changegonnacome

NATO membership for Ukraine in my opinion is simply never happening as long as Putin is President of Russia.........again it goes to the question of what was the driver of the invasion in the first place.....if your still wedded to Putin the imperialist theory then yes this NATO membership outcome is very possible, indeed likely - this was at the end of the day a greedy land grab that has failed miserably and the costs are becoming too high to sustain for Putin & justify its continuation and as such then you end the conflict with concessions (NATO, give up land captured). The alternative theory and the one with the most evidence IMO is Putin/Russia as existentialists.......globally isolated, shrinking economy, bad demographics, greening of the economy runing their long run biz model, cornered, scared rats concerned chiefly with the Russian's states security & survival over time..............this existentialism paranoia manifests itself in Russian-European foreign policy vis a vis Ukraine AND Belarus......which have always been the highest priority as bulwarks for Russia against a Europe & NATO it does not trust......as I've said before, using the existentialist paranoia framework, it is through the lands of Ukraine & Belarus that Russian state perishes as it nearly did in WWII. Now you can say its impossible what has Russia to fear from any invasions from anyone in Europe......."we" iwould never invade them.......it's crazy to think like that......but this is not the way the real world of nation states work........the ultimate intentions of your opponents are never clear......put simply in the international system of nation states......only the paranoid survive......or put another way as a leader of nation your main job is to maintain its existence.....so when your opponents/enemies make strategic moves (even if they are truly innocent & defensive in nature) the correct posture for long run survival (your ultimate core job responsibility as a leader of nation) is to assume rather that EVERYTHING is an offensive move. This idea, this existentialist idea is enshrined in the USA and many other nations in the very structure of their governance.....in democracies everything is up for debate & power dolled out to the house/senate/judiciary with all the checks and balances......there is one area where the President of the US retains almost unfettered control.....and that is in regards to military foreign policy.......see everybody gets it.....when it comes to the very survival of a nation.....there is very little space debate or consideration...look at the paranoia emerging around China in the US and its long-term threat to the USA.......the job of a nation is to be to paranoid.......Putin is paranoid.......Xi is paranoid.....Biden is paranoid......paranoid people dont think rationally.....therefore dont expect Putin to act rationally. I dont think this invasion was driven by rationailty or imperialism.....I think it was driven by existentialism & paranoia. NATO membership for Ukraine is therefore not a deal on the table that Putin will ever accept.

My comment about Ukraine running out of men before Russia was a combination of population AND casualty exchange ratio combined. Ukraine running out of men before Russia is just patently clear just based on the strategic aims of the two sides. Attrition ratio imbalance is patently clear based on the strategic posture/aims of the sides - dont forget Ukraine is trying to TAKE land, Russia is DEFENDING land.....the short hand military math for the casualty exchange ratio based on this posture alone is at best 2 to 1......more likely 3 to 1 in Russia's favors. It is the Ukranian men who are the end of the day going "over the top" and getting mowed down by entrenched Russian forces. Then on top of this you just layer on the clear male 16 - 65 population size advantage Russia has over Ukraine......sure lots of bodies being put through the meat grinder on both sides......but a proportionally higher percentage of Ukrainian males aged 16-65 are getting put through it everyday.

This is the math problem at the heart of the conflict. Ukraine runs out of men aged 16-65 before Russia does. Ukraine runs out of artillery, supplies & various weaponry before Russia does. & finally 'the West' runs out of perseverance & staying power before Russia does. If there was some kind of imperfect deal to be had in May 2022.......and Boris Johnson et al told Zelensky 'no dice' in a Churchill fever dream......then its really a terribly sad situation for every life lost on both sides since then.

Remind me of this from an Adam Curtis documentary I recommend folks check out - Hypernormalisation.....modern Russia is a bewildering mess of propaganda, fake news & psyops........all designed to ensure that people there are never really sure what is exactly happening & by whom...even the 'opposition'...it's designed to lead to civic paralysis which in and of itself is a form of power.......and based on the evidence of the last couple of decades its worked quite beautifully....as measured by civil disobedience that has ever seriously threatened the Putin regime in that time

Yep - the basic hard landing thesis didn’t go away it just got delayed this movie ends one way it’s only the running time that’s TBC….the US is running a deficit as if the GFC just happened yet unemployment is at a 60yr low….the bond market it seems is starting to think through the implications of that relative to issuance to come, structurally higher inflation and as a consequence is pushing up rates at the long end. Folks wanted the yield curve to on un-invert….it is….but not in the way that is positive for asset prices.

