TwoCitiesCapital

Genius really :o Not genius. Counterfeiters have been doing this for ages. What's new is that somehow central banks have been able to sell the idea that counterfeiting is what will save economies...

I would elect an actual turd over Hilary so yes, that includes Trump. Hilary fits my definition of true evil. Hilary is true evil? Suppose Hilary does win the election and it is a 90% certainty based on polls. What will happen? Who will suffer, who will die? Probably no one as everybody who stood in her way will already be dead. #HillaryIsTheRealZodiacKiller

Well, Santander didn't buy any of them, but it wasn't a bad time to be buying them. Below are the returns, not including dividends, since that post. Banco Santander Chile: +23.87% Banco Santander Brasil: +131% Banco Santander Mexico: +30.92% Despite this incredible performance from it's subsidiaries, SAN itself is down -17.53% over the same period currently sporting a market cap of $60B. This has significantly shifted the market implied values of operations in Europe (only accessible by buying a stake in the parent). If we look at it's ownership in its public subsidiaries and the Americas and their market caps, (BSBR - 88.3% OF $26B, BSMX - 75% of 12.59B, and BSAC - 67% of 10.3B, SC - 58.9% of 4B), we see that it's ownership in public subsidiaries is around $42.5B against it's current market cap of $60B. So what that is telling us is that the market implied value of the remainder of U.S. and European operations is only $17.5B - or roughly 4x it's earnings contribution (~4.5B - 1st half of 2016 annualized) while America's trades closer to 15x (~2.8B - 1st half annualized). I still think America's offers decent value with a long runway for growth, but methinks it's time to roll out of the subsidiaries and back into the parent to increase that European exposure. Prior to today, about 1/3 of my exposure to Santander was through BSBR and the other 2/3 via SAN as I anticipated higher returns from BSBR either through an EM recovery or through Santander repurchasing the entire entity. Now that it's rallied quite a bit, and the parent has languished, the repurchasing is less likely and the gains I've received are pretty favorable to roll back into an even larger position in SAN. Totally out of BSBR and back to 100% SAN.

The real problem with CEO wages, as with most, is that the benefit is concentrated and the cost diffuse. The average shareholder may contribute $0.50 of their share in profits/revenue/etc. to a CEO in any given year. How many of you are willing to go through the effort to fight a proxy battle limiting CEO wages for that $0.50 gain a year? How many of you believe a CEO is going to fight for his $10,000,000/year? This is no different than poor gov't policies that favor a handful of people at the cost to the population. Things like subsidies for farmers - the average person doesn't care that $0.10 of their taxes go to farmer subsidies, but the farmers care quite a bit. If you try to cut that fat from the budget, farmers cry foul and the normal people don't speak up so it stays. It's not a real problem until people realize this is how it works and then you literally get thousands of $0.10 charges that you can't get rid of. The best policy is to prevent stuff like this happening in the first place, but that rarely happens because there is no accountability along the way given the diffuse cost is so small. The next best policy is to make sure it benefits you instead of others.

I didn't realize this. So the Iraq War Resolution that Hillary voted for basically delegated authority to declare war to George W? Kind of a loophole where congress didn't formally declare war? According to this, congress at least voted on something for Bush Jr's wars: https://en.wikipedia.org/wiki/Declaration_of_war_by_the_United_States#Declarations_of_war Sure - they voted to give Bush authority to invade AFTER soldiers were already on the ground in the country. The first special forces were sent in July 2002. American soldiers were on the ground in Iraq and executing on missions to execute Hussein and his generals for 9 months BEFORE Congress approved anything. That's how every "war" has been. The president sends in troops, bombs the country, and 6-9 months later Congress basically has it's hands tied to vote in support of the use of force. What looks worse at that point - supporting our troops or the international embarrassment it would be for Congress to vote against is effectively saying, "we're not at war and the American people don't support this, but we've been bombing the shit out of you anyways. Sorry"

Value investing is paying less for what you get. If that means you foresee incredible growth, but it's not priced in, you can buy a growth stock and be value investing. Or you can buy a cigar butt that is priced for negative growth that merely remains stable and still win and be value investing. The problem with the paying less for the value of growth is that it's much harder to accurately estimate the growth trajectory of a company over a 3, 5, or 10 year horizon and to discount that back to today to determine if the price is reflecting that growth or not while it's generally easier to find the value of presently available assets. Both are value investing. Both work well if done correctly. One is just harder than the other and probably a good bit less reliable given the ever-fluctuating nature of forecasts/estimates/outcomes - but if it's done well, you get tremendous results.

