baufinanciaphaster 👹
@bauhiniacapital
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残り物には福がある. Trafiquant de l’ésotérique. Unverified(Ogre). Usually couth, sometimes kempt, often gruntled. Strong opinions, held weekly, sometimes more often.
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The secret to becoming a trillionaire, even if you have no capital to start.
Save on $4 coffee/day by drinking water, invest $28 every week, earn 1% a week like
@reallwillmeade
says by buying ETFs and hedging with puts (like HFs do). After 40yrs, you will have $2.98 trillion.
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Dear
@BillAckman
, I'm gonna QT this b/c you don't really reply to people (2x in past 12mos AFAICT) but you QT a lot, and you have responded to one QT in 18mos. You don't seem to interact much but use twitter as a bullhorn. Your loss.
My, I hope thoughtful, replies follow:
1/n
This is a very thoughtful piece and I agree. We have a large notional short position against the Hong Kong dollar through the ownership of put options. The peg no longer makes sense for Hong Kong and it is only a matter of time before it breaks.
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I think that may be the worst attempt to rescue a sunk cost I have ever seen.
I wonder if Michael Lewis just ruined himself for ever talking about finance again.
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Modelling the approximate "Blow Out Portfolio" of 9 blocks sold Friday.
Blue is the portfolio value if long-only (in USD mm).
Greenish is the portfolio vs a 100% NDX hedge (as of 31Dec19).
Red is 15 day realized EWMA (0.94) volatility.
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A couple of points on USDJPY:
1) The MOF (officially, the Vice Minister of Finance for international Affairs) is the one who decides. The BOJ is the execution desk, not the decision-maker.
2) Gov Ueda can guide policy to react to market conditions if necessary, but will not
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@nycsouthpaw
Is that 'Goochland' on his t-shirt the same Goochland which is.... [checks notes...] just north of Richmond and... [checks notes again....] as of when he was probably growing up, on the Forbes Top Ten List of "Where the Rich are Moving"?
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It is hard to overestimate the dumpster fire of repo reporting by people (one is particularly egregious) who do not understand the plumbing. Repo IS plumbing. Every day. For trillions of dollars.
If you really care, there are some things to read to educate yourself.
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1 trillion trees is actually totally doable.
Trained tree planters can plant 2,000 trees a day. That means 2 million man-years at 250 days/year. 500,000 people for four years at US$30k/yr is US$60bn.
A tiny fraction of climate change cost.
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Some details about Japan, the BOJ, the spread trade, and why and whether it may collapse.
A 🧵
Japan, the BOJ, and why the spread trade may collapse.
A 🧵
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BOJ conducts "rate checks" - Nikkei.
The way intervention works (in Japan, and often in other places) is first they start talking about the level of the asset. That is "jawboning" or "verbal intervention" ("口先介入").
In Japan, this has been going on since March-ish.
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Some would call signing a 27-yr contract to buy LNG at a crude-linked price in a foreign currency a combination of a new asset (27yr LNG receivable) and liability (27yr FX liability).
You know, the way accounting does.
For others, it magically becomes a reserve asset.
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You'd think
@RAF_Luton
would know better than to allow them to cross the streams.
It would be bad.
Fact of the Day: When they're not fighting fires RAF firefighters revert to their secondary role as aircraft cleaners.
You'd think with all that playing volleyball their aim would be better.
Photographed from a Canberra
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This is a take. The thread is worth reading for the take.
I expect it overstates things.
Couple of problems.
1) while vanna can drive moves, I expect it is more gamma curvature and density than vol (in real trader terms, vanna of one-week options is meaningless).
When Tesla joins the index, these historic call option flows and the hype machine behind them will hit the big red fire truck that is the S&P, at 500mph
Implied volatility will be unable to rise. Call options will bleed value. New flows will be absorbed by real traders.
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If you assume half the world is dead in 10 years b/c Thanos finds the last Infinity Stone, but have no visibility into precisely timing the extinction event, how would you construct a portfolio that does well until then, and then accelerates??? What do you want to own today..??
