Spekulatius

interesting article on the situation in 1948 which indeed seems similar to what we have today: https://www.ft.com/content/f6bf6064-a348-4f37-b784-5b9e7ba05448 Looks like back then, the Fed targeted credit expansion rather than interest rates. https://fraser.stlouisfed.org/title/annual-report-board-governors-federal-reserve-system-117/1948-2405

Rather than predicting what might happen in the future, we might be better off just looking at the current data sources that are available to us. Taxes seems to be a good real time indicator. To be certain, there are some indicators that are pointing down - like ECRI's leading indicators: So you never really know. I personally would go with the tax data over these guys for now.

Well, isn't this the oldest fiscal trick in the world. It's particular beneficial if a lot of debt is held foreign because then it doesn't hurt the own citizens. I think it's laughable that some debt doomsdayers argument that we can's service our debt with higher interest rates, because with my Mickey Mouse math, up to 7%, Uncle Sam wouldn't pay anything. Of course I don't expect inflation to stay there, but even though the debt relief from the current inflation is quite substantial and the argument is even true, if we have 3% inflation and 3 % interest rates. Just looking at the YTD tax receipt until 3/18 (latest data) gives you a picture - its at $1.804T vs $1.46T in 2021 - that's up 23.5%. Might be a bit distorted due to the 4/15 tax deadline, but still. Uncle Sam is literally swimming in cash and so are many states (CA being one). https://fsapps.fiscal.treasury.gov/dts/issues/2022/2?sortOrder=desc#FY2022Q2

Not to mention that rates stay deeply negative with 7-8% inflation, even if they raise to 2%. Also, Uncle Sam benefits from the inflation like no other - 7% of the debt just got incinerated via inflation while he pays 2% on average ( $0.56T of interest on $28.5T in debt)

Yes. As always, I am a bit early.

Sold CACI in my IRA accounts.

The hypersonic Khinzal missile is probably just as useful than the V1 was in WW2, it’s more propaganda than anything else. It does not matter much if they have it - it’s a very expensive weapon to use in any case, considering that the Russian don’t seem to even have a lot of conventional precision guided missiles.

The Fed talk may sound hawkish, but when they say they raise the interest rate 7 times and indicate that they don’t go more than 0.25%, we will get to 1.75% at best with inflation around 8%. That’s really dovish if you think about it. As for COVID-19, I think it’s a nothing burger in Europe and the US, but will be an issue in China foremost because of zero COVID-19 policies and because their own vaccines are crappy. We have seen some insane moves with commodities, US and Chinese tech stocks, I think if you are good at trading those, you can make a lot of money. Mr Market is bipolar and maybe stays this way. I also think that Mr Market underestimate the chance that the Ukraine conflict escalates. Right now, it looks like a near zero chance of this happening is implied and I would go over this (maybe a 10-20% range).

London RE does not seem where I would put my money. Don’t they call London Londongrad because there is so much Russian money there? I also think the GBP looks overvalued and may be on its way down.

The analogies between Putin and Hitler become clearer and closer. Putin is already in full blown genocide mode, his war rally to celebrate the Crimean annexation in Moscow is similar to Goebbels Sportpalast speech ( Wollt Ihr den totalen Krieg!) - both were after a strategic defeat (Stalingrad) and now he fired of his hypersonic Wunderwaffe in the general direction of the NATO. Just like the NAZI‘s did, he is looking for friends in Asia. similar to Hitler and the Nazis, Putin is always doubling up, if he loses, betting that the other sides doesn’t call his cards. While nothing is every exactly the same, history does rhyme and this rhyme looks very scary to me. I am of the opinion that we are already in a war with Russia already we just don’t call it like it is yet. I don‘t think we can kick this can down the road either, hope I am wrong. The implications for the equity market are not positive, I think. On a related note, it isn’t just Putins war either, there is a significant part of the population aligned with him. There is also a significant part that is not - mostly young people. This YouTube 1420 channel gives an interesting view on how people in Russia think, with random looking street interviews. Some folks are quite gutsy, putting out there opinions like that:

LOL, I see also this odd conspiracy fellow INArtecarloDoss is involved and Kuppy who thought the financial systems would blow up, because we boycott the Russians. They could be right on direction, but it I am sure it will be for the wrong reasons. Its not a surprise that violent changes in the future market in either direction blow up traders.

