UK

Yes. I am EUR based (btw inflation where I live is like 20+ and we cannot even rise rates ourselves:)) with majority of the portfolio assets in US/Global and so with large, like 60+ percent, USD and other currency exposure. That served well up till now, but those currency movements of lately become so large, that it is becoming hard to ignore, especially also if you do some borrowing in EUR. My long term view is that it is more likely than not, that EUR goes JPY way, with permanently lower rates and depreciation against USD (because of economy, demography, geopolitics, not to mention currently ongoing war and energy issues). But it could be dangerous position in the short/mid term. One more question I do not have a good answer.

https://www.bloomberg.com/news/articles/2022-10-14/summers-sees-more-land-mines-after-uk-warns-on-bond-shut-out?srnd=premium-europe “I doubt we’ve seen the last mine go off. Some of them might be in the private sector. I think more of them may be international,” Summers said. He said he was struck by “countries reporting difficulty in getting market access” at this week’s meetings in Washington. I am not sure if that would mark possible bottom, but how can FED not stop/pivot if situation in credit market gets more seriuos despite of infliation?

https://www.bloomberg.com/opinion/articles/2022-10-14/fed-s-next-crisis-is-brewing-in-us-treasuries Conditions are so worrisome that Treasury Secretary Janet Yellen took the unusual step Wednesday of expressing concern about a potential breakdown in trading, saying after a speech in Washington that her department is “worried about a loss of adequate liquidity” in the $23.7 trillion market for US government securities. Make no mistake, if the Treasury market seizes up, the global economy and financial system will have much bigger problems than elevated inflation.

Good overview of the situation: https://www.bloomberg.com/opinion/articles/2022-10-14/uk-financial-crisis-threatens-to-derail-central-banks-in-global-inflation-fight?srnd=premium-europe Overall, therefore, the British soap opera has sharply increased the chances of the dreaded policy “pivot” for the rest of the world. For reasons of financial stability (a euphemism for avoiding a crisis), more central banks will come under pressure to reverse their course. If Bailey and the BOE hold the line and buy back no more gilts, it won’t end the issue, but it would provide other countries with more hope that Quantitative Destruction and a monetary policy pivot can be avoided.

https://www.bloomberg.com/news/articles/2022-10-13/bitcoin-btc-becoming-less-volatile-than-stocks-raises-warning-flag And even though lower volatility is typically welcomed in the stock market, for instance, the combo could spell trouble for Bitcoin, where there tend to be plenty of speculators who enter the space purely for the thrill of the swings.

https://www.wsj.com/articles/venture-firms-are-betting-on-public-tech-stocks-as-startup-market-stalls-11665653404?mod=hp_lista_pos3 Other firms—including Sequoia Capital and Andreessen Horowitz, two of Silicon Valley’s most high-profile investors—are going further, buying shares in public tech firms they hadn’t previously backed as startups. Venture capitalists say they are taking advantage of a stock selloff that has allowed them to buy shares in high-profile tech companies at a good price for the first time in years. At the same time, they say they have struggled to find good investments in the startup market, where prices for new financings have remained expensive and startup rounds have slowed despite record capital. In the first quarter, Sequoia’s U.S. startup funds purchased over 2.5 million new shares in data-analytics firm Amplitude Inc. and 573,500 new shares in food-delivery service DoorDash Inc., according to public filings, two companies that counted Sequoia as one of their largest shareholders when going public. At the time Sequoia bought the shares, the stock prices of both companies were down more than 60% from last year’s all-time highs. Pat Grady, a partner at Sequoia, said the firm began making lists of public companies to invest in when the market began to dip late last year. Sequoia went through a similar exercise after the 2008 crash, when it came up with a list of 20 public companies. It ended up buying two stocks—in software firms Autodesk Inc. and Cadence Design Systems Inc. Mr. Grady said the firm eventually regretted not having made more public-market bets in the wake of the financial crisis. Purchases of some public shares by venture firms from earlier this year have already tanked, illustrating the risks. Sequoia’s DoorDash investment from March has shed over 40% of its value, even though the food-delivery firm’s second-quarter revenue growth surpassed analyst estimates. Vince Hankes, a partner at New York venture firm Thrive Capital, said his team had long admired the business behind Carvana Co. , a used-car retailer that Thrive hadn’t backed before it went public in 2017. As Carvana’s stock began to crater last fall, the firm took note.Thrive ended up buying 812,713 shares in Carvana in the first quarter and then almost doubled its stake in the subsequent months, according to public filings. “We think about it very similarly to how we make a private company investment,” Mr. Hankes said, adding that Thrive’s goal is to hold its public stocks for years.

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.

I see LVMH 2023 EPS estimate 31 EUR?

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.

Last hope standing for team transitory:)? https://www.bloomberg.com/news/articles/2022-10-12/kuroda-vows-to-keep-easing-to-support-still-recovering-economy#xj4y7vzkg

https://www.bloomberg.com/news/articles/2022-10-11/jerome-powell-s-inflation-fight-recalls-paul-volcker-s 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.

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.”

I think this GB case evolving in real time is really interesting and could provide some ques of what to expect: https://www.wsj.com/articles/the-bank-of-englands-dilemma-easing-and-tightening-at-the-same-time-11665501588

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.

US saving rate is 3 per cent (and average 401k perhaps much lower)

UMG, GOOGL, some META and some TSLA puts, to offset possible premature accumulation:)

https://www.cnbc.com/select/congressional-stock-trading-could-soon-be-tracked/

https://www.cnbc.com/video/2022/10/10/jpmorgans-jamie-dimon-warns-us-likely-to-tip-into-recession-in-6-to-9-months.html https://www.cnbc.com/video/2022/10/10/dimon-sp-could-yet-fall-by-another-easy-20percent-from-current-levels.html

https://www.economist.com/briefing/2022/10/06/ukraines-military-success-is-reshaping-russia-as-well-as-the-war 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.

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.”

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.”

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.

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.

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.