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https://x.com/i/lists/1669153613199835138?t=R0mCicxs7zfJE_yOAek4gQ&s=09
AkhenOsiris
Tariff State of the Union
Negotiate First:
- India
- Australia
- Brazil
Retaliate First:
- Canada
- EU
- China
- Mexico
Need to Think:
- South Korea
- Japan
All roads lead to negotiation eventually, even Canadians are talking with US, but just noting the kneejerk reactions.
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The Kobeissi Letter
BREAKING: President Trump says he “couldn’t care less” if automakers raise car prices in response to his 25% tariff, per Bloomberg. https://t.co/zCpPc51Vm3
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The Kobeissi Letter
Leading indicators point to a further inflation rise:
The US manufacturing input price index jumped to ~65 points in March, the highest in 31 months.
The last time we saw the index just high, CPI inflation stood at 8.5%, the third-highest reading since the 1980s.
At the same time, the services input prices index rose to 60 points, the highest level in 18 months.
Input costs across both goods and services sectors surged at their fastest pace in 23 months.
Inflation is back on the rise.
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AkhenOsiris
The Athletic $1/mth subscription ends, changes to $5/mth.
Oh dear...click Cancel.
"Dear reader, loyalty offer of $9.99 for 1 year, do you accept?"
Ok.
3 years in a row, between 80 cents to $1 a mth 😂
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The All-In Podcast
Trump’s Tariffs: 40 Years in the Making 🇺🇸💰
On E221, the besties discussed President Trump's newly announced 25% auto tariffs.
@chamath:
" The one thing I'll say about Donald Trump is you may not agree with the tariffs, but he's been incredibly consistent."
"I stumbled into an interview he did with Larry King in 1987, and he walked through the entire trade imbalance 40 years ago."
@realDonaldTrump in 1987:
" The fact is that you don't have free trade. We think of it as free trade, but you right now don't have free trade."
Chamath:
"Here's what tariffs do: tariffs are a level-setting mechanism that fixes a historical imbalance."
"What they want is to create the economic incentives to re-shore as much industry as possible into the United States."
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The Kobeissi Letter
BREAKING: Hedge funds sold the second-largest amount of global technology stocks in 5 years this week, according to Goldman Sachs data.
This was only smaller than the early August 2024 sell-off.
The most activity was seen in US tech which accounted for 75% of the net selling.
Not even the early stages of the 2022 bear market experienced such a rapid exit from these stocks.
The sector has led this quarter’s losses with the Nasdaq 100 index declining -13% over the last 6 weeks.
Hedge funds continue to dump Big Tech.
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The Kobeissi Letter
How hot is inflation?
1, 3, and 6-month annualized Headline AND Core PCE inflation are now all above +3.0%.
1-month annualized Core PCE inflation is now running at a whopping +4.5%.
This is 250 basis points ABOVE the Fed's long-run target, all as the Atlanta Fed now sees -0.5% GDP contraction in Q1 2025.
Truly incredible.
This is absolutely insane:
From Wednesday to Friday, the S&P 500 lost -$100 billion PER trading hour for a total of -$2 TRILLION.
Then, after the market closed on Friday, S&P 500 futures erased ANOTHER -$120 billion in minutes.
What happened? Let us explain.
(a thread) https://t.co/Rc1GCF1876
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� 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭 𝐡𝐚𝐬 𝐛𝐞𝐞𝐧 𝐨𝐛𝐭𝐚𝐢𝐧𝐞𝐝 𝐟𝐫𝐨𝐦 𝐬𝐨𝐮𝐫𝐜𝐞𝐬 𝐛𝐞𝐥𝐢𝐞𝐯𝐞𝐝 𝐭𝐨 𝐛𝐞 𝐫𝐞𝐥𝐢𝐚𝐛𝐥𝐞, 𝐛𝐮𝐭 𝐢𝐬 𝐧𝐨𝐭 𝐠𝐮𝐚𝐫𝐚𝐧𝐭𝐞𝐞𝐝 𝐚𝐬 𝐭𝐨 𝐜𝐨𝐦𝐩𝐥𝐞𝐭𝐞𝐧𝐞𝐬𝐬 𝐨𝐫 𝐚𝐜𝐜𝐮𝐫𝐚𝐜𝐲.
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App Economy Insights
📊 This Week in Visuals:
🧘🏻 $LULU Lululemon: Soft Outlook
🐶 $CHWY Chewy: Autoship Unleashed
🎮 $GME GameStop: Bitcoin To The Rescue
https://t.co/5YgDFUj9i9
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Finding Compounders
How to look at ROE
Source: @FocusedCompound https://t.co/YS4WdtQNOb
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The All-In Podcast
🚨🚨🚨 pod up
@GavinSBaker is BACK!
he joins the besties to discuss:
-- the ai cold war: usa 🇺🇸 vs china 🇨🇳
-- m&a bounceback
-- @coreweave ipo
-- the endgame for tariffs
-- signalgate
-- el salvador deportations
(0:00) the besties welcome gavin baker!
