Spekulatius

It's not about punishing the Russian people although they inevitably will feel the pain. It's about destroying the Russian war machine via their Achilles heel which is their weak economy. The assumption is that Russia simply can't keep war machine going for long if the economy is in taters. Make no mistake - we are at war with Putin& Russia. We chose our weapon to fight back - finance and trade / tech where we have got the machine gun, and they got a pocket knife (economy the size of Texas). The alternative is either doing nothing, or fight a real war with troops on the ground. We don't want the latter and quite frankly doing nothing at this point is like doing nothing when Hitler moved into Poland. Personally I think the Russian economy will be in total taters in a month or two, We are talking shortages everywhere, high tech parts difficult to get and their army running out of spare parts. I think it is well possible that their tanks will be just sitting there broken in a ditch with no spare parts and the Russian soldiers pack up and take the bus or walk home. Maybe I am smoking something. Worth a try, imo.

I also knew the products and looked them up, then put it on my Mexican stock tracking list. I recently realized that the stock has been tanking. Granted, they do have issues with price inflation possibly exceeding their pricing power, but for the life of me, I could find a reason why a food producer's stock should get wrecked so much. So I bought a few shares as just another portfolio bet. Actually, what made me push the buy button was that the company has been buying back a lot of shares in 2021. This is unusual for emerging market stocks and I think it warrants some attention. FWIW, this is family controlled and they have a somewhat weird structure where all the different subs are only 50% owned, but fully consolidated. It screws up some financials websites metrics. As for the products, we actually found some in a Super Walmart in NH. Walmart's often have a decent Hispanic food selection and they are cheap. I highly recommend the Street taco sauces: https://www.salsas.com/herdez/products/taqueria-street-sauces/

SWMAY, PYPL, AKZA (all adds).

I still think the future markets got this wrong. Crude oil should not move because US does not buy Russian oil any more, but purchases the same amount of oil from some place else. This is just a a ring around Rosie and I think the price spike will likely reverse. Now if Europe would decide likewise and ban Russian oil (they likely won't) this would affect a few million barrel daily and cause a major imbalance and that would push prices higher.

High energy prices hit low income people living in rural areas the most. They consume more energy and have less disposable income than a city dweller if you need to use cliché's. Even Texas as a whole does not benefit any more from high energy prices. Certainly most people living in Texas won't.

The US can easily ban Russian oil because it barely buys any Russian oil (just 3% of total, which would be a little more than 300k brl). This is different in Europe, where I think about 40% comes from Russia. For prices it won't matter because oil is fungible - it will go up in price everywhere - US and Russia. Olaf Scholz , the German chancellor,. said already that banning Russian oil can't be done in the short term. if just the US bans Russian oil it would be little more than virtue signaling, but Europe needs time to wean themselves off Russian oil and gas. Germany will start the expedited build of 2 LNG plants on German shores which was announced the day after the invasion. I am hearing stuff targeted at reducing gas consumption with mandatory and subsidized heat pumps and solar cells on pretty much every house. All this will take time. Coal plants will not be sunset (Germany is self sufficient on lignite coal) and possibly the nuclear plants as well. Stuff seems to be getting done, but this isn't something that will happen in 14 days or even 6 month for that matter. It will take years. One thing I can say is that Olaf Scholz is a pretty welcome change from Merkel. It's ironical because he was voted in the office as a "green chancellor" for the Social democrats while Merkel was head of the conservative party. Now, he is called the "war chancellor" and as far as I can tell, he is doing a pretty good job in the difficult position he finds himself in.

I guess the sanctions do work in the way that they ruin their economy and thus makes these countries much less of a threat. They won’t remove dictators - this is something the people need to do themselves, or the passing of times does it.

This does not contradict anything I have been saying. It was a deliberate decision by the Saudis to fight back for market share. Nobody forced them to do so, and prices were healthy before they did. It was a colossal mistake for them too and when shale production came back a few years later, they didn’t repeat this mistake.

