Spekulatius

Ooof:

Fewer abortions=> less women in work force=>higher crime rates long term => higher inflation and Public spent

Yes, I second this. odd lots is a great podcast looking into macro issues. One thing I want to point out is that some snarky responses to Biden's letter are not a smart move. Biden for example could easily slap an export ban on refinery products and reduce the current extraordinary refining margins and lower prices at the pump. This was done before by prior administrations and these things often get resurrected. The US is still net exporter of refined products right now. I am sort of surprised this has not been floated around, since it is a short term fix, albeit with pot. long term negative consequences, but in a time when you want to quickly show results who cares? https://www.energyintel.com/00000180-1f98-d412-a3b2-9ffd68090000#:~:text=Exports of US refined petroleum,in the week ended Apr.

In your ketchup example, it depends on how input costs are doing. We have been seeing indications that Producer input costs have been rising faster than inflation. Producer input prices have been deflationary for a long time, but not recently - if producer input prices rise faster than inflation this means lower margins on aggregate: FWIW, I am seeing a lot of companies in manufacturing who have margin issues recently.

They talk about Apple and Apple play as well. There clearly won't be an Car with a Mercedes Star and Apple software. They do integrate Apple Play into their software. I have ranted about self driving before in the tesla thread. I think some legacy car maker have a better approach to self driving than Tesla , which has an camera only approach because Elon says so. I think the stock is worth looking at. They are currently overearnings on margins, but they could sell more cars if supply chain issues get sorted out. Shares are cheap and they paid a 5Euro dividend for a 58 Euro stock. They recently spun of their truck business, which is interesting on their own merits, but also indicates more nimbleness and more focus on shareholder value. (No position yet).

Just look at ROA and ROE of Italian banks vs US banks. Country frameworks and central bank policy really matters for banks. Europe has crippled their banking system with low interested rates. Now with the inflation surging and the ECB forced to raise interest rates, that may actually be changing, so it’s possibly a good time to take a look at some European banks again. I probably wouldn’t look at Italian banks first out of concern about Italiens weak economy and fiscal policy.

I really enjoyed this one from Verge. They interviewed the Mercedes CEO: https://www.theverge.com/23172839/mercedes-benz-ceo-ola-kallenius-electric-vehicles-self-driving-luxury-tech-g-class Mercedes is an interesting company to look at. They have really transformed from a super conservative company into something far more modern. I think they actually got the lead in self driving vehicles. Going all electric in 2030. I never heard much about the CEO be he sounds very reasonable and quite humble. https://www.theverge.com/23172839/mercedes-benz-ceo-ola-kallenius-electric-vehicles-self-driving-luxury-tech-g-class

Financials don’t have an issue with Inflation. I would argue that financials benefit from some inflation if interest rates increase with inflation as is the case right now. If we get hyperinflation, then this would be an issue for financials as well, but I don’t see this coming.

I sort of like BHP and RIO. SCCO is in Peru which is iffy politically. I think you could invest in BHP and RIO and do Ok over the cycle if you buy at a good price (maybe lower than current prices) just from the dividends alone. Don’t expect any multiple expansion. https://www.reuters.com/world/americas/perus-ruling-party-turns-castillo-calls-president-step-down-2023-2022-04-29/

Just a reminder that even if disruption is possible, it doesn’t mean it’s going to happen. The super app in the US exists already and is called the iPhone!

They are down because the price of commodities is trending down. It's Munger's elevator (going up or down matters, not which level you are). 80% of the success in commodities is being correct about the direction of the commodity prices, not because you analyze a company correctly (the missing 20%).

Whether right or wrong doesn't matter. Politicians on both sides believe it and so does Powel. He has the mandate so squash inflation, so we are going to see a Mini Volker 1981 playing out.

That one could become a cigarette butt literally.

