TwoCitiesCapital Posted June 8, 2023 Share Posted June 8, 2023 Sure seems like the speculative excess is coming back into the market despite significantly higher discount rates. Carvana up 60% today to $4.5B market cap despite still losing money, still burning cash, and most liquidity improvements coming from running down inventory and not replacing it. Travel/leisure companies like RCL are trading at EV's 20-30% higher than they did in 2019 when they were profitable and discount rates were ~3% while today they're losing money and discount rates are 5.25%. NVDA is trading at 30x sales. Even if AI adds immensely to revenues and profitability, 30x sales is an enormous hurdle for future returns. Amongst other things, it seems to me that speculative excess hasn't been removed from the market. The Fed may have further latitude to continue to raise interest rates in an attempt (misguided IMO) to "fight inflation". Hard for me to imagine that being a positive for equity markets where earnings yields are already significantly below treasuries (and growth has ground to a halt). Link to comment Share on other sites More sharing options...
Gregmal Posted June 8, 2023 Share Posted June 8, 2023 So on names like CVNA, it’s all because of speculative excess? Not the bozos who recklessly shorted these things and overstayed their welcome? Surely CVNA has very little short interest? Talked with @changegonnacome about this last October. Some of these things are off massively. Still stupid crowded shorts. What genius is still hanging around for the last few bucks on the short side? Perfect example of why sometimes it’s better to not be a hero and just do nothing. Link to comment Share on other sites More sharing options...
Gregmal Posted June 8, 2023 Share Posted June 8, 2023 Yea CVNA has 65% short interest. Tell Chanos to give it a rest. And stop blaming Joe Six Pack for taking away your god given right to make money shorting a $10 stock that’s already declined 90%+. These guys have no one to blame but themselves but still shamelessly point fingers. Guess the Fed needs to hike more to bail them out, yea? Link to comment Share on other sites More sharing options...
Spooky Posted June 8, 2023 Share Posted June 8, 2023 I hope the Fed raises rates more aggressively, it will give me another bite of the apple. Link to comment Share on other sites More sharing options...
Spooky Posted June 8, 2023 Share Posted June 8, 2023 Also we just hit bull market territory on the S&P 500 again... up 20% since October. Link to comment Share on other sites More sharing options...
TwoCitiesCapital Posted June 8, 2023 Share Posted June 8, 2023 (edited) 1 hour ago, Gregmal said: Yea CVNA has 65% short interest. Tell Chanos to give it a rest. And stop blaming Joe Six Pack for taking away your god given right to make money shorting a $10 stock that’s already declined 90%+. These guys have no one to blame but themselves but still shamelessly point fingers. Guess the Fed needs to hike more to bail them out, yea? I don't think I mentioned anything about Chanos or Joe Six Pack or blamed any demographics. Quite having imaginary arguments with imagined slights against the 'little guy '. I just said speculative excess still exists and provided a handful of varied examples of speculative valuations. Perhaps CVNA is a short squeeze. It's NOT the only example of unprofitable tech company rising 40-50% this year. Nvidia and Royal Caribbean are absolutely not. So what are you trying to say? Edited June 8, 2023 by TwoCitiesCapital Link to comment Share on other sites More sharing options...
Gregmal Posted June 8, 2023 Share Posted June 8, 2023 (edited) 17 minutes ago, TwoCitiesCapital said: I don't think I mentioned anything about Chanos or Joe Six Pack or blamed any demographics. Quite having imaginary arguments with imagined slights against the 'little guy '. I just said speculative excess still exists and provided a handful of varied examples of speculative valuations. Perhaps CVNA is a short squeeze. It's NOT the only example of unprofitable tech company rising 40-50% this year. Nvidia and Royal Caribbean are absolutely not. So what are you trying to say? No, but that’s always the argument. Speculative excess is never referred to as professional folks short selling regional banks or high beta tech stocks. And it’s never the little guy calling the fund manager out. It’s something the pissed off underperformers blame for getting it wrong. It’s always saved for when stocks and typically stocks short sellers think they deserve profits on; when they go up. When you look at what’s rallying, yes, it’s super high short interest stuff, and stuff like RCL that the recession bros bid down on this never ending recession calling exercise. Stuff is indeed rebounding as last years stories prove to be greatly exaggerated which is hardly speculative excess. Much of it is short sellers throwing in the towel or perhaps just the market starting to realize these things. Same phenomenon happened in summer 2020 which also had people stunned that “how in the world are we only 5-10% away from all time highs”….As I’ve pointed out plenty, look at homebuilders. They lied all last year about an housing crash and drove these into the dirt. Turned out to be nonsense and the stocks went on a tear. When people, media, and fund managers of influence drum up these stories, they either play out or they don’t. What we ve seen this year is that they were largely fabricated. Earnings have normalized, not fallen off a cliff. The consumers and jobs market remains sound. Inflation is behind us. The world isn’t ending. Edited June 8, 2023 by Gregmal Link to comment Share on other sites More sharing options...
