SharperDingaan

I hear you, but compare theory to actuals ... Imagine you have a $1,250 budget to cover your food and your portion of utilities/rent (bunk mates). It used to cost you just $1,100/month, you had $150/month to spend on other things, and life was good. In year 1 there is 10% inflation, it now costs $1,210 (1100x1.1), and you only have an extra $40/month to spend. As pointed out, that inflation essentially 'taxed' you $110/month. In year 2 there is 8% inflation, but you got a 2% raise. You have 2% more budget at $1,275/month (1250x1.02), but your cost is now $1,306 (1210x1.08). With the 2% raise you are in the hole $31/month (1275-1306). Without the raise your are in the hole $56/month (1250-1306). Given that the monthly shortfalls are not major, you cut back your standard of living to accommodate. Inflation > wage increases continue, and the monthly shortfalls get bigger. If you rent and your building is sold, there is a good probability that your new utilities/rent will be at market rate and a lot higher than you currently pay. To pay the higher rent you cut back on food, and visit the foodbank. Once a quarter, then once/month, then twice/month. You're either going to demand a raise > inflation, or vote with your feet (if you can). Employers will rant that unions are screwing them! and that they cant get labor (at the price they can pay). Rather than close now unviable businesses, they import illegals and abuse them. Slaving. To get out of the inflation trap the population needs to either do something else, work somewhere else, or become capitalist (helicopter money, guaranteed minimum income, etc.). Wage increase > inflation is straight forward if you're young and able, or a good thief ... but a very different story if you have mortgage, kids, are old and infirm. Yet none of this is in the theory ..... Hence, hardly surprising that so many are dismissive, and rightly so! SD

The reality is that retail is pretty clueless, and always has been. Back in the day, HF's used to be very smart ... but now? - not much better than retail. Margining and packaging dogshit to retail in shiny wrappers, claiming they are fully hedged, and blowing up as/when the market moves against 25%+. Mostly smart enough to not be holding the bag when it blows up; but hey bud, WTF happened to those hedges !! Buying/selling multiple names in any quarter isn't investing, it's addiction. And addiction is a great business! as every reasonably competent legal drug pusher can attest to. There are very few genuinely very good investors, they are almost all contrarian, and for the most part they are all private. Inflation thing. Prices do not go down simply because inflation goes down; lower inflation does not reduce the number of people having to use foodbanks. And inflation driven wage increases, REDUCE the number of people forced to use those foodbanks. The only whining is pensioners whose pension isn't inflation adjusted, and businesses exploiting low cost wages; folks who knew they were taking risks, and believed everyone else should pay for it! ..... welcome to moral hazard. SD

Lot of good points ... Bifinance. Quite a few would surmise they are close to collapse, and begging/lobbying for a bailout. We are 53% of the industry market cap! 67% of derivatives trading! we're the crypto Lehman Bro's ... bail us out - or go down with us !!!!. Thing is, Bifinance doesn't do anything special, and quite a few others do mostly the same thing. If Bifinance weren't there anymore ... industry cap would just be lower, and their market share would simply fall on everyone else - bonus! And the derivative thing? Margin on CME derivatives is updated daily - collapse this sucker and lets play! BTC as store of value. It's occurring, but like all things - adoption is slow in the early stages. Nobody is going to put all their store into BTC, but quite a few are now experimenting with small portions. Unimaginable if you live in the US, but quite a bit different if you live in a Ukraine, Peru, DR/Haiti, South America, Africa, etc. Back in the day nobody thought of their car as a store of value (& still don't); but yesterdays 'Morgan' looks quite a bit different today! Even the Tin Lizzy, and Whisky Six has done well Wisdom of age. Undoubtedly true!, but sadly it comes with limitations. We used to have horse/buggy, then came the motor car. We used to have sail, then came steam and electric (diesel/nuke); change the underlying technology and much of the wisdom instantly becomes obsolete. However, given that collective behavior generally doesn't change much over time (wars excluded), in some things - the older you get, the smarter you get! Live and learn. If you also happen to make a buck or two along the way, bonus! SD

Binance put out an assurance report, and the auditor withdrew it - not good. The report was essentially being misinterpreted/misrepresented, and its forced removal has triggered an additional $6 billion of outflow over 3 days .... so far. All in addition to last week's net $1 billion plus. Most would also argue that the run is accelerating, and Bifinance no longer has the resiliency it once had. Not all virtual token is the same - skip the DD and you will get burned. SD

