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baufinanciaphaster 👹 Profile picture
baufinanciaphaster 👹
@bauhiniacapital
残り物には福がある. Trafiquant de l’ésotérique. International Man of Mycterism. Usually couth, sometimes kempt, often gruntled. ‘bau’ at bsky place.
11 subscribers
Feb 17 • 13 tweets • 3 min read
Kids, don't do this at home. Chart crime doesn't pay.

1) Don't do TotRtn of *yield* on 10yr vs other 10yr, calling it "related to cross-currency swap" when one yield is 8x the other at the start 🤷‍♂️
2) IF "JPY carry trade leverage" (i.e. "funding"?) is getting more expensive and Image you happen to be short JGB 10yr vs UST10, you are making not losing money. You couldn't possibly tell it from the 2yr chart above but assuming GC borrow, the now 8yr JGB you shorted 2yrs ago is ~92.5 and your now 8yr UST long is 96.50-ish. You've made 7.0-7.5% in carry, 4% on the
Feb 16 • 28 tweets • 6 min read
I'll admit I am not sure what @riteshmjn's (or Luke's) "second derivative" is here.

I will, however, point out that if the USG suddenly stops paying X% of GDP into the economy, it does not mean the US GDP is instantly and permanently downsized X%. We can look at it from a different perspective - one easier to think about.

The USG fires one person. USG spending goes down by the salary and other related payroll items of that one person. GDP goes down, ceteris paribus by the total reduction of spending of that person?

No.
Feb 14 • 12 tweets • 6 min read
The Wall of Shame: A 🧵

Scott Bessent: "The U.S. has a strong dollar policy, but because we have a strong dollar policy, it doesn't mean that other countries get to have a weak currency policy."

reuters.com/markets/us-loo… Hike input costs by $1trln, and consumption stays the same. Trump gets $1trln of tariff revenue.

And as Scott Bessent told us, there's no inflation because consumption/prices of other goods (the non-imported US-produced ones) go down. Image
Image
Jan 4 • 26 tweets • 6 min read
An interesting thread by @Geo_papic . Worth reading.

I found the @Stevemiran piece odd. Weirdly judgmental. And at odds with its own arguments.

Some of the cognitive dissonance within is just Trump-following.

Trump wants a weaker dollar, and lower trade deficit, but also wants foreign countries (which will be "taxed" and "paying" tariffs) to maintain their pace of using the USD as a reserve ccy.

This doesn't make a lot of sense. One cannot have foreign countries "profiting less" but then reinvesting the same USD amount.

The Trump concept is
Dec 15, 2024 • 40 tweets • 7 min read
Some MORE comments about index construction.

1) Generically speaking, there are VERY few large US stocks which issue large amounts of new equity in order to buy something. It happens from time to time, but it is reasonably rare.

When a company like MSTR issues new shares to buy BTC, it gets a little complicated. The MSTR issuance was not a large block. It was an at-the-money offering which means the brokers doing the offering sell shares bit by bit in the market. At a certain point, the share count of newly issued shares will become 10% of TSO.
Dec 15, 2024 • 36 tweets • 7 min read
Some comments on index construction.

Whenever I discuss index construction, there are a few tautologies and a few misconceptions which arise.

When a stock like MSTR or SMCI or TSLA go into a big index, lots of people comment. It's worthwhile going through the mechanics. To start with NASDAQ said on Friday that PLTR, MSTR, and AXON will go into the NASDAQ 100 as of the open of Monday 23 Dec, replacing SMCI, MRNA, and ILMN.

That means there's buying and selling to do on 20 Dec at the close.

.nasdaq.com/articles/nasda…
Oct 27, 2024 • 7 tweets • 2 min read
Japan polls are closed.
The LDP has really shot itself in the foot. The election that didn't need to be.

Turnout appears lower than 2021, so the story is *probably* centre voters who tilted LDP last time now defecting to centre-left - the old DPJ.

I don't think we can predict what the coalition will look like. Whatever it is, I bet it will not last a year.

If LDP+Komeito+2-3 others can create something, this will be market-neutral-ish but perhaps tilts yen weaker.

If CDP forms a coalition tilting slightly more centre,
Apr 30, 2024 • 8 tweets • 2 min read
Yowza. Looks like Japan's intervention was larger than I thought it was.

Am guessing ¥5.5-6.0trln based on the Forecast BOJ Current Account Changes "Financial Factors" change for May 1.

That's $35-38bn. I'd expect they'd be "comfortable" selling twice that again, without problem. If Korea and US joined in, one could expect another $50-100bn total selling as well.

As previously noted, this fiscal year (ending 31Mar25) is also the year of the quinquennial policy mix review.
Apr 26, 2024 • 23 tweets • 5 min read
A couple of points on USDJPY:

1) The MOF (officially, the Vice Minister of Finance for international Affairs) is the one who decides. The BOJ is the execution desk, not the decision-maker.

2) Gov Ueda can guide policy to react to market conditions if necessary, but will not be a/the deciding factor on yen intervention

3) The MOF is sitting on big gains from the intervention in the 2010-2012 period. What they sold in Sep 2022 and what they would be selling now would likely be (as far as the bureaucratic memory is concerned) "taking profits" rather
Mar 22, 2024 • 17 tweets • 4 min read
I've been trying to get my head around this shocker because it opens a couple of weird cans of worms.

First, US$78bn of inflated revenues was something like 53% of reported revenues in 2019-2020. If those were false, then 2018 has to be in question (2019 gain was only +2.4%yoy but 2018 was +49.9% vs previous year, and that is not in question?

