Is The Bottom Almost Here?

[TwoCitiesCapital]

2 hours ago, changegonnacome said:

 

I can say the above with a high high degree of confidence - in aggregate across SPY....with the underlying earnings dynamics deteriorating underneath (volume/costs/margins etc.)......then layering on top the fact that bonds are competing with equities such that multiples are very unlikely to expand any time soon (contraction is the more probable path)........you've got two really strong headwinds for SPY levels.....I've traded around this idea now for many months....effectively selling vol.

 

On Europe - I would say it looks very interesting from a valuation perspective......and I've significant amount of my NAV there........Europe unlike the US looks way more like what @Gregmal talks about in regards to the US....which is to say one time event driven inflation (supply chain/energy ec.) that is subsiding as those events roll off & base effects kick in.....Europe doesn't suffer from the same level of monetary inflation issues, I contend, that the US induced via the scale of its COVID largesse.....it has excess labour capacity/immigration on the sidelines that can be induced to increase output........interest rate sensitivity is much more pronounced with much larger proportion of the credit there floating rate.....which means to the extent nominal spending growth is exceeding productivity growth the ECB can meaningfully impact households budgets and put a brake on aggregate spending growth.

 

It isnt all roses of course....being energy independent as the US is just a huge structural advantage.....likewise geography as we've talked about before.....Atlantic & Pacific Ocean/Canada/Mexico.......living in a 'safe' neighborhood with friendly neighbors is an immense advantage over time!

 

I've done well with selling vol this entire downtrend TBH. 

 

Now I'm buying it. 

[LC]

9 hours ago, Dinar said:

I would buy Diageo, Campari, Heineken Holdings, Safran, Tel Aviv Stock exchange (Israel, not Europe.)  I own but probably would not add here: Dior, L'Oreal.  

I looked at the Tel Aviv exchange a bit. Would you mind sharing your brief perspective? I was a little leery of throwing money at a financial institution in Israel. 

[Dinar]

39 minutes ago, LC said:

I looked at the Tel Aviv exchange a bit. Would you mind sharing your brief perspective? I was a little leery of throwing money at a financial institution in Israel. 

Here is a link to a write-up from 18 months ago, it is NOT my write-up.  I think the business has improved since then.  

Tel Aviv Stock Exchange (TASE IT) Investment Overview

October 2021

A Brief History

▪Tel Aviv Stock Exchange (“TASE,” or “the company”) began operations in 1953 when a consortium of Israeli banks and investment houses joined together to establish the exchange.

▪Over the next ~50 years, TASE established a clearing house, enabled electronic trading, launched options trading, and created the first exchange traded note.

▪In 2000, the Knesset (the unicameral national legislature of Israel) approved an amendment to Israeli securities law enabling dual listing in Tel Aviv for shares that were listed in the United States.

▪Subsequently, the company expanded upon this arrangement, allowing dual listing of securities trading on the London Stock Exchange and Nasdaq.

▪In 2018, Hong Kong, Singapore, and Toronto were also added for dual-listing.
▪In 2017, the Knesset ratified an amendment enabling changes to TASE's ownership structure. Additionally, the Israeli District Court

ratified the TASE demutualization arrangement.

▪The privatization paved the way for TASE’s for-profit evolution, reducing conflicts of interest and increasing TASE’s freedom to operate as an independent, standalone entity.

▪In August 2017, Itai Ben-Zeev was appointed as CEO.
▪In July 2019, TASE became a publicly traded company when it floated 31.7% of its shares to foreign and Israeli institutional investors

and to the public at large.
▪The shares trade under the Bloomberg ticker symbol “TASE IT”.

2

Source: company filings and presentations.

Business Description ▪TASE is a monopoly financial infrastructure asset that plays a central role in Israel’s capital markets and overall economy.

▪The company is unique among global exchanges in that it spans the gamut of Israel’s entire capital markets infrastructure, offering products and services that include (a) listing, (b) trading in equities, fixed income, and derivatives, (c) clearing and settlement, (d) securities lending, (e) IT/co-location, (f) market data, and (g) indices.