I go back and forth on 2nd amendment / gun control, but I don't think it's within a president's power to modify. If there's political will / popular support against the 2nd amendment we should vote on an amendment. It makes me uncomfortable when presidents support hollowing out certain aspects of the constitution as it implies a disregard for the document they swear to protect. I think there's a very good argument that we should stop selling semi-automatic rifles, but I don't support doing that any way other than a constitutional amendment. Well that depends on how literally you interpret it. I think having a strict, literal interpretation of the document does more harm than good and is not what it's intended to be. I'm pretty sure the founders didn't intend on allowing the people to own semi-automatic weapons. I'm comfortable with having Executive/Legislature regulate our freedoms. If anything goes out of hand, we have the Courts to protect us. See, I'm not sure of that. Most commentary on the intent of the amendment seems to be that it was some combination of maintaining a strong standing militia (similar to what Switzerland has) and preventing government tyranny. That would imply to me that it was written to allow for military-grade weapons. I think there's a good argument that military-grade weapons have progressed to the point where we no longer wish for people to have them (or at the very least be able to easily obtain them), but I think that's a change of direction from how it was intended and should be enacted through an amendment. I'd vote for that amendment, but I wouldn't want it done a different way. The problem is once we start allowing loose interpretations the whole document basically just becomes symbolic. That's where I really diverge from Hillary/Obama though. My biggest issue with Obama's presidency is the use of military force without a declaration of war as I think is required by the constitution. Part of the benefit of that is it requires the president to come to congress, say "hey here's my rationale and my plan", and then thoroughly debate both parts. Hillary rushed Obama off to war (at least in Libya) without taking the time to go through Congress and now we're suffering the consequences (see tail risks post above re EU disintegration). The Germans took their time, thoroughly debated the question of "what happens when Gaddafi is gone", and decided to abstain from the bombing. Obviously congress isn't always right either, but it helps. I agree. The whole ISIS mess stems from the US intervention into Libya, so Trump's claim that Obama and Hillary are the founders of ISIS aren't that exaggerated, though I know he is definitely joking. But the media picks this up as another sign that Trump is unfit and immature. There's actually evidence to suggest that a number of the very same Syrian rebels we armed and trained defected to ISIS. I would imagine that allowing as much collateral damage as we have over a decade worth of bombings has certainly not driven the younger generation is these countries to like the U.S. I wouldn't go as far to say that Bush/Obama/Clinton are the founders of ISIS - but I don't think that blaming U.S. foreign policy in Iraq/Syria/Lybia is a reach at all, and they've all had a hand in the disaster that it's become.

I go back and forth on 2nd amendment / gun control, but I don't think it's within a president's power to modify. If there's political will / popular support against the 2nd amendment we should vote on an amendment. It makes me uncomfortable when presidents support hollowing out certain aspects of the constitution as it implies a disregard for the document they swear to protect. I think there's a very good argument that we should stop selling semi-automatic rifles, but I don't support doing that any way other than a constitutional amendment. Well that depends on how literally you interpret it. I think having a strict, literal interpretation of the document does more harm than good and is not what it's intended to be. I'm pretty sure the founders didn't intend on allowing the people to own semi-automatic weapons. I'm comfortable with having Executive/Legislature regulate our freedoms. If anything goes out of hand, we have the Courts to protect us. See, I'm not sure of that. Most commentary on the intent of the amendment seems to be that it was some combination of maintaining a strong standing militia (similar to what Switzerland has) and preventing government tyranny. That would imply to me that it was written to allow for military-grade weapons. I think there's a good argument that military-grade weapons have progressed to the point where we no longer wish for people to have them (or at the very least be able to easily obtain them), but I think that's a change of direction from how it was intended and should be enacted through an amendment. I'd vote for that amendment, but I wouldn't want it done a different way. The problem is once we start allowing loose interpretations the whole document basically just becomes symbolic. That's where I really diverge from Hillary/Obama though. My biggest issue with Obama's presidency is the use of military force without a declaration of war as I think is required by the constitution. Part of the benefit of that is it requires the president to come to congress, say "hey here's my rationale and my plan", and then thoroughly debate both parts. Hillary rushed Obama off to war (at least in Libya) without taking the time to go through Congress and now we're suffering the consequences (see tail risks post above re EU disintegration). The Germans took their time, thoroughly debated the question of "what happens when Gaddafi is gone", and decided to abstain from the bombing. Obviously congress isn't always right either, but it helps. There hasn't been a declaration of war since before Vietnam. While I agree with you that it's unconstitutional, basically every president spanning the last 4 to 5 decades has done it...

