changegonnacome

And we shouldn't forget that 20 million of them that died in WWII......the bodycount far exceeding any losses by any of the Allied forces in defeating Hitler. Putin doesnt forget of course......he draws a line in history from Russia's contribution to WWII , to the fall of the Berlin wall and assurances given to Gorbachev in 1990's during German re-unification about NATO aspirations to the East...& then of course the April 2008 NATO Bucharest Summit declaration from Bush out of nowhere around Ukraine/Georgia potnetially joining NATO.........and then the invasion by Russia into Georgia a few short months later ..bit of a conincidence.........then of course the 2014 Russia Crimea invasion after further NATO saber rattling.......then of course the recent phone calls from the United States president in 2019 to the President of Ukraine telling him to investigate his US rival or the ex-Vice Presidents son sitting on the board of Ukraine largest gas company with no energy experience........I dunno its like Ukraine was getting a bit puppety on the US side, dont you think.........then you got the Feb 2022 Russian invasion.......and I guess to the uninterested outsider it seemed it like it came out of nowhere cause Putin is a "lunatic".......god forbid we might for second think about why this is happening & what to do about it in a way that strips the whole sorry affair of nonsense narratives of good guys/bad guys....democracy/autocracy.......and have a think about solutions that dial down the aggregate human misery, the death and destruction and reduce the overarching probability of total nuclear annihilation (however slight that possibility is, it can ALWAYS & should always be made lower)

The summer exceeded expectations

The UK is now an emerging markets economy, the lunatics have taken over the asylum there .....you want equities listed in sterling but with RoW non-GBP revenues

Leveraged yes....but not all leverage is created equal..... on what business is the leverage placed.....a company that sells a consumer staple or is it leverage placed on a company that sells consumer discretionary/luxury products.....very different outcomes. High FCF/shorter duration......wont lead the decline.........see the growth/value gap is shrinking as predicted by many.....but its the growth names which are contracting to shrink that gap......everything is/will fall if the BETA commands it.......value/high FCF are falling from a 'lower height' than low FCF/longer duration.....on a comparative basis value/high FCF will outperform growth.....but in market like this where the BETA sucks.............its a competition in who has the least ugliest wife........but when the BETA stops sucking, price stability returns AND the new normal of more elevated inflation and by extension higher more normal rates vs. 2010's......I expect value/high FCF to go on the tear again.....such that it wins back the crown of 'best' strategy over the long pull.....its got some catching up to do.....the last 14 years was just heaven for the growth factor.......but i think its time in the sun is over

This 'market' aint over till TSLA is valued like a straight up car company.......the 50% annualized rev growth story supposedly holding up the valuation will be stopped dead in its tracks by the global recession.......its car factory footprint TODAY (Freemont, Texas, Shanghai,Berlin) with some modest edge outs in capacity inside of these should see Tesla peak out at best 2.5m annual run rate in this cycle.....the story built into the stock is of course an auto company producing 20m cars per year by 2030 + autonomy + robotaxis + humanoid robots........the breaking of the car production ramp narrative alone (which will be irrefutable even the dreamers cant deny it) will BREAK the stock......ironically after every short seller you ever heard of has been burned for the last half decade.....now is the best risk reward I've ever seen in being short the Tesla bubble....I mean is this thing gonna quadruple on you right now to a 3.2 trillion company? Not a chance, a double? Give me a break!.........but everybody has PTSD. Its exactly the way markets work.....NOW is the right time to be short Tesla but peeps cant bring themselves to do it because of the corpses of short sellers all around it. Its hard to step over dead bodies to pick up diamonds

Hitler didnt have the whole destruction of the planet....about an arms reach away from him. The math has changed.

Sounds like it - its a dangerous game the West is playing however....big picture I mean for everybody on the planet, however tiny the chances are this escalates into a nuclear threat....conducting a proxy war with a nuclear power not in some far flung jurisdiction in the Middle East or Asia where the stakes are low....... but rather right on that nuclear powers doorstep.......when you think about doomsday scenarios which would trigger the use of nukes.......existential regime threats against a nuclear power are one.......coming right up to the doorstep of a nuclear power is one (see Cuban Missile crisis).........whatever happens next in terms of arming Ukraine, any hint that West is interested in regime change or providing military hardware that might find itself hitting pre-Feb 2022 Russian territory has to be avoided at all costs. I support Ukraine's right to sovereignty & to exist.......but in the nuclear age.....world leaders have to be respectful of everybody else on planets right to EXIST too.......good guys/bad guys......democracy vs autocracy.......I get it......sounds like a Hollywood movie....but it aint real life.....at some point getting to an imperfect peace is the right answer for the 8bn people in the World not just 40m Ukranian's.....Ukraine has to win a little, Putin has to win a little for this to end....your momma never told you this but sometimes good things happen too bad people.

