Spekulatius

Interesting - we heard that story before. I get MS "research" via my retail E*trade account and the analyst is Gary Yu and has an OW on $BABA with a $140 target. I guess I get what I am paying for.

Any idea why BABA is down today ? I didn't see any relevant news. The explanations I saw in the IBKR news feed seem unconvincing (Rate hikes etc.).

Conventional strike. Lot's of cruise missiles on military targets in occupied Ukraine and Russia. Sea blockade. No ships leaves Russian harbors. No ship goes in. Just a few options. I have no idea, but I think a nuclear counterstrike is not likely, at least not as a first measure. If Russia continues with nuclear weapons it well eventually escalate. FWIW, i don't think giving Ukraine 50 nuclear warheads on ballistic missiles is the worst idea in this case.

The vast majority of the people will be better of with shallow recession and 2% inflation. If the current situation of negative real wages (in real terms) persists for a few years, the middle class will get absolutely destroyed. Now, I understand why people like Sternlicht think differently - just look at their business and how they benefit from negative real interest rates. How would his business do, if real interest rates (after inflation) were at 3% like they were in the 80‘s ? Probably not so great.

@ACooke re TPB I agree with your assessment. It’s one of my biggest losers (in terms of % loss). I have been adding just a little recently, but my concerns with the CEO (no consumer goods experience) prevent me from getting in bigger. I think they should sell or close down the NewGen (vape) business

I also bought some PCYO but paid a bit more than you (~$9.4). Had a position before but opportunistically traded out of if a short time ago and wanted exposure back. With microcaps, buybacks rarely happen because the CEO are often concerned about reducing liquidity even more and also have quite obscure frameworks for capital allocation. Big picture - you get PCYO for COVID-19 prices but with better fundamentals.

Added more WRK and few other small adds here and there.

Yes, this is correct - the 8%+ inflation is backwards looking, but even the core inflation is 6%+ right now. The core inflation has inputs that change much more slowly so it will take a while to take it back. Based on core inflation data - at 4% risk free bond yield, the real interest rate is -2%. As for manufacturing a recession, you could always say this is what a tightening cycle is trying to do. Inflation means demand exceeds supply, so demand needs to be reduced to match supply, unless supply starts to increase (which would work as well but it does not appear to be happening). Luckily (or unluckily for the stock market investor), the Fed has ways to go until it really impairs the second mandate which is full employment. We have more than full employment, so until labor market shows some significant increases in unemployment, the first mandate (price stability) is what drives the policy for the time being. The absolute nightmare scenario, which is think the Fed is trying to avoid, is that Fed starts to ease again (too early) and then all of a sudden inflation starts to rise again with a vengeance. Now the Fed has a real problem with credibility and to squash an inflation flareup, they have to rise interest rates way higher than in the first tightening cycle, because they have lost all the credibility. That would be a true repeat of the 70's sh$tshow and no one wants that.

If you think in broad terms - 4% interest rates with 8% inflation is still very accommodative. Even a 6% mortgage at 8% inflation is -2% in terms of real rates. I think in order to really crack inflation - the risk fee interest rates will have to be positive in real terms (subtracting inflation) for a while. Now if this occurs with 6% interest rates and 5% inflation or 4% interest rates and 2% inflation I am unsure, but that we do get real interest rates in this tightening cycle and that interest rates need to stay positive (to help squash a reemergence of inflation) seems likely. Brought to you from Spek's macro soapbox and worth exactly what you paid for,

Nothing that has been thought said can ever be taken back. Friedrich Durrenmatt FWIW, I think the Republic of Taiwan will be recognized by the US and many other countries this decade as a sovereign country.

I think negotiations are at this point are unlikely to lead to anything. There is no willingness from either side to negotiate. Both Putin and Zelensky stated this very recently.

These seem like very serious declines in the far outskirts of Toronto. I would expect houses to fall first in those newly discovered WFH communities. https://www.ctvnews.ca/business/where-have-home-prices-dropped-the-most-across-canada-1.6070565 But the biggest declines were in the communities that were within a two-hour drive from Toronto. The benchmark price of a home in Cambridge fell 24.5 per cent in the same period while Oakville, London and Kitchener-Waterloo saw declines of 23 per cent.

Sten Nadolny wrote a fantastic Novel about Franklin. I read it in German, but the English translation seems very good as well: https://www.amazon.com/Discovery-Slowness-Sten-Nadolny/dp/1589880242 I agree on House of Dragon - the script is very good. As for Rings of Power, Galadriel get's stuck a bit too long on this Island for my taste. I like the other storyline with around Arondir the most. I feel they could do more with the Dwarves.

