Picture Credit: David Merkel, with an assist from the YouImagine AI image generator and Pinetools || Twitter birds read books

Capital Markets

• Money managers are so eager to take advantage of high yields on shorter-term debt that they may be undervaluing an unusual risk embedded in many of the bonds https://t.co/xMsrMpPb3q  I would hardly call callable bonds “quirky.” But 3NC1 bonds fit this yield curve Mar 03, 2023
• US government bonds prices have been hit by inflation & economic growth fears https://t.co/oSqaVg72y6  “It’s unlikely that an economy as levered as the US economy can take real yields like that for an extended time. At some point, the expectation is that the Fed will have to cut.” Mar 03, 2023
• @MebFaber My paternal grandpa bought CDs and rolled them in his retirement 1967-1991, my mom stayed invested in her stocks. Who won? My mom. Mar 03, 2023
• These are some of the 1980s suburban offices that back Blackstone’s mortgage-backed securities now in default https://t.co/tnXDJX9X6I  Higher rates lead to inability to refinance marginal commercial real estate debt — this time, in Finland Mar 03, 2023
• The SPAC fad is ending in a pile of bankruptcies and fire sales https://t.co/KZs7UH5gRh  A lack of focus on risk control, and the incentives of the sponsors meant that no one was really looking over the economics. I couldn’t see any value in it. Mar 01, 2023
• Oaktree Capital moves into leveraged buyout lending with $10bn fund https://t.co/A8aRrdUcFp  I respect Oaktree, but is this really the right time in the risk cycle to do this? Mar 01, 2023
• The likes of Apollo and Blackstone are seizing a once-in-a-generation opportunity as Wall Street’s leveraged finance desks reel from billions of dollars in losses on mistimed loans https://t.co/5knMymTssP  Increase of loanable money will compress spreads & misprice risk. Mar 01, 2023
• The inherent flaws of corporate bond ETFs https://t.co/MUnliZRXyv  There is a counterargument. Some market participants and academics argue that the bond ETFs more closely reflected the underlying economics of the market than did the multivariate pricing grids. Feb 28, 2023

Companies

• Tesla already uses heat-pump technology in its cars. Now Elon Musk is teasing the idea of making heat pumps for homes https://t.co/F2Q90NbCCu  Home heat pumps aren’t always effective. Mar 03, 2023
• The financial lifeline that pulled Bed Bath & Beyond from the brink of bankruptcy is already at risk because of the retailer’s tumbling stock price https://t.co/vu667fkh9g  Trying to avoid default via dilution is a ticklish business Mar 03, 2023
• https://t.co/yIx3A3qmEF  employees buying a home will soon be able to use their company shares as collateral, as part of a deal with mortgage lender https://t.co/bDkVjveM6J  https://t.co/Ruv1VkH2P0  Someone will lose as a result of this… can’t tell who yet. Mar 03, 2023
• Life insurers raised rates on policyholders. The policyholders fought back and won refunds. https://t.co/Aue1WomWPF  Insurers forget that w/nonguaranteed elements they can adjust interest rates paid with impunity, but mortality charges have to be based off of experience. Mar 03, 2023
• Viatris warns it will stop selling essential drugs in UK without changes to drug pricing agreement https://t.co/Jji5Mb8V9Y  NHS not facing its limits. UK budget is strained. You can borrow money, but who will respect your creditworthiness? FD: + $VTRS Mar 03, 2023
• Scandal at South Africa’s Eskom: the CEO and the cyanide-laced coffee https://t.co/v2SUs4GQyf  Until South Africa gets rid of the corruption and crime surrounding Eskom, it will never have a stable supply of electricity Mar 02, 2023
• The used car retailer is ceasing all operations and closing its headquarters in Memphis, Tennessee https://t.co/Vhdu2P5vhb  Bad intermediate-term trends in used vehicle sales, prices, and default rates. Feb 28, 2023

Odds & Ends

• Whiskey Fungus Fed by Jack Daniel’s Encrusts a Tennessee Town https://t.co/VI2a7DjWjm  What an unusual externality. Jack Daniels should find a way to compensate those harmed, or find a way to kill the fungus. Mar 02, 2023
• Will the Harm from Baltimore’s Highway to Nowhere Ever Be Repaired? https://t.co/Ikca1ej12Q  Half-doing it was worse than doing it, or not doing it. We ended up with the worst of all worlds, but that’s just Baltimore. Bad political culture leads to very bad outcomes Mar 02, 2023
• Some businesses have been told to remove certain adjustments in future financial statements to avoid violating rules against individually tailored metrics https://t.co/xBI9coSxSD  The PCAOB could write a “principles” document to show in theory how non-GAAP earnings should work Feb 28, 2023

Railroads

• Was Greece’s train crash that killed 57 people caused by more than “human error”? https://t.co/ECPZdEayAP  Article goes into neglect of rail infrastructure Mar 03, 2023
• Railroads aren’t the only ones that bear responsibility for making sure that train cars are fit to ferry cargo, @blsuth says. Most of them are privately owned by shippers, lessors and investors https://t.co/I0j2cy48dC  Some private railcar owner might have to share in the damages Mar 03, 2023

Culture

• Homicides were down in the US in 2022 and continue to fall in the biggest cities. The cause of the spike is still being determined, @foxjust says https://t.co/nryomAR3IZ  It helps to factor in % of population that is male, 15-30 years old. Mar 03, 2023
• Inside the tawdry, drug-fueled, violent world of America’s top life insurance salesmen https://t.co/WqToefmoUh  They aren’t the top. They are just a backwater for a bunch of frauds. Aberrant companies like Globe Life $GL, that tolerate such malfeasance will lose to short-sellers Feb 28, 2023

Deflation

• Rent declines in major US metro areas signal tenants may be maxed out on how much income they can devote to housing https://t.co/e588CD8iKt  Good for renters & probably a good leading indicator on inflation Feb 28, 2023
• Heard on the Street: Previously red-hot prices for cobalt and lithium are suddenly slumping https://t.co/dYhKcRfJRU  The cure for high prices is high prices. Feb 28, 2023

Picture Credit: David Merkel, with an assist from the YouImagine AI image generator || Twitter bird happily surfs

Real Estate

• NYC’s biggest-ever office-to-housing conversion is opening in the Financial District at prices ranging from just over $1 million for a studio to $12.75 million for a four-bedroom spread https://t.co/sXCwHGAgC3  Nice, if you can afford it. Feb 24, 2023
• Home lenders are looking for ways to make 6% mortgages more appealing https://t.co/fOq3ulMZm0  Don’t do a buydown of the first-year interest rate. If you can’t afford the house on a level rate basis, don’t buy the house. What will you do when the rate rises? Feb 24, 2023
• That 3% Mortgage Just Keeps Getting Better https://t.co/mFcum8UPo1  Rather than prepay, invest prepayment money in higher-yielding safe bonds. If rates fall such it doesn’t work anymore, take the appreciated bonds and do a big prepayment Feb 24, 2023
• The US housing market lost the most value since 2008 https://t.co/qJYXFrPWp7  Has the FOMC forgotten the lessons of the Great Financial Crisis? Yes! Same errors that Bernanke committed… same certainty Feb 23, 2023
• A growing number of big office landlords are defaulting on their loans, reflecting high interest rates and the popularity of remote and hybrid work policies https://t.co/5LJIGtxPrn  Slow motion train wreck Feb 22, 2023
• Some people buying their first home will see their fees cut by about $800 a year under a new program that aims to address soaring borrowing costs https://t.co/ABVJpJfqj1  Make FHA loans more attractive by reducing the rate charged on mortgage insurance by 0.3% Feb 22, 2023
• A couple near Chicago sees investing in real estate as a way to boost their wealth. A financial pro offers advice https://t.co/lVFWXKktkX  No. Real estate is a business. Consider the value of your time, as you say you want to start a family. Buy shares in equity REITs instead. Feb 22, 2023
• Pyramid’s Crossgates Mall loans lurch toward default https://t.co/Xx2tiOqSR6  “Like most large malls across the U.S., the Crossgates business model has been crushed by the pandemic and changing shopping trends” Feb 21, 2023
• A growing number of big office landlords are defaulting on their loans, reflecting high interest rates and the popularity of remote and hybrid work policies https://t.co/5LJIGtxPrn  Office properties & lower quality retail will show increasing defaults Feb 21, 2023
• Europe’s property sector is springing cash calls and dividend cuts on shareholders. But investors in the financially stronger firms aren’t all smiles @hughes_chris https://t.co/nxWXx4cVWw  Effect is highest in Sweden, lowest in the UK Feb 21, 2023
• A California-based real-estate agent was arranging a deposit when she realized she was getting scammed. “My guy was ready to wire $70,000 to this escrow. Thank God he didn’t.” https://t.co/IRvY6Ap0fW  Bizarre real estate stories where crime was a factor. Feb 20, 2023

Odds & Ends

• Starbucks launches a range of olive oil-infused drinks in Italy to boost market share in a country where it’s struggled to gain a foothold https://t.co/qsDrYX3fHr  That will work? Feb 23, 2023
• Is tort reform in the Sunshine State even possible? https://t.co/xyLdMxeue8  Unlikely. By the state gov’t being too interventionist in market issues and yet allowing for too many tort claims to go to trial, the P&C insurance markets are broken in Florida Feb 23, 2023
• @michaelxpettis I said something like this yesterday, but not as well. Thanks. Feb 23, 2023
• The Securities and Exchange Commission is investigating whether investor-protection laws were violated as stablecoins were issued https://t.co/PAF7eJnwfF  They are akin to deposit accounts in banking, and should be regulated that way. This one doesn’t belong to the SEC. Feb 23, 2023
• Social Security Myths That Won’t Die https://t.co/BFGmcGq9GE  Mostly correct, though there are some nuances that he misses. Worth a read. Feb 22, 2023
• The pandemic wiped out decades of gains by US students. Many parents are in the dark about how far their own kids must go to recover https://t.co/MKkoW2YSuK  One big error of the COVID era was not requiring an additional year of school for students, to make up for what they missed Feb 22, 2023
• Major brokerages and news media feature technical analysis https://t.co/D6REmikOvx  Pictures grab people, because they like patterns, whether intellectually defensible or not. Feb 21, 2023
• My tweet “Clouds moving rapidly west, with strong surface winds out of the south” s/b “Clouds moving rapidly east, with strong surface winds out of the south” But what a day, now it is “Clouds moving rapidly east, with strong surface winds out of the north” Feb 21, 2023
• The Perfect Retirement Investment Nobody Wants https://t.co/27PPPYbt3k  Life insurers have gotten badly burned on LTC. Many annuity companies don’t want to offer LTC. Agents don’t like Immediate Annuities because they never get another commission from the policyholder Feb 21, 2023
• Asda is rationing sales of fruit and vegetables after widespread shortages. Here’s what UK shoppers need to know https://t.co/x7ITKaOtuU  Effects of a bad growing season in N. Africa Feb 21, 2023
• Plains, Ga., has about 550 residents—including Jimmy Carter, who is receiving home hospice care. “When I heard the news my heart hurt to know that he was going through this.” https://t.co/3Q5eSEDV6s  Liberal Baptist became a most improbable President of the US Feb 20, 2023

Non-US

• Soaring onion prices are forcing governments to protect supplies https://t.co/QpkUL7EyZN  If you want to see riots, have poor people unable to afford moderately good food. Feb 25, 2023
• New Zealand’s recent cyclone shows “the importance of physical cash still in society today,” RBNZ Assistant Governor Karen Silk says https://t.co/lxfSOZh3Th  You can’t have a society without physical currency Feb 25, 2023
• How India is shaking off its shackles and emerging as an economic power https://t.co/E7WETLSov6  This is wishful thinking. Cultures change slowly, and the Indian government is still pretty corrupt. Feb 23, 2023
• Iraq is planning to pay for private-sector imports from China in yuan, injecting foreign currency into the financial system to help ease pressure on the dinar https://t.co/IIQsGpJNbI  Will do little for the Iraq economy Feb 22, 2023
• Iran introduces fresh restrictions on foreign currency sales after a rush on euros and dollars weakened the rial to an all-time low of 500,000 against the greenback https://t.co/BCAg4mi3Om  Corruption, bad policy and sanctions create this hyperflation Feb 21, 2023
• Kazakhstan says local brokerages that snapped up Russian sovereign debt last year did so largely on behalf of clients who were Kazakh and Russian residents https://t.co/he4RkZaErR  Own Russian sovereign debt? There is liquidity in Kazakhstan. Feb 21, 2023
• Russian exports of discounted crude and fuel oil to China jumped to record levels as the re-opening of the world’s biggest energy importer gathers pace https://t.co/j6iiSMmeFT  The discounts to Brent for Urals ($13) and Espo ($8) Crude are smaller than what I have read in the past Feb 21, 2023
• Terrorists were blamed when explosives were found in an SUV parked outside the home of Mumbai’s richest man. The truth was far more alarming. https://t.co/ckyNmd6as8  Long article on entrenched police/political corruption. Another reason India will not develop Feb 21, 2023
• Japan promises radical spending to boost its birthrate. Will it work? https://t.co/judPpbjI0z  It probably won’t, but perhaps governments could reduce old-age social insurance payments to those who don’t raise children, making the systems solvent #thepunishmentfitsthecrime Feb 20, 2023

Portfolio Management

• Wagering on the bounce in stocks was always a long shot. Now it’s looking like a sucker’s bet https://t.co/Uy9U89wJBF  The problem is greater for growth stocks Feb 25, 2023
• “There’s a risk that the macro economy delivers results that markets are still woefully unprepared for,” Billionaire quant investor Cliff Asness warned https://t.co/1yPXSxPr4f  “the valuation gap between the priciest and cheapest stocks is still at the 94th percentile” #agree Feb 23, 2023
• The fixed-income market has become too bearish, too quickly https://t.co/4CyBDZevFM  Hard to say. There seems to be more demand to borrow on the long end of late. They may be wrong, but the long end of the bond market is rarely irrational. Feb 22, 2023
• Rajiv Jain is the opposite of Ark CEO Cathie Wood. He’s quietly built a stock-picking juggernaut by investing in old-school, out-of-favor companies https://t.co/JEYvyUM7WD  Difficult to get so many decisions right consistently. Feb 22, 2023
• The DJIA’s shake-up in the summer of 2020 dumped Exxon Mobil, Pfizer and Raytheon just as it was their turn to thrive https://t.co/QAnLl0umqv  The short-run effect of index inclusion/deletion is up/down, but the 2020 DJIA changes had the opposite performance over the next 2.6 yrs Feb 21, 2023
• Rising interest rates boosted corporate pensions last year. This year rising rates may boost costs. https://t.co/YctKh06Uxi  It doesn’t have to work this way. You can invest to immunize your pension costs against changes in interest rates. It’s not rocket science. Feb 20, 2023
• Biden’s SEC is coming for your investment account https://t.co/kTUj8hg9nQ  Actually, Gensler’s proposal would level the playing field, and create a fairer market structure for smaller investors. Why we have such a fragmented market system today astounds me. Feb 18, 2023

