Spekulatius

Oooff, probably the top for inflation, but watch out for core inflation data: https://finance.yahoo.com/news/june-cpi-preview-inflation-likely-surged-to-new-40-year-high-last-month-215233961.html “Core” CPI, which excludes the volatile food and energy components of the report, rose 5.9%, compared to 6.0% in May. Roughly 6% core inflation suggests 6% risk free interest rates if it becomes entrenched.

If the choice is to go with 100% energy stocks or zero, I would pick 0%. there are way better ways to protect against inflation than buying energy securities.

Tech will be the beneficiary when interest rates stop rising or even go down again, Imo.

Interesting chart from JP Morgan’s quarterly investment letter regarding energy cost. I am surprised how bad coal and nuclear is on the cost curves https://am.jpmorgan.com/content/dam/jpm-am-aem/global/en/insights/market-insights/guide-to-the-markets/mi-guide-to-the-markets-us.pdf The more I think about this, the fulcrum energy is NG and not crude oil. Crude oil will more likely than not come down a bit, but I think NG prices will stay elevated due to demand from Europe, mainly because the Ng from Russia has been taken out of the market for a while.

One of the great articles about Market correction and what to do with them from Morgan Housel: https://www.fool.com/investing/general/2013/08/19/what-i-plan-to-do-when-the-market-crashes.aspx I think one of the most important parts is to have a plan that makes sense and to stick with it. The permabears often suffer from thesis drift. If they correctly predict a market correction of let say 33% - once the market reach the price target they will say “Now look at this or that, fundamentals are worse than zi predicted etc etc” and the new target is 50% down or whatever. Then when the target isn’t reached they blame the central bank, the plunge protection team, QE+money printing or whatever and claim the market is just about to collapse. There is always something, but the above is a clear plan that I think makes sense and is a useful framework. You can modify as needed.

Putin is not going to mess with NATO territory, I but he will go into other places where he can. target smay be Caucasus, Kazakstan , he is already in Syria, maybe mess with states around the Persian gulf. He wants to resurrect Russia as a superpower. He is also absolutely ruthless, probably the most ruthless leader since Hitler. Zero moral compass. Claiming that Ukraine would be better off his he had conquered it diss not seem to agree with Ukrainian people which I think are probably the people who know best. On the war, if current conditions exist, the Russian will grind it out and win, if you call it that. We probably have to support them in the long haul, rain their troops on western weapons and supply them in sufficient quantity , train their pilots on F-15’s - the whole nine yards.

I did a similar bet in 2007 when peak oil was all the rage. I betted a case of Sonoma county wine that crude would go below $50/ brl within 10 years. I never collected the bet though, moved out of area and I guess my counter-party forgot too. I betted simply based on my assumption that a lot of crazy things happen in commodity markets. I actually would make that bet again that crude will be below $50 within the next 10 years (2032) at some point.

Quite frankly, Lindt or Ghirardelli beats Seas Candy. The company is worked for in CA had a sale for a discount on Xmas and I bought a box once and wasn’t impressed. I never bought one again. I don’t think this 3 day rule makes any sense, chocolate sits much longer I bet. I think somewhere along the line, they underinvested in Seas Candy or they might be giant in the Candy business right now. May be the alternative was just better than organic or inorganic investments in this business.

I am a fan of Aimee Mann's work and like many of here records. The last one (Queens of Summer Hotel) is a bit different - almost like a musical of sorts:

Ukraine is not part of the EU either. The EU has delivered weapons to the Ukraine as well as monetary aid. They are also taking in millions of refuges - the US does very little on that end. Lots of countries are contributing to the effort - not just the US. The money spent here is well spent, imo. If Putin wins here (whatever that means) he is going for another adventure and it's going to get more expensive and will cost American lives to stop him.

Just be aware that Germany does not use all that much NG for power generation. The current number is ~10% of the power generated by NG. Germany can handle the NG crisis from a power perspective, but most NG is used for heating and the industry and that's where lack of supplies will hurt. I am just saying this because people think that nuclear is the solution for the NG shortfall. It is only a small piece of it. Germany will not have power shortage because of lack of NG, but they will see curtailing which might hit the industry hard (especially the chemical industry like BASF).

I think you are wrong about this, We could well be done with commodity inflation here, but what if labor want their bite after losing ~4% of their buying power in real term? The labor negotiations in Europe for example will get fairly tenuous and I think it will seep over the US. If labor says, well inflation Is 8% right now, so I want that, plus a compensation for last years losses. What then? We probably see labor strikes coming back too just like in the 70’s. Strikes were very rare since the 90’s, but they actually do work if labor is scarce like is the case right now. Thats why inflation, especially unexpected inflation is so damaging. It affects different sectors and people at different times and sets up a flywheel eventually because everyone feels getting screwed, which is actually correct. I am old enough to remember the second half of the 70’s and even the lines on gas station in 1974 (which were less of an issue in Germany than the US), the labor strikes and the whole economic mess. You just had no idea what next year would bring, some years seemed just like everything is fine again (1976) and then the inflation raised its ugly head again in 1978. Its one thing to read about this and look at old charts and another one to live though it, even though only as teenager. The Fed is well advised to really get this bottled up for sure and if it causes a recession, so be it. The labor market is likely still on full employment even with a recession anyways, so that part is not that big of a concern.

