changegonnacome

Hey it’s a rabbit hole that’s worked. I’m long term bullish just not on US stocks in the short term…not a trader but this short term trade, became so obvious to me that I had to play…when I’m less certain I’ll take off the various vol and short things I have knocking around...I mean don’t paint me as an ultra bear…..go have a look at my Hostelworld write up and earlier statements about moving outside the US I’m bullish just not on US…..globally it’s the most egregiously overpriced due to ZIRP and the economy suffering REAL monetary inflation…..the beta sucks in the US, it’s impossible to swim against it……short term there is money to be made recognizing the regime change…..at worst it takes the sting out of holding MSGE….at best much better…..and I’ve been doing bad businesses as well don’t worry . Tesla still doing what’s it’s doing even down nearly 50% ytd ….tells me this bear isn’t near done….your puzzled, as am I…..that’s because we haven’t seen full capitulation yet in US markets, but that’s coming too. This bull has been on the rampage for a decade it will take more than a few lacerations to take it down. Every rally is bear market rally in the short term IMO. Doom porn…..I just like things that make money. The greatest doom porn available this year was Europe around March & I stepped right into it with Hostelworld in a big way. I know retarded doom when I see it….the issues in the US are real, the monetary inflation is real and persistent and pernicious. It’s slowly choking consumers…..the cure is killing foreign earnings…..its a recipe for trouble.

Not during a secular regime change it isn’t…..ZIRP to AZIRP (ABOVE zero interest rate policy) which is exactly where we are right now…..you’ve been holding on to 2010’s ideas too long in the face of compounding evidence to the contrary…..that world is over, it’s a new world…..it’s been working very well for me this year……come on in, the water is warm…..you have an ultra bullish bias…..there will be a time for that, just not now……I’m desperate desperate to turn bullish on the US….but it’s really not the time yet…..FANGMA cracking is just an invitation to get more aggressive on the short side and selling vol. Is it also time and OK to continue talking about E failing off a cliff? Seemed it was dirty word there for a while that garnered derision but I can hear the clicking of Wall St. analysts updating SPY FWD earnings guidance right now on back of META/APHT…..and lets be clear Apple not giving guidance heading into their most important Qtr is a chickenshit move and speaks volumes about the trajectory of their business and how the global economy is deteriorating underneath them.

Just FYI as you seem to think TSLA hasnt been hit or something...its down 44% YTD........its got WAY more to go so agree with you there. AAPL is the last to go over the cliff........but over the cliff it shall go.....it is the quintessential money manager bear market hide out but in the end the bear gets even the best of breed......

https://www.marketwatch.com/story/apple-earnings-show-iphone-sales-miss-amid-questions-about-smartphone-demand-stock-dips-11666903283?mod=election-2020 That didnt take long - iPhone sales miss.......when you on purpose moved the opening couple of weeks of new iPhone sales into this quarter to make the numbers and even that didnt work out.....it does not bode well for the holiday quarter. Not giving financial forecasts at this stage is also bullshit.....I can give you a forecast....its not good....ive listend to some European telco calls and new handsets are in deep trouble.

Know its in good fun but dont cry for me just yet.....I've had way more than just Apple & Tesla shorts on, even them when done with options like I have have given me some fantastic annualized returns especially twinned with Twitter merger arb.....I've been riding the indexes too SPY/QQQ...with the simple thesis that we are in a secular bear market.......every rally is a false flag operation........I buy puts on the rips, and I sell on the dips! Dont count me out on AAPL and Tesla though either - their days are coming too

Another General taken out and shot....

And then.........they started shooting the Generals.......

Advertising businesses are cyclical…….there’s an old market heuristic about buying cyclicals when they look expensive, not when they look cheap…..in regard to meta/goog…..the question is where we are and what remains & at what speed will the secular shift to digital ad spend continue at……for GOOG you only need to answer that question and be comfortable based on your assessment ……for META there are way more difficult questions be answered. META is not Apple in 2017, Google just might be….but not quite yet.

I wasn't really commenting on GOOG's valuation per se.........simply thinking of it as a bellweather for the economy. Definitely FANGMA will come down from its lofty FCF yield of old.........as financial instruments they have competition now not from TikTok or Alibaba.....................but from high yield savings accounts!