(1:20) @nvidia balance sheet questions, @coreweave ipo, m&a/ipo bounce back
(16:22) us vs china in ai: manus, china building its own nvidia, and more
(28:37) the administration's endgame for tariffs
(53:05) signalgate: context and fallout
(1:09:42) el salvador deportations
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AkhenOsiris
There was a time and place when TSLA would rip 10% on this. 2021 was that fucked up 😂*MUSK: XAI BUYS X IN DEAL THAT VALUES XAI AT $80B, X AT $33B - *Walter Bloomberg
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AkhenOsiris
AI Stocks, Hypothetical Top Indicators (please add):
- @dylan522p appearance on @joeroganhq
- Perplexity IPO
- Increasing Masayoshi Son involvement (😱)
- Coreweave IPO (😱)
Fuck, the last two are happening...
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The Kobeissi Letter
The S&P 500 is down -4.9% year-to-date and sentiment is as if we are in a full-on recession.
What happens if we fall -20% or more? https://t.co/zgvYv2k1Tb
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The Kobeissi Letter
Institutional capital is pouring into gold:
In a recent Bank of America survey, 58% of fund managers said gold performs best in a trade war.
This compares to just 9% for 30-year Treasury Bonds and 3% for Bitcoin.
Throw in the US deficit spending crisis and gold quickly becomes the only global safe haven asset.
It's truly a historic time in the market.
The modern day gold rush:
Gold prices are now up +70% in 16 months with a new record market cap of $20.75 trillion.
In fact, gold is worth $1.25 trillion MORE than the COMBINED value of the remaining top 10 most valuable assets.
What is gold telling us?
(a thread) https://t.co/JcEgjnWpgL
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The Kobeissi Letter
The modern day gold rush:
Gold prices are now up +70% in 16 months with a new record market cap of $20.75 trillion.
In fact, gold is worth $1.25 trillion MORE than the COMBINED value of the remaining top 10 most valuable assets.
What is gold telling us?
(a thread) https://t.co/JcEgjnWpgL
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The Kobeissi Letter
US debt crisis is set to get even worse:
The US Debt-to-GDP ratio is projected to reach a record 156% in 2055, according to the CBO's latest forecast.
This is up from 154% estimated in January 2025 projections.
The CBO assumes nominal US GDP will grow to $88.4 trillion by 2055.
Meanwhile, total federal debt held by the public is set to reach a whopping $138.0 trillion.
The worst part?
This forecast assumes the US avoids a recession during this entire period.
What happens if the economy enters a recession?
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AkhenOsiris
Mike Santoli:
Market bottoms are a process not a moment, that 40% of 10% corrections deepen to at least 15% even outside of recessions and initial correction lows frequently need to be retested over a number of weeks. In this context, the index retracing most of its snapback bounce is fairly typical. Of course, it’s called a “retest” because sometimes they fail.
Frank Cappelleri of CappThesis on Friday asked a kaon-like question: “Was the back half of March a failure to go up … or a failure to go down? In other words — which side has been more frustrated by the lack of net movement?”
The staticky technical and fundamental atmospherics around Big Tech don’t have much to do with the suspense over the April 2 White House deadline for a new set of “reciprocal” tariffs.
Yet tariffs are standing in as the convenient focal point for nearly all other relevant investor worries: Perceived risks to growth and inflation, as well as wariness around erratic or capricious policymaking that is keeping businesses off balance and upending global alliances.
Such a pileup of feared negatives suggests at least remaining open to ways that things might turn “less bad.”
Could the April 2 tariff deadline prove a psychological clearing event for stocks that culminates this correction phase? Might next week’s jobs report reassure investors that the labor market is resilient? And has the market’s setback lowered that bar enough for first-quarter earnings to act as a source of relief?
All pragmatic questions in a moment of piqued and pervasive pessimism.
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Finding Compounders
RT @gainify_io: $NKE has taken three hits in a row.
Each of the last 3 earnings triggered revenue and EPS downgrades from Wall Street.
Sentiment finally bottomed or more cuts coming? https://t.co/NyJhwVXczc
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Investing visuals
How you can tell that $ASML is a cyclical business👇 https://t.co/05Y11qXIx6
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The Kobeissi Letter
The market no longer believes the Fed:
Since the "Fed pivot" began in September 2024, market-based inflation expectations have more than DOUBLED.
In fact, markets now see +3.3% inflation over the next 2 years, the highest since March 2023.
