In this episode of the VALUE: After Hours Podcast, Kyla Scanlon, Bill Brewster, and Tobias Carlisle chat about:
- Value Investing In The Commodity Space
- What’s Causing The Wheat Crisis?
- Xiang Guangda’s Wrong-Way Bet on Nickel Futures Broke The Exchange
- 50% Moves In Chinese Stocks
- Calling The Bottom
- Berkshire’s Acquisition of Allegheny
- Homebuilders Are Cheap
- Warren Buffett Still Buying Occidental Petroleum
- The Market Has Already Figured Out The Future
- Jerome Powell’s Options From Here
- Economic Inequality Out Of Control
- Bloomberg Op-Ed Slammed – Eat Lentils and Let Your Pets Die of Cancer!
- Has The Dot Plot Ever Predicted Anything?
- There’s No Incentive To Hold Inventory
- The 10-Year Is Ripping
- Opportunities In Open Interest Options
- Oil Goes Into Everything
- Pressure On Supply Chains. Agriculture & Commodities
- Flat Yield Curve
- Consumers Are Just Unhappy
- You’re More Likely To Invest If You Meet With The CEO
You can find out more about the VALUE: After Hours Podcast here – VALUE: After Hours Podcast. You can also listen to the podcast on your favorite podcast platforms here:
Tobias: And we are live. It is Value: After Hours. It’s 10:30 AM on the West Coast, it’s 1:30 PM on the East Coast, all the changes to daylight saving and so on. I’ve got no idea where it is globally. I’m joined as always by Bill Brewster.
Tobias: Our special guest, today. Kyla Scanlon. How are you, Kyla?
Kyla: Hey, I’m good. Thanks for having me on.
Tobias: You are a macro specialist. We’re value guys who’ve been talking macro all the way over our skis. So, we’ve got a laundry list of stuff that we want to talk to you about and hopefully, you can help us to that.
Kyla: I’ll try my best.
Bill: Good luck.
Kyla: No promises. [laughs]
Tobias: Where are you based?
Kyla: I’m in Denver right now. Yeah, Denver, Colorado.
Tobias: Very cool. What’s happening in Denver?
Kyla: A lot of stuff. It’s not snowing. Apparently, mushrooms are legalized here.[laughter]
Kyla: So, a lot of stuff that I don’t know about. Yes.
Bill: This is what you learn when you talk to me pre-show.
Tobias: What about you, Billy? What’s happening in Florida?
You’re More Likely To Invest If You Meet With The CEO
Bill: Ah, not much. Friday, I drove around, visited some small caps. That was fun. Got my energy going. I need to do that more. I enjoy that part of life. Good things happen when you get out and talk to people.
Tobias: Do you find when you meet with them, you’re more likely to invest with them than you would otherwise be?
Bill: I don’t know. Maybe. I don’t know.
Tobias: Because I have this theory that everybody who gets to become CEO or C-suite is super charismatic. When you meet them, you just happen to like them, because they’re great salespeople for the most part. Then, you become more inclined to invest you. So, you can’t switch off how much you like them.
Bill: I don’t know. How many microcap CEOs have you talked to?
Tobias: Yeah, that’s a fair point.
Bill: [laughs] I don’t know that it’s the cream of the crop when it comes to political game. Yeah, I guess, I probably bought Berkshire for the first time, because I like Warren and Charlie.
Tobias: Did you meet them just for–? [crosstalk]
Bill: No, but just hearing them.
Tobias: That’s fair enough. How would you otherwise make the decision?
Bill: I guess, you could sit there and read. But that’s my version of hell. I’m not capable of just not meeting people.
Calling The Bottom
Tobias: Now, we’ve got Kyla here. There’s so much crazy stuff. Kyla, your background is in macro, but your– I was saying to Kyla before we started that I see more of Kyla on Instagram than I do on Twitter. My Instagram feed is almost entirely kettlebells, UFC, and dudes eating raw meat. So, algorithm has selected for that.
Kyla: [laughs] I don’t know. That makes no sense.
Bill: I need to follow you.
Tobias: I find it a little jarring funnily enough that it comes in like that.
Tobias: This has been a wild-wild week though. I think we tweeted something saying this is the craziest macro environment backdrop that certainly I’ve probably encountered in my short– [crosstalk]
Bill: I call the bottom. I keep my Ackman moment when I cried on Value: After Hours. Now, pretty much bottom tick-tick.
Tobias: Did you call.
Bill: No. Hell no. I didn’t call it.
Bill: I was scared, and crying, and that happened to be the bottom.