In addition, crypto is clearly a risk on asset and gold more the opposite.

The ordeal of lacks and other foreigners has been covered in Sky News quite a bit. There is also a bunch of Indian students stranded in Northern Ukraine that seem to have been forgotten a d who have no way out. On a related note, anyone knows what game Modi is playing in all this? Modi always strikes me as an enigma.

Some adds here and there. As a new position, bought some HERDEZ.MX.

Everything consumer discretionary is absolutely getting wrecked today. $SKX, $ROST, $TJX, $MTY.TO are a few I follow. Even housing related stocks are within spitting distance of 52w lows. $OC, $PHM, $FND, $HD, $MHK, $TOL

FFH biggest holdings Eurobank, BB, to a lesser degree ATCO and Fairfax India are down quite a bit. I bet the marks on Digit would be way lower to given the Fintech carnage. It's not like everything is going gangbusters here.

You forgot that Putin demands unconditional surrender implicitly (lay down arms) while the Russians still attack. Ukrainians would be stupid to take this deal. Demilitarization also is a squishy term. It means that the Ukrainians need to hand over all the keys to the Russians. There needs to be a mediated cease fire first with UN troop involvement most likely.

GMED

@mcliu yes rising US production was factor but there were several more - prices were relatively high to begin with (Crimean incident) and then Saudi Arabia decided to fight back for market share and opened the spigot. That was really what trashed prices all of a sudden. Iran also had reduced exports before and came back in 2014/2015. In other words, it was more the Opecs doing than the US, although Opec's moves were triggered by the increased US production to some extend. FWIW, demand destruction is not a binary thing that sets in at a specific price. It is a gradual thing that slowly kicks in when prices move higher. Same with supplies.

Less usage by some is still less usage. You will see the biggest reduction in usage in emerging markets, imo. Anyways, drilling in the US has very little impact on energy prices, it's more impacted by prices than any political posturing or ESG. US oil production is about 11m BRL and was down ~800K in 2020, during the Trump presidency. That had nothing to do with politics too, it was due to low prices and lack of demand. US production is rising again and we may get back to peak production levels from 2019 this year. All those changes are tiny compared to the Russian oil production of 11M brl/day which may get off market if sanctions work and is roughly equal to US production. Simple math. I actually agree that canceling the pipelines is a mistake. However, i don't think it has a major impact on US oil production. These pipes would take years to build anyways, so earliest impact would have been in 2024 or thereabouts even in the best case scenario.

Less usage. It's what higher prices do.

Yes, I get this example. Reflectivity is a real thing when you are in a confidence business like any company in the financial sector. I just don’t think Lehman would have made it either way.

I would seriously doubt that Lehman and a bear sterns failed because of short sellers. Lehman ran at a ~30x leveraged ratio going into the GFC with a lot of impaired assets. There was no way they could remain solvent. They were already dead, they just didn’t know it yet in 2008. Short selling has nothing to do with this.

I think the end game is that the iron curtain is going to go up again, with different borders this time. This is what it’s going to boil down to.

One fellow stated that naked short selling has driven thousand of companies out of business. Can you tell me one that was driven out of business by short selling, and more specifically naked short selling? People are mixing up cause and effect here. Even Overstock or Gamestock were not driven out of business by short selling. Nobody mentions promotes like 90% of the SPAC’s, Chamath and many others in this lengthy TV special.

His KEDM letter is worth considering, it is quite an extensive piece of work. I do think his risk management is no nonexistent. There is a reason his track record before 2018 or so disappeared. Also, take his Twitter takes with a grain is salt - first he talks about owning a “fukton” of RSX then it’s just a few hundred BP of losses. He also was long a Kasachstan Fintech that lost 2/3 of its value very quickly.

I don’t know - many perceived differences wouldn’t survive a blind test. that’s true for many things, but especially spirits. https://www.npr.org/2018/03/01/590022606/is-there-really-a-difference-between-expensive-vodka-and-cheap-vodka

@nafregnum Thanks, I missed that. Very important distinction.