Has the Fed lost its credibility? https://t.co/KWjK2LekQM
This is absolutely insane:
From Wednesday to Friday, the S&P 500 lost -$100 billion PER trading hour for a total of -$2 TRILLION.
Then, after the market closed on Friday, S&P 500 futures erased ANOTHER -$120 billion in minutes.
What happened? Let us explain.
(a thread) https://t.co/Rc1GCF1876
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Dimitry Nakhla | Babylon Capital®
RT @DimitryNakhla: A quality valuation analysis on $MELI 🧘🏽♂️
•NTM P/E Ratio: 44.66x
•1-Year Mean: 47.97x
As you can see, $MELI appears to be trading near fair value
Going forward, investors can receive ~7% MORE in earnings per share 🧠***
Before we get into valuation, let’s take a look at why $MELI is a great business
BALANCE SHEET✅
•Cash & Short-Term Inv: $3.70B
•Long-Term Debt: $2.82B
$MELI has a strong balance sheet, an ok BB+ S&P Credit Rating & 48x FFO Interest Coverage
RETURN ON CAPITAL🆗➡️✅
•2019: (4.8%)
•2020: 3.7%
•2021: 8.1%
•2022: 14.7%
•2023: 25.7%
•2024: 23.0%
RETURN ON EQUITY🆗➡️✅
•2019: (14.2%)
•2020: (0.1%)
•2021: 5.2%
•2022: 28.7%
•2023: 40.3%
•2024: 51.5%
$MELI has strong and improved return metrics, highlighting the financial efficiency of the business
REVENUES✅
•2019: $2.30B
•2024: $20.78B
•CAGR: 55.30%
FREE CASH FLOW✅
•2019: $314.29M
•2024: $7.05B
•CAGR: 86.32%
NORMALIZED EPS✅
•2019: ($3.71)
•2024: $37.69
SHARE BUYBACKS❌
•2019 Shares Outstanding: 48.69M
•LTM Shares Outstanding: 50.70M
MARGINS🆗➡️✅
•LTM Gross Margins: 52.7%
•LTM Operating Margins: 12.7%
•LTM Net Income Margins: 9.2%
***NOW TO VALUATION 🧠
As stated above, investors can expect to receive ~7% MORE in EPS
Using Benjamin Graham’s 2G rule of thumb, $MELI has to grow earnings at a 22.33% CAGR over the next several years to justify its valuation
Today, analysts anticipate 2025 - 2027 EPS growth over the next few years to be more than the (22.33%) required growth rate:
2025E: $46.91 (24.5% YoY)
2026E: $64.98 (38.5% YoY)
2027E: $84.98 (30.8% YoY)
$MELI has an ok track record of meeting analyst estimates ~2 years out, but let’s assume $MELI ends 2027 with $84.98 in EPS & see its CAGR potential assuming different multiples
40x P/E: $3400💵 … ~17.6% CAGR
38x P/E: $3230💵 … ~15.4% CAGR
36x P/E: $3060💵 … ~13.2% CAGR
34x P/E: $2890💵 … ~10.9% CAGR
As you can see, $MELI appears to have attractive return potential IF we assume >36x earnings (a multiple justified by its growth rate & moat)
$MELI boasts an expansive growth trajectory, fueled by powerful network effects that should drive sustained momentum
Key factors contributing to its promising outlook include 🔑
1. Margin expansion
2. Unparalleled access to Latin America's burgeoning economy
3. Network effects that produce self-reinforcing dynamics ensuring long-term competitiveness, among other things
Those buying $MELI today at $2165💵 are buying it for a fair price, with little margin of safety — however, these growth rates have to be revised down substantially for $MELI to miss the mark, even if the company grows earnings at 25% CAGR over the next 5 years, shareholders will likely end up with a decent return
I consider $MELI a strong buy closer to $1945💵 (~10% below today’s price) where I can reasonably expect ~12% CAGR while assuming a conservative 32x end multiple, ensuring some margin of safety
#stocks #investing
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𝐃𝐈𝐒𝐂𝐋𝐎𝐒𝐔𝐑𝐄‼️: 𝐓𝐡𝐢𝐬 𝐢𝐬 𝐍𝐎𝐓 𝐈𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐀𝐝𝐯𝐢𝐜𝐞. 𝐁𝐚𝐛𝐲𝐥𝐨𝐧 𝐂𝐚𝐩𝐢𝐭𝐚𝐥® 𝐚𝐧𝐝 𝐢𝐭𝐬 𝐫𝐞𝐩𝐫𝐞𝐬𝐞𝐧𝐭𝐚𝐭𝐢𝐯𝐞𝐬 𝐦𝐚𝐲 𝐡𝐚𝐯𝐞 𝐩𝐨𝐬𝐢𝐭𝐢𝐨𝐧𝐬 𝐢𝐧 𝐭𝐡𝐞 𝐬𝐞𝐜𝐮𝐫𝐢𝐭𝐢𝐞𝐬 𝐝𝐢𝐬𝐜𝐮𝐬𝐬𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭.
