Sameer Advani

Macro, long/short equity, contrarian, portfolio strategy
Sameer Advani
Macro, long/short equity, contrarian, portfolio strategy
Contributor since: 2012
"he's a grumpy old troll, who lives under the bridge" ...
haha...hilarious. what an a$$ clown
Interesting. What are your views on the sustainability of the dollar rally if US interest rates more or less converge with European and Japanese rates over the rest of this cycle?
Why "Poom" and not "Boom"?
The basic premise being that if an asset is "risk free" then your only compensation should be to keep up with inflation, correct? However, there are two components of risk, inflation and expected depreciation. Is the additional real yield not compensation for that expected depreciation? Or does that not factor in for domestic buyers of domestic risk free debt?
If that is the case then risk free yields have much farther to fall, and the Fed has historically been overcompensating rentiers on their savings instruments. This would also argue that the Fed did not create instability throughout the greenspan and bernanke years as nominal yields were higher than they should have been. Is that no also a source of dislocation, or mis-allocation of capital?
Hence the idea of QE infinity, only way to make debt cheaper is to inflate it away or write it off, the latter being unpalatable.
If you think of the sectoral balance for a minute, if China and other stop accumulating debt, it would indicate that the current account is lower in real terms than previously, which means there are more domestic dollars searching for a home versus "recycled" funds. The net effect would be a wash, as those dollar would find there way into treasuries as well. Foreign holders of US debt do not set the long end of the curve, that is set by market expectations of inflation as well as expected depreciation of the currency. Right now, ten year inflation expectations are around 1.6%. I suppose the market could demand a higher rate based on expected depreciation, but most treasury debt is still domestically held so foreign buyers are price takers, not price setters. Net result? China, Japan and other foreign entities have no impact on US bond yields.
Great article. What about the potential impact on purchases of treasuries? How will the slowdown in China and devaluation of the yuan affect the market for treasuries. Also, if China moves to nationalize much of the excess debt from bank balance sheets, will this be through a sterilized or unsterilized creation of funds via centralized debt issuance and money creation? If it's sterilized will they sell treasuries to maintain the value of the currency, and will that put downward pressure on the dollar?
Consumer memory is fairly short and they have been able to slow the customer loss with massive discounts. However, going forward, they are losing a large amount of their operating leverage that they got from the cheap Chinese imports, so it's hard to say whether there is compelling long term value. Trading the bounce off the bottom may be a good play, but the upside may also be limited.
Nice call. Regarding dilution, bail-ins, npl's, etc, it would seem that the market was way ahead in pricing this in, however, the unknown risk of a return to the drachma has temporarily been removed so the price may stabilize from here unless there is another dramatic change in the political sphere.
great article, probably prescient. fuel cells and 3d printing are the right analogy.
great article. pet food is $20B industry, these guys have 0.4% of the market, yet they trade at 5x the sales multiple of their competitors. no scale, no moat, no differentiation. all hype.
There's no barrier to entry, no competitive advantage, no way to create brand loyalty. Not a good recipe for value creation.
I disagree that the economy is somehow on hold depending on fed action. The markets might be, but the markets are not the economy. Capital formation is less dependent on overnight rates, and way more dependent on aggregate demand. Investment will happen if economic conditions warrant, and those conditions are not determined by the Fed. The Fed only controls the shortest end of the leash.
Great article. Apparently nobody is listening. The flattening yield curve should be of great concern to the fed. Without a steeper yield curve there will be limited credit creation. Those calling for the end of deleveraging may be correct in the absolute sense, that debt in nominal turns has stopped declining, but without robust credit creation there will be tepid gdp growth at best, and it will take several more years of slow credit creation and tepid nominal gdp growth before debt levels return to a historically stable level.
ouch, timing is everything I guess. 44m seems somewhat trivial given the huge reserve increase last year.
Bold call, I applaud your courage. There's only about two people in the world calling for a lower dollar and you're one of them. I agree with you, the recent strength may be overdone. I attribute it to the narrowing trade gap that came about as a result of increased shale production. If that tapers off significantly, which it will if prices stay low, the dollar should lose some support. In addition, if the EU gets even a little bit of it's mojo back, money will move into euro assets.
go as at the wind blows seems to be the clarion call...perfect timing to be a contrarian.
Some blame declining productivity growth, as incremental R&D generates less and less marginal benefit to productivity over time, and with globalization, much of the R&D is readily replicated in lower cost regions so that the benefits are more widespread at a faster rate than in the past. This leads to a faster convergence of living standards where "developed" economies stagnate on a relative basis, and "emerging" economies make vast leaps in productivity and growth.
I guess the greater existential question is whether americans and europeans need or want a further rise in living standards relative to the rest of the world. When is the standard of living sufficient? We may be reaching the limits of what we can sustainably produce from the earths resources, so in some ways, it is starting to edge towards a zero sum game. Of course, futurists would say there is no limit to human ingenuity and resourcefulness. That may be true, but part of the driving force of rapid innovation in the past was necessity. Do americans and europeans have that burning necessity to make life much better than it already is?
It's not a supply/demand imbalance, there is demand for any quantity of supply, it's the price that adjusts to clear the market. The oil market is not over supplied. We don't really know what the true marginal costs are for shale producers. As long as the price is above their true marginal cost, they will keep pumping. The petro states will also keep pumping to keep employment high. They pay local wages in local currency, but earn in dollars, hence the rapid depreciation of their currencies, but employment is paramount so they will keep pumping and suffer inflation, which is better than social unrest which is possible if they shut down production.
Not so sure. As long as there is global excess human and physical capacity there will be a lid on wage growth.
you guys really did your homework. nice job.
Where's the FCF? A look at their cash flow statement shows that they are investing all of their operating cash flow back in capex. All of their cash flow is coming from depreciation/amortizat...
A company will issue stock when management believes the stock is fundamentally overvalued, or the company is in dire straits. Either way, it's never a good sign.
that's what you call a smackdown. ouch.
Yah. No. It's not moving higher until the next fuel cell bubble. Let it go.
Let it go. Worthless stock, worthless technology, worthless company and pathetic management. Y'all should have heeded our warnings at $10, 8, 5 and .....
puh leeze
companies don't do secondary offerings unless they think their stock is wildly overvalued. ever heard of the pecking order of corporate finance?
plug is a dog with fleas. get over it and move on. nothing to see here.
Why does it matter? Why should Apple raise the dividend? As a shareholder I would prefer that they invest the free cash flow in positive NPV projects and buyback stock