Wow - are the ‘Mothers of Russia’ going to stand for this………the domestic regime in Russia is going to get very interesting over the coming months……..I wonder at what point does Xi suggest to Putin that this all really has to end for everybody’s sake……..China’s domestic economy is going to be at the receiving end of a global recession……what usefulness has this distraction got left for Xi/China I wonder?…..the West’s ‘Taiwan invasion sanctions playbook’ has been revealed to punish Russia…..China can spend the next 5-10 years building a Russia-eque sanctions proof regime based of off this information……sure it distracts the US from where their head should be which is Asia that the only upside left…..but what else now is to be gained.

30 year money at 2021 rates....is like winning the state lotto.....beg, borrow, cheat but dont let go of that paper!

Suspect we’ll touch something in the late 2000’s on SPY….settling somewhere in low 3000’s where the next, hopefully decade long expansion, can build out from. Some type of ‘financial event’ is very likely between now and when price stability is returned. I won’t even guess it’s exact source but changing the most important price in the economy (the price of money) so rapidly and so aggressively after such a prolonged period of ultra low rates has 1st and 2nd order effects way beyond the capacity of anyone to predict.

Problem here is I think BAC would have been a beneficiary of a gradual return to more ‘normal’ inflation/rates….which would have been a sign of strong economy with stable prices. A good mix for a credit institution. Issue we have now is an economy that doesn’t have stable prices…..a Fed so far behind the curve with negative real rates everywhere….that they are literally racing to raise rates….and that speed and aggressiveness has increased the likelihood of a very HARD landing for the US economy……a recession at best, some kind of unforeseen financial crisis at worst…as the Fed desperately tries to put the inflation genie back in the bottle. This is not a good mix for a credit institution like BAC. BAC hasn’t ‘worked out’ even with Fed Funds heading to 4%…..because fundamentally it’s a levered bet on the US economy but the trajectory of what happens next to that economy (employment/credit quality and/or demand) is highly uncertain given the unprecedented speed at which the monetary authorities are now having to slam on the brakes. BAC stock smells trouble out there in 2023….I tend to agree. The math on lots of things doesn’t work anymore and lots levered X/Y/Z plays from 2010’s are out there in the shadows waiting to blow up… things that simply don’t work anymore in (a) quite a severe recession & (b) more importantly even once inflation is ‘fixed’ it continues to remain in the conversation for the 2020’s (demographics/cold war 2.0/reshoring/greening) such that rates aren’t ever really going back to what 2010’s folks might think of as ‘normal’. Marking a levered illiquid portfolio of 2.5% cap rate CRE junk at your next refinancing conversation where subprime rates are 7-8% & 30yr yields 5% is not gonna be a fun experience for the ‘fund’ holding this junk and the investor who seeded that fund. What little equity was in these things could get taken out the back and shot very quickly. Personally I think BAC/WFC are gonna do fine and I might own both at some point again….the banks won’t be the problem this time around….it will be the shadow banks/asset managers where all the denigrate behavior that used to be inside of the money Centre banks was shipped off too where the blow ups will be this time.

Got ya - fair dues to him/them. I think they are providing descent advice there. But you look at the valuations...not everybody is like your buddys institution.....check out SPY.......in the context of a 30yr @ 6%, China/Europe entering recession, DXY @ 111....its bonkers IMO SPY I mean........then add in all the good reasons why we are potentially entering an era of secularly higher inflation pressures versus the goldilocks ( for low inflation) period we just came out of bookend by COVID & starting in 1980......

As I said above........this is guiding clients or investing clients assets in Costco/Apple/Microsoft etc at 3-4% FCF yields, while the 30yr treasury is potentially going to 6%......conservative sometimes is another word for institutional ass covering, while keeping the client FULLY invested and with you and making sure you dont get sacked in the post-mortem

This aint over - the market mania/meme stock stuff that began in 2020 - until Tesla breaks........as I said before we are the beginning of the end......but no where close to the end of this........the degenerate gamblers haven't been cleaned out yet and Tesla is living breathing proof

