Buffett Still Selling & Playing Defense

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Macroeconomic Risk Map

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Why I Like Ike

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The Good, The Bad, The Fugly Of COVID Consumption

A couple of very interesting and informative charts on U.S. consumption patterns during COVID from Patrick Zweifel at Pictet Asset Management.

Definitely confirms our priors. Can’t find a fairly priced bike anywhere.

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Gold To $3,500?

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The Market For Whom The Bell Tolls

Does it get any louder than this or is this time different?

The greatest and wealthiest investor in history has no clue, has lost his touch, and is one of those Idjit “permabears,” right?

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The Poster Boy Of The Current Mania


We concede that TSLA should have some option value for its battery tech moonshot but a 1,160 PE ratio? Come on, man!

Toyota (TOY) currently trades at 8x earnings.

Tesla makes an incredible product, in our opinion, the best automobile in the world and no other comes close. Classic case of great company, bad stock with a junk credit rating to boot.

Best to trade this one like pork bellies or be Howard Marks (see Tweet below).

There is no free lunch and somebody or many somebodies are about to get seriously fucked, just as the TSLA shorts have been skewered over the past year.

Stock Splits – The New Free Money

Seriously, though, stock splits are the new, new free money. TSLA is up almost 75 percent since it announced its 5:1 split just a few weeks ago, which is tantamount to walking into a bar and asking to change a $50 bill for five $10 bills and having the bartender hand you back eight $10 bills.

But, hey, maybe there’s some scarcity value premium to $50 bills,

Next to the United States two-dollar bill the fifty-dollar bill has the lowest circulation of any denomination measured by volume. – Wikipedia

Gawd, we love efficient markets.

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Pitchforks Cometh…Or Worse

The rivets are starting to pop, folks. Buy stonks.

Things fall apart; the centre cannot hold;
Mere anarchy is loosed upon the world
W.B. Yeats

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Time For Some Context, Again

Money Fueled Bubble

Speculative manias gather speed through expansion of money and credit. Most expansions of money and credit do not lead to a mania; there are many more economic expansions than there are manias. But every mania has been associated with the expansion of credit. –Kindleberger & Aliber

M2 Money Supply Growth

Social Movement 

Stock prices are likely to be among the prices that are relatively vulnerable to purely social movements because there is no accepted theory by which to understand the worth of stocks….investors have no model or at best a very incomplete model of behavior of prices, dividend, or earnings, of speculative assets. – Robert Shiller

Galloway attributed part of Tesla’s (TSLA) meteoric rise to the buying influence of “mostly young men, mostly spending their stimulus checks, levering up their purchases and juicing the stocks.”  – Yahoo Finance

Know Thy Marginal Buyer

This person willing to pay top dollar is called the “marginal buyer”. Most of us don’t really think about him [her] much, but he (or she) is very, very important.

Why? Because the marginal buyer not only determines price levels, but also their stability and degree of volatility. The behavior of the marginal buyer, as well as the degree of competition for his/her “top dog” spot, sets the prices of nearly every asset class held by today’s investors.  – Peak Prosperity 

Crazy Town Valuation

This Time Is Different

• The central bankers, policymakers and investors involved in every financial bubble are utterly convinced that, in terms of economic events, “this time is different.”
• Otherwise-savvy people ignore the telltale signs of a bubble when they are in the grasp of “this-time-is-different syndrome.”
• Even brilliant thinkers like former Federal Reserve Chairman Alan Greenspan fall victim to this syndrome.
• Bankers and economists in the ’20s predicted that wars would not recur and the future would be stable.
• From 2003 to 2007, conventional wisdom said central bankers’ expertise and Wall Street innovations justified soaring home prices and rising household debt.
• In fact, rising home prices and financial innovation are strong indicators of a bubble.
• Currency debasement was common for centuries. In the past 100 years, inflation has replaced debasement.
• Financial crises have occurred regularly over the past two centuries.  –  Reinhart & Rogoff

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Manufacturing Jobs Rocking In Craft Beer & Cupcake Production

We had a little fun Twitter exchange yesterday with Scott Lincicome, a Senior Fellow at the Cato Institute, and Brent Orrell, Resident Fellow at the American Enterprise Institute.

So we had to run some numbers on job growth in the manufacturing sector using the BLS Data Base.

Craft Beer and Cupcake Jobs Outperforming 

First, our use of the term  “Craft Beer” is a bit of a misnomer.  The BLS defines this category as all employees in breweries, wineries, and distilleries.  So too with our use of the term “Cupcakes”, which the BLS defines as employees in chocolate and confectionery manufacturing.

We choose to use these terms to emphasize our priors that higher-paying manufacturing jobs continue to be replaced by lower-paying jobs even in the manufacturing sector and that the headline numbers should be more closely dissected and analyzed.

Craft Beer & Cupcake Manufacturing Jobs Rocking

Nonetheless, however, defined, the growth in both subsectors — albeit a very small proportion of nondurable manufacturing goods employment — are far outpacing the overall manufacturing job growth, which is kind of/or could be a fractal of what is taking place in the overall sector.   Emphasis on could as this is really a fun MM exercise and if we were serious we would spend more time on it but you’re not paying enough and we will leave that to you and the Fellows above.

Nevertheless, the data show that from just before the Great Financial Crisis (GFC), in August 2008 to peak employment prior to the COVID crisis in February 2020, job growth in the “Craft Beer” sector increased by a stunning 145.15 percent compared to 11.11 percent for total nonfarm payrolls, -3.79 percent for total manufacturing job growth, and -2.72 percent for nondurable manufacturing jobs.

“Cupcake” jobs growth also significantly outperformed, up 17.78 percent — again,  albeit from a low base.

Upshot

Not a very bankable analysis but does give you sort of a sense and story of what’s going with employment in the manufacturing sector, which, by the way,  is also very sensitive to the movements in the dollar.  We highly recommend you check it out for yourself.

Good cocktail conversation and some potentially nice political fodder for those who understand how to mine data and waterboard it until it confesses whatever you want it to.

We also defer all things confectionery to the daughter of GMM’s chief stock picker, Carol K.,  who is a master pastry chef, very impressive for a young teenager.

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