changegonnacome

Digging around the Inflation print today and dare I say it - it remains unsupportive of the idea that the Fed will be cutting soon. BLS productivity data for 2023 however genuinely surprised me and I got this wrong....that the US had greater than 1.5% productivity numbers left to squeeze out of itself.....damned inventive is this capitalism thing. So I dunno - maybe the Fed does a funds rate tweak 25b-50bpsps or something later this year....but unless the underlying economic data changes.....its really a staying higher for longer situation again this year with nothign like the big cuts priced in...with obviously increasing MoM chances of the mythical and rarely seen soft landing unicron coming over the hills.......where the Fed cuts 200bps or more not because its white knuckle terrified of what's happening to the economy but rather doing it cause 5% rates are no longer required.

Your right - send me me your dets on DM....and let me help you stack them satoshis a little bit. Sound fair?

Sorry buster - the DOJ brought down Binance and met the exact conditions I stated was the barrier to an ETF approval and was the basis underpinning my 0% approval odds...that 0% was based on the Binance/offshore market status quo.....go look over my posts I couldnt have been clearer on that.......which were numerous on the Binance & the surveillance on spot market problem that made approval back then an impossibility. The day Binance died, our bet died. Like you do know what happened a month or so ago well in advance of the ETF approval? I'm sure you were following......... yep you guessed it.....Binance guilty plea deal to the DOJ & treasury charges & CZ's surrender.....following this Binance shockingly capitulated and agreed to allowing DOJ to put Binance into FULL US government MONITORSHIP.....unbelievable capitualtion......which amounts to US government contractors (most likely audit & accountancy professional paid for by Binance but working for the DOJ) sitting inside Binance offices/system reporting daily everything back to DOJ, treasury and the SEC in real time re: trading activity & Binance's customer activity. So - you didn't understand my posts back then I think and so i guess you didn't understand the significance of the Binance takedown in November and its influence on this spot approval.....I could go dig up the posts highlighting my repeated linking to the Binance problem in the spot market to the approval odds.....our little 'bet' was off the day Binance the criminal enterprise ended & basically gave the US government a front row seat & data pipe to everything happening inside Binance and by extension the majority of the spot market trading volume. Tell you what - I'll dig up my posts to help you @alxcii not feel so hard done by and as a show of good will - here's the most succinct one in all its predictive glory (but the posts were numerous on the Binance problem): To quote myself from that June 2023 post above- I couldnt have been any clearer or any more accurate in setting out what would need to change for an approval. Spoiler alert what I said needed to change did change in the US vs. Binance criminal case: "Underlying spot BTC market volume dominated as it is by offshore exchanges is the barrier here. You’ve got a chicken and egg problem for the SEC to ever approve a BTC ETF. End of story. Right now the spot BTC market volume is dominated by a long list of extremely dodgy entities….the 800ilb gorilla @ 62% share (Binance) has just been charged by the SEC with about the most heinous crimes an exchange/FS entity can be accused of. Until centralized BTC exchange market volume tilts in a 60 or 70% way to respectable entities in the US or EU…then the spot ETF is never happening. How could it? The spot market is dominated by nefarious actors completely outside the purview of any regulatory agency that the SEC respects. Tell me that in 2025 BTC centralized volume market share will hit 75% for Coinbase, Paxos, Gemini & Kraken then we can have a conversation about a spot ETF approval until then it’s a pipe dream." Well as I said above back in June Binance was an 800ilb barrier to approval........and the US government in November made that 800ilb offshore gorilla Binance its bitch!.......and in doing so.......the centralized BTC exchange market volume DID indeed tilt in a 60 or 70% way (more like 80%) to the very conditions I'd set for a BTC-ETF approval...which is to say that TODAY entities under the complete surveillance, control and dominance of the United States & Europe have deeply deeply significant KYC & transaction volume visibility into BTC land......allowing the SEC to finally approve. I'll also drop another insight for you as the BTC crew celebrate what is surely a blasphemous outcome for Satoshi and his true followers.......BTC, if you haven't got the memo, is now highly centralized with big finance overlords like BlackRock likely to dominate the space with the majority of volume and visibility down to the transaction layer (as I just outlined) sitting under US government ownership & surveillance..... the US government has just unbelievable visibility into BTC land now & big finance has its claws into the fee income........Satoshi must be rolling in his grave.....lots of his supposed true followers have shown themselves to be fakers.....so willing were they to embrace whatever was needed to get US government approval for an ETF........they showed themselves to be nothing more than 'number goes up' crypto Judases...betraying Satoshi in the ETF garden for a few satchels of silver Today wasnt the start of something for BTC.......it was the end. The greedy BTC crew like Cathy Woods just handed the US government the keys to the kingdom for a few gold coins.....and BTC in exchange lost all its outsider libertarian characteristics......its just another piece of financial infrastructure (like the swift payment system) dominated and controlled by the US government. You do get that @alxcii right? - Binance is under severe and total US monitorship, Coinbase/Kraken are onshore & KYC/AML/IRS information printers....and most importantly SAR prisoners, BlackRock for gods sake is likely to become the largest holder of BTC by volume......the US gov just turned BTC in so many ways into..... how would crypto people say it......BTC is just another mechanism through which the "corrupt" US government and elites subjugate the masses. It was meant to be so much more. It's kind of masterful what they've done....that good old US government.......what did Macheivil say all those years ago: "The best way to deal with an enemy is to make him a friend." - Niccolò Machiavelli, The Prince The naive BTC'ers think the US government somehow capitulated today and became BTC's friend......I'm afraid not......the US gov just put BTC under its conservatorship & stewardship......BTC servies at the pleasure of the D.C. now. All the love out there for the US gov approval for BTC also kind of reminds of the deeply melancholy end of 1984 with poor Winston Smith succumbing to the overlords.....I swear I thought I heard some gin soaked tears on twitter spaces earlier: “He gazed up at the enormous face. Forty years it had taken him to learn what kind of smile was hidden beneath the dark moustache. O cruel, needless misunderstanding! O stubborn, self-willed exile from the loving breast! Two gin-scented tears trickled down the sides of his nose. But it was all right, everything was all right, the struggle was finished. He had won the victory over himself. He loved Big Brother.” ― George Orwell, 1984 it took Winston 40yrs to break.....BTC broke and sold itself down the river to Big Brother in 15yrs.....for all the early fire and fury I expected a bit longer. Oh well.