Economics

• “It’s everywhere.” A bird flu outbreak has led to the death of nearly 60 million farm-raised chickens, turkeys and ducks in the U.S. Farmers fear the virus is here to stay. https://t.co/3v2NvG5N5u  A greater proportion of laying hens have died vs chickens generally in the US. Feb 23, 2023
• Which explains why egg prices have risen so much more than chicken meat prices… https://t.co/eEyGIkUTVG  Feb 23, 2023
• The world’s largest trial of the four-day work week finds a majority of companies are making the shift https://t.co/hnAky9goEQ  Color me dubious Feb 21, 2023
• The rise of kitchen table economics https://t.co/Bo6nBxqnZB  Yes, contracts are too complex and construe everything in favor of the large corporations, but you don’t have to sign them unless you are getting enough value. Feb 21, 2023
• Letter: The economic conditions that make wars more likely https://t.co/NfubUHNC8R  “A plan is needed to regulate current account imbalances, which draws on John Maynard Keynes’s project for an international clearing union.” You really want near-fixed exchange rates? Feb 21, 2023
• Presidents are tweeting about it, and it’s featuring in election campaigns: Here’s how the world fertilizer crisis became political https://t.co/in7c4UVLgO  This is over shortages of potash & phosphate. Also trade issues stemming from a few wars and their related sanctions Feb 21, 2023

US Politics

• Illinois Governor J.B. Pritzker said he’s willing to spend what it takes to keep Ron DeSantis & Donald Trump out of the White House https://t.co/V8cFk679HD  “Taking your eye off the ball.” I’ve done that. Neglects core responsibilities as governor to criticize national politicians Feb 25, 2023
• White House is considering two economists who in the Obama administration—Karen Dynan and Janice Eberly—as candidates to become the Federal Reserve’s vice chair https://t.co/IbgMLjjkiP  Please, not an economist. No academics. No former Fed or government lackeys. Feb 23, 2023
• The Defense Department and Microsoft are investigating an error that exposed military emails, highlighting the security risk of moving sensitive Pentagon data to the cloud https://t.co/w2YPXK9VCM  Happens to the best of us, and the government as well. Feb 23, 2023
• Biden’s Social Security Trap by @wjmcgurn https://t.co/o2c5ZSJQrV  There is no political will to solve OASDHI (Social Security). Thus in 2032, we will face a scenario like this: https://t.co/BXY54hjsoB  https://t.co/8YWKsnmZvX  Feb 21, 2023
• The PCAOB says it doesn’t have jurisdiction to monitor audits of privately held crypto firms. Some say there are ways to strengthen the board’s crypto oversight https://t.co/GUoKyWjYY6  Until you can say it is a deposit, commodity, or security, you don’t know how to regulate/audit Feb 21, 2023

Technology

• Germ-zapping lasers can help cut down on infections after surgery https://t.co/979qq9KSSu  Sounds promising. Feb 25, 2023
• How Rust went from a side project to the world’s most-loved programming language https://t.co/YvAvVy4H0K  Long read, but fascinating. Memory flaws are one of the biggest reasons for software crashes, and Rust eliminates that problem. Feb 24, 2023
• Apple is making major progress on a no-prick blood glucose monitoring system for its smartwatch https://t.co/fzN4nDBa1Q  Big stuff, if it works, which has been elusive so far Feb 23, 2023
• Ozempic’s popularity among people looking to lose weight has limited supplies for diabetes patients who depend on the drug to control their blood sugar https://t.co/2cFHjgLzjK  What is nice for those who want to lose weight is necessary for diabetics Feb 22, 2023
• Removing carbon from the air will be a key step in fighting climate change. But it’s plagued by problems https://t.co/IhFxHwvqYV  Interesting, if it genuinely does what they say it does Feb 20, 2023

China

• Xi Jinping is set to have more control in decisions over the financial system, with the likely revival of a powerful committee and a possible appointment of a key ally in the central bank https://t.co/eu2p8z2dpx  What good or bad comes from this is a mystery – ill-minded tinkering Feb 25, 2023
• Empty shipping containers pile up at packed Chinese port as orders dwindle https://t.co/3f8GPQ1By3  So much for the Chinese economic recovery Feb 21, 2023
• Thousands of Chinese Retirees Protest Government Cuts to Benefits https://t.co/8JmxGfyENx  Social Insurance plans fail when the ratio of workers to beneficiaries gets too low. Feb 21, 2023
• Any gains China might have anticipated from its embrace of Russia are hard to spot. But the costs are clear & growing https://t.co/F8wNl8ruWU  “Xi is trapped in a strategic dilemma, at the mercy of events. His erstwhile masterstroke is looking more and more like a losing bet.” Feb 21, 2023
• Pakistan’s creditors are demanding China take as big a haircut as them in any sovereign debt restructuring, perhaps bigger. It should @mihirssharma https://t.co/2wnXDsT4nW  If corruption is not ended, debt forgiveness won’t do much Feb 20, 2023

Companies

• Carvana’s disappointing quarterly results sent the online used-car dealer’s stock into freefall and triggered a string of warnings from analysts https://t.co/Pe6xrZjMBT  So much for showmanship $CVNA Feb 25, 2023
• BYD Most Likely Faked Its 2022 Sales Numbers, Real Ones Could Be Much Lower https://t.co/hpjoersddF  I have no idea, but if true, wow. Feb 24, 2023
• National Public Radio will reduce its staff by 10% after projecting a $30 million revenue shortfall for the coming year https://t.co/shgKfke3Xb  In the end, it is just a business, albeit a nonprofit. Good nonprofits care for their people and don’t overexpand during booms https://t.co/Tlzm6Habx1  Feb 23, 2023
• The EV question for auto executives is: How quickly should they make the shift to electric vehicles? https://t.co/8MaVClqMLB  The danger is in moving too fast on this. Let unsubsidized consumers decide. Feb 22, 2023
• Almost a decade ago, Elon Musk envisioned a passenger transit that moved at nearly the speed of sound. Where is it? https://t.co/rhGkIWdDSn  Hyperloop: Boring fantasy, not technology Feb 21, 2023

South Africa

• Eskom’s chairman says outgoing CEO behaved “reprehensibly” when he made accusations of theft and corruption within the state-owned electricity company https://t.co/dupwUx6T1U  Telling the truth is “reprehensible.” Coal thieves also a problem. Get ready for more blackouts. Feb 23, 2023
• South Africa’s rand rallies after the budget unveiled details of plans to deal with debt at the ailing state-run power utility Eskom https://t.co/TX3kvaN8PN  Unless you deal with corruption and crime surrounding Eskom, this is all for naught Feb 22, 2023
• South Africa’s finance minister will probably spend about five minutes of his budget speech Wednesday on Eskom — a tense 300 seconds for bondholders https://t.co/SBswUTR3G4  If you can’t end the corruption & sabotage regarding Eskom, the debt transfer won’t help South Africa Feb 21, 2023

Ukraine War

• As NATO’s military commander a decade ago, Admiral @StavridisJ worked productively with Russian generals. But Putin’s obstinance led to his doomed war in Ukraine https://t.co/73lA9K8J0B  The Russian military exists to make the French military look good Feb 23, 2023
• As Russia’s invasion of Ukraine enters year two & relations with China worsen, concerns persist over whether the US is ready to fight a war https://t.co/w2JbHsZNi0  “Every single person knows that what we’re doing is crazy,” said Ferrari. “But everybody is helpless to change it.” Feb 21, 2023
• Vladimir Putin should read the story of King Croesus. In fact, so should we all https://t.co/abmJ06n3qu  Almost no expected the current outcome. That said, many wars end in a stalemate. That seems to be what is happening now. Feb 20, 2023

Personal Finance

• Why don’t we talk about money? https://t.co/uYnJdKGDFs  Other reasons: looking bad by comparison, people may think you are arrogant because you have done well. I think children need to understand how the economics of the family works, so they can do it as well or better Feb 22, 2023
• Some parents aren’t waiting for retirement or urgent healthcare needs to move in with adult children https://t.co/EeBAGjFVHu  Think hard about this, and all the adults talk it through — who is in charge? How are bills paid? Privacy? There are many ways for this to go wrong. Feb 22, 2023
• Markets Weekend: When is a Banc not a bank? https://t.co/QoSdP3yFKx  When it offers bonds that function like deposit accounts. How Compound Banc could originate the loans mentioned does not make sense. Avoid. Avoid. AVOID! ht: @felixsalmon Feb 20, 2023

Adani Group

• The combined market value of Adani Group’s shares have just fallen below $100 billion https://t.co/qsNPOK1xGh  The question is how much liquidity they really have, versus maturing debts and needed working capital. Paying off a few debts w/scarce liquidity could backfire Feb 22, 2023
• Almost a month after a bombshell short seller report lopped off $132B in market value from Gautam Adani’s empire, the Indian billionaire has doubled down on his comeback strategy https://t.co/7RybNimFLC  Making a virtue of necessity, while capital costs skyrocket Feb 20, 2023
• Adani Group stocks have seen more than $132 billion of market value wiped out since the explosive Hindenburg Research report, but none is hit as bad as Adani Total Gas https://t.co/3j9MzDyK5S  What a chart https://t.co/nlK8PZNAKZ  Feb 20, 2023

Credit

• The $1.8 trillion student debt bubble is about to burst https://t.co/LPQAkME8BI  Do NOT borrow money to get a degree that will NOT give you the income to repay the debts. And don’t complain unless someone forced you to go to college & take on the debt Feb 25, 2023
• An office landlord tied to money manager Pimco has defaulted on $1.7 billion of mortgage notes https://t.co/xUCEuoGkfW  Becoming a self-reinforcing cycle of skittish lenders, defaults, sagging prices for offices. Feb 24, 2023
• A quirky German debt product is gaining fans around the world. Here’s what it is all about https://t.co/FvUnDBAfLJ  Illiquid promissory notes with low disclosure and no secondary market. I can see why borrowers like it, but all the lenders get is extra yield vs a traditional debt Feb 22, 2023

Picture Credit: David Merkel, with an assist from the YouImagine AI image generator || Twitter bird flies off into the sunset

Companies

• Missed signals: behind Trafigura’s $577mn loss on non-existent nickel https://t.co/fJNQSmKbgl  Fascinating that they never did physical checks of what was delivered. Also that they didn’t do a background check on TMT. Feb 16, 2023
• Podcast Companies, Once Walking on Air, Feel the Strain of Gravity https://t.co/RaNTop40uS  My kids ask me to do a podcast. I tell them it’s too much work for too little gain. I would rather read than listen, unless I am driving or cutting the yard. Feb 15, 2023
• One of the world’s richest families was thrust into the spotlight by a surprising share sale from one of its own members https://t.co/Gk6Xzr2OcU  You need a liquidity plan, akin to what a private real estate fund does. You can’t assume that no family member needs liquidity Feb 15, 2023
• How Ben & Jerry’s ended up at war with itself https://t.co/x2W5knUvR7  The revolution eats it own children, even as they eat ice cream Feb 15, 2023
• As tech companies shed thousands of jobs, more employees want a say in their severance https://t.co/WHDVvdwRCO  Hiring a lawyer at your severance can be valuable. Feb 15, 2023
• On the latest episode of the Zero podcast, @AkshatRathi speaks to the founder of Imprint Energy, which developed a printable battery for internet-connected devices. https://t.co/uIdNoxfPlz  Looks promising Feb 15, 2023
• FICO scores are flawed. These lenders say they’ve found a better way to judge your credit https://t.co/jklyVW53r3  Sowing the seeds of new consumer bankruptcies on the low end of the income scale. Avoid debt for consumption purposes. Feb 14, 2023
• A $4B accounting shortfall typically raises alarm bells for an auditor. Somehow a PwC affiliate missed it at Americanas https://t.co/Vr72rqV6c7  PwC may have cultural problems. If you can miss something that large & not be culpable, it calls into question the value of audits Feb 14, 2023
• As tech giants look to slim down, middle managers are feeling the pressure https://t.co/4I5JhO6ez8  Not sure if this is good or bad Feb 13, 2023

Odds & Ends

• New Car Prices Are So High Only Rich Americans Can Afford Them https://t.co/yrGEmDSIVS  This will eventually have political impacts, as regulations affect poor people more than the rich Feb 18, 2023
• Wanting to go big with AI in search, Microsoft could end up causing the kinds of harm it will come to regret, writes @parmy https://t.co/e9g3Mlom6D  They are not sentient. They are easily tricked. They are code. Feb 18, 2023
• The buildout of so-called dark warehouses has begun, but the high-tech facilities are far from common due to their high price tags and the limitations of robotic technology https://t.co/i1xgwi8BKY  Not quite ready for prime time Feb 17, 2023
• A ‘Crucial Bridge’ to History, the Codex Sassoon Could Fetch $50 Million https://t.co/z9xQGClGoF  Really, you can’t put a price on this. I bet there are Hebrew scholars worried about who will buy this, & future access. Feb 16, 2023
• 3 amateur codebreakers set out to decrypt old letters. They uncovered royal history https://t.co/kNGYZx6YT7  But nothing significant, really… Feb 16, 2023
• This Company Uses Machine Learning to Track Your Antibodies https://t.co/c0r5Bk1Tn4  Promising technology Feb 15, 2023
• Two of the most-talked-about Super Bowl ads on Sunday focused on an unlikely topic: Jesus https://t.co/lDOsgH3cjM  The gospels were written for a Roman audience as eyewitness accounts of who Jesus was & what he did. Read them & ask, was Jesus a legend, liar, lunatic or Lord? Feb 13, 2023
• @codywillard Wow, Cody. Glad you’re alive. The Lord had mercy on you and your family. Feb 12, 2023

Culture

• Yes, Single People Can Be Happy and Healthy https://t.co/6mrXtdv6ai  It is better to be single & wish you were married, than to be married & wish you were single. That said, this article is wrong, at least for men. Married men live longer & are happier than single men, on average Feb 18, 2023
• The adults celebrating child-free lives https://t.co/hkiZK3zrpn  Those not having or adopting children should be excluded from government pensions and healthcare benefits Feb 18, 2023
• Some school districts are doing away with honors classes, which has made some parents unhappy https://t.co/rPHDXEx68L  All teaching only reaches a fraction of IQs. This is why there needs to be many levels of teaching: high, middle, low, if you want to have all children improve. Feb 17, 2023
• Education should not be a social experiment. It needs to be based off of what works, not wishful theories. What gets taught to prospective teachers in college is positively harmful to pedagogy. We need to end that. https://t.co/uHyxOznUxl  Feb 17, 2023
• Miriam Adelson, along with her late-husband, poured tens of millions of dollars into former President Trump’s reelection campaign. Now she’s leading a push to legalize gambling in Texas https://t.co/jMmlxpVWq7  Legal gambling leaves society as a whole worse off Feb 16, 2023
• As the country emerges from a pandemic that left children zoning out over Zoom, parents are turning to the turbocharged “Russian math” method to give their kids an academic edge. https://t.co/zsdtgrNnel  The examples given are not impressive Feb 16, 2023
• Disney has tightly controlled Winnie-the-Pooh’s image. With the copyright expired, ‘Winnie-the-Pooh: Blood and Honey’ breaks the wholesome mold https://t.co/2H3IxjRtOc  This is not good, but it is notable. Perhaps $DIS will find a way to sue. Feb 15, 2023

Real Estate

• America’s Priciest Neighborhoods Are Changing as the Ultra-Rich Move to Florida https://t.co/GOIJ61QsPD  The wealthy seek lower taxes and warmer places. There should be no surprise here. Feb 15, 2023
• Turning offices into condos: New York after the pandemic https://t.co/z8zoyRUTyy  Popular concept. Tough but not impossible to execute Feb 15, 2023
• Brookfield Defaults on Two Los Angeles Office Towers. The properties include the Gas Company Tower and the 777 Tower https://t.co/KmTLc9r9OZ  Losses go to Brookfield DTLA Fund holders, & their lenders Feb 15, 2023
• When It’s Easy to Be a Landlord, No One Wants to Sell https://t.co/brqym7aoJS  With help from firms like Mynd that do property managment, you can keep your home w/a low rate mortgage, and rent it out Feb 13, 2023
• Why mortgage rates spiked from 6% to 6.5% early-February 2023 & what’s next https://t.co/y6sKncYEBs  Complex way of saying “We don’t know.” Hint: the long end of the curve does not move much in response to short-term inflation. FOMC, take note Feb 13, 2023
• The high costs of housing are influencing romantic decisions https://t.co/opJ5P2Abjw  Moving in reveals who each of you really are. Selfishness, laziness, bad communicating, substance abuse, lying… break relationships Feb 13, 2023

