Parsad Posted February 10, 2023 Author Posted February 10, 2023 6 hours ago, TwoCitiesCapital said: The inverted yield curve strangles credit creation. That's what slows the economy. It hardly matters WHY or that it's the Fed who is manipulating it - it slows credit extension and the flow of dollars through the economy leading to economic slowdowns. It's probably not just a predictor of recessions - it's probably partly causal to them which is why it has a 100% track record of success. +1! Fully agree. That lack of credit leads to failures. The first to fall in Vancouver...more to come around North America. https://biv.com/article/2023/02/major-vancouver-condo-developer-seeks-creditor-protection?utm_source=BIV+Newsletters%2C+effective+July+1%2C+2017&utm_campaign=ca05f066ac-RSS_EMAIL_CAMPAIGN&utm_medium=email&utm_term=0_16cfea3308-f66769357a-[LIST_EMAIL_ID] Cheers!
CorpRaider Posted February 10, 2023 Posted February 10, 2023 (edited) 6 hours ago, TwoCitiesCapital said: I +1 The inverted yield curve strangles credit creation. That's what slows the economy. It hardly matters WHY or that it's the Fed who is manipulating it - it slows credit extension and the flow of dollars through the economy leading to economic slowdowns. It's probably not just a predictor of recessions - it's probably partly causal to them which is why it has a 100% track record of success. Yeah I can't even get no more positive carry going with capital from my friend Peterffy. Now I understand why the yield curve inversions slam on the brakes. Edited February 10, 2023 by CorpRaider
TwoCitiesCapital Posted February 14, 2023 Posted February 14, 2023 (edited) David Rosenberg on Twitter If this were us looking in the rear view mirror, would it be obvious that a soft landing were coming? Edited February 14, 2023 by TwoCitiesCapital
Gregmal Posted February 14, 2023 Posted February 14, 2023 What’s the CPI print gonna be? What’s the Fed gonna say? Who friggin cares. Go fish.
CorpRaider Posted February 14, 2023 Posted February 14, 2023 Thurston over here starting out on his three-hour tour.
drzola Posted February 14, 2023 Posted February 14, 2023 Gregmai if your actual picture here, what type of boat our you running there? Looks sweet and very nice? My father was a Fisheries and Water Sciences Biologist and a fishaholic. He psased on a decade ago this spring. Fished over 150 days a year easily in his prime.
Castanza Posted February 14, 2023 Posted February 14, 2023 28 minutes ago, CorpRaider said: Thurston over here starting out on his three-hour tour.
Gregmal Posted February 14, 2023 Posted February 14, 2023 (edited) 17 minutes ago, drzola said: Gregmai if your actual picture here, what type of boat our you running there? Looks sweet and very nice? My father was a Fisheries and Water Sciences Biologist and a fishaholic. He psased on a decade ago this spring. Fished over 150 days a year easily in his prime. Try to fish with Paul every year when Im down in the Keys. https://www.budnmarys.com/boats/relentless/ My dad used to have a boat like that. However much fun they are, theyre 10x the work. Can't beat the fishing though. In NJ I have a low maintenance Lund. Edited February 14, 2023 by Gregmal
changegonnacome Posted February 14, 2023 Posted February 14, 2023 As they FinTwit meme says - CPI ex-life continues to trend down If you've got a pulse, like eating food and want a roof over your head and consume services on a daily basis......it ain't over unfortunately.......and we are only now beginning to hit the inflation that doesn't get on a shipping container in China (thats gone and accounts for the 9% to 6% 'easy' fall)......but rather its the inflation thats Made in America and the result of manufacturing too much paper money to chase a finite and relatively fixed amount of domestic goods & services. SPY earnings for Q4 continue to disappoint and we are getting close to a final accounting on these............there's a reasonably strong argument emerging that on a go forward basis SPY @ 4100 is now more expensive, relative to earnings multiple and risk free alternatives, than it was @ 4800.
Spekulatius Posted February 14, 2023 Posted February 14, 2023 48 minutes ago, changegonnacome said: As they FinTwit meme says - CPI ex-life continues to trend down If you've got a pulse, like eating food and want a roof over your head and consume services on a daily basis......it ain't over unfortunately.......and we are only now beginning to hit the inflation that doesn't get on a shipping container in China (thats gone and accounts for the 9% to 6% 'easy' fall)......but rather its the inflation thats Made in America and the result of manufacturing too much paper money to chase a finite and relatively fixed amount of domestic goods & services. SPY earnings for Q4 continue to disappoint and we are getting close to a final accounting on these............there's a reasonably strong argument emerging that on a go forward basis SPY @ 4100 is now more expensive, relative to earnings multiple and risk free alternatives, than it was @ 4800. I think the bond market can forget about H2 2023 rate cuts. This will become obvious over the next few month.
changegonnacome Posted February 14, 2023 Posted February 14, 2023 15 minutes ago, Spekulatius said: 1 hour ago, changegonnacome said: I think the bond market can forget about H2 2023 rate cuts. This will become obvious over the next few month. Totally - and heaven forbid the relatively benign energy tailwind we’ve had goes away…..China is 100% back at the trough of global energy consumption plus some games at the margins by Russia married to the SPR piggy-bank being raided a few too many times by a President on an election cycle and you could so easily flare up energy prices again.