Tobias: Yeah, a lot of people have pointed out that how super Bearish Podcast last week was the bottom and I think we’re up 10% or something since then. Well done to all of us again.
Bill: No, you’re all welcome.
The 10-Year Is Ripping
Tobias: I think one of the things that really stood out to me over this last week, the 10-year has exploded again. The 10-year’s ripping up. Kyla, what’s going on? Why is that happening?[laughter]
Tobias: Easy one. Just easy one to start off. Just to ease you in.
Kyla: Yeah, it’s mostly, probably the Fed and just trying to figure out what the Fed is doing. They rose rates by 25 basis points and then Jerome Powell spoke in front of NABE yesterday, and came off a little bit more hawkish, and just basically like, “Yeah, we could probably do 50 basis points, maybe sometime soon.” So, the market was like, “Oh, wow, that’s super wild, dude.” I think that’s what the market is trying to digest right now is what does a really hawkish fed look like and can the Fed actually do what they think they can do without cratering the economy? So, I think that’s what it’s a little worried about, potentially.
Bill: Do you have that answer for us?
Kyla: Do I have the answer of the crater [laughs].
Bill: Yes, that would be nice if you could tell us.
Pressure On Supply Chains. Agriculture & Commodities
Kyla: I’m not sure, because Jerome Powell, he said yesterday that he doesn’t think a recession could come anytime soon, next year, he said. I don’t know. It’s concerning because there’re just so many things going wrong that it’s hard to imagine that there wouldn’t be a recession. But the labor market is still relatively strong, and they seem to think that they can ease back the labor market and make it a little bit more manageable. So, slow down wage inflation, make it so more people, go back into the labor force, and ease some of the labor pressure. But I just think there’s so much pressure from supply chains, and just agriculture, and commodities, and I just don’t know how that all plays into the broader economy.
Tobias: One of the indicators that I check in on every now and again. Cam Harvey did this research, where he said, 10-year and I think it’s 10-year and three-month inversion is the yield curve inversion typically indicates or it has since 1960 something has been a precursor to a recession. I have the 10-2 from the– Is that the Fred site or whatever it is that–
Tobias: The Feds, the Feds.
Tobias: Fred. So, Fred, thank you. So, the Fred’s– The 10-3 is nowhere near inverting. It’s rocketing away. I’ve seen this in Twitter, in the media repeatedly that they’re looking at all these or quite a few of the other points on the curve does seem to have inverted a little bit.
The 10-2 seems to be the one that gets quoted most often and that looks like it is getting pretty close to invading. That’s also been a reasonable predictability. It wasn’t Cam Harvey’s original formulation. That was 10-3. Do you have any view? How’re we going to invert, is inversion– does that going to lead to a recession? What’s happening?
Kyla: Yeah, I think it had to be inverted for 90 days to be recession. Is that right?
Tobias: Is that the call. That’s probably right. I forget the exact detail, but yeah.
Flat Yield Curve
Kyla: I think that if that’s the correct paper, I think that was the exact statistic. But yeah, I think that broadly the yield curve is just flat. It’s just pretty flat going into a tightening Fed. It doesn’t give them a lot of room to mess around, I guess. I think that it’ll depend on how the market sees stuff and how they think the Fed is going to move forward. But yeah, they just don’t have a lot of room to make a mistake.
Tobias: Francisco Scaramanga says, “the 10-3 spread is not near the papers list of probabilities right now. Yeah, that’s what I observed, too. It was really, really wide. But it seems to be that there’s quite a lot of discussion of it. I think it’s largely driven by the 10-2, but that 10-2 is not the– It’s funny that becomes the–
Tobias: Yeah, somebody said that– Dylan Thomas says, “the inverted yield curve called COVID. Yeah, I agree. I saw that, too. We were talking about that a little bit beforehand.
Kyla: Yeah. I’m not sure, but I think that’s definitely been a big data point is like, “Oh, the yield curve inverts and then there’s a recession.” When a recession happens, the Fed has to usually cut rates. So, I’m not sure.
Tobias: Where do they cut from [laughs]?
Kyla: It’s part of the problem.
Kyla: They don’t have any room.
Consumers Are Just Unhappy
Bill: I guess consumer confidence has come down a little. Well, I guess, a fair amount since the peak, but I don’t know. Housing starts strong, spending strong, I guess, rate of change is what people look at, but it’s tough. It’s tough to figure, because the consumers, at least, appear to be in really good shape but how much of that inflation eats off, I don’t know.