Adani Group

• Adani Group tells investors that they will address deadlines to repay debt with options including private placement notes and cash from operations https://t.co/FUEWh43C3I  But will they be profitable after refinancing near-term debt at higher rates? What covenants will they make? Feb 17, 2023
• Adani halts $847mn acquisition of coal-fired power plant in India https://t.co/hJQDR61XfB  Financing is less available. Not a good sign. Feb 16, 2023
• That would functionally subordinate some of their public debts, making them even less valuable. I remember looking at the final private placement Enron issued. Complexity was over the top; we did not participate. I would love to see the PP memorandum leaked. https://t.co/sDRoh7P6qc  Feb 16, 2023
• Indian conglomerate Adani Group is in talks with potential investors as it considers offering privately placed bonds for at least three of its group companies, people familiar with the matter say https://t.co/YF98mIE4Vb  Maybe they do secured debt, or add protective covenants Feb 16, 2023
• Adani Group sees no material refinancing risk for its listed companies and has no significant near-term liquidity requirements https://t.co/frK2aP7nZq  Complex holding company structures make liquidity management difficult. I’ve lost money on a few of those. Feb 15, 2023
• Adani Group sees no material refinancing risk for its listed companies and has no significant near-term liquidity requirements https://t.co/frK2aP7nZq  If so, keep paying down your debts, and feed losses to the shorts. Feb 15, 2023

The Markets

• The rise of short-dated options is creating event risk on the scale of the stock market’s early-2018 volatility implosion, JPMorgan’s Marko Kolanovic says https://t.co/IRIg7SYOb8  Possibility of self-reinforcing move if 0DTE options go into the money, forcing option deals to hedge Feb 16, 2023
• A once arcane corner of Wall Street is now in demand as borrowing costs soar and $6 trillion of bond maturities loom https://t.co/XZsM1nDN43  The corporate bond market is not arcane, & though there will be bankruptcies, this is not a crisis. Feb 16, 2023
• The shares have surged so much that it’s creating a dilemma for investment giant Nuveen — and posing a little-known risk to its investors https://t.co/jmcR1WpDbH  Why not do an “in kind” distribution as a dividend, or a discounted buyback, or just “ride the ask” $ENGH Feb 16, 2023
• Credit Suisse is offering investors a hefty incentive to buy its new euro bonds just days after announcing a bigger-than-expected quarterly loss https://t.co/OeuM8J31NO  Seems desperate Feb 15, 2023
• The mood is starting to shift in global credit markets after a three-month rally https://t.co/VRjlamNJ0W  Credit rally overdone & difficult to get away from LIBOR #liborwasbetter Feb 13, 2023

Non-US

• Nigeria is trying to gain more control over its vast cash economy by compelling citizens to swap their old money for newly designed naira bills. But the plan is running into serious trouble https://t.co/63mjaLLbBQ  Difficult to outlaw cash when financial systems are underdeveloped Feb 16, 2023
• It’s undermining Beijing’s attempt to engineer an economic recovery tied to consumption https://t.co/GrjowTdfdT  Efforts to get Chinese to consume more creates financial speculation via low rates on personal loans. Feb 15, 2023
• More than 200 construction bosses face arrest in Gaziantep and cities across Turkey’s earthquake zone. https://t.co/sCgMpMdLup  Corruption leading to deaths Feb 15, 2023
• Japan is quietly experiencing its biggest outbreak of the pandemic https://t.co/rbwea15TwH  Elderly population is more likely to die. Medical resources are stretched. Feb 15, 2023
• Moldova’s pro-European president accused Russia of trying to overthrow its democratic system and open a fresh front in Moscow’s war on Ukraine https://t.co/2koKvf0DbJ  Putin wants the USSR back. Feb 13, 2023

Central Banking

• Richmond Fed President Tom Barkin says he supported the central bank’s plans to continue raising interest rates in quarter-point increments https://t.co/R9w8bhtw3l  Driving through the rear-view mirror. My three questions he didn’t answer at the 3/22 @CFASBaltimore all came true Feb 17, 2023
• President Christine Lagarde reiterates that the European Central Bank intends to raise borrowing costs by another half-point next month https://t.co/zGOtVri6ka  Unless you want to discover hidden weaknesses in EU financial systems, you shouldn’t invert the yield curve further Feb 15, 2023
• Liquidity, leverage and interconnectedness? https://t.co/abqrRH6lsZ  Good interview w/@fmnatalucci. He understands financial risk and liquidity. A lot of what he said sounds like me. Where I see risk is not open-end high yield funds, but EU banks & pseudo-banks. Feb 15, 2023
• The White House is considering nominating Austan Goolsbee, who became president of the Chicago Fed last month, to serve as vice chair of the Federal Reserve’s board of governors https://t.co/QwxJJD5Gph  We could do worse, but why not Lacy Hunt? Feb 15, 2023
• The end of distressingly high inflation is coming into view, but the cost of goods, housing and other services is complicating path for easing consumer prices https://t.co/laCY0cZDdn  Focus on median inflation than all of the measures that drop out whole spending categories Feb 13, 2023

Economic Policy

• How three major bills could change the American economy. https://t.co/ufiiuufFTw  Nothing useful, lots of additional debt Feb 17, 2023
• The US Supreme Court could rewrite the rules of the internet with a challenge to the liability shield cherished by online companies https://t.co/sQfeDhzmJO  I lean in favor of allowing lawsuits against social media companies for inadequate moderation, but limiting damage claims Feb 17, 2023
• Odd Lots Transcript: This Is What Happens If the US Actually Hits the Debt Ceiling –What if it doesn’t get lifted? https://t.co/AkPZE6hxoy  No one knows. Maybe the 14th amendment section 4 can be invoked to invalidate the debt ceiling Feb 16, 2023
• New York City is pausing a small business loan program less than a month after it launched after an unanticipated influx of over 10,000 applications https://t.co/i9uRS9Ml2o  Why governments should not subsidize: they are either too generous or cheapskates Feb 15, 2023

China

• China’s sweeping policy support for the property sector has been no quick fix for developers’ liquidity struggles, leaving some investors waiting until the last minute for cash https://t.co/EB7wDHkaJH  The Chinese Communist Party learns reflating a bubble is surprisingly difficult Feb 17, 2023
• Heard on the Street: China’s fiscal position—and ability to fund other priorities—will increasingly be threatened by threatened by rising healthcare costs https://t.co/0sX2iyoBoE  Social welfare systems only work well when populations are young. Feb 17, 2023
• Investors are buying Chinese stock funds, betting that the reopening of China’s economy will help push markets higher  https://t.co/hISEKrfwbN  ‘“There’s opportunity, to be sure, but I think those are trades, not investments,” said Nancy Tengler.’ Feb 15, 2023
• In China, single mothers are facing fewer hurdles as Beijing tries to boost its fertility rate https://t.co/BNIeVRlIs2  Reduces abortion Feb 15, 2023

Crypto

• Binance is considering ending relationships with US business partners as regulators turn up the heat on crypto https://t.co/8f7dIWson0  Pushing crypto out of the US is good policy Feb 17, 2023
• Crypto platforms could soon face a new set of hurdles to hold digital assets owned by clients of hedge funds and private equity firms in the US https://t.co/m9bZLCxokL  Makes sense if you want custodial accounts. Feb 15, 2023
• Sam Bankman-Fried was blocked from using virtual private networks while on bail, with the judge overseeing his fraud case expressing concern that VPNs present similar risks as encrypted messaging apps https://t.co/7zpiWHoMjE  From crypto-king to peasant disallowed encryption Feb 15, 2023
• US regulatory crackdown on crypto aids Tether’s USDT, a stablecoin that’s located offshore, even as the transparency of its reserves faces scrutiny https://t.co/didoPeEO6t  US holders of Tether will appreciate the foreign domicile when Tether fails & recovering value is hard Feb 15, 2023

War

• Hundreds of fuel vessels are taking steps to hide where they’re going https://t.co/wK67gNEjV2  Evading sanctions — there is a profit to be made, and Russia needs money for the war Feb 18, 2023
• Many countries are reassessing their military might — and it’s not just limited to Ukraine’s neighbors https://t.co/C0QpA7rXOj  War takes resources, & budgets are stretched… what will be given up? Feb 18, 2023
• The world’s war machine is running low on ammunition https://t.co/VAMcJLwxbp  Together with stretched government budgets and relatively tight money globally — is this why the long end is selling off? Feb 16, 2023

Pensions

• Time Bomb of Public Pension Funding Ticks Louder https://t.co/QO6mS07lwI  One way the article could have been improved would be to add in the effects of falling interest rates, not just the long stock rally Feb 13, 2023
• The aggregate funding level for state and local pension plans is below 50%, inviting a disaster that would outstrip the occasional municipal bankruptcy https://t.co/QO6mS07lwI  Well written. Will it take the failure of a US State to get serious about this? Feb 13, 2023

Picture Credit: David Merkel, with an assist from the YouImagine AI image generator || Twitter bird tweets, and tweets!

Portfolio Management and Finance

• The buying binge that has propelled US equities almost without interruption for four months is nearing a point where past rebounds caved in https://t.co/VyThd4RAZ1  Valuations are in the 97th percentile. Nominal equity returns over the next 10 years are 2.44%/yr #bondsarebetter Feb 11, 2023
• Global investment banks including JPMorgan and UBS are renewing efforts to gauge investor interest in Chinese developer bond sales, in hopes of revitalizing a key business following a yearlong deal drought https://t.co/1stAioiz51  Policy unreliable, aggregate debt levels too high Feb 10, 2023
• Tough to catch lightning in a bottle twice. https://t.co/zFlb6LUyk4  via @Jack_Raines This is like my saying, “Whom God would destroy, He first gives him an easy win.” Feb 09, 2023
• A lawyer reminded lenders of the human cost should $BBBY crater before all capital-raising options were exhausted https://t.co/DJlWeG350d  “If I was running a meme stock I would be an idiot not to try to capitalize on the madness of crowds.” –Matthew Tuttle of Tuttle Capital Mgmt Feb 09, 2023
• The surge in technology stocks has been pronounced in the riskiest corners of the market, suggesting potential for a reversal https://t.co/pBEaeFIerO  & Stocks have rallied despite weaker earnings and economic expectations, producing “massive disconnects,” https://t.co/MEGXwrTynD  Feb 08, 2023
• Robinhood is mounting a counterattack at the SEC’s proposals, saying they would turn back the clock to the days before zero-commission trading https://t.co/dWi1l28A6c  Just require one central order book for each security Feb 08, 2023
• How Much Portfolio Insurance Do You Need? https://t.co/SQZL9yKuzc  If you can write something like this without mentioning war, plague, famine, expropriation, etc., you don’t understand the concept of “unknown unknowns.” Feb 08, 2023
• Some U.S. companies face reduced cash flows and higher tax bills as they are hit by a double whammy of interest-rate hikes and a tax-law change https://t.co/dLRalMLHSa  Fascinating headwinds for corporate earnings. Tax laws now encourage firms to de-lever Feb 07, 2023
• Expect more defaults in the $4 trillion municipal-bond market this year, Bank of America strategists said https://t.co/KGswnLzzmY  With muni debt of “unrated securities in the not-for-profit, nursing home and hospital industries” you have to focus on economic necessity. Feb 07, 2023
• What Are Stock Buybacks and How Did They Rise Above $1 Trillion? https://t.co/TrZ9SOsaVa  Deficient article. Stock buybacks already get taxed from the capital gains of the seller. Misses a major reason for buybacks: makes a company less of a takeover target #buybacksaregood Feb 07, 2023
• Newbie investors got burned in 2022. Some are backing away in 2023. https://t.co/2ERk1bPyJZ  In general, you don’t make money when you trade; you make money while you wait. Feb 06, 2023
• The stock market is broken https://t.co/Zhe9B3KTGI  Advocates replacing continuous trading with auctions. My take on that (11 years ago): https://t.co/t9AR42RWoO  Feb 06, 2023
• An Early Sign That the Market for Green Bonds Is Stalling (Political risk comes for us all.) https://t.co/3vH8OgYzj2  Investors are not willing to pay much extra for them, so why go through the complexity of issuing them? Feb 06, 2023
• The world’s largest publicly-traded hedge fund is bracing for a selloff in emerging markets, a view that pits it against bulls at some of Wall Street’s biggest investment banks https://t.co/zZqzqXC5T3  It’s rare when you find a skeptic on the whole sector that he manages Feb 06, 2023
• He made a fortune on one big trade during the Great Recession. Now he’s eyeing a new market https://t.co/inhJYR5yXs  Daniel Ivascyn is looking to time the corporate credit cycle Feb 06, 2023
• Despite appearing unsustainable, financial bubbles can last a surprisingly long time https://t.co/XjD8XsktiC  True, but when they break it is a doozy, and difficult to reflate. Beware assets that require investment to maintain their current value Feb 06, 2023

Crypto

• A trove of documents shows who controls Tether, which runs the dominant stablecoin, and the company’s weaknesses. Tether is at the center of the crypto economy. https://t.co/Wjpyee2wsd  Tether, the rogue money market fund that doesn’t publish an NAV. Feb 11, 2023
• One of the earliest peer-to-peer platforms for trading Bitcoin is shutting down, a casualty of the prolonged crypto downturn https://t.co/U0AX9h2lLo  Money laundering does in another crypto exchange Feb 10, 2023
• SEC Chair Gary Gensler says the settlement with crypto exchange Kraken over staking “should put everyone on notice in this marketplace” https://t.co/EsIkDixbin  Similar to repo, margining, or securities lending. Feb 10, 2023
• ‘Sam? Are you there?!’ The bizarre and brutal final hours of FTX https://t.co/H90Ieiuhbu  Insane ramblings of SBF as everything fell apart due to his neglect of normal safety protocols. Feb 10, 2023
• Tether Holdings says more than $700 million in “net profit” was added in the fourth quarter to the reserve that backs the digital asset https://t.co/cQ1x9MmwZ0  Which means they will be hosed in the next bear market. Feb 10, 2023
• The squabble between crypto billionaires Cameron and Tyler Winklevoss and veteran Barry Silbert appears to be over, paving the way for a resolution of one of the industry’s biggest bankruptcies https://t.co/Dpc5Jt9aVW  Compared to other crypto BKs this was resolved easily… Feb 07, 2023
• Three months after crypto exchange FTX collapsed, Argentina’s government is weighing creating oversight requirements on crypto companies, sources say https://t.co/sxqT8TXgIn  Funny to see Argentina focusing on the solvency of crypto. What of their own solvency? Feb 07, 2023
• The curious case of FTX VIPs https://t.co/9Y5lfxKHlR  The tangled web of relationships for lawyer David Boies Feb 06, 2023
• There’s a wild theory that the price of Bitcoin is being propped up—and the academic who proved manipulation in 2017 suspects it may be happening again https://t.co/8v7D9Fusky  Simpler theory: Tether is using Bitcoin to back its currency Feb 06, 2023