▪To our knowledge, no other exchange has all these products and services under one roof.
▪TASE’s revenue streams are diverse, with non-transactional revenue (e.g., clearing, market data) growing as a percentage of the

3

overall mix

1H21 Revenue by Source

1H21 Revenue by Type

  

16% 20%

21%

40%

40%

Trading and clearing commissions Clearing house services
Other

Securities registration
Distribution of trading and other data

Transactional

Non-transactional

Source: company filings and presentations.

60%

Investment Thesis

A recent demutualization and IPO, TASE is a monopoly financial infrastructure asset that we believe is capable of compounding intrinsic value at ~35%+ annually in the coming years. Historically, TASE operated as a member-owned, not-for-profit entity run primarily for the benefit of Israeli banks. Strategic and financial decisions were made on behalf of the company’s members. TASE’s recent demutualization reduces conflicts of interest and increases its freedom to operate as an independent, standalone entity.

We believe that TASE has significant opportunities to launch new products and services, optimize pricing, and drive efficiency gains. We expect significant value creation to result from accelerating revenue growth and margin expansion. In addition, there are several sources of value which we expect management to realize over time that, in aggregate, can be worth more than half of the company’s current market capitalization. We believe management is highly incentivized to create value and is taking appropriate steps in this direction. Finally, we believe that TASE could be an acquisition target for a larger global exchange.

We note the following:

• ▪  TASE’s revenue growth is accelerating and can grow sustainably in the high-single / low-double digits.

• ▪  The company’s margins can double or more as they approach peer levels over time.

• ▪  TASE owns its corporate headquarters building, which alone is worth ~30% of the current enterprise value and can be monetized.

• ▪  An unusual arrangement with pre-demutualization shareholders could result in cash proceeds to TASE equivalent to ~14% of the current enterprise value (without additional dilution).

• ▪  Net cash currently on the balance sheet (~7% of the market cap) and future free cash flow generation (we estimate ~30% of its current market cap over the next ~5 years) provide management with significant firepower for organic and inorganic investments.

• ▪  TASE’s CEO, Ittai Ben-Zeev owns options on 4.25 million shares, providing a strong incentive to create value.

• ▪  Given significant consolidation activity in the exchange space over the years, we think TASE could be acquired by a larger global exchange for a significant premium.

4

Thesis Point #3: Owned Real Estate a Sizable “Hidden Asset”

▪ TASE owns its corporate headquarters building at 2 Ahuzat Bayit Street in downtown Tel Aviv. ▪ The building is state of the art, less than ten years old, and in a prime location.
▪ We believe the company can crystallize the value of this asset over time.

▪ Management believes it would cost ~2% of the building value annually to rent the space the company requires.
▪ A 6.0% cap rate (which we understand to be the approximate market level for premier Tel Aviv office properties), implies

significant value creation in a sale or sale-leaseback transaction.
▪ Using conservative assumptions around rent / sqm and Tel Aviv office cap rates, we believe the building is worth ~500 million ILS,

or ~30% of the current enterprise value:

7

 

Source: company presentations, CBRE Tel Aviv Market Survey (Q320).

Thesis Point #4: Unusual Pre-IPO Arrangement another “Hidden Asset”

▪ As part of the TASE privatization, pre-demutualization shareholders received shares in the new company that entitled them to a maximum of 508 ILs per share in value upon a sale, with the proceeds in excess of that cap going to TASE.

▪ In H2-19, the banks sold a bit over 10% of their shares at ~1,000 ILs on average.

▪ This resulted in proceeds to the banks of ~14.3 million ILS and proceeds to TASE of ~13.8 million ILS. ▪ Currently these shareholders own ~19.5 million shares (~19% of shares outstanding).

▪ If all these shares were sold at the current price, TASE would receive more than ILS 222 million of net proceeds.

▪ This value is equivalent to ~14% of the current enterprise value.

▪ On February 10, 2021, TASE announced that its board of directors is exploring a structure that enables the buyback and allotment of shares to pre-IPO shareholders with the goal of incentivizing them to sell their “Arrangement Shares.” While discussions have broken off for the time being, it is encouraging that management and the board are exploring ways to crystallize value and increase liquidity.

