8 Feb 2022

Just a few unstructured thoughts. Macron went to meet Putin in a last ditch effort to try and negotiate a way out of the Russia / Ukraine invasion. The psychological symbolism delivered in this pathetically over the top setup tells you all you need to know about the guy running Russia.

Facebook / Meta is in trouble down 40% and it appears they are fighting many many battles regarding privacy transgression or blocking. This story aint going away, kind of like the woes of Magellan.

A couple of weeks ago I wrote about the market falling out of love with Hamish Douglas the Chairman, Co-founder and CIO of Magellan because of his short term under performance after being the darling of the industry leading to $120 billion of assets under management. Douglas exited the firm yesterday citing personal and medical reasons. I think there is so much more going on behind the scenes than we know of. I did say that in my letter as I was only commenting as a casual observer. The share price is down more than 79% from its highs. I think it is safe to say this is no Berkshire Hathaway and another example how hard it is to remain at the top of your game for long. That is left for a few rare individuals.

Remember everyone was talking about the latest SPAC pricing in the big billions of dollars. Not so many people talking SPAC anymore.

I have to say the next chart really surprised me in the middle of a pandemic the SP500 Earnings were 40% above trend. Something is seriously messed up when a pandemic and lockdowns is good for an economy. This requires much deeper research in the years to come.

It turns out the big players once again in the buy the dip trade in January were corporate buybacks. I suspect a big chunk of the EPS above trend growth came from buybacks.

Lastly on the equities side of things, Everyone is hedged for a crash according to Goldman Sachs who have been averaging $1 trillion worth of puts per day.

The fixed income market is starting to lose some of its air. It seems like people are starting to exit this asset class. It is still remarkable that there are $10 trillion dollars of negative yielding bonds. However this is surely unsustainable in an inflationary environment. There will be massive mark to market losses on the holdings of these bonds. The primary holders are the central banks who will once again become more intertwined with their government treasury departments as they require capital for their capital adequacy.

Finally to end off with some TMZ style reporting.

200m from my house is guy who parks his Bentley and his McLaren in the street. His driveway parks another Bentley 4X4. Take a guess where he made his money Crypto. I cannot figure out why he hasn’t bought in a more upmarket neighbourhood where he can have a decent driveway and garage to park his luxury cars?? Maybe he is trying to stay under the tax mans radar. There is more to this story, which I will need to research more before spreading more gossip.

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