Odds & Ends

• Tech holdouts are making life hell for their colleagues https://t.co/33MuTLJtxU  But are management teams willing to hold classes for those who are not so good with technology, including top executives? Feb 10, 2023
• A DNA technology that can screen for a wide range of disease-causing microbes in a single test could be a game-changer in diagnosing all kinds of infections. https://t.co/MHxW6gASyI  From a medical standpoint, this is the most promising thing I read this week. Feb 10, 2023
• 11 Important Things I’m Thinking About In 2023 https://t.co/mjiE4oZ0WE  Stoicism, the crutch some people lean on because it is much easier than loving God and your neighbor more than yourself Feb 09, 2023
• The Anxious Style of American Parenting https://t.co/9k4VfViTbY  There used to be more of a consensus on parenting prior to 1980, so there is little good guidance. Also, many people are quick to criticize. Feb 09, 2023
• Why Did the Beatles Get So Many Bad Reviews?, by @tedgioia https://t.co/lued7s54w4  Perhaps all music critics are sourpusses because it sounds more intelligent, and they generally aren’t talented musicians Feb 08, 2023
• Max Martin knows how to create a number-one hit https://t.co/J4157Ro0PB  Get to good stuff fast for an impatient generation Feb 08, 2023
• The discovery of a ring around Quaoar, a small, sun-orbiting world beyond Pluto, is challenging astronomers’ ideas about how such rings form and persist https://t.co/K4Vi2nPAzo  Another example of how we know so little about the cosmos Feb 09, 2023
• An ex-professor has made a fortune making scanners to fix teeth https://t.co/F4fzumb7Jy  Well done, you have solved a significant problem inexpensively! Feb 07, 2023

Companies

• Micron Technology Board Committee Approves Cuts to Executives’ Salaries https://t.co/kQK4gtCF3g  It’s nice to see things like this. FD: + $MU Feb 10, 2023
• Clif Bar CEO, Other Executives To Exit In Wake Of Its Nearly $3 Billion Sale To Mondelez https://t.co/sNGgDRBOZJ  When I read this, I think $MDLZ is losing out because of all of the leaders not staying with what they have acquired. Feb 10, 2023
• BYD is exploring setting up its own factory in Europe. The Chinese carmaking giant is more likely to establish its own plant than take over one from Ford in Germany https://t.co/vi1DVtN3FX  For adoption of EV cars to really begin, they have to cheaper than hydrocarbon cars Feb 07, 2023
• Fossil-Fuel Addiction Is Getting Harder for Oil Giants to Kick https://t.co/lWJUPCEq9w  Hydrocarbons will be needed for a long time. Alternatives are far too expensive for poorer people to afford. Feb 07, 2023
• Lab-grown meat has a bigger problem than the lab https://t.co/pyHn1QQboG  You missed the biggest problem: it will be more expensive than meat via animal husbandry. Feb 07, 2023
• Meet the man who wants to turn empty New York office space into luxury apartments https://t.co/lbk2KRjyco  This needs to be done more. Cities need fewer offices, and more multifamily. Feb 07, 2023
• Bed Bath & Beyond announces offering of convertible preferred stock https://t.co/82mQ7dvXmC  Yes, the financing methods of last resort. Get the next one ready! $BBBY See also: https://t.co/YFm0OHgvak   Feb 06, 2023
• Bernard Arnault has a succession plan to cement his family’s control over his luxury goods empire LVMH — and prevent the infighting that has plagued billionaire clans like the Murdochs & Ambanis https://t.co/SRbovCnUo0  Complicated succession plans create conditions for stagnation Feb 06, 2023

Personal Finance

• Work gives a bit of meaning to life. Better if you know that the core meaning is serving Jesus. I have no compulsion to work. I could retire now. I like working. Retirement is a bogus post-WWII concept https://t.co/x9fpStkXLs  https://t.co/C2LxlUQx6k  Feb 11, 2023
• Have we outgrown a single retirement age? The ability to stay at work boils down to privilege, leaving governments under pressure to address it https://t.co/7yJVJ1Vqlf  Exorbitant promises meets the challenge of bad demographics. We lost a reason to have children via entitlements Feb 11, 2023
• Criminals use Telegram to recruit ‘walkers’ as America’s big banks see an 84% increase in check fraud https://t.co/xzhkrW6oKR  I’ve gotten cheated on this as well. Hint: check your bank account weekly, show bogus transactions to them quickly, and the bank will eat the loss. Feb 10, 2023
• Jim Cramer versus the world https://t.co/98cG6IOAWL  I wrote for Realmoney.com for 4+ years. Some readers called me the anti-Cramer. I am grateful to Jim, who invited me to write. I wrote one article (without naming Jim) to warn viewers about him: https://t.co/ZIw7qaa663  Feb 10, 2023
• Risk-free Annual Returns of 50% https://t.co/Lcil2SnWi4  No one invites you to earn a high return with no risk, except to cheat you. Feb 08, 2023
• Where Do Millionaires Keep Their Money? [It’s Not Where You Think] https://t.co/Fz61jVYz6t  I’m not sure this is right. I’m pretty certain wealthy people have more in their own businesses, and less in alternatives (unless that means real estate) Feb 08, 2023
• A decline in mortgage rates has kick-started people’s interest in buying homes https://t.co/qcehMofDxf  Small uptick, a lot depends on when the recession comes. Feb 06, 2023

Non-US

• As Iran marks the 44th anniversary of the Islamic Revolution, the younger generation is digging up the regime’s brutal past https://t.co/kJ37dVAJfj  Revolution in 1979 kept only one promise: Islam. It produced an economically & politically unequal society dominated by the mullahs Feb 11, 2023
• Biden and Lula Put On Pro-Democracy Show Under Bolsonaro’s Shadow https://t.co/pPcHGPJdvl  Why not trade dropping Cuba and Venezuela sanctions for free and fair elections in both places? Lula, you in? Feb 11, 2023
• When I was 20, one of my friends was the son of the US Ambassador to Afghanistan. He had a crude poster on his wall saying “Afghanistan — the Russian word for graveyard!” There was a picture of an Afghani stabbing a Russian. Well, today we spell Afghanistan this way -> UKRAINE Feb 11, 2023
• Moldova’s pro-Western government resigned amid the worsening economic fallout from the war in neighboring Ukraine https://t.co/cXCODSFFuq  It’s a challenge living next to Russia. Feb 11, 2023
• Marina Ovsyannikova said the French group Reporters Without Borders helped exfiltrate her from Russia using different vehicles https://t.co/Z7hw6vGM87  Congratulations on surviving, escaping, and the bravery you displayed on Russian TV. Feb 10, 2023
• South African President Cyril Ramaphosa declared a state of disaster to enable the government to accelerate its response to an ongoing energy crisis https://t.co/llFoCIBLS2  Unless you can root out the corruption at Eskom, this will not succeed. Feb 10, 2023

Adani Group

• India has struggled to attract private capital to infrastructure projects. In Adani Group, New Delhi found an ally ready to promise billions to build a shinier India. https://t.co/TMjeY0Fugw  Corruption has its costs. How much truly goes to build a better India? Feb 10, 2023
• Adani Group plans to prepay a $500 million loan due next month to a group of banks as the Indian conglomerate looks to bolster its finances following a short seller attack https://t.co/1UDde6kuMB  Wonder if they are running short of liquidity, but making a brave face of it for now Feb 08, 2023
• Hedge funds and distressed debt specialists have scooped up bonds related to billionaire Gautam Adani’s business empire as they look to capitalize on falling prices https://t.co/zf7dEQI4CR  Encouraging for Adani Group… the buyers do their homework Feb 08, 2023
• Gautam Adani’s ports business to repay $600mn in race to cut debt https://t.co/RfI7PvW0ED  If he can genuinely pay down the debt of one of his main subsidiaries, Adani Group will likely survive. Feb 08, 2023

Artificial Intelligence

• Misinformation and bad data are the biggest risks to AI bots like ChatGPT https://t.co/OdnNWXxxV8  Use an area where you are an expert, and chat with a chatbot about it. You will be disappointed by the low quality. Feb 10, 2023
• Chinese search giant Baidu plans to integrate an AI-powered chatbot into its main search engine in March, people familiar with the matter said https://t.co/m6IezSGREd  Wait for it to criticize the Communist Party Feb 09, 2023
• Google has detailed new search features powered by artificial intelligence https://t.co/uual0i2tHP  Give the chatbot enough “ethical” principles and it might not be able to say much… from the the company that gave the bland rule “Don’t be evil.” Feb 09, 2023
• Bing-O! @JoannaStern checks out a new version of Microsoft’s search engine with impressive ChatGPT-style artificial intelligence. https://t.co/tDUh1b1U74  As for me, Bing got my first question wrong and Google & You.com got it right. Feb 09, 2023
• Traders See AI Tech Shaping Their Future, JPMorgan Finds https://t.co/tfxzMHdvI7  This is unlikely. Feb 06, 2023

Automobiles

• Auto Credit Availability Tightened Again in January https://t.co/4GTGDuKvzL  Unless you are a cash buyer, this is not a good time to buy a car. Feb 11, 2023
• Auto lenders, dealers draw more scrutiny after pandemic-era boom https://t.co/WSie3ZTABP  Given the way that lending agreements are drafted in a complex way, lenders possess most of the rights, so they take advantage of those who are unsophisticated. Feb 07, 2023
• Even after you think you bought a car, dealerships can ‘yo-yo’ you and take it back https://t.co/VmivEQuNIF  Yes, it should be illegal to sell the trade-in vehicle before the sale is final. Feb 06, 2023
• Auto loan delinquencies rise. What to do if you struggle with payments https://t.co/Xm82fLahZi  Their suggestion: “The sooner your bank or credit union is made aware, the easier it is to come up with possible solutions.” Feb 06, 2023

Politics

• The first major criminal charges that Donald Trump could face for interfering in the 2020 election might come from Atlanta — but won’t stay there https://t.co/Yp5ikYs5Et  Nice to see Trump getting some pushback for his wrongdoings Feb 08, 2023
• Crime Is the Only Issue in Chicago Mayor’s Race by Joseph Epstein https://t.co/HYh74TlnbV  It takes some doing but Chicago makes Baltimore look good by comparison Feb 07, 2023
• Florida lawmakers are proposing to give Ron DeSantis full control over the board overseeing Disney’s special district, as the Republican governor escalates his fight with Disney https://t.co/W5pzQKyjfI  W/the legislature, he would appoint a new board not controlled by $DIS Feb 07, 2023
• The White House slammed a proposal by House Republican committee and caucus chairs to set up a panel examining Social Security and Medicare solvency as part of debt-limit negotiations https://t.co/Vg5td3459l  Someone tell the GOP that a SS payment will get skipped in 2032. Feb 07, 2023

Economics

• Fed’s Williams says there is still more work to do to bringing down inflation. https://t.co/7nWl8htdaL  For diversity, equity and inclusion, the FOMC has imposed maximum IQ limits on its members. Feb 09, 2023
• Some workers are thrilled about being laid off https://t.co/EEKwSOQ2Cs  Remember, it is unusual to like being laid off Feb 08, 2023
• Nearly 10% of US workers report having a main job plus at least one other side gig, a survey shows https://t.co/yYIJwyWSe1  The data here is interesting. More people work 2+ jobs. Few are in the office every day. Feb 07, 2023

Commodities

• How metals keep going missing in an industry that has a history of risk and fraud https://t.co/vZyck422lM  Perhaps you should take delivery. Wait, you can’t take delivery? The problem of warehouse receipts Feb 10, 2023
• Commodity trader Trafigura Group faces some $577 million in losses after discovering metal cargoes it bought didn’t contain the nickel they were supposed to https://t.co/48uoyHJtTa  One metal looks like another, right? Feb 10, 2023

Picture Credit: David Merkel, with an assist from the YouImagine AI image generator || Chibi Gautam Adani surrounded by Twitter birds

Adani Group

• “Foreign investors are clearly watching.” Billionaire Gautam Adani is battling the worst crisis of his corporate life and that’s raising big questions about India’s credibility as a destination for global investors https://t.co/zkvzRS87R6  Indian cronyism affects foreign investors Feb 04, 2023
• S&P Global slashes the outlooks on Adani Group’s credit scores to negative as investors grow concerned about potential governance risks and funding challenges https://t.co/Z2FSJfUxyB  Not so big, just neg outlook, not neg watch Feb 03, 2023
• In six trading days, Gautam Adani has lost more than Sam Bankman-Fried and had his wealth wiped out almost as fast as Elon Musk https://t.co/WXJ7aMZhPC  Easy come, easy go. Wealth does not grow that fast, unless there’s too much leverage employed. Feb 02, 2023
• Gautam Adani recently had a $147B fortune. Now, he’s facing billions of dollars in losses, a short seller’s accusations of fraud and a canceled $2.5 billion stock sale. https://t.co/7VxW1TRVgV  He never had a $147B fortune. The float is small, and the debts are high. Price<>Value Feb 02, 2023
• Adani says his ports-to-power conglomerate would examine its capital market strategy after pulling his flagship firm’s $2.5B stock offering following fraud allegations made by Hindenburg https://t.co/uUIaQfzKnm  If you think you can grow without free cash flow you are nuts Feb 02, 2023
• The flagship company of beleaguered Indian tycoon Gautam Adani pulls a record $2.4 billion share sale https://t.co/iJMW4nnV4F  Time for the financing methods of last resort https://t.co/3rqY8GgZ6e  Feb 01, 2023
• The crisis plaguing Gautam Adani takes a sudden turn for the worse, with a record 28% plunge in his flagship company’s stock raising questions over the collateral he needs to cover loans https://t.co/4b2HYe4IDc  When the is no free cash flow, you can’t fight back against shorts Feb 01, 2023
• Adani Group put up $300 million worth of its shares on Friday to maintain its collateral cover on a $1 billion loan, sources say https://t.co/au2vrOHbt7  This looks risky, or at least dilutive. Why not borrow directly? Jan 31, 2023
• Abu Dhabi-based IHC says it will invest $400 million in the $2.5 billion follow-on share sale floated by Indian billionaire Gautam Adani’s flagship https://t.co/oyEscsd9yy  They are as shady as Adani Group, and are using many of their techniques. Jan 31, 2023
• A plunge in dollar bonds of Adani Group companies quickened on Monday after a rebuttal by the Indian conglomerate failed to ease concerns following a scathing report by short seller Hindenburg https://t.co/RjJU0HJcSO  If I were speculating on the bonds, I average in slowly Jan 30, 2023
• RT @AlephBlog: Billionaire Adani Says India Will Add $1 Trillion to GDP Every 12-18 Months https://t.co/FAbMGwkyV5  Not likely. When this ov… Jan 30, 2023
• Adani Group fired back at an American short seller, but the group’s 413-page response didn’t stop a slide in the shares and bonds of its companies https://t.co/72zaxIzoDE  Maybe some margin calls? Also IHC of Abu Dhabi has similar issues. Debt, complexity, fast stock price rise… Jan 30, 2023
• These are the guys who bought $400 million of stock in an Adani Group subsidiary. Birds of a feather flock together. https://t.co/HOgpd9E0sX  Jan 30, 2023
• For more on International Holding Company, look here: https://t.co/QUAfU9B2PR  https://t.co/fz6Y0WzVMv  Jan 30, 2023
• Adani says Hindenburg’s conduct “is nothing short of a calculated securities fraud” https://t.co/OskrHOfmQj  As we say near DC, “Never believe anything until it is officially denied.” Also, saying, “Same as above” many times does not answer the question. Same as *what* above? Jan 30, 2023
• Also, cheaters often label accusers they way they themselves should be labeled. Calling Hindenburg “Madoff” increases the likelihood that Adani is engaged in fraudulent activity. https://t.co/weWJnxUD9w  Jan 30, 2023
• Adani responds to Hindenburg report, but stocks continue descent https://t.co/HhxMJ4RJGn  Fascinating that Adani Group for all of its size, needs to get a measly $2B secondary IPO done. They don’t want to give up control, but they probably need liquidity https://t.co/IIDr73q2hH  Jan 30, 2023