Kyla: Yeah, I think the consumer is just unhappy. Housing starts might be going up, but getting a house is seemingly near impossible if you look at some testimonials on Twitter and then I think that people just are seeing inflation in the news. There is a good paper by a former member of the Fed, who basically wrote that inflation expectations are a core driver of inflation. People see inflation more, they’re going to start pricing, but into their personal economic model, and then it shows up more, and it’s that feedback loop. So, I think that there’s a lot to worry about that.
Bill: Yeah, a lot of the oil guys like to point out that the last time oil hit, what was it? It was like 140 in 2014. Is that what it was? They’re like, “If you adjust that for inflation, we could see 180 to 200 here.”
Tobias: It’s got to go over 180 or 200 to rival at 140 in whatever that was.
Bill: Yeah, I think it was 2014-2015.
Tobias: I don’t know all that much has changed from when we discussed this last week. It seems to be that it is all pretty bearish stuff is out there other than probably those consumer sentiment ideas.
Bill: No, I guess, I’m sorry. It looks like 140 was 2008-ish, around June 30th of 2008. And then 100 was in 2014, if my data is accurate.
Tobias: The equivalent today is over 200, right?
Bill: Yeah, that’s what they say. So, I don’t know.
Oil Goes Into Everything
Kyla: Yeah, oil is concerning, too. Because that goes into everything. It’s not just gasoline for the cars. It’s in products, it’s in pens, it’s in coffee mugs. Oil makes so many different things and there’s been a lot of people calling for 200. I think that there’s room for spare capacity for OPEC isn’t that bad, but I just wonder if we’re going to be able to make up the loss from Russia, that seems to be a big debate point as well, yeah.
Bill: That was when I was crying last week. That was what I was very concerned about.
Kyla: Oh, really?
Bill: I wasn’t actually crying, but I was fairly close. But I think that that’s true among a lot of commodities and I don’t know. You just see bombing of schools, I don’t know. The idea that even if there is some peace treaty that we’re just going to like say, “Okay, well, all is well that ends well or whatever.” It’s not and you’ve got like– I don’t know. The commodity complex seems really, really messed up to me and I’ve just never seen that before.
Kyla: Yeah, very fragile.
There’s No Incentive To Hold Inventory
Tobias: It’s been weird few years, because we’ve had two years of supply chain issues, because people can’t work or all of the ships of the containers are full, the ships are full. Now, we’ve got actual supply. The supply has just been cut off for a lot of things. Understandably, that would lead to some inflation, right? This is why I do think it’s a difficult macro backdrop just to figure out what’s going on, because contrast that with those consumer readings like that, this seems to be very happy and yeah here we are. It’s a scary-looking backdrop.
Bill: Yeah, I was talking to my buddy, who is in– He works for a gas blender, and he’s in charge of the Northeast, and he’s been saying gasoline is going to go higher for a while. He didn’t think it would explode higher, the war kind of accelerated what he was saying. But he said the other thing that’s happened is because the curve is in backwardation, I guess, what is it? Backward dated? I think that’s how you say it.
He’s like, “There’s just no incentive to hold inventory.” Everything that you have you’re selling it. There’s no inventory in the system right now, except he made a shit ton last week, because somebody called him up and they were like, “Do you want to buy whatever–.” I think it was in some pipeline or whatever and he said, “Who are the sellers?” As soon as he heard, he said, “Give me everything they’ve got,” because he realized they were getting liquidated on their hedge losses.
Kyla: Oh, wow.
Bill: Yeah. He had probably the best week of his career last week, because he was just buying forced liquidation.
Tobias: He’s a gasoline blender. So, he’s not a trader. He’s just buying it as an input.
Opportunities In Open Interest Options
Bill: Yeah. His background is as a trader, he was trying to explain to me, he knew that something funky would happen, because he was watching the open interest in the front month contract and the open interest in the back month– or in the next contract or way off, and I forget what he told me. I need to have him write it down and teach me how this stuff works. But he looks at open interest all the time. But yes, what he does today, the reason he has the view he has is he traded in New York for a long time and then he moved to come back to work with it’s like a family company, and they have a lot of storage facilities, and then they blend, and they send finished product.
Tobias: Like a cocktail mixer at the bar?
Bill: Pretty much, yeah. The only thing that I know is, he told me he thinks Valero. He was like, “If I’m ever on the other side of them, I’m terrified because they are very, very good at what they do.”
Tobias: Still don’t make much money.
Tobias: It’s always cheap– [crosstalk]
Bill: Not an easy game.
Tobias: That’s not an easy game. With Russia having all of the sanctions on it, is all of this money flooding into crypto?