US Tech has done a monster move last week, similar to what we have seen with Chinese tech/growth. I have no clue if this lasts, but if you can get some of these turns even approximately right, you can make a lot of dough. Its not really a stock pickers market either, it’s more like a market for those who can guess sentiment and market turns right. The specific stock you pick doesn’t really matter all that much, it’s being in the right factor trade or market segment at the right time. This is what you see in bear market rallies often.

90% of storage is relative to storage capacity, which seems roughly 3900 BCF, if this source is correct. Last winter they filled up less than 90% (maybe 75% based on eyeballing this by Oct ). https://www.celsiusenergy.net/p/european-natural-gas-inventories.html#Current This requirement I guess codifies the NG buffer and was actually put in place before the invasion. The 3900 BCF storage capacity is roughly enough for 3 month average usage.

@formthirteen great summary. I think 3 & 4 are the biggest issues. So far Belarus has not been involved, but could be, The goal for this vector would be to cut of supplies from the west. This Austrian officer assessment is pretty good. They also have another video up on YT on how a Russian battalion operates. When you listen to Putin’s soccer stadium rally and the other talk yesterday it’s clear he won’t let go. He sacked some generals and I guess there were some new guys now in charge that come up with Plan B (Plan A was Blitzkrieg and it clearly failed ) which might be what the Austrian officer described. This war is going to take quite some time - more than 4 weeks from here is my guess.

One of the best tactical assesment I have seen in German (or Austrian )

LOL, very true, but that doesn’t prevent us from trying.

I am taking already some on stocks that had muddied earnings like $STNE. I agree that yield curves and high inflation are not good things. I have no idea about the future and quite frankly , I think it’s pretty hard to make Macro predictions and even when you are right, it does not necessarily mean being right about the stock market.

Who said they need to store the LNG? They need to replace 40% of their NG supply currently coming from Russia with LNG from other sources. It will take a while but should be doable. Also coal plants will be running more / longer and perhaps Nuclear plants as well. Rest comes from renewables. The plan is to cut Russian gas by 2/3 in one year and the rest in 3 years. Ambitious but doable.

I guess we havn't see the top yet. Tech is having a monster rally today. Mr Market running around like a headless chicken. Love it.

I think Putin is just busy making the cheat code for 50,000 Syrian mercenaries work.

A little early, but yesterday was St Paddy's day and today the weekend starts:

To me a 10% normalized FCF yield does not sound too enticing. A 20% FCF at current prices assumes that current prices persist for a while and that's not a bet I am willing to make. If one is willing to dive in, you can find plenty of stocks with >10% FCF yield and much less commodity price exposure. The packaging sector alone has a handful of those, just to name on example.

Looked briefly into Shell $SHEL as a potential long regarding LNG play and now I want the 30 min of my life back spent sifting through their annual report. Selling Permian oil fields to reduce carbon dioxide emissions - really? They sold them to COP which will keep drilling and emit the carbon dioxide for them. It's so obvious of a Shell <pun> game that I wonder who takes this seriously.

Putin sacking his generals and throwing some in jail. Looks more and more like Stalins playbook. https://www.dailymail.co.uk/news/article-10624659/Russia-sacks-one-generals-amid-claims-leaked-information-led-loss-life.html Good thing for Putin the buck doesn’t stop at the very top in a dictatorship.

We have been agreeing on some things here, so I knew it wouldn’t last . Tell me how this works: Total world wide oil production ~95M brl. US oil production ~10.5M brl How much of this US oil production is influenced by government? May call it 5% (which is generous). so now the oil price is set as a function of world wide demand / supply balance and you think that Biden can influence prices? Besides that ESG was a factor under Trump, is a factor under Biden and will be factor with the next President. Lots of talk and barking on both sides, but neither one has much of an impact. NG is a different issue, because to a large extend, NG prices are set locally or by LNG imports, so there are barriers to move stuff around. Crude however is pretty friction less and trades on global supply demand balance, adjusted for oil quality difference and transportation costs (which are low).