𝐓𝐡𝐞 𝐢𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧 𝐜𝐨𝐧𝐭𝐚𝐢𝐧𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭 𝐢𝐬 𝐢𝐧𝐭𝐞𝐧𝐝𝐞𝐝 𝐟𝐨𝐫 𝐢𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧𝐚𝐥 𝐩𝐮𝐫𝐩𝐨𝐬𝐞𝐬 𝐨𝐧𝐥𝐲 𝐚𝐧𝐝 𝐬𝐡𝐨𝐮𝐥𝐝 𝐧𝐨𝐭 𝐛𝐞 𝐜𝐨𝐧𝐬𝐭𝐫𝐮𝐞𝐝 𝐚𝐬 𝐢𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐚𝐝𝐯𝐢𝐜𝐞 𝐭𝐨 𝐦𝐞𝐞𝐭 𝐭𝐡𝐞 𝐬𝐩𝐞𝐜𝐢𝐟𝐢𝐜 𝐧𝐞𝐞𝐝𝐬 𝐨𝐟 𝐚𝐧𝐲 𝐢𝐧𝐝𝐢𝐯𝐢𝐝𝐮𝐚𝐥 𝐨𝐫 𝐬𝐢𝐭𝐮𝐚𝐭𝐢𝐨𝐧. 𝐏𝐚𝐬𝐭 𝐩𝐞𝐫𝐟𝐨𝐫𝐦𝐚𝐧𝐜𝐞 𝐢𝐬 𝐧𝐨 𝐠𝐮𝐚𝐫𝐚𝐧𝐭𝐞𝐞 𝐨𝐟 𝐟𝐮𝐭𝐮𝐫𝐞 𝐫𝐞𝐬𝐮𝐥𝐭𝐬.
𝐈𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧 𝐜𝐨𝐧𝐭𝐚𝐢𝐧𝐞𝐝 𝐢�[...]
The Kobeissi Letter
This is absolutely insane:
From Wednesday to Friday, the S&P 500 lost -$100 billion PER trading hour for a total of -$2 TRILLION.
Then, after the market closed on Friday, S&P 500 futures erased ANOTHER -$120 billion in minutes.
What happened? Let us explain.
(a thread) https://t.co/Rc1GCF1876
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The All-In Podcast
M&A and IPOs are Back 🔥
On E221, @Jason and @GavinSBaker discussed the current state of dealmaking with a pro-M&A administration taking over.
@Jason:
"I mean, M&A with Wiz and now CoreWeave going public, the Wrath of Lina Khan is over."
"We gotta give the administration a lot of credit for maybe removing the roadblocks to M&A and IPOs, or at least people perceive that."
"So I don't know if perception becomes reality here, but it does seem like M&A is a bit on fire."
@GavinSBaker:
"CoreWeave bought Weights & Biases, which I think is a really interesting acquisition for them that kind of further differentiates them and maybe de-commodifies them a little bit."
"There have been quite a few acquisitions by big companies of smaller companies in the last month, and I think because none of the companies that have been bought have been public maybe it's flying a little under the radar, but it's happening in an accelerating way."
"And I think this would be very good for the market, and animal spirits, and everything that we care about."
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AkhenOsiris
RT @neilksethi: BoA (Hartnett): "DeepSeek, DOGE, Trump geopolitics big drivers in Q1, but US tariffs set to jump from 2% to 8% of imports (Chart 3); we expect Trump underplays not overplays April 2nd to avoid 2nd wave US inflation; [NFP on] April 4th more important to set April direction…soft landing 100-200k payroll = no recession = recent SPX 5.5k low holds (US retail/homebuilding stocks bounce); hard landing <100k payroll = spx to new lows in april, taking global stocks, banks, credit down (kick-starts big trump pivot to tax cuts)."
"most faq is 'what stops doge & tariff shock therapy?' (a: inflation jump in bond yields, lower trump approval, gop house losses, jump in unemployment in pa, wi, mi)"
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AkhenOsiris
Both Nasdaq Comp and QQQ in sniffing distance of intra-day and closing lows from March 13th
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AkhenOsiris
90% DVOL day first time during drawdown. Capitulation post bombardment incoming.
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The Kobeissi Letter
BREAKING: Elon Musk says xAI has acquired X in an all-stock transaction which values xAI at $80 billion and X at $33 billion. https://t.co/rSRwnRrCle
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The Kobeissi Letter
BREAKING: The State Department is officially shutting down USAID and has formally notified Congress of its closure.
The remaining 900 employees are set to be terminated. https://t.co/TvQvbgxLUI
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