I bought a little PBR-A today. Drinking the dividend cool aid as long as it lasts. I don't mind commodity plays, but I like them for the capital return, preferably over dividends (holding stocks in the IRA). Those who think any of this is a compounder will probably get wrecked. Something like BHP or RIO on the metal side might work too. One thing is for sure, the big cos are operating more on cash returns and are now paying out excess earnings, unlike in the past where they tended to deworsify (just look at BHP's energy adventure). I think over a cycle one could get a high single digit dividend return at current prices and higher if the shares go lower. I prefer cash over buybacks because management will always buy back stocks when they are flush and the stocks are pricy and stop the buyback when things get a bit iffy and the shares cheap. BHP has one of the best iron ore reserves that exist in a political safe space (together with VALE), so they should be able to make money throughout the cycle. These are the plays to look for when prices go much lower.

If you read the Riksbank article it's not about allocating capital (making loans), it's about keeping control of the currency the payment infrastructure and creating having access to make payments that are swift and digitized for everyone. If you think about this, the US banking system fails miserably on this. ACH payments take 3 days plus and many are underbanked and have no access to payments conveniently. They need to go to a Walmart desk and pay up to pay their utility bill. So if there is a public or government sponsored fast payment system, then this could benefit quite a few people, especially when cash is phased out. These people shut out of the banking system need an alternative. Perhaps the SS (or welfare) payment in the future will have an option to get paid to a treasury account (just like treasury direct) and they also create an app (or someone else will) to allow payments from this account just like the cash app does currently. I don't see a reason why this wouldn't work, technically. The digital currency would enable this because there is no temporary lending involved because these transfers are quasi instantaneous. Current payments are involving short term loans because they are not instantaneous and take days to settle.

if you think a light recession is coming, I would switch to growth stonks and sell the commodity stocks. The commodity stocks are likely to go down the drain with lower commodity prices. I know there are a lot of energy/commodity bulls out there, but I feel this has been a momentum trade that started to unwind (imo). If you think a serious recession is coming you should not own any stocks at all.

Housing prices are affordability driven. If people can’t afford to buy, they won’t. Same if they lose their job or are afraid of job losses.

The Riksbank paper is very well worth the read. Thanks for posting. I think it is most notable that they don’t want to lose control over the payment system to private enterprises that they have no control over. I thought their remarks about the central bank losing control over their currency when private market solutions (stable coins - Libra etc) or other currencies prevalent is also interesting. The latter is more important for a smaller economy with its own currency (Swedish Krona) than for US or Euro based economies. .

Fednow is for banks. You won’t have an account with the Federal reserve and run your payment for a six pack of beer or a coffee through central bank account. We have discussed the Fednow payment utility on another thread.

That's a shoe in <pun>. Added some META.

This is true - there is a lot of filler content (or maybe niche content) out there but does it matter? there is still more good content on aggregate than there ever was. I also love some of the niche content like Scandinavian crime shows. Recently watched an Indian crime show (Aranyak) just for the cultural background and loved it. https://www.imdb.com/title/tt14167344/ Before streaming it was very hard to get access to this content and now it's easy.

Buying multi family at 3% cap rates with 6% mortgages makes you a growth investor. I know a few people who have done real estate successfully over the years and they are all cash flow investors (property are cash flow positive from day one). Everything else gets you in trouble.

The e- yuan is very iffy from a privacy POV, because the Chinese central bank basically knows exactly where the digital money is and what it’s doing, if this works as advertised. So it should absolutely get forbidden in every country that cares about privacy and their citizen being watched by the Chinese central bank. Privacy is the main issue with CBDC - yes it can be done, but should it be done? It might just be better of improving the payment infrastructure and make the ACH payment almost instantaneous rather than taking 3+ days to clear. That alone would go a long way to digitize the payment system without wrecking the privacy.

This should have a shot at becoming a real movie. Maybe some scout takes notice,

Note that the central bank digital currencies have nothing to do with crypto and are not based on blockchain tech.