wabuffo

Getting close to unloading KNOP. Somewhere between $20-$22, KNOP will do a secondary as part of funding the dropdowns that are sitting with its sponsor right now. KNOP has managed this beautifully. wabuffo

I'm sure I'm going against the consensus here but I'd rather own Chinese RMB than USD, today and for the next decade(s) to come. The last person I remember making such a definitive statement was Giselle Bundchen ("pay me in Euros! I don't even get out of bed for USD!") I think it was in Nov. 2007.... https://www.dailymail.co.uk/tvshowbiz/article-491838/Supermodel-Gisele-Bundchen-I-wont-bed-US-dollars.html Sad trombone song for Giselle...... Good news is I hear her husband gets paid well...and in USD! wabuffo

I personally think we should crater the economy every once in a while because it's healthy ... The United States used to be on a gold standard, had no central bank and no income tax. I mean what could be better than that Ayn Randian ideal ("really low taxes, sound money")? And yet, we would have a depression every 15-25 years. Is that healthier? Now we debase the currency bit-by-bit and come in with fiscal guns blazing at the first sign of economic trouble. MMTers say that's better. I honestly don't know if it is. Perhaps its too early to know for sure how this new "model" will do. Not to get political, but we like to think that as a democracy we want freedom. As I get older, I sometimes think that's not what we actually want. We don't want freedom, we want comfort - and we are willing to trade some freedom for it. That's because true freedom - in the purest libertarian ideal of no government involvement - is just too wild, wild west for most people. So we settle. wabuffo

why not just run virtually unlimited deficits We already do - pretty much year-in, year-out. We tried to run a surplus in 1998-2001 and cratered the economy from 2000-2002. For the public sector (Fed govt) to run a surplus, the private sector has to run a deficit (i.e, borrow to maintain consumption). To this day, I am convinced that the surpluses of '09-01 were one of the primary factors that led to the borrowing binge that was the mortgage crisis of the early aughts. wabuffo

More CASH, at 3X what I paid a year ago. 10% position now. Diamond hands, never sell...... LOL wabuffo

I don't know if its transitory or not.... but to play devil's advocate. You have three things that are causing an absolutely booming economy 1) very good fiscal policy (to put it mildly - two stimulus checks in one quarter) 2) for now, terrific tax policy (low personal and corporate tax rates) 3) recovery from shutdowns That's a policy cocktail for 6% GDP growth, if not more in 2021. Meanwhile supply chains are trying to ramp back up while demand outstrips their initial start-up curves. I'm not surprised that price is being used to clear demand for the time being. In addition, demand for US dollars and US dollar assets are through the roof. We've got to stop thinking in terms of Phillips Curve nonsense - ie that strong economic growth is inflationary. Now perhaps inflation is coming - but IMHO, it won't happen unless fiscal policy makes a big mistake like implementing the full suite of Biden tax increases being proposed. That will definitely be inflationary. Of course, I really don't know and could be wrong. wabuffo

Dr. Gold doesn't seem worried..... FWIW wabuffo

https://apps.newyorkfed.org/markets/autorates/tomo-results-display?SHOWMORE=TRUE&startDate=01/01/2000&enddate=01/01/2000 31 participants enter into $142b of reverse-repos with the Fed. That's a new recent record since the Fed bumped up the limits. So in reverse repo, the banks give the Fed bank reserves and receive from the Fed a one-day borrow of US Treasury securities. Since banks are sitting on $3.7t of bank reserves - this represents almost 4% of total US commercial banks reserve balances. BTW - this reverse repo number is growing just about every day. Sucking and blowing, the Fed is..... wabuffo

I'll start a new topic to discuss - if you like. I think their technological edge will last for quite a while. wabuffo

IDN - Intellicheck. Very speculative micro-cap. Could be a mistake.

