UK

Not good: https://www.bloomberg.com/news/articles/2022-10-23/xi-stacks-china-leadership-body-with-allies-cementing-control?leadSource=uverify wall President Xi Jinping stacked China’s most powerful body with his allies, giving him unfettered control over the world’s second-largest economy. Xi, 69, put six close associates with him on the Politburo Standing Committee, including former Shanghai chief Li Qiang, who appears set to become the next premier after Li Keqiang retires. The move effectively puts all of Xi’s men in key positions responsible for running the government, tearing down divisions between party and state instituted following Mao Zedong’s chaotic rule that ended with his death in 1976. The new lineup signals a greater emphasis on ideology over pragmatism in policy making for China, which now has fewer voices at the top to question Xi’s policies of Covid Zero, tighter control over the private sector and a more assertive foreign policy. In opening the party congress last week, a defiant Xi offered China up as an alternative to the US and it allies while calling for self-sufficiency in advanced technology.

This is interesting view: https://www.wsj.com/articles/the-u-k-market-meltdown-prime-minister-uk-borrowing-tax-cuts-energy-subsidies-truss-resign-kwarteng-boe-11666273710?mod=hp_opin_pos_4 Economic growth, which brings with it higher interest rates, might now be viewed by many in the market as a bug rather than a feature. It’s terrible news if so. Britain has shown over the past month that it cowers in the shadow of a financial system that can no longer tolerate productive economic growth or the policies necessary to achieve it. Will other countries find the same to be true for them?

https://www.bloomberg.com/news/articles/2022-10-20/treasury-yields-may-peak-before-end-of-the-year-gundlach-says

Yes, I do not have a strong view, but I agree with you om this. More importantly Buffett seems also on this side:). And these transitions are long and costly trends, so perhaps what happens to world economy or even China (if something happens) is much more important than that in the near/mid term. However if demand would collapsed in the short term due to one or another reason (I am not predicting it), do not be surprised those peak demand theories getting attention again:)

That is awesome post. I have seriously invested in bonds only once in my life, that is during GFC and Euro crisis, when you were able to get like >10 per cent yield from government bods shorter than 10 years duration. And since I try to look at least for 8-10 return in stocks, the same applies to bonds in my view. Only I still prefer shares, because i.e. if bonds is at 5 and shares of a good company at 20 PE, I much prefer the later, because it also includes growth and safety of not loosing complete/majority of purchasing power, in case inflation and currency would go Turkish style. I was not investing at the time, but was old enough to experience two currencies going to the toilet paper in my country:). I ques that shapes attitudes somehow:). But that framework of yours on looking at the 6 per cent of long term bond is very informative and a thing to think about!

I have no strong opinion on that myself, but in my investing lifetime there were probably allready two peak oil times and then two peak demand times. Perhaps reallity is somewhere in between. https://www.bloomberg.com/graphics/2022-clean-energy-electric-cars-tipping-points/?leadSource=uverify wall

I agree re index composition, more or less similar situation everywhere vs SNP500. RE UK: they have their currency, borders, language, top universites, positive demography via controlled skilled imigration (if they want) etc. I would not loose my sleep owning assets in UK in the long term and if I was forced to invest only in assets in Europe, UK definately would be on the top of the list.

https://www.yahoo.com/now/billionaire-investor-bill-ackman-joins-175616088.html

Despite all these missteps, I think UK is the closest thing to US, here in EU, and it will be fine in the long term or at least relatively will do better than rest of the Europe.

When phrases like "untouchable" and "valuation does not matter" are used (and they are not about Russia or even China or simillar country) I am pretty sure they are speaking so under srong influence of the recent price action:)

Not about small caps, but seems interesting: https://www.wsj.com/articles/u-k-markets-are-on-sale-nobody-wants-to-buy-11665996328 “It’s an untouchable market right now,” said Viraj Patel, a London-based global macro strategist at Vanda Research. “You could easily make a case where things get progressively worse from here.” “Those elements are completely incompatible,” Ms. Ielpo said, noting that while U.K. stocks trade at a large discount, he views few opportunities. “We don’t think valuations are a relevant indication” for U.K. equities.

Quite good writeup: https://seekingalpha.com/article/4546944-fairfax-financial-unfairly-punished-by-investors-significantly-undervalued?mailingid=29398128&messageid=2800&serial=293

Another one on sentiment: https://www.bloomberg.com/news/articles/2022-10-17/small-time-options-traders-bet-big-on-us-stocks-falling-further?leadSource=uverify wall

Thanks. Yes, unfortunatelly I mostly agree with your sombre view. Probably just wishfull thinking on my part.