I think that too many market participants haven't seen an inflationary/rate hiking cycle and really cant see what happens next......or just institutional bias to keep dancing while going over the cliff........better to fail conventionally than succeed unconventionally.....insituational money managers will go over the cliff holding 3% FCF yielding instruments even when the 30yr is printing 6%.....in retrospect it look dumb....but inside the machine it aint dumb at all, its the exactly right thing to do if your a money managing agent collecting a fees.....nobody gets sacked in the market meltdown post-mortem holding a basket of FANGMA even if they drop 30-50%...... as a money manager you get to live another day.....and re-build your AUM's

Short the indexes and short companies with no cash flow, poor balance sheets, requiring on-going access to capital (debt/equity)....also companies that became 30yr bond subs in the 2010's........financial instruments yielding below 4% FCF....this last one hasnt quite happened yet but it will......thats when the indexes really cave in

Depends on the housing equity/debt math too.....did they buy in late 2021 in say Phoenix.......a $2m mortgage being inflated away against an equity base thats declined by 30%....still puts you in negative equity.

Yeah exactly...my view exactly - shallow recession, unemployment ticks up to 5%...put in federal supports to cushion, as best you can, those who are the collateral damage to solve the problem. Get inflation back to 2% and then re-tackle the full employment manadate in an environment of price stability. I mean the alternative to NOT raising rates aggressively & killing inflation is not good either. People realize that right? Raising rates aggressively, creating a recession and ticking employment up to 5%.....is the LEAST worst option If the FED theoretically did NOTHING as some here seem to be advocating (which is an option for coward civil servants) - well let me tell you STAGFLATION itself begins to engineer a slow down in aggregate demand as peoples real incomes get hit, companies unsure of the future path of prices pull back from investment etc etc etc.....problem with this solution....is its chaotic, unpredictable, broad based and scattered across the population......ever hear of the working poor? Ever hear of political instability? Last time I checked we had a little incident on Jan 6th? Want AOC as the next president? Run the do nothing STAGLFATION experiment. Its a terrible problem, sometimes in life your presented with only bad options. This is one of them. Its very hard to direct assistance into the 'working poor' space its hugely complex & the scale potentially immense....you dont want to create dis-incentives to employment, you dont want to distort labor markets.......whereas employment status is binary & easier bureaucratically....you are either in work or out of work. As I've said before an economy printing 6% inflation is one where ALMOST everybody is losing their job just slowly via diminished purchasing power.

I think like this: > inflation is real, persistent and occurring at a domestic level which can be seen in the BLS data, labor shortages, unemployment rate etc. > if you dont have price stability in an economy.....pretty soon you might not have a society....look to S.A. for infinite case studies > solving inflation requires bringing aggregate demand down and for a period bringing it actually under aggregate supply i.e. slack....you and I might call it excess labor/capacity = unemployment > to do so you need to engineer a slow down in demand.....this is achieved in the following way and in sequence by the monetary authorities.......you hit first the (1) Money Supply then (2) Credit Markets....which eventually seeps into (3) Spending/Income > we have only really achieved a complete 'mark' for (1).....on (2) the Fed was so far behind the curve that credit markets in the US TODAY have crazy quirks where the prime rate for borrowers is BELOW the inflation rate such that REAL rates are NEGATIVE.....see you hit credit markets, as credit shows up in spending and income and fuels/ stymies aggregate demand. This is what needs to get hit & we aren't really there yet fully cause well it just makes sense to borrow right now to supplement spending/income so it keeps the aggregate demand buoyant.....but we want it subdued. Call me when the REAL rates to borrow money have a PLUS sign in front of them...such that I know the spending/income lever is finally getting pulled. > so to summarize....credit markets still aren't tight.....and unsurprisingly incomes/spending/employment havent felt pretty much ANY effects yet....I mean whats priced in that this will all be over soon and we get back to 0% Fed funds? Priced in...think I said somewhere else....I think we might be at the end of the beginning......markets seem to think we are getting close to the end, they are wrong....there is a ways to go here my friends.....like at a basic level I dont see SPY earnings cuts getting priced in....SPY earnings HAVE to get hit......whatever P/E your using, the E is WRONG.......SPY earnings estimates are wrong.......think about it the Fed is TRYING to hit aggregate demand........is that good for SPY earnings, Wall street still hasnt chopped 2023 earnings yet from what I can see?....and the DXY strength doesn't help $ earnings either.....and when America sneezes the world catches a cold....engineering a slow down in the US...creates problems for China/Europe/Emerging market but more importantly this isnt good for SPY earnings a good 40- 50% of which are non-US. Monkeys pick bottoms.......i just dont want to fight the Fed......and they've demonstrably got more work to do and I'm not going to be collateral damage in that process...... I fully expect we will have a 'minsky moment' some time between now and when inflation is 'fixed'/under control.....a moment when folks will get that the Fed isnt coming in to save the mark to market levels in their portfolio this time like March 2009 or March 2020....a time of real "get me out at any price" stuff......this time folks are on their own and there is a hell of alot of market participants out there who know ONLY the Fed 'put' era when it was an asymmetric trade for the Fed to cut rates & grow the B/S.....this time it isnt such an easy choice for the Fed