10yr/30yr yields are already back towards pre-COVID levels so while it is nice to see the extended issuance Unfortunately the Bank of Canada bought a large portion of them - thus converting long-term fixed government debt to extremely short-term variable government debt. For example - the Govt of Canada has issued $14.9b 2.75% bonds due in 2048 and the Bank of Canada bought 40% (~$6b). In so doing, the BoC swapped central bank reserves to acquire these. At some point, the BoC (and therefore the Federal govt) will be paying more than 2.75% on that $6b - perhaps for a long time and at much higher rates. Some of you may say - "well by buying 40% of that issue, the BoC helped the Federal Govt get that low rate on the other 60%. That is false. Federal govt's spend first, creating financial assets in the private sector banking system. The debt issuance (as I've explained before) is just a bank reserve maintenance function and not actual borrowing. Central bank policy makes no sense to me. wabuffo

Any opinion on what might cause the dollar to lose its reserve currency status? Stahleyp -- you know what gives the dollar its reserve currency status? The world's most powerful military run by a civilian-led government that isn't afraid to use it. My view is that the day the US military is eclipsed by some other great power is the day the dollar begins to lose its reserve currency status. I'm joking (kind of)... But the reality is that the US military keeps the shipping lanes around the world open from harassment and preserves the world's ability to trade freely so as to obtain the resources their own countries don't possess. All countries around the world benefit from that arrangement and don't have to spend on their own military to defend themselves and their ability to trade. Also, the US is still the world's largest economy and is willing to endure the huge trade deficits required for the rest of the world to acquire US dollars and US dollar assets by net exporting to us. The rest of the world prefers to run trade surpluses - so how could they become reserve currencies? Everybody grumbles about the American hegemony but they all benefit from it -- including China (especially China). wabuffo

Looks like gold is having a bit of a run. Any concern there as a harbinger of inflation? Yes - definitely a concern. I think there's going to potentially be a blip here in late April - early May because the IRS pushed back the tax deadline. My working assumption is that tax collections will be a bonanza (especially the last-minute non-withheld taxes) this year. That may cause a temporary US Treasury surplus and a little bit of price suppression on gold. But once we clear early May - gold could take off. Of course, my predictions on gold are no better than a coin flip. As a technical walk on the wonky side - I've been a bit surprised at how slowly and unaggressively the US Treasury has been in getting its general account balance (TGA) down. In addition, the Fed is doing stuff to install pressure relief valves to keep bank reserves from growing. For example: 1) The NY Fed is doing quite a bit of reverse-repo activity now (prior to mid-March there was zero activity). Reverse repo means banks show up with reserves and borrow a US Treasury security overnight. https://apps.newyorkfed.org/markets/autorates/tomo-results-display?SHOWMORE=TRUE&startDate=01/01/2000&enddate=01/01/2000 Its consistently running at $30b per day rolling over daily. It hit a peak of $134b on March 31st - which seems to imply banks doing a bit of "window dressing" for quarter-end regulatory filings. So with one hand the Fed takes Treasuries from the banks and gives them reserves but with the other hand it takes back reserves and gives banks Treasuries - talk about sucking and blowing at the same time. 2) I'm also wondering about the growth of "deposits" at the Fed's "other" deposits column. This line item has grown from around $75b at the start of 2021 to $410b in the latest week - much of it in the last few weeks. These are deposit accounts like that of the US Treasury and the commercial banking sector - but seem to not belong to either of these institutions. The footnotes to the Fed's H.4.1 report say: Seems to me like the Fed is trying to hide extra reserves everywhere but behind the seat cushions as the banks scream "no mas" to the Fed. wabuffo

I think U.S. Bank CEO's are starting to chafe under the effects of the Federal Government's stimulus programs (both those of the Federal Reserve and the US Treasury). PNC Bank CEO speaks some truth in the latest conference call: https://seekingalpha.com/article/4419491-pnc-financial-services-group-inc-pnc-ceo-bill-demchak-on-q1-2021-results-earnings-call

