TwoCitiesCapital

The pop will come approximately 2 days after they announce phenomenal earnings - as it has the last few times they've had great earnings. Has been shocking how predictably it has repeated this behavior.

CBDCs will only disintermediate stablecoins if they are ERC-20 compliant (or compliant with whatever dominant blockchain/smart contracts exist at that time). Otherwise, the primary use case of stablecoins remains intact - retaining a short-term store of value on blockchain without having to make the trade-off of multiple day length delays in getting money off of, and onto, the blockchain again. I think the ideal in the crypto industry will be to redefine what is "stable". It's ironic to me that cryptoCURRENCIES rely on the stability of the USD when one of the primary rallying cries of the industry in that the USD is not stable and declines in value. I understand that it is two very separate time frames in consideration, but it's still funny to me. Seems to me that fiat-backed stablecoins currently serve as a "means to an end" and are not fundamentally supported by the overall ethos of the crypto environment. My guess is they won't be around in 10-years regardless of whether or not CBDCs are ERC-20 compliant tokens or not. My guess is that Bitcoin, or some other solution, will have reached the point of such wide acceptance that downside volatility will be tolerable and crypto-native services will have no use for pricing things in fiat anymore. Maybe that is a pipedream, but it certainly seems to be what DAI and other types of services would point to...once backed by something other than 3rd-party, centralized, USD-backed stablecoins for the value peg.

I don't disagree. As mentioned, my best guess is they probably are either lending or comingling the money to/with Bitfinex so Bitfinex can generate a higher yield/return from the cash then would otherwise be earned sitting in cash. As long as there isn't a problem with Bitfinex and whatever investments they're making, there shouldn't be a problem with Tether. But that's more akin to owning equity in Bitfinex with none of the upside and all of the downside. This is why I won't own it. Agreed an audit would make likely clear up the uncertainty and it seems they're unwilling to do that which is shady. But I also don't think it's entirely a fraudulent ponzi scheme as they've been through multiple severe corrections (50-80%) and it didn't fall apart. I also don't necessarily think the blow-up of Tether would permanently crater the entire crypto market, but it would obviously be a bad thing for sentiment and flows in the near-term as billions would be eviscerated in potential crypto demand if Tether was unable to maintain the peg. I'd rather it just go quietly into the night as people move towards more transparent and audited options like USDC, GUSD, Dai, Paxos, etc.

Regarding whales, I don't view the accumulation of Bitcoin by a number of very patient, very forward thinking individuals, a few years back to be a bad thing. As for the inequity - we all had the opportunity to accumulate BTC at much lower prices. The way it was initially distributed was to a handful of hobbyists/experts who were using/testing it (makes sense - couldn't airdrop to the entire population who had no interest or ability to receive it) and since then something like 90% of the coins mined have been sold in the open market. I remember when BTC was $100/coin and thinking it was a bubble. It's no fault of the whales that I'm not a whale today - the fault is my own. That sounds pretty equitable to me. Also, nobody says the USD is broken because of the wealth accumulated by Zuckerberg, Buffett, Bezos, Page, etc. We can argue about the political system or the tax maneuvers that allowed it, but nobody really blames it on a failure of the underlying currency/unit of account. I don't know why I would view BTC differently. Lastly, the number of accounts owning less than 10 BTC has been growing nearly every year while the number of whale accounts has been shrinking. "Minnows" now own something like 20% of the all BTC outstanding while the whales (1000 BTC or more) control ~30% of the supply outstanding. Those with between 10-1000 own the remainder. This is a much fairer distribution than wealth currently denominated in USD.

https://www.whatbitcoindid.com/podcast/gradually-then-suddenly-pt-2-bitcoin-first-principles Probably the best conversation I've heard on Bitcoin as a currency as opposed to simply a store of value. Discusses the fundamentals of what characteristics make a good currency and then discusses why Bitcoin compares favorably to the alternatives - and with currencies it tends to be near winner take all as we're all incentivized to use the same means of payment. Not a Bitcoin maximalist myself, but definitely moved closer that direction after hearing this discussion.

https://news.bitcoin.com/circle-publishes-usdc-attestation-reserve-report-reveals-segregated-accounts-in-usd-denominated-assets/ USDC also owns corporate bonds and commercial paper. Must not be backed by USD as stated. /Sarcasm

Nice! Just closed out my TLT calls myself, but I opted for the $138 strike that were a bit ITM at purchase so didn't do anywhere near 8x.

This is true for now, but I don't have any reason to believe the US isn't headed into the realm of 0 and negative rates just like Europe and Japan. It'd be foolish to assume our outcome would be different when we followed the same prescription. Aging population. Disinflation. Innovations that increase productivity and reduce the need for capital. Excessive debt loads that need to be serviced. All point to lower trend rates until central banks decide we need to inflate our way out of debt loads that can't be serviced by working age population.

