"There are decades where nothing happens; and there are weeks where decades happen"--Vladimir Ilyich Lenin.
The media would probably make you feel like this statement is true most weeks, but nonetheless, a huge week ahead with the Election, the FOMC and a number of Treasury auctions in the mix. It's gonna be lit!
"Risk is what you don't see...The biggest news, the biggest risks, the most consequential events are always what you don't see coming. - Morgan Housel
If you've paid attention to this blog over time there is probably a message of avoiding market forecast, about preparation over prediction, being able to survive the volatility that comes from uncertainty, about patience, humility, avoiding complexity and noise.
"If you are merely forecasting the most likely outcome over the next year or two you will be most unlikely to hang your spreadsheet on predicting a discontinuity. It’s much more sensible to predict a continuation of current business or to follow guidance. It’s rare for us to know when a dramatic change will occur but frequent for it to be close to inevitable at some point. Certainty is an abject temptation. The world is too complex, too erratic and too full of surprises to make spot forecasts of anything of significance. I’d push this further: trying to be ‘correct’ is the enemy of good investing. It’s much more valuable to have doubt and to make portfolios the beneficiaries of potential Black Swan. Therefore the best we can do is to come up with a set of possibilities and probabilities, endeavour to make them extreme, blend them with each other and then think about the potential returns. Then we watch. It’s better than acting. Or as Charlie Munger urges “this habit of committing far more time to learning and thinking than to doing is no accident”. Occasionally weadjust our sights as time, learning and our thoughts progress. We need to give up the excessive arrogance implicit in forecasts if we are to maximise returns." - James Anderson, "Abberration or Premonition" (2018)
As for the end of last week. Jobs missed big, but didn’t seem to matter, as investors seemed to look through the noise that was generated by weather and strikes. The establishment survey had a very low response rate and the household survey showed a large weather impact. Yields rose further even as markets price in 25bps of cuts at Thursday's FOMC decision (delayed a day due to the Tuesday elections). The 10Y is nearly 4.40% and the 2Y is over 4.20%.
ISM manufacturing missed but prices paid component beat by a lot, looking a little stagflationary, but really when was the last time ISM manufacturing really mattered, aren't we a services oriented economy?
Warren Buffett is sitting on over $300 billion of cash.
Mon: Factory Orders, Durable Goods, 3Y Auction
Tue: Election Day, ISM Services, 10Y Note Auction
Wed: Mortage Apps
Thur: BoE Decision, FOMC Decision, Jobless Claims, Productivity
Fri: UofM sentiment
XTOD: Sure looks like Warren Buffett sees a storm coming. He’s liquidating out of the stock market.
Cash reserves now sit at a whopping $325 billion.
XTOD: “It's so easy to get so busy that you no longer have time to think—and you pay a huge price for that.”
XTOD: So why not buy the building and simply rezone it? Well... rezoning in NYC isn't a 'simply' sort of thing. The details of what that process entails are for another post. (You're not the first person to think of that 😉) The city has recognized this area is obsolete and has been working on a plan to rezone the "M" zoned areas of midtown south. But the plan is yet to pass. A draft of the plan is public, and there have been several public meetings about it. There is definitely progress. However, there is no certainty regarding the requirements or when exactly the change will go into effect. This means that the only possible value of 29W 35th Street is uncertain while the building continues to incur in costs.
Perhaps a low-enough basis can make it an attractive investment if an investor is willing to take the risk of an uncertain timeframe and an uncertain set of requirements-- which may cap the asset's value to an unknown degree. So far, it seems that the basis isn't yet low enough for anyone to accept those risks.
XTOD: “Look for the job that you would want to hold if you didn’t need a job.” — Warren Buffett
https://x.com/StealthQE4/status/1852782791051923721
https://x.com/FoundersPodcast/status/1852709927602487392
https://x.com/antonia_mdprjct/status/1852847583963619343
https://x.com/InvestingCanons/status/1853166994247623165
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