Drill baby drill:

It’s possible true, but first of all no one here says “fuck the next 2 years “ (neither do you) and second we do not know if interest rates come down or how much. Higher internet rates get discounted into a higher discount rate for equities after a while. It may not happen instantaneously (or it may) but it will happen just as higher spot prices for crude will get build into the valuation for E&P’s. FWIW and that has not been discussed enough what did scree up the 70’s was not inflation , it was unpredictable inflation. We had 10%+ in 1973 and 1974, then a recession in 1975 lower inflation and 1976 and 77 seems relatively cal and them all the heel broke lose. The problem was that nobody could predict what happened next, companies did not know what to expect next year, how to set prices and how to invest. The seesaw was impacting the economy in many ways. If inflation had been let’s say a relatively steady 7% throughout the 70’s, it would not have been such a big problem. We are having the same issue now. Commodity prices seesaw like crazy. Next year, we could well see labor trying to take their share after been screwed by unexpected inflation this year etc. It’s going to make the economy way more volatile. If we don’t get this under control, I expect the next few years to be very very volatile. Maybe the 20’s will be the decade of the macro trader rate than the buy and hold investor popularized in the last decade.

Something between 1) and 2) could very well happen. Nobody wins outright and this goes into a Cold War with flare ups. We should be prepared for the long haul - a conflict that last years with lower intensity.

The question is not what inflation is priced it, it’s what interest rates are priced in. Each percent increase in LT risk free interest rates will push down valuations by about 10-15% assuming constant equity risk premium.

You can buy both Ethereum and bitcoin in Interactive Brokers now.

Completely misleading. Yes, changes in the earth orbit do change climate, but they do so over 100,000 of years not the time scales were are seeing here. Go to the source and look up what NASA are really saying, not some amateur website: https://climate.nasa.gov/news/2948/milankovitch-orbital-cycles-and-their-role-in-earths-climate/ https://qr.ae/pv4rYf Sott.net is a site that is associated with the Quantum Future Group, the new religious movement created by Arkadiusz Jadczyk and Laura Knight Jadczyk. Nothing to do with investing either.

Not sure their numbers got that much worse relative to CPRT. IAA spun off KAR in 2019, so that's reduced their revenues. IAA's profit metrics were always worse and I think one reason is that CPRT owns their scrap yard facilities while IAA tends to lease them.

Fed has 3 main priorities: 1) reduce inflation 2) Keep financial markets operating well 3) Employment 3) is not an issue right now. We have full employment. I don't see any issues regarding 2) in the US, but I think the massacre in EM and other currencies could be an issue in some countries with respect to their financial systems. I am not sure how much that matters to the Fed. So focus is going to be on inflation until unemployment starts to creep up substantially. I think the Fed can lift interest rates quite a bit more before something breaks with 2) or 3). A mild recession (we are likely in one already) does not seem to affect labor markets much. I don't think some techie layoffs in cryptos really count, those people can easily get a job at a Fortune 500 company. Where things may get ugly is Emerging markets where credit could become very tight - that's where liquidity gets sucked out first, but that's not the Fed's problem until it affects the US economy.

Thanks, not a bad take. I also think we might not be far from the bottom here for the time being.

I am with @awshere. If you study even tiny bit of history, you will see that the likely hood of solving this situation with a peace deal coming from a position of weakness is very low. My thinking is that we are at war with Russia and the sooner we acknowledge the fact the better. It’s the Ukrainian that are fighting for us (and themselves ) so we don’t have to. If we supply them with the weapons to make a stand and even push the Russians back, it will be a crushing defeat for Putin. If not and Ukraine is lost , we better get ready for another fight somewhere else where we don’t have others to fight for us. There is now a new iron curtain going up in Europe again and elsewhere that will remain in place and determine geopolitics for a long time - think a decade rather than a year.

I agree on capital allocation and it gives me pause many commodity plays. I suspect that a lot of bad decision will be made yet again if they feel flush. With those, I really would like to see a clear capital distribution plan. BHP and RIO for example have that, they just distribute cash. For example going back to RIO which does a lot of copper, it seems that both Copper and RIO are back to 2020 prices. However, before make a sad face for RIO shareholders, you have to account for almost $15 in dividends you have received from them. Nobody can take these away. So if you hold those in an IRA or tax deferred account, they are good investments even with the stocks going nowhere.

No fly zone does apply to the Ukraine but not international waters, where this plays put. The US can sent warships to protect convoys in international waters and warplanes as well. Even if we don‘t care about other countries , we care about Ukraine. Grain exports are a large part of their economy, which Putin want to wreck. We should not allow him to do that. Still think we should give Ukraine enough rockets to soften up Crimea and Sebastopol ahead of this but priorities are probably elsewhere right now.

@Viking What I wrote is nothing else than Mungers Elevator up or down concept in a specific framing. I would guess that it works about 80% of the time. I think one mistake people make is that they buy something with certain issues and after they buy, they think that this issue is going away and multiples increase. In fact, at least with commodity plays, the opposite is happening and as fundamentals improve, the multiple gets lower. It is exactly the opposite that happens with growth stocks (as fundamentals improve, the multiples increase). This makes for a power full Feedback loop with growth stocks, but rarely not with value stocks, especially commodity plays. With commodity plays, you should be comfortable if you can live with just the cash distributions without any multiple expansion or much price improvement over and entire cycle (trough to top). If you get a good return on this, you probably bought at a good value. On CNQ, I agree with everything you said and think it will probably be OK above $80/brl or thereabouts.