No I wont be buying - but I will be shorting Coinbase......in an ETF world where the ETF can be traded commision free via robinhood or Schaeb or whatever brokerage you want.....and then the ETF itself carries a tiny 0.2% annual mgmt charge....your charge for a $51 dollar purchase of BTC at the end of the year is measly and reasonable 10.2 cents on that fifty one dollar purchase and you can sell it too. Same 10.2 c cent cost for a roundtrip. Contrast that with Coinbase today - who will charge, as best I can tell, Joe Crypto Sixpack 6% or $2.99 to buy $51 of bitcoin (so much for getting away from greedy/sleazy banks with this new financial system that is democratizing finance for the little guy uh!)...6% in, 6% out if I read that properly.....so up to 12% taken off the table for a roundtrip, oh my lord...........so 30 or 60 times more expensive to transact, hold and sell BTC on Coinbase than it will be to buy,hold,sell inside these ETFs via trading on Schwab or Fidelity or Robinhood......and only one 1099b to deal with at the end of the year to boot! Coinbase is in deep dog doo.......and all the 0.01% custodial fees in the world looking after the assets of these ETFs is not going to make up for the lost revenue they had during the golden age of scalping their customer that they've enjoyed for the last decade......that party is surely over for them now?

As always could have been better but could have been worse..big positions of consequence...GLV up 40%, HSW up 20%...BOI down a bit..all with room to run in 2024....the last couple of years have worked out reasonably well in aggregate: 2023 - +22% 2022 - +15% Some non-taxable accounts where I do some levered bets adds a couple of hundred 100bps....which overall is up~40% over the last 24 months. If you like drama - I guess a more eye catching year would be +50% in 2023 but invariably, in the vast majority of cases, that would have meant who knows down 40% in 22 or something..........which for lots of funds out there is basically the case.....the compounding / LP math on the above - down 40, up 50, for those wondering.....means your just simply DOWN in absolute terms over two years...Buffett's first rule is dont lose money for a reason, the return uplift required to make up losses is tough math.....then heap on fund fees and the inflation adjusted math that nobody likes doing (~10% cumulative diminution of purchasing power of a dollar over the 22-23 period) and you can see how the vast majority of LP's in funds that 'killed' performance wise in 2023 will be no better off in real terms at the start of 2024 than they were at the end of 2021 market peak. My first 2024 prediction I'm fairly confident in.........is that 2022 'amnesia' will be the most common unwritten theme of end of year fund letters soon to come out......where the fund manager will pretend that with an avg. 2% cash holding over the period....he had enough dry powder of consequence in 2023 to take advantage and 'buy the dip' or my personal favourite is the game where the manager pretends he somehow magically rotated into higher quality names (without realizing losses on previous holdings that were down a bunch into the mouth of 'the bear'). The reality is the manager rode the market down and rode the market back up with some position window dressing. It's the nature of the beast but it's always amusing the games that need to be played in the fund mgmt business to hold on to OPM.