We printed WAY more, but QE locks a bunch of it up as bank reserves which don't circulate. The near term drop in the dollar may be done, but long term the trend is against it. We've seen over 20 years of global reserves decreasing reliance on the USD. We've seen 5-10 years of countries that have run afoul of the US reducing their reliance on dollars in trade (China, Russia, Iran, etc.). Continued trillion deficits in good and bad times? Gradually and then suddenly.

The problem with valuing things like this is doesn't work outside of the vacuum of the handful of companies its used to justify valuations for. For instance, Blackberry's QNX governs critical functionality in nearly 200 million vehicles in a segment that has blown up over the past decade. Surely this type of relationship is more valuable than the casual user of a messaging service - cars are more valuable, far more sticky, and have many more paths to monetization than messaging does. And we haven't even discussed BB's IP and cyber security businesses. That being said, I generally agree with BB's valuation over the past few years because monetization is what matters. Not eyeballs. Not users. Not vehicles. Not clicks. Monetization. Both BB and WhatsApp have failed to generate meaningful revenues and profits...but WhatsApp gets taken out at $19 billion because of the number of users it has while we ignore the same metric when valuing Blackberry. Who cares how many users? If you can't monetize them, they're not valuable to the company.

To be fair, while he (and I) have clearly been wrong on Amazon, I'm not so sure he will be on Tesla and WhatsApp. Amazon was fortunate to land on Amazon Web Services which is now where the bulk of profits come from. Tesla and WhatsApp haven't done anything close to that. Even with the benefit of hindsight on Tesla's business performance, I'm still convinced it was overvalued 3 years ago and remains dramatically so today. It's only profits come from regulatory credits which will be wound down over the next few years. It was never able to achieve profitable scale in an environment where it was the only game in town and now that it has competition and is ceding market share its unclear it will ever get there. And while WhatsApp didn't impair Facebook's value, it's still hard for me to see how and why it was worth $19 billion back then. I don't think it's worth $19 billion today. There is limited, if any, synergies with Facebook business and no real path for monetization that supports anything close to $19 billion valuation even YEARS after the acquisition. I'd be very concerned if Prem "learned" his lesson and began buying Tesla TBH.

Implying permission to take based on the their reading of the statute implies their collective view that it wasn't illegal/wrong to do so - so yes, their collective view appears to be that it wasn't a takings. Maybe we get more court rulings - but if the last 9 years has taught us anything it's that nearly every single court ruling, including Lamberths, has largely been a bust so far. This is why the preferreds now trade at 5% of par. It's not that the market misunderstands - it's that it understands all too well. 9 years of disappointment after disappointment and the only thing that we can point to with hope is more of the same stuff that caused all of the disappointment. You say opportunity. I say status-quo.

It seems about right to me. How do you price the value of the rule of law when the current precedent is "Congress/Treasury can steal with impunity as long as Congress says they can steal with impunity"? Seems the price is absolutely reflecting the correct amount of pessimism for how terrible that last SCOTUS ruling was and knowing all future rulings have the potential to be taken to the same level and simply take years to disappoint again.

I think that's too simple of an answer. This shit traded at $550-600 USD/share back in 2018/2019 with the same guy in charge and the same historical mistakes. I made the case back then it was hard to see how they'd get a reasonable return on the share price from that level and sold my entire position. A commentary on the market environment and forward looking returns - not Prem. Now, 3 years later, book value has caught up to that share price range and Prem and co have delivered wonderfully on the environment of the past 3 years: insurance cos, subsidiaries, equity investments, TRS/share repurchase, all are performing wonderfully and no one wants to pay more than $425-450 for it. I'm buying hand over fist - a commentary on market environment and forward looking returns - not Prem.

Not all today, but recent moves in the past week or so. Opened put positions in HYG Locked in bulk of profits from my TLT call spreads. Rolled my long put spreads in Apple forward to October Reopened put spreads in American Airlines to October Added to FIH with intention of participating in the tender with my newly acquired shares Added to FFH as I cannot fathom how it continues to trade so cheap as book value is exploding

Definitely a good history here. Shady dudes and it's shocking that Tether retains such a large market share amongst stablecoins. Who uses this stuff?!? That being said, it is losing market share (from 82% a year ago to 58% today) and I hope that continues. Despite all of the shady stuff, there is no definitive proof of a Ponzi scheme. It's possible all of this points to implicit backing as opposed to explicit i.e. Tether lends cash to Bitfinex for more productive uses and then Bitfinex implicitly backs Tether cash claims. This wouldn't be a Ponzi scheme - just far more risky than your traditional stablecoins. What makes me skeptical of the Ponzi narrative is we've seen a crypto winter and multiple large drawdowns following without the 'fraud' being exposed. How can people be so sure it's actually a Ponzi if it survived all of that? If 50-80% isn't enough, what would it take? The most obvious answer to me is that it's probably NOT a Ponzi scheme, but also does not operate in a way that passes the smell test. As such, I don't use it, but am skeptical it'll by the catalyst for a crypto collapse.

https://news.bitcoin.com/university-of-cambridge-bitcoin-mining-map-shows-chinas-hashrate-dropped-to-46/ Data suggests China was below 50% of hash power BEFORE recent bans. I don't think China will ever be the majority of hash power again. Their loss.

