UK

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.

https://www.bloomberg.com/news/articles/2022-10-06/bill-gross-sides-with-pimco-bond-bulls-in-seeing-yields-peaking?srnd=premium-europe https://www.wsj.com/articles/when-interest-rates-rise-fast-markets-tend-to-break-how-to-spot-the-cracks-11664974804 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:)

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.

https://www.wsj.com/articles/ukraines-new-offensive-is-fueled-by-captured-russian-weapons-11664965264 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.

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:)))

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: https://www.bloomberg.com/news/articles/2022-10-03/inflation-in-europe-now-looks-even-less-transitory-than-in-us

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?”

Maybe somebody will renew this with Powell:)

I understand, that one years earnings is only small part of the value, etc, and this relates only to SNP as a whole, but historically I think it is a good yardstick to look at the total market through this F PE valuation lenses, because it provides, if not perfect, then somewhat normalised basis: It is interesting, that putting some 4 per cent growth on the SNP500 earnings for 20 years (ant 2 after that) at some 10 per cent discount rate you would also arrive at around 16x fair value for the whole market, so this 16x seems like fair/reasonable multiple for the total market. We are at it know, but the main problem I think is that those future earning estimates is still anticipated at around 240 for 2023 (and have not changed a lot from spring i believe) and comparing to estimated 210 for this year, it anticipates some 14 per cent earnings growth. I am not sure if this is not to optimistic? Those estimates always too optimistic, but in this case I am afraid they are just terrible lagging (and perhaps already getting adjusted in the markets mind) and if you put more conservative number, like same 200 and a still "not distressed" multiple of say 15x, you would arrive at 3000 for SNP500. If I had to invest only in SNP, below that level, I would be fully invested and perhaps, below some 12x, even add some 20-30 percent leverage, especially if it would be clear at that time, that rates will not rise anymore/are going down. I also like these charts: But perhaps all this does not mean nothing at all if you invest in a particular companies and have somewhat longer horizon than 6-18 month. Also it will be very interesting to see what team BRK will do in this environment, after all those writings about buckets and raining gold, they did not so much in 2020 spring, and later explained, that it was because that situation was really special/unknowable (which I agree it was), this year I think they (Tod?) said, that this time situation is more from their playbook. But maybe they just wait for that phone to finally starting to ring again, another way to time the bottom:), and also something to think about while trying to answer threads subject question.

You are not the only one asking these questions:). From 2020 letter: "When our partnership distributed its Berkshire shares in 1969, all of the doctors kept the stock they received. They may not have known the ins and outs of investing or accounting, but they did know that at Berkshire they would be treated as partners. Two of Stan’s comrades from Emdee are now in their high-90s and continue to hold Berkshire shares. This group’s startling durability – along with the fact that Charlie and I are 97 and 90, respectively – serves up an interesting question: Could it be that Berkshire ownership fosters longevity?"

For fun: “SPX 666 (GFC low) to 3333 (QE bull high) to 2222 (COVID) to >4444 (QE supernova) to 3333 (bond bear); we nibble 3600, bite 3300, gorge 3000,” https://www.investing.com/news/stock-market-news/big-low-wont-be-in-before-q1-no-huge-rally-until-policy-panic-occurs--bofas-hartnett-432SI-2902877

I have no idea and do not invest based on such things, but after reading about all this "pension margin call" situation, you really start to wonder, that it feels a little bit like 2007, when everyone quickly started getting educated on subprime stuff:). It was zero interest rates and unlimited QE policy for 14 years and 10 years from last major financial/market dislocation (EUR crisis until whatever it takes). At the start of the year, almost all assets where on the expensive side, if not in a bubble and when rates go up by such magnitude after such long time (and before this bond market was in bull market like forever), who knows what interesting things could happen? In 2018, when FED tried to raise rates, markets went down like 20 per cent and it pivoted:) But this time I think it not so easy to do or very hard for them to do in a major way before time. At least not until major dislocation (hopefully/probably not in US at first) or at least more substantial market drop:). However it leads to a much more exiting times in the markets, just look at GOOGL, was at like 30+ PE year ago, now it is <18, on relative basis, on par with SNP!, on absolute basis, taking growth into account, perhaps also well above 10 per cent return at this price in the long term. More on LDI (new term for me:)): https://www.bloomberg.com/opinion/articles/2022-09-29/uk-pensions-got-margin-calls?srnd=premium-europe&leadSource=uverify wall UK

https://www.economist.com/briefing/2022/09/28/an-investigation-into-what-has-shaped-xi-jinpings-thinking