Their inability to replenish the frontlines with troops is very real......via straight up fleeing of Ukraine by fighting age men at the beginning of the war and the various deferment bribery scandals reaching a crescendo in August. https://www.bbc.com/news/world-europe-66478422 "Volodymyr Zelensky confirmed that more than 30 people face criminal charges, with all regional officials in charge of military conscription removed." Complete removal of all regional officials speaks to a serious lack of internal buy-in for the conflict not to mention widespread corruption in the civil & army service. Anecdotally from speaking to Ukrainians that work in my company - there is a not so minority view in Ukraine that Zelensky but especially the Ukrainian right (using Zelensky) whistled to the graveyard with this war by pivoting so strongly to the West in the 2010's (NATO/EU) culminating in Zelensky becoming Trumps lap-dog in the infamous 2018 phone call.......while simultaneously running an overly aggressive & belligerent foreign policy with their big neighbour to the East- Russia. The Ukrainian right in short was too idealistic, some would say naive in their drive to 'join' the West. Pre-invasion some 30% of the Ukrainian population did not want to join NATO chiefly due to its antagonizing nature between Ukrainain-Russian relations. Which is to say that one third of Ukranians knew that poking the Russian bear is not a clever strategy. In the same way that Vietnam, for many, became "not my war".....the War between Ukraine & Russia for descent slug of fighting age men in Ukraine is 'not their war'......they saw it coming and the pivot to the West was strongly opposed by many in Ukraine because they understood the realpoltik of being small country in the shadow of a much larger one. Two thought experiments - Many consider Joe Biden an idiot when it comes to foreign policy......if Uncle Joe landed the US in the dumb and completely avoidable conflict with Mexico......how quick would republican leaning fighting age men be to go fight 'Joe's war' Secondly - just ask yourself I guess what Charlie Munger's hero in Singapore would have done - Lee Kuan Yew -given the Ukrainian set of cards heading into the 2000's......the answer of course would be obvious to Lee Kuan Yew > play both sides > the only answer is to have good relations with both the West AND Russia recognizing the reality that Ukraine will always remain via geography sandwiched between these two 800ilbs gorillas .....so your fiduciary responsibility to your people as their leader is to skillfully align and diverge on policies such that Ukrainian prosperity, security & survival might be maximized inside this reality. Hell I bet Lee Kuan Yew would figure out a way to get US dollars AND Russian rubles in various aid & financing packages from both. The idealogue Ukrainian right did the opposite......politics is the art of pragmatism, not idealism.....the foolish forget the former and execute the latter. The reality is Ukraine has been led by second rate political operators for more than a decade (perhaps longer). Zelensky is an actor playing the role of a politician........a 1st rate politician or political party would never have gotten themselves into the situation the Ukrainian right has gotten Ukraine into.* *Of course if you want to believe the conventional wisdom re: Putin the Imperialist.....then whats happening in Ukraine was simply inevitable.....and I get that argument if your happy always to have your foreign leaders/countries distilled down to mere caricatures...James Bond villains.....but I don't think it stacks up.....the world is much more complicated than the goods guys ('us') and the bad guys (anybody that isnt 'us'). I find the nuance constantly gets lost in the foreign policy realm via mixture of natural tribalism that afflicts us all and the medias need for villains & heroes........multi-segment 22 minute news programs aren't designed to explore complicated issues of sovereignty, security and power politics between states.