People talk a lot about trickle down economics as it pertains to society. It’s a theory with little real evidence of success. One place I know trickle down to be true - is as you alude too in Silicon Valley…it’s a circular economy with VC’s pouring money in at the top of the funnel where it trickles down to Google & Facebook ads to drive growth at all costs. Ponzi’s/Crytpo sure - but don’t dismiss this result with rose tinted glasses…..this does not dissuade me from reading ALOT into these numbers as it pertains to the non-ponzi economy….i.e. the real economy. It speaks to a slowdown. Before you @Gregmal start blaming the Fed and bs inflation narrative….one should note the fact that Fed policy acts with a significant lag…..what these results point to is a weakening in the consumer that pre-dated any real effect from the Fed rate rises….this is a slowdown that occurs in the absence of any Fed intervention , a slow down that occurs when purchasing power of some of 1/3 of an economies consumers (the marginal consumer with little wallet slack) begins to get destroyed by inflation. Then on the international side we have DXY strength & end market weakness etc

Exactly - the social media/adtech space is about to discover for the first time the cyclicality that is advertising…it’s real business activity……artfully obscured as it has been by all the Silicon Valley rhetoric & mission statements. In the last recession ~2008 digital ad spend was some 10% of total ad spend…..the secular trend to digital advertising was so strong that it grew through that downturn….not now when digital constitutes easily 50%+…..when the CFO walks into the CMO office to ‘make the quarter’ the CMO has to cut the digital budget this time.

Only thing you need to note - this is the slowest revenue growth for GOOG since 2013…..2013…..like pretty much a decade. If that doesn’t given you pause I’m not sure what will. Advertising & GOOG is the canary in the coal mine for the economy and the canary in this case has stopped chirping.

https://www.bloomberg.com/news/articles/2022-10-25/microsoft-alphabet-lead-tech-stocks-lower-as-results-disappoint?srnd=premium&sref=7zqHEcxJ Things slowing down..........I mean we shouldn't be surprised......DXY where it is & Jay-P telling you he's gonna slow it down.....and even if Jay-P did jack.....inflation destroying purchasing power would slow the sucker down anyway. Microsoft moaning about strong dollar Google talking about weakening consumer/ad market The above excuses are completely valid and i expect them to be repeated ad nauseam, by lesser lights than GOOG/MS, for the next number of quarters......

Should say that I'm playing devils advocate a bit......nothing is absolute. Bear case always sounds smarter......thats what makes it so seducing for many....and I watch for its siren song. I think the evidence in support of the bear case is mounting however, day by day, week by week. I'm desperately looking for reasons the US doesn't go into a recession with inflation such that we have stagflation and I cant find many/if any reasons why SPY, broad market indxes will do well. Lots of things have to go right for that to be case....

Not sure you have too.......you simply have to accept that perhaps the disinflationary benefits it provided reached its peak in the last decade and the incremental benefits are diminshing/decreasing YoY. As mentioned earlier the productivity gains/benefits from automating a production line happen once, not every year. Why would globalization be any different?.......once you do it, enjoy the surge in productivity the dis-inflation, its then done.

yep 2500 would be better, 1200 even better.......if your optimizing for ONLY the speed of getting back to 2% inflation, that would work great .....of course the Fed is optimizing for a few more things than that..........but you get my point. In the globalization era 1980 - 2021 (RIP). The answer is yes. Those periods of time were characterized by incremental productive capacity coming online globally.....it was the goldilocks era.......whether it be through immigration to the USA, global labor pools being added in China/India/E.Europe or the application of technology allowing us to produce more with less........however every easy productivity enhancing investment/project got funded during ZIRP......the lousy productivity numbers we are seeing now in the context of being beyond FULL employment in the US + every easy productivity lever having been pulled already......has got us to here......old fashioned monetary inflation. See you can only automate a production line once.....the productivity gain acrues in that year only...not every subsequent year. Nominal spending growth is bumping up against the edges of the US economies ability to produce goods and services and so you get inflation. I dont see anyone rushing to help...........near-shoring, safe shoring, trade wars with China, US chip export controls, southern border, immigration being a hot button political issue, East Asia/Taiwain strait, war in Eastern Europe such that US companies are de-risking that part of the world too.......these are not disinflationary trends.......its King Midas in reverse for the period your holding on to in your example above.