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How to NOT Understand What is Going On In Financial Markets
Read this thread. All the way through. It is full of claptrap and fear-mongering.
If you want, you can follow along in my thread.
1/ HOW TO UNDERSTAND WHAT'S GOING ON IN FINANCIAL MKTS. Western world built up a debt bubble of stunning proportions over past ~50yrs. It's deflating now, just as it tried to do in 2008, 2001, 1997, 1994, 1987, 1981 & 1974. Each time, tho, there was enuf balance sheet capacity...
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Evergrande ($3333) chart updated with important breaking news at bottom right.
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People need to take a chill pill and
@Jkylebass
needs to understand how money works in HK.
1) There is a US$10bn IPO which launched yesterday and prices/closes in one week.
Big IPOs take money out of the system. Big and popular IPOs take a LOT of money out of the system.
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Within a portfolio (and a portfolio construction method), thinking about optionality and opportunity is important: a counter-thread.
Within a portfolio, thinking about optionality and opportunity is important. There are ways to maximize your portfolio optionality/opportunity without paying for it.
1) Option Spreads
2) Closing a position
3) Cash / Margin
4) Selling Puts instead of using limits to buy
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Fascinating. I'd call it a must-read. This may be the layman version but I'll admit it scares the crap out of me.
In 2017 Masa Son warned of the AI singularity within 30 years. Reading this....
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Spoken like someone who has never visited Japan. Or someone who took a cab from Narita straight to the Grand Hyatt and ate in The Oak Door, French Kitchen, and Keyakizaka before going upstairs to an office. Then back to the airport.
Granted, it’ll be OK food but it’s not Japan.
Wonder how Japan manages to have basically no homeless people, no giant rats, no drunks, no drug addicts, no litter, no weed clouds, one blasting loud music.
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All I can say is... wow.
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Nice AMC 8K on issuing 11.55mm shares.
"Don't Buy Our Stock"
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I gotta say... as a longtime former resident (and admitted Japanophile) the death of former PM Abe is really, really big news.
Abe was, in the end, probably more significant as a politician than his mentor Koizumi and while he was ex-PM, he was still partly kingmaker.
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Inspired by the fancy restaurant receipt, I made myself £800 worth of bauklava this afternoon.
I’d put it up against his any day.
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For those thinking about the BOJ policy meeting tomorrow. A little depth will be worthwhile.
Everyone knows Kuroda-san is on his way out. His term ends 8 April. USUALLY, the govt releases its "nomination" in February and then the candidate goes in front of the Diet for
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Carson Block of
@muddywatersre
writing in the FT lays the blame of stonk gyrations like GameStop (sub $20 on 12 Jan, up 18-fold in 10 trading days) squarely on low rates and passive investing.
This is Hogwash, Blatherskite, Buncombe, and Taradiddle.
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A "debate" on Joe Rogan is the intellectual equivalent of a pro wrestling bout.
It's not done for the sake of (intellectual) athleticism, or truth. It is crass entertainment. The participants are part of the script.
Many honest people would decline just as athletes avoid WWE.
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I don't think people get it.
Selling Bloomberg LP is the *whole point* of getting elected for him.
NEW: Bloomberg adviser
@TimOBrien
tells me the billionaire businessman will release his tax returns, and he’ll sell Bloomberg LP if elected.
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I did not expect that from the BOJ today, but it makes some sense.
30y was at 1.40+. 15yr at 0.83, and a straight line from 5 to 15 would pass through 10y at 50.
Someone will make bank on the jump in 10yr yields for now. This steepens the front and makes bank lending easier
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For those following the Evergrande situation, there is one special commentator who deserves singling out.
The "former Fitch analyst" Dr Marco Metzler is the key man. He is a veritable fount of misinformation and bad analysis. And he is absolutely prolific. Today he had this out.
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US, at 70,000 cases a day, raises the alert on HK citing a "moderate" level of cases of covid.
