ratiman

It's not the case that the recession crowd has stopped predicting a recession. The consensus has not shifted to "inflation is here to stay". A few people predicting higher inflation does not change the consensus. The consensus is vastly and overwhelmingly on the side of disinflation, a slowing economy (variable lags), and lower rates and lower inflation over the long term. If that is your position, you are with the crowd. The crowd is usually right but you are not bravely fighting the consensus. For instance consider the consensus (from Nick Timiraios of WSJ):

So Powell comes out and says what everybody is realizing, that current rates aren't very restrictive, and now Fedwatch has Fed staying flat through December at . . . ZERO. Not .1% but actually 0%. I'm clearly missing something. Isn't the first rate cut the hardest, because it commits the Fed in one direction? If the Fed stays flat it leaves open the option of hikes without flip flopping. There must be something else going on because cutting with everything at highs and oil perking up and so on strikes me as insane.

I bought a really crappy and tiny tech distributor that mostly distributed hard drives to system integrators near Atlanta that was run by the son in law of the dead founder. A real prize. I owned too many shares to get out very smoothly until one day half the world's hard drive capacity was knocked out of service by a typhoon and I realized that at least 20% of the inventory was hard drives. I called in to the next conference call (I might have been the only caller) and asked if hard drive prices had doubled. He said they had more than doubled. The next earnings report, earnings were about half the stock price. I sold the morning of the the earnings report when the PE was about 5x and I might have just gotten back to even. It went bust not much later. It was called SED International.

I like the new BG2 podcast, with VCs Bill Gurley and Brad Gerstner. What's fascinating is that Gurley is genuinely interesting and has a distinctive perspective and Gerstner just spits out some words that make noise as if he were jerome Powell testifying in front of congress. I'm not going to be investing in startups but it is interesting to hear what Gurley thinks about self driving cars, LLMs, etc. Just fast forward through all the Gerstner parts.

The housing market has been consistently undersupplied since GFC. Only borrowers with pristine credit scores could buy homes and NIMBYs in coastal cities have also impeded housing supply. There is a huge bulge of millenials buying homes and not an adequate supply so I don't see rent or housing prices slowing down. Once people start stripping components out of inflation it starts to sound like a rationalization. Inflation is like heating up a pan of pop corn, the pan is getting uniformly hot even if not every kernel is simultaneously popping.

I think there is a widespread expectation that we are going back to disinflation. Disinflation was underestimated in the 80s and 90s and today inflation is being underestimated. 4.2% seems like not nearly enough to compensate 10 year bondholders for the risk of inflation. If Donald Trump becomes president does anybody think he is going to put the gov't on a diet? Does he look like that kind of guy? The handful of deficit hawks are vastly outnumbered not just in congress but even among Republicans. The Fed signaling they are about to cut will paradoxically make it much harder for them to cut.

According to the CME Fed tracker, there is a minuscule chance (.3%) that the Fed rate stays flat through December. https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html This doesn't make any sense to me. Right now nominal GDP is higher than the Fed rate (5.25%). If inflation is ~3%, economic growth is ~2-3%, then Fed rate is below NGDP. Trailing NGDP growth is at 6%. How can it be virtually GUARANTEED that the Fed will cut when Fed has not brought inflation to 2% and the rate is not restrictive? Plus we see oil and copper and trucking and gold are taking off. I don't get why the rates market and Fed are so dovish. The chance the Fed stays flat should be at least 5-10%.

Was EInhorn ever long GM and short TSLA at the same time? This is perfect midwit meme content because both the dumbest and smartest investors know that you don't want to be long the past and short the future.

Does anyone believe that GM is trading at 5x earnings? It came public at $25 in 2010 and is currently at $38.

A former Greenlight analyst basically refutes Einhorn point by point in this clip. It's not that the market has gotten too irrational, the market is too efficient. https://www.youtube.com/watch?v=7ZpLMWpUQPM&t=1683s

Einhorn owned GM for years. Is he saying that GM was really trading at 5x when it was trading at 5x and he had to sell GM because the market wouldn't recognize the true value of GM? Because if that is his argument then he's just making excuses for owning a bad company with a low multiple.

Will natgas investors ever make money? It seems like the industry is stuck in a permanent glut. Another widowmaker trade. Natgas is below $2.5 which is where it was about 25 years ago.

On the day his father died his son Phil liked this tweet: It’s amazing how fast you can go from “a robot is vacuuming my house” to “a robot is doing a bad job vacuuming my house, man fuck this boi”

Why not just look at return on capital? It shouldn't matter how it's funded. I think somebody won a Nobel prize for proving that.

But can't the assets be transferred to another bank?