So, Biden made it clear that the US would defend Taiwan, if China would attack the island. https://www.cnbc.com/2022/09/19/biden-says-us-forces-would-defend-taiwan-in-the-event-of-a-chinese-invasion.html

It‘s interesting to note that NG prices in Europe have collapsed since they spiked due to Putin shutting down NG supplies at the end of August. They are still extremely high though. German NG Storage is now 89% full, following the plan, despite the pipeline closure. Putin played his best card and it looks now that it was a huge mistake. The fear is often worse than the actual result.

Yes, the refineries will be reconfigured. That also means building new pipelines. I don’t know the plans because I only read some bits in German news sources so far.

The refinery won’t get oil from Russia- it’s going to be reconfigured to use other oil and new infrastructure is going to build (pipelines ) to do so. This is really not that difficult and I stated this a few times before - we and Europe are at war with Russia. We just haven’t declared war yet, but economically it is already a war. If you want know how this end, just look at how German assets did in the WW1 - All these companies with German sounding names like Bayer US, Schering etc ended up being US companies.

The show is living proof that mining is a lousy business. They probably get extra revenue from the TV producer to keep the whole thing afloat.

Florida seems to have worse inflation than the US in general, so I don’t think De Santis knows how to solve the problem either. https://www.bls.gov/regions/southeast/news-release/consumerpriceindex_miami.htm Consumer Price Index, Miami-Fort Lauderdale-West Palm Beach — August 2022 Area prices up 10.7 percent over the past 12 months

Some of the economic sanctions will remain in place for decades. As for the Rosneft seizure the assets are technically moved to a trust fund. The matter of seizure was considered a matter of National and energy security for Germany as those refineries had trouble to stay in business for a bunch of reasons with the Rosneft ownership. I think the main lesson here instant investing across political fault lines is extremely risky and that applies directly to investing in China.

@SharperDingaan I haven’t seen craft beer pricing going up. At least the larger regional craft beer players product still can be bought in my local supermarket for $13.95 per 12 pack. That’s surprising given the higher packaging transportation and input (hops) cost. I am guessing that margins here are shrinking. I do see some movement up for wine prices, especially at the premium side.

Sternlicht talks his own book. Look at what his business does. Higher Interest rates are poison for him. It always makes sense to understand the interest of a speaker.

You also have the strange thing going on that gluts and shortages for differnt items exists at the same time, which screws everything up. Some of this has to supply chain managers yanking orders on and off like crazy. That‘s really bad for productivity (see the Fred’s productivity chart which has gone negative ). One of my buddies working on the semiconductor equipment industry told me that they cancelled all their for supplier that are out more than 6 month because they are no concerned about demand, That’s after years of shortages and double ordering. now imaging these suppliers doing the same thing in Panik and you have another shock way running though and other value manufacturing value chain. Those things are happening now all over the place. As for @Gregmal assertion that inflation is on the retreat, i think partly it is as it pertains to volatile raw material and perhaps energy, gas etc, but it’s not true for core inflation. Core inflation is around 6% and I think it’s higher for producer prices. I know my company targets high single digits and that after years of 2% or less increases. The lousy productivity means that unit costs are higher and manufacturers try to pass those on. Those things have entrenched themselves and won’t go away easily. I am in the process of shopping for a new car and if you want to have fun check what car manufacturers are doing as far as MSRP prices are concerned for their 2023 models. There might be something going on here that car manufacturer are miffed about dealers selling cars for thousands above MSRP and now trying to grab some extras margins raising the prices. The new Honda CRV is a case in point, even when you look past the point that the base model won’t even offered any more for the 2023 model, they raised the price for a like to like car by the high single digits for their 2023 model. Does anyone really believe that this is going to be reversed? I think that’s what entrenched inflation is looking like. and it’s just one example amongst many here. Ironically the only countries immune from inflation seem to be China and Japan. China has seems heavy dose of inflation but they are back to 2% and change.

https://www.wsj.com/articles/scotts-miracle-gro-shortage-glut-inventory-fertilizer-11663261193?cx_testId=3&cx_testVariant=cx_2&cx_artPos=0&mod=WTRN#cxrecs_s Interesting story about Scott's Miracle gro but there are some general things you can learn from this. The COVID-19 epidemic pretty much screwed up every manufacturing value chain I am aware of. How exactly depends but in all cases it's either a huge boom or bust in demand followed by the opposite. I have seen this in the company I work for, where demand for certain components went from hero to zero in mid 2021 all of a sudden. Be it toilet paper ,energy, lumber ,semiconductors, cars or even gasoline and crude or lawn fertilizer in this case - we are seeing ripples that originate from the epidemic and that are still moving though the economic value chains to this day. I think every boom will be followed by an equally severe bust and vice versa. Fun times.

Also, by giving Ukraine Access to Starlink, he might have done more helping them than many governments. https://www.wsj.com/articles/ukraine-leans-on-elon-musks-starlink-in-fight-against-russia-11657963804?mod=Searchresults_pos10&page=1