Yes, very much so. Especially at the low end. I enjoy browsing Craigslist for cars and trucks, just browsing keeping pace with prices. The prices that people are asking for low end junkers is crazy. 17 year old Tacoma with 175k miles, $7k: http://pittsburgh.craigslist.org/cto/5730759423.html 16 year old Buick Le Sabre $3900: http://pittsburgh.craigslist.org/ctd/5733247620.html (this should be an $1800 car max) 14 year old Camry: 3500 note the hood won't close, obvious accident damage: http://pittsburgh.craigslist.org/cto/5730482118.html Prices for used cars at subprime lots are in the $7-10k range now. In the past they were typically in the $3-6k range. I should have just posted this and let it linger. 1998 Dodge Neon for $800, has a brand new motor (what else is bad..??) has 144k miles cracked dashboard covered with tape. Guarantee this thing shifts like a rock around 2nd or 3rd gear: http://pittsburgh.craigslist.org/cto/5714356377.html That's a crazy price. I remember looking at cars similar to this back before the crisis and they were in the $350 range. Cars are depreciating assets. The system isn't built around the assumption that their value will always rise, which facilitated the credit card treatment of houses and exacerbated the problem when that assumption proved wrong. The funny thing about that whole debacle is that homes/buildings are also depreciating/depreciable assets, and yet for some reason we always expect their value to rise.

Small speculative position in CMG after watching foot traffic steadily rise of the last 6 weeks at 3 different locations in NYC. Seems like the brand is coming back and I expect Q3 results to improve materially.

Sure - but the automotive industry has secular tailwinds behind it with the massive aging of the fleet. Even if a small recession caused a temporary drop and sub-prime autos blew up, the industry would probably be fine now that it is in a much better position than 2008. Further, consumers who own 3 cars aren't able to leverage those cars up to be many multiples of current net worth/annual income like was done with houses, because they typically aren't buying them with the intention of re-selling them.

I'll use that as my shameless introduction of Gary Johnson to this two party discussion. Only candidate who recognizes the war on drugs doesn't work. I like him mainly because of economic track record. He started a construction company in NM, grew it to 1000 employees, sold it, and became Republican governor of New Mexico (a mainly blue state). As governor he used the veto ~750 times, cut taxes 14 times and left office with a budget surplus. His running mate, Governor Bill Weld of Massachusetts, has a similar track record. They've promised a balanced budget within 100 days and are the only candidates willing to discuss entitlements (they suggest raising the social security age and having a means test). They want to eliminate all income taxes (corp and personal) and replace them with a sales tax, with the main benefit being it would make the US a much more competitive place to have a global company. They recognize that small businesses are really what drives job growth (especially as small businesses become big businesses) and want to make it as easy as possible to start a company. Also the only candidates who support free trade. Main concern with them so far has been that they "can't win" but with the two main candidates as polarizing and scandal-ridden as they are, it seems a bit early to make that call. Anyways, that's the end of my plug. Here's Patrick Byrne (Overstock CEO) with the rest: Well, if this is true, I think Gary Johnson is solid. Does he believe in separation of power or does he think a president can do whatever he wanted to do, like Obama/Hillary? He used veto 750 times so I am worried if he is more like Obama who believes he can do whatever he wanted to do. Libertarians in general believe in limited gov't. Basically, the approach is less is more when it comes to gov't. Keep the Republicans out of your bedroom and the Democrats out of your wallet, maximize personal liberties while doing no harm to others. Basically the Libertarian mantra at the moment. I also tend to like them because they appear to have some integrity and stick to their policies/guiding principles as opposed to flip-flopping and pandering to the electorate just to get votes to do whatever the hell they want.

