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Note on Monetary Policy and Jackson Hole

Erdmann Housing Tracker β€’ 126 implied HN points β€’ 25 Aug 23
πŸ’° Finance Monetary Policy Inflation Interest Rates Housing Market Economic Analysis
  1. Powell's approach to monetary policy is based on conventional models, which may not fully address current economic issues.
  2. There is a concern that inflation is settling above the 2% target due to trends in goods and services.
  3. Housing supply issues contribute to 'inflation' and can be misleading when analyzing monetary policy impacts.

January 2024 CPI Update

Erdmann Housing Tracker β€’ 63 implied HN points β€’ 14 Feb 24
πŸ’° Finance Economic Analysis Monetary Policy Inflation Federal Reserve
  1. Reaction to monthly CPI updates often fails to consider the lag affecting the shelter component, leading to surprises in news interpretation.
  2. Market expectations of a Fed rate cut were influenced by the latest report, shifting them further in the future.
  3. Monetary measures like currency in circulation and M2 trended down post-Covid scare, while the Fed's balance sheet shrinks without obvious disruption.

European stocks offer earnings stability in surprising places

Klement on Investing β€’ 1 implied HN point β€’ 08 Jan 25
πŸ’° Finance Investing Stocks Market Trends Economic Analysis Risk management
  1. European stocks can provide surprisingly stable earnings even in tough times. It's good to look for companies that have shown consistent growth before.
  2. In this uncertain economic climate, having a strategy can help investors feel more secure. Focusing on steady performers might be a smart approach.
  3. Many investors are looking for ways to adapt and manage risks this year. Finding reliable stocks in Europe could be part of the answer.
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Clouded Judgement 11.22.24 - Is Software Back?

Clouded Judgement β€’ 10 implied HN points β€’ 22 Nov 24
πŸ’° Finance Investing Market Trends Economic Analysis
  1. There seems to be a shift happening where software companies are performing better while major tech stocks are lagging. This raises questions about whether this trend will continue.
  2. Recent earnings reports from software companies show strong results, suggesting that their business fundamentals might be improving significantly.
  3. There's a strong possibility that the market is looking for new investment opportunities, especially as some investors take profits from the longstanding success of major tech firms.

The Most Important New Disinflation Indicator

Apricitas Economics β€’ 63 implied HN points β€’ 15 Jul 23
πŸ’° Finance Inflation Housing Economic Analysis Monetary Policy Labor Market
  1. The New Tenant Repeat Rent Index provides a more accurate measure of current housing market conditions and predicts future disinflation.
  2. Housing inflation is currently the main driving force behind overall inflation, with non-housing inflation remaining relatively stable.
  3. The 'speed limit' theory of inflation suggests that the growth rate of the labor market, rather than its level, is a key determinant of rent inflation and overall price stability.

The American Secular Cycles

America in Crisis β€’ 39 implied HN points β€’ 04 Apr 23
πŸ‡ΊπŸ‡Έ U.S. Politics History Policy Political theory Economic Analysis Demographics
  1. America's history follows cyclical patterns of expansion, stagnation, crisis, and resolution, influenced by population growth, economic inequality, and elite competition.
  2. Secular cycles have been identified in American history from 1780 to 1930 and a current ongoing cycle since 1930, driven by demographic mechanisms and economic inequality.
  3. The resolution of past cycles involved significant events like the Civil War and the Great Depression, with policy responses playing a crucial role in resolving economic and political crises.

We Don't Need to Destroy the Economy to Save It

Kyla’s Newsletter β€’ 52 implied HN points β€’ 06 Jul 23
πŸ’° Finance Economic Analysis Investing Market Trends Policy Analysis Financial advice
  1. The economy is doing okay, with signs of improvement, despite individual struggles.
  2. People's responses to economic data and progress vary, highlighting different perspectives.
  3. Challenges like constant availability, lack of choice, and desire for community impact societal values and behaviors.

What was the Tech-cession?

Apricitas Economics β€’ 48 implied HN points β€’ 06 Aug 23
πŸ’Ό Business Tech industry Economic Analysis Employment Trends Media influence
  1. Tech layoffs have significantly reduced and share prices of major tech companies have rebounded, indicating a positive shift in the industry
  2. Although tech-sector job growth has slowed, overall employment in the industry remains high compared to pre-pandemic levels
  3. The tech-cession led to a significant decline in compensation which impacted the broader economy, especially in high-tech areas like California

China's Premier just consulted these economists. What's their view on the economy?