The big things going forward for NYC will be infrastructure, climate, and demographic trends. Infrastructure: I left in 2017 and the subways were basically beginning to fall apart with no option of fixing. Many of the components literally just aren't made anymore since these are running on pre-war technology. There were plans to shut entire lines down for a year, or more, to replace with more modern technology. I don't know if they went through with that, but the options looking forward are awful and there are no great alternatives. Car ownership is incredibly expensive, fraught with headaches, and you sit in traffic all of the time. Buses? Often times its faster to walk. Taxi/Uber? Sure...but way more expensive and way slower than a subway at peak hours. Also, consider what traffic will look like if even just 10% of regular subway riders opt for vehicles....Disaster! Climate: NYC just isn't built for flooding. I was there for Sandy and it was a disaster compared to my experiences on the Gulf Coast with REAL hurricanes. Being an island surrounded on all sides by water, and not having invested in infrastructure to prevent flooding, and having your transportation underground is a recipe for disaster. Particularly in a future where we anticipate more violent storms and rising ocean levels. We're also entering the 19-year period of elevated tides due to the moon's orbit which will only make all of this worse for the next 2-decades. Climate change has the potential to impact NYC just as dramatically, if not more so, as any coastal city like Miami and New Orleans because there's not much flexibility for an alternative transportation infrastructure if/when subways flood. Demographic Trends; The 2010 census showed a net migration out of the Northeast towards the South East for first time in decades - mostly due to aging population and tax arbitrage I'd guess. The 2020 census confirmed the trend, though could have been skewed by temporary Covid-related factors. Do we expect either the tax, or the aging population, to change in the next 10-years? My guess is the 2030 census shows more of the same. I'm not predicting an imminent decline for NYC - more so just a secular stagnating of total population or a slow decline. It's still a great city, but I think it's best years are behind it.. at least for the next 1-2 decades.

Anyone want to take a guess as to what the real return on junk bonds will be over the next 5-years? I have no idea what the default rate is presently, but Ackman pointed out it was like 5-6% in CDX HY index a few months AFTER the Federal Reserve/Treasury injected trillions. Can't imagine a world in which 3.9% compensates you for the credit risk AND inflation....

I would think that the IRS also reads the WSJ, so we'll see if anything comes of it. My understanding is the same as yours - you can't have private companies you control in your self-directed IRA. That being said, the dude is rich and can hire much smarter tax professionals than me to help him find a way around that rule or some legal structure that makes it ok. It's quite possible this follows the letter of the law, but not the intent. No different than backdoor Roth contributions via conversion which are legal, but clearly are skirting the intention of the law and income limits.

We'll see. I'll rely on IB to notify me if forced sale. They'll be the ones held accountable for enforcement. So far, I've just been told I can't buy more. Though it looks like from what you've linked that owners are provided 365 days to divest so we'll see. That'll be coming up in the next 4 months or so. Also, to clarify, I own the Hong Kong shares directly and not a US traded ADR so maybe that matters as well.

I don't know if the ETFs are forced to sell, rather just not buy more. I own China Mobile via IB and am an American citizen. I can't add to the position, but wasn't forced to sell it. I would assume ETFs might be similar in that they could just direct new flows to all the names that aren't China Mobile. Though, operationally they may just choose to sell it to avoid the headache

Europe and Japan have had 0 to negative rates on and off for years now. No 100 CAPE ratios there. At sufficiently low enough rates, the theory and application behind discount rates just completely falls apart.

https://cointelegraph-com.cdn.ampproject.org/v/s/cointelegraph.com/news/1inch-to-launch-dollar-pegged-stablecoin-with-ichi/amp?amp_gsa=1&amp_js_v=a6&usqp=mq331AQIKAGwASCAAgM%3D#amp_tf=From %1%24s&aoh=16251810307580&csi=0&referrer=https%3A%2F%2Fwww.google.com&ampshare=https%3A%2F%2Fcointelegraph.com%2Fnews%2F1inch-to-launch-dollar-pegged-stablecoin-with-ichi Pretty certain this is a very similar, if not the same, design as the Iron Finance coin that just failed. Partially collateralizing a stable coin with a single, volatile crypto is a recipe for disaster. I'm not yet convinced DAO's approach with a basket of cryptos that over-collateralize works just yet, but that's a better design than this.

I don't know what "safe" implies, but both are backed by cash reserves and are audited regularly so you should have confidence that they'll maintain a dollar peg. Both are also backed by of the two of the largest, more established players in the space and have massive reputational damage to their main business models if these fail.