Well worth a view. Stand out slide. Cant remember here who was trying to categorize the Russian’s as some 3rd world country that had lost its access to resources and was somehow incompetent and impotent from a military industrial standpoint. Review the slide above and realize that on the left you’re looking at the ‘West’ emptying out its lockers to supply Ukraine shells etc……then on the right it’s Russia with a little help from its friends. You take the above , add in the simple population advantage Russia has plus their GDP advantage. Then layer on the fact that the Russian’s are their own masters here in terms of funding the war….plus their own captive military industrial complex to produce what they need (artillery, tanks, drones, missiles) Ukraine by contrast is running the war on shaky welfare payments from the USA/UK/EU……and the consumables (artillery, tanks) are coming not from their own captive industrial base….but the combined industrial bases of the West which has been shown during Covid and during this conflict to be quite limited relative to the past and relative to China/Russia who never de-industrialized as we clearly have. Ukraine is in a terrible situation……and without a decisive step change in the quantum and scope of our support, they are doomed….perhaps Putin sits tight till Nov 2024 to see who takes the WH….but I suspect not…..at a certain point I think he drives to take more territory bordering the Black Sea all the way to Odessa if possible. Time is on his side - this could be a 2025 or 2026 project for all he cares….time is not the friend of Ukraine or the West’s flagging support.

Market was predicting lower rates in 2022 for FY2023….the market has been predicting rate cuts since effectively 2022 and been wrong. The difference here is the market is predicting rate cuts (what’s new) and the Fed via the SEP for first time is agreeing with the market. So the point still stands - this incremental Fed driven rally is built on the SEP projections of those previously derided as being incapable of predicting anything.

The ironic thing of course regarding this rally for those that have laughed at the incompetence of the Fed (with justification). Is that this rally.......is BUILT on the inflation & rate projections contained in the SEP of the very same committee members that were ridiculously late to the inflation in the first place.......and are/were so derided as incompetent in their ability to predict anything, any time, anywhere. However when the committee predicts something that can be 'sold' by Wall St. i.e. stock go up. Well they aren't idiots any more and we have total faith in their predictive powers in the SEP

Been kicking around all the data - and to be honest I admire the markets view that things are just done and were headed to 10% annualized returns again for the next decade. Feels a bit like a George W Bush on the back of an aircraft carrier moment - an exercise in collective wishful thinking. The reality is I can't wait to get to Jan 1st to take some of these 2023 gains off the table such that Uncle Sam extends me some 0% margin financing until Mid-2025 to play around with.........either inflation doesn't cooperate as per expectations or it does cooperate but really its coming at the cost of a weakening economy. The 3 to 2% journey remains in my view the perilous one and I've seen little to suggest otherwise. I really do wonder what the Fed is seeing as regards weakening incoming data. The change in tone was abrupt - either they can see significant weakening on the horizon or in some sense they've done what many have been asking for....they've given up on the 2% target and are happy to run the economy hot at ~3% inflation. Further raincheck to those talking about a new broad bull market.... let's get SPY back to ATH's first (inflation adjusted) which is really something at the ~5200 level....we've cracked ~4700 and are back to the nominal all time high.....there's been 10% cumulative inflation since the Dec 2021 high......if your not grossing up your mostly ATH Dec 2021 positions by 10% to assess their inflation adjusted performance during this late-2021 to 2023 period your involved in a form of willful self-deception.

“‘People Snatchers’: Ukraine’s Recruiters Use Harsh Tactics to Fill Ranks” - https://www.nytimes.com/2023/12/15/world/europe/ukraine-military-recruitment.html?smid=nytcore-ios-share&referringSource=articleShare  Ukraine running out of soldiers - Zelensky had to sack his whole recruitment apparatus earlier this year…as they were literally selling draft dodging get out of the war tickets to fighting age men. The corruption in Ukraine remains completely under appreciated in the West The Ukrainians need to be sent weapons & money quickly for a final push to secure some incremental victories and get to the negotiating table. Today they are asking for weapons & money….the longer this goes on they will start asking for men. Let’s not get to that point.