Portfolio Management

• Cathie Wood is having a scorching start to the year and she wants investors to know it https://t.co/unUdiVze8B  Humility is not her strong suit. Feb 03, 2023
• How many stocks should a portfolio hold? https://t.co/AsYvvxPmoo  Usually, I think 20-35, but it depends on what types of stocks, and what other assets you own, and your time horizon. Feb 03, 2023
• Legendary ‘Big Short’ investor Michael Burry issues an ominous warning after the latest stock market rally: ‘Sell.’ https://t.co/fY3XdLg8IX  We are in the 97th percentile of valuations as the equity share model goes. But I don’t see weakness in financials. Analogy 2000-2002? Feb 03, 2023
• Michael Platt built an $11 billion fortune by turning his back on outsiders’ money to focus on tending his own — with some perilous losses along the way https://t.co/UQZnbki7tO  Odds of flaming-out are nonzero. Feb 02, 2023
• After the Darkest Hour Comes the Dawn https://t.co/RbSkvVGTo3  European Value looks promising Jan 31, 2023
• European de-equitisation comes of age https://t.co/d8KHqn7eR9  Interesting, probably positive for European stocks. Jan 31, 2023
• The Forgotten Lessons of 2008: Seth Klarman https://t.co/BwtgKTbq21  Worth reviewing. Valuations are still stretched, and debt levels are high, though not at the banks. Jan 31, 2023
• Heard on the Street: After an epic 15-year run, hedge fund Universa’s Mark Spitznagel says the financial system is poised for a crisis—eventually https://t.co/YobK8GMFHH  Has anyone gotten a look at what Spitznagel uses for hedging? I assume credit default swaps, but am I right? Jan 31, 2023
• How Do Active Managers Invest Their Own Money? @ritholtz https://t.co/OrOH6x4j1F  Many active managers invest passively. I invest over 90% of my liquid assets in my active strategies. It would be dishonest for me not to have significant skin in the game as an active value manager. Jan 31, 2023
• Pension-fund investment in private-market loans reached an eight-year high in 2022, even as banks pulled back on lending and default rates inched upward https://t.co/Ke7N42SMx9  If CALPERS has shown up, the bull cycle is near its peak. Jan 30, 2023

Companies

• British companies are starting to pay a premium for staff who work five days a week in the office, according to recruitment giant Reed https://t.co/S1TAegZiZC  This shouldn’t be a surprise. Being able to interact more freely is valuable. Feb 02, 2023
• A startup that sells $555,000 flying motorbikes will soon start trading on Nasdaq, making it the rare Japanese company to trade on the American bourse https://t.co/X7hU6RFRYk  Not useful in its present form, but with improvements who knows what this could bring? Feb 02, 2023
• Industrial companies like Caterpillar, UPS and Dover appear to be moving full steam ahead on investments amid chatter about a downturn https://t.co/icbGmSukui  I would be skeptical for this to persist Feb 01, 2023
• Blackstone’s $69 billion real estate trust hit a monthly redemption limit in January, ramping up the pressure on the massive vehicle for wealthy individuals https://t.co/UINfs7x4Le  Get out if you can. Feb 01, 2023
• AIG Terminates Interim Finance Chief Mark Lyons https://t.co/j5r5pNwWhy  Odd. $AIG Jan 31, 2023
• Why Does It Feel Like Amazon Is Making Itself Worse? https://t.co/18JZI92WOm  Interesting thought. As a facilitator of third party sellers, $AMZN works less well than as a first party seller. But maybe they just want to be a middleman. Jan 31, 2023
• Lawler: D.R. Horton (DHI) Net Order Price Declined “Roughly” 10% from Peak https://t.co/AofAP4Hh8C  Housing prices continue to sag Jan 30, 2023

Non-US

• Ghana plans to convert an estimated $3.3 billion of loans owed to its central bank into bonds, making it the single biggest holder of domestic government securities and exposing it to an ongoing debt restructuring, sources say https://t.co/eHkTOgg9bB  No free lunch Feb 03, 2023
• Maybe sending tanks and escalating in Ukraine is the only way to end the war. But Western leaders haven’t earned the benefit of the doubt https://t.co/3YG0EfLg4M  This does need to be talked about more as the EU & the US are depleting stockpiles of armaments… is this worth it? Jan 30, 2023
• Parts of Johannesburg are being subjected to renewed water-supply cuts as ongoing electricity shortages disrupt pumping operations https://t.co/HpuzaIrv3j  Theivery & corruption plague Eskom. When will S. Africa’s leaders focus on the good of the nation and clean up Eskom? Jan 30, 2023
• Will accusations of dirty governance tactics in India spur global investors to change course? @shuli_ren https://t.co/HqEmEeOSFX  Given the complex holding company structure, how much debt might not be disclosed because of joint ventures, etc? Jan 30, 2023
• For Russian gas to reach India, it will have to build pipelines through Afghanistan and Pakistan, writes @JLeeEnergy. Good luck with that. https://t.co/ZQuFDe6PN6  Putin does not care for his own people. He has semi-permanently damaged his own economy. Jan 30, 2023

Central Banking

• Understanding the FOMC through the eyes of a child https://t.co/yV3G6wDvV8  Avoiding bravery and panic — be humble. https://t.co/OrNU6vBsyS  Feb 01, 2023
• ‘Colossal’ central bank buying drives gold demand to decade high https://t.co/enUPd28Dad  Gold is a nice neutral asset to hold, particularly during wars and trade wars Jan 31, 2023
• Banks tighten lending standards in an uncertain economy https://t.co/qF6FEzgBQ6  Credit deteriorating on the low end Jan 31, 2023
• The Goose That Stopped Laying Golden Eggs https://t.co/8P3aOUZE4g  Central Banks should keep their assets short, and not play around with the yield curve. Jan 31, 2023
• The Fed Is Asleep At The Wheel And Americans Are Feeling The Consequences https://t.co/qRWqSx032A  Falling M2 and ODL, inverted yield curve, weakness in housing and autos. Time to cut rates. Drive through the windshield, not the rearview mirror Jan 31, 2023

Legal

• A former Allianz fund manager says the lawyers who were engaged to represent him in a fraud investigation switched sides to become government informants https://t.co/YA8HSihKdn  Maybe we are getting to the point where employees need to purchase their own E&O policies. Feb 03, 2023
• A derivative lawsuit in Delaware seeks to hold McDonald’s directors and officers liable for failing to sufficiently intervene in a sexual-harassment scandal. https://t.co/9vAJDklSRo  If appealed, it will likely be reversed. In other news: D&O insurance premiums rise again. Feb 03, 2023
• A court ruled that Johnson & Johnson can’t use the bankruptcy system to administer tens of thousands of talc claims because the fund the company created to pay claimants had too much money. https://t.co/ZLQ19Ldgrh  To me it seems like a form of fraudulent conveyance of a liability Feb 03, 2023
• Johnson & Johnson will probably face years of litigation in courts around the US before it can resolve baby-powder lawsuits https://t.co/utpZ8D5wyq  Until now, it has been difficult to deny a bankruptcy petition, even from solvent entities Feb 03, 2023

Crypto

• New York Digital Investment Group, one of the largest crypto lenders, is repossessing 27,403 mining machines from bankrupt miner Core Scientific https://t.co/J44Dyp7kW8  If selling the machine isn’t profitable, why should running them be profitable? Feb 03, 2023
• A trader faces criminal charges for allegedly manipulating the decentralized exchange Mango Markets and draining more than $110 million of cryptocurrency https://t.co/Lv4MUKJAoE  Some may think “code is law,” but there are more general laws that exist outside computer code Feb 03, 2023
• When a one-time TV and film producer’s company bought Farmington State Bank, it got a name change and a new shareholder: Sam Bankman-Fried’s Alameda Research https://t.co/3iqIKi0PVl  Could be wrong, but crypto can’t be a reserve asset at a bank. Maybe it could be held as surplus Feb 03, 2023
• Crypto’s Tax Shelter Problem https://t.co/V6X2S0G0Mo  Secrecy on the part of tax havens compounds the difficulty of getting money back Feb 01, 2023

Financial Plumbing

• The glitch at the New York Stock Exchange has become a pawn in the ongoing battle over a rewrite of stock-trading rules proposed by US regulators https://t.co/JsCnvxwy2x  One central order book would be nice Feb 02, 2023
• “We are at the beginning of a reckoning.” Scott Peng, one of the first people to call out Libor, is now sounding the alarm over its successor https://t.co/3ot0DVxfzm  “Corporate borrowers… can’t enter into paid term SOFR swaps, given the ARRC’s recommendations” #liborwasbetter Feb 01, 2023
• Smart money is betting on insurance money to fund fast growth https://t.co/zJyogt1VbS  The bad old days for life insurers returns. Insurers/reinsurers are taking too much asset risk. Some regulators should disallow reserve credits for insuring asset performance by weak reinsurers Jan 31, 2023
• if I wanted to talk to an institutional expert on deep out-of-the-money put options, who should I talk to? Feb 01, 2023

Politics

• Biden administration proposed an end to an exemption allowing health plans to exclude coverage of no-cost birth control on moral grounds, part of work to protect access to contraception since Roe v. Wade was overturned https://t.co/yPPi43RP3n  Supreme Court already ruled on this Feb 03, 2023
• How Biden Officials Bungled a Better Vaccine https://t.co/xgUujkehiy  Argues that C19 isn’t merely seasonal, & that the J&J vaccine offers more durable immunity FD: + $JNJ Jan 30, 2023
• Missouri Camping Ban Squeezes Rural Homeless Population https://t.co/ENuahUJzJX  This fits my ruralization of poverty theme, and now rural areas fight back. Jan 30, 2023

Personal Finance

• Most Americans stayed the course with their retirement savings in 2022, even as the stock market fell and inflation rose https://t.co/1kmr4sqigB  Retail investor driving through the rear-view mirror, which is temporarily self-reinforcing Feb 03, 2023
• Penalties on early 401(k) withdrawals stop some workers from putting money away because they fear they won’t be able to access it https://t.co/wpMqKLcr68  This is the price of getting tax deferral. Sorry, this is fair. Feb 02, 2023
• In the event of an emergency, you can crack your nest egg, but financial advisers say it should be a last resort. https://t.co/keHuFmuUWF  Think hard before doing this. It might be better to do a home equity loan, or borrow from the 401(k). But sometimes the present trumps future Feb 02, 2023

Energy

• Models of collapsing oil demand look increasingly at odds with short-term trends https://t.co/YDN6mmjV4c  If the end of 2022 didn’t teach us that the transition will be slow, what will? Feb 02, 2023
• Diesel prices have receded from record highs, but pressures on supply signal that gains at the pump may have run out. https://t.co/IoGwx0s6yD  Diesel supplies are tight, especially on the east coast, which spills into jet fuel pricing https://t.co/n7X7Me2SGi  Feb 02, 2023

Credit

• Another company could be pulling a J. Crew https://t.co/IGsDlbtsYa  What you get for lending without significant protection from covenants Jan 30, 2023
• Worries loom for used-car market https://t.co/rK8o23mFYT  More downward pressure on prices Jan 30, 2023

Odds & Ends

• 17 Most Dangerous Toys of All Time – Banned Kids Toys https://t.co/l1tbGC3HCP  I remember catching a Jart in my hand after an errant throw had it flying at my face. That hurt a lot, but healed well. That said, it was a fun game, and played it many times without accident. Feb 03, 2023
• The 31 Most Hard-to-Pronounce Words https://t.co/NozETlULPg  Aside from 2 ridiculous words that I never heard of, I think most well-educated people pronounce these correctly Feb 03, 2023
• 26 Ridiculously Hard Jeopardy! Questions to Stump Your Brain https://t.co/Evqk8kqQ28  I got 5 right, 3 wrong, and 18 I had no idea Feb 03, 2023
• This ‘airliner of the future’ has a radical new wing design https://t.co/L3NZBQvFrs  Looks flimsy. Feb 03, 2023
• “The more you put in the store, the more bandwidth it requires,” said Ahold Delhaize USA CIO Rom Kosla https://t.co/dYXVUeYEgs  Tech equipment is inexpensive for what it can do & there are many alternatives for how to do it. This shouldn’t be so tough. Feb 02, 2023
• U.S. home prices declined in November from the prior month as higher mortgage-interest rates made home purchases less affordable for home buyers https://t.co/Kaufh1fxEW  Absent economic weakness, mortgage rates are at their lowest level in 5 months. Price declines should slow Feb 02, 2023
• “Miracle Mineral Solution,” or MMS, is easy to find on Amazon despite FDA warnings on how toxic and dangerous the potion can be https://t.co/R3khPhWkz2  Astounding that people would drink bleach. Feb 01, 2023
• It’s the new chicken-and-egg question: Should I just buy some birds? Some shoppers thought that was the answer to record egg prices. It’s often not so simple. https://t.co/ILUzbLmmSk  There are simpler ways to save money. Jan 31, 2023
• Medical Schools Bail on Academic Merit and Intellectual Rigor https://t.co/Lzp8C3xNMU  This is a place where you should value competence over ideology. Jan 30, 2023

Picture Credit: Harper Collins, Simon & Schuster, with an assist from Pinetools.com || As is common with ChatGPT: explain this to me in a way that a five year old would understand.

I have five grandchildren living near me. The oldest one is three, the second oldest is two. The two oldest ones are boys, and they love me. Grandpa is a lot of fun. I read to them, and play with them. I am slightly unpredictable to them, enough so that it makes them test me as they play with me. I never do anything their parents would not like, but the parents appreciate the way I take care of them. I even change diapers!

But from my grandchildren, and remembering my children, I appreciate the simplicity of books for young children. So, tonight I want to comment on We’re Going on a Bear Hunt, and the short story inside Frog and Toad Together, entitled “Dragons and Giants.”

We’re Going on a Bear Hunt displays a family who think going on a bear hunt is easy, and so they don’t prepare properly for it. They proclaim many times, “We are not afraid.” After many going through many obstacles to find a bear, once they find a bear they run away back to their home as the bear chases them. They lock the door and hide under the covers in the master bedroom. As I said to my three-year old grandchild, “Were they afraid?” He thought for a moment and said “Yes.” Smart kid.

In the story “Dragons and Giants,” Frog and Toad admire the bravery of those they have read about fighting dragons and giants. They muse as to how brave they are, and conclude that they are pretty brave. They go on a hike outside to prove their bravery, are nearly eaten by two creatures and almost crushed in a landslide while proclaiming that they are not afraid. Then they run home, go to the bedroom, and tell each other how grateful they are to have such a brave friend, while they hide safely at home.

Now, what does this have to do with the FOMC [Federal Open Markets Committee]? They want the honor accorded to Paul Volcker for his extraordinary efforts for extinguishing inflation in the late ’70s / early ’80s. Regarding inflation, things are nowhere near as bad as in 1981, but they want to sound stern about inflation, even if it isn’t a big threat. They want to look good and courageous. Thus they proclaim loudly their fight against inflation.

Sadly, because of too much debt, deflation is the greater threat, and once it is too late because monetary policy has been too tight for too long, the FOMC will panic and loosen rates more than they should when the recession hits, setting the stage for the next mistakes of the FOMC. (Can Saturday Night Live parody the FOMC? It deserves parody.)

The FOMC runs from panic to panic, never willing to admit that they made mistakes that helped create the panics. It’s a foolish system. A gold standard would be better. I offer my own standard for those who like fiat money.

Replace the FOMC with a computer. The key variable is the difference between 10-year and 2-year Treasury yields. When the difference is greater than 1.5%, raise short rates until the difference is less than 1.5%. When the difference is less than 0.25%, lower short rates until the difference is more than 0.25%, unless it would make the policy rate negative.