Expect to be disappointed. Differentials blew out this quarter, WTI is quite a bit lower than it was in Q3, and most are adjusting capex budget (lower)/still plugging away on target debt levels. It's a lot smarter to simply do nothing, wait on Q123 results (hopefully a lot better), and hold excess FCF back for potential Q223 M&A. Buybacks may be high on investors minds, but they are a relatively low priority at present. SD

It's useful to think of payments in steps. 1) Today, using existing rails, that are slow/near capacity. 2) Tomorrow, using CBDC, that is very fast and cheap to transact with. 3) Next day, with CBDC efficiency, but without the CB wallet and CB rails. BTC is going directly to 3), but the cost of anonymity is a transactional mining fee, and less efficiency than CBDC. BTC does not need to be 'best'; it just needs to be a functionally better fit for purpose, and cheaper than existing alternatives (Hawala, Chitti, Baba internet, etc.). Different metrics. SD

I have great confidence in the well practiced abilities of CB's and the criminal element to get it fixed, and fixed fast! Across the world, corruption works great, it's pervasive, it's reliable, and a healthy part of BTC activity is state actors using the channel to settle up covert operations; a proven currency designed for zero-trust environments is a very useful thing! Mess with the program ... and there are people inside/outside of every state, with a strong interest in your rapid demise Whether the angels wear white wings or black ones, they will all be working together, and they are all very good! THAT's the REAL security behind BTC; the 51% thing is just being polite!. And that angel with white wings .. is often just one that managed to shake all the soot off !! Much better than farmland! SD

PPP argument. If everybody on the carousel debases their currency by about the same amount, over the same length of time, the FX exchange rates between each of them will not change by much. The carousel keeps turning, but now there's just a rain of pretty colored paper (QE, helicopter money) to add to the festivity as we all slosh through seas of liquidity. But if I'm not on that carousel (BTC) ...... I'm not debasing my currency, and every time I step on/off that carousel I'm buying/selling BTC for more and more colored paper. I buy at USD 16,000/BTC, sell BTC at 30,000/BTC, and all that extra colored paper (USD 14,000/BTC) pays for my fun and games while on the carousel. If I'm skilled, I step off the carousel with the same number of BTC (zero), and maybe a Porsche. Already rich, and getting richer in colored paper terms; but same as I was in BTC terms (zero). Hell of a game! SD

In parts of Europe it is common practice to charge your hybrid at your house, at night, and pay a low rate for the power. If you aren't using the hybrid next day, the hybrid simply dumps its charge into the grid at a set time, and at the prevailing (higher) rate at the time; pocket the difference in rate x quantity of charge. When you already have solar on your roof, and meters that allow two-way flow, the hybrid simply becomes another battery; it's just one that you can drive! Similar thing around stationary bikes in gyms. The gerbils pump the pedals, the rotation generates charge stored in a battery, dump the charge into the grid next day at a high rate. All controllable from your smart 'phone. SD

The kicker is that everything is relative to your book of record currency (BTC), and BTC will not be the currency you're using for day-to-day living; you will be using your nations cash/CBDC instead. Daily change in BTC is meaningless unless you need to buy/sell for local cash/CBDC. Currently, wealth has to be stored in either physical or intangible assets; both of which can be seized at any time. Whereas, if BTC is to be the store of value; reliance is on the 21M cap staying in place, and criminal 'enforcement'. Both have their merits, and a prudent diversification would be high weightings in both alternatives. BTC at 100,000 USD? No big deal if USD devalues 50%, and there is even a very modest shift towards BTC as a store of value. BTC at 12,000 USD? No big deal if USD revalues 15%, and some of the walking dead bite the dust. All that really matters is how much BTC you have (as per your book of record), and inability to seize it. One thing to 'know' it, but a whole different thing to implement it! SD

When we were looking at putting a fixed portion of our gains/losses into crypto, and further investing in UK RE we built six data series/graphs. Average price of our 'target' UK home vs ounces of gold, versus BTC, versus CAD; plus ounces of gold vs BTC. All dating back to the beginning of 'reliable' BTC market quotes. There are diversification possibilities, but one has to be mindful that the correlations are not stable over time, and the possibility of market discontinuity has to be stress tested - CAD/BTC, BTC/GBP, GBP/RE involves at least 4 variables that change significantly over time. It also requires a change of mind set. Book of record denominated in BTC, and seeing the RE as a dwelling that could be literally anywhere in the world. The place you live in day-to-day, alongside rental properties that are now anywhere in the world - and wherever the best risk-adjusted deals are. Rental property on a Greek island, versus rental property in either the same or a nearby city. SD