The other part here is that PwC's onshore entity was the one auditing the books of the onshore Hengda entity. To screw up that amount of revenue across 1,000+ project companies meant that the audits of an
Mar 16, 2024 • 8 tweets • 2 min read
The CSRC admonition to companies to pay higher dividends and/or buy back stock became really visible in English when China Telecom and China Mobile listed A-Shares and in their prospectuses they had nearly identical sections and clauses about returning capital to shareholders and how their company, in different stages of its corporate lifecycle, would be expected to have a payout ratio of X, Y, or Z. That was academic for them because they were in Z meaning much higher div payout ratio to come, but key was that the language was identical
Mar 11, 2024 • 10 tweets • 3 min read
Reading that Memo which is "NOT the official Prospectus or OM and shouldn’t be relied upon as official material for the upcoming macro fund"...

30-40 trades a year, half making money, half losing money, 15% fund target return at 10-12% annualised vol because either the ex-ante trade distribution is truncated (there's a chart) because of great trade identification and top-notch portfolio construction OR ex-post because portfolio management and trading is top-notch.

Assuming each trade lasts 3-6mos = one has 7-20 trades on at any given time.
Feb 10, 2024 • 18 tweets • 5 min read
Nope.

"International bondholders just got wiped out for the benefit of domestic creditors - CCP policy!"

WRONG

"The lesson: Apportioning losses between domestic creditors and foreign creditors will be political, ie. domestic creditors outrank international creditors.

WRONG This is not new. It has been known by any foreign bondholder who bought the bonds in the last decade. The bond offerings often provided org charts. There's one in the thread below.

Feb 6, 2024 • 4 tweets • 1 min read
As a brief reminder... The Three Red Lines, which caused a flutter of excitement when Bloomberg revealed a letter from Evergrande to the GD govt threatening potential default was...

[checks notes]

...42 months ago. 3RL MOHURD/PBOC seminar: 20 Aug 2020.
EG letter to GD: 24 Aug.
3RL in the news 2-3 days later.
Endgame pretty clear 1mo later.

1 year after that, 3 different Odd Lots guests had opined on the future.

Fast forward another 2.5yrs... Alf is on it.

bloomberg.com/news/articles/…
Jan 13, 2024 • 28 tweets • 7 min read
In the late 90s, then again after the GFC when traditional investments had gotten smoked, many investors (Harvard, TIAA, numerous sovereign pension funds) decided to invest in alternative assets.

Famously, US timberland investments had performed well for decades prior to 2008/2009, largely because of a long housing boom. Boston-based GMO and the Yale endowment had famously been invested.

Harvard started investing in non-traditional "resources" investments late 90s (well pre-GFC) on the suggestion of Jane Mendillo, who later became CEO of HMC
Oct 4, 2023 • 35 tweets • 9 min read
Some details about Japan, the BOJ, the spread trade, and why and whether it may collapse.

A 🧵 First off, why do we care so much about Japan and the BOJ?

After all, the BOJ owns a tiny amt of US Treasuries. And zero US equities.

BOJ foreign assets in USD terms are ~ unchanged in 5yrs. The chart is TIC data - mostly MOF FX reserves.

Total J holdings are FAR bigger. Image
Aug 23, 2023 • 32 tweets • 8 min read
It is strange how people bent on a certain bias can read almost anything the way they want.

@michaelxpettis had a great short thread commenting on a bizarre quote indeed.

Someone tweeted(!) a sarcastic response to Michael's thread. And then Mr I've Gotta Hammer So That's A Nail (IGAHSTAN) pointed out Pettis' essential argument about gold.

Which, of course, Michael Pettis doesn't make. He doesn't refer to it once. The article doesn't either. Image
May 10, 2023 • 16 tweets • 3 min read
A striking thing happening in Japan this earnings season is in the progress updates to the mid-term management plans. Usually, in MTMPs, there is a "shareholder return policy" which returns capital to shareholders through divs and opportunistic buybacks with some buybacks signalled in advance, and some buybacks indicated with "if we have the cash."

Rarely do companies actually change their MTMP mid-plan.

But this year, it's happening more.

Some of it is activism, and some of it is based on the recent TSE Council of Experts recommendations to
Jan 17, 2023 • 22 tweets • 4 min read
For those thinking about the BOJ policy meeting tomorrow. A little depth will be worthwhile.

Everyone knows Kuroda-san is on his way out. His term ends 8 April. USUALLY, the govt releases its "nomination" in February and then the candidate goes in front of the Diet for confirmation hearings. The top three candidates mooted to replace him are AMAMIYA, NAKASO, and YAMAGUCHI. They are not the same. And that is, to my mind, crucial.

The KISHIDA administration is on a slight approval ratings bump vs Jan lows but that approval rating has fallen
Nov 24, 2022 • 31 tweets • 8 min read
Dear @BillAckman, I'm gonna QT this b/c you don't really reply to people (2x in past 12mos AFAICT) but you QT a lot, and you have responded to one QT in 18mos. You don't seem to interact much but use twitter as a bullhorn. Your loss.

My, I hope thoughtful, replies follow:
1/n 1) "This is a very thoughtful piece." You agree. You have a position.

"The peg no longer makes sense for Hong Kong and it is only a matter of time before it breaks."

The presentation of YOUR argument is Richard Cookson's opinion piece.

Now.
Nov 22, 2022 • 15 tweets • 4 min read
Because it's "indie research", a 🧵.

This is fascinating news and there are some interesting read-between-the-lines aspects. I don't quite agree with @RobinWigg's take.

First, Bernstein is a broker. It is not fully independent research. They have salesppl, earn comms, execute. SG cash equities is also a broker. They have... much less research, less equity sales 'talent' generally, but some derivs- and access-adjacent cash equities flow.

They will form a JV under Bernstein's brand.
SG injects its cash equities business.

societegenerale.com/en/news/press-…