This would be much more stable than what we have at present. Rather than proclaiming bravery and running away when they are wrong, it would be far better for the FOMC to be quiet, and not take aggressive policy actions.

Oh, and for those that want to know what the FOMC should do, I tell you they should loosen 1%! What will they do? Fools that they are, they will tighten.

Companies

• Intel shares slid in late trading after the chipmaker gave a dire forecast for the current quarter https://t.co/hClfp9Y1C9  $INTC lost its way in the 2000s, and did not respond effectively to changes in new chip designs & uses. Most of my computers don’t have Intel chips. Jan 27, 2023
• The rate of returns at U.S. retailers more than doubled last year from 2019. What are the best ways for companies to deal with this flood? https://t.co/nTbNIGFKam  Well-written article. Makes perfect sense. Jan 27, 2023
• The legacy of Jack Welch lives on as forced rankings endure despite controversy https://t.co/KDR5e2EYxM  It’s true that putting constraints on surveys makes them more accurate on average, but the effect on culture is bad because it harms teamwork. Jan 27, 2023
• Elon Musk is upending the way that Twitter works. Ella Irwin is in charge of making his impulses a reality. https://t.co/9B2KrhbjNv  This will eventually result in lawsuits and laws limiting Twitter. Self-regulation is the best defense against external regulation Jan 27, 2023
• When you can’t speak to the manager — or anyone https://t.co/B23satO6kM  In the short-run it saves money not having a call center. In the long run you lose customer loyalty, and don’t get feedback on how to improve. Jan 26, 2023
• It takes an enormous amount of processing power to keep ChatGPT running https://t.co/tCtpfQ3aLh  So OpenAI stays near $MSFT — it minimizes their costs Jan 26, 2023
• Giving four months’ notice or paying to quit has workers at a health-care company feeling trapped https://t.co/mfYdvI5P8s  If training is specific to the company, it benefits the company, so the laborer does not benefit, and should repay. Opposite for general skills Jan 26, 2023
• Heard on the Street: Johnson & Johnson’s consumer business was the only division to deliver growth in the fourth quarter https://t.co/AjchC9YOkO  Surely they could have come up with a better name than Kenvue? Jan 25, 2023
• Crypto companies seeking to go public over the past year have faced increased scrutiny from the Securities and Exchange Commission https://t.co/e5Bod8Y4jp  Highly speculative companies get more scrutiny. Jan 24, 2023
• Twitter is being sued for allegedly not paying the rent on its headquarters, adding to the legal battles between the social-media company and vendors since Elon Musk took over https://t.co/uAtdtLWBzT  Elon likes to see what he can get away with. You can’t cut your way to greatness Jan 24, 2023
• Allstate plans to tap the pool of recently fired tech workers to help the insurer overhaul its business https://t.co/Jtc6c76qx6  Most IT developers would find most insurers to be pretty stifling. In all the insurance firms I worked, only one division of one company got IT right. Jan 23, 2023

Market Structure Issues

• Meet the 11 ordinary twenty-somethings with $250 billion riding on their lives https://t.co/l69SlZqLwC  This is bizarre. Sometime between 2070 and 2110, this will have to be restructured $SPY Jan 27, 2023
• Heading into Tuesday, a NYSE employee failed to properly shut down a disaster-recovery system — leading to a disaster https://t.co/ZUFpA84Eag  If you always trade with limit orders, this wouldn’t be a big deal. Market orders are risky. Jan 26, 2023
• About 9% of outstanding US leveraged loans tied to Libor have no successor listed, but businesses may use extensions past the June 30 phaseout deadline https://t.co/Qr9PdTxJQp  Five months left on the grand experiment. Will SOFR be able to absorb the stress and hedging? Jan 26, 2023
• Wall Street firms that help issue ABS wouldn’t be able to bet against those products under a Securities and Exchange Commission plan https://t.co/kfi4j40i6Y  Sometimes dealers sell bonds to clients via shorting as a service to clients that wanted more. Is that disallowed? Jan 26, 2023
• Private companies desperate for cash as economic conditions sour are cutting confidential deals to avoid a dreaded down round https://t.co/cPbAL1K7GK  Kicking the can down the road, or, living to play for another day? Jan 25, 2023
• Josh Kushner is richer than Donald Trump after billionaires back his investment firm. https://t.co/38CuybHp7I  be careful of measuring wealth off of small financing rounds, or stocks with small floats. Jan 25, 2023
• Question of using term SOFR for ABS remains unresolved in 2023 https://t.co/hU1QhKLfVC  Lenders want predictability, even if there is some amount of basis risk — thus the desire for term rather than floating. This should get ironed out through futures markets. #LIBORwasbetter Jan 25, 2023
• A Depression-era backstop that Wall Street banks use for short-term funding is the latest corner of traditional finance to be ensnared by upheaval in the crypto industry https://t.co/IEnVkbTpoq  The Federal gov’t has too many entities that lend money, guarantee, etc. Jan 25, 2023
• A chaotic open for some stocks listed on the New York Stock Exchange sent chills across Wall Street, leaving some investors frustrated and others clamoring for an explanation https://t.co/81wbDOjyrV  I had two stocks halted. No big deal. Wait a little, and markets were normal. Jan 24, 2023
• The last time hedge funds and asset managers were this split on the future for benchmark Treasuries was when the Fed’s tightening cycle was about to peak in late 2018 https://t.co/0R3k0DViL7  Usually the guys that are levered up lose Jan 23, 2023

India

• India’s integration into the global economy means the next big scandal may well be London or Singapore, rather than Mumbai, @andymukherjee70 writes https://t.co/iuLYhx1a8m  Much as the SEC has its weaknesses, isn’t the Securities and Exchange Board of India considerably worse? Jan 27, 2023
• Talk of cronyism misses the point. If Adani didn’t exist, the Indian government would have had to invent him in order to fulfill its development ambitions https://t.co/rxffQ1B6uW  Relying on “big men” to run businesses is dangerous to any economy. It’s one reason India stays poor Jan 27, 2023
• India’s Adani slammed by $48 bln stock rout, putting share sale at risk https://t.co/OvQLXRe2sz  Complex holding company structures with lots of debt are inherently fragile, dependent on liquidity being easily available. Jan 27, 2023
• “Largest Con in Corporate History?” Nate Anderson’s Hindenburg is betting on it as the firm targets Asia’s richest person Gautam Adani https://t.co/ss3SZwlpVC  Any complex company that compounds at too high of a rate for its industries is suspicious. Think of Enron. Jan 26, 2023
• India’s Adani Group explores legal action against US investor Hindenburg Research after its report accused firms owned by billionaire Gautam Adani of “brazen” market manipulation and accounting fraud https://t.co/FtdOdF9GhZ  Fighting short-sellers is often a sign of weakness Jan 26, 2023
• Adani Group’s shares fall after Hindenburg Research issued a report and said it had taken a short position in the company https://t.co/qT29MJsgZf  Conglomerate, price rise too rapid, lots of debt –> too much risk. Jan 26, 2023
• “India is on the cusp of huge change.” How soon can a country once synonymous with red tape become a $10 trillion economy? https://t.co/PlD05lJ2S9  This isn’t likely. India has deep cultural problems that hinder them from developing. India is an empire more than a nation. Jan 23, 2023
• From soap to paint, optimism for a harvest-led revival is laced with nervousness about urban spending https://t.co/0r1WHEABFN  Among other problems, “India’s software-exports industry — a large employer in metropolises — has become wary of hiring because of slowing global growth.” Jan 23, 2023

Portfolio Management

• Happy 30th birthday to the ETF* https://t.co/m1hGrVswFV  Nathan Most, the man who changed the structure of fund investing by creating $SPY. Jan 27, 2023
• The Buck Stops Here https://t.co/ukhvcQG0nt  Worth considering. The US has outperformed for a long time, and the US Dollar is weakening as the Fed decelerates Jan 26, 2023
• Vanguard’s 10-Year Equity Outlook https://t.co/SjTITqtoqg  All the non-US equity estimates are at least 3%/yr too high, commodities & non-US could be accurate. Jan 26, 2023
• ChatGPT was asked to create a market-beating ETF. Turns out AI has a long way to go https://t.co/kMJB59xPJc  ChatGPT is remarkably humble. Jan 26, 2023
• Adding to that, bond ladders are the all-weather strategy for handling all aspects of interest rate risk. https://t.co/7ggbuMnL0q  Jan 25, 2023
• Beware: even cash and bonds can land you in a fix https://t.co/tjEGYtnD1Z  A good introduction to the concept of reinvestment risk. In this environment, you get a higher yield by investing short, but when the bond matures, will you get a good yield to reinvest at? Jan 25, 2023
• This Changes Everything for Hedge Fund Managers https://t.co/Uj4vuyEKcl  ‘“The higher the cost of money, the lower the competition,” says Avenue Capital’s Marc Lasry on the risk-free rate.’ You have to be more selective as to who can afford the high interest rate Jan 25, 2023
• Why Invest in Stocks When Bond Yields Are Higher? by @awealthofcs https://t.co/DxUb55SwmD  Probably the only ones buying long bonds at the rates peak in 1981 were those that had to defease/hedge long liabilities. Everyone else was too scared. So life insurers, DB pensions… Jan 25, 2023
• The Bank of England warned that life insurers are taking an “optimistic” view of how easily they could ditch assets in tough times https://t.co/Wk4gHZp8Mr  Depends on how big the positions are relative to the market, & sadly, the article does not give that stat. Jan 23, 2023

Fraud

• $4 Billion Accounting Scandal Exposes Supplier Finance Risks https://t.co/TpXAL3MToM  Caldor returns! Jan 27, 2023
• Crypto Speculators Are Betting On Ethereum’s Shanghai Upgrade Risks https://t.co/LM0ndJEhyJ  Ask where the yield comes from. These strategies blew up in 2022, and will do so again in 2023-4. Jan 27, 2023
• What the poet, playboy and prophet of bubbles can still teach us https://t.co/qQu5XrPyGH  How Charles Mackay, author of “Extraordinary ­Popular Delusions and the Madness of Crowds” described bubbles, but couldn’t see the biggest one of his time: railroad securities. Jan 26, 2023
• The Getty Family’s Trust Issues https://t.co/KkeXoSFnnn  Very long. I knew half of this, and it reinforces two of my beliefs: tax all income types equally, and abolish all tax deferral. Jan 25, 2023
• Digital-asset wallet linked to one of crypto’s biggest hacks has moved over $150 million of stolen funds to tap a trade involving a derivative of Ether https://t.co/2F69VAZahc  From crypto news today, remember that security is always weakest at endpoints, where transfers are made Jan 24, 2023
• Spyware that can turn even the most secure of phones into surveillance devices has become affordable enough that lawmakers are starting to do something about it https://t.co/yEy28x3oon  Is there really no way to scan for these zero click hacks? Jan 24, 2023
• Thinking of buying crypto on the dip? @LionelRALaurent suggests you take note of authorities’ accelerating crackdown https://t.co/2dX3L3FbB3  No social value to crypto, aside from ransoming yourself from authoritarian regimes Jan 23, 2023

Energy

• Scientists Are Turning Abandoned Mines Into Gravity Batteries https://t.co/PoAugP2e3Z  Physical batteries have a lot of advantages Jan 27, 2023
• Man-made graphite isn’t very green, so battery makers want the mined, natural mineral. The problem is there isn’t enough. https://t.co/7yQesrsNHf  “It’s the largest raw material in the battery.” Though not the most expensive… it can be synthesized if mines can’t produce enough Jan 25, 2023
• This giant underground battery is a $1-billion clean energy solution https://t.co/6Wg88Q7SqW  Compressed air drives a turbine when power is needed. Clean, right? No one would argue against this? Wrong. Jan 25, 2023
• Construction of wind and solar installations has slowed to a crawl in the US, despite billions of dollars in federal tax credits and investor enthusiasm for clean-energy projects https://t.co/yxrYY84yWR  When many want to do the same thing, bottlenecks appear & delay ensues Jan 24, 2023
• Nuclear reactors are being pushed to operate for more than double their intended lifespans. It’s a risky experiment with global consequences https://t.co/JtYhXZEWbB  Choices, choices — do the maintenance well. Schedule downtime. Jan 24, 2023
• An increasing number of wind turbine malfunctions are indicative of green power’s growing pains https://t.co/RJLwfqIW20  There is probably a limit to how large you can make turbines without smallish flaws cascading into large failures. Jan 23, 2023

CMBS / CRE

• Office Dominates New Transfers as CMBS Special Servicing Declines in December https://t.co/DyFCFkzQGO  One year ago, I bet the owners did not think rates would get this high. Jan 25, 2023
• Refinancing Tough as CMBS Maturities Pile Up in New York City https://t.co/EJrmmDrDEA  Facing the end, of extend, and pretend. Jan 25, 2023
• CMBS Realized Losses Increased in December https://t.co/ToWWYtZkPt  Interesting. Many of the losses took 5+ years to work out. The biggest loss took over 10 years, with 100% severity. Jan 25, 2023
• Expiring Interest Rate Caps to Fuel Distressed Property Sales https://t.co/jZyDmEP7Jx  Will your rents cover higher financing costs? Jan 25, 2023
• $9B plunge in NYC commercial real estate sets up brutal political fight over shrinking tax pie https://t.co/x27iLbUJqc  Not so many office buildings are needed as before Jan 25, 2023
• Surge In ODCE Fund Withdrawals Is Another Worrying Sign for Commercial Real Estate – https://t.co/VlYRaEtnvP  You will get money… just not as much as you would like, nor as quickly. Jan 25, 2023

Non-US

• Brazil and Argentina’s presidents have launched discussions on a common currency, but their plans are nothing like the euro, which replaced national currencies like the lira, franc and deutsche mark entirely https://t.co/O2LZY7UWXb  Much ado about nothing. Jan 26, 2023
• Countries with established auto industries have been blindsided by China, which is poised to become the world’s No. 2 car exporter https://t.co/HpomO1RNmH  China does not lack for labor. Odd to promote a capital-intensive industry Jan 26, 2023
• Zimbabwe’s leader seeks investment for a new capital just down the road from an impoverished and overcrowded Harare https://t.co/aGxTgu773Y  Better to focus on improving agriculture & infrastructure for public well-being. The Saudis may have money for folderol, Zimbabwe doesn’t Jan 26, 2023
• The UK faces a brutal reality: either taxes are raised, free NHS services are cut, other government departments are effectively scrapped — or the health service breaks https://t.co/k2vS4P6TK9  If you think healthcare is expensive now, wait until it is free Jan 24, 2023
• The on-off talks are back on again: Brazil and Argentina Are Discussing Whether to Combine Currencies https://t.co/XEDcxjHXGN  Would likely fail. Argentina can’t peg to anything given its lousy economic policies. A euro-like currency fails if much of the zone runs large deficits Jan 23, 2023

Personal Finance

• Only one in three Americans can comfortably cover a $400 emergency expense, according to new survey data https://t.co/EWpFVnxe4q  Make good choices when you are young, apply yourself to school and work, and don’t overspend. Jan 24, 2023
• Couples often grow more alike over time in their approach to spending, saving and risk, researchers say https://t.co/ag4MfeMC3b  Opposites can work if communication is good, or if one party lets the other do it. Otherwise it can be a disaster. Jan 24, 2023
• The trouble with ‘buy now, pay later’ https://t.co/ZnEhIhILnD  People forget the 1920s, where BNPL was common and it led many into bankruptcy. Those who ignore history are fated to repeat it. Jan 23, 2023
• Used car prices drop 12pc but bargains a long way off https://t.co/q0s8tZ9w6C  Yes, used car prices have fallen, but they are not cheap yet. Jan 23, 2023