Pekingnology β€’ 67 implied HN points β€’ 08 Jul 23
🌍 World Politics China Economic Analysis Fiscal policy
  1. Economists discussed the challenges in China's economy and emphasized the need for strong fiscal and monetary policies with institutional reforms.
  2. There is a call for active participation in global digital economic and trade agreements, establishment of open capital markets, and alignment with international provisions.
  3. Encouraging innovation in the financial market requires a tolerant approach to failure, role of long-term institutional investors, less frequent information disclosure, open capital markets, and stable macro policy orientation.

US Supply Chains are Recovering

Apricitas Economics β€’ 42 implied HN points β€’ 20 Jun 23
πŸ’Ό Business Supply Chains Semiconductors Manufacturing Inflation Economic Analysis
  1. US supply chains are recovering after facing crises due to the pandemic.
  2. Constraints like materials shortages and logistics issues are decreasing, indicating improvements in the supply chain.
  3. Consumer demand for goods has slowed down, leading to manufacturers facing more demand constraints than supply constraints.

How the Banking System Changed Post-SVB

Apricitas Economics β€’ 32 implied HN points β€’ 05 Jun 23
πŸ’° Finance Banking System Economic Analysis Financial Institutions Risk management Monetary Policy
  1. After the collapse of Silicon Valley Bank, the American banking industry is adapting by relying less on uninsured deposits and more on alternative funding methods like borrowings.
  2. Deposits have restabilized post-SVB crisis, but banks are facing challenges with tight lending standards due to renewed economic pessimism and liquidity concerns.
  3. Banks are cautiously navigating post-SVB crisis by reducing reliance on uninsured deposits, managing securities losses, and addressing liquidity worries amid tighter monetary policy.

Clouded Judgement 10.11.24 - Budget Flush

Clouded Judgement β€’ 5 implied HN points β€’ 11 Oct 24
πŸ’° Finance Market Trends Investment Strategies Economic Analysis Corporate Finance Startup funding
  1. A budget flush happens when companies spend leftover budget at the end of the year to avoid losing any funds. This can boost sales for software companies looking to close deals quickly.
  2. Last year's budget flush was stronger than usual, with companies spending more due to concerns over budget cuts. This year, a similar trend could happen, driven by a more positive economic outlook.
  3. The performance of software stocks is rising, signaling optimism in the market. Investors are hopeful that major companies will report good earnings, which could lead to more investments in the software sector.

Testing the Vibes Hypothesis

Gideon's Substack β€’ 14 implied HN points β€’ 28 Nov 23
πŸ‡ΊπŸ‡Έ U.S. Politics Election Public Perception Demographics Economic Analysis Political polarization
  1. A New York Times poll revealed a disconnect between people's perception of the economy and the actual economic data.
  2. Biden voters, especially those under 45, have a more negative perception of the economy compared to older voters.
  3. Possible explanations for the perception divide include demographics, housing costs, rising expectations, and political polarization.

Market Power in Housing Construction

Erdmann Housing Tracker β€’ 2 HN points β€’ 21 Feb 24
πŸ’Ό Business Market Power Economic Analysis
  1. There is a widely held notion that the homebuilding industry may have oligopolistic power, potentially stemming from a misdiagnosis of the 2008 crisis.
  2. US home construction markets have been experiencing unusual behavior, with demand exceeding supply capacity, builders selling incomplete homes while pushing input prices higher, showing signs not typical of an oligopoly.
  3. Blaming corporations and outsiders for housing issues may perpetuate deep-seated prejudices and prevent solving communal problems effectively.

January 2019 Data Update 1: A reminder that equities are risky, in case you forgot!

Musings on Markets β€’ 19 implied HN points β€’ 03 Jan 19
πŸ’° Finance Investing Market Trends Equities Risk management Economic Analysis
  1. Investing in stocks comes with risk, and it’s important to remember that not every dip in prices is a chance to buy. Stocks can lose value, and there are reasons why they usually offer higher returns than safer investments.
  2. The equity risk premium, which tells us how much investors are being paid to take on the risk of stocks, has increased recently. This might suggest that stocks are undervalued compared to historical norms.
  3. Looking ahead, market conditions could be challenging with potential slowdowns in economic growth and global crises. Understanding these risks helps investors make more informed decisions.

Office to Residential Conversions

Arpitrage β€’ 1 HN point β€’ 05 Nov 23
πŸ’Ό Business Real Estate Urban Development Government Policy Economic Analysis Environmental Impact
  1. Cities are considering converting older office buildings to residential spaces to address urban challenges like reduced foot traffic, high carbon emissions, and housing affordability.
  2. Local and federal policymakers play vital roles in facilitating these office to residential conversions through regulatory changes, property tax relief, and financial incentives.
  3. Conversions may face challenges due to interest rate shifts, building constraints, and alternative real estate uses, but proactive measures can help make them financially viable.

