ValueArb

The Revolutions podcast said that the Bolscheviks bailed on their first peace agreement with the Germans thinking they could do better, then got crushed losing far more territory before agreeing to far worse peace terms. The history of the Russian revolution according to the podcast is incompetent groups fighting each other while pissing off the peasants as much as possible. Every competent general got saddled with horrifically poor political policies that caused their failure.

ARKK is $49.87 right now. Its down -47% YTD, -59% over last year, and it's trailing the S&P 500 and QQQ over all periods including YTD, Year, 5 Year, and since inception. And the most obvious part, ARKK continues to have net inflows this year, up nearly a billion.

With interest rates likely to rise substantially I think this is the year a -13% start ends up far lower. Regular PE ratio for the S&P 500 is biased by an unrepeatable COVID year profit spike. The Schiller PE ratio averages out earnings over multiyear periods and says we still have a long way to go.

He allegedly has $60B in loans. That's the only way a margin call at $560 would make sense. Edit: According to Matt Levine: " He has pledged about 88 million Tesla shares to secure other loans, he is pledging perhaps another 64 million shares to secure this margin loan, so that leaves about 20 million shares — worth about $20 billion — free and clear that he could sell to raise more money." And I think they should tax any margin loan above your basis as a sale (and credit you back when you actually sell). It's not just Billionaires doing it, so make fair by applying to everyone.

The higher prices for Canadian housing are easily explained by the higher quality outer wall construction required by the Canadian construction code in order to resist Moose attacks and the heavier insulation requirements to reduce the endemic freezing deaths in May.

If this is correct, it's super scary. Says his first margin call would be at $570, and it's at $876 right now. https://www.benzinga.com/trading-ideas/technicals/22/04/26825670/could-elon-musk-face-a-margin-call-on-his-tesla-shares

Do you cover OTC stocks?

Holy crap, how can that be real? What mom says I can't wait to go to the beach in my S&M themed suit while one of 7 year old daughters wear a string bikini?

Not only is inflation, interest rates and currency issues huge problems but the guy in charge has the worst possible ideas for addressing it. Maybe there is a macro "expectations" trade where you bet that after having his face smashed in by dumb macro policies Erdoğan does a 180 and fixes things. But predicting that is beyond my ken, especially when his low interest rate policies are dictated by his political strategy.

I think this war has years left. I can only see three ways out 1) Ukraine capitulates to a negotiated settlement giving up all of the Donbas and the southern Ukraine landbridge. Putin declares victory and withdraws. 2) Putin is forced to withdraw because of mass Russian demonstrations. This is so far away it seems like a fairy tale. Putin has deliberately resisted conscripting from "European" Russia, ie Moscow and its areas to prevent generating unrest. Most of his forces are from the republics and far east. This is also why they are attempting to recruit in Syria. I don't think you see massive peace demonstrations or calls for Putins ouster until the Russian mothers in Moscow start losing a lot of their kids. 3) Putin is overthrown, assassinated or dies of whatever he's ailing of. This is probably a lot more likely than mass demonstrations, but still unlikely in the short turn. There has to be a lot of infighting going on at the highest levels of his regime, and the military might not wait to get purged. But without clear popular support the risk is too high. #1 may happen because Zelensky has been so open to negotiating but I doubt he's willing to give up so much after all their sacrifices. I think he and the Ukrainians will be happy to wage years of bloody war and insurgency until they get back most of the Donbas and any southern territory that's been lost outside of Crimea.

So Elon is borrowing $25.5B to buy Twitter, and putting in $24B in "equity", but I suspect that most of his "equity" is borrowed against his Tesla stock. I've read somewhere he's increasing his Tesla margin loan by $12B. And all of this money to buy a "business" that's never been profitable and has negative cash flow of roughly half a billion a year. I've also heard the Tesla board restricts how much margin debt Elon is allowed to have, but since Elon controls the board I'm a little skeptical how rigorous those limits are. This all has me thinking what happens if Tesla's stock price drops below $600, where it was a year ago. Or below $500 where it was in 2020. ARKK owns 1.5M shares of $TSLA, and it's at a two year low today. Its had nothing but inflows even as it dived from $156 down to $53, but that can change in a heartbeat forcing her to again start selling her most liquid holdings. I'm not rooting for his failure here. I wish he would just focus his energies on Tesla and SpaceX. But I'm getting strong house of cards vibes.