Holy crap Picasso, You are like my internet big brother or something... Agreed 100% again... Value investing has always been dead, and what is dead may never die (isn't that a profound use of GoT quotes? They don't call me The Philosopher for nothing........................) We need more GoT quotes on here. The other thing is that everyone is suddenly the same type of value investor. They all read the same books (you have the bibles like Graham, but everyone reads Greenblatt), the same CFA material, they attend very similar business school programs, their pitches sound the same, they're on Seeking Alpha as a "deep value," "special situation" investor, etc. 9/10 pitches on VIC have the same boring thought process. But you'll learn so much more by talking to PM's, getting a sense for why they shut down ideas, all the biases that form, and really understanding why certain stocks get cheap or expensive. Learning about the kind of pressure that gets put on a manager to sell out of a position even if it doesn't make economic sense to do so. All the rest of the value investing stuff is easy to learn, and with the internet it's free knowledge open to starving kids in Africa. +1 I'm very much into buying what no one will own. I'm in full support of movements to green energy, but coal assets just got way to cheap not to own. I'm currently making a killing on coal equities like CNXC and CLD that I started buying in late 2015/early 2016. I know coal is on it's way out, but I also know it's going to be years and there's going to be winners along way because literally NO ONE will touch these things with a 10 foot pole and I get faces from everyone that I tell that I own them...

It's pretty simple - there's a lot of oil and coal money that supports the GOP that is at risk if we make a dramatic shift to renewables.

And today Amex vs Visa & Mastercard? I have both Visa and Mastercard and am indifferent to them. They are pieces of plastic in my wallet - commodities that are to be adopted/dropped based on their rewards programs they offer on their different cards. The benefits I've received from AmEx greatly exceed the number of points I receive on purchases. There's been two occasions where flights I was booked on were delayed/canceled and it was really going to impact my plans. After speaking with airline representatives who said there was nothing they could do, a quick call to AmEx had me rebooked on flights with that same airline. I don't know how they do it - just that they do. This customer service paired with all of the other travel benefits makes travel somewhat enjoyable and has fundamentally changed my travel experience. Other cards have comparable rewards programs. None of them have the comparable customer service or the softer benefits that come along with it. I dont' think Google needs any explanation - Google Search, Gmail/Inbox, Google Maps, YouTube, Android, Chrome, Google Now, etc. etc. etc. All services that have dominated their respective peers and are provided for free to consumers. Google has fundamentally changed my life experience.

Google American Express Both have increased my quality of life at limited (or no) cost to myself. Both have great products, great services, and continue to be light years ahead of their competitors in doing this.

How could it all stay the same? 500,000 mortgage on a 200,000 investment? Clearly I meant something different than you thought. I shrank the house price by 1/5 when somebody argued that examples that favor the rich don't matter. So now it matters based on their argument :D You need to scale down the mortgage as well by 1/5. But the interest rate and gross rental yield both remain 4%. 1.2% of $200,000 home is 2,400 in property tax. 50% debt to equity is $100,000 mortgage. So $4,000 in interest expense on 4% mortgage. 4% gross rental yield is $8,000. $8,000 less the interest expense is only $4,000 pre-tax profit. Property tax of $2,400 is 60% of pre-tax profit. Very, very high tax relative to the pre-tax profit. And that is assuming 0% income tax! 1) Agreed that "inflation" should be considered when making investments, but I hesitate to call it a tax as it's not money taken at gun-point for social good. But, let's ignore that for a second. The higher inflation goes, the lower the real debt level gets all things equal. So, to pay off down the real amount of debt, we need higher "taxes" (even inclusive of higher inflation this time around). There's no disagreement between us here. 2) If real estate returns are really that poor, I don't blame tax rates/inflation. I blame the price of real estate. No one is forcing you to buy a house. 3) No one is entitled to make a positive cash return. Especially not entitled to receive one in excess of a mortgage/inflation/taxes/etc. You're buying something and gaining 3-5x leverage (or more in some cases). Some investments require a negative carry. I don't think that just because you're cash return AFTER paying the mortgage/interest is negative is indicative of exceptionally high tax rates. It's simply a negative carry trade where you're paying for that leverage. When I'm short a stock, is it the taxes that I should be blaming for the monthly cash outflow? Or the cost of borrow? If I can't make enough money on the short to cover the borrow and make a decent after-tax profit, I'm not good enough at shorting and should try something else. Anyhow, I don't really feel that this argument is adding much to the overall conversation. Taxes on traditional forms of income are low. The share of the country paying these traditional forms of income is low. Gov't spending on social programs is likely to explode from an aging population and interest on a 19 trillion debt burden when rates rise. We're already have massively high, recurring deficits if comparing to anything outside of the last 12-16 years with a massively high debt with the expectation that costs are going to rise even further. It's most reasonably to assume that historically low tax rates will go UP and that the tax base will be broadened in this environment. It's as simple as that. Could I be wrong? Sure. But what is the most likely outcome? Higher taxes. Those could be in the form higher income taxes, higher sales taxes, higher capital gains taxes, higher taxes on transfers of wealth, taxes on wealth itself, a reduction in credits/deductions, a higher bar to be eligible for social programs, higher inflation, etc. etc. etc. but it's all the same thing. You either give more to your gov't or you get less from your gov't. Those are really the only two options for the younger generation. For the better part of two decades, the debt has grown faster than GDP. Why we think that we're going to magically start growing at a rate that will make up for two decades of largess AND the expected increases in spending is beyond me. Is it possible? Sure! Is it likely? Hell no.