Kyla: That’s been a narrative, I think, that some politicians have developed is that, Russia like broadly Russia the entity government will use crypto to evade sanctions, but there’s no evidence of that happening. I think individual Russian people, Ukrainian people, too, are using crypto, because their currencies are all over the place. But broadly, Russia is not using crypto to evade sanctions.
Bill: That’s countered a narrative, Kyla. Come on.
Bill: Using facts.
Kyla: [laughs] It’s interesting, because it’s a spinout of trying to regulate it, I think and trying to regulate it in a bad way, potentially. Yeah. The narratives are interesting around all of this stuff. What people will say like, especially how are you just talking about gasoline, like on TikTok, there’s a bunch of different videos talking about, “Oh, gasoline.”
People are like, “The gas stations are price gouging and that big oil companies can make more profits,” and there’s just such a big gap between understanding how the system actually operates. It’s not just price gouging. It’s a little bit more than that. It’s how they are able to secure contracts. I guess, whatever, your buddy did, I don’t quite understand it. Then with crypto, yeah, just saying these things that don’t quite make sense, but if it’s a broader thematic that people are trying to squish it into.
Value Investing In The Commodity Space
Bill: What he did was, if you’re producing corn or whatever, well, I guess, corn is not a great example. But oil, you can hedge it in the future, but you have the bank extend your credit facility to allow you to do that hedge, because you’re losing on your hedge and then you’re going to deliver physical in the future. So, it doesn’t actually matter, but you have a paper loss in the interim. What happened when the commodities ran like they did was people’s banks or whoever the lender was like, “We don’t actually want this much counterparty risk.” They called– or they didn’t extend further credit. It put some people into a forced liquidation scenario. He was the one that bought it. Value investing in the commodity space.
Tobias: One of my first jobs as a lawyer was suing on [unintelligible [00:17:34] agreements and it was suing on these tripartite agreements or not tripartite. They had interest rate currency and then whatever the underlying commodity that was not uncommon for them to sell them. Then if the person can’t make good, then you sue him the contract. We’re the ones who executed, we’re the ones who actually did the suing.
Bill: You were a suer.
Tobias: Well, that’s the job.[laughter]
Bill: How many of those did you collect on?
Bill: Yeah. Your credit risk sucks.
Tobias: That said, yeah, you just brought it off, but you got to come up with some– There’s got to be some events, so you can close off the contract.
Bill: Hmm. So, you have to sue in order to close out the contract?
Tobias: Well, you’ve got a contract, and you got to terminate the contract, and then you got to find a way to collect, you never get it. I didn’t ever see it. I only did it for a few years and I don’t know how many we processed in that period like 50 or something, none of them collected.
Bill: Yeah. People must love talking to you about their legal bills.
Tobias: I didn’t do any talking. Yeah, well, they’re all big commodity or they’re all investment banks. They’re agricultural investment banks. They got plenty of money.
Bill: Yeah. It doesn’t mean they like the legal bills, though.
Tobias: Ah, they weren’t that bad. Relative to what they were making, I’m sure they’re happy with it.
Bill: Yeah, that’s fair.
What’s Causing The Wheat Crisis?
Tobias: One of the people that I worked for was the Grain Board. Let’s talk about wheat.
Bill: All right.
Tobias: What’s going on?
Bill: I have no idea. My assumption on everything is there’s a huge shortage of everything.
Kyla: Yeah. Russia and Ukraine produce a lot of wheat and that’s just not there. There’s a drought in China that really interrupted the planting season. There’s just all these both natural and geopolitical events that are disrupting the agricultural flows. But wheat is, I think it’s up a huge amount like 43% year to date, something just absurd. I was reading something, where there’s this– I think he owns a bakery, and he’s very worried about securing his wheat. Yeah, input– [crosstalk]
Bill: Everything is really fucked. That’s the technical term. The contract size is 5,000 bushels. So, that’s what we’re quoting here.
Tobias: How much is a bushel? No one knows. It’s just 5,000 bushels. [laughs]
Bill: No, it’s a bushel, man.
Tobias: Yeah, it’s a well-made unit.
Bill: From 2019 through 2020, it was below 600 bucks the entire time. I don’t know what volume weighted, but it looks right around 550. Today, it’s 11– Yeah, 1,120. So, double. It really started to ramp when Russia-Ukraine popped off. But it was higher. It was up at 775 before it went parabolic.
Tobias: It’s hurt a few. It’s hurt the consumers of grain rights. Domino’s Pizza has been beaten up, because it’s big grain consumer. I saw that some Domino’s like head franchisee in one of the countries was worried about where he’s going to get this grain. That might have been Australia or not entirely sure.