I sold my home February of last year. If I could time the market I would have waited 12 months but still very happy with what I got. I only sold because of divorce. I would never have sold otherwise. But even if interest rates continue to rise, supply is so constrained I don't see prices dropping, just leveling off. I don't see any opportunity to buy a new house at current prices unless I move out of my expensive community to a more rural one. But I have to live where I live until my kids finish high school, so after that I probably move somewhere cheap and buy something cheap.

https://www.cnbc.com/2022/04/12/stock-market-futures-open-to-close-news.html 8.5% inflation. Doesn't look like the Fed is even close to having a handle on inflation. One worry is that federal interest costs will continue to increase, and eat up the federal budget. The CBO estimated 10 year treasuries wouldn't reach 3.4% until 2031, and they look to hit that by Fall now. The treasury's weighted average duration is under 6 years, it's going to have to roll over a lot of its debt in the next few years at much higher rates. Why weren't they moving to 10 years and longer when rates were at all time lows?

I don't think mortgage rates should be that high. I do think that mortgage rates may get that high, or higher if inflation persists at current levels. The market is saying that inflation is temporary, so interest rates are only up a little bit. Treasuries up from 1.2% to 2.8% and 30 year mortgages from 2.8% to 4.9% since July). But if inflation does not start to decline, rates will continue to rise. If 7% inflation ever becomes the expectation (after a few years) treasuries will be higher than that and mortgages higher still. What percentage of the time inflation subsides and what percentage it continues is not something thats in my circle of competence to gamble on. I do bet that inflation continuing or accelerating happens more than 10% of the time. Fixed income investors aren't entitled to a real return, but they also aren't likely to take duration risk during inflationary times without being heartily compensated for it. Anyone buying 10 years to get a 1% higher yield than 1 year treasuries offer is taking a huge risk at the moment. If inflation is still 7% a year from now they'll likely be looking at losses approaching 30%.

You've been right at nearly every point so far, but I still have trouble getting anywhere near real estate in this market. First, at current inflation rates (7.9%?) mortgage rates should be at least at 9% or 10%. But market is saying inflation is 100% temporary, and Yellen said last fall that it will tail off starting this fall. We see this in current interest rates, which haven't increased remotely to the levels one would expect if you thought inflation was going to last years. So essentially interest rates have bumped a bit to help pay for this temporary inflation spike and probably will slowly decline as inflation declines. So lets assume that 85% of the time inflation is just a temporary issue that has already peaked. But what happens that 15% of the time the Fed can't get handle on inflation. Lets not forget they really didn't see it coming, and maybe they really can't do what it takes in the short run (higher rates/unemployment?) to prevent it from continuing. If it was easy to kill inflation Jimmy Carter would have been a two term president. So a year from now if inflation is still over 7%, what will bond investors think? What will they accept? Will anyone be buying ten years at 2.8% to lock in what could be 5% annual loss of purchasing power? What would any bond and debt investors think after nearly 2 years of "temporary" inflation still strongly persisting? We have to have much higher interest rates in this scenario, and mortgage rates are likely blowing past 7% on their way to 9%+. In that case, if the person who bought a home when the rates were 3-4.5% wants to sell it, the buyer is going to have to pay two to three times as much a month in interest. That has to dramatically transform the market, reducing demand substantially, and hurting prices. We had 40 years of declining mortgage interest rates goosing Real Estate valuations, what happens when that tailwind turns into gale sized headwind? Again, this is unlikely to happen. But some percentage of the time something like it will. If I have to take a 70% downswing in my home builders 15% of the time, that materially affects how much I value them at and how much risk I want to take with them.

I think your posts focus too much on what Putin wants to do and what the Russians actually have capabilities to do. They can't supply their troops indefinitely. They can't stop drone attacks on their supply lines. They can't protect their armored vehicles from the tens of thousands anti-tank weapons. They can't control the air-space. They have run low on precision guided munitions so they have to use dumb bombs on low level attacks, where they are Stinger bait. Rebuilding their stocks was going to be extremely difficult with their small economy, with sanctions it's going to be much harder. So it's unclear whether they can bombard Ukrainian cities heavily for long, and it seems pretty clear even if they do the Ukrainians aren't surrendering. Remember Stalingrad? They can never control even eastern Ukraine with only 150,000 troops. They need to start mass mobilization to even have a chance. They have to be able to do that without inflaming the population. They'll have to hide the constant losses to guerrilla attacks from their own population for same reason. The Ukraine can fight this war for a long, long time. They have better supply lines, and are getting more advanced weapons than Russia. If Russia tries to enter Kyiv it will be a death trap to their tanks and armored vehicles. If you know how, you can kill a Russian tank with a roll of wire, a rifle and a molotov cocktail, and many Ukrainians have been trained how. If Russia takes Kyiv they'll just move the seat of government and keep their snipers, drones, IEDs rocking on. Meanwhile most of Russias commercial airline fleet will stop flying by end of the month for lack of maintenance and parts. A good number of businesses will be shut down for lack of foreign parts, putting angry unemployed workers on the street. Soon the jails will be full of protesters and police will be scrambling for places to put new ones. At that point the risk of protesting drops to near zero, and the crowds grow. Putins cronies know their yachts, planes, Italian villas are lost forever as long as he's in power, they also know their graft were a big part of the hollowing out of Russias military capabilities. The military knows their troops are just meat for the grinder as long as he's in power, and that they are going to get the blame for the Ukrainian debacle. One of these groups is going to attempt to take out perceived enemies soon. One Russia retreats, there will be a new Marshall plan with the EU, Britain and the US to rebuild the Ukraine. They'll use seized Russian capital reserves to fund it. The Ukraine will have a stronger economy than Russia for decades to come.