They get the US to double gas exports to Britain, both directly ... and indirectly via closer 3rd party states. Most likely near term 'stabilization', by keeping spot over a target price, and taking physical delivery on expiring options/forwards at Europe's major collection facilities. Longer term, Biden cuts a deal with industry for more gas vs oil - which everybody can live with. https://oilprice.com/Energy/Natural-Gas/US-To-Bail-Out-Britain-By-Doubling-Natural-Gas-Exports.html SD

The market will sing a different tune in the new year, once winter sets in and millions of Europeans start receiving their gas and electric bills. Everybody claiming poverty after Christmas, screaming for lower interest rates and longer time frames over which to finance their outstanding debt, and gas companies both rationing gas above X BTU/month per user, and restricting it from those not paying on time. And all of it assuming no accidents at Russian LNG terminals. Can't buy LNG from a ME supplier, swapping it with a Chinese entity, obtaining it from a Russia - if the Russian terminal/pipeline is unable to deliver. Nord Stream can be such a bastard SD

Thieving everywhere depends primarily on the economic tide; when the tide is rising everyone will do well, but if you also own the best thieves in the biz ... the results are spectacular! - even when the thieves are stealing you blind! However, when the tide is falling ... even the best thieves will have a sh1tty year. Hence ..... to own a GS is to BOTH own a very good thief, AND to own the changing economic tides. Volatility, and the need to swing trade around a core position, to fully benefit from the exposure. Shares for the economic cycle, and tactical put options for the inevitable periodic 'misses'. Of course, if along the way you should become even just half as good as they are .... that's bonus SD

Come to think of it they should also be a high weight core holding, to allow for swing trades. The scum is no good if its rubbish, and there's always a need for a good thief! Just always keep an opposing option position so as to also benefit from the funny money SD

Some pretty obvious choices to us ... US weapons, booze, and the cure for venereal disease! SD

I hear you, but the comment was based on buyer expectations - NOT the issuers. The buyer has a negative real rate of return, on the same credit risk, whether they buy the CDIC insured GIC or the Canada. But if they buy the GIC they only lose 1.9% (real return), vs 6.9% (inflation) if they do nothing. Had the GIC buyer bought the Canada and held to maturity the buyer would lose 3.9% (real return). Identical credit risk, identical zero risk to capital (Canada held to maturity), yet the GIC has a 200bp improvement in real return? The GIC buyer via an actual transaction, is demonstrating an inflation expectation 200bp lower than the market. Inflation at 4.9% within 1 year (our time estimate). We also know that negative real returns are NOT the norm. Hence, if that GIC buyer determined -1.9% real rate were to simply return to a neutral zero, inflation would have to be 3.0% within 1 year (our time estimate). Were the BoC were to achieve its 2% target, the real rate would have to rise to 1% - or about the long-term average. WEB would call this ‘inversion’, and if the market is in ‘balance’ – it should tie up with CB pronouncements. NOT the media line, hence it appears to be ‘shocking’ ….. SD

Does it really matter? Assume a 100K investment (CDIC insured at Canada's credit rating). Yesterday I could buy a 5yr Canada for 3.00%, a 5yr GIC for 5.00%, and current Canadian inflation was 6.9%. If I buy the Canada, I am assuming a negative real return of 3.9% (3.0-6.9). Whereas if I buy the GIC, I am assuming a negative real return of 1.9% (5.0-6.9). Put another way, the real world (main street), expects inflation to fall 200bp (-1.9-3.9 real) in the near term, and another 190bp (-1.9 real) over the longer term; or Canadian inflation falling to 4.9% in the next few months, and 3.0% over the next year. In relative terms, if that is better than the US/EU; CAD strengthens. Quite a bit different to what the media/Bay street would like you to believe SD

Look a little closer at the magnitude of your swing trade gains/losses, and compare against the magnitude of your YTD gains/losses on holdings that weren't traded. Then look at the magnitude of the gains/losses avoided PTD on things sold, had you not sold them. Was half (or more) of your gain/loss made via trading?, or was it made via simple buy/hold? Between forced trimming, capital repatriation for our UK property, and routine swing trades; most of our gains did not come from buy/hold. We also very much lucked out on crypto (primarily due to sloth/venture distraction), as much of our new capital avoided the meltdown. Point here is that one can't plan these things; but one can't benefit from them either, unless one exposes oneself. Happily our vodka and caviar found a buyer last week, and the 'collective' chess has seldom been so good. Fueled by a little Beluga, crackers and caviar for Christmas. SD

I have great confidence in the abilities of both the boc and mathematics. All else equal if inflation goes down 300bp so do interest rates! SD