Agree - its destabilizing to let it go too far.......its implicitly understood I think at the Fed....and certainly by the Fed chair......4% inflation is another form of stealth wealth transfer......its a game I benefit from, holding hard assets financed with low rate fixed term debt.......but I always think of the situation something akin to how I think about companies......are they short term greedy or long term greedy.........short term greedy is sitting with a 3% mortgage on your hard asset base and smiling at 4% inflation knowing that your 'winning'......but what is winning if you de-stablize the whole system and end up with AOC or Marjorie Taylor Greene as president in five years time. Long term greedy or what I consider to be the optimal long term solution is what I think happens next.......Fed keeps pressuring financial conditions & remains resolute in the face of weakening......with true domestic disinflationary pressures in place.....corporates start to meaningfully give up margin that get translated into hopefully REAL gains in wages for median American worker. The US fiscal authorities start to get the budget under control by increasing taxes while reigning in and reforming dumb spending The lunatic fringe of the American right and the American left haven't come to prominence by accident.......a whole generation maybe two of median American workers have been left behind in terms of proportional participation in growing output of the US.....the wage data is clear on this.......the fact that each party in the USA is beginning to be hijacked by its lunatic fringe is a symptom of this......Jan 6th is a symptom of this.......and IMO it needs to change.......not because I'm some bleeding heart for 'poor' people.......but because its the best LONG term for my family's wealth & happiness accumulation to live in a country/society that isn't falling apart at the seams. Dont forget the simple maths......any number times ZERO is a ZERO......best way to not end up at ZERO is to not mess with a pathway that looks like its heading there

Europe isnt one 'place' - you invest in Italy you expose yourself to crazy italian politics......the short version of how I think about Europe is I want to own things in countries that are closer philosophically to the USA. Which is to say that they respect and champion something closer to free market enterprise. My shortlist of European countries I consider investable are: UK Netherlands Switzerland Ireland Luxemburg Germany These are in the main the 'centre right' countries in Europe....with some exceptions the rest of Europe is very much left or centre left......and prone to bananas economic policies at times where they can swing wildly left....the above on balance tend to default to free market solutions with minimal interference.

This is one of my favourite thought experiments - for the bitcoin maxi maxis...who think that it might replace sovereign currency one day.......fine.....lets say it does.....we have ultra hard money (21m bitcoins), not controlled by a central authority.........and then a pandemic comes......the monetary largesse that occured in 2020/2021 stabilized a very difficult situation....it worked because it WAS centralized (Jay Powell/Jannet Yellen open the flood gates) and it worked to stablize things because it was FIAT money (we just printed more). There is not 'perfect' monetary system...always trade-offs in complex systems......the one we have is the least worst

Wall St pleasing capex underinvestment + ESG mafia have for sure created bottlenecks......and doubly so as @Spekulatius says bottlenecks in on/near/friend-shore locations

Good argument out there that due to Wall St.'s aversion for capex over time (see O&G) that lots industries that supply physical goods predominantly input goods acquiesced to shareholder demands & have systematically underinvested in capacity.......you know all the stats no new steel plants built in X years, refineries etc.

That would be more my style

Forget eggs - your best bet is that the 30yr treasury just today took a time machine back to levels not seen since 2011. Watch out for 30yr T levels last seen when Rhianna was singing about Umbrellas!

Let's see - from what I can see the July CPI is the last 'easy' print that was 'in the can' so to speak. Moving forward beginning with August CPI the rubber is hitting the road........headline progress will need to be matched by actual and underlying progress on supercore....the progress here, has been modest to say the least....but won't deny in the last couple of prints there has been some encouraging but very modest moves down these need to continue and in fact accelerate.

