Spekulatius

Polish interest rates. Oof:

Yep, money is getting tighter in some areas. Add to this the increase in risk free rates and the tightening becomes substantial: https://fred.stlouisfed.org/series/BAMLH0A0HYM2

ATVI (merger arb). Sold part of my HENKY (crystallizing tax losses) and bought AKZA (AKZOY) from proceeds.

4% risk free means that corporate bonds in the BBB- range trade at 7%, maybe higher if spreads go up. I think it will be enough to slow down the economy. One thing to keep in mind is that Powell just got re-confirmed and is pretty safe, especially with inflation being front and center with both parties and in the headline news.

I think Airbus (AIR.PA) is much better risk adjusted bet than BA. Better blance sheet, much better management and better products. WBD is too tough of a call to me with the knife fight in streaming. I agree on the merger arb opportunities.

The commodity supercycle is going to get cancelled by the next recession. Works every time.

Margin call time for the clowns:

These are the components of the CPI. The Fed wants to bring the inflation down from 8% to 2%, so the inflation for largest components (housing, food, transportation, energy) will have to come down, otherwise its mathematically impossible to get there:

Because his then intoxicated relative likely doesn’t have any money. As the insurance Bible says “Thee who can pay, get slapped with a lawsuit!”

Speks rule: If everyone predicts one thing it wont happen.

Why choose when you can combine the two - it’s called Cuba Libre.

AC erst ing inflation cant be good for insurance companies writing a long tail insurance. I would think that any underwriting assumes a certain inflation rates for the claims to be paid in the future. One measure I quickly look at when looking at an is ursnce co and the “length of the tail “ is to calculate the reserve to premium ratio. I think property insurers have a ratio of reserves /premiums of about 3 typically, which implies a 3 year tail (it takes 3 years to lay a claim on average). So you have exposure to 3 years if inflation. now if you underwrite with the assumption that we see 2% inflation in the next 3 years, but inflation is really 8% for threes years, well thats a 18% delta in payout. This get much more fun , if you think about long term care insurance, which had already underwriting issues before that and now get hit with an additional dash of inflation. Haven’t seen much issues yet, but I sure would not want to have exposure to this sector right now. I admit the above is all a simpletons view and there much more nuance to it.

You dont have to go to Japan- same is true in many rural areas in Europe. You can buy houses there dirt cheap. The village I grew up with had population of 1200 when I was born and has below 900 now. The same thing happens in many places, countries in Europe and even in the US. This is due to compounding effect of demographics and people (like me) moving away.

You say people do not understand the banking and monetary system? I am not surprised:

Moreover the asset inflation most likely has led to a lower labor force participation. Labor force participation has dropped during the pandemic, but never really recovered post pandemic, which is an obvious problem now that demand is above post pandemic levels. Fundamentally, with the rapidly rising salaries at the low end, one would expect a higher labor force participation compared to pre pandemic, yet we are still 1% below roughly. That a structural reason for wage inflation that now seeps into core inflation and likely a reason why inflation will remain sticky.

Yep, imaging doing this and having an “accident”. No worries, this why you have auto insurance:

We can simplify the whole thread and argument and just blame the Fed.

Seems like the same method could be applied to lay off child rearing expenses to an insurer.

Adding to existing positions in VNT, JXN, GOOGL so far.

Very simple. My job. I know a lot of others in the same boat, including my colleagues. Yes, I could job hop and find a different job for more, but likely would have to move, which creates a significant hurdle as far as family is concerned.

Wage growth is tracking inflation by a mile. I don't see this benefiting anyone, least the middle class. I checked the stats at FRED. Hourly earnings were $30 in Dec 2020, now $31.95 May 2022. That's 6.5% or annualized ~4.5%. Inflation is running north of 8%. So the average worker lost 3.5-4% of his purchasing power in the last 18 month. Ouch.

What is this thread about? Isn't almost everybody who posts here part of the elite? Or is the problem that we are part of the elite, but don't get to make the rules? What has the valuation multiple of MSFT has to do with all this? I just don't get what this is about.

@yesman182 awesome analysis and thanks for posting. I think this is how Buffett et all probably look at Berkshire’s valuation as well. The stock does not look screaming cheap but not expensive at all either.

Same here. piggybacking on @BG2008 research.

These things are not luxury items/brands. FWIW, this kind of thinking gets you in trouble when value investing.