Spekulatius

It’s cheap but improving. Share buybacks, and rising dividends and a stated goal to get to P/B>1. There seems to be an activist too. Cement and aggregates are a good business and they make their money in the US and elsewhere. Their Japan business is money losing and they want to rationalize it such that it gets to 10% margins. Many ways to win.

Don’t forget the crypto deal with Trumps crypto venture: https://qz.com/abu-dhabi-cryptocurrency-trump-stablecoin-mgx-binance-1851778879#:~:text=MGX will invest $2 billion in the cryptocurrency exchange Binance Holdings&text=We may earn a commission from links on this page.&text=MGX%2C a fund backed by,by a Trump family firm. A free jet for Trumps library and a deal worth a few hundred million for his family crypto business is not a bad tally.

What is the catalyst? The Denso business seems very low margin and I am not sure it creates value.

The qualitative factors are the same. Expansionary budget is released by new government while also cutting taxes. prior to this self inflicted upheaved has unsettled markets. Bond yield are going up while at the same point currency is going down. Bond yield are basically a vote on confidence, so the current admin basically is getting a yellow card in soccer lingo. we are one step closer to fiscal dominance which is what happened in the UK in 2022. We probably don’t get there but it’s more likely than it was a couple of month ago.

Current situation reminds me more and more of Liz Truss mini budget: https://www.crfb.org/blogs/americas-truss-moment

We can tell by Walmart gross margins and profit margins if they eat the tariffs or not. It’s quite simple.

I wonder at which point Trump is going to come in and state that these high treasury yields are a bad deal for America and this needs to be fixed with a restructuring. Whatever happens after this will be blamed on Biden and Powell. Bessent will explain this thing while in incessantly shaking his head while talking.

FMCB will be fine. they had ~120M in unrealized losses in HTM and the AFS unrealized losses are accounted for. they how a strong deposit base. I would worry more for the likes of BofA. They had ~$108B in HTM losses by YE 2024.

I am going to survive the second term too but surviving isn’t thriving. People also miss that Trump 2.0 is not like Trump 1.0. It’s now the unfiltered essence that we are seeing. The trading guideline is to assume that every nonsense remotely possible that fits MAGA ideology will be tried and then later mostly reversed. I am more confident about the former than the later.

There is always a delay, but they have updated for me know 8:10PM EST.

I don’t know more than what they are saying. They have ~$20M left on the Buick authorization so I assume they want o use it for buybacks. My guess is the plan is to buy them back directly from share holders seeking for an exit, since open market purchases with the limited liquidity would be difficult and drive up share prices. FMCB isn’t really buy back shares in quantity until recently so my guess is that they regard the shares as cheap.

Hmm:

I put some $5233 Taiheiyo Cement in my Japan basket to replace $CX which I sold. 3rd Avenue Value fund seem to like it too and they mention it in their last investor letter. It checks quite a few boxes for me.

This is typically Trump. Either get a quick publicity win (deal) or I am out of here. ruffling Putins feathers would be too difficult. It will be interesting what happens with Iran in the same context. My guess is that it will be a similar deal than Obama did.

Well, if you sell engines a two engine plane is better for you than a one engine plane. Worth pitching to Trump . The new big beautiful bill is great for defense stocks. I got to say, the 8% spending cut thy was bounced around earlier by Hegseth scared me a bit +15% sounds much better. I sold my HII on thy China surge (don’t like the business, but the narrative setup was good). I only own RTX (reduce a bit) and Thales (only starter position) and think both are much closer to s sell than an buy here. I have to say, that defense investing seems relatively easy - I bought 8 stocks or so over the last few years and have yet to incur a loser. No doubt a result of the environment since at least 2022 but also because narratives seem to move stocks around much more than they should in this rather resilient business.

It’s fun contemplating macro but time is better spent checking individual securities. But then on the other hand it’s useful to some extend to time entries.

My guess is you won’t if you see their numbers. Defense is a low margin business and I think they won’t look that different than those of the large defense contractors. There is only so much premium I pay for a CEO having a good taste with shirts and wearing flip flops.

They are actually against both. H1B, student visa etc. are all in the firing line. Our birth rate is dropping too. We are just ahead of Japan but seem to go in the same direction.

This ought to be a big concern. There is a huge disconnect between what the current admin is trying to do and what they are capable off. If those plans don’t pan out. I think we are looking at MAGA socialism and they actually may get help from Bernie and AOC and the like which would make the horseshoe hypothesis come true.

While true, it is notable that Japanese bond yields are blowing out too- they are at 3% for the 30 year bond, that was 2% a year ago. Mr Bond isn’t concerned about defaults, he adjusts for higher future inflation.

Well Bessent was talking his book yesterday and the bond guys are not buying it but rather be selling. Beautiful big budget is voted for with monster deficits. Not a big deal..

The multiple has come down such that buybacks are accretive . This used to be a richly valued bank, not any more. FWIW, they bought back the stock from an estate, below market price.

FMCB doing alright even though the EPS growth mostly came from buybacks: https://www.fmbonline.com/_/kcms-doc/171/91360/MSR10662_Q1_2025EarningsIncrease_PressRelease.pdf Too cheap imo, because index funds can’t own it.

We had high inflation in the 70’s, mostly because oil was extremely important for the economy (much more so than it is now) and the price went up ~10x during the decade. It is quite possible and indeed quite likely imo, that if we get another inflation spell, oil will trail inflation and oil producers may see margin compression because their costs rise faster than product prices. There is not guarantee that oil or energy is going to be a good inflation hedge going forward.

The problem with using inflation as a tool to deflate the debt is two fold: 1) The population has been sensitized due to the exposure from 2021-2023 and subsequent exposure will very likely yield worse results politically , just like poisoned oak exposures. 2) Our debt stack isn’t very long duration so the upcoming maturities will suffer from higher and higher interest rates if the bond folks get the idea. the recent rise in long bond yield suggests that this happening. Going very short term with financing the deficit is against the Mar a Largo idea. Not that this means it won’t happen. Another thing - people who criticize Yellen for the short maturity of the treasury debt financing stack need to realize that this was the idea behind QE. QE means that the Fed was constantly buying treasuries and MBS to keep LT interest rates lower. If Yellen had issued long duration treasuries to finance the debt, it would have negated QE. Not that QE really worked but the idea was at least consistent with what they tried to do together with Fed. Those who still got 2.x % mortgages from 2021 can thank her for the windfall.