Spekulatius

That’s why I believe Biden’s somewhat offhand comment that China messing with Taiwan will get a military response from the US was a very real wink with a 4x4 to China to not even try. I think they know already with the Ukraine unfolding that it’s a no win proposition for them.

Global foundries is way behind in tech, so they can’t replace TSMC. It is actually their business strategy to focus on trailing edge nodes/ processes since they couldn’t compete with TSMC on leading edge. Anyways, any attempt of China trying to take Taiwan would likely destroy the fabs, so they would be worthless at that point. US would retaliate by blockading Chinas sea routes with the Navy , so no ship would get into Chinese ports. US and rest of the world goes into really bad recession, but China would literally die on the vine with no access to oil, raw material or even do trade unless the US allows it. Really bad for the US, but suicidal for China. No way Xi takes a chance on this.

The US has no claim on Taiwan, but the people living in Taiwan should be able to decide for themselves. As for the case that Taiwan falls in Chinese hands, how would NVDA or AMD etc ge access to Samsungs capacity. Specifically, why would give Samsung NVDA for example capacity? I don’t think they have much to spare and what they have would go first towards their own needs and their current customers. Or another example, why would Intel give AMD capacity in their own fabs? It makes much more sense for Intel to ignore AMD request for capacity since they basically would be out of business without any manufacturing capacity and Intel could pick up the pieces. I think a lot of companies would go out of business and bought up for pennies on the $ in this case, because if you can’t producing anything for a couple of years you are . I think INTC would be a $150 stock on this case, they would make money hand over fist, gobble up AMD engineering assets and get a monopoly on CPU’s again. Likewise with NVDA. Perhaps Samsung would by them for a song. Any fabless semi company without LT contract with still producing fabs would be screwed.

The chart shown above has little to do with money printing. Fiscal deficits cause money printing, but putting assets or reserves on the Fed's balance sheet doesn't. The reason is simple - these transaction leading to above do not put a single dime in anyones pocket. The stimi checks did and that's why they matter. As @wabuffo stated many times before, watch what the treasury is doing rather than the Fed. of course the Fed matters too, but it's not because of money printing. The actions of the Fed makes it more expensive to borrow money, but mostly not because of what they did (raise interest rates a little), but because Mr Market is trying to front run what they may do in the future.

Apple, NVDA, AMD come to mind. NVDA and AMD might be close to zeros actually - where would they get their chips made? Apple would be more than 50% off, but might somehow manage it.

I know BASF well. The stock looks cheap and pays a nice dividend, but I think they have structural issues now as a huge consumer of natural gas and electricity. I think this business may have a permanent input cost issue, due to dependency from Russian NG.

I don’t think there is specific evidence, it’s more a reaction to the events in Ukraine and meant to remove ambiguity about the US reaction if China gets too enterprising towards Taiwan.

This gets criticized right now, but was absolutely the right statement to make, imo: https://www.cnbc.com/2022/05/23/biden-says-us-willing-to-use-force-to-defend-taiwan.html

So us old grumps who grew up on the 60’s and 70’s are immune while the millennials need to hold on for dear life. Will be fun to see the political theatre about immunizations etc on that one. Mortality is about 1% potentially, so higher than COVID-19 but might hit younger people more. They are also more likely to participate in sex Orgies and other activities facilitating transmission.

@Viking Actually the Fed hasn't done much. They just raised the interest rates a tiny bit. What has happened is that the market participants are front running the Fed . Who know what really ends up happening. As far as corrections are concerned, they seem to happen now much quicker and are more vicious in a sense. The fall 2018 correction was quick, the COVID-19 correction decline was super fast (faster than 2008 in fact) and the current correction is also a quick one. No grinding bear markets any more. The whole correction started with speculative stuff like SPAC's, then the ARKK stuff and then moved to the growth stock generals (FANGS etc) as well as banks, consumer stocks and others. The current correction is just 3-4 month old really, but started last year in Spring with the highly speculative stuff (which pretty much got obliterated by now). If anything, i think this correction could be over quicker than people think, based on prior experience.

Trading around helps. Bear markets have dislocations all the time - stocks goes up while similar stocks don't etc for example , because of technical reasons. Fierce bear market rallies (Sell the rip) etc. Just don't make it the primary focus, because it leads to underperformance once the bear market turns into a bull market.

I think he can get out - happens all the time with mergers. Can't find financing etc., employees against him whatever. He does need to pay $1B most likely. NASDAQ comps (SNAP etc) have fallen ~25% since deal was announced. On a break, I think this could be a high twenties stock.

The modern nation state evolved to wage war more efficiently. Conscription as well as waging a total war was not possible before. One may or may not like it, but a amalgation of tiny little fiefdoms would not have a chance against modern organized army. It's jungle out there and without a nation and institution to protect out. we would be in the middle of it. The Ukraine is an example of what happens with a state on it's own when the large neighboring state goes bonkers.

