Thursday, August 22, 2019

August 22nd Links

  • Jeff Roe, Ted Cruz's former campaign manager, called Trump's son-in-law, Jared Kushner, and reminded him of Trump's fury at Pompeo's Kansas caucus speech. As Tim Alberta recounts in his book, "American Carnage," Kushner put the call on speaker, so that Trump could hear. "No! That was him? We've got to take it back," the President-elect roared. "This is what I get for letting Pence pick everyone." [New Yorker]
  • Pay the market no attention. Enjoy the beach, the pool, the tennis court or the mountains. President Trump will not let us fall into recession. He has tools. His latest idea is cutting payroll taxes. And he can always tie up a "deal" with the Chinese. Just announce a deal and drop some irksome tariffs. He has tools to get re-elected. [Technology Investor]
  • Much of AMZN's current FCF is due to its negative working capital. That means as it grows sales, payables rise faster than receivables & working capital, generating cash. However, this is NOT sustainable FCF, because another name for payables is short term, non-interest-bearing debt. As soon as they stop growing, this cash flow will disappear, and if sales ever fall, this source of cash flow will quickly turn into a huge FCF drain. [LT 3000]
  • Dopamine is mildly toxic. The body is usually pretty good at protecting itself, but the mechanism fails under stress; this is why too much methamphetamine rots your brain. Why would you use a toxic chemical as a neurotransmitter? For the same reason you would use antiparasitic drugs – because you want to kill anything smaller than you that tries to synthesize it. [SSC]
  • It remains to be seen how long the music will keep playing. However, as the amount of aggregate upstart losses grows (which must happen if all this VC funding is to be absorbed), at some point the equilibrium point will be reached where the pace of fund-raising falls short of these aggregate losses. This could occur, for e.g., if Softbank is less successful with its Vision Fund 2 fund raising than it hopes, and/or more high-profile IPO failures such as Lyft/Uber sour the market's appetite for Unicorn IPOs to the point where meaningful negative marks need to be taken by VC funds when they monetise their investments via IPO (notable also is that the listing of Uber et al will now expose a growing share of the Vision Fund's investments to potentially significant mark-to-market losses, impairing its ability to manufacturing paper gains by funding - sometimes as the sole bidder - up-rounds in its investees). At this point, capital will become scarce and Unicorn valuations will start to fall, as loss-making enterprises compete for scarce funding to keep the lights on. This will result in negative valuation marks being taken by VC funds/the Vision Fund, which will then in turn sharply dampen the appetite for investors to tip more more money to these funds (high apparent returns and 'low volatility' have been their chief attractions, particularly as pension funds, insurance companies, etc, try to replace lost income from falling bond yields with the illusory high returns/low volatility provided by private equity/VC vehicles - another disaster in the funded status of these investors' long-tailed obligations that is waiting to happen). The whole ecosystem will then start to quickly unravel, and an epic bust likely awaits the sector (my prediction is that investors in the Vision Fund(s) will ultimately lose the majority of their investment, and Masayoshi Son will no longer be seen as a visionary, but instead as a poster-child for this cycle's utterly irrational excesses). [LT 3000]
  • I'd calculate how much management is benefitting from its ownership (could be done by taking HNSFA's NI % vs. a "normal" NI % (4% maybe?)and assuming mgmt is getting the "missing" income). Compare that to the passive income mgmt could make on their proceeds of the sale of the company. That could give you some idea of the likelihood of a sale. [CBS]
  • Regulars are a different breed. Often, they haven't settled down, or don't have kids, or have come through the crucible of child-rearing with an impulse to be out again. Some have drinking problems. Many others enjoy a drink but are not afflicted. Some nurse pain, but others are simply looking for human connection. For decades, sociologists have agreed that three conditions are essential to making friends: proximity; repeated, unplanned interactions; and a setting that encourages people to let their guard down and confide in others. College presents these conditions, but as people get older, pair off, change jobs, move, and race through days, it can be difficult to maintain a life in which all three conditions are present. The interactions regulars have—unpredictable in date and duration, but not in place, and with a splash to ease away their guard—allow for connections to bloom. [link]
  • Former Federal prosecutor and Labor Secretary R. Alexander Acosta said he was told to lay off Epstein, as he "belongs to intelligence" -- why no media followup on this? (Still don't believe in a Deep State?) Clinton said he only flew on Epstein's plane 4 times (but 26 is also commonly reported) and never visited the island (despite many eyewitness claims to the contrary). No investigative reporting on this by mainstream media? Epstein's partner Ghislaine Maxwell is the daughter of Robert Maxwell, a billionaire with possible Mossad connections. What were Epstein's links to Israeli intelligence and national interests? (Robert Maxwell's death is at least as mysterious as Epstein's ...) Why did it take the FBI so long to get to Epstein's island? What have they found in Epstein's house and on his island? How much blackmail material is there and who is implicated? Were it not for the possibility that the Epstein scandal might be damaging to Trump, would there be anything close to this level of mainstream media interest? Why was there almost zero interest in Epstein in the previous 15-20 years? Someone was protecting Epstein (someone with influence on the DOJ, FBI, perhaps US intelligence) long before Donald Trump had political power of any kind. Why? What other obvious scandals are hidden in plain sight? Iraq WMD? Spygate? Compromised politicians and national leaders? Blackmail by national intelligence services? Ideology-driven Social Media and Search filtering of information? Ivy League discrimination against Asian Americans? [Steve Hsu]
  • I tried to go phoneless, and replace my phone with an Apple Watch, but unfortunately I still wanted to use some utility apps like Uber and Venmo. The solution I've settled on is that I've turned my phone to greyscale (to reduce its addictiveness; go to Color Filters in Settings), deleted email, Slack, and all entertainment apps (YouTube, Twitch, Instagram, and even the browser), deleted the app store (locking it with a passcode that I don't have access to). My phone is now only useful for reading, music, texting; I find myself using it much, much less, at basically no cost to my quality of life. [Justin Kan]


eahilf said...

(Still don't believe in a Deep State?)

If the 'Deep State' exists (duh), then it controls the government -- therefore all of the following questions are moot:

Why did it take the FBI so long to get to Epstein's island? What have they found in Epstein's house and on his island? How much blackmail material is there and who is implicated?

The Occam's Razor explanation for Epstein is that he was running a 'honey pot' operation to trap, blackmail, and then control powerful men -- but I'm not sure you can rely on Occam's Razor when the 'Deep State' is involved.

But I am convinced, as I was from the first moment I saw the foto of him holding onto Virginia Giuffre, that Prince Andrew fucked that chick and is a liar.

eahilf said...

Wanted to mention that I found the SSC link -- "parasite manipulation of host behavior" -- very interesting:

Even mere viruses can alter behavior; the most famous example is rabies, which hacks dogs, bats, and other mammals into hyperaggressive moods that usually result in them biting someone and transmitting the rabies virus.