+1 Invading Iraq may have been the worst foreign policy mistake in decades....and then Democrats took that playbook and continued it.

Tax rates vary. I was thinking about what the tax rate would be on one of the most common types of investments that ordinary Americans make. Housing. Suppose you rent out a single family home for a 4% gross rental yield in California. That's not all that terribly strange in California. Well, you might get $40,000 in rent for a $1,000,000 home near the coast. Further, let's say you have a 4% loan with a $500,000 mortgage. Okay, now assuming there are no other expenses (fixes to appliances, etc...) then you have a $20,000 mortgage interest expense. So you have $20,000 in profit before taxes. Okay, your first tax is going to be the roughly $12,000 you'll need to pay called a "property tax". So the property tax eliminates 60% of your income. So your tax rate begins at 60%. Now you then pay state Income tax and Federal income tax. Combined, those taxes can easily be 40%. So that leaves you with 24% that you can keep for yourself. You paid out 76% of your pre-tax income in taxes! And that's a relatively common type of investment. Sure, but that's in CA which is recognized as being one of the highest tax districts. Same with NYC where I'm at. But that's not representative of the cash return on real estate or the taxes charged for 90% of the people who live in this country. I know for a fact that I can buy small commercial buildings with triple net lease tenants at 6-8% cap rates and that leaves the tenant on the hook for most everything maintenance related. Residential houses where you're covering maintenance expenses and have short-term leases (riskier) probably get a higher cap rate. Call it 7-9%. But, the real crux of this is that the majority of the country also isn't defined by landlords, but rather by tenants (either paying rent or the own mortgage, not collecting rents). Of the 50% of people who do pay a positive net income tax rate, the largest tax liabilities for most are income taxes which are historically low and further reduced by additional credits and deductions that can be taken against them. Also, I don't have the statistics on this, but I'd also hazard a guess that 50% of the population paying net income tax may also be a historic low.

I agree with many points you made but not the last one that I bolded. The younger generation is not supporting Trump. Look at the poll breakdowns. Trump polls poorly in the younger demographic. For example, here's the latest CNN poll http://i2.cdn.turner.com/cnn/2016/images/08/01/2016.post-dem.convention.pdf Under 45: Clinton 63%, Trump 30% Over 45: Clinton 44%, Trump 48% This poll is not an outlier. I've seen similar generational breakdowns in other polls. I think those numbers are just as extreme (if not more) when you look by education. People with post-secondary degrees are even more tilted away from Trump. I don't disagree, but defining young people as those "under 45" is sweeping with a very large brush. Maybe filtering down to a demographic of 18-lower/mid 30s would be more appropriate to capture the individuals I was referencing. And of course, not necessarily all of them are supporting Trump, but a lot of them aren't supporting Hillary either. It may just be they feel forced to choose between one or the other. I know that my facebook feed is full of Bernie supporters who still trash Hillary. I don't know exactly what they'll do when it comes to vote, but they have a few options: 1) vote Hillary, the "anti-Bernie" 2) vote Trump (probably even worse than Hillary in their minds) 3) Don't vote or 4) vote 3rd party When you have polls that remove those last two options that would arguably carry the majority of that group, and leave the two most unfavorable, you're obviously going to get skewed results among a number of people. And I don't know how it shakes out nationally, but a lot of my friends from traditional Southern/Republican districts definitely support Trump - and they're college educated.