Bill: Yeah, it’s bizarre. I did hear that anecdata that so far, the fast-food chains have been able to push through a lot of cost increases and it has not impacted velocity.
Tobias: I’m glad it’s not going to impact the bottom line, I’d much rather that the end consumer pay for that. [laughs]
Bill: Well, that’ll– [crosstalk]
Tobias: There’s that inflation.
Bill: Well, this is what I was saying yesterday or last week, it’s everything. Like Kyla said, it’s all your inputs with oil, it’s your food. I just don’t know what that looks like because I’ve never seen that.
Tobias: It’s coming apart at the seams. There’s a lot of holes in the dike. There’s a lot of leaks in this thing and wheat prices are just one of them. When you’re chatting beforehand, Kyla, what’s the fertilizer issue with wheat?
Kyla: If you think about wheat, corn, etc., all the agricultural products, I’m sure you all know this, but fertilizer is an input to that, and then natural gas is an input to fertilizer. So, you’ve had European consumers pull or– producers pull back on fertilizer, because natural gas has been so expensive. Then Russia is a huge producer of fertilizer, Belarus is a huge producer of fertilizer.
A lot of farmers are not getting their fertilizer. I think one guy, he grows corn, and he’s not getting his fertilizer on time, and that’s going to cut his yield in half. That’s also concerning is that, things are already super high and that’s it. I feel we’re being super grouchy about all of this right now, but that’s also worrying is that, the planting season isn’t even showing up in the prices right now, and the lack of fertilizer to grow everything.
The Market Has Already Figured Out The Future
Bill: Yeah, typically, markets don’t bottom on this kind of news. Typically, this is the wall of worry. I think that’s what people would say and then the other thing is, it’s more important to think about what the world looks like in 18 months or even 36 months, because today’s headlines were priced in before. That said, this feels weird.
Tobias: What I have observed looking at, I’m an equity guy, so looking at equity price crashes in the past is often the stock market figures out that the worst has gone by before any of the fundamental data shows up. It’s not March 2009. It wasn’t there are a whole lot of really good prints that came through.
That was the thing that caused the market to rally. The market just took off like a rocket. Then we started seeing the prints for companies doing a little bit better than that they had bottomed. Is the same thing going on here? We’re just looking at trailing data’s stitching a narrative together to it and the market has already figured it out, it’s all solved, we already live in the future.
Bill: Kyla, you want to take a stab at that?
Kyla: I don’t know.[laughter]
Kyla: I’ve only been an adult for the pandemic. Well, that’s not true. I’ve been an adult in the world. When I graduated college, the pandemic literally happened six months later. I’ve only existed in this really weird market environment. In terms of how the market thinks about stuff, I feel the market is not that smart, but I know that’s counterintuitive to what everybody seems to think about it.
Tech rallying on Jerome Powell saying that he was going to raise rates during his presser, that just didn’t make a whole lot of sense to me. I feel the market is seeing some stuff that maybe like, we’re not and I know that some of the banks have come out and been like, “Oh, earnings are going to be awesome for some of these companies, because all they have to do is pass this cost off right to the consumers.” So, perhaps, yeah, that wasn’t a great answer, but maybe.
Bill: Yeah, I think that hypergrowth, I’ve been trying to think about this a lot, because I’m trying to think about whether or not I want to take exposure, and then if I do, how to do it. I think the answer, if I do is through an ETF, because I’m clearly not the person that can generate alpha there. But I do think that, look, valuations have come down a lot, and if it is true that they can raise rates and the economy can absorb that, then I think it’s a plausible case to argue that growth in 24 months from here looks pretty darn good. That’s what I’ve always been taught and read that’s how the market thinks about stuff. It is not what’s going on today, it’s what’s happening at least 18 months from today.
Economic Inequality Out Of Control
Tobias: What if we have a famine underneath and luxury real estate at all-time highs on the top? What does that say about society?
Kyla: I think it would make sense.
Kyla: I think wealth disparity has gotten really bad and that’s part of the worry with the fertilizer in the food production is that, the US doesn’t import that much from Russia, Ukraine. Definitely, still a lot, but not nearly as much as Africa.
Kyla: I think there’s a lot of risk with that. But then you have people, who are able– There was a tweet the other day that said that and I don’t really agree with it. But they said, “inflation is a tax on the financially illiterate,” which I thought was a really mean way to say it. But if you’re able to have a luxury home, you’re probably going to have some hedge against rising food prices. So, yeah.