changegonnacome Posted June 9, 2023 Share Posted June 9, 2023 1 hour ago, Gregmal said: Inflation is behind us. That just isn’t so - with SuperCore sitting where it is and not moving down for months now….headline will find it impossible to get below 4% this year…. Ultimately what I find quite alarming is that once you come to the conclusion I have , from the actual data, that the inflation fight isn’t behind us….and that 500bps of raises has achieved no progress on domestic made in America monetary driven inflation (SuperCore)….& that the disinflation that has occurred to date has pretty much had zero to do with the Fed hikes it was simply late departing transitory inflation that was going away anyway…..and so the sticky persistent inflation underneath that remains has been immune to 500bps of rate hike hikes in 15 months….I find that quite alarming relative to how high rates may need to go given the rate insensitivity of the economy……I genuinely think, a bit like Druckenmiller, that they are some fat pitches to come. Happy to participate in this rally but feels like a great place to bank some gains…..build some liquidity…..and wait and see if Powell is gonna walk the walk late summer, fall…..cause all the inflation data to date is demanding the Fed gets more aggressive. Let’s see maybe the June/early July data on supercore surprises…..if it doesn’t things are gonna get nasty starting ~July 26th……watching the 10yr/30yr heading back towards 4% over the last couple of months shows I’m not the only one concerned that Fed is failing to bring inflation back to target. Link to comment Share on other sites More sharing options...
Gregmal Posted June 9, 2023 Share Posted June 9, 2023 1 hour ago, changegonnacome said: That just isn’t so - with SuperCore sitting where it is and not moving down for months now….headline will find it impossible to get below 4% this year…. Ultimately what I find quite alarming is that once you come to the conclusion I have , from the actual data, that the inflation fight isn’t behind us….and that 500bps of raises has achieved no progress on domestic made in America monetary driven inflation (SuperCore)….& that the disinflation that has occurred to date has pretty much had zero to do with the Fed hikes it was simply late departing transitory inflation that was going away anyway…..and so the sticky persistent inflation underneath that remains has been immune to 500bps of rate hike hikes in 15 months….I find that quite alarming relative to how high rates may need to go given the rate insensitivity of the economy……I genuinely think, a bit like Druckenmiller, that they are some fat pitches to come. Happy to participate in this rally but feels like a great place to bank some gains…..build some liquidity…..and wait and see if Powell is gonna walk the walk late summer, fall…..cause all the inflation data to date is demanding the Fed gets more aggressive. Let’s see maybe the June/early July data on supercore surprises…..if it doesn’t things are gonna get nasty starting ~July 26th……watching the 10yr/30yr heading back towards 4% over the last couple of months shows I’m not the only one concerned that Fed is failing to bring inflation back to target. Because we keep modifying the whole thing. CPI, PCE, unemployment rate, core, super core, super duper core, ultra core, ultra super duper core….anyway you cut it we are in restrictive territory and cheeseburger and bartender salaries ain’t taking us much higher on rates. Link to comment Share on other sites More sharing options...
Viking Posted June 9, 2023 Share Posted June 9, 2023 We have seen a massive increase in interest rates over the past year; far in excess of what anyone felt would happen. The Fed is also engaged in QT. We have a banking crisis at regional US banks, which is tightening credit. The Treasury needs to issue something like $1 trillion over the next 6 months to refinance and refill coffers (which will suck liquidity out of the system). Looks to me like risks to the economy are pretty elevated right now. Or traditional monetary policy no longer works - that new paradigm / this time is different thing. Does this mean people should move to cash? No, of course not. My base case is the US and global economies keep rolling along with slow growth. But i am very happy right now to lock in gains on a part of my portfolio. My cash weighting is back up to 35%. Happy to sit in the weeds (with cash earning a risk free 4%) and wait for some market dislocation where Mr Market serves up some fat pitches. I am pretty certain i will get at least a couple mouth watering opportunities in the coming months/year. Just like 2022. And 2021. And 2020… Buy and hold (index investing) worked like a charm when we lived in a QE world. It didn’t really matter what you owned… everything went up - every year. In the QT world of today, i wonder if active management might do a little better… Link to comment Share on other sites More sharing options...
Gregmal Posted June 9, 2023 Share Posted June 9, 2023 Forgot to add another one of the Feds “preferred inflation measures”…the SPY….Jpowell still having a drink and touting 3000 SPY? It just keeps changing. All that’s left is moving the goalposts. Link to comment Share on other sites More sharing options...
changegonnacome Posted June 9, 2023 Share Posted June 9, 2023 53 minutes ago, Gregmal said: Because we keep modifying the whole thing. CPI, PCE, unemployment rate, core, super core, super duper core, ultra core, ultra super duper core Greg you know thats BS as it pertains to my position - go back to my posts from late 2022/very early 23 in this thread.....and those posts from back then were a back and forth between you and I in the main.......i was talking to you back then about domestic inflation...made in america inflation i called it, occasionally I called it "underlying monetary inflation"......might have used sticky & underbelly too ....and that one needed to ignore foreign goods, supply chain stuff, energy, shipping container stuff as it was destined to disappear & roll-off..........I despise folks moving the goal posts so dont like getting falsely painted with that brush .......I've been 100% consistent on the nature of the inflation problem in the USA....never claimed it was persistent 9%....always guided to mid-4's, maybe 5 at a stretch inflation absent any cracking in the labor market/economy..........anyway I used to call it 'made in america' inflation....till this new supercore inflation name became dejour.......I decided to start using it as folks woke up to the real nub of the issue......about six months after i was talking about it! I'll take a tiny flea sized victory lap on that one.......albeit my expectations around the speed by which the US economy/labor market would detoraite in the face of 500bps in rate hikes has been off by about a country mile and for which I give myself an 'F minus'! Don't steal my 'made in america' inflation victory away Link to comment Share on other sites More sharing options...
Parsad Posted June 9, 2023 Author Share Posted June 9, 2023 Now locked...time to move on to "Have We Hit The Top?" thread. Cheers! Link to comment Share on other sites More sharing options...
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