Spekulatius

Bought some TSM. Missed the dump yesterday.

What is the best way to get a summary of the Chine communist party congress that is starting today: https://www.scmp.com/20th-party-congress Arguably the most important event when investing in China.

The UK may be an example where we have seen the limit of MMT. yes, you can have your cake and eat it too to a certain extend, if you are a central bank, but we have seen the rug pull in the UK. The combination of weak economy more proposed spending and tax cuts was just too much resulting in a rout for gilt bonds and the GBP. That's what a failure of MMT looks like. Now, the BOE has to tread very carefully. I see now that the finance minister has already been booted after 6 weeks on the job. Now the question is, who is next? https://www.cnbc.com/2022/10/14/uk-pm-liz-truss-fires-finance-minister-kwasi-kwarteng.html

@dealraker I also have $GE on my to do list, but I have my hands full with stuff I own already and know more about. Years ago, we had quite a bit of discussion about a similar case $DD (was $DWDP, DuPont). Like GE is was a lumbering Gina where new management came in ( Breen) and split up and restructured the company with complex mergers. This was a case that created a lot of brain damage and very little results. It may serve as a cautionary tale to be very careful in these situations. @BG2008 Same with spin-offs lately as most of them have been disasters.

I don’t know how much signal there is in NG European spot prices, but they have gone down to 146 Euro from a peak of ~340 Euro. If I were a betting man, I would bet on these prices going down further and US prices going up. https://tradingeconomics.com/commodity/eu-natural-gas

@Dalal.Holdings Actually Aswath invests as well, partly based on what he teaches. I also think he is talking about operating earnings, not GAAP earnings. Operating earnings indeed don't change as much than GAAP earnings. His equity premium framework is very helpful to understand the impact of higher interest rates on valuations, imo.

I agree on LVMH. For a lot of exporters, the current estimates in Euro have not baked in the exchange rate changes (weaker Euro). I expect to see some surprises, especially for companies like LVMH that see no direct impact from higher energy prices. Even BASF's earnings yesterday weren't that bad even though they sit in the middle of the problem as far as energy prices are concerned.

That has nothing to do with coupling or decoupling with China though. The US needs to keep an open door policy for able emigrants from China and elsewhere. Oddlots podcast has a good episode about China: https://www.bloomberg.com/news/articles/2022-10-13/dan-wang-on-the-extraordinary-moment-for-china-s-party-congress?srnd=oddlots-podcast#xj4y7vzkg 1) doesn't expect much change to zero COVID-19 policy after the big congress on Oct 16 2) Whack a mole everywhere (Property, gaming, Alibaba / ecommerce, education and now even booze !) 3) Trade war started by trump now continues with Biden (semi's etc.)

SS follows a formula indexed to inflation. It has nothing to do with Joe. FWIW these continued hot core inflation prints are proof that the inflation is not all that transitory. We said transitory in 2021 and the Fed acted upon this being transitory, yet here we are with 2022 with almost done and the inflation dragon is still alive. The most important thing the Fed needs to do once it's done raising (which may be soon) is to keep the interest rates high for a while. In my opinion, until the interest rates are noticeable positive after inflation. That's probably the only way to slay the inflation dragon. Of course I do not run the Fed and don't have a Nobel price in economics. I do remember enough about the 70's and my toys getting noticeable more expensive every year.

Looks like the impact is about $7B with the biggest losers being AMAT and LRCX ( not surprisingly) https://finance.yahoo.com/news/applied-materials-cuts-forecast-blaming-202509425.html

As @TwoCitiesCapital said, the cruise line stock prices are deceiving because these cruise lines diluted shareholders so much and raised debt. I would rather invest in something like LUV or even BKNG or EXPE if I feel like investing in travel.

Love this anecdotes. I believe patience and common sense beats trying to outsmart the market at every turn over time. Just look how badly these hedge funds are performing as whole to prove this. Says the guy who went all in with his 401K in late September 2008...

FWIW, I am in the same age bracket than your father in law. 20% downturns occur about every 3 years on average. The last ones were in 2018, 2020 and now 2022. What we are seeing here is nothing out of the ordinary. https://www.fool.com/investing/general/2013/08/19/what-i-plan-to-do-when-the-market-crashes.aspx

Not so good news for defense contractors potentially: I think LMT and BAESY has relatively significant business with Saudi Arabia. (sold mine a while ago) The foreign affair committee is bi-partisan: https://foreignaffairs.house.gov/members Peter Zeihan must be running victory laps recently.

I am curious, how do you lose a decade worth of savings in a 21% decline? Assuming, he had his money in index funds, he would be back to where his account was in November 2020, which does not seem like a big deal to me. Checking back to a decade ago (2012), he would still have 3x his money.

First victim - chips are down for Yangtse Semi: https://www.wsj.com/articles/u-s-suppliers-halt-operations-at-top-chinese-memory-chip-maker-11665573761?mod=hp_lead_pos7 RIP.

Found this on twitter:

Buying a bit more CMCSA here. Painful.

This is correct, I just wanted to point out the magnitude of risk here. Semi equipment sales to China won’t entirely go to zero. For example, the equipment to produce trailing edge nodes for analog semis won’t be affected as I understand it. I think the beneficiaries are MU and even TSM in the long run , because any competition from China is going to get kneecapped. TSM also sells into China (~10%) but I think that entails some re-exports as well, so likely impact is lower. In the long run, their strategic position has become more significant, I think.

ALT investment have been a way to get returns in a ZIRP environment. If you can get real returns with bonds again, then ALT investment would become less attractive and the big institutions would probably shift some allocation to bonds rather than ALT investments. I think the most likely thesis breaker are sustained higher bond yields.

Javier is incorrect- the Saudi we’re all in on the oil embargo in 1974. I don’t think we get a deal with Iran though, except maybe a narrow nuclear proliferation deal. Optics are terrible with the protests and Iran delivering weapons to Russia. I think we see something with Venezuela- much less hostile and dangerous and it’s right at out doorstep.

Yes, LNG tankers are shifted. China for example needs way less LNG. That said, I do not know the supply chain situation that well.

How do you explain that the USD is so high if they are selling treasuries. Do you think they keep it in cash? They sure aren’t buying stocks or real estate.

No, they would not write back the goodwill if PCP as a business improves.

Your logic makes no sense. The USD is at record highs, so it's not that foreign entities are selling it. If anything , there seems to be a shortage of USD and the EM's are going to feel the pain.