I think this map is innacurate in that it lists Russias "areas of control" as large filled in areas when in many cases they are really spider webs of controlled roads where the Russians don't dare stray too far from.

NATO, the US and the EU aren't putting troops into this conflict, they are doing a lot to help the Ukraine but they refuse to enforce a no fly zone or do anything that could provoke a confrontation with the little bear cub. I mean right now they won't even sell used MIGs to the Ukraine. Ukraine isn't going to attack Poland to provoke a wider war, Poland is front and center doing the most to help them and is their most important ally. Maybe if the Ukrainian government would disintegrate and the war devolves into a bunch of regional guerrilla fights. Then maybe radical Ukrainian freedom fighting group would pull some whacky stunt but I think they would be far more motivated for a terrorist attack on Moscow than on a friend that is probably still supplying them. And it wouldn't work anyways. This is Putins Vietnam. The Ukrainians are never going to surrender, even if the government is wiped out and replaced, they will be fighting across the Ukraine for as many years as it takes to eject the Russians and restore their government, and they'll be way better supplied and unified than the Vietnamese ever were.

https://en.wikipedia.org/wiki/Budapest_Memorandum_on_Security_Assurances "1. The Russian Federation, the United Kingdom of Great Britain and Northern Ireland and the United States of America reaffirm their commitment to Ukraine, in accordance with the principles of the Final Act of the Conference on Security and Cooperation in Europe, to respect the independence and sovereignty and the existing borders of Ukraine; 2. The Russian Federation, the United Kingdom of Great Britain and Northern Ireland and the United States of America reaffirm their obligation to refrain from the threat or use of force against the territorial integrity or political independence of Ukraine, and that none of their weapons will ever be used against Ukraine except in self-defence or otherwise in accordance with the Charter of the United Nations; 3. The Russian Federation, the United Kingdom of Great Britain and Northern Ireland and the United States of America reaffirm their commitment to Ukraine, in accordance with the principles of the Final Act of the Conference on Security and Cooperation in Europe, to refrain from economic coercion designed to subordinate to their own interest the exercise by Ukraine of the rights inherent in its sovereignty and thus to secure advantages of any kind;" Putins invasion goal was to install a puppet government so he could control the Ukraine. That seemed doable before the invasion, now it seems audacious. He may have pivoted to trying to wreck the Ukraine's economy to make it less able to withstand Russian coercion and interventions. What's likely going to happen is he'll eventually take Kyiv and most of the eastern part of Ukraine at a very heavy loss in Russian military equipment and lives. He'll try to install a fake government over essentially "The Republic of Eastern Ukraine" supported by Russian troops, but it will still suffer heavily from guerrilla attacks and assassinations. I think eventually he'll be forced to withdraw Russian forces back to Crimea and Donbas, the puppet regime will fail, and that the US, Britain and EU will use seized Russian reserves to rebuild Ukraine. The alternative is regime change in Moscow, which would quickly lead to withdrawal of troops, a peace agreement and probably collapse of the Donbas as I think the new Russian leaders won't want any of Putin's bloody ulcer.

Hundred percent agree. I think the CCP leadership is living rich, fat and happy off the sweat of the Chinese people, the last thing they want to get involved in is a war, not in Taiwan and especially not in Europe. But they'll happily stick it to the US and the West any chance they get, and take advantage of every opening. Of course I admit I can be wrong about any of the things I posted. Putin was probably the wealthiest man in the world and his position was very secure despite the poor Russian economy and the massive theft by him and his henchmen. And he may have thrown all of that away on an un-winnable quagmire that he never needed. Predicting the outcome of a war or another persons decision-making is even harder than making macro calls in investing.