Hey CB - finally had a bit of time to read the article you posted... suggests (to 'solve' the SLR technical features related to our new monetary era) to the Treasury to issue extra debt (overfund) to 'others' and use the cash in order to buy the treasury debt held by the Fed as a result of cumulative QEs. We may disagree about motivations, but I think this is basically what the US Treasury did in 2020. It issued ~$1.8T more in US Treasury securities than it needed vs its net spending. This grew its Treasury general account to as high as a $1.8T balance. I still believe this was done to take the pressure off the banks in terms of reserve balance growth (basically banks would've had $1.8T more in reserves if the US Treasury had not done this). Now whether or not the US Treasury turns around and uses its large TGA balance to "buy" the Fed's holdings of US Treasury assets really doesn't matter (and the author of the article admits as much when he says that in his proposal the US Treasury can just sit on the large balance). It just goes to show how ineffective and counter-productive the Fed's QE policy is. More importantly, anyone who claims that the Fed is "monetizing" the US Treasury's deficit spending is betraying a lack of clarity over what is really happening here. The same effect can be achieved by letting the US Treasury deficit spend without issuing a commensurate amount of US Treasury securities to "finance" that spending while the Fed goes to the sidelines (which is what is happening in 2021, sort of....). wabuffo

Basically his argument is QE is deflationary I don't really agree with this. As you said, this person's argument seems to miss the actions of the US Treasury. I think most people do when they talk monetary policy. Here's what is/would be deflationary. If the US Government (and therefore the US Treasury) ran a multi-year surplus at the Federal level - like we did in 1998-2001. With a surplus, tax receipts (and other Federal govt fees, levies and judgements paid) exceed spending. This removes bank deposits from the banking system and creates a dollar asset "shortage" which led to the deflationary recession of 2000-2002. Recessions lead to a dramatic reduction in tax receipts, which flips the US Treasury back into a deficit -- and the economy is tipped back upright again. What I would say is that QE suppresses interest rates which as I've said before hurts savers more than it helps debtors. Savers seeing a loss of interest income, save even harder - which, in turn, hurts consumption and economic activity. That's not deflation though - that's just lowering GDP growth. Basically some days I wish the Fed would just fire all of its PhD economists and retain only a small staff to help the Fed Chairman, who I would, in turn, lock out of his/her office from 9 to 5 (when markets are open). LOL. wabuffo

Quick Fed update. Total US Commercial Banking Industry Reserves (i.e., illiquid deposits stuck at the Federal Reserve) are about to top $4 trillion. (per yesterday's H.4.1 report) https://www.federalreserve.gov/releases/h41/current/ Bank's are getting a triple scoop of (unwanted) reserve growth at the moment: 1) continued US Treasury deficit spending due to stimulus creates new bank deposit liabilities + federal reserve assets. 2) continued Fed open market purchases of Treasury assets is swapping those purchased assets for a reserve asset. 3) a new factor is the US Treasury's need to run its account balance at the Fed down to a target of ~$117b before August 1st, 2021 when the Congressional Debt limit toggles back on (unless Congress extends it). At the moment, that balance sits at a bit less than $1t, and the US Treasury is starting to run it down. This means that for every dollar that the TGA balance goes down, bank reserves go up a dollar. This is because the US Treasury is spending but then not issuing a corresponding US Treasury security to soak up the reserves its spending is creating. (BTW - this is a real-time MMT lesson that demonstrates how US Treasury issuance isn't really borrowing, it is a reserve hygiene maintenance operation). Here is a chart that I created from the weekly Fed H.4.1 balance sheet report since the start of 2020. The orange line is the actual weekly total reserve balances by the US commercial banking sector on deposit at the Fed. The blue line is what it would've been if, in theory, the US Treasury stayed at its Aug 1st to-be target of $117b. You can see that the US Treasury really ran up its TGA balance during the pandemic, kept it high, but now is starting to run it down and the two lines are starting to converge. It does look like banks are heading to $5t of total reserves vs $21t of total assets. How far will this go? No idea - but its nuts. The good news is the banking sector is super-low risk. The bad news is return on assets and return on equity is gonna suck. wabuffo

They are basically a billionaires collectible. But the billionaire gets to deduct almost the entire purchase price (since there's few tangible assets in a sports franchise) over 15 years in the form of annual tax deduction against his/her personal income from other sources. I bet Steve Ballmer pays close to zero income taxes on his Microsoft dividends thanks to his Clippers purchase. That's why billionaires line up to buy the best/most valuable franchises. I do agree with you though that they are generally poor investments as public companies and really should be privately held by rich individuals. wabuffo

Sold rest of NVEC today - thanks for the great idea Wabuffo!

