602811&messageid=2800&serial=29602811.6852&utm_campaign=rta-stock-article&utm_medium=email&utm_source=seeking_alpha&utm_term=29602811.6852 Solutions is waiting just around the corner...gee such things probably shows, that this downturn is not over yet:)

Maybe if some really substantial decouplimg from China occured? But maybe it is possible that it just to far for the market participants to look untill some time after year end. Also, what I do not understant: so Japan not even tries to raise rates, UK just has ackknowleged, that its economy (or financial system) can not bear substancially higher rates. I am sure EU will soon follow them too. US is in the best position, but I do not understant how is it that different and if it will be able to have very high rates for long, when the whole world around can not afford it? And somewhat normal rates, like right now, is nothing to freak out about, it would be healthy for a long term. RE high/low FCF, value vs growth, sure some reversion and justice is due:), however, if growth is real, than it is part of the formula. Just put terminal growht rate of 10 or even 6 percent into any FCF / (i - g), and see where that gets you. Not growing FCF at a 10 per cent discount is worth 10x, IF it is growing by 7 percent for at least 10 years, then that current multiple quickly goes to more than 15x etc. The question is ofcourse if the growth is real, and before this year it was overprojected and overvzlued on steroids. This is changing very fast this year:). Another thing, not every time, but ussualy these higher FCF / jam today companies are much inferior in other ways: roe, capital intensity, leverage, structurally disrupted etc. so you also have yo be carefull with them.

This is exactly how I feel too. Excited, probably to much or to early or both:). Only I try to sleep longer, few hours does not work for me in a longer term:). I had more pain earlier this year and after unsuccessful "trip" with china, by dumb luck in timing, in the summer I was back to mostly BRK and cash in my portfolio. Usually I am fully invested or use some leverage and only if markets are really crazy I would go to no more than 1/3 cash and some defensive, not very overvalued things (this happens very rarely) . BRK usually fits that well, I do not remember it to be overvalued since after GFC. Changing mind in summer on China was still very painful since I took risk and waited for better exit prices than was immediately after Russian invasion. I have never owned any FANG (only AAPL indirectly through BRK) before (only similarly "long duration" non tech companies), but in general am very biased to owning them (no leverage, diversified globally, pricing power, high roe etc), so now I am in a process in spending my cash on these kind of companies (e.g. UMG, GOOGL, META etc). If Prem is right and they will have fall another 50 per cent (as from CC), then again, not for the first time, I am too early. I am EUR based, so also have this strong USD benefit this year (possible problem in the future) and not sure what to do about this. Also we have a crazy (probably temporary) situation with RE prices where I live since they are still like 20+ per cent up from a year ago. In 2008 they also lagged stock market substantially and it was an opportunity then and perhaps even more is now. This time residential RE prices are especially distorted (for the benefit at this point in time) because of war in Ukraine. We were quite used to this, but suddenly it is like half of people around you are either from Belarus, Ukraine or Russia itself. However much more painful or harder to make any moves in RE, than in stocks, but I feel some pain from just watching and not doing anything about this:) UK

Seems like some pivot in markets attitude towards FFH:)

Nice charts! Thanks!

https://www.afr.com/chanticleer/howard-marks-on-why-now-is-the-time-to-look-at-china-20221103-p5bv9i

https://www.afr.com/wealth/investing/what-howard-marks-says-really-matters-to-investors-20221104-p5bvie Like medicine, there are side effects. So the condition today is excessive inflation and the medicine is monetary tightening, quantitative tightening and … when you slow the economy, some people get hurt.” That will create opportunities for Oaktree, which specialises in distressed debt investing. “Clearly we are excited about the future because the bargain hunter, the value investor, does not have many opportunities to find bargains when everybody has money and they’re too eager to put it to work. We want some difficulty, we want some risk aversion,” he told AFR Weekend in an exclusive interview. He was in Sydney to meet clients in a broader funding effort. “In the real world, things fluctuate between pretty good and not so hot. In the market, they fluctuate between flawless and hopeless. We’re not at hopeless. Hopeless is October 2009 or March 2020. But at least we’re not flawless anymore.” Mr Marks isn’t the only high-profiled investor to warn on the state of the economy. This week Paul Singer, founder of activist hedge fund Elliott Management, warned the world could be on the path to hyperinflation and “global societal collapse and civil or international strife” due to inaction by central bankers. But Mr Marks urged investors to ignore the endless debate about when inflation might peak or how high interest rates might go, which he said epitomised the macro-driven, trading mentality that dominated the market. He said his next addition to his famous series of memos to investors would be entitled What Really Matters. “We try to buy the stocks of companies that will become more valuable over time, and the bonds of companies that will pay interest and principal as promised. This is what matters.” Mr Marks said Oaktree was in the mindset of “patient opportunism”. “When there’s nothing clever to do, our job is really to avoid mistakes. And when there’s nothing clever to do, the mistake lies in trying to be clever. I think now we’re in transition from a very challenging period to I think a period when we will have access to more bargains. The job today is to wait.” “The Opportunities Fund group maintains a list of the things that are on their radar screen. In March, it was maybe 20 lines. In June, it was the whole page. And now I think it runs to five pages. So there’s a dramatic upturn in areas to look at, that conceivably can give us the returns we want. “Usually the things that give us the most opportunity are the things that were most warmly embraced in the good times.” But even after this year’s tightening cycle – the Federal Reserve has taken rates from zero in March to 3.75 per cent, and the RBA has moved from 0.1 per cent to 2.85 per cent – Mr Marks said pressure around the world would be for rates to move lower as quickly as possible. “Everybody wants low interest rates. The government, because it makes it easier to service the debt. The homeowner, to service their mortgage, and the LBO [leveraged buyout] operator, because it makes it easier to finance his deals. The only people who don’t want low interest rates are savers and lenders. “I think that there’s going to be a strong bias toward low rates for a long time. And even if rates were to stop here, or end up at 4.5 per cent on the Fed funds rate, or 5 per cent, this would still be historically low.”