Canadian floating rate mortgages work a little differently. At the time the mortgage is issued, the borrowers ability to make payments is stress tested at the current rate (ie: 3%) plus 200bp (ie: 5% trigger rate). The monthly payment is then the mortgage balance x the trigger rate for the length of the mortgage. At current rate (3%) < trigger rate (5%) the monthly payment includes a modest debt repayment. At current rate > trigger rate (5%) the borrower must make a higher payment. Typically the payment remains the same, the monthly difference added to the outstanding debt, and the term extended (25 to 30 year) if needs be. The reality is that while it is not impossible, it is pretty hard to default on a floating rate mortgage. Media estimates (strongly manipulated) currently place > 50% of all Canadian outstanding floating rate mortgages at above their trigger rates.; selling both fear and armageddon as the monthly payment is no longer covering the interest cost. However, as/when the current rate falls below the trigger rate again, the mortgage will instantly return to performing status as debt repayments resume. The BoC has been raising the market rate, and the floating rate mortgage rate to combat inflation. The pace of the increases has been widely telegraphed as about to slow, most would expect inflation to be at least 200-400bp lower 6-9 months out, and the more aggressive the decline - the more room the BoC will have to lower both the market, and floating rate mortgage rates. Raise hard, and raise fast; and most would expect the bulk of floating rate mortgages > trigger rate to be back to performing within 12 months. The only folks bitching are the media and Bay Street ..... everybody else is just thankful for a way out, and ability to keep their house. Media is paid to sell a game set-up that punters are expected to lose at, and it is very good at it. So ... take a page from Nash (game theory), and change the game set-ups - thereafter let the best manipulator win, and no holds barred! However, you can ALSO exit the game whenever you wish, .... whereas the media - not so much Good luck! SD

Lots of unpredictable drama, disruption, and 'accidents' - but ultimately it settles when a sanctioned barrel goes for the same price as an unsanctioned one. Sanctioned barrels trade at roughly a 25-30% discount - the higher cost of transport (transfers & additional distance) - the costs of bribes/'insurance'. A simply spilt of the difference, and the price of an unsanctioned barrel drops $15-20. Of course, should a key sanctioned facility experience a similar event to the Nord Stream pipeline, the rise in the unsanctioned price gets offset by the presence of the sanctioned oil - and everyone doing all they can to get it back into production .... SD

The bear case is largely two-fold (1) ESG is repealed as just too difficult to do, market floods with new supply (2) Russia/China successfully pull off an entirely alternative supply/demand market for sanctioned o/g outside of 'western' control - linked to the conventional market via OPEC membership. Both are possible high impact events, but with a low probability of success, net of western interference - simply because Infrastructure cannot be used/repaired without western complicity. Three big buyers (China, Asia, India), three big sellers (Russia, Iran, Opec+), settlement in Yuan vs USD, and processed via China's financial system. Uninsured ships and cargo's, loading facility/ship/cargo security/sinkings's just another cost of doing business, whistle for pollution cost restitution. No different to driving drunk, and uninsured, down the highway; not good, but an everyday occurrence in much of NA. Most would argue that of the two, ESG repeal is the easier to implement. To gage probability of success, think of how difficult it would be to achieve that ... if you do NOT live in the world's o/g basins! SD

In our area, prices have settled down but the froth is now gone. You still have to pay up, but you aren't offering 20-30% over the ask anymore. Supply is also quietly rising as inflation has driven up condo fees, property taxes, etc. - and the next round of gentrification is taking over..... It's also noticeable that a lot of those whose sold to rent a while, have discovered that renting is only 'predictable' as long as the place you are renting isn't sold out from under you. Forcibly have to move once and its shame on me, but if I have to move a second time - it's back to another house that I've just bought! McMansions essentially exchanging into upgraded smaller condos that are easier to clean. Amusingly, a growing number of those condo's are also owned by groups of little old ladies whose spouse have croaked out. They all live together, keep each other company, travel when/where they like, hire a maid/chef to do the chores once/twice a week, and enjoy a combined free cash flow through the roof. Nothing wrong with grandma! SD

Canada has already had this, and for quite some time - in Alberta, it is the Alberta Carbon Trunk Line. Primarily funded by the six major tar-sands producers, and arguably - using monies that would otherwise have gone to a windfall tax. While the media might argue otherwise, the reality is that the Canadian o/g industry is collectively both very proactive and very pragmatic; their families/kids want to save the planet as well. Sadly, it's a requirement, when the local provincial leadership is often useless. https://enhanceenergy.com/actl/ SD