The EU, with the best of intentions, have done Ukraine in my opinion a great disservice by accepting their EU application and moving them to candidate status in recent days. Zelensky, his country in ruins, principally as I've stated before from a failed policy of pivoting aggressively and recklessly to the West, as the leader of a country lets not forget that sits at the nexus point between the West and the East, continues to double down on this failed strategy. Poking the Russian bear again with EU membership talk when he is literally running out of money, men and munitions is a foolhardy move. Continuing with this plan, there wont be a Ukraine left to join anything - the EU, NATO etc. While the EU is an economic union, the elite in Russia I'm sure view it as an interim step to NATO membership....regardless its ensured that whatever chance there was at frozen conflict driven by a Russian pause has gone out the window this last week......Russia will be redoubling its efforts now to re-take Kherson and then Odessa aiming to cripple Ukraine economically on a permanent basis. Battle line have moved hardly at all in the second half of 2023.......suspect 2024 will be the year of the Russian counter-offensive with increasing slices of Ukraine falling under Russian control testing the WH & Congress's resolve in an election year......its tough to fund a war at the best of times but what voters hate funding the most is a war (albeit a proxy one) where the US is demonstrably 'losing'. Russian election interference wont require bots on facebook this time - it will be Russian victories in Kherson or Odessa next summer. The politics in D.C. need to stop now - we are in a quagmire in Ukraine, no doubt about it......waist deep in the big muddy......the only move forward is too triple down on Ukranian support and give them whatever we can/should to hurt Russia and allow for some version of a Ukrainian victory with a small v.

The problem in Ukraine (or Afghanistan/Iraq).....is a very simple one......they ultimately aren't strategically important to the USA.......therefore resolve and perseverance as compared to the incumbent forces in the region is lacking......you can be a great military power but resolve & perseverance isn't measured in warheads & artillery. The Taliban couldnt compete militatrily with US forces.....but they out competed them in resolve & perseverance and won. Here we are in Ukraine what less than 24 months after the war started with US political leadership withholding funding and talking about the next round of funding being tied to an 'end game', an end game with battle lines drawn with some 20% of Ukraine under Russian occupation......so 22 months in and the 'West' is lagging in resolve & perseverance cause really Ukraine isnt strategically important to us. We rode in like heroes telling Zellensky not to negotiate with Putin when Russia occupied 5% of Ukraine cause we had his back and here we are. 20% of Ukraine gone, talking about an end game. Now take the other side of the coin....Russia.....in 22 months Ukraine's concubine status, its neutrality remains a high priority objective for Russia......the check mate element here though is simple and its the resolve and perseverance elemnt........forget 22 months.....in 22 years......in a 100yrs years.....Ukraine will remain strategically important to Russia.....Russia's resolve and perseverance as regards Ukraine is almost infinite as compared to ours. We did the Ukrainian people a disservice it seems with our blowhard talk of support and standing ovations for Zelensky in 2022......Zelensky taught he was selling us the war when in fact we were selling him our (false) support cause it felt righteous and good in the moment. What does Buffet say - dont own a stock for 10 seconds that you wouldnt be willing to own for 10yrs. Well my rule of thumb is don't get involved in a war for 10 seconds that you wouldn't be willing to be involved in for 100yrs.

Poor Europe….with friends (USA) like this who needs enemies. Repeat after me - friends don’t blow up other friends energy pipelines. Except in international relations where you really don’t have any friends only interests that align. https://apple.news/AMjgtEJQTRAC-whtvhq01vw

Think what we said was that nominal wages increasing at ~5% clip with 1.5% productivity growth is incompatible with 2% inflation….that’s proved correct….inflation didn’t just go away in 2023 as many predicted & we got ZERO rate cuts as the market had predicted…..inflation has proved sticky….higher for longer played out….the stickiness in that ~3.x% SuperCore range is the made in America inflation we’ve talked about. It remains unduly high albeit with some recent MoM readings that give soft landing vibes. Two things are probable in Q1 2024 based on this (1) MoM SuperCore will reaccelerate as increased wages become increased nominal spend (let’s see on that one ) or (2) absent number one the most likely explanation will be a consumer diverting pay increases to debt pay down/prudence. Which is annolgues to an economy slowing. Let’s see it’s beyond interesting how this hiking cycle ends.

Yeah suspect SuperCore needs to be down at this level before they’d consider moving….and as you say the justification would be that even with cuts rates would remain restrictive. We’ll find out in Jan/Feb/Mar - but if the economy is in as good a shape as folks say….SuperCore is going to re-accelerate in Q1 fueled by nominal pay increases taking ‘good’ cuts off the table. If inflation continues to moderate into Q1 (in spite of these nominal pay increases)…that’s the tell that the underlying economy is flagging and you’ve got a pullback by the consumer….and so the cuts to come are really the most common central bank cuts - rescue cuts.