HK has not had a local case in 41 days. Not a single case. It has had 2 in cases in 3+mos. Both working in airport lounges dealing with incoming pax.
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I've been trying to get my head around this shocker because it opens a couple of weird cans of worms.
First, US$78bn of inflated revenues was something like 53% of reported revenues in 2019-2020. If those were false, then 2018 has to be in question (2019 gain was only +2.4%yoy
EXCLUSIVE: Chinese authorities are examining the role of PwC in Evergrande's accounting practices after the developer was accused of a $78 billion fraud
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Very interesting thread on China's "crackdown" and within a Chinese perspective on control, makes utter sense.
An opinion piece today on - The best take I've read so far on Beijing's views and motivations re: crackdown on Didi, IPOs and the move to reign in internet companies. Some key quotes below. 1/x
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The idea that bitcoin "ultimately shifts power from banks & corporations back to the people globally" is an idea which could only be held by someone who doesn't understand money.
"…useless complicated math problems…"
@SenWarren
if you believe
#bitcoin
doesn't ultimately shift power from banks & corporations (the ones you fight!) back to the people globally…you're right…useless. If instead you want to help us decentralize that power…math is critical.
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@ChrisCJackson
If someone knows Bill Ford, it will be up to ppl like him to set the record straight the next 4yrs.
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Hong Kong sometimes does evening views pretty well (my friend’s place).
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A very simple and yet effective chart.
Age of a person getting older plotted against interest rates
Look at that yellow dot and draw your own conclusions.
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Put another $30 into the pot every week by not drinking alcohol or smoking cigarettes and it's $6trln in 40yrs.
Make it an even $100/week and it's $10 trillion.
Start with $13,000 like Will suggested, add $100/week, and you get to $24.3trln.
Ya know... like hedge funds do.
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@guardpilot
@nycsouthpaw
Indeed, that is what the story created behind him says. On a 90-acre plot (which ain't cheap).
Farmville IS south of Richmond by 16-17 miles.
About the same distance latitude-wise as going from the LA Zoo down to Compton in LA and just a tad more than the length of Manhattan.
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@Noahpinion
@FabiusMercurius
Also important to not say things which aren't true.
1) Evergrande did not just default.
2) Evergrande's debt did not cross $600B USD.
As to "owned by many int'l banks", 8 out of the 10 listed are index funds where it is a truly tiny weight, and the other two might as well be.
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Oops. Blocked again by
@INArteCarloDoss
who seems to find issue with people pointing out issues with his all-encompassing expertise.
This time? I pointed out that what % of ratings bucket doesn't meet certain criteria doesn't tell you how much of the industry does.
🤷♂️
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For a non quant…
delta is instantaneous beta (of option price to stock price)
Gamma is change in instantaneous beta when price moves.
I was explaining gamma and delta to a non-quant and tried explaining it as ‘how much you have to buy to replicate the PnL and how that changes’. He didn’t quite get it so I said ‘it’s the second-order Taylor polynomial expansion of the option price’ which I guess is still hard?
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It still makes the news and I was asked to do an Evergrande thread, so here it is.
There were headlines/noise again this week in China property space.
Backdrop is important. The Three Red Lines policy put in place in late Aug-20 was designed to make the heavily indebted (1/n)
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Aside from being an inefficient database protocol, the whole point about BTC is that it is a scarce asset.
That is a RIDICULOUS dystopian concept for "money."
"But it's an asset!"
Yeah, so are cassette recordings of my doleful sighs when I read 💩 like that. Very scarce.
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Found in an estate sale 14yrs ago for $60, sold for $80mm to dealer who sold it to Dmitry Rybolovlev (who spent $95mm to buy derelict Trump estate, saving him in depths of GFC) for $127mm, who then sold it for $450mm to MBS. And now it's not real.
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I am deeply disappointed in all the journos I know who did not jump on Carlo's
#bigflip
hashtag on 23 Jan.
A well-followed twitter account who creates a hashtag for an opinion because he changed his mind obviously deserves widespread financial media coverage for that opinion.