Tobias: If you own a lot of assets, you probably don’t care that much about inflation. Because it’s not your assets are just repriced higher. But if you have to keep on buying stuff, then higher prices every time you go to buy stuff, particularly, if you’re on a salary or a wage that you have to go and negotiate that at once every now and again or we may not be in a position where you can negotiate it, you’re always lagging behind. Your purchasing power has always been whittled away. That’s always going on. It’s just that becomes, it’s much more obvious in times like this.
JT and I often, complaining about the Fed. I’m not a huge fan of all of the money printing that the Fed does for exactly this reason, and I think it leads on to some other bad things in the economy, too, and some other. I think it’s how we fund wars really. If you take away that power, then you largely take away the ability to wage this constant warfare all the time. But that might be not be cheery enough for this podcast. So, [crosstalk] I’ll keep going.
Bill: What if? Let’s play some devil’s advocate here. What if the wages get increased to offset inflation and then supply chain ends up getting fixed over time, prices come down, and now wages have gone up and that sticks? That’s a potentially cheery scenario.
Tobias: That’d be ideal. Hopefully, we’re looking at the worst-case scenario now where it just slowly improves from here.
Bill: Yeah. I do worry a lot for Third World and developing countries. I think that the headlines are going to be really ugly over the next 12 months.
Tobias: It creates a lot of political instability. There’s been talk of that Arab Spring, too. There’s been a few of those.
Bill: People aren’t going to be able to eat. It’s horrible.
Kyla: Yeah. It’s interesting, too. Europe is now essentially better in the energy markets. Europe and Asia, and then emerging markets, economies skip it out, because Pakistan has not been able to get diesel, because they just can’t keep up with other bids to a certain extent. So, that stuff happens to where it’s just skewed.
Bloomberg Op-Ed Slammed – Eat Lentils and Let Your Pets Die of Cancer!
Tobias: What they need is substitutions. Bloomberg could give them some advice. Evidently, you can eat lentils instead of eating meat.
Kyla: Oh, gosh, yeah. Uh-huh, that article was really something. It was so tone deaf. [giggles] Yeah, the first sentence, I’m not sure why they thought that was a good idea to publish.
Bill: I didn’t read the article, but I read the takes of the article-
Bill: -and I found the takes, very funny.
Kyla: Yeah. It was– [crosstalk]
Bill: Why were people saying, “Kill your dog?” Did Bloomberg actually say, “Get rid of your pets?”
Kyla: They said that chemotherapy for your dog is ineffective. You should think about not doing that.
Tobias: Well, chemotherapy for the dog?
Tobias: I thought they were saying, keep the animals around, so he gets to eat when it gets really bad.
Bill: Oh, that would be so sad.
Kyla: Yeah. It was a lot of stuff about lentils, and then the dog thing, gasoline, so, thinking about that. Then they also said don’t buy in bulk, which was interesting.
Tobias: Oh, it’s not.
Bill: I wasn’t sure, because that’s the first thing. That’s what literally Costco’s business model was. Buy in bulk and save money.
Tobias: Because it’s holding?
Bill: That was one of the things that I was thinking. Maybe they’re thinking that like if everybody buys in bulk, we create a run.
Kyla: Like toilet paper, Saga 2.0 from the pandemic.
Bill: Why do people do that?
Tobias: You don’t want to go with that toilet paper, mate? It could be very– [crosstalk]
Bill: I guess, but when COVID was popping off, there was this woman that had two huge things of toilet paper.
Tobias: [crosstalk] enough.
Bill: At that time, we were only supposed to be locked down for two to three weeks. How much pooping is she doing?
Tobias: Well, she was smart, because she foresaw that it was going to go on for a lot longer than that.
Kyla: Two years, yeah.
Bill: That was longer than two weeks.
Tobias: She’s got her pile of toilet rolls in almost down to the bottom. So, she can come back out of the bunker now.
Kyla: and Bill: Yeah.
Bill: I wonder if [crosstalk] restoring.
Tobias: She’s like Will Smith in that, whatever it is that, the zombie movie. She’s come back out, she’s the only one alive, and she’s still got toilet paper.
Kyla: That would be such a terrible world. Yeah.
Bill: I was pretty mad at her. I had not stocked up on toilet paper at that time.
Tobias: I saw a lot of people were returning their toilet paper when it turned out that it wasn’t going to be that bad.
Bill: No, no, no, you can’t do that. It’s not okay.
Tobias: Yeah. Not used, obviously. It just taking back–
Bill: I understand that. I understand that. But if I was store owner, I’d be like, “You’re not returning toilet paper to me. No way.”
Tobias: You might need to. Who knows? You’ve taken a big lead position in toilet paper. You’ve cornered the market.
Tobias: You are the Hunt brothers of toilet paper.