I take issue with this statement. While I see what you mean in terms of technological development, advances in certain fields, etc., it's estimated that millenials will be the first generation in a long while to NOT be better off than their parents on average. Millenials are graduating in a world that demands they go to college at an exorbitant cost, take on tens of thousands in debt to do so, to be eligible for jobs that are highly competitive and barely pay better than the $15/hr demanded by fast food workers who don't need degrees, just so they can become "contributing members of society"/tax payers which means they are immediately on the hook for carrying the rest of the country with their income taxes by taking. Further, tax rates are at historical lows while deficit and debt are at historic highs. Any millennial with a brain can see that the likely trajectory in taxes is up even while the likely trajectory of benefits for our generation is down (social security being nonviable, growing health care costs to be carried publicly, deleveraging of public balance sheet at some point given the 100k/tax payer balance at the moment, etc.). Millenials are looking at more debt (personal and public), higher taxes, more expensive housings/cars/etc., lower social benefits, lower incomes, and lower investment returns going forward. On top of that, very little of this was their fault (other than maybe student loan balances). This is all the consequences of decisions made by those representing their parents and grand parents. Sure we have smartphones and computers are ubiquitous. It's still hard for me to see how that makes up for a lot of the above and can definitely understand why the younger generation is pissed off and supporting non-traditional candidates like Bernie and Trump.

TwoCities, if you dont mind me asking, what are you expecting FCAU's Adj EBIT to be this year and next in light of the new guidance? No specific dollar targets on my end. I'm no expert on the automotive industry and don't really have expectations for this years EBIT other than I anticipate that it will likely continue to improve each year going forward for the next 2-3 years. I'm not really expecting miracles - just organic deleveraging and margin improvement from a continuation of the current sales cycle. It's not a large leap of faith for me to believe that they can make more than 2x the current amount of cash flows via margin expansion in 2-3 years time and I believe the current state of U.S. auto market gives them a long runway to achieve this. Of course, there's the upside optionality of a merger/sale even though no one currently seems interested. The position in Exor is only slightly related - obviously there's exposure to Fiat in there, and I know about from following Fiat, but that's more of a "buying a good management team at a discount to NAV" type investment and will likely to continue to hold that long after I've traded out of Fiat. Interesting, thanks. I actually decided to go for EXO over FCAU because of the management, the add'l layer of discount and also I figure worst case scenario it's better to be totally aligned with the family via EXO equity as opposed to FCAU stock. Do you take their $54 NAV at face value or do you have an adj NAV for EXO? Same reasoning for EXO - I may eventually convert the entire Fiat position, but have only just recently started digging into EXO so have maintained my holdings in FCAU for the moment. Today's purchase is my first of EXO and was basically done in addition with the same idea of levering upside exposure in the event FCAU rises in the near to mid term. I typically make simple adjustments to the stated book value of holding companies for things like equity accounting and then apply my own discount factor for companies that I understand less (like Fiat/Ferrari) or are more cyclical/leveraged/etc. In this case, I think a 30+% discount is a reasonably good starting place to get a starter position as I try to better understand the company and peg a value.

TwoCities, if you dont mind me asking, what are you expecting FCAU's Adj EBIT to be this year and next in light of the new guidance? No specific dollar targets on my end. I'm no expert on the automotive industry and don't really have expectations for this years EBIT other than I anticipate that it will likely continue to improve each year going forward for the next 2-3 years. I'm not really expecting miracles - just organic deleveraging and margin improvement from a continuation of the current sales cycle. It's not a large leap of faith for me to believe that they can make more than 2x the current amount of cash flows via margin expansion in 2-3 years time and I believe the current state of U.S. auto market gives them a long runway to achieve this. Of course, there's the upside optionality of a merger/sale even though no one currently seems interested. The position in Exor is only slightly related - obviously there's exposure to Fiat in there, and I know about from following Fiat, but that's more of a "buying a good management team at a discount to NAV" type investment and will likely to continue to hold that long after I've traded out of Fiat.

EXO (Exor) FCAU (Fiat Chrysler)

Well, I wasn't that far off with my $500M for fixed income/interest as bonds provided $303M and net interest income was $160M, but expenses and underwriting results were a bit worse than expected. Not a bad quarter all around though, just not the $500M I had been hoping for with the rally in bonds.