Thursday, September 16, 2021

Thursday Night Links

  • Before I was famous I had a whole bunch of jobs where all I needed was boots. People would look right past me, or if they did look at me, it was with a mean look. But when I got famous, people would look at me and smile and wonder where they knew me from. If they flat-out recognized me, they'd laugh and dance like they'd won a prize, and I'd just stand there and smile and feel warmth from their love. So the fame made the world, which is a real cold place, a little less cold. And as for my gambling, it's true I lost it all a few times. But that's because I always took the long shot and it never came in. But I still have some time before I cross that river. And if you're at the table and you're rolling them bones, then there's no money in playing it safe. You have to take all your chips and put them on double six and watch as every eye goes to you and then to those red dice doing their wild dance and freezing time before finding the cruel green felt. I've been lucky. [Norm Macdonald]
  • Not only was he funny, he was as based as you could be and still be a working comedian. And he had the courage of his lack of convictions: recall his bit long ago, at some ESPN awards show, with an audience largely composed of black athletes, at which he said (I’m quoting from memory here…) to Charles Woodson — the University of Michigan defensive back who had just won the Heisman Trophy — “well, they can’t take that away from you…unless you kill your ex-wife and a waiter.” The horrified looks on the faces of audience members said it all: blacks and whites alike largely suspected that O.J. had, literally, gotten away with murder, but to say it publicly in front of black athletes and the white people who worship them?  That was unforgivable. [Sailer]
  • I have long known in my gut that usual measures of social wealth, most of all GDP, are fraudulent, in that they falsely identify value where there is none. I have intuited we were all being lied to, and that those who assured us that ever more value was being generated by our society by what appear to be objectively valueless activities were, at best, hiding something. This outstanding book, by left-wing economist Mariana Mazzucato, explains what is being hidden, what hard truths are being avoided, and what she thinks we should do about it. And while I don’t agree with all her prescriptions, or with her rosy view of government competency, the first step on the path to self-improvement is admitting you have a problem. [link
  • The bigger picture things carbon capture, hydrogen, those are – those are harder steps for us to take one because our infrastructure's really not designed for those. It's obviously much easier for natural gas Transportation Company to be talking about hydrogen. It doesn't really fit with the liquids pipeline. The returns on many of those projects are not attractive right now. When we look at them, we're not a research and development company, we're an operating company. I don't think our investors want us to make large investments in speculative investments that may have good returns seven or eight years ago, if everything goes as planned. And so that's why we're kind of viewing ourselves in a low capital environment, which isn't a bad thing. We're not anticipating declines in EBIDA over time even though we're not spending a lot of capital. So if we – our expectation is, if we have a stable, slightly growing EBIDA stream and we're using our available cash for equity buybacks, which is our preferred return of capital method at this point, then we can be growing our cash flow per unit, which I think in the long-term is what investors want. And so that's what we're focused on. And buybacks are still our preferred method. We've talked about increasing distributions; we've talked about special distributions. Special distributions are laid out on the list. Buybacks are our preferred method. I won't rule out an increase in a distribution at some point, but that's – that's our view of capital allocation priorities right now. [MMP]
  • For more than 20 years, Swedish Match has been a pioneer in the transformation of its business model away from combustible tobacco, starting with the divestiture of its cigarette business in 1999, and later with its divestitures of pipe tobacco, premium cigars, and its non-US machine made cigar business. After conducting a thorough strategic review of its businesses, today’s announcement of the planned separation of the US cigar business marks the next chapter in this transformation, where smokefree products such as nicotine pouches and snus will play the leading role in building a stronger Swedish Match in line with societal trends. The intended separation of the cigar business provides even greater focus on building Swedish Match’s presence in the growing modern oral category, while also providing opportunities and greater flexibility for the stand-alone cigar business to execute its own strategic plans toward delivering strong value as an independent company. [Swedish Match]
  • The analyses that I have seen are pretty complacent about EBITDA. They take a >$3 billion level as a given and then assume that since CBB and CNSL's debt (which both trade close to par) create those enterprises at >5x EBITDA, FTR will do the same. The problem is that if the ice cube continues to melt, not only will EBITDA be lower, but it will probably be worth a lower multiple. In the 2x2 matrix of unsecured recoveries above, there's really only a line of realistic outcomes: low EBITDA, low multiple; or high EBITDA, high multiple. Unless you can have reason to believe that the decline in customer losses is about to stop, there does not seem to be a margin of safety in the unsecured debt. If 13% of customers (net - more after figuring churn) left over the past two years, they probably went somewhere, since they are not likely just canceling their internet entirely. There must be competitors in Frontier's markets that are better or cheaper and are eating their lunch. For all we know, the most alert or savvy customers are the ones who just left and it is the beginning of an S-curve of the slower to react customers leaving too. [CBS]
  • Although the benefits of primary COVID-19 vaccination clearly outweigh the risks, there could be risks if boosters are widely introduced too soon, or too frequently, especially with vaccines that can have immune-mediated side-effects (such as myocarditis, which is more common after the second dose of some mRNA vaccines,3 or Guillain-Barre syndrome, which has been associated with adenovirus-vectored COVID-19 vaccines4). If unnecessary boosting causes significant adverse reactions, there could be implications for vaccine acceptance that go beyond COVID-19 vaccines. Thus, widespread boosting should be undertaken only if there is clear evidence that it is appropriate. [Lancet]
  • As such, it may now finally be time to get bullish on green bud. The stocks have been absolutely hammered recently. This appears to have washed out the bullish sentiment towards the entire group that was engendered by the bubble in the stocks a few years ago. Furthermore, the washout in sentiment has sucked a group of very profitable and rapidly growing companies into its vortex even though they continue to post stellar results and their future is only getting brighter. [Felder]
  • Here are some examples I followed over the past decade: modern art, war, corporate governance, health care and big pharma, government, and fractional reserve banking. Having to go to college to get a job instead of taking an IQ test and getting applied vocational training is a Scam. That's 2/3 of GDP right there! You're going to pay a tax every time that you as principal have an agent doing something for you or when you have to engage with something that is a societal Scam. The size of the tax depends on the relative bargaining power - e.g. your alternatives - and your knowledge and ability to monitor the agent or your ability to use your own agency to get around the scam. On the far extreme, we have a literal tax, income tax, where we have no bargaining power and we get nothing in exchange for our single largest annual outlay. [CBS]