Sold BMY. Worked out well.

@crs223 the libertarian utopia does not exist. Any Government might do a lot of things wrong, but try to do without it. Even if you do manage without it, the neighbor government / country will just move their army in your utopia and that will be it. As for Ukraine winning, I think it is possible, but might take a long time, unless the Russian army collapses , which I don't think is likely. They can win, when Ukraine as well as the territorial forces and newer formed volunteer units get NATO weaponry and fully trained on those as well as getting seasoned. (the Ukraine regulars are seasoned and some territorial forces are, but many are not and neither are most volunteer units at this point and they are taking heavy losses on front lines). If Ukraine is fully armed with western/ NATO weapons, I don't think the Russians have a chance against them any more.

German Russians clash over war in Russia. Apparently Putin's propaganda reaches far beyond Russia:

I think it's possible but would require a long time. it is possible, if the Ukrainian army's weapons are completely replaced and they are trained by western weapons. the western weapons are so superior to what Russian have, it's almost laughable. Think about the precision amo alone. the Russians barely have any. NATO has precision artillery that can put a 155mm round on top of you car in a parking lot 50km away. NATO just needs to make it abundantly clear that they support Ukraine with all they need in term of weapons and the economy. So as long as Ukraine is willing to fight, there is just no way Russia can win. They can choose to run their army and eventually conscripts into a meatgrinder in Ukraine and loose 100k eventually 200K people for what exactly? That also sends a nice message to China regarding Taiwan. Sure all this is expensive, but it is cheaper to deal with Hitler reincarnations doing their biding down the road. Edit - found this clip regarding precision ammo tests with 65km reach: Would love some of these bad boys being put to use in Ukraine actually.

I think in the long run, the only way to keep Ukraine safe is to admit them to the NATO. That's the end game here, Essentially they are already in through the back door. Maybe not as a full member, but through contractual terms with individual members providing weapons, intelligence and with the EU membership also providing economic aid (which will be needed for many years. There simply is no way the Ukraine remains neutral after all this. Besides nuclear saber rattling, there is nothing Putin can do about it.

Belgium appears to have automatic indexations of salaries to the CPI. That's the exception and not the case in most other European countries and certainly not in the US and Canada. I agree with automatic indexation to inflation, the inflation is not an issue, at least not short term.

A lot of people don't stay in a house forever. If there is a significant chance that you are going to sell your house in the next 10 years, I would recommend the 10 year ARM.

We can debate what is right or wrong for a long time. What decides this are not you, me or even the Fed, its the 10 and 30 year bond yields. if the 10/30 year bond yields go up, then equities and asset prices will get whacked. As for who get's hurt most, i don't think it's the bottom 25%. The bottom 25% just got a huge pay boost from minimum wage boosts and a strong labor market. Those that still don't work get transfer payments that are indexed to inflation for the most part. Who gets hurt most is the middle class. In a nut shell, It's 8% inflation and 4% wage increases for them. Do this a few times over and you talk about a serious loss of purchasing power that will have an impact - basically 70's all over again. I take a recession over this scenario any day

One thing to consider, since we are talking about the 70’s is that back in the early 70’s, didn’t really expect high inflation and first, the higher inflation was considered to be transitory, just like it is now. External factors were blamed like the newly formed OPEC as a one off factor, not without reason. Except the issue was that even once the first oil price shock was over, the inflation never backed down to the level expected. This brings second and perhaps most important factor in play , there is a difference between expected and inflation (which is priced in) and unexpected inflation (which isn’t and undermines confidence). If inflation constantly runs higher then expect, it undermines the confidence in the Fed and bad things start to happen is this keep occurring. In this scenario, Gold tends to work best. Again, listen to Damodarans most recent talks about inflation, they are very very good:

I think it’s interesting to note that each 1% rise in treasuries (Aswath references to the 10 year) should result in a 20-25% drop on the SP500, according to Damodaran. Seems like a very large drop to me and I don’t know on what math this is based on. I guess it’s the total return= equity risk premium+ risk free rate of return formula. Equity risk premium in the US has been around 5% and risk free premium is round 3% now, so going from 3-4% should be more like a 11% drop. I guess I should listen to Damodaran classes in YT (which are great): Anyways, I like the idea to just watch the bonds for signal rather than trying to guess here what inflation might or might not do. This overall doesn’t sound that great overall.

This is a delightful podcast interview with Aswath Damodaran on We Study Billionaires podcast series: https://podcasts.apple.com/us/podcast/we-study-billionaires-the-investors-podcast-network/id928933489?i=1000558680175

If nothing about a business changes and the price goes up by 60% in short order, it may be time to sell.