Daily Economic Update: February 7, 2024

The S&P advanced as yields fell as the market digested rising consumer debt levels and Fedspeak.  The 3Y auction seemed decent with pricing thru where when issued was trading.   Mester seemed to indicate the Fed will cut this year, but that there's no reason to rush and likely no need to cut aggressively.  We get more Treasury supply today and Thursday along with more Fedspeak.

On this blog I think I've intentionally or at least subconsciously written about noise, narratives, and forecasting.  In writing about these topics, I have tried to highlight what I see as the challenges that come from simplifying the complex in such a manner that creates a false sense of certainty.  That's not to say that simplification cannot be an appropriate way to make an important message accessible, but rather to build awareness that the ability to create vague, simple messages often wrapped in a well crafted veneer that is alluring, is a trick employed by charlatans throughout history  to cement their wealth and power at others expense (see post on finfluencers and Mill's Civilization essay) .  Obviously with social media and AI, the ability for those who want to create cultlike followings and draw people into otherwise ridiculous ideas has grown and will continue to grow exponentially.  The risk of falling into the simple, vague, but alluring promises is particularly high in financial services and probably a risk we'd be wise to realize exist.

"For years the financial services have been making stock-market forecasts...they are sometimes right and sometimes wrong. Wherever possible they hedge their opinions...in our view...this segment of their work has no real significance except for the light it throws on human nature in the securities markets. Nearly everyone interested in common stocks wants to be told be someone else what he thinks the market is going to do. The demand being there, it must be supplied."  - Ben Graham

The tricks of today's charlatans are very similar to those played in the past, just now done easily with scale.  Awareness of the games played in crafting messages and building a following is a first step towards building a better understanding of potential tricks and determining the appropriate course of action from there.  In fostering awareness of the methods used by charlatans, author Robert Greene, whom I referenced in my FOMC Recap, has what he calls "The Science of Charlatanism Or How to Create a Cult In Five Easy Steps".   Those five steps are (with reduced commentary):

1. Keep it vague; keep it simple: promise something great and transformative, but use total vagueness.  People want to hear a simple solution will cure their problem.  If you explain in detail the benefits to someone, you will be expected to satisfy them, so avoid details.
   
   
2. Emphasize the Visual and Sensual over the Intellectual:  dazzle your followers with visual splendor, colorful charts, new technological gadgets - anything that creates a pseudo-scientific veneer. 
   
   
3. Borrow the Forms of Organized Religion to structure the group - talk and act like a prophet to hide the fact you are a dictator.  Ask people to sacrifice something to your cause (ex. sign up for your newsletter which gives you money).  Even better if you tier your community.
   
   
4. Disguise Your Source of Income - you must never been seen as hungry for money and the power it brings.  Never reveal your wealth comes from your followers' pockets.
   
   
5. Set Up an Us-Versus-Them Dynamic - make it so that any outsider who questions you or tries to reveal the charlatan nature of your belief system can now be described as an enemy.

I can't speak for everyone, but I see so many of those dynamics at play particularly in social media.  You too can probably think of various accounts in the finance "crowds" on X/Twitter or YouTube particularly where the topic is something to do with things like crypto, MMT, certain company's stock (ex. Tesla), "experts" explaining the recent moves in a market, predicting a soon to come recession or crash, people talking their own book, etc.  Once you're aware, you probably then think about where else some of these dynamics are involved in other areas of your life.

"Men are so simple of mind, and so much dominated by their immediate needs, that a deceitful man will always find plenty who are ready to be deceived."  -Niccolo Machiavelli

XTOD:  Great thread outlining the reality and uncomfortable truth behind the headlines and incessant CNBC pumps & promos  https://x.com/ttp_cap/status/1754917296638767318?s=20

XTOD: Adam Neumann just totally crushed the ZIRP era. Nobody close.

XTOD: When Barry Sternlicht was 32 y/o he started Starwood with Bob Faith and an assistant. 18 months later, after acquiring 8,000 MF units, he sold to Sam Zell’s Equity Residential REIT in return for 20% ownership.  By the time he was 37 they owned Starwood Hotels and Lodgings Trust, the largest Hotel REIT in the world with $20B AUM and 120,000+ employees across the globe.  Today Starwood Capital Group and affiliated entities manage over $120B in assets across the globe and have become the giant in the room.  Today’s episode is full of incredible stories of how they climbed to the top of the real estate world: 0:00 - AI & Hotels  6:34 - The Midas touch  8:16 - Scaling to 120k people in 7 years 14:00 - Shared Pair REITs  27:15 - Thoughts on Blackstone  35:25 - How to buy a REIT 39:45 - Taking a company from $1B in AUM to $10B   48:50 - How did you keep Starwood Capital moving while you stepped away?  58:22 - Selling Caesar’s Palace 1:07:53 - Thoughts on the market in 2024 https://twitter.com/i/status/1754852728344363340

