Guess who would be really happy with Trump’s tariffs?

Warren Buffett

That’s right. In 2003 he wrote an article pointing out our huge trade deficit problem and proposed a solution… tariffs!

🧵 At the time we had ~$400 billion trade deficit and Buffett was so worried, he was betting on foreign currencies, hoping a weakening dollar would ensue

What’s amazing about Phil Knight’s Shoe Dog is that his company (eventually named Nike) spent so many years on the brink of bankruptcy because of too much debt.

And then, this: “Essentially the American Selling Price law, or ASP, said that import duties on nylon shoes “must be 20 percent of the manufacturing cost of the shoe—unless there’s a “similar shoe” manufactured by a competitor in the United States. In which case, the duty must be 20 percent of the competitor’s selling price.

Updating my monthly thread on inflation and inflation expectations. Market participants are still expecting inflation to cool down, judging by 1y, 2y and 5 in 5y inflation swaps: 5 and 10y inflation breakevens are in agreement:

$SQ (Block) has chosen to vertically integrate to a much greater extent than $SHOP and as a result, gets a lot more revenue and gross profits. Both companies have similar market caps, EVs and GMV/GPV: But look at how much more Block gets out of that "flow" in terms of gross profits, compared to Shopify:

I took a look at ARK's $ROKU model. The base case is a $605 price target by 2026 (current px: $89).

Key assumptions:
- 157m active accounts
- $88 ARPU
- 15% FCF margin
- 44x FCF

Thoughts 👇🏻 I think the number of active accounts is aggressive. It's hard to see the US grow very quickly; it feels somewhat saturated at ~61m accounts?

International should grow fast but...

Interesting to see the Coatue slides.

They believe markets will decline another ~20% after earnings revisions come down and every sector declines.

That's possible. They think it's very likely.

On the other hand... 👇🏻 Interesting to see a few contrary opinions:

On May 24 Orlando Bravo went on CNBC and said,

"For us in private equity, as a buyer and operator of software companies, this environment of five times forward revenue is the buying opportunity of a lifetime."

Some thoughts on $LMND earnings today:

Marketing efficiency is holding up, with estimated LTV/CAC at 2.3x: Pace of customer adds is good:

Forgive me, but these people are idiots. The only reason why nuclear is expensive is because they—the regulators—have made it impossibly so. Here is the type of bureaucracy would-be nuclear innovators have to deal with:

https://twitter.com/marceloplima/status/1480737105781346306

Walmart's IPO was in 1970.

It took the company nearly 20 YEARS until it turned free cash flow positive.

If $WMT were a SaaS stock today, it would have the "unprofitable" label and people would laugh at it. Here's a snapshot of when the company had its first FCF positive year: 1989

Did $UPST issue a press release saying it's going out of business? The company is expected to grow revenues 50% this year. It had a 31% EBITDA margin in Q2.

On normalized (at scale) margins) it's trading at 22x this year's EPS. At current sub-scale margins, 34x.

Literally the ONLY option we have to scale energy production and decarbonize is nuclear ☢️ Why are California, New York and Germany shutting down nuclear?

If the Federal Reserve has been responsible for major episodes of asset inflation / deflation (read: market crashes), shouldn’t its mandate be broader than just “full employment and inflation below 2%”?

It seems they’re ignoring a lot of problems by focusing on two variables. “Meltzer's magnum opus demonstrates clearly the Federal Reserve is simply a politically motivated central planning bureau whose inherent hubris dooms it to failure, like all other permutations of statist organization.”

I just read this great book on nuclear fusion and here are a few cool things I learned: Humanity's energy consumption is 18 terawatts.

Only 1/3 of that is from electricity.

The rest is from things like transportation, where we burn fossil fuels.

To electrify everything, we need to at least 3x our electricity production.

Much more if we want to be wealthier!

In 1976, the US estimated we could achieve nuclear fusion if we expended maximum effort ($100 billion total). Instead, we have been spending so little, it’s under the “maybe never” line: For context, we spent $2 trillion in Covid relief (20x) as much and our government’s budget today is $4.8 trillion per year so $100 bn would be 2% of that budget.

2%!

Fact: 70% of our immune system is in the gut (intestines). When we eat added sugars, the bacteria in our gut (microbiota) don't get fed properly and end up eating the lining of our intestines (leaky gut syndrome).

My hypothesis: this hammers your immune system. Someone agrees:

"As an allergist and immunologist...when it comes to our immune system, what we eat matters a lot. And no ingredient is more detrimental to your immune health than sugar, especially during Covid."

cnbc.com/2022/01/15/thi…

This document by the DOE's Office of Nuclear Energy has some great goals. My only questions are: why not MORE and FASTER? Here are the goals:

Imagine if the entire state of California, rather than shutting down nuclear, built a few more plants. It would have enough power to end blackouts and desalinate water to end droughts.

https://twitter.com/karanbhangui/status/1480917003737120770

Nuclear is the safest and cleanest form of energy

Our nuclear regulator:
- 2,868 employees
- $863m budget
- 47 years in operation
- LICENSE APPROVALS: ZERO

https://twitter.com/elidourado/status/1445792188072402946

They approved a *design* for a small modular nuclear reactor, and bragged it "only" took 42 months!

It required a 12,000 page application and 2 MILLION pages of "additional documents."

Simple back of the envelope valuation on $SQ near-term:

Net revenues this year should be around $8-9 bn. By 2025 we should see ~$16.5 bn.

Operating margins at scale should approach 40%; let's assume 34%.

Diluted shares ~632m by then (incl. AfterPay dilution)

... Business should still be growing fast at that point and will likely trade at a V/MA multiple, say 30x earnings.

EPS ~7 per share, $223 stock price, 16% IRR from here.

Note that if you go further, IRR tends to increase.

Second note: When Sarah Friar was CFO, guidance was...

If this had happened 2,500 years ago the visualization would be a huge army waving an Apple flag storming the Facebook citadel, destroying its walls, pillaging the city... in just two quarters, Apple has gone from a non-entity to having targeting superior to Facebook's 🤯 Back in March, Zuck theorized that $FB might even end up in a stronger position after Apple's iOS 14 changes.

https://twitter.com/MarceloPLima/status/1372660540481409029?s=20

Cardano just announced a strategic partnership with DISH. I'm watching it but I can't figure out what this does for either company. Does anyone know? Chris Ergen talks about identity and social security cards. I agree these should be on-chain. But where does DISH/Boost come into this?

Here's the announcement: