On the massively-overdone #bigflip macro thesis (higher growth & rates tanks stocks), let me try this, using Levine's writing style:
If the numbers a year from now are GDP +2-3%, CPI +3%, and Fed Funds 5-6%, that would be, like, pretty normal? For any time prior to the GFC?
If the numbers a year from now are GDP +2-3%, CPI +3%, and Fed Funds 5-6%, that would be, like, pretty normal? For any time prior to the GFC?
On the 2 replies with counters - both valid:
(1) "But then S&P500 at 18x is too high": Yes indeed, which is why I still own almost all high-cash-flow or high-hard-asset stocks and own none of my old high-growth / low-or-zero-current-profits tech stocks.
(1) "But then S&P500 at 18x is too high": Yes indeed, which is why I still own almost all high-cash-flow or high-hard-asset stocks and own none of my old high-growth / low-or-zero-current-profits tech stocks.
(2) "The wall of corporate debt maturities needing to refinance higher would crush earnings or cause bankrupties": Yes, that's a problem for some, but I'm not sure its a huge overall markets problem. Don't own the zombies.
Some of my holdings have a lot of variable-rate debt that has already repriced. They're doing fine b/c they have plenty of EBITDA.
For all co's, higher inflation & growth means higher profits along with higher interest expense. It can be a net benefit.
For all co's, higher inflation & growth means higher profits along with higher interest expense. It can be a net benefit.
https://twitter.com/BeenThereCap/status/1621152859298611206
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