8

TASE IT - Pre-Restructuring IPO Proceeds

Shares Held by Pre-Restructuring Shareholders (at 12/31/2019) Maximum Value per Share to Pre-Restructuring Shareholders Total Proceeds to Pre-Restructuring Shareholders

Current TASE IT Share Price
Maximum Value per Share to Pre-Restructuring Shareholders Value per Share to TASE (at current share price)

Shares Held by Pre-Restructuring Shareholders (at 12/31/2019)

19.5 5.1 ILS 99.1

16.8 5.1 11.7

19.5

    

Source: company filings and presentations.

Total Proceeds to TASE IT (at current share price) ILS 228.2 % of Current Enterprise Value 14%

Extremely Attractive Pro Forma Valuation ▪ Multiple sources of current and future value have the impact of reducing our effective purchase price to a low single digit multiple of

estimated 2026 EBITDA. These include: ▪ Current cash on the balance sheet;

▪ Future free cash flow generation;
▪ Net proceeds from share sales by pre-restructuring shareholders; ▪ Monetization of headquarters building.

▪ We believe that management could add further value through share buybacks or M&A, but we don’t give them explicit credit for that in this analysis.

TASE’s global exchange peers currently trade at mid-teens enterprise value / EBITDA multiples (see Appendix II) Source: company filings and presentations.

9

  

Extremely Attractive Long-Term Compounding Potential

• ▪  We believe the combination of accelerating revenue growth, margin expansion and several other levers for value creation can combine to drive intrinsic value growth of 35%+ annually.

• ▪  Should management allocate the ample firepower it will have at its disposal towards value-creating M&A or accelerated share repurchases, we believe upside can exceed 40% annually.

• ▪  While we’re not underwriting a takeout, we believe TASE is a logical acquisition candidate for a larger global exchange. Historically, such transactions have occurred at sizable premiums due to significant synergy potential.

Framing the Base Case Return Opportunity

(amounts in millions of ILS or ILs per share, unless otherwise specified)

Core Business: Estimated 2026 EPS Exit Multiple

Core Business Value per Share at Year-End 2025

Additional Sources of Estimated Value:
Net Cash per Share at Year-End 2025 Cumulative Dividends
Owned Real Estate Value (net of taxes) Pre-IPO Shareholder Sale Proceeds to TASE

Total Additional Sources of Value

1.85 26.0x 4,814

Total Per Value Share 434 407 260 244 494 463 228 214 1,416 1,328

10

   

Total Value at Year-End 2025 Current Price
% IRR

6,142 1,678 36%

Source: company filings and presentations.

Risk Factors

▪ Potentially adverse regulation.

• ▪  Given TASE’s relatively recent privatization, the regulatory environment in Israel is not yet well defined, which can create

  scope for surprises.

• ▪  All indications thus far are that Anat Guetta, Chairwoman of the Israeli Securities Authority, is pro-market and has goals of increasing capital markets participation and opening the Israeli market to foreign investors and other market participants.

  ▪ Geopolitical risk.
  ▪ Particularly in the Middle East, this can be difficult to handicap.

  ▪ Timeliness of management execution.
  ▪ The pace of revenue growth and margin expansion could take longer than anticipated.

  ▪ Limited liquidity in TASE common stock.

• ▪  The company’s common stock has relatively low daily trading activity, which could limit our ability to purchase and sell

  shares easily and may increase short-term volatility in the stock price.

• ▪  We believe that liquidity will likely improve over time as TASE moves past its demutualization and relatively recent IPO and develops a track record with investors, but this could take longer than anticipated or not materialize at all.