At 25x ARR, why is Cursor so cheap?

Alex's Personal Blog β€’ 0 implied HN points β€’ 16 Jan 25
πŸ’° Finance Investing Startups Market Trends Valuations Economic Analysis
  1. Cursor, an AI coding tool, has impressive annual revenue of $100 million but is valued at only 25 times that amount. This valuation seems low for such a fast-growing company.
  2. In comparison, other AI companies like Anthropic and OpenAI are raising funds at much higher valuation multiples, around 42.4x to 68.5x their revenue.
  3. Investors might find Cursor a more appealing option due to its lower valuation compared to its peers, making it an interesting investment opportunity.

Breaking Byzantine Fault Tolerance

Coin Metrics' State of the Network β€’ 0 implied HN points β€’ 27 Feb 24
πŸ•Ή Technology Blockchain Cryptocurrency Network Security Economic Analysis Market Trends
  1. The Total Cost to Attack (TCA) metric introduced in the research is a valuable tool for assessing the economic viability of potential threats to Bitcoin and Ethereum networks.
  2. Analyzing the economics of potential attacks on blockchain networks highlights significant economic disincentives for attackers, with the costs to compromise Bitcoin ranging from $5B to $20B and Ethereum's cost estimated around $34 billion, proving to be prohibitively high.
  3. The study emphasizes the security mechanisms of major blockchain networks like Bitcoin and Ethereum, indicating a promising future for the cryptocurrency industry amidst market growth.

Bitcoin vượt 20K USD

ThΓ‘i | Hacker | Kα»Ή sΖ° tin tαΊ·c β€’ 0 implied HN points β€’ 16 Dec 20
πŸ’° Finance Cryptocurrency Investing Market Trends Technology Adoption Economic Analysis
  1. Bitcoin has surpassed $20,000 USD, with some notable differences in this surge compared to past increases.
  2. Institutional investors, like companies and hedge funds, are increasingly buying BTC, indicating growing acceptance of Bitcoin as an asset.
  3. Altcoins are not rising at the same pace as Bitcoin, with many ICOs being scams, suggesting caution in the cryptocurrency market.

Value Investing II: Tough times for Value Investing - Passing Phase or a Changed World?

Musings on Markets β€’ 0 implied HN points β€’ 23 Oct 20
πŸ’° Finance Investing Market Trends Economic Analysis Fund management Stock Analysis
  1. Value investing has struggled in the last decade, and even famous investors like Warren Buffett have faced challenges. This makes some question whether traditional value investing methods still work.
  2. Past success of value investing doesn’t mean it will always perform well. There were periods in history when growth stocks outperformed value stocks, highlighting the ups and downs.
  3. Many value investors believe the recent poor performance is just a temporary issue or blame the economy. However, there's a growing recognition that changes in the market might require new strategies.

A Viral Market Update VII: Mayhem with Multiples

Musings on Markets β€’ 0 implied HN points β€’ 24 Apr 20
πŸ’° Finance Market Trends Investment Strategies Economic Analysis Risk Assessment Equity markets
  1. Market prices have been very volatile as the coronavirus crisis continues, but there's been some recovery in stock values recently. People are looking for signs of stability in their investments.
  2. The use of pricing multiples, like PE ratios, is becoming less reliable during this crisis. Investors need to be cautious and consider the uncertainties that come with these financial metrics.
  3. Different asset classes have performed differently, with healthcare stocks generally doing well while energy and financial sectors have struggled. Understanding these trends can help investors make better choices.

A Viral Market Meltdown III: Pricing or Value? Trading or Investing?

Musings on Markets β€’ 0 implied HN points β€’ 16 Mar 20
πŸ’° Finance Market Trends Investing Strategies Risk management Valuation Techniques Economic Analysis
  1. Price and value are different concepts. Price is what you pay in the market, while value is what a stock is really worth based on its cash flow and risk.
  2. During market chaos, prices can swing wildly based on mood and speculation. This means prices might not reflect true value for a long time.
  3. Investors need to figure out their approach based on their belief in value, their cash situation, and where they think they have an advantage in the market.

The Ferrari IPO: A Price Premium for the Prancing Horse?

Musings on Markets β€’ 0 implied HN points β€’ 15 Oct 15
πŸ’Ό Business Finance Investing Market Trends Luxury goods Economic Analysis
  1. Ferrari sells very few cars each year, making it exclusive and a status symbol for the super-rich. This scarcity helps keep its prices high.
  2. The company is different from most car makers because it focuses on high margins and limited production, rather than just selling more cars.
  3. Ferrari's brand is worth a lot and helps it make more profit compared to other car companies, but investors should be careful about how much extra value they place on the brand when estimating its worth.