Bill: That’s fair. Your trade is going to get cancelled.
Jerome Powell’s Options From Here
Tobias: What are Powell’s options from here? It looks like a pretty nasty backdrop, but we’ve been talking about for a little while here. There doesn’t seem to be a lot of room to lower that they hike a few times hoping that they’ve got some room to get lower.
Kyla: Yeah, I think that seems to be what most people are agreeing upon is that, they’re going to try and hike as fast as they can, and then probably could eventually. So, that seems to be what they’re looking forward to is fast and furious Fed.
Tobias: Fast and furious.
Kyla: [giggles] Yeah, and then they got to deal with the balance sheet and that’ll be essentially another rate hike. I’d imagine that. And also, they’ve got all these people yelling at them. I think there’s a lot of sentiment that they’re having to price into how they think about stuff.
They did 25 basis points this time around, and then you turn around, and Bullard was yelling, “Oh, should I have done 50?” Then Powell yesterday said that, “Nothing was stopping them from doing 50.” I think that we could probably see 50 in the main meeting, and then we’ll hear more about the balance sheet then, and that’ll give us a pretty good idea of how tight they’re going to go.
Tobias: We’re still historically pretty loose, though. We weren’t down where we are here.
Kyla: Yeah. That’s the bad part, I think. Well, I don’t know if good or bad is the correct terminology, but yeah, it is still very loose monetary policy, because they did take their time. The market was telling them to hike sooner than they did. During the presser after the FOMC meeting or yeah, during Powell’s presser, he got asked, “If he was buying the curve a couple of different times?” Each time he was like, “Oh, no, we’re not.” But I think that most people would say that they might be.
Has The Dot Plot Ever Predicted Anything?
Tobias: Have they ever followed the dot plot? I don’t know, when they started publishing the dot plot, but that’s only a fairly recent invention. It’s like the last few years or five years maybe. Has the dot plot ever predicted anything? They’ve always just shut underneath the dot plot, right?
Kyla: Well, they’ve always had something happen. In 2018, it was the repo crisis and they had to all of a sudden take care of that. They’ve never been able to fulfill their plan. I don’t think that the market ever believes that they will. They’re like, “Okay, that’s cute.” It was cute that you think you can do that. That gives them a little bit of idea on [unintelligible [00:34:37] rate and thinking about where that could be, but I don’t know if the Fed ever– I’m sure they obviously met it before, but recently, in the past decade, I don’t think so.
Tobias: There’s always going to be an excuse to not hike there. If you look back any stock market history, every year or something, there’s some event that’s big enough to justify a cut again or not hiking. I just thought we’ve gone through COVID, we’re ready to hike, and then, oh, here’s the Russia’s invaded Ukraine. There we go. There’s another reason not to hike. They’ll just keep on saying, “We’re going to hike on 25 basis points.” That’s neither here nor there. That’s meaningless really. Until they keep on just saying, “We will hike the next one and see what the market says.” It’s a verbal hiking rather than ever having to actually ever do it.
Kyla: Yeah, it’s slam poetry. That’s what I call it.[laughter]
Kyla: They all come out, and they all talk, and the market responds. Literally, after Powell spoke yesterday, the market was, I think the odds of them doing 50 basis points at the next meeting went up 10%. Nothing changed, except for Powell saying where it’s– Yeah. It just depends on that. Ultimately, the market does the job, the Fed’s jobs for it to a certain extent if that happens.
Xiang Guangda’s Wrong-Way Bet on Nickel Futures Broke The Exchange
Tobias: Let’s talk about nickel. What’s been happening in the nickel market?
Kyla: Yeah, that’s been pretty wild. It’s gone back down, but that was interesting too from the whole commodities perspective, where this tycoon in China, who earns like a pig. Nickel shop, pig iron nickel, which is the cheaper version of nickel. He just has a huge short position on nickel and LME allowed him to accumulate this massive short position. Then when Russia invaded, the whole thing just went crazy. Then all the shorts had this hedge against everything or cover their shorts and then the price of nickel exploded. The LME cancelled trades and they were like, “Oh, this just won’t happen.”
I think it was $4 billion and trades were cancelled, which is quite a bit of money. Then, all of a sudden, people when the LME reopened, they had to buy back at prices that they did not want to buy back at. The whole question now becomes like, “What’s the credibility of the LME? Are they really supposed to be cancelling trades like that?” Yeah, so, it’s a whole saga. How is this even allowed to happen and then what does it mean in the aftermath?
Tobias: I’ve had some bad trades that I’d like to put back after the fact.
Bill: Yeah, I would, too.