https://www.bloomberg.com/news/articles/2022-11-03/boe-hikes-by-75-basis-points-but-rejects-market-rate-path?srnd=premium-europe&leadSource=uverify wall The Bank of England delivered its biggest interest rate increase in 33 years but strongly pushed back against market expectations for the scale of future increases, warning that following that path would induce a two-year recession. Staying on the market path used in the forecasts, which peaks at around 5.25% next year, would knock 3% off GDP and ultimately push inflation to zero, the BOE said. An outlook based on rates staying at their current 3% level implies a shorter, shallower recession and sees inflation fall close to target in two years’ time. “We think bank rate will have to go up less than what’s currently priced into financial markets,” BOE Governor Andrew Bailey said at a press conference. “That is important because, for instance, it means that the rates of new fixed-term mortgages should not need to rise as they have done.” The remarks mark a sharp contrast with Federal Reserve Chair Jerome Powell, who said Wednesday that US rates will probably go higher than people are thinking. UK government bonds and the pound fell after the BOE’s decision. Investors had already tempered their view for UK rates, suggesting a peak around 4.75%. Not in US, but this sounds like some pivot, no? So Japan, UK, EU probably soon. What if: https://www.bloomberg.com/news/articles/2022-11-02/gundlach-tells-cnbc-no-75bp-rate-hike-next-time-as-a-base-case In his view, the US inflation data will cool off in 2023, and if the Fed is successful in bringing down inflation to the 2% area by the end of next year, it will continue declining and would go well below 2%. “It is implausible” to think that inflation will halt at the 2% range and stay there. “It will go negative,” he says.

https://www.ft.com/content/6ca9a470-59ee-4809-8a5b-35f6073c9907 Ottawa has ordered three Chinese groups to divest their stakes in Canadian critical mineral companies after a defence and intelligence review concluded that the investments posed a threat to national security. In a move that reflected a significant hardening of Canada’s stance towards China, the government ordered Sinomine (Hong Kong) Rare Metals Resources to exit its stake in Power Metals, a Canadian lithium miner. Ottawa also instructed Chengze Lithium International to divest its stake in Lithium Chile and told Zangge Mining Investment (Chengdu) to unwind its investment in Ultra Lithium, another Canadian resource developer. Industry minister François-Philippe Champagne said Canada welcomed foreign direct investment from companies that “share our interests and values(opens a new window)” but would “act decisively when investments threaten our national security and our critical minerals supply chains”.

I agree, nothing to add:). In 2008-2009, when I was younger but much dumber, it almost cost me a lot to listen to much to such scaremongering. Thanks god, that autumn, I think in October 2008, biography of WB just came out, and my wife accidentally decided to buy one for me, while returning home from some foreign trip. After reading it and then all BRK letters, I quickly become much more balanced in terms of who you should follow and listen to:). Signer is smart investor, but he costantly tries to sell you an idea, that world is super dangerous and becouse of that you should almost always be hedged, of course only they know how to do this, therefore, you cannot invest without them.

I remember reading similarly very scary letter from them somwhere in 2020 spring or early summer:), but just to keep this discussion alive: https://www.ft.com/content/f3bb0f96-1816-4481-8318-4f7583326a4a The world is “on the path to hyperinflation”, it said, which could lead to “global societal collapse and civil or international strife”. While such an outcome is not certain, this is currently the direction that the world was headed, it added. However, Elliott said markets had not fallen far enough, given the many risks present, and warned of a further reversal of the so-called ‘everything rally’ seen near the top of the bull market of recent years, as sky-high investor exuberance lifted all manner of risky assets. There are so many “frightening and seriously negative possibilities” that it is hard not to think that “a seriously adverse unwind of the everything bubble” is coming, it said.The hedge fund estimates a 50 per cent fall from peak to trough would be “normal”, suggesting further large falls to come in major equity markets, although it added it was impossible to know whether or when that would happen. Elliott, which is up 6.4 per cent in 2022 and which has only lost money in two calendar years since launch in 1977, pointed to a handful of areas of potential stress that could accelerate market falls. It highlighted banks’ losses on bridge financing, potential markdowns of collateralised loan obligations and leveraged private equity as areas of potential risk for markets.The firm was also critical of investors who believed market falls will always prove shortlived and can be “ignored”.The idea that “‘we will not panic because we have seen this before’ does not comport with the current facts”, it said.