Yep there's no end to the tricks the CCP could do in an authoritarian state to drive spending....it will make 0% interest rates look quite quaint. They had the one child policy.....how about no money left in your checking account policy....that would definitely pack out the bars & restaurants at the end of month in Shanghai or whatever Tier 3 city really needs some life in it!

Excellent points you make re: their history.....will require extra coaxing to get them to spend. Kind of makes me think that the rest of the world might not be going back to ZIRP + printing...........but the Chinese might be.......was pretty nice time to own US stocks during the ZIRP years.....I wonder if we'll be saying the same thing in 10yrs time about Chinese equities.....0% on savings, stimulating demand via wealth effects......sounds very USA 2010's to me

HSW

Yep the Chinese tailwind might very easily turn into a headwind........and not just economically speaking!!!!!

Totally agree - the Chinese saver needs to be turned into a more US-like consumer and fairly quickly if they are going to soak up some of the excess manufacturing capacity they have. That Chinese savers effectively represented a very large purchaser of US treasuries is a very interesting dynamic......decoupling from China is both inflationary for the West in terms of the goods that we buy but encouraging/forcing the Chinese leadership to get their people to spend more and save less will, all things being equal, mean one less financier of OUR debt fueled consumption in the West.....yet another reason why perhaps we are never going back to ZIRP.

HSW

Can't remember where I read it or who said it - but there's something to effect that the market exists to embarrass as many people as possible....immaculate disinflation or the back to the races trade has sucked alot of folks.....and maybe its 'back to the meat grinder' as Grantham has called it...I think in the last few months we've taken every good piece of news on inflation and taken it to the inflation is done thesis extreme......been saying it for months.....but apart from the obvious & predictable headline CPI improvement the data I look at is disappointedly and stubbornly pointing to underlying persistent and hasnt budged an inch core ~3.5% inflation......the problem with ~3.5% inflation is that it is too subject to flare ups.....when folks ask why do central bankers shoot for 2%......the answer might be as piffy as - "they shoot for 2% such that they end up at 3%".......it hasnt always been so that central bankers failed to reach up to their 2% target.......the normal course of history for central bankers is that they've consistently failed to get inflation down to their target. I've a feeling we are entering a more normal period for this type of thing......just given the inflationary pressures around........makes it all the more important to get down to 2% for a number of quarters....such that inflation might actually might settle out at 3% over the next ten years.

HSW

The margin differential married to the revenue growth is/has been an unbeatable combo......its an engine for EPS growth. Then there's a whole argument about regulatory capture, antitrust......citizens united.....thats seen the large caps secure every break of the ball in the US tax code, M&A greenlights etc. It's been an unbelievable run.

BLS wage data today......totally inconsistent with 2% inflation......ChatGPT better start delivering some productivity gains pronto or else Short version - seems like further hikes are incoming......& the soft-landing/no landing dream is receding.....

Not suggesting you’re looking at some wholesale exit from equities…..but remember stock prices get set at the margins of supply and demand for that paper…….flows……even marginal flows (as a % of total US wealth) can matter…..TINA……turning to inverse-TINA……creates an interesting dynamic……rising bond yields are kind of screaming at equites that they may need to do offer a better ERP in the future if they want to keep bums on seats. Look at the 30yr….what a magical time to hold equites it has been….the longer duration the better…..i was very lucky to have this tailwind in the 2010’s to build the economic base I have. I’ll take some credit for suerpior decision making ….but no man is an island……and the wind at my back helped a lot especially when my decision making wasn’t so superior.

Yeah such a large cohort of retirees or close to retirees who’ve got to be looking at fixed income alternatives to equites….and figuring out the above math….totally get the superiority of equites over the long pull…..but certainly a certain age cohort (not the peeps on here) get to a point where they want a smooth ride, they wanna reduce the potential brain damage to return ratio of their financial life and are happy to give up a few points of performance. Current math points to very little points been given up! Like I said not the COBF crowd who wanna squeeze all the juice out of the returns orange….but this isn’t a normal gang of people…normal people wanna do what’s easy , with the lowest friction and risk…..the bond market is calling them.