 

 

Daily Economic Update: February 6, 2024

Better than expected ISM, with the prices paid component markedly higher, coupled with continued digestion of recent strong data and Powell's 60 Minutes appearance lead to a pop higher in yields.  Maybe markets are starting to come back around to the idea that the Fed won't be cutting 6-7 times this year.  The recent moves higher following last Friday's jobs numbers have the 10Y yield back to 4.15%, which marks a solid move off recent lows of ~3.80%.  The 2Y is almost back to 4.50% off recent low of 4.20%.

The last week has me wondering whether we've re-entered the end of summer/early fall of 2023.  It was during that time period that all of the talk from the Fed (including Powell's J-Hole speech) seemed to focus on uncertainty around estimates of the neutral rate of interest.  We'll have to wait for both the NY and Richmond Fed to update their estimates of the neutral rate.  Yesterday we had Kashkari out wondering if neutral rate has increased post pandemic https://www.minneapolisfed.org/article/2024/policy-has-tightened-a-lot-how-tight-is-it

On the day ahead it's Fedspeak starting at noon.

XTOD:  ISM Services 53.4, Exp. 52.0, Last 52.3  ISM Prices Paid explode to 64.0, Exp. 56.4, Last 56.7  When is the Fed hiking again?

XTOD: "Stock options is always an expense. Its in kind but Analysts reverse it. It's like a pizza store owner giving away free pizza because u can't supplement the wage because u can't pay them high enough wage. It's eating into profit & got to be factored in" 👌--- @AswathDamodaran

XTOD: There's a difference between "I don't have the time" and "This isn't a priority." It's okay to communicate the latter even though you always say the former. Be brave, friends. We're all protecting our time and attention.

XTOD: "By working faithfully eight hours a day, you may eventually get to be a boss and work twelve hours a day." — Robert Frost, American poet and winner of four Pulitzer Prizes

Daily Economic Update: February 5, 2024

I wrote this while wearing an Apple Vision Pro, while driving a Tesla Cybertruck...you're welcome.

Friday's job report was a blowout, leading to the question of what is the need to cut rates?  Average hourly earnings was also much stronger than anticipated.  Maybe Powell was onto something when he expressed a desire to see more data before confirming the Fed's policy was restrictive.   

Some recent data might lead one to wonder where the elusive "neutral rate" is these days. Powell was asked this in his news conference last week and uncertainty over the neutral rate is now a long forgotten topic, but was the topic of Powell's J-Hole address.  Continued strong GDP data and Atlanta Fed GDP estimates for 1Q2024 with a 4 handle, obviously lead to the question how does the economy keep expanding.  Economist Scott Sumner tackled this topic in his post, Why might I be wrong about trend GDP?   In basic terms, the economy can grow by doing more with the same amount of resources (i.e. Productivity) or by increasing real economic inputs (ex. labor).  Sumner hits on the potential grow impact from the politically thorny topic of  immigration as an under-looked factor that could be increasing real GDP (see Powell comments from 60 Minutes below...maybe Sumner was onto something)....Elon Musk was busy sharing his own opinions on immigration this weekend.

Powell stayed busy in the news cycle with a 60 Minutes interview and candidate Trump indicating he won't reappoint Powell if elected.  I mentioned the need for the Fed to maintain independence in a charged political environment in my last FOMC Recap.

If you didn't watch Powell on 60 Minutes, he stuck to the FOMC script, implying that March will be too soon to cut rates and that the number of cuts priced in could be on the high side.  That said, here's a summary of what I considered to be notable quotes (my emphasis added):