Stagflationary Mark said...

Her core claim is that “much of what is passing for value creation is just value extraction in disguise.”

My credit card pays cash back. On the surface, it looks like value creation.

If I use my credit card to pay my property taxes, the truth is revealed. The government won’t eat the fees but will instead pass them entirely to me. Any cash back I would receive is dwarfed by the fees.

This also applies when buying precious metals from a dealer. Some will take credit cards but you’ll pay more. I’ve read reviews of customers blaming the dealers for passing these fees on, instead of blaming the credit card companies for them. It’s a competitive low margin business. Dealers can’t absorb those fees.

Credit card companies are masters of extracting value. As consumers, we’d be better off overall if we’d all pay cash when we could. Businesses could charge us less. On an individual level, we are rewarded with some cash back for using credit cards though.

Classic prisoner’s dilemma. What is best for us as a group, is not best for us individually. It’s by design.'s_dilemma

The prisoner's dilemma is a standard example of a game analyzed in game theory that shows why two completely rational individuals might not cooperate, even if it appears that it is in their best interests to do so.

Further, those who don’t pay off their high interest rate credit cards in full each month are prisoners in more ways than one. Value is being extracted from them at an alarming rate.

Anonymous said...

Leftists always get pissy if you point out that the median income has risen by like 6-7x or so in the past 100 years. It may even be more.

It goes against their anti capitalist agenda. So that is why you often hear lefties talking about how GDP should be ignored and cannot be relied on.

Kind of the same thing as bible thumpers arguing that carbon dating is not all that reliable when you point out that dinosaurs are not in the bible.