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Beware China conspiracy theorists who source everything from Jeff Snider.
I was pointed at this thread earlier.
I am now blocked. Took two responses with actual data, so you'll have to click in.
This chart is Zoltan. He knows plumbing.
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6) "HK's best days are behind it."
Possibly. One could say the same for some US states, but strangely, few advocate that Louisiana and Mississippi (combined pop similar to HK) should give up their dollar peg despite lower economic correlation to the US econ than HK probably has.
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@zatapatique
And alt-right twitter is like
See???!!! I told you! And it's even got French words! ⬇︎⬇︎⬇︎
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Twitter is a wonderful global community where VPTLs (Very Pretty Twitter Ladies) can congregate to discuss their Very Important Opinions on matters of the day.
Today,
Alicia Knox AliciaK53988018,
Erin Nelson ErinNel20627208
Kim Volk KimVolk09741496
Julie Grimm JulieGR63641637
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I was asked to comment on this. So comments follow.
There is more to this thread above.
Please forgive typos. Happy to have feedback/discuss.
Our standard deal for managers and the formal announcement letter are attached. We will pick ten managers to be among the first cohort and begin trading in Q1 2021. Good luck!
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If you "extensively reviewed" your dd process and 18mo "relationship" reaching the conclusion your outcome was all SBF's fault, you tell people something you really don't want them to hear.
Better to stay silent and be thought a fool than open your mouth and remove all doubt.
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S&P downgrading Evergrande twice in 10 days is bad news.
I expect the worse news is cases being centralized in a single court (Guangzhou Intermediate People’s Court, by order of the People's Supreme Court). Tells you preparations are being made.
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To be very clear, this was an exercise in arithmetic, not a recommendation that anybody will ever become a trillionaire or quadrillionaire by investing and saving their coffee money.
Making 1% a week compounds to 67.8% a year. Nobody I have heard of has done that over time.
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Your regular reminder there are plenty of blue checkmark professionals 'specialising' in finance who should probably just find another milieu.
The Fed is buying corporate bonds and it is paying ABOVE PAR for those securities. In fact in the latest data dump (today), it’s buying on average bonds at a price of 107, or 7% more than they are actually worth at face value 2/8
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Tokyo is a wonderful place. Parked outside my 'temp office' in Tokyo today was a delight from the 70s.
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Dear Emma,
There are issues with your tweets here. A bunch of them in fact.
About HIBOR, the press, mortgages, defaults, the peg, and how it works.
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My beer has a more violently beautiful sunset than your beer does.
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A brief word about the petrodollar, triggered by this exchange below.
"Price oil in gold and blow up the petrodollar" is not the way it works, and it never will be.
The denomination of the price of something is just what it is. (cc
@jroche071973
)
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This may be the most important chart in macro. This is what people are betting on.
It’s all there.
The Fed. The BOJ. Inflation. QE vs QT.
In one handy number.
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Would you believe that in the year since his famous "sell everything tweet (since deleted) marking one of the all-time great market-timing calls,
@realwillmeade
has more than doubled follower count to 171+k?
(adding 20+ new followers per tweet, which is quite a feat I admit)
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Hong Kong waterfront buildings at night always seem to have that not quite Blade Runner (but good enough to enjoy) vibe.
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I'm not saying it's not possible, but that's not the argument I'd make if I were a "former Goldman Sachs analyst" or "Former PM at Goldman Sachs founded $1.4 billion hedge fund"
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It’s not Bitcoin going up as much as it is the cumulative wealth produced over centuries by the top 10 economies of the world has dropped by 35% in the past four weeks and 60% in 11mo b4.
The value of the world’s labour and creativity is a quarter of what it was a year ago.
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In the late 90s, then again after the GFC when traditional investments had gotten smoked, many investors (Harvard, TIAA, numerous sovereign pension funds) decided to invest in alternative assets.
Famously, US timberland investments had performed well for decades prior to
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Illiquidity works in both directions.