Gregmal Posted February 14, 2023 Posted February 14, 2023 Agree. There’s an awful lot of people who seem to be trying to make something out of nothing. Get on with your lives folks.
dealraker Posted February 14, 2023 Posted February 14, 2023 Yawl jest let me know's when's ta sell my Berkshire and AJ Gallagher...heer? Otherwise I's 'a jest readin' stuff in dis heer one-upin'-one-another doomsday bragging contest on COBF. Actually I'm reading all you guys, trying to come up with some sort of a vote contest to post up so we can look back and see which one, and of course who (that person that gets 10 years of COBF boasting/expert time) gets it right. Remember though, the certainty of it all: This inflation/recession time? It is simply one ahead of next time. Hell, if you are going to worry about this recession - then go ahead and worry about the next few too. They are, after all, absolutely part of the intrinsic value of our favorite stocks here like Alphabet... right? If, of course, that business even still exists "then"... yet something else we m-u-s-t worry about!!! Meanwhile, on the Berkshire/Fairfax "crypto" (really???) forum it seems Bitcoin is a unanimous buy. Ahh, the safety zone! Being silly, nothing but silly.
Intelligent_Investor Posted February 14, 2023 Posted February 14, 2023 Housing is gonna be a real pain for CPI prints. House prices are inelastic and won't come down unless its significantly cheaper to rent, but due to low supply, rental occupancies are high and so are rental prices due to lack of supply. I don't see a setup where the fed can hike out of supply shortages on the housing front.
Gregmal Posted February 14, 2023 Posted February 14, 2023 Check @wabuffo updates. It’s all coming down and now they’ll grasp for OER to keep the gig going. It’s remarkable
nafregnum Posted February 14, 2023 Posted February 14, 2023 On 2/8/2023 at 7:30 AM, StevieV said: I should clarify - I'm not asking for myself. I'm just curious if there are career paths people have taken that they'd recommend. The most common refrain from people seems to be: "don't become a ________". I'd love to hear opposite examples. You might like this -- the "least regretted" chart from this post:
changegonnacome Posted February 14, 2023 Posted February 14, 2023 59 minutes ago, Gregmal said: Check @wabuffo updates. It’s all coming down and now they’ll grasp for OER to keep the gig going. It’s remarkable Difference between coming down and it being at target - is I'm afraid night and day. I mean I'm trending upwards towards being a billionaire........but I'm not signing the giving pledge next week......ya know what I mean!
John Hjorth Posted February 14, 2023 Posted February 14, 2023 Sanjeev [ @Parsad], Perhaps, We may need a Macro Forum here on CoBF [, similar to Investing and Politics], too, for folks who think they may get rich [fast or slow] dealing with that matter a lot, to sort out the macro stuff and discussions related that. I think it's fair to say, some discussions are getting tiresome here.
TwoCitiesCapital Posted February 14, 2023 Posted February 14, 2023 (edited) 3 hours ago, Spekulatius said: I think the bond market can forget about H2 2023 rate cuts. This will become obvious over the next few month. Ultimately though - the good thing about bonds is you can know exactly how much you will lose if rates go an extra 1% higher and/or stay there for 6-12 months longer. Don't want the duration risk? Short term bond funds now have YTMs 4-6% with barely any interest rates risk at all. Equities are still very expensive. Fewer companies are beating estimates AND those estimates were dramatically curtailed in recent quarters. Newly revised expectations are for -5% YoY earnings growth in Q4, -5% YoY in Q1, and -3% YoY in Q2. They then expect it to get back to positive growth by year end w/ +2% for 2023. If inflation is running 6+% all year, how are equities having nominally negative earnings? If inflation in 2023 is going to average significantly higher than 2%, then why do we still view equities as an inflation hedge when earnings are only expected to grow ~2%. That will be the second year in a row that earnings growth have significantly lagged inflation for that calendar year.... Also, given that we've revised the last 2-3 quarters earnings expectations lower as we moved through the quarters, what's the likelihood that the +2% year-end target remains? Why are we paying 21x forward earnings when growth is only +2% nominal? Edited February 14, 2023 by TwoCitiesCapital
changegonnacome Posted February 14, 2023 Posted February 14, 2023 Anyway getting fixated on report to report is not particularly useful. What it does point towards is the higher for longer thesis - and if you dont think that matters relative to the prospective earnings of many public companies over the short-medium term well, OK. Rates at these elevated levels for a sustained period of time has never not done damage to the US economy. For every month that Fed Funds sits at 5%+ one should think of the cumulative scar tissue building up inside the US economy - projects being paused, financing deals failing leading to defaults, M&A deals not getting done, housing/investment commencements being postponed, consumer purchases being deferred. Not saying sell everything but pick your spots - anti-fragile resilient companies are my key overlay these days.
