Spekulatius

I think in the long run, the only way to keep Ukraine safe is to admit them to the NATO. That's the end game here, Essentially they are already in through the back door. Maybe not as a full member, but through contractual terms with individual members providing weapons, intelligence and with the EU membership also providing economic aid (which will be needed for many years. There simply is no way the Ukraine remains neutral after all this. Besides nuclear saber rattling, there is nothing Putin can do about it.

Belgium appears to have automatic indexations of salaries to the CPI. That's the exception and not the case in most other European countries and certainly not in the US and Canada. I agree with automatic indexation to inflation, the inflation is not an issue, at least not short term.

A lot of people don't stay in a house forever. If there is a significant chance that you are going to sell your house in the next 10 years, I would recommend the 10 year ARM.

We can debate what is right or wrong for a long time. What decides this are not you, me or even the Fed, its the 10 and 30 year bond yields. if the 10/30 year bond yields go up, then equities and asset prices will get whacked. As for who get's hurt most, i don't think it's the bottom 25%. The bottom 25% just got a huge pay boost from minimum wage boosts and a strong labor market. Those that still don't work get transfer payments that are indexed to inflation for the most part. Who gets hurt most is the middle class. In a nut shell, It's 8% inflation and 4% wage increases for them. Do this a few times over and you talk about a serious loss of purchasing power that will have an impact - basically 70's all over again. I take a recession over this scenario any day

One thing to consider, since we are talking about the 70’s is that back in the early 70’s, didn’t really expect high inflation and first, the higher inflation was considered to be transitory, just like it is now. External factors were blamed like the newly formed OPEC as a one off factor, not without reason. Except the issue was that even once the first oil price shock was over, the inflation never backed down to the level expected. This brings second and perhaps most important factor in play , there is a difference between expected and inflation (which is priced in) and unexpected inflation (which isn’t and undermines confidence). If inflation constantly runs higher then expect, it undermines the confidence in the Fed and bad things start to happen is this keep occurring. In this scenario, Gold tends to work best. Again, listen to Damodarans most recent talks about inflation, they are very very good:

I think it’s interesting to note that each 1% rise in treasuries (Aswath references to the 10 year) should result in a 20-25% drop on the SP500, according to Damodaran. Seems like a very large drop to me and I don’t know on what math this is based on. I guess it’s the total return= equity risk premium+ risk free rate of return formula. Equity risk premium in the US has been around 5% and risk free premium is round 3% now, so going from 3-4% should be more like a 11% drop. I guess I should listen to Damodaran classes in YT (which are great): Anyways, I like the idea to just watch the bonds for signal rather than trying to guess here what inflation might or might not do. This overall doesn’t sound that great overall.

This is a delightful podcast interview with Aswath Damodaran on We Study Billionaires podcast series: https://podcasts.apple.com/us/podcast/we-study-billionaires-the-investors-podcast-network/id928933489?i=1000558680175

If nothing about a business changes and the price goes up by 60% in short order, it may be time to sell.

Lots of Capital returns.

$JXN tiny adds to $SONY, $RHUHF

@bizaro86 MSGS is not a Malone related company. It’s controlled by Dolan. I own LBRDA and just a bit of WBD (starter). I think LBRDA, WBD and LSXMA are the most interesting from the bunch.

I looked into getting into the ATVI arb as well, but what bugs me about is how much other video game stocks have gone down since the deal was announced. So, if this deal falls apart, I think the downside is quite large and I think the stock could easily see a 5 handle. Anyways, I concluded it's not for me.

Anyone think a bear market can be over with $TSLA around $800 and $GME ~$100 ? I don't think so. it seems to me that there is are a lot more balloons to pop.

Any one noticed that every Malone related stock is getting whacked recently: LSXMA, LBRDA, WBD, LILA, LBTYA, LTRPA and probably more that I forgot. Strange how they all move together in a high beta fashion (partly due to relatively high leverage of these entities).

Bought some IAA (starter) yesterday. I also bought back some V.

The difference between late 2018, when the Fed started to tighten and now we have 2% vs 9% inflation. At 2% inflation, the Fed put for equities was in place, at 9% inflation, I am not so sure. I think there still is a Fed put, but the strike price is much lower.

Interesting thought that buying SWMA might be way for PM to get into the US market again.

@shruI don’t think your hypothesis makes much sense. 1) a lockdown in China will hurt the Chinese economy much more so than it does collateral damage to western economies (probably need order of magnitude more). 2. china is not the cause of inflation in the west, the causes are lack of labor in western economies, and rising natural resource prices as well as shortages due to demand spiking. 3) China is in much more risk of having a bubble popping the west. China has a real estate bubble that far exceed what we have in the US or even Canada. Worse, since they have pegged the Yuan to the USD, their monetary policy is tied to US monetary policy, until they decide to get rid of the currently peg. It seems like markets already predicting that this may happen, because the Chinese Yuan is very weak agains the USD. I think Chinese has to be much more concerned about their social fabric than the west at the moment. We can tell this from “common prosperity” agenda which whacks their stock market , but I guess they feel they have to do it nevertheless.

Reassuring: https://finance.yahoo.com/news/yellen-says-u-financial-system-165428712.html

SWMAY - looks like $PM wants it. Is it just me, but it seems a bit like a lowball offer: https://finance.yahoo.com/m/378efe91-d398-3c46-99a9-04960755e00e/philip-morris-in-talks-to-buy.html

I started watching Tokyo Vice and agree, it’s a great how. Highly recommended. I also started to watch Season 2 of “Undone”, the mindbending series on Amazon Prime. Loved the first season as well. Not for everyone, due to the unusual concept.

Yes, housing prices tend to be strong when employment is robust. On the other hand, rising unemployment causes distress in the housing market. This has almost always been true. There is a bit of reflexivity here because strong housing itself caused employment to rise. In any case, I think it is likely that a weakening labor market goes hand in hand with a weaker housing market.

@scorpioncapital Utilities have been a good performer over the last 2 years. I wonder of the current environment is good for them though. Sure they have some pricing power but a regulated utility has their equities regulated typically at around 10% and the cost of debt is increasing, so their WACC goes up. Will regulators grant them higher equity returns into compensate for that? I don’t know and haven’t really seen any evidence of that.

@muscleman, yes the total quantitative tightening seems to be $47.5B monthly, which is basically a nothingburger.

It also depends on the rate of inflation. You need to think real interest rates (nominal rates minus inflation). We currently could support double digit interest rates, due to 9% inflation run rate.