I was looking over recent data which is impressive in terms of MoM inflation & by golly its what the early innings of a possible soft landing would kind of look like......but I cant escape the basic high level economic math here somewhat confirmed by the tick up in todays data.......while some expansion of the labor force has surprised to the upside such that aggregate goods and services being produced in the US have expanded on top of an expanding labor force....& we've had some energy tailwinds on the input/headline inflation side......the underlying productivity math driving domestic made in america inflation is still not on point and cant be.......and AGAIN nominal wage increases negotiated against a tight labor market at the end of 2023 are going to be injected in the US at EoY which will become spending growth in 2024.......core has leveled out at an uncomfortably high level but is about to get a boost again in early 24 such that cuts get put off the table by the Fed (once again) dashing hopes with further higher for longer talk (assuming we dont have a weakening economy....but isnt the soft landing dream 'back to 2' & no weakening???) Short version - a 3.7% unemployment economy with poor demographics & 1.5% productivity growth giving itself ~5% nominal pay increases (see below) is, repeat after me, not a 2% inflation economy.....its a 3-3.5% inflation economy. So something still has to give here across that equation - a productivity boom or a couple of million workers showing up that we've never counted are the soft landing solutions.....the reality is that inflation is more likely to be solved by nominal spending falling significantly. https://www.atlantafed.org/chcs/wage-growth-tracker#:~:text=Do you want to ask,individuals observed 12 months apart So if cuts are indeed coming as is priced in.......they aren't soft landing/good news cuts.......they are the other kind. This inflation cycle ends in the usual way IMO - rates remain higher for longer UNTIL the economy/labor market rolls over.

For sure - broadly you need to have a variant perception which by definition is non-census. Having a different view than that baked in the current price and being proved RIGHT is what matters. Analysts forecasts for revenues, EPS etc. certainly help locate a broad zipcode for expectations around underlying business performance - with the assumption that those expectations are in the price. There are two components to stock price returns......underlying business performance (dollars & cents) crudely EPS but then there is perceived business quality which factors into the multiples paid by the market for that EPS.....so called exit multiple. The way to make money is to have differing viewpoint on the underlying business performance and/or business quality - returns come from both and I've made money in both....separately and at the same time. For example, as a case study, one of my investment Hostelworld has both working for it. Their social strategy is driving underlying business performance - revenues, FCF, EPS - relative to the past and relative most importantly to the consensus. This alone will drive the stock up. So thats one box checked - underlying business performance. However, given the terminal value fears around the company when Booking.com entered the category questions were raised about the quality of those earnings - multiples came down to reflect concerns on the moat. Again in this regard a change in the perceived business quality - via social strategy re-moating the business - will likely once proved out a bit more with time - see the multiple paid on EPS re-rate higher as the consensus view on the business quality (i.e. durability of earnings) changes as the market gets more comfortable that the social strategy represents barrier to entry for other OTA's such as booking to steal market share. I've crudely talked about this in the past as the kind of surprise factor - the underlying business performance surprises vs. concensus or a company's durability or moat surprises vs. concensus......you can have negative surprises too of course and we've all had them!

As I've said before - the reason we cant bring ourselves to give Ukraine the means to truly 'win' when you rightly point out we could in the morning......is that policy makers in Europe & the United States, if they are being honest, cant quite bring themselves to open up the pandora's box of downside risks for themselves that would occur if Russia actually truly loses here......think through what it would mean for Russia to be crushingly defeated........this is compounded by the reality that Ukraine has little strategic value to either the US or Europe. Russia is not a real threat to EU/US/NATO countries....they are struggling to hold on to what 20% of Ukraine...edge out regions from their own borders to boot......these folks who talk about Warsaw being next have Hitler delusions and no clue of Russia's true offensive military capability.....cliff notes....they are extremely limited as we are seeing in Ukraine. They would not last five days inside the border of NATO if that came to pass. Also take a step back and realize that (1) this is war right on the border of the worlds largest nuclear power and so is it a good outcome to corner a nuclear rat on its border and (2) giving the means to Ukraine to push Russia back to its 2014 borders....is also the means by which the Russian borders itself can be breached by Ukraine. You might think we could tell them (Ukraine) to stand down when we want but revenge & blood lust is a terrible sickness and the risk that Ukrainian soldiers would rush into Russian villages and commit war crimes of revenge is not to be discounted. Spinning the chaos wheel for a country of limited strategic value to the US and Europe - is a poor use of a spin of that wheel. The risk/reward is skewed towards chaos. My guess is the West wants a settlement that has enough juice for both Zelensky AND Putin...lets call it a 75% win for Ukraine & a 25% win for Russia........the early 2022 border with an Oblast or two extra for the Russia column (likely in some kind of self-administrative zone structure so it isnt fully Russian) + non-NATO membership assurances is where this ends up.......if indeed it ever ends up with a piece of paper at all. Let's see.