Spekulatius Posted February 14, 2023 Posted February 14, 2023 (edited) 31 minutes ago, changegonnacome said: Anyway getting fixated on report to report is not particularly useful. What it does point towards is the higher for longer thesis - and if you dont think that matters relative to the prospective earnings of many public companies over the short-medium term well, OK. Rates at these elevated levels for a sustained period of time has never not done damage to the US economy. For every month that Fed Funds sits at 5%+ one should think of the cumulative scar tissue building up inside the US economy - projects being paused, financing deals failing leading to defaults, M&A deals not getting done, housing/investment commencements being postponed, consumer purchases being deferred. Not saying sell everything but pick your spots - anti-fragile resilient companies are my key overlay these days. Higher for longer is good for banks. Solid deposit franchises will generate sustainably higher NIM in an environment with bonds at 4-5% than they did with ZIRP. I don't think it's priced in bank stocks for the most part. A soft landing shouldn't be that much of a problem on the credit risk side. That's directly actionable, not just macro chitchat. Edited February 14, 2023 by Spekulatius
dealraker Posted February 14, 2023 Posted February 14, 2023 10 minutes ago, Spekulatius said: Higher for longer is good for banks. Solid deposit franchises will generate sustainably higher NIM in an environment with bonds at 4-5% than they did with ZIRP. I don't think it's priced in bank stocks for the most part. A soft landing shouldn't be that much of a problem on the credit risk side. That's directly actionable, not just macro chitchat. Spek, just for your perspective...I was screaming at my family to sell their bank stocks by 2005. And I mean asshole like in their face about it. As you know I was buying banks (that I already owned) a few weeks ago.
changegonnacome Posted February 14, 2023 Posted February 14, 2023 1 minute ago, Spekulatius said: Higher for longer is good for banks. Solid deposit franchises will generate sustainably higher NIM in an environment with bonds at 4-5% than they did with ZIRP. I don't think it's priced in bank stocks for the most part. A soft landing shouldn't be that much of a problem on the credit risk side. That's directly actionable, not just macro chitchat. 100% agree......the most leveraged version of this in a way is European banks....in oligopoly markets. https://www.bloomberg.com/news/articles/2023-02-06/steve-eisman-of-big-short-fame-sees-a-new-paradigm-unfolding-in-markets?sref=7zqHEcxJ Steve Eisman had a good appearance on Odd Lots Podcast last week worth listening too........and he touches on the banking sector post-Dodd Frank and GFC reform........these are institutions stuffed to the gills with regulatory capital with assets categorized by risk weights (RWA's).....forced at the first sign of trouble to forecast and take FULL!! provisioning on expected losses on loan books.........these aint grandmas GFC banks, where the story just keeps getting worse till common shareholders get diluted in an equity raise... ....his take which chimes with mine......is that they are priced as if a modest US recession would send them into negative earnings territory or worse.......in reality I think the banks with large deposit franchies like you say will actually make a profit through the cycle in anything but the worst of the worst economic depressions. What happen to their valuations once that reality gets proved out......that are now kinda of anti-fragile......well they need to trade closer to a market multiple.......and when some are earning 16% RoE and are trading below tangible book thats a long way up to get you that market multiple. Then add in secularly higher rates due everything we've discuced.
changegonnacome Posted February 14, 2023 Posted February 14, 2023 2 minutes ago, dealraker said: As you know I was buying banks (that I already owned) a few weeks ago. My man! I nibbled on some Wells....curious what banks are on your radar?
dealraker Posted February 14, 2023 Posted February 14, 2023 (edited) 14 minutes ago, changegonnacome said: My man! I nibbled on some Wells....curious what banks are on your radar? change I added to BAC at $32-and-something --- and Wells when it was lower than now- but can't remember the price. I also added to two banks I've owned since their IPO's: Cathay (CATY since about 1990 or so) and East West (EWBC since 1999). EWBC has gone up a lot since a few weeks ago, Cathay a tad. I had intended to buy HOPE, but just literally forgot about it. My family business wanted to buy something Asian, not much of this "something", and had bought HOPE. But almost immediately they decided to change to an index - chosing EEM. The feeling was the anti-Asian thing was maxing out giving things related to Asia low prices. It was a small endeavor, almost a speculation. Edited February 14, 2023 by dealraker
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