11

Appendix II – Comparable Company Analysis

13

Capitalization

Valuation

Profitability

TASE IT Comps Company

Tel Aviv Stock Exchange

Global Exchange Peers

B3 SA - Brasil Bolsa Balcao
ASX Ltd
Cboe Global Markets Inc
Bolsa Mexicana de Valores SAB de CV CME Group Inc

Deutsche Boerse AG TMX Group Ltd Euronext NV Nasdaq Inc

Average Median

Market Cap

533

13,624 11,364 12,975

1,117 71,368 31,554

5,898 12,324 32,545

21,419 12,975

Enterprise Value

429

11,533 7,509 13,851 985 74,258 35,792 6,429 14,925 38,072

22,595 13,851

EV / Revenue

EV / EBITDA

P/E Ratio

Dividend Yield

1.08%

1 23% 3 97% 1 58% 5 19% 1 81% 2 09% 2 30% 1 48% 1 11%

2.31% 1.81%

EBITDA Margin

Growth

Proj'd Cur Yr+1 Growth Revenue EBITDA EPS

    

Ticker

TASE IT

B3SA3 BZ ASX AU CBOE BOLSAA MM CME DB1 GY
X CN ENX FP NDAQ

Price

1,678.00

12 22

80 48 121 69 38 91 198 72 143 75 132 45 99 60 194 64

Cur Yr

4.2x

68x 10 4x 96x 51x 15 4x 89x 83x 10 1x 11 2x

9.5x 9.6x

Cur Yr+1

3.7x

64x 99x 93x 48x

14 4x 83x 79x 87x 10 7x

8.9x 8.7x

Cur Yr

13.4x

84x 14 2x 14 8x

85x 23 4x 15 5x 13 7x 17 0x 20 2x

15.1x 14.8x

Cur Yr+1

10.9x

83x 13 6x 14 6x

78x 21 3x 14 3x 13 3x 14 2x 19 6x

14.1x 14.2x

Cur Yr

39.6x

14 6x 31 4x 21 5x 15 3x 29 9x 22 0x 18 8x 19 4x 26 4x

22.1x 21.5x

Cur Yr+1

31.3x

13 8x 30 2x 20 8x 13 9x 27 2x 20 2x 18 5x 18 4x 25 3x

20.9x 20.2x

Cur Yr

31.6%

Cur Yr+1

33.6%

15.0%

22.3% 26.8%

          

80 7% 72 9% 64 7% 60 0% 66 0% 57 5% 60 7% 59 3% 55 4%

78 1% 72 9% 63 6% 61 0% 67 8% 58 2% 59 3% 61 2% 54 7%

54% 49% 30% 66% 69% 72% 48%

16 1% 4 3%

20% 50% 12% 85% 97% 85% 24%

19 8% 30%

57% 40% 30% 98%

10 2% 89% 15% 55% 41%

 

64.1% 60.7%

64.1% 61.2%

6.6% 5.4%

6.7% 5.8% 5.0% 5.5%

Despite faster revenue growth, significant margin upside, and substantial “hidden” assets, TASE trades in-line with its global exchange peers on an EV/EBITDA basis

Note: all market cap and enterprise values shown in U.S. dollars. Valuation metrics are based on consensus estimates from Bloomberg. Source: company filings and presentations.

[Viking]

So what are we learning as we begin month 3 of 2023? Inflation is a bitch. Not transitory after all (we really mean it, this time). What does this mean for investors? Interest rates are going higher. Perhaps the Fed funds rate in the US will get to 6%. What does this mean for stocks? Apparently nothing. The economy can easily handle much higher rates. That is a surprise to me… buy hey, we all know the stock market is always right.
 

The US (and Canadian) employment report on Friday will be super interesting. If the job market stays strong… we could see a 50 basis point increase when the Fed next meets. 
 

The Canadian $ is getting killed today. Interest differential matters. The Bank of Canada is willing to tolerate higher inflation - many Canadian households carry far too much variable rate debt (unlike the US) - home mortgages, lines of credit etc. The Bank of Canada is on pause at 4.5%.
1.) So a plunging Can $ will drive inflation higher in Canada. Because lots of everything we buy is imported (i.e. get ready for another big price increase from Apple).