Valuing Country Risk: Pictures of Global Risk - Part II

Musings on Markets β€’ 0 implied HN points β€’ 29 Jul 15
πŸ’° Finance Investment Risk management Valuation Economic Analysis Market Trends
  1. Investors need to adjust cash flows based on country risk, which means recognizing how risks in different countries can affect expected earnings and cash flows.
  2. An alternative way to deal with country risk is by increasing the required return on investments to reflect the higher risk, which also lowers the asset's value.
  3. It's important to avoid double counting risks when making adjustments and to ensure that any changes made for country risk are clear and understandable to others.

Rediscovering risk in emerging markets: A Country Risk Premium update

Musings on Markets β€’ 0 implied HN points β€’ 10 Jul 13
πŸ’° Finance Investing Markets Risk Assessment Economic Analysis Emerging Markets
  1. Investors often forget about risks during good times but become overly worried during bad times, especially in emerging markets. Recently, many have realized that emerging markets have more risk than they thought.
  2. Sovereign ratings and default spreads are important for understanding country risks, but they are often slow to react to changes. This shows that emerging markets can be more vulnerable and that investors need to stay updated on these risks.
  3. The perception of risk is shifting back to where emerging markets are viewed as riskier compared to developed markets. This might mean investors should reconsider where to put their money, especially if they believe the adjustment in stock prices isn't enough to match the increased risks.

Tax policy

Musings on Markets β€’ 0 implied HN points β€’ 29 Jan 11
πŸ’° Finance Tax policy Economic Analysis Investment strategy Debt Management Tax policy Economic Policy Financial regulation
  1. The average U.S. company pays about 29% in taxes on its taxable income, which is higher than many companies in other countries.
  2. U.S. companies experience much more variation in tax rates due to a complicated tax code, which can lead to unequal tax burdens.
  3. Investment and borrowing decisions should focus on economics rather than the tax code, but simplifying taxes might require sectors to shift their tax responsibilities.

Cash and Cross holdings

Musings on Markets β€’ 0 implied HN points β€’ 28 May 10
πŸ’° Finance Investing Valuation Markets Corporate Governance Economic Analysis
  1. Companies like Adris Grupa and Apple hold significant amounts of cash, but the market's perception of that cash can vary. Sometimes, cash isn't valued equally and can be discounted if a company isn't performing well.
  2. Tata companies often have cross holdings, meaning they own shares in each other, which complicates their valuation. Investors need to consider multiple companies to accurately value one.
  3. In emerging markets, trusted family names historically provided a way for investors to make decisions due to limited information. However, as markets evolve, these cross holdings might not reflect the true value of individual companies anymore.

Macro Bets: A general framework..

Musings on Markets β€’ 0 implied HN points β€’ 23 Nov 09
πŸ’° Finance Investment Market Trends Risk management Economic Analysis Behavioral Finance Investing Market Analysis Risk management Behavioral Finance
  1. Making macro bets can be risky. You need a unique advantage, like having more patience or better trading skills than other investors.
  2. It's better to keep your macro bets simple. If you believe in something like rising gold prices, it makes more sense to directly buy gold instead of a related company that has other risks.
  3. The main danger with macro bets is being wrong about your prediction or the market not agreeing with you. With so many investors out there, standing out is tough.

Emerging Markets... and maturity....

Musings on Markets β€’ 0 implied HN points β€’ 24 Aug 09
πŸ’° Finance Market Trends Valuation Investing Economic Analysis International Markets Emerging Markets Investing Valuation Currency Market Trends
  1. Emerging markets are now focusing more on individual companies instead of just macroeconomic factors. This means people are paying closer attention to how well companies are run and their financial choices.
  2. In the past, most business valuations in Brazil were done in US dollars due to distrust in the local currency. Recently, there's been a shift to using the Brazilian Reais, showing more confidence in the local economy.
  3. Brazilian companies are increasingly focusing on domestic investors rather than just attracting foreign ones. This shows that the market is maturing and recognizing the importance of local investors.

GE's aborted buybacks...

Musings on Markets β€’ 0 implied HN points β€’ 26 Sep 08
πŸ’° Finance Investing Market Trends Corporate Finance Stock Buybacks Economic Analysis
  1. Companies prefer buybacks over dividends because they can change buyback plans more easily in tough times. This helps them avoid bad market reactions.
  2. Investors should be cautious about companies that announce buyback programs; they might not actually go through with them.
  3. Stock buybacks are currently a major way companies return cash to shareholders, showing how they respond to market conditions and investor expectations.