Housing is collateral damage......last time I checked the Fed doesnt have a mandate to fix the housing market......its price stability & full employment......now they are trying to fix inflation...........I agree with your statement that labor force mobility is going to drop off a cliff as people wont budge out of their 3% mortgaged home and move elsewhere into the arms of 6% mortgages (which feels a bit long term inflationary to me, if you dont mind me saying ).....a dynamic economy needs labor to move to where its required. Being short people, in the places you need em brings pricing pressure! Probably another one to add to the list of reasons why we aint going back to ZERO anytime soon even after we 'fix' this hopefully transitory inflation issue. Anyway housing and stock market is collateral damage this time around with some intent from the Fed around negative wealth effects......its the mirror opposite of post-GFC.....where the stock market was collateral beneficiary of stimulating and cutting rates to bail the system out. Dont fight the Fed.

Dont you get it........everything got turned up to 11.....in terms of nominal house prices in 2020/21......there was/is nowhere for them to go now but down.....house prices rose against a backdrop of 2.75% rates which reached a crescendo in terms of affordability......your waffling on about rates a decade ago & comparing them to now but you don't mention what the nominal house prices back then were against that 3-4% mortgage rate....I'll give you a hint.......they were way lower. Its never just rates & its never just house prices.........its house prices, mortgage rates & incomes.....the variables change but what doesn't change is MOST people buy their house over 30 years on a monthly schedule using a mortgage & a bank will only allow ~35% of disposable monthly household income be consumed in the servicing of the mortgage.

If you want to sell your house, I dunno , this calendar year some time, you are going to have significantly reduce the price to get the deal done cause your prospective purchaser hasn't changed....its still the same socio-economic bracket person and their household cash flows haven't changed much but the mortgage rate they can secure sure has....and to get that purchaser to buy your house your going to have to significantly reduce the nominal house price level down such that they qualify under bank debt service capacity models underwritten against a 6% mortgage. That memo. Principal and interest payment on a $500k house mortgaged for 30-years: @ 2.65% it'd be $2,015 (i.e. Jan. 2021) @ 3.11% it'd be $2,138 (i.e. Dec. 2021) @ 6.42% it'd be $3,134 (i.e. today) The way you fix the math above to get you back to $2k monthly mortgage payment.....is the seller cuts the asking price, by alot.......there is no mortgage demand because people arent dumb, nobody is signing up to a Q3 2022 mortgage against 2021 house prices!!!!....buyers are on strike, sellers pretending its just a blip.....and as I've stated before a few times in regard to my housing theory......the socio-economic profile of people who live in various houses/neighborhoods rarely changes.....but interest rates & nominal house prices do......but all in all monthly mortgage payments should consume perhaps ~35% of monthly disposable household income..........if a neighborhood is traditionally populated by X type of professionals....tell me the prevailing wage in that profession, income tax rates and mortgage rates....and I'll tell you the house price. Take the same equation and you can see why house prices have to give here if transaction levels are to be restored

You mis-read my message - i said a tiny change in mortgage rates was all it took to blow out affordability i.e. buyers were already at the edge of affordabilty with 2.75% mortgage rates....the move to 3% blew them out....and 4%....and 5% etc etc. We are saying the same thing.

You should check out the same math when i pointed this out about 20 pages and 5 months ago....it was like negative -7% real rates.....folks have got so addicted to low rates, they cant even conceive of a world of a 6% yielding checking account........why.......well i guess a bunch of people are kind of long duration & invested in a bunch stuff when you do math that has a cap rate/FCF yield of 3-4%.......that is already but will look absolutely bonkers in a 5-6% checking account world.......and they'll look back and ask themselves what the hell was I thinking!

Because nominal house prices rose so high in 2021 that a tiny in change underlying interest rates literally blew out monthly mortgage payment affordability......buyers have gone on strike as result, hence mortgage demand collapse.....sellers haven't got the memo yet and hold dear to 2021 comps......transactions & mortgage demand will restart once nominal price levels reset downwards and/or mortgage rates fall back.....or alternatively home sellers wait for a couple of years of nominal wage increases such that the price of the home has fallen in real terms & affordability is restored by that mechanism