2.) And government spending at both Federal, Provincial (BC anyways), and municipal continues at exceptionally high levels. Property taxes in the city of Vancouver are increasing 10.7% this year; and they are projected to increase something like 8% on average over the next 4-5 years. 
3.) Some economists have estimated as many as 1 million new people entered Canada last year (illegal and legal immigrants, international students etc).
4.) there is a good chance oil prices are headed higher in 2H as we get into the period of season strength. Chinese demand should also really be picking up by then. And perhaps we see Russian supply start to dip (sanctions, lack of investment).
But the Bank of Canada is convinced the current 4.5% BofC rate will lick inflation up here… good luck with that. 

Edited March 7, 2023 by Viking

[Gregmal]

Thirty two hundred! Even if just for a split second so I can say I called it!

[SHDL]

20 minutes ago, Gregmal said:

Thirty two hundred! Even if just for a split second so I can say I called it!

NQ 3200 would be great, hope we get there tomorrow morning 

[BiggieCheese]

Out of the loop on this - why are so many healthcare stocks (e.g., J&J, Danaher, Phizer and CVS) near 52-week lows?

[Spekulatius]

1 hour ago, BiggieCheese said:

Out of the loop on this - why are so many healthcare stocks (e.g., J&J, Danaher, Phizer and CVS) near 52-week lows?

Sector rotation. They were hot last year, this year not so much. Don’t ask me why.

 

There are some pockets where COVID-19 hangover exists from lower demand. Pfizer’s COVID-19 vaccines are one example, but it also effects testing equipment and some clinical research business.

Edited March 7, 2023 by Spekulatius

[Spooky]

5 hours ago, Viking said:

But the Bank of Canada is convinced the current 4.5% BofC rate will lick inflation up here… good luck with that.

 

How are you playing this Viking?

[Spooky]

I got pretty lucky with timing but transferred a lot of CAD to USD yesterday.

[Viking]

4 hours ago, Spooky said:

 

How are you playing this Viking?

@Spooky i have been locking in pretty good YTD gains for a while now (my total portfolio is up about 12%). As i have said before, most of my investments are in tax free accounts (i only pay tax when i withdraw the money) so i can be very tactical. As of today, i am at 55% cash and that is earning a very respectable interest rate of 4%. Persistent inflation + Strong economy + Rising interest rates + hawkish Fed = volatile stock market. I wonder if financial markets are going to get one more tough love lesson from the ‘don’t fight the Fed’ instruction book. My guess is Mr Market is going to serve up a few more fat pitches later this year. I think patience + cash will be rewarded.

[Cor]

Out of curiosity if CAD continues to weaken against USD how would that affect Canadian oil stocks?

[Gregmal]

Was talking to someone earlier and the subject came up and I couldn’t figure it out, but look at energy prices right now. Compare something like oil, to like the last decade or two. Why are people getting a free pass on just declaring energy prices are too high and part of the dreaded inflation problem…no, they are not. Not even newsworthy or close really lol. 

[SharperDingaan]

7 hours ago, Cor said:

Out of curiosity if CAD continues to weaken against USD how would that affect Canadian oil stocks?

 

They do better as the product is sold in USD, and production costs are in CAD.

It also stokes M&A as CAD companies become cheaper in USD terms. 

All good 

 

SD

 

[thepupil]

50 minutes ago, Gregmal said:

Was talking to someone earlier and the subject came up and I couldn’t figure it out, but look at energy prices right now. Compare something like oil, to like the last decade or two. Why are people getting a free pass on just declaring energy prices are too high and part of the dreaded inflation problem…no, they are not. Not even newsworthy or close really lol. 

 

I'd agree here.

 

Brent is $82 relative to $71 10 year average

WTI is $77 relative to $65 10 year average

Natty G is $2.60 relative to $3.40 10 year average

Rotterdam Coal is $118 relative to $100 10 year average 

Dutch Natty is 44 relative to 34 10 year average 

 

All of these have declined substantially over the past year or so, are above pre-covid prices, but not crazily so, and not really at all in real USD terms. 

 

There's some strong dollar at work here though. For example, Brent is $78 euros, relative to $60 Euros 10 year average (so 30% above, whereas Brent is only 15% above 10 yr average. 