US Economy

• Seven Signs That Economic Growth Is Starting to Falter https://t.co/UkiMH7p2Eo  Mostly employment, retail, and low-end consumer credit Jan 25, 2023
• Employers are shedding temporary workers at a fast rate, a sign that broader job losses could be on the horizon https://t.co/oBZIbci9tj  Labor markets may be weakening. Jan 24, 2023
• The pride of central bankers has taken a battering as inflation has soared. But they need to prioritize growth over restoring their dented credibility https://t.co/3pfEivyJTQ  The inverted yield curve is the markets telling the FOMC “your forecasts of inflation are wrong.” Jan 24, 2023

US Politics

• U.S. weapons industry isn’t prepared for a China conflict, a report says https://t.co/7no7A9cZqE  Will defense spending be a priority or not? What allies are you willing to give up on? Jan 25, 2023
• Democratic congressman Khanna says Biden administration might have to take unilateral action to head off US debt default https://t.co/MBz3DDAvWz  Gimmicks might affect acctg, but never the real economy. We need to stop running primary deficits & then all deficits to avoid crisis Jan 24, 2023
• The Biden administration’s analysis of the tax code by race is in. It shows White Americans disproportionately gaining from lower rates on capital gains and dividends https://t.co/wf5qjfddGr  This isn’t about race, but class. That said, tax all income equally. Jan 23, 2023

Odds & Ends

• The Duck Brigade Behind a Farmer’s Plentiful Rice Harvest @atlasobscura https://t.co/yV9IupsDg3  The ducks eat the weeds. At the end of the season, people eat rice and ducks. Jan 27, 2023
• “We are not out of drought in California, but this certainly makes a significant dent,” said Karla Nemeth, director of the California Department of Water Resources https://t.co/hWv12RqjE6  That there are far fewer farmers than before also makes a dent in water demand. Jan 27, 2023
• Transcript: What the Heck Is Going on With Egg Prices “Let’s crack open the story.” https://t.co/32vZBDCrQc  From the avian flu to feed costs to holiday demand Jan 25, 2023
• Getting a divorce in Japan is relatively simple. But it can sometimes result in single-parent custody, leaving one parent largely excluded from a child’s life https://t.co/p0efdka5eN  If you want to get sad, read this. Jan 24, 2023
• New Paper Says Crypto Is Just A Hot Ball of Momentum-Chasing Money https://t.co/1kD0RxVDH8  So are Ponzi schemes Jan 24, 2023
• Earth’s inner core may have reversed its rotation, potentially shortening the length of the day by a fraction of a millisecond over the course of a year https://t.co/UwtynNMmgk  Uncertain hypotheses Jan 24, 2023
• Steelmaking is a major source of planet-warming emissions. A group of British scientists have come up with a way to avoid them. https://t.co/fkR7F76rr2  Cheaper, too — could be interesting. How prevalent is perovskite? Jan 24, 2023

Picture Credit: David Merkel, with an assist from the YouImagine AI image generator || Running at the beach

Non-US

• New Zealand Prime Minister Jacinda Ardern’s resignation highlights the complexity of post-Covid economic challenges https://t.co/wYjiYV0MLi  People got tired of an overly interventionist leader who did not listen. Jan 20, 2023
• Argentina’s plan to repurchase $1 billion of its deeply distressed dollar bonds has emerging-market investors scratching their heads https://t.co/hlu9qSfIrI  If you are going to do this, don’t announce it in advance. Just do it quietly. Jan 19, 2023
• Entrepreneurs Flee China’s Heavy Hand: ‘You Don’t Have to Stay There’ https://t.co/Ijh5EWbg9A  China faces a talent and capital drain. Once you experience freedom, no level of economic incentives will get you to return to Communist China. Jan 19, 2023
• India may have already surpassed China as the world’s most-populous nation https://t.co/pJiou6pys7  India’s culture would have to change a lot for it to have a fast-growing economy. Cultural change is difficult, so it is not likely Jan 19, 2023
• How Rich Are Gulf Countries? Region’s Wealth Funds Have $3 Trillion to Spend https://t.co/KNNvnYr0BT  Finding new ways to lose money Jan 18, 2023
• China’s population started shrinking in 2022 for the first time in six decades https://t.co/W3S9zvd3Aw  This is not news. Anyone paying attention knew this was coming 15 years ago. Jan 18, 2023
• The UK is poised to threaten social media bosses with prison if they break new safety rules. That’s sensible, says @parmy https://t.co/uMKTmduBFs  Not sensible. We don’t jail corporate leaders for tortious corporate actions. Instead, we fine the companies severely. Jan 18, 2023
• Russians became the top foreign buyers of real estate in Turkey last year, helping sustain the world’s hottest housing market by tripling purchases https://t.co/JHIAXw2uHe  Also happening in Georgia. Many Russians escaping Russia, and becoming significant in nearby nations. Jan 18, 2023
• Western banks struggle to exit Russia after Putin intervention https://t.co/C1tdCYaYzK  The wind-down strategy seems the most compelling Jan 17, 2023

Credit Issues

• The rapid meltdown of Americanas has left Brazilians with the prospect of losing a ubiquitous company known for its iconic red-and-white logo and holiday sales https://t.co/do9eD4mroq  Things like this don’t happen by accident. Management may have corrupted their accountants. Jan 20, 2023
• Property markets face a deepening debt crisis as the era of easy money ends, and the fallout is everybody’s problem https://t.co/fFKTSmtiqI  Stick to low leverage, quality and only “B” properties that are necessary… Jan 20, 2023
• US watchdog cracks down on private equity securitization vehicles https://t.co/rjSGcuzh7i  NAIC: 1) always late 2) underfunded 3) lacks smarts 4) states don’t listen to them 5) tries to grab control of credit questions, botches it, & gives it back to the rating agencies Jan 18, 2023
• Opinion: More rotting assets are lurking in the shadows of the financial system https://t.co/kn6eaxfGMq  Definitely opinion & biased. Many of the things stated here are wrong. That said, if defaults pile up from CLOs, let the entities funding them default, and don’t bail them out Jan 19, 2023
• Big banks might need to be broken up if they become too big to manage & are unable to fix significant regulatory lapses, a top federal banking regulator said Tuesday https://t.co/ThWQ1ujBId  Regulators most willing to break up the big banks likely have the least ability to do it Jan 18, 2023  

Portfolio Management

• Baillie Gifford admits ‘humbling year’ after $14bn loss on Tesla and Shopify https://t.co/2fA5cLEtwT  Evaluate using dollar-weighted returns, like the PE guys do. Jan 20, 2023
• Corporate fraud is widespread – and largely undetected, study says https://t.co/GEyfWRziKA  Cash flow conquers all. If things were that bad, you would see a lot more insolvencies. There is bending GAAP, and breaking GAAP. The former is common, the latter is not. Jan 20, 2023
• Questioning the Illiquidity Premium https://t.co/8Q7lbVMxij  Simply put, you shouldn’t buy an illiquid investment unless you will likely get a premium return versus similar illiquid investments. Realizing an illiquidity premium is never guaranteed Jan 17, 2023
• Investing When Your Time Horizon Is Short https://t.co/lmLOsMtFwv  If your assets need to spent in 3 years or less on average, don’t own stocks. Jan 17, 2023

Science

• Propulsion System Could Get Us From Earth to Neptune in 1 Year https://t.co/iIuEIL25yp  This isn’t likely. Transferring kinetic energy with extreme accuracy would be tough. Jan 20, 2023
• Companies are turning to microbes to alleviate fertilizer’s negative impact on the environment https://t.co/UIqd68kEf2  Milorganite has existed for years, Yara. But other technologies here could be game-changers. Jan 20, 2023
• A nuclear-powered copter on Saturn’s moon Titan. Blimps on Venus. Space engineers are planning innovative flying machines to explore far-away worlds. https://t.co/LWiEDPiztg  At least unmanned missions are cheap. Pity they won’t find any life out there aside from microbe stowaways Jan 19, 2023
• New research finds that global temperatures would be about 0.1°F higher, had it not been for an increase in atmospheric dust https://t.co/LQmqIbtmVv  Think of volcanoes. This isn’t news. Jan 19, 2023

Auto Finance

• Can You Use a Home Equity Loan to Buy a Car? https://t.co/hg91niTa5L  Could be a good idea if you pay it down quickly (<5 years), but not otherwise. Jan 19, 2023
• The steep plunge in used car prices – what it means, and what’s ahead https://t.co/cslWrGFhbQ  In general, the fall in prices is far greater the older and cheaper the cars are. Once new cars are being bought and sold in volume, recent used car prices may decline more rapidly. Jan 18, 2023
• Hangover Time for Used-Vehicle Dealers. For Buyers, Patience Will Pay Off | Wolf Street https://t.co/HP7R7jyREj  It’s likely that the prices of used autos will continue to fall. Jan 17, 2023
• How Auto Lenders Can Help the Growing Ranks of Troubled Borrowers https://t.co/GA7XI7VDmy  The low end is experiencing greater credit stress Jan 17, 2023

Politics

• It’s Time to Put a Brake on the Debt-Ceiling Charade https://t.co/XQ4RAnotdG  Switzerland has an expenditure cap that requires balanced budgets over time. It would be a lot better than what we have now. Jan 18, 2023
• A looming, high-profile fight in New York speaks to a widened interest in state judicial appointments since the U.S. Supreme Court overturned Roe v. Wade https://t.co/uwNJeEeHxz  New York, where liberals fight liberals. Jan 18, 2023
• Lawsuits across the U.S. are challenging policies aimed at getting homeless people off city streets https://t.co/mIFMoYyamI  I’ve known some homeless people over the years. The main common factor: lack of self-control, which is a skill that can be lost or developed. Jan 17, 2023

Private Equity

• Private equity’s slowdown in 3 charts https://t.co/GTXKsF1wDD  The situation is extended and ugly. What can we say? Watch for writedowns. Jan 20, 2023
• Inside The Secretive World Of Shark Tank Deals: Who The Real Winners Are https://t.co/tMyOhmeC4h  Interesting article. I’ve never been impressed with “Shark Tank”, because like all investing, acting quickly leads to ruin. This helps prove it. Jan 20, 2023

Crypto

• Binance Is Bleeding Assets, $12 Billion Gone In Less Than 60 Days https://t.co/rgdl1GniHM  Bye, bye, Binance Jan 20, 2023
• Genesis Global Capital is laying the groundwork for a bankruptcy filing as soon as this week https://t.co/0WuMU0SrE9  Which will likely lead to a Gemini bankruptcy… Twin bankruptcies, and it is only the beginning. Jan 18, 2023

Companies

• Meme stock Mullen risks drowning its investors by issuing a ton of shares, argues @chrismbryant https://t.co/Vvt5SYVoqG  This is a rational response to meme stock investors: stuff them full of stock. Jan 19, 2023
• Looming Twitter interest payment leaves Elon Musk with unpalatable options https://t.co/oJmCngeWjC  If Twitter is worth no more than $15B at best, then basically the banks will own it, unless Musk tries to fold it into $TSLA, or some recapitalization that spreads the pain Jan 17, 2023

Odds and Ends

• California Has a Gas-Price Mystery: Too High, But Why? https://t.co/FlrG5NHpsB  Low refining capacity, low number of gas stations per driver — blame California regulations. Jan 20, 2023
• Appliance makers are betting that internet-connected “smart” appliances will help transform their businesses and customer relationships—but not all consumers are plugging in https://t.co/z2p59IWD06  Better to buy simpler appliances, they break less, & fancy features are marginal Jan 20, 2023
• A major Hollywood producer just pulled back the curtain on how hard it is to make movies—and how the streaming model killed the independent film https://t.co/LkO6HxoEj3  In general, this is good. Edgy content is usually bad content. Jan 20, 2023
• Tech startup workers are grappling with what the market tumult means for their finances. https://t.co/gbBj7Y8ijd  It’s a big risk to give up a lot for the startup company you work for in order to have a chance at a big score. ~80% don’t succeed. Jan 19, 2023
• The Financial Accounting Standards Board is moving to permit companies to apply a certain accounting method to more tax-credit investments https://t.co/Kfdvz15ydT  This is an interesting corner of investing. The accounting issues matter less than risk-based capital issues Jan 19, 2023
• Fake meat companies promised to halt climate change, protect animals and make people healthier— while making billions. But they’ve turned out to be another food fad https://t.co/gYtcLlx7D8  It comes down to lower quality at a higher price Jan 19, 2023
• Something has been killing American young people in sharply rising numbers, but it’s not vaccines, @foxjust says https://t.co/d0WWDl5z5S  Large increases due to accidents, homicides, suicides, & C19 Jan 19, 2023
• Bob Prince, who helps manage the world’s largest hedge fund, says more people need to lose their jobs before inflation will be brought under control https://t.co/GH6YFITkMR  No, the Phillips curve does not exist in the presence of global trade. Don’t create a financial crisis Jan 18, 2023
• Food waste is a major contributor to climate change. This startup wants to reroute your kitchen scraps from the landfill back to the farm https://t.co/svDMWmZAaH  But why make them pay to do this? This is your cause. You should pay for it. Jan 18, 2023
• The Consumer Financial Protection Bureau is weighing new restrictions on fees companies charge to wire money abroad https://t.co/998tjpQ24v  It’s fine if compensation is disclosed or undisclosed, just not both. https://t.co/HWWVFqqmCr  Jan 17, 2023
• Going electric is often prohibitively expensive for truck drivers operating at US ports. One California startup may have a solution https://t.co/sy5KNgEFql  All-in, a lot of the supposed environment advantages go away when applied to extremely heavy vehicles. Jan 17, 2023
• CES, the consumer electronics convention held in Las Vegas this month, felt a lot like the flashy auto shows of yesteryear, with a techy twist https://t.co/mMJPoHDJWj  Just be for real; flashy niche ideas that are costly will not pay off. Jan 17, 2023

Picture Credit: David Merkel, with an assist from the YouImagine AI image generator || Boldly flying in front of a stained glass window

Portfolio Management

• Sick of the ups and downs of the markets? Assets that don’t trade at all might sound tempting, but @jasonzweigwsj says beware of the pitfalls of private offerings https://t.co/AO2RWVMdVq  Don’t let the volatility of publicly traded assets scare you into buying opaque investments Jan 13, 2023
• Why investing will grow more difficult in 2023 https://t.co/nq173pzVFO  The VIX, and option volatility generally is over-followed, and there are options speculators than before, particularly with calls. 2023 is merely a sequel to 2022, already anticipating the FOMC stopping Jan 13, 2023
• Experts Spent Years ‘Angst-ing’ Over Value. In the End, the Answer Was in the Textbook. https://t.co/7gEByaPayA  Abundant liquidity from the Fed emboldened growth investors to bid prices to unsustainable valuations. Jan 11, 2023
• Barbarians Are at Grayscale’s Gates. Can They Take Over $GBTC? https://t.co/pKLMtrt4go  This situation may be hopeless, so learn from the broader principle: be careful before investing in anything where it is extra difficult to vote out management. Jan 10, 2023
• 3 Ways to Measure Management Integrity https://t.co/ft2IfzGblW  Integrity is important because if a management team is unethical toward stakeholders, in a tough situation, they will cheat shareholders as well Jan 10, 2023
• How often do you need to rebalance your portfolio? The answer may surprise you https://t.co/Q21GMn5zLj  Rewards for rebalancing have declined because risky asset classes have become more correlated over time, as diversification has become more broad Jan 10, 2023
• Brokers that offer traders the chance to buy less than a full share of a stock are set to face more scrutiny from a key industry watchdog https://t.co/NvfIUAnFyE  These are worthy of scrutiny, but the amounts involved are small potatoes, for the most part. Jan 10, 2023
• The California Public Employees’ Retirement System is making a $1Bn wager that small private equity firms can boost the pension giant’s returns and clout https://t.co/NGKkU6tnmD  CALPERS has a knack for being late… adding money to two small private equity shops now? #pe_glut Jan 10, 2023
• Monte Carlo Failures Aren’t Plane Crashes https://t.co/AenaX40s1k  Attempts to distinguish between meeting needs and wants. Does not take into account, as far as I can see: quasi-MC, return assumptions, variances, correlation, mean-reversion, momentum, extreme events, etc. Jan 09, 2023
• Estimating Future Stock Returns, September 2022 Update https://t.co/EwIuzWnCDL  My but future returns are limited. 3.2%/year over the next 10 years. Does that sound attractive? Jan 08, 2023
• A look back at the wildest financial predictions from the everything bubble https://t.co/oOIPcQ7Se4  Impossible to have an “everything bubble.” That said, stocks, housing, and crypto are still overvalued. Jan 08, 2023