Interesting - devils in the detail.....but constructing some theoretical median retail investor portfolio over the last decade........and then charting the historical performance would be interesting. Guess the alternative option would be to just chart Tiger Global's performance....I'm not sure if retail investors were feeding the Tiger, or wether the Tiger was feeding retail but I'm guessing the 3,5,10yr performance look pretty similar

Does the stock market constitute one factor in a multitude of factors called 'financial conditions'. The answer is YES. Is it the ONLY thing. Absolutely not. Put a few whiskeys in Jay-P and ask him to 'fix' inflation would he prefer SPY at 3000 or 4000.......he'll say "pass the whiskey kid, 3000 all the way" If you truly want the best for your brokerage returns over the next 3yr, 5yr period...........everybody should be cheering on the TEMPORARY slump in SPY to 3000........what we have is a very sticky band-aid called inflation plastered on to the economy......its better its ripped off swiftly.......than peeled off slowly. SPY 3800 is slowing the removal of the bandaid.

They look at it all in its totality.......the stock market....is just another capital market....debt, equity.......one coin, different sides......the cost of said equity capital must be raised to engineer the slow down in the real economy they need......SPY at say a 5% FCF yield is still pretty cheap equity capital cost in an economy printing 8% inflation....one should think of things in terms of the hurdle rate for investment......stock market assigns a 3% FCF yield to your company....or 20x sales multiple.....well its saying continue to 'grow, grow, grow' and here's the cost of equity capital we'll charge for you to do that, find something with a higher IRR than 3% and you can capture the spread.....business investment decision 'go/no go' are fed through these prisms. Then of course there is the simple wealth effects that get transmitted by someone looking at their 401k/brokerage balance & making purchasing decisions. I'm not saying its the only thing, please dont take that from what I say....its complicated and an orchestra of factors feed into 'Financial Conditions'......but all things being equal..........does SPY at 3800 help Jay Powell achieve his aims?....or does SPY3000?......the answer is the later.

Clear articulation from a former Fed official of what I've talked about before - equity markets & their levels........are another version of interest rates (the price of equity capital vs. debt/credit)....they are all broadly 'financial conditions'.......higher market levels, all things being equal, are counter-productive to the Fed's strategic & overarching aim of slowing the economy down and returning price stability. Price stability can not and will not be returned without a period of time where the US sits below its aggregate productive capacity......the Fed calls it slack, you might call it a recession/unemployment. I expect Jay Powell is re-writing his Nov speech with tougher language in light of index rallies..........................market participants the last two decades have had a Pavlovian response to falling market prices conditioned into them.....he's got a hell of a job to do to train a very old dog with some new tricks.

Wouldnt the argument be that Berkshire's ZERO cost float during ZIRP world represented only a tiny marginal advantage versus PE firms who would (1) pay alot more for operating businesses with OPM and (2) access relatively cheap debt (float) externally themselves to acquire them........perhaps moving forward BRK's insurance float becomes a real competitive advantage again...........as costs of capital return to more normals levels and multiples to revert to more normal levels

MSGE, LBTYK, HSW, GLV.L, BOI

On Ukraine....seems like Russia now has given up the strangle Ukraine economically strategy that would have been possible by land locking Ukraine from the Black Sea......and has reverted back to the demolition strategy....which is to send it back 20-30 years in time via destruction of infrastructure. Monstrous stuff.

Soundtrack for the animation makes it, scary stuff........reminder that nobody 'wins' any future war (between nuclear powers) in the atomic age......victory wont be ticker tape parades in Times Square.......it'll be finding out your loved ones weren't incinerated in the initial blast.....then hoping against hope in the ensuing years that various lumps and bumps aren't cancerous.

Taking opportunity to 'sell' volatility when I can and where it makes sense.......then short via puts US indexes (& some names) while holding disgustingly cheap high FCF yield consumer staple type things that are buying back shares right now or have irreplaceable hard assets enhanced by inflation at their core.... with a strong tilt towards Europe/UK where you know the recession/nuclear war is is already 'priced in' so sentiment can only kind of get better there & as a USD investor the currency at some point will be a tailwind............then short some consumer discretionary/economically sensitive to recession stocks & then companies where their FCF yield is flirting with the same yield that is going to be available from a humble high yield savings by year end. For example CIT bank is offering a 3% savings account today.....guessing this is gonna be 4% by year end. Folks will wake up soon and wonder what the hell they are doing holding equities with FCF yields in that neighborhood when FDIC alternatives exist. Then I really like market neutral stuff right now, merger arb, works outs - like the Twitter deal trade I had on. Need to do more work on this type of thing actually.