All very true - the only problem of course - is that this is all micro stuff..Russia is in the big picture inconsquential as economic and military power (excepting nuclear).....what your describing are small victories & glancing blows in a secondary theatre of war in Eastern Europe with a country of little consequence with minimal threat to the long term security of the United States....the macro or big picture game of chess the only one that matters is the competition/containment game between the United States and China. Everything else is literally a sideshow excpet where it feeds into this competition. The problem is what I consider to be a US foreign policy gaff in the Ukraine-Russia theatre which has resulted in something that is not strategically optimal position for the United States....which is to have Russia & China as closely aligned as they now find themselves economically & militarily post the Ukrainian invasion. In effect the war in Ukraine has driven the Russian's into the arms of the Chinese when the opposite should have been our goal. Attempting to create a democratic utopia in a corrupt country like Ukraine is like playing video games when you should be studying for your finals. Grandmaster level chess for the United States five years ago would have been to figure out how to drive a wedge through Russia-China relations.....or at least ensure a level of economic interdependance between Russia & the West....the fact that Russia with the world largest nuclear arsenal is now a concubine or client state of China with the world's third largest nuclear arsenal is a terrible outcome for the worlds second largest nuclear power the United States. It should also not be lost on those keeping score in this new emergent Cold War 3- that one of China's great strategic weaknesses is its lack of domestic energy resources. Well unfortunately it seems that we've handed them the resource rich nation of Russia as a client state. It is now their gas and oil station to play with. Strategically isolating China, taking potential allies and making them our allies or at the least neutral parties is the real game here. Ukraine in or out of NATO was, if everybody is being honest, inconsequential to long run US security & even European security (there's a reason Merkel & Holland so roundly rejected Ukraine accession post-Bucharest...it wasnt additive)- in this light it was a somewhat pointless exercise in the liberal democratic nation building disease that affects many in the beltway......the cost for this disease is usually trillions of dollars and US casualties (Afghanistan/Iraq etc)....the real cost here isn't trillions of dollars....its much worse IMO......we've created a rock solid alliance between China & Russia which seems almost immutable now and please dont pretend this was inevitable the evidence is clear Russia post the USSR's collapse spent the last decades desperately trying to have its own strategic autonomy away from China by diversifying its energy exports to you guessed it Europe....its is not an optimal outcome either for Russia to be so dependent on China but this is where we and they are. Its neither a victory for them but dont mistake it for a victory for 'us'. It isnt.

The most important lesson of these internals comms make for anyone looking at the situation and thinking about the future of the conflict - is that irrespective of Putin......the Russian establishment more broadly cares deeply about Ukraine when they think of Russia's security architecture. It is as the US Ambassador to Russia said - the "brightest of red lines" for the Russian establishment.....Putin could die tomorrow and he is very very likely to be replaced by a leader with similar or even greater desire to dominant and control Ukraine/Belarus/Georgia for security reasons. Its a point I made earlier in this thread and one that will become very very important as we lap the two year anniversary of the invasion with support already being questioned in Western capitals........and that is the question of staying power, perseverance & strategic importance.......and I'm more convinced than ever that Russia's perseverance around Ukrainian neutrality vis a vis NATO is effectively infinite given its strategic importance to them. Infinite in the same way that the Taliban's perseverance to retake control of Afghanistan was - in the short run military might matters most..... the US controlled Afghanistan for 20yrs......in the long run perseverance matters most (the Taliban retook control in a matter of days once the US hightailed it out of there)......if we assume Russia and Ukraine's perseverance is equal as both are equally concerned with their security/survival.....then its a question of military might......Ukraine absent exogenous support, over time, is in trouble for this reason and will likely end up compromising on almost all fronts (EU/NATO/Oblasts).....the question now in my mind is the level of Ukrainian compromise required to bring things to a sustainable peace that will allow Ukraine to re-build and when is the optimal time to do that.