It's a holiday in Japan today so normal "leak" channels are out (if BOJ is in the market on behalf of MOF, info would be through night desks, and agent might be Fed/ECB, or foreign banks).
No idea if that is rate check or intervention.
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Oops. It looks like the plugin "Make Trump Eight Again" is being applied to the new non-Trump POTUS account.
Guess it might be time to turn that one off.
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It has been obvious for a couple of Fed meetings now that the pace of rate hikes was slowing.
This one was +23-25%. The last one +30-33%. The one before that +43-50%.
The trend has been clear. Not sure why people haven't seen this.
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And if you are LEVERED long, one single Terrible, Horrible, No Good, Very Bad Day could have a bad effect.
The problem is correlation, leverage, and size.
The numbers below are for a long-only portfolio which is not levered at all.
This all went bad on Wednesday.
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BABA in HK (9988 HK) just traded the biggest one hour volume since it has been listed in HK.
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An excellent treatment by
@michaelxpettis
. Frankly much more expert and adult than most of what has been written (long form helps).
Definitely worth a read. I would go one step further and say...
Here is a longish essay I just published on my Carnegie blog about the difficulties Evergrande poses for Chinese regulators.
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@JoyAnnReid
@jeffjarvis
@KellyannePolls
Didn't you talk smack about Donald Trump on National TV, repeatedly, only 9mos ago?
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Friday afternoon. Markets closed.
My last espresso of the day.
Sun is out (only a few puffy clouds yonder). Wind is up. And one local kingfisher family is chirping angrily at me for having disturbed them from their perch.
Too bad. Coffee time is coffee time.
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Have watched this a dozen times in the last six days.
Unbridled genius at work here.
I’ll never listen to AC⚡️DC the same way again
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Someone's got a sense of humour.
What exactly are bonds and how do they work?
We’ve got a 30-second overview 👇
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"So I called Mike Pearson... on his direct line, see....? And I asked, 'Mike, is there any fraud going on at the company?'
He said 'not that I know of'.
So I bought another 2mm shares at $108, got a 150pg deck, a couple of bottles of water, and we did a call with investors."
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Aren’t they supposed to be done?
*MORGAN STANLEY IS SAID TO OFFER 20M SHARE BLOCK TRADE IN ROCKET
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Best value espresso machine I will ever own (20-bar, <$80).
Decent crema at times but still trying to dial down best grind/tamp combo. Grind today a bit too large.
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Japanese banks getting smashed today.
Someone selling a TOPIX Banks basket (in some size) I guess, ahead of the flurry of H1 results out on the 10th (those results will set guidance for H2/full-year where banks will take AFS losses they should have taken before).
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Single BEST aerial view of the expanse of Tokyo I have ever seen. Stunning.
Thanks Eric and his h/t to
@justinmccurry
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Boy... I just stopped to make myself an espresso.
Doppio.
Based on my billable rate, that was an expensive espresso. $116. plus $1 for the coffee and $0.026 for the electricity.
Just wait til mrs bau figures out what going to see John Wick 4 is going to cost us.
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@neelkashkari
If twitter had been around when you were a banker, would you have been real name account talking finance? Seriously?
Famous ‘coward’ writers include Ben Franklin, Bronte sisters, Jonathan Swift, Agatha Christie, Asimov, Toni Morrison, dozens of Constitutional pundits in 1787.
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Damn. A big puddle outside Tokyo Station never looked so good.
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Hi
@pmarca
. Interesting you should say that. I agree being open to criticism and other ideas is important to keeping oneself grounded.
Anyhoo…keeping it real over here. Hope everything’s OK over there on the other side.
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Japan earnings season is in full swing.
The buybacks and changes to shareholder return and div payout policy are really, really bigly.
I really hate to say this kind of thing, but I have been saying it for months....
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BRK bought shares of a gold miner to the level of 0.07% of gross assets (the same level as 1 share of AMZN for every $4.5mm of gross assets).
I’m guessing he didn’t.
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