 

 

[Gregmal]

So much of this continues to shine through as bullshit. For once, it’s great to see these do nothing politicians destroying Powell for his tunnel vision obsession with jobs. Jobs are good you clown! The government shares the blame, but sitting here with such a blindness to the bigger picture is recipe for disaster. This has become a stealth war, waged by big corporations and greedy rich people on the average Americans…pissed off and grumpy that labor is expensive, interest rates for freeloading at zero risk aren’t higher, and that it’s expensive to dine out.
 

Energy is not an issue. Housing is where it should be after a generational event and a decade of under building, and when you look at food, you really see this core issue…government created industry…wage price spiral my ass Cheetos are $5.99 a bag now up from $2.49. Your cost inputs for Fritos didn’t double in the past couple years. You just have 40% of the shelf space and your one or two competitors are like oh cool, more money! Same with anything from a farm…you create industries with oligopoly like features…yup, airlines now too, this is what you get. That’s life. Playing these games with rates in an attempt to part the have nots with what little they have is downright sinister.

[changegonnacome]

5 hours ago, Gregmal said:

The government shares the blame, but sitting here with such a blindness to the bigger picture is recipe for disaster.

 

Falling corporate profits in both nominal & real terms in this environment....as we've talked about here ad nauseam.....does not suggest some corporate conspiracy or greed both driving inflation and benefitting from it.
Corporate greed I'm afraid is not the boogie man here.....corporate profits will be some of the collateral damage, already are in this inflationary period. I wish it was as easy as owning PepsiCo & collecting my Cheetos cheques….it isn’t.

 

The other beneficiary of inflation is someone with marketable skills in short supply who's labor ratchets up in lock-step with inflation such that their YoY purchasing power is being preserved.......and where that person acquired a portfolio of HARD assets pre-pandemic such as homes and investment properties.......and smartly re-financed those hards assets with mortgages in 2020/2021 with the numbers 2 or 3's in front of them. These folks are winners too here but the combo of both is likely relatively rare and would require (based on anecdotal chats) someone to be jumping jobs yearly.

 

Inflation is a silent tax on us all.......the only true true beneficiary is the fiscal authority who's historical debt issued in the distant past (on the basis of 2% inflation expectations) grows smaller in REAL terms as its taxing authority falls on ever higher nominal wages/ salaries , capital gains and corporate profit numbers being generated in its fiefdom.......such that the historical debt piles service costs in real terms is falling or put another way the debt burden is becoming less and less of a burden! That assumes of course the fiscal authority doesn’t simply ratchet up its committed spend as the nominal tax windfall rolls into the coffers…..but even modest restraint or deadlocked congress should see the debt pile shrink in real terms…

 

The US gov might have sent cheques to everybody during COVID……but I really do consider what’s happening currently with inflation as a version of people unwittingly and without their understanding sending inflation cheques back to D.C.….there are no free lunches in life…..and bailing out everyone and everything that moved in 2020/2021 was not ‘free’. Relative to the potential alternative societal COVID scenario - anarchy, chaos, mayhem - what we got and the price we are paying now with inflation can be seen as rather benign. 

 

 

Edited March 9, 2023 by changegonnacome

[Spekulatius]

@changegonnacome Yes, that’s correct. Inflation is a flat tax on everyone and we know where tax checks go. Inflation is the government way to silently reduce liabilities and obtain more taxes at the same time.

[Gregmal]

What part of the Cheetos got hit with enough inflation to warrant prices moving from $2.49 to $5.99 a bag? Corn? Vegetable oil? The plastic bag? Manufacturing process is entirely automated. Guess Chester the Cheetah asked for a raise?
 

A lot of the food price increases are simply being done because they can. which end of the day isn’t a bad thing. People shouldn’t be eating that junk anyway. 