On the surface their progress doesn't look so bad. But it is actually disastrous. In Iraq, we invade a country with half the population where a substantial portion of it hated Saddam, and against a military larger and better equipped than the Ukrainians. We had to have incredible logistics because we were fighting halfway around the world, and took a very safe and deliberate path, starting with shock and awe to wipe out Iraqi air defenses. There was no plan to take Iraq in days, but one rooted in excellent logistics to surround areas of key resistance before cleaering and rely on local support. Russia planned for most Ukrainian people to welcome it because Putin's inner circle was delusional, and planned for a blitzkrieg to take Kyiv and install a puppet regime in two days. Clearly that failed. But the mark of how poorly they understood their opponents is Kharkiv. It's majority Russian speaking and the most heavily Russian city in the Ukraine and only 26 miles from the border, yet it's still free and fighting vigorously a week after the invasion. They flew in paratroopers (their elite troops) into Kyiv airports thinking they could easily capture them and fly in massive amounts of troops to take the city center but they got massacred. So what did the Russian leadership do? They did it again and again and failed every time with massive losses to their most irreplaceble troops. So now they've been forced to send the regular army down roads in the middle of the muddy season in the Ukraine. Their armored vehicles that get off road are abandoned stuck in the mud. They don't have the logistics to supply them so many are abandoned after running out of gas. Troops are hungry (many videos of them ransacking stores for food). They don't have absolute air supremecy so the remainder are getting hit from the air. They can't establish large safe perimeters off the roads so they are getting hit with Javelins and MLAWs. When any tanks get separated from infantry in urban areas its a death sentence, even civilians can kill a tank with a roll of wire, a couple rifles and some moltov cocktails. Besides the trucks out of service because of terrible service, there is also many photos of dud Russian rockets and grenades. Most of their troops are using old equipment that is failing at a high rate either because of poor maintenance or outright theft by Putin's henchman. The Russian command has compensated by sending in more and more fresh meat. Estimates are they have already committed 90% of their forces, they have no reserves. The big resupply column got stuck before it could get to Kyiv and it's getting pounded, the forces attempting to surround Kyiv are in danger of being surrounded themselves. In the south things are going better, but note that that's the dry part of the Ukraine and its also the flat part. The rest of the Ukraine is wilder and rougher, and filled with angry partisans carrying AK47s, Stinger Missiles and Javelin tank killers. And more is pouring in from the border. The Ukrainians appear to getting resupplied with more ammunition and more and better handheld anti-armor and anti-air missiles than the Russians have or can get to their troops. The Russians are running out of everything, but especially trucks.

The already small Russian economy has probably lost one third of its production capacity due to sanctions. That's a massive loss, the war material Putin is expending now took many years to fund, it will probably take at least a decade to be restored. Before the war and sanctions, they couldn't even build their new Armata tank in any volume, they might only have a handful at the moment. They couldn't build their new fighter, the SU-57, they either only have 3 units or maybe a dozen but aren't risking them in the Ukraine or in combat to protect their foreign sales potential. Now with sanctions they probably won't even be able to build another Armata or SU-57, as they likely rely on some foreign components/materials the Russians are ill prepared to produce. Energy was roughly a third of the Russian economy. China isn't going to pay market prices for oil, and the key pipelines run to Europe. All the western oil companies have announced they are pulling out, which means Russian energy production is going to lose a massive amount of needed investment and expertise. And they won't be able to buy Western drilling equipment and tools Their energy production is going to fall substantially, oil fields naturally deplete but deplete far faster when you aren't using advanced tooling and expertise to manage them. So not only are they going to make a lot less for the oil they export, they won't be able to produce as much oil to export but worse they have to meet internal demand first so that means they may have far less to export. Their space launches relay on German production of essential fuel components. But that doesn't really matter because they've lost every potential customer. Previously Roscosmos was in heavy decline due to theft by it's management, had immenese safety issues and had lost most of it's commercial sales to SpaceX. It's over for the Russian space industry. Most of their commerical airlines won't be flying in three weeks. The vast majority of their fleet is Boeing/Airbus which will no longer supply parts and Russian carry limited equipment stock. Three weeks is the estimate until they have to start grounding most of their fleets. They will have to rework their supply chains for almost every single good, and in many cases they won't be able to. They certainly won't be getting wheat from the Ukraine. People in Russia will be reliving Soviet Era Russia where stores were mostly empty all the time. And the Ukrainians are giving every captured Russian soldier a phone to call home with, so Putin can't maintain the fiction of a Russian victory for long. As tens of thousands of Russian soldiers die, and hundreds of thousands are wounded or captured, the demonstrations are going to grow. I literally don't know how Putin survives till the end of the year.

How cheap Chinese tires and poor maintenance are part of the reason Russian advances have stalled. https://theweek.com/russo-ukrainian-war/1010857/how-cheap-chinese-tires-might-explain-russias-stalled-40-mile-long

Russian SAMs abandoned in Ukraine potentially leaked their codes so Ukrainians can reuse them and listen into Russian traffic. https://twitter.com/TrentTelenko/status/1499491499360362501/photo/1

This is one of Russia's newest and most expensive battle tanks, abandoned by road. https://twitter.com/Osinttechnical/status/1499436624270311429?s=20&t=5jBrC4LS9kEA3RrIZDaCIw