Culture

• US birth rates are at record lows – even though the number of kids most Americans say they want has held steady https://t.co/Nz026ECbUX  There is no mystery here. If you don’t have children while young, odds decrease that you will have children, and a higher number of them. Jan 14, 2023
• The Half-Madness of Prince Harry by @peggynoonannyc https://t.co/l34TqzQmK9  Seems like a PR “scorched earth policy.” Why should we care about the English monarchy, including Harry? Is he trying to destroy something because he cannot have it himself? #envy Jan 13, 2023
• The new conservative Israeli government means Jewish activists have more support for praying at the Temple Mount. https://t.co/Cbxx8xqrNq  Playing with dynamite Jan 12, 2023
• Why Italians have become the most common foreign nationality in London https://t.co/SCsAskWoS2  Culture matters. There is more opportunity in London than much of Italy Jan 10, 2023
• Xi Jinping’s plan to reset China’s economy and win back friends https://t.co/ezTQgj9u62  It’s rare to see someone have severe opinions “spin on a dime.” These efforts are meant to end the protests and regain some Western support. Xi will revert when he finds it advantageous Jan 10, 2023
• The Engineers Are Bloggers Now https://t.co/j9DU5Ot69p  Anytime you can get good writers in STEM fields to break down the complexity, it is a treat. Management appreciates those who can take a tough subject and explain it to them. Jan 10, 2023
• CFP? CSLP? There is an alphabet soup of financial-adviser credentials https://t.co/reycid43Lm  Credentialing is overdone. The only ones who directly benefit are those who create the credentials. This will eventually fade, aside from credentials that are genuinely hard to obtain Jan 09, 2023
• Is it time to kill calculus? https://t.co/7vmGjNozdI  Maybe, and it might be good to replace geometry with analytic geometry, but adding data science and probability will leave most STEM majors underprepared for college math. Jan 08, 2023
• Also, the article is wrong when it states that current math pedagogy favors boys over girls. It is the opposite, except in the top decile. This proposal would not make things better; it would create new problems. Math pedagogy peaked in the 1950s and has gone down since https://t.co/qxQl3tnt2z  Jan 08, 2023

Companies

• Bed Bath & Beyond continued to surge on Thursday after the company’s bankruptcy warning reignited interest from retail traders https://t.co/EeW4tHeUdT  Time for a secondary offering of $BBBY stock, or quietly do a PIPE. Or a rights offering w/some warrants, or a junior convertible Jan 12, 2023
• With $200 billion already squandered and Tesla in sharp decline, it’s possible Elon Musk will never be the world’s richest person again https://t.co/VPqvOEMAOk  Could Elon Musk lose all of his $TSLA stock? Dubious, but losing almost all of it is quite possible. Jan 11, 2023
• A swing and a miss https://t.co/Iva3XAYNIT  A commercial real estate pro comments on Univ. CA’s recent transaction In BREIT. His conclusion: even with the discount, they would have gotten a better deal in the public REIT markets Jan 10, 2023
• Pizza Robot Company Stellar Draws Engineers From SpaceX https://t.co/ZcxP4vAI08  If it can get the cost of a pizza down with reasonable quality, this could be interesting on a mass market basis. Jan 10, 2023
• Ukrainians accounted for 45% of all the new foreign companies that set up shop in Poland last year, according to a report https://t.co/lhFlsqYkJn  Will be interesting to see how Polish/Ukrainian relations evolve. Jan 10, 2023
• Warren Buffett’s excellent Japanese adventure will probably keep pumping out profits even as oil and gas prices slip from their highs, writes @JavierBlas https://t.co/wZrceogkZY  Another small win for Buffett Jan 09, 2023
• The US Supreme Court turned away four appeals by Fannie Mae and Freddie Mac shareholders who wanted compensation after the Treasury collected more than $100Bn in profit from the GSEs https://t.co/Uud0coWGJO  The common stock should have been canceled after the bailout Jan 09, 2023

Central Banking

• Transcript: Why Banks Are Suddenly Borrowing From the Fed’s Discount Window https://t.co/3YUSj4Jnhv  Long, but valuable if you want to learn how the Fed’s discount windows, and other liquidity facilities work Jan 13, 2023
• Peru extended its biggest-ever phase of monetary tightening Thursday to curb a spike in inflation that is aggravated by anti-government protests https://t.co/gwJ82CTznj  When no foreigners have to buy your debt, in order to aid exporters, inflation can get out of control quickly Jan 13, 2023
• The Bank of Korea raised its benchmark interest rate on Friday in what could be the final act of its 18-month tightening cycle https://t.co/5K5LrbIsK1  Yield curve inverted, seemingly stopping. Jan 13, 2023
• More investors are putting greater focus on services inflation and labor-market data as they try to grasp a more complex inflation picture https://t.co/6UsJ8f4SY6  Leaving out anything skews the inflation picture. But ignore the Phillips curve. Wages have low impact on prices Jan 11, 2023
• Jerome Powell said the FOMC is strongly committed to lowering inflation even though interest-rate increases could fuel political blowback https://t.co/BaPhhEtJM7  FOMC drives through the rearview mirror. Should use forward looking indicators even if at odds w/present conditions Jan 10, 2023
• The Fed is not a ‘climate-policy maker,’ Powell says https://t.co/fHymyqQHI0  Well said, stick to your statutory mandates — if you can actually achieve them (Tsst… the Phillips Curve was a post-WWII statutory anomaly. It does not exist when there is global trade) Jan 10, 2023

Auto Lending

• Used-vehicle volume hits lowest mark in nearly a decade https://t.co/Jwi4SzmNaq  Delinquencies are rising, & as there are more new cars, there will be more trade-ins. Used car prices should continue to fall. Then expectations effect as dealers pay less for trade-ins as lots fill Jan 14, 2023
• Inventory crisis dragged auto sales to a decade low in 2022 https://t.co/Kq8MJthZNm  Oversupply of used cars coming as many trade in for new cars Jan 13, 2023
• Growing new car supplies means used car prices are starting to drop https://t.co/6VEB0oOfkF  And the prices will likely fall further, as interest rates are higher, and credit is tighter. Jan 12, 2023
• Used car prices post biggest drop ever as new luxury car sales boom https://t.co/STXfvk1Emx  Conspicuous consumption among the wealthy Jan 11, 2023
• It’s Not Just a Car-Loan Crisis https://t.co/t6W4ZDo923  The author is partially right, in that many mortgages and car loans are now inverted as asset prices fall, as the FOMC has raised rates. But car loans are shorter, which makes inversion more severe. Defaults will be greater Jan 11, 2023
• Why worries over subprime auto bonds might be only getting started https://t.co/foKwjdA7Og  More reasons why overprovision of credit in auto finance will either led to 1) more defaults, or, 2) reduction in loan options if $CACC has to pull back –> falling used car prices Jan 08, 2023

Crypto

• Sam Bankman-Fried should be treated as innocent until proven guilty, Ackman says https://t.co/ASTbvVsyy7  A worthy thought. Spitzer won when he got people to compromise. Remember that the grand majority of cases that went to trial were won by the defendants vs Spitzer in the 2000s Jan 13, 2023
• Samsung Asset Management indicated the firm could consider starting a spot Bitcoin ETF in Hong Kong if the city allows such products https://t.co/xaiqRnevBB  Enabling people to lose more money while leveraged, and perhaps unleveraged. Jan 13, 2023
• Mike Novogratz sounds off on Sam Bankman-Fried and Barry Silbert: “The toxic masculine side of me would like to punch them both in the jaw.” https://t.co/z21VhMAhBj  A crazy dreamer — all crypto is a Ponzi at some level. Jan 12, 2023
• FTX advisers have found more than $5 billion in cash or crypto assets that it may be able to sell to help repay creditors, a lawyer for the company said https://t.co/M5UiEHUhnn  Like Madoff, claimants won’t get nothing, but they won’t get paid in full. Jan 11, 2023
• Coinbase Crypto Exchange to Cut Nearly 1,000 Jobs https://t.co/uFKd747eM0  If you are laying off people, you are likely not a growth company. With $COIN estimate cash burn rate vs cash available to the holding company Jan 10, 2023

Credit Issues

• A deal frenzy that included Elon Musk’s Twitter takeover has left Wall Street banks struggling to revive the lucrative business of backing big mergers https://t.co/X9QhKAolI8  Take your losses & be done. The bear phase of the credit cycle lasts well into the FOMC’s loosening cycle Jan 13, 2023
• To many young consumers, zero-interest layaway plans such as Afterpay mean free money, and the idea of paying down daily indulgences doesn’t faze them. A report on the problem with Gen Z’s love of “buy now, pay later” programs https://t.co/JLg75QPM3q  Credit losses emerging Jan 12, 2023
• Japanese Internet Firm Rakuten Selling $200 Million Bond https://t.co/VjsYLTR3Cz  Interesting that some junk credits are also bringing deals. Jan 10, 2023
• Europe’s Bond Sales Top $130 Billion in Record Time https://t.co/aYljLxYqkr  Interesting to see this level of borrowing… also the $20B Saudi Arabia deal. Many Non-US entities borrowing long in USD Jan 10, 2023

Rain in California

• Beach towns such as Capitola, where a wharf was torn in half, have borne much of the brunt from California’s recent series of torrential rainstorms https://t.co/ejqXBkHZbA  If you build on the coast of the ocean, or next to a large river, you are asking for trouble. Jan 13, 2023
• EXPLAINER: Storms put California levees to the test https://t.co/fjndwqBvbI  I used to live in Davis, CA. The levee systems of California are crucial for avoiding flooding. But responsibility for the levee is dispersed in public and private hands. Complex and underfunded Jan 10, 2023
• California faces more drenching rain, as concerns about drought have been replaced by fears of flooding that’s killed at least 14 people https://t.co/A2ZqSxJlBg  Excellent news for farmers and skiers. No drought in 2023. Can we get this for the Mississippi river basin? Jan 10, 2023

Science

• Why Not Mars https://t.co/cYPeEfG5Ta  I don’t favor going to Mars, unless it is done with private money. And if we go there we should ignore the international treaty requiring that we don’t contaminate Mars with Earth organisms. Impossible to avoid. Jan 14, 2023
• A climate startup removes carbon from open air in a first for the industry, potentially launching an industry to address climate change https://t.co/NDpLZUTJIv  Looks like a promising technology, if CO2 is indeed a pollutant. Jan 13, 2023
• Why ChatGPT may be the most human form of A.I. yet: It produces informed BS https://t.co/wyzVlZoSrz  I’ve been playing around with the chat utility at https://t.co/ATiFIuhEjl.  It’s not always right, but if you point it to the right resources, it learns. Jan 13, 2023

Food

• Alchemist: Is this the world’s most creative restaurant? https://t.co/suamcigX9z  Odd, not creative, I will pass on this even if one like it is nearby. Jan 14, 2023
• This new, eco-friendly ‘sugar’ has half the calories of cane sugar: ‘A world-changing ingredient’ https://t.co/DYZgg5PiVe With so many people skeptical about additives, drugs, vaccines, why is there quick adoption of new ‘sugars?’ Jan 14, 2023
• A US government agency will move to regulate gas stoves as new research links them to childhood asthma. “This is a hidden hazard,” said an official https://t.co/limmfmgZSj  If this were true, we would have known it long before. Gas offers much better control in cooking. Jan 09, 2023

Energy

• The Edge of Productivity https://t.co/VZE0RrV3nz  Interesting article on energy use trends, but way too bullish on the impact of AI for productivity. Jan 14, 2023
• The US is backing a Nevada lithium project in an effort to create its own supply chain of the metal. https://t.co/p1w4J57hdT  If it’s that good of an idea, why do you need public financing? National security? Jan 13, 2023

Odds & Ends

• A case before the Supreme Court challenging the liability shield protecting websites such as YouTube and Facebook could “upend the internet,” Google said in a court filing https://t.co/xyLPZIveIL  The internet would survive, but profitability of social media would decline. Jan 13, 2023
• “It would be great if the companies would switch away from email and start using other services,” one executive said, “but people don’t change.” https://t.co/w0q4gGOsuU  Don’t trust email. Skepticism is warranted w/those you don’t know, & those you do know when it looks weird Jan 13, 2023
• The West Coast, for the past decade a leader in the housing boom, is stumbling, while eastern and southern cities are holding up better https://t.co/CHQluSWy2F  Places where the boom was no so large, or where there have been many migrating to the area. Jan 13, 2023
• Private jet business booms despite commercial airline revival https://t.co/HG8PosSnZ4  ‘“Inflation never affected the 1 per cent,” said Kevin Singh, president of Icarus Jet, a private jet broker.’ Convenience, flexibility, and not having to go through security are the keys. Jan 10, 2023
• President Biden asked Treasury Secretary Janet Yellen to stay in her post, and she agreed, a White House official said https://t.co/GnR4FrlRAl  This should not be news Jan 10, 2023
• Unmarried Women No Longer Pay a Financial Penalty in Retirement https://t.co/caAhCPHrN8  Accurate title would be: Middle Income Women Do Badly in Retirement, Married or Not Jan 10, 2023
• Brazilian police clashed with supporters of former President Jair Bolsonaro in the capital of Brasilia on Sunday https://t.co/zLbWuoW9IP  There was no possibility that they could overthrow Lula. Jan 09, 2023

Picture Credit: Aleph Blog || I know this is late, but still, here it is…

At September 30th, 2022, the S&P 500 was priced to return 4.14%/year over the next ten years. Given the rally since then, that return has shrunk to 3.20%/year. Does that sound attractive? It is lower than the yield on the 10-year T-note, and lower than current inflation (which is falling like a stone, don’t tell the geniuses at the FOMC).

And you could be adventurous, as I was when I was a corporate bond manager (2001-2003) buying long single-A and BBB/Baa bonds. Even at 10 year maturities, you can get well over 5% for sound credits.

The stock market needs to fall around 20% to be at parity with lower-rated investment grade bonds. This is not pleasant news, but given the media drumbeat of:

Stocks always beat bonds! Stocks always beat bonds! Stocks always beat bonds! Stocks always beat bonds! Stocks always beat bonds!

It needs to be said that it is not always true. It wasn’t true in the 2000s decade. It wasn’t true in the Great Depression.

I’m keeping this short this evening. The US corporate bond market is still more attractive than the US stock market. If the S&P 500 drops below 3100, with no changes in interest rates, then the stock market will be a better buy.

So be ready for the stock market to fall further after the Fed stops tightening, when the recession ensues, and buy stocks amid the panic.

PS — when the tech giants are firing people, that is a sign that they are no longer growth stocks.