[Ulti]

24 minutes ago, Gregmal said:

A lot of the food price increases are simply being done because they can

https://podcasts.apple.com/us/podcast/companies-are-telling-us-the-real-reason-theyre-still/id1056200096?i=1000603417602

odd lots podcast on this very subject

[Spekulatius]

As to why Cheetoh's went up in price - listen to this oddlot's podcast. The new corporate mantra is "Price over volume". It means that companies started to rise prices even if they lose some volume. There are a lot of examples cited:

Pepsi (double digit price increases), Wingstop (raised prices when chicken wings wholesale price went up and didn't lower them when they went down), Hotels (occupancy down compared to 2019, prices up), Cruises (same) . You can also look at energy (crude) or automobile (less supplies, higher prices). The list goes on and on. It's not just limited to consumer goods, it happens in industrial markets or services as well.

 

This will end when the consumer  / customers start to push back presumable. So far that has not happened yet.

 

Another thing to note - people and business are now already conditioned to see price increase and don't push back as much any more. This shows that inflation has a strong behavioral aspect. in other words we have already sticky inflation that creeps up in many, if not most goods and services.

https://www.bloomberg.com/news/articles/2023-03-09/corporate-earnings-calls-provide-clues-on-inflation-odd-lots-podcast?srnd=oddlots-podcast#xj4y7vzkg

Edited March 9, 2023 by Spekulatius

[Gregmal]

So really it’s a multifaceted economic evolution that’s taken decades to play out, mainly through consolidation. Companies are raising prices and consumers bitch but they’re ok with it…yet these government schmucks and hedge fund guys just say “inflation” and declare we need to spray nukes until it stops? Won’t the consumer just simply say, no, at some point?
 

Rate hikes haven’t solved much of anything, really. They’ve dropped housing activity, but prices? Not really. Energy? Is fine despite robust consumer activity and travel the past year. At the start of the inflation campaign a year ago a bag of chips was $3.50….nope there. Big victory though on Beyond Burgers…way down in price. And of course Joe and Tom six pack can now get their hands on a 15 year lease in Times Square! But otherwise, as was mentioned from the beginning, the rate increases won’t do much because the issue isn’t rooted in anything rates can solve. But let me guess…the folks who short the market screaming for rate hikes will just claim this is evidence we need more rate hikes lol?

[thepupil]

12 hours ago, Gregmal said:

So much of this continues to shine through as bullshit. For once, it’s great to see these do nothing politicians destroying Powell for his tunnel vision obsession with jobs. Jobs are good you clown! The government shares the blame, but sitting here with such a blindness to the bigger picture is recipe for disaster. This has become a stealth war, waged by big corporations and greedy rich people on the average Americans…pissed off and grumpy that labor is expensive, interest rates for freeloading at zero risk aren’t higher, and that it’s expensive to dine out.
 

Energy is not an issue. Housing is where it should be after a generational event and a decade of under building, and when you look at food, you really see this core issue…government created industry…wage price spiral my ass Cheetos are $5.99 a bag now up from $2.49. Your cost inputs for Fritos didn’t double in the past couple years. You just have 40% of the shelf space and your one or two competitors are like oh cool, more money! Same with anything from a farm…you create industries with oligopoly like features…yup, airlines now too, this is what you get. That’s life. Playing these games with rates in an attempt to part the have nots with what little they have is downright sinister.

 

 

you can see PEP's wild and crazy (and by that, i mean completely non existent) margin expansion from all those price hikes here:

 

Edited March 9, 2023 by thepupil

[Gregmal]

3 minutes ago, thepupil said:

 

 

you can see PEP's wild and crazy (non existent) margin expansion from all those price hikes here:

 

These have largely occurred in the last year, and especially that last 6 months while the input increases largely precedes that. If investing in super duper large blue chip stocks was my thing, I’d probably wager heavily on those margins going up over the next 12-24. Same with something like Lamb Weston. 

[Spekulatius]

I also think the Fed is in the "business" to impact peoples and by extension the business behavior to transmit their monetary policies. That's why Powell and the other Fed governors do these talks and the Fed publishes their notes and all those things.

 

If the Fed truly believed that behavioral aspects don't matter or they can't influence them, then they would do nothing of this sort and just raise or cut interest rates or change monetary policies without comments or pre- announcements. That's clearly not what they are doing.