Keep in mind FWIW that Munger's foreign investments haven't done as well as his WFC, BAC, USB US bank investments (or that 10% corporate bond that he bought and sold). - Posco (PKX) - sold most of it at break-even to a loss. Did a writedown during his ownership for acctg purposes. - 005389.KS (Hyundai Pfd 3) - sold all of it at a loss. Did a writedown during his ownership for acctg purposes. - 1211.HK - his initial purchases back in 2011 didn't do great and he wrote down most of it to FMV. Its performance has largely been due to its big pop in 2020 - otherwise its been "meh" for most of his holding period. He sold probably 15% of it last year IIRC (too early - before the pop). Probably sold another 25% this Q to fund the BABA purchase. Not saying it won't work out. Just pointing out the mixed-track record of buying/selling Asian stocks. wabuffo

Start a new thread on HQI and I'd be happy to opine. I am impressed with the business model where they hold the total AR for systemwide franchise sales and then remit payroll to the individual franchise branches. They just made two decent-sized acquisitions and their core business slowed down due to COVID's impact on temporary labor. I think their earnings will ramp up as more outdoor venues open up where they get some of their temp labor demand and they convert their acquired businesses over to the franchise model. I originally bought it as a special situation during HireQuest's reverse takeover of CCNI because they were doing a large $6 tender to get their ownership over 50% control. But the closer I looked at the pro-forma numbers, the more I thought the HQI mgmt was lowballing the numbers to get people to tender and the more I liked the mgmt and the business. wabuffo

Long-term buy-and-holds for me are CASH, HQI. Smaller-caps with unique business models in very competitive industries but run by exceptional mgmt teams. They've already run up a lot since last summer, though, so may not go anywhere in terms of price near-term. Share price of these two can be volatile so expect severe draw-downs every once in awhile (especially CASH). Also keep in mind HQI did a reverse merger of the old CCNI (Command Center) in order to go public and changed the ticker to HQI, so ignore the stock chart before mid-2019-ish. wabuffo

I like to sell at the money puts for stocks I like. In this case, the premium was too juicy to resist, and puts me into the stock at my buy price if I am put the shares I think one has to be very careful with this strategy. A closer look indicates that selling naked puts is almost always a bad strategy. 1) if one is selling puts at a strike price above one's estimate of IV, then one is not getting adequately compensated in terms of premium for the risk being taken. IOW - one is selling insurance way too cheaply. 2) if the strike price of the naked put is at or below your estimate of IV, then you are better off buying the underlying stock. Why bother with the naked puts in this case? There could be times where selling puts makes sense - but usually because someone like Buffett is accumulating the underlying stock. He has done this in the past when he believes he is buying a stock trading below IV and wants to lock in the price for continued accumulation beyond the immediate term of his buying (eg, KO in 1993-94 and BNSF in 2009-10). wabuffo

DISCK @$33.80

CASH (Meta Financial) just got the nod (for the third time in three chances) to be the official "stimmie" prepaid card issuer on behalf of the US Federal government. https://www.metafinancialgroup.com/news-releases/news-release-details/metabankr-serves-agent-distributing-prepaid-debit-cards-part-0 CASH runs with a balance sheet size typically at around $6b in assets, so for CASH to get a transfer of deposits/reserves via the US Treasury's general acct at the Fed of $11b so close to quarter-end will be instructive to show how our monetary system works. This $11b is on top of the $7.1b CASH got in January in the second round of stimmie which probably has not been fully run down as yet. Heck - I think there's still some deposits left over from last year's first round of stimmie in Q2, 2020. While these reserves and deposits will run down as prepaid card recipients get their cards and spend their balances (these balances will transfer to other banks who represents merchants/service providers who sell the stuff that these prepaid card recipients spend their card balances on) - what we should see on CASH's balance sheet at 3/31 is a massive (and I mean massive) "cash balance" of probably two-thirds the total of CASH's entire asset base. Of course, deposits will be equally huge as well. When the quarterly report comes out, we'll revisit this.... I think it will be quite a good case on how the Fed, US Treasury and bank money flows work. wabuffo