Tobias: What’s the time period when you can call up and say, “I don’t want to take it back?”
Bill: I don’t know. It’d be nice to reverse the decade and just go long the S&P.
Tobias: Yeah, wouldn’t lever it up.
Tobias: Nickel one was a weird one, because the guy is a nickel producer, but the nickel that he produced he can’t exchange it. It’s a different grade of nickel. So, it doesn’t work that way.
Kyla: Yeah. I’m not sure what they settled on in terms of him figuring out how to pay, because it was $8 billion in potential losses and I don’t know exactly how much ended up being losses for him. But there was talk that he would exchange some of his pig nickel iron for regular nickel from the government of China has a stow of nickel. He would exchange there and then they would be able to make the deal.
Then when he developed this pig nickel, I hope I’m saying the right term and sorry if I’m not. But it’s a cheaper version of nickel. When he developed that, that sent the whole market into a tailspin back then, too. He’s just always been messing with them. [laughs] Very bigly having the short position that he did, everybody knew about it. I think his nickname is “Big Shot.” Yeah, it’s just ridiculous that, oh, that was able to go down, but that’s commodities, I guess.
Tobias: It’s a different world to equities. I guess it’s a completely Wild West Frontier, where they just do whatever they want, bust trades after they’re done.
Tobias: Have you ever heard of that before? Is that trades being busted after the fact?
Kyla: I haven’t. Yeah, I don’t think it’s just not a good luck for the exchange rate, because how can you trust them after that? I know a lot of people aren’t going to do business with LME after this, but– [crosstalk]
Tobias: Do you have alternatives? Are there alternatives?
Kyla: I don’t know. Where else do you trade nickel? I’m not sure. That’s the biggest one.
Berkshire’s Acquisition of Allegheny
Tobias: Bill, do you have any thoughts on the Berkshire acquisition of Allegheny?
Bill: I don’t. I think if Buffett is buying an insurance company, my thoughts are not as valid as his.
Tobias: Yeah, it’s an $11 billion acquisition, I thought.
Bill: Yeah, it’s right in his wheelhouse. I’m sure it would be a good compliment to his assets. I think I heard from my man, Francisco that they have a go shop. I haven’t really looked into it. That would suck, because they’ll probably get outbid.
Tobias: It’s been floating around as one of the cheaper names out there. But I don’t know if it ever qualified as being a particularly good name. I don’t know. I don’t want to be getting– [crosstalk]
Bill: I hesitate to speak on insurance, because there are people like Chris Bloomstran out there that actually know what they’re talking about and I don’t. But I suspect that this will go down as a nice addition to the portfolio once it’s all said and done. Hopefully, it ends up in a portfolio or may not.
Warren Buffett Still Buying Occidental Petroleum
Tobias: What about OXY? Got anything [crosstalk]
Bill: [crosstalk] oil. A fair amount of people have been like, “He’s never bought oil well.” So, maybe oil is the thing that he doesn’t know how to time.
Tobias: Interesting. He did okay with a Chinese CNOOC, whatever that was. China National–
Bill: Yeah, but I think he messed up [crosstalk] was like Chevron in 2007 or something. I don’t know. I think he’s obviously always like those assets and he played into part of the capital stack to get that acquisition done. Now, maybe the thesis that he had in the beginning of financing that transaction is actually coming to fruition, and he thinks that people are going to have capital discipline this time, and that this time may actually be different.
Tobias: It’s not a prognostication on the trajectory of oil, right?
Bill: Well, I think you need to have oil work above your breakeven cost. The price of oil is going to impact what the firm is worth.
Bill: But I suspect that he thinks that it works at lower prices.
Tobias: It was doing right at 60 bucks. It was making money at 60 bucks. I heard somewhere.
Bill: Yeah. His bet is that we really settle closer to 80 or something like that. That works at 60.
Tobias: Buffett likes the chemicals business within OXY.
Bill: Yeah, maybe. I don’t know.
Tobias: Those chemical businesses are a pretty thin margin too, that they don’t make much money.
Bill: Yeah, I have no idea. You’re talking about the Permian, which I know nothing about for real.
Tobias: I know it’s a Basin.
Bill: Yeah, that’s right. [crosstalk] Look, he’s liked it and he’s got the best energy company probably in the world, and now he’s got some pretty serious interest in the Permian. So, seems to be aligned with the energy portfolio. I think it had just some of his, if your insurance claims go up, if materials cost more or whatever, maybe he feels like hedge is– I don’t know. I don’t know how he runs his put.
Tobias: “Prices are allowing OXY to de-lever way faster than expected. No more chemical plants will be built.”
Tobