Spekulatius

Aren’t the e-currencies much more disruptive to banks? After all, if I can store my digital currency in any type of digital wallet, I don’t need a checking account any more. Assuming the Digital wallet has transactional features, what would the point of a checking account be, especially with banks offering no interest ? How would the banks getting deposits in this scenario?

Anyone noticed that they actually met earnings and beat on revenues? The sale of their NAND business which lost hundred of millions for $9B is good news too - every little bit helps. Back in 2006, when they were under pressure from AMD as well, they traded for >20x earnings. Apparently, expectations are much worse now.

The roads around Shanghai are certainly better than the roads in most US cities.

Well at least you admit it. This was not a low stakes issue which is why I questioned your level of confidence. When people become confident in such things, the danger is that precaution is thrown aside. When leaders dismiss precaution and instead exhibit confidence that “the virus will be gone soon” or “a vaccine will be here soon”, the cost of them being wrong—economically and in terms of lives lost—is massive and will be borne by society... The Asian countries and some others like NZ seem to get the precautionary principle. Others not so much. Let's for a moment assume the herd immunity thesis is broken (we don't know that yet). You're not the only one holding it, there are plenty of others who will realize this as cases and hospitalizations go up, and we anticipate they could go up fast. My question is, can one make money from this understanding? If yes, where are the opportunities to make money if a significant third wave hits? Edit: this question is based on the realization that cases and markets have not correlated much in the last 6 months These days, the way to make money is: bad news -> stimulus -> stonks go up (and even good news as long as fed doesn’t tighten) The virus has gotten less deadly as we’ve matured our treatment modalities: proning, remdesivir, antibody cocktails, steroids, avoiding things that don’t work (HCQ,etc) but a third wave would drive a population already conditioned to a deadlier covid to reduce consumption/activity. And having a virus that can kill your relatives and/or spending time in the ICU/hospital with a respiratory virus is not exactly enticing even if you survive. So while stonks may go up, the fear is that the real economy will get hit. As they say, an ounce of prevention is worth....but it’s too late now for that anyway. I agree on the importance of stimulus - it’s is more important than the outcome of the election. As Long as the WFH plays do well, the general stock Market will do well too, especially QQQ, even if a lot of other sectors are ailing.

That about sums it up: https://www.cnbc.com/2020/10/23/fauci-says-trump-hasnt-attended-white-house-coronavirus-task-force-meeting-in-several-months.html

Europe got complacent. Cases here are rising too - in all regions. I think we will crack 100k cases/ day very quickly. Hospitalization is the one metric to look at. The last waves topped out at 60k COVID-19 hospitalization. Once we get to this number, the hospitals system becomes strained, we are going to have local restrictions again. Edit: another indicator - my wife went to Costco today and noticed that several items like paper, wipes were sold out, just like during the first wave. Apparently people are getting ready for things to come.

TRV as it reached my price target.

Disclosure: i've held banks before and, in fact, in 1996-7, investing in CIBC (one of the large oligopolistic banks in Canada) resulted in my first double over a few short months. In retrospect, i eventually realized i didn't know what i was doing and that everybody is a genius in a bull market. Unfortunately, this means that in 2044, it could be realized that the post referred to above is utterly irrelevant. The post was triggered by the items listed below and concerns mainly the US although similar dynamics apply in countries equipped with a modern day central bank. In fact, one could argue that the ECB countries and especially Japan are leading the way (declining NIMs, ROEs etc) into the quicksand and the US seems to say "i can stop anytime". i wonder if negative rates are on the way and some people suggest that, after a very short term boost, negative rates would tend to cause what European and Japanese banks, in general, are experiencing. https://www.frbsf.org/economic-research/publications/economic-letter/2020/september/commercial-banks-under-persistent-negative-rates/ items: -a few 10-Ks -this thread -this, read this AM: http://blog.yardeni.com/2020/10/dont-fight-t-fed.html -this book, written some time ago, before Citigroup became a shadow of its former self https://www.amazon.com/Citibank-1812-1970-Harold-van-Cleveland/dp/0674131762 The way I've been trying to think about how the profitability of the US and Canadian banks will fare in a zero or even negative rate environment is to look at some of the Nordic countries and other European countries with banking oligopolies. They have been dealing with zero and negative rates the last few years and have remained profitable throughout. Lower rates hurt profitability until the structure of an oligopolistic market kicks in and the big players compete less on price. How encouraging is the example of Scandinavian banks really? I it is correct that those banks are profitable, but Nordea trades at 0.85x book, Danske trades at 0.45x book, SVenska trades around book. Better than some European peers, but not great either. From the looks of it, they run way higher leverage than HS banks too, which is another issue (probably structurally enabled through regulatory constraints ). Besides, the US market is way less of an oligopoly than Canada and Scandinavia. Inthink the Bank to look at are the UK banks like Lloyd once the UK comes past Brexit and the COVID-19 issues.

What does PM offer (other than country diversification) that MO doesn’t? MO should have more pricing power (Price for cigarettes in thr US is relatively low) and is cheaper. I think what spooked the markets with PM is the 7.6% unit volume reduction which includes IQOS sales. The tobacco market goes up in smoke way faster than historically.

The Swiss Kanton “Schwyz” went from “doing great” to “ Oh crap!” Within 2 weeks. Cause is apparently a super spreader Jodler event (Swiss folks singing) with 600 attendants. Rapidly rising and constraint hospital capacity are the result. Schwyz is a relatively sparsely populated Kanton in central Switzerland.

^ Interesting papers. The paper below seems to indicate that excess death were somewhat undercounted. Granted Alzheimer victims don’t have a great prognosis anyways, but still:

No. I did not. I am a cheese lover, so I suspect I missed something.

Yes, this is very true unfortunately as whatever is posted in the politics section inevitably spills over. I have seen at least one investment board ( investorvillage.com ) getting totally destroyed by political posts. That said, the separate section for politics contains the damage somewhat.

The growth over value statement from Lachlan makes me think twice investing in FOX. It makes no sense whatsoever for Fox shareholders. Fox is a mature cash cow business. If Fox doesn’t distribute cash now, when will they do so?

Van Trapp from VT if you can get it. Sierra Nevada also has an Octoberfest that’s pretty good. I do drink the Sam Adams Octoberfest which is easy to get where I live. From the German Oktoberfest beers, I prefer the Hacker-Pschorr and the Löwenbräu, but they are much harder to get.

I looked. And there is almost no criticism of Trump in Feb/March. He is the President of the United States. He's going to get criticism (even if he did everything right). But blatant Trump-bashing was exceptionally rare on this thread. My guess is that you are recalling conversations from other threads. I'd say that you are correct about Feb/March. The discussions in Feb/March had already frequently become contentious, with a few posters directing personal attacks and insults at others who held different points of view. At that stage, the personal attacks were usually of the nature of questioning the other person's intelligence or numeracy (ex, person X is too stupid to understand exponential growth). The reality was that there were intelligent and numerate posters on both sides of most issues, but their views were driven by differing assumptions about a wide variety of known-unknowns. My memory was that the political rancour was a little later in June or July, when most of Europe and Canada had their situation well in hand after a lengthy lock-down, but Sweden and the US had a growing mess on their hands. At that stage there were frequent posts lamenting the situation in the US and frequent questions about whether America was great yet and #winning was occasionally used. It was a bizarrely political discourse where every bad outcome was attributed to particular politicians. The venomous political statements related to the covid situation in the US seem to have abated somewhat as numerous countries in Europe have lost control of their situation. SJ The trends in Europe show how quickly this can run out of control. 40k cases today in France is pretty bad. They have started curfews , but this time, they are more targeted towards hoy spots. I think a total lockdown of the economy is unlikely in Europe as it is in the US. US trends are pretty lousy too - rising cases almost everywhere, but that’s not driving the response - hospitalization is and it’s rising too. These COVID-19 trends have persistence, once they start rising, they keep rising for a while: https://covidtracking.com/data/charts/us-currently-hospitalized These hospitalization rates at a local level will drive a response at a local level. We will find out if muscleman herd immunity theory is correct, but I think not. Too many population groups haven’t seen the virus yet. I live in MA ~35 miles out of Boston and no way there is any herd immunity here. Just 10 positive cases in a town of 3300 with no case since May (we have town stats here and testing a availability is pretty good). Other towns around me are similar , but there are also hot spots in between (mostly blue collar communities) with way higher rates too. I expect rising rates and hospitalizations, but hope for the best. Thanksgiving and inevitable travel and family gathering could well ignite another surge. We know from Europe that family events and private meetings/house parties are a major cause of spread and those are hard to control.

You say you understand but the poster above didn't really explain it. Inventory went down, meaning it was sold and hence generated cash. The carrying value of the inventory would be expensed through COGS. The *total* cash flow generated from the sale is really the gross margin (from your income statement) plus the carrying value decrease (change in inventories). I thought the explanation was fine. Now do inventory write downs. An inventory write down is a non event for the cash flow statement.

I think people here underestimate the importance of this being and LP with IDR’s. With this structure 1) The GP calls all the shots 2) GP has an interest to grow in size and issue more LP units 3) IDR’s will be exchanged into more LP units when it is beneficial for the GP. This playbook is well established and I am really surprised, investors still fall for it.

They have a nice asset in Wyoming, which is cost-advantaged relative to synthetic production, and cost-advantaged relative to other trona miners. However, I don't trust management. Didn't take a rocket scientist to figure out they inflating annual production through deca rehydration, and eventually production would drop off significantly. The manner in which they disclosed this made them appear either dishonest or incompetent. Happy to chat more about this one on a dedicated thread for CINR. Read the same VIC pitch and I'm in too. Lets start one :) This entity still has 50% IDR’s. Automatic pass for me.

Interesting fact about NIMs ( Q2/Q32020): Lloyd ( UK ): 2.4% WFC: 2.13% BAC: 1.72% JPM:: 1.75% All those banks NIM are being reduced by a flood of deposits. BAC and JPM have a lot of non- interest income, WFC not so much. Years ago, I looked at Brit and Irish banks and thought : “ Are banks with NIM < 2% really worth owning?”. Now here we are...

In my view, this is the main concern. The narrative: Streaming video on demand and video games are fundamentally better products than linear TV, so eventually linear TV (and the cable bundle) won't exist, just as the horse as a mode of transportation effectively no longer exists. Fox currently gets almost all of its profits from FoxNews's position in the cable bundle and the affiliate fees that produces (along with reverse retrans from Fox Network's position in the cable bundle). FoxNews cannot monetize in the same way outside the bundle (e.g., DTC), so the company is based on a dying business model that will slowly bleed out and always look cheap. The Fox Network has many of the same problems, and you can't make money broadcasting sports because the sports leagues will suck out all economic profit. Which parts of that are wrong? Yes, I think this is a pretty good outline for the bear case and it is really hard to argue why this is not going to happen. It’s more of a matter of when then if, imo. Quite frankly, I think the generation that is growing up right now will not watch much linear TV any more. Fox also has the renewal of the NFL right coming up in 2022, which could prove to be a watershed moment for them. It’s not their biggest cash cow, but according to analysts estimates Fox sports is still 25% of their cash flows, so losing the NFL rights could really hurt.

The Covid-19 turbocharged WFH trend provides an option for people, who want well paying jobs who formerly were only available in a city, to move elsewhere and do the same job. Some pole will like this and take this option and some don’t because they prefer to live in a City anyways. How these net movements work out is any wine guess, but it seem certain that there is a net migration out of large expensive cities. The places these people move to (suburbs) will see stronger home appreciation and large apartment buildings in large cities will probably be less desirable.

CBOE (add ) for me.

Thanks for the post Spekulatius! It's my first time hearing about title insurance so I'm just wondering, what made you choose ORI over FNF or FAF? Sorry for the ignorance. ORI isn’t a pure play title insurer - its just 40% of their business. ORI is cheaper one some metrics - P/B. I think they might have more leeway to recover and they re not solely depend on refinance volumes like pure play FNF and FAF are. I think FNF and FAF are good plays here and probably the way to play the refinance boom. Both seem to have higher margins in their title insurance business (double digit vs high single digits for ORI, if I remember correctly), so that’s another interesting tidbit that I don’t understand.

I think it is. One risk to look at is that they own gathering assets in Wyoming and Appalachia. both are low cost NG Bassins, but CHK went bankrupt and we still have to see if they need to take a haircut on cash flows (via contract renegotiations) to keep the gas flowing. I have exited this on the way down around current prices and haven’t entered back in, so I haven’t kept track of this. Alternative plays with both pros and cons are EPD and OKE.