•  Right. And we have to, we have to balance those two risks. There is no, you know, easy, simple, obvious path. We have to balance the risk of moving too soon, which, as you mentioned, or too late. And there are different risks. We think the economy's in a good place. We think inflation is coming down. We just want to gain a little more confidence that it's coming down in a sustainable way toward our 2% goal……
• And I can't overstate how important it is to restore price stability, by which I mean inflation is low and predictable and people don't have to think about it in their daily lives…
• I would say it this way. It's really going to depend on the data. The data will drive these decisions..[As to imply there is ever a time that they don't depend on the data]
• We do not consider politics in our decisions. We never do. And we never will....You know, I would just say this. Integrity is priceless. And at the end, that's all you have. And we in, we plan on keeping ours. [Looks like Powell read my FOMC recap]
• Well, interesting, you know, we were being honest, and I was being honest in saying that we thought there would be pain. And we thought that the pain would likely come, as it has in so many past cycles, in the form of higher unemployment. That hasn't happened. It really hasn't happened...
• So, it, I would say this. In the long run, the U.S. is on an unsustainable fiscal path. The U.S. federal government's on an unsustainable fiscal path. And that just means that the debt is growing faster than the economy. So, it is unsustainable. I don't think that's at all controversial. ...
• I don't think there's much risk of a repeat of 2008. I also think, you know, we need to be careful about making proclamations about the -- particularly about the future. Things have surprised us a lot. [First I'll tell you that there is no risk of 2008, but then I'll hedge by telling you I can't predict the future...and that we're often wrong] But no, on this, on this, I do think it's a manageable problem. I think we're doing a lot to manage it.
• I think we need to just remember that we have this dynamic, innovative, flexible, adaptable economy. More so than other countries.....the United States has been the indispensable nation supporting and defending democracy, security arrangements, economic arrangements. We've been the leading voice on that. And it is clear that the world wants that. And I would want the United States to know, people in the United States to know, that this has benefited our country enormously. It benefits our economy so much to have this role.
• We had a combination of rising labor force participation in prime-age workers, and we also had with that, we had a resumption of immigration. So, there was really no immigration net in or very little during the pandemic...But in 2023, we saw immigration move back up to the levels that would have been normal before the pandemic.....Because, you know, immigrants come in, and they tend to work at a rate that is at or above that for non-immigrants. Immigrants who come to the country tend to be in the workforce at a slightly higher level than native Americans do. But that's largely because of the age difference. They tend to skew younger...I will say, over time, though, the U.S. economy has benefited from immigration. And, frankly, just in the last, year a big part of the story of the labor market coming back into better balance is immigration returning to levels that were more typical of the pre-pandemic era.
•  I would say it this way. The economy's strong. The labor market's strong. Inflation's coming down. There's no reason why that can't continue. We're gonna try to use our tools to give the economy -- to continue to improve as inflation comes down. We'll give it every chance to do that. That's our plan. We don't have a perfect crystal ball about the future, and things could happen. But I do think the economy is in a good place, and there's every reason to think it can get better.

On the week ahead it will be ISM Services and Fedspeak.  And don't forget about geopolitics which Powell called the biggest risk in the near term.

XTOD: The hole in the border fence was way more interesting than Powell.

XTOD (reply): I disagree. He WANTS the subject of deficits to come up. And he WANTS the "politics" to be examined as well. His answer was strong. He knows the crossroads are coming, probably later this year. The Fed will have to decide whether to consider more QE to help Treasury sell debt.

XTOD: We generally don't need more data.  Just more insightfulness

XTOD: In the Fall of 2022 Powell was basically begging companies to fire ppl

We've added 4.1 million jobs since then and inflation is down 

Coming around to the idea no one really knows what truly drives the economy

And maybe monetary policy doesn't matter as much as we all think

XTOD: BARTIROMO: If things are so bad, how come the stock market is on a roll? 

TRUMP: Because they think I'm gonna be elected 

BARTIROMO: You think the stock market is rallying because people think you're going to be elected?

XTOD: James Clear: "I think about decisions in three ways: hats, haircuts, and tattoos. 

Most decisions are like hats. Try one and if you don't like it, put it back and try another. The cost of a mistake is low, so move quickly and try a bunch of hats. 

Some decisions are like haircuts. You can fix a bad one, but it won't be quick and you might feel foolish for a while.   That said, don't be scared of a bad haircut. Trying something new is usually a risk worth taking. If it doesn't work out, by this time next year you will have moved on and so will everyone else. 

A few decisions are like tattoos. Once you make them, you have to live with them. Some mistakes are irreversible. Maybe you'll move on for a moment, but then you'll glance in the mirror and be reminded of that choice all over again. Even years later, the decision leaves a mark. When you're dealing with an irreversible choice, move slowly and think carefully."  (From  @JamesClear 's 3-2-1 newsletter)

Daily Economic Update: February 2, 2024

Jobs Day in 'merica!  Consensus is for +185K headline, but the whisper number seems higher. Weather is cited as factor that could detract from the headline number.  Average Hourly Earnings are expected to be ~4.1% annualized and will likely be heavily scrutinized.