UMG: https://www.sec.gov/Archives/edgar/data/1811882/000119312521200767/d179734dex993.htm

https://www.wsj.com/articles/whiplash-in-stock-market-shows-investors-are-still-on-edge-11665871144?mod=hp_lead_pos3

https://www.bloomberg.com/news/articles/2022-10-15/uk-fiscal-mess-becomes-butt-of-jokes-during-week-of-imf-meetings?srnd=premium-europe One joke circulating on Twitter went: “Apparently Kwarteng had to fly home first class, as no-one wanted him near business or economy.”

Again, I agree on opportunities, and I also am in a process in changing my portfolio defensiveness. And it is just a discussion on "market bottom". I do not think one should try to time or wait for it too much or care about to much if he is invested in good companies for longer term.

I agree with you on that. I read that now even Klarman finally sees some value for long term investors now:). But I was talking about sentiment which usually marks the bottom and also my surounding anecdotal sentiment, from very unprofessional people etc, and which is probably always late and not that important. However in spring 2020 these pain points were quite quickly checked during the markets darkests hours. And yes, no craziness anymore, but not that big pesimism either. US market and CBNC comentators are probably ahead of that, but I remember Cramer was screaming for rate cuts in GFC, not just telling to sell into the rallies.

This is very good point and I would say we are nowhere near that sentiment, at least around me. Now, like 80 per cent or more people in my country invests only in RE, but in the last 5 years, but especially since pandemic, more and more are discovering equities. These days they still get lots of publicity and, like every day in a local business paper I see articles, how to invest in stocks etc, where to open account, lots of success stories, usually how one invested in Tesla during pandemic etc. So far no fear or apathy at all. Even some enthusiasm. However they already mostly stopped writing about cryptocurrencies and NFTs. Also I have some friends, who usually, like in the worst moment, want to sell everything and swear to do not own equities anymore, or they switch their life insurance from equities to bonds. Not happening yet either. Though recently seems nobody also inquires about how to invest into Chinese EVs and similar stuff anymore:)

https://www.bloomberg.com/news/articles/2022-10-15/torched-stocks-are-about-the-only-thing-working-in-fed-s-favor?srnd=premium-europe Even with Thursday’s big bounce, the S&P 500 has lost a quarter of its value this year. Shocking as that’s been for investors, it’s one of the few things happening anywhere that actually accords with the Fed’s goal of draining the economy of bloat. Recently, the toll in terms of wealth destroyed -- about $15 trillion to date -- has started to approach that of the 2008 financial crisis, when measured against US gross domestic product. And while the stock market isn’t the economy, it’s a signal and an input into it, affecting everything from consumer sentiment to the price of private enterprises. Declines on a par with what’s already happened in equities have been a decent proxy for reversals in inflation more than a dozen times since the late 1950s, according to research from Doug Ramsey, chief investment officer at the Leuthold Group. While painful in the short run, the decline of the equity market’s size relative to that of the economy can be seen as a healthy development for market bulls. Plunging asset prices have finally pushed the stock-market capitalization relative to national gross domestic income out of the top quintile of historical readings, which has preceded equity declines in the next year, three and five years, data compiled by Ned Davis Research show.

https://www.ft.com/content/885865b1-2320-43c0-b41e-10c1d026202a China has insisted it will stick to its strict zero-Covid policies, saying its extensive testing and quarantine apparatus is sufficient ahead of the 20th Communist party congress, which begins on Sunday. On Thursday, leading epidemiologist Liang Wannian said there was “no timeline” for an exit from zero-Covid rules and earlier in the week the state-run People’s Daily newspaper ran a prominent defence of the strategy. Liang added that the country now had the capacity to test 1bn people in a single day. In Beijing and other major cities, including Shanghai, authorities have tightened measures ahead of the launch of the congress and residents need to test negative every few days to enter most buildings.

https://www.wsj.com/articles/how-to-keep-the-ukraine-conflict-from-going-nuclear-11665761260 The U.S. government should be communicating, quietly and often, to the Russian military not to follow any unhinged orders from Mr. Putin to use nuclear weapons. Anyone who orders nuclear use and anyone who implements such orders, they should be told, will be held accountable. Mr. Putin has brought a great disaster upon the Russian military, Russian elites and the Russian people. Washington should be reminding all Russians that a Ukrainian victory in this war won’t be an existential threat to Russia. It would be existential threat only to Vladimir Putin. Mr. Putin has surrounded himself with “yes men” who protect him and tell him what he wants to hear. But the cocoon of loyalty around him is beginning to crack, according to American intelligence sources. Nikita Khrushchev was overthrown in 1963 in part because he displayed such reckless decision-making during the Cuban Missile Crisis. When former NSC adviser Zbigniew Brzezinski was asked, “How come you failed to predict the ouster of Khrushchev?” he replied, “Tell me, if Khrushchev couldn’t predict his own ouster, how do you expect me to do so?” Analysts inside and outside the U.S. government can’t predict exactly when or how Mr. Putin will be overthrown from within. The future of Russia will be determined by the Russian people. But a Russia without Vladimir Putin must be our long-range hope, even if it is not our immediate expectation.