John Liu

Don’t know of good retail surveys. Banks and brokers watch client activity, sellside might report on that.

B of A’s institutional investor surveys are monthly and have been run for decades.

were respondents line workers or company bosses?

Recession will be priced in at 4200
18X lower SP500 2025/26 est

CRWV $19BN mkt cap on $1.9 BN 2024 revs. 10X P/S.
MSFT’s 2024 AI rev around $5-8BN est. So is MSFT’s AI biz only worth $50-80BN?
Either CRWV undervalued, MSFT overvalued, or CRWV’s AI biz different from MSFT’s AI biz.
To believe the 3rd, have to think MSFT’s own AI apps are a lot of rev.

4.0 is nothing, you don’t even wake up

Bessent’s breezy baton passing is going to be more like the Bataan Death March.

Long before we see material change in global supply chains, the markets will get nasty.

end/n

When will it start? Not until companies have confidence and certainty on what tariff/trade policy will be in coming decades - that years of work/$billions of investment won’t be undone.

But no business can be confident in anything with this erratic, impulsive, disordered government.

4/n

How much will it cost? I think more than what is (planned) to be spent on AI capex. Many $ trillions.

From what money? These are typically industries with single digit EBIT margins, already levered, 10% ROIC.

2/n

Bessent claims US economy “detox” won’t mean recession, because baton will pass from government spending to private sector.

How long for companies to rebuild global supply chains in US? I think decades to build factories, develop workforce, automate enough to offset US wages, recreate IP.

1/n

Now the tug of war. Old-economy stocks, under-owned, not expensive, have lagged badly, but quite affected by tariffs-recession. Vs. Tech/AI stocks, way over-owned, sharp pullback makes them look inexpensive, supposedly less affected by tariffs-recession but expectations very high.

There is no “Trump put”. He is Tariffman, tariffs are his painless answer to everything, without tariffs he has no leverage, no power (econ-wise). He can’t give them up. He can pause and pretend, but the market is wise to that game, and tariff uncertainty is as bad as tariffs.

List of negatives last few weeks GDP Nowcast
Real pers spend
Pending home sales
UE claims
New home sales
Consmr confidence
Crypto/Trump trades
Inflation expects
1Q est revisions
US markets vs int’l
Mega stocks vs broad mkt

Have I missed anything

Inline guide, sleepy call, rote questions

Threads is just overflow from Instagram. Not a place for serious discussions.

I am reading that the global LNG market will be in tight supply, i.e. attractive for producers, for years.

What if a US-forced “peace” in Ukraine results in Russian gas freely reaching Europe again?

I’d think LNG could be in glut. An own goal by the US.

Trump seems fixated on rare earths in Ukraine, Russia, etc. Maybe tell him rare earths aren't actually rare; the #2, 3, 4, 7 RE reserves are in Brazil, India, Australia, USA; that the barriers to US RE industry are financing, environmental regs, and Chinese dumping, all very solvable.

You mean Mt Trump

It is a real threat. When DeepSeek Reasoner is competitive with OpenAI o1, cost millions not tens/hundreds of millions to train, can run on Huawei AI chips, and is available via cloud at 5% the price/token of o1, or free download . . .

Seems reasonable but irrelevant.

Chinese insurers will have a very different investment portfolio than Western insurers, where equity is typically 5% of investment assets. Hope their risk exposure is also very different.

I usually get terrible espresso in specialty cafes, and decent espresso in standard bistros.

Ha ha

I don’t hate Biden. He did a great job while he still could, and then did the best he could with his diminishing capabilities. I am angry at his “inner circle” who didn’t tell him the hard truth.

Insurance market, already “hard”, now will get harder. Nationally.

Inflation, affordability, building materials implications too.

End/n

If FAIR assesses $10BN, that is 60-70% of total annual homeowners’ insurance premiums in California. In theory a one-time assessment; but will be more catastrophes. Add other sources of premium increases. Hence, premiums doubling.

For high-risk areas, premiums will increase much more. 3/n

Preliminary estimates $20BN insured loss from L.A. fires. Over half probably insured by FAIR plan. FAIR has appx $350MM reserves and $2BN reinsurance, so will have to assess other insurers in state. Insurers can pass FAIR assessments on to policyholders, after first $500MM. 2/n

California homeowners insurance premiums likely to double or more.

1. Premiums were already rising fast.
2. New rules will allow more increases (model-based underwriting, recovery of reinsurance costs).
3. FAIR plan assessments for Los Angeles fire losses.

1/n

Insurance will be available, at multiples of current premiums. Some property will go to banks, other owners will keep their land, some will sell to the investors booking their flights now.