Jobless claims rose slightly more than expected at 224K, Q4 Productivity beat expectations with unit labor cost coming below estimates at 0.5% vs. 1.3% est.

BoE was on pause and it sounds like they are going to be potentially even more cautious than the Fed as they revised higher growth estimates. 

The market liked META and AMZN earnings and the META dividend.  The 2Y is ~4.20 and the 10Y ~3.88% as the 2s10s un-inversion watch has hit a pause.....

AND for all the rate cut talks Atlanta Fed GDPnow is now at 4.2% for 1Q2024.

XTOD (Taleb): Explaining the debt/death spiral. Some of my comments were spreading on social media (they was a a discussion in Congress).  Debt servicing = 40% of the past deficit. Next year we will pay interest on that. Debt servicing will reach 70% ,80%, displacing other expenditures.  On top of the fragility, there is an intergenerational transfer of liability, highly immoral (h/t Spitznagel). 

Note/Errata: total deficit north of 30 Trillion is the accumulated deficit. (I mistakenly used the same word to describe current and accumulated).

XTOD (Prof. Steve Keen): Do the accounting Taleb. The deficit creates the funds used to buy government bonds. There's no borrowing involved so long as you're financing bonds in your own currency.  You visibly don't get that government bonds aren't competing for "loanable funds", but creating money on the bank liability side, and funds on the asset side that enable banks & primary dealers to buy the bonds. You're falling for an obsolete model of banking.

XTOD (Taleb):  What you showed does not deny the presence of a debt spiral and there is no such thing as "obsolete" banking.  So you are saying that a debt spiral is good?  If what tou are saying is invariant to scaling then let's abolish taxation and just spend like crazy while printing bonds.

XTOD (some random reply): MMT told me everything will be fine, though. Sure, history disagrees with them, but it's a very convenient theory to justify living for today, tomorrow be damned.

XTOD (unrelated to the Taleb thread):  Essentially, if the US has moved to a secular growth regime higher than pre-pandemic then the path to 0.5% real-FF will end up being expansionary....So while we are debating whether or not 3 or 4 or 7 cuts this year makes sense, we are in effect implicitly debating what neutral is, due to a general assumption there isn't an upside risk to inflation.  This is why i jokingly say the Fed either needs to hike or a recession has to happen soon....This is why I think we continue to see the market trade in a violent range this year, particularly in the first half as we consume incoming data and determine the clearing price not just for bonds, or stocks or whatever you trade, but for the economy itself.

XTOD: A Few Thoughts on Spending Money https://collabfund.com/blog/a-few-thoughts-on-spending-money/

Daily Economic Update: February 1, 2024

Yesterday's FOMC left the policy rate unchanged at 5.25-5.50%.  The statement included many changes including that the committee does not expect it will be appropriate to reduce the target rate until it has gained greater confidence that inflation is moving sustainably towards 2 percent.  Powell continued to assert the need to get inflation back to 2% and noted that the policy rate is likely at its peak.  The Fed will be data dependent.  They want to see continued good inflation prints, the 6 months of "good" inflation prints doesn't seem to be enough to give the FOMC full confidence to declare victory yet. Powell described themselves as being in a "risk management mode".  Powell seemed to indicate that a March rate cut is out of the question, but we'll see.  And deep fakes of Powell pressers are a thing (and pretty funny depending on your taste)

Powell still had an easier day than Zuckerberg.

ECI and ADP data both were lower than expected with ECI below 4% (annualized), theoretically easing some risk of wage price spirals.  In other news, New York Community Bancorp shares fell greater than 30% after cutting their dividend following posting a loss and building up reserves (especially for office loans) as concerns about regional banks regained some attention.  

Yields fell with the 10Y below 4% and stocks fell as well.

On the day ahead it's BOE Rate Decision, jobless claims, nonfarm productivity and ISM mfg.

XTOD: Today wasn't about QRA it was Fed pushing back on easing, bad reaction to decent earnings and guidance, and NYCB.  But the headwind from QRA stepped up as 519BN Net new money from coupon sales will be absorbed and -317BN of Bills will result in RRP stabilizing and delay QT Taper

XTOD: Not one question for Powell on NYCB or the BTFP

XTOD: which acronym will replace BTFP and how many trillions will it inject?

XTOD: I get that no one should  mechanically follow Taylor rules. But it's interesting that all three versions tracked here by the Atlanta Fed say you're too tight.

FOMC Recap: What did the man in the orange hat say today?

 

What did the man in the orange hat say today?  

Is the correct answer, “I don’t know, and I don’t care”?

On a long enough horizon, how many times the Fed cuts rates in 2024 is just a bump on the long, unmapped road that investors need to navigate, a road that is filled with plenty of uncertainty.  A road where the only certainty is that there will be some unexpected twists and turns along the way.  Those that can navigate the unforeseen and the short-term setbacks on this journey are likely to reach their destination, those that attempt shortcuts and are reckless may not.  We all know that the game of predicting the future is a tough one, filled with many losers, so speeding down the road in search of returns based on prediction alone may not always end well.  We have plenty of recent experience to know that the biggest shocks to the economic system tend to come without warning.

Speaking of uncertainties, 2024 is an election year.  Appointed to lead the Fed in 1979, Paul Volcker was no stranger to election years.  In his memoir, Keeping At It, Volcker recounts the story of a meeting in the summer of 1984, an election year, where he was summoned to the White House to meet with President Reagan.  The message from Reagan’s Chief of Staff, Jim Baker, was “The president is ordering you not to raise interest rates before the election.”  Volcker laments that he wasn’t planning on tightening policy at the time and the dilemma he faced in deciding whether to report the incident (he didn’t), stating, “How could I explain that I was ordered not to do something that at the time I had no intention of doing.”  Volcker describes the whole incident as a “striking reminder about the pressure that politics can exert on the Fed as elections approach”.

The Powell Fed may find themselves in a similarly tricky political position.  The Fed may believe that cutting rates is the correct policy but potentially worry that cutting rates later this year may look to be politically motivated, or vice versa.  In navigating the politics of an election year, Powell would be wise to heed some advice from Volcker’s memoir, specifically the importance of credibility in restoring price stability and guarding against the “real danger [that] comes from encouraging or inadvertently tolerating rising inflation and its close cousin of extreme speculation and risk taking…”

So much attention is focused on predicting what the Fed will do next, but what really matters for navigating the long road to investment returns is the institutional credibility of the Fed, ultimately earned not by words, but by actions.  Actions that ultimately create a stable environment for businesses to do their job of solving the world’s most difficult problems.  Actions that at times mean changing interest rates and at other times finding creative solutions to keep the banking system from imploding.

In maintaining the independence and power of the Fed that ultimately backs its institutional credibility, which is necessary to foster a trusting and stable business environment, my advice to Powell is to revisit Robert Greene’s book The 48 Laws of Power with specific consideration to the following of Greene’s laws:

              Law 4: Always Say Less Than Necessary: When you speak, always say as little as possible. The more you speak, the more likely you are to say something foolish.

              Law 5: So Much Depends on Reputation – Guard It With your Life: Reputation is the cornerstone of power. You can influence more people and gain more opportunities with a solid reputation. Therefore, it is essential to protect it fiercely.

              Law 9: Win through your Actions, Never through Argument:  Winning an argument gives you momentary advantage but winning through actions gives you lasting power. Actions demonstrate competence and create value, whereas words, often in arguments, lead to negative emotions and resentment.

               Law 20: Do Not Commit to Anyone: It is the fool who always rushes to take sides. Do not commit to any side or cause but yourself.  By maintaining your independence, you become the master of others.

Following these laws, over the long run, the Fed can maintain its reputation for fostering sound money and financial stability. For all the criticism, controversy, mistakes, and triumphs attributed to the Federal Reserve, as an institutional system, it has served the country well.  In Volcker’s words “…it remains a precious asset for the country in troubled times.”

Daily Economic Update: January 31, 2024

FOMC Day is here. Check back after Powell's presser for a recap.  Yesterday's JOLTS showed an increase in openings, but subdued quits is seen as a sign of some loosening in the job market.  Consumer confidence remained solid and while stocks were relatively flat, after hour earnings from Alphabet and Microsoft were viewed as weaker than expected.  Yields fell a few bps with the 2Y at 4.32% and the 10Y at 4.02%.  Overseas China's economy and the two wars are still a mess.

Ahead of the Fed we get ADP Employment, Employment Cost Index, and the Treasury Refunding Announcement. 

XTOD: The economy is so hot companies have to make layoff announcements every day.

XTOD: Never incorporate your company in the state of Delaware

XTOD: New money wants a Lambo, old money wants a tax shelter.