I was chatting over Thanksgiving with a friend in the foreign relations community and he flipped some US foreign comms links from 2008 that came out via wikileaks that might make interesting reading to those interested. I hadnt read them before. "NYET MEANS NYET: RUSSIA'S NATO ENLARGEMENT REDLINES" - https://wikileaks.org/plusd/cables/08MOSCOW265_a.html "RUSSIAN OPPOSITION TO UKRAINIAN NATO MAP UNCHANGED"- https://wikileaks.org/plusd/cables/08MOSCOW147_a.html "RUSSIA "LOSES" BUCHAREST" https://wikileaks.org/plusd/cables/08MOSCOW1090_a.html Finally he suggested I pick up this book from the US Ambassador to Russia from the late 2000's- William J Burns The Back Channel: A Memoir of American Diplomacy and the Case for Its Renewal released in 2019- https://www.amazon.com/Back-Channel-American-Diplomacy-Renewal/dp/0525508864 In the book apparently is a message Burns sent to then Secretary of State Condoleezza Rice in 2008 which I think helps put in context the reason why Russia is not throwing in the towel in Ukraine any time soon even if Putin mysteriously died or was overthrown. Ukrainian non-nato membership & its place in Russia’s national security architecture is dogma in the Russian foreign policy establishment. Putin maybe change but that principal won’t. “Ukrainian entry into NATO is the brightest of all redlines for the Russian elite (not just Putin). In more than two and a half years of conversations with key Russian players, from knuckle-draggers in the dark recesses of the Kremlin to Putin’s sharpest liberal critics, I have yet to find anyone who views Ukraine in NATO as anything other than a direct challenge to Russian interests.” - William J. Burn's ,US Ambassador to Russia cable to Condoleeza Rice

Yeah I think the Buffet argument is that tech is so subject to disruption it fails the Berkshire test....which is high certainty forecastable into the future market position and by extension cash flows - coke etc. Buffet is always looking for things that WONT change such that compounding is uninterrupted....and tech feels to him like it's built on shifting sands. What likely has changed in reality, for some of the tech giants today- specifically the platform/ecosystem guys (M7) and I think only anti-trust stops it.....is that certain companies have so expertly positioned themselves in their markets that while disruption remains a risk of course......they posses such a dominant market position/moat/platform/scale that innovations from left field competitors can be assimilated and disseminated so that new disruptive competitors are quickly turned into concubines e.g. OpenAI. In some sense - some of these companies are now the doorway through which step changes in innovation can only occur and they are acting like a toll road on that future innovation - Microsoft, Apple & Google - feel to me the most like this but any of the M7 I'm sure can make that case. They are no longer subject to disruption - they are now the rails on which next generation disruption takes place.

Momentum is important if your the weaker opponent as Ukraine is....time is not your friend when the country your figting has 5x the population, 5x the GDP & 5x industrial capacity...Ukraine surprised Russia with the speed and ease with which they took back Kharkiv & Kherson.......Russia's army appeared at this point to be at its weakest......I think looking back in the future THIS might be considered the point of strongest negotiating ability where Russia may have surrendered more land than Ukraine currently occupies. Russia now will IMO sit & defacto permanently annex the land it currently occupies.......the conflict will be partially frozen here via some cease fire.....but Russia in occupying 20-25% of Ukraine's official land mass has created a strategic situation where Ukraine will not be a member of NATO ever.....for if Ukraine joins NATO.....NATO is immediately at war directly with Russia under the security guarantees.....which the West has no interest in.

I think the reporting appear pretty solid on this from reputable sources - that a tentative deal was being put together in Turkey......lots of water from Turkey to a workable peace however so this woulda coulda sliding doors moments are rife with 'what ifs'.....however it appears that Boris Johnson chiefly with no doubt implicit/explicit US backing encouraged Zelensky to walk away......the hubristic math was that Ukraine's counteroffensive would be so wildly successful with the West's help that a better deal lay out in the future for Ukraine. They (Uk/US) were probably right about that to be fair........but the West/Ukraine missed the moment of peak negotiating strength which was earlier this year when Kharkiv & Kherson were recaptured.......alas that was many many months ago now......and who needs a deal more now is much less clear.