XTOD: Billionaire Barry Sternlicht sees more than $1 trillion of losses for office real estate, calling the properties “one asset class that never recovered” from the pandemic.  Once a $3 trillion asset class, offices now are “probably worth $1.8 trillion,” said Sternlicht, chief executive officer of Starwood Capital Group. “There’s $1.2 trillion of losses spread somewhere, and nobody knows exactly where it all is.”  “We’re in the business of getting loans,” he said. The banks “don’t show up, they’re not even playing. So the alternatives are the debt funds, which are having a field day.”

XTOD: Just Months After "Massive Labor Deal," UPS Announces Massive Layoffs

XTOD: Quits and hires rate are now a notable step below 2019 levels.  Quits does better predicting labor market conditions and there's an increasing trend in job openings across the 21C. So, at this critical moment, worth weighing quits more when we are watching labor market. /1

XTOD: By now, everyone knows Taylor Swift is a government psyop and this is exactly why Corporate Media is having a meltdown about it:

-4 years ago, the Pentagon Psychological Operations Unit pitched NATO about turning Taylor Swift into a “social influence” asset

-In 2019, George Soros bought her entire music catalog

-In 2020, she came out as a raging liberal Joe Biden supporter, after previously being politically neutral

-In 2023, her Eras Tour raked in higher revenue than the GDP of 50 countries

-In 2023, she helped register over 35k new voters with a single Instagram post

-And now she’s dating a Pfizer & Bud Light agent in the NFL, the most watched live sport in America

-Even the NYT wrote a story on how Biden is courting her for an endorsement and how he wants to appear on stage with her

You don’t have to be a conspiracy theorist to put it all together, you just have to be paying attention

XTOD: This guy’s hilarious

XTOD: Did you know syphilis can kill? As US cases soar, here's everything you need to know, from symptoms to treatment

Daily Economic Update: January 30, 2024

S&P (new ATH) and Nasdaq continued to rise as we await tech earnings and the deluge of data and central bank speak yet to come.  The 2Y is 4.32% and the 10Y is 4.08% with yields falling slightly following the Treasury's announcement that they expect to borrow less than market expected, we'll know more about the mix of bills and notes come Wednesday. 

Yesterday, we finally learned that China's Evergrande is indeed bankrupt, something I think everyone has known for like at least 2+ years.  Maybe Elizabeth Warren can fix China's property sector?  It's simple, the solution to every problem is to cut rates. If housing market sucks and prices are falling, cut rates, if the housing market has rising prices, cut rates.  There is literally nothing rate cuts can't cure.

In fairness to Senator Warren and the 3 other Senators who sent the letter to Jay Powell, they make some valid points.  Indeed, higher borrowing cost do make it more expensive to buy a home and higher interest cost can make it more expensive to bring on new housing supply online, all good points. However, in my opinion, they missed an opportunity to really hit the Fed on all the MBS they bought through QE and how that possibly led to existing homeowners refinancing at ridiculously low rates which likely discourage them from putting their home on the market.  There are likely a myriad of other factors creating supply and demand mismatches including zoning policies, WFH policies (less need to move for a job), increased boomer wealth (less need to sell, downsize, as they already have 2nd homes), as well as some of the other policy distortions that have come out of the pandemic......who knows.

Call me crazy, but it's weird that it seems like home prices were rising the fastest when rates were near zero and they've started to level off now that the Fed has hiked rates...

On the day ahead it's JOLTS as the highlight.

XTOD: Market summary:  Janet Yellen launched another drone attack on bears.

XTOD: Buffett held up stacks of paper and said, “Read 500 pages like this every day. That’s how knowledge works. It builds up, like compound interest.  All of you can do it, but I guarantee not many of you will do it.  - The Joys of Compounding

XTOD: 1/ What is a compounder?  "High quality, franchise businesses, ideally with recurring revenues, dominant & durable intangible assets, pricing power and low capital intensity. We focus on franchise quality, durability, financial strength, industry position, & management quality"..... Key characteristics:

• High ROIC • High margins • Recurring revenues • Low capital intensity• Innovation-driven • Pricing power • No excess debt • Quality management • Low cyclicality • Resilient in downturns • High barriers to entry • Organic growth potential...Avoid traps like:  • Fading companies • Highly acquisitive companies - where mgmt are not disciplined • Poor or greedy mgmt • Overdependence on single product • Cuts to R&D, marketing, development • Mgmt with short-term focus   https://t.co/I8y4BGcAA4

XTOD: American men are stuck in what’s been dubbed a friendship recession, with 20% of single men now saying they don’t have any close friends, an all time high, per PBS.

XTOD: Working on becoming a combination of Erlich from Silicon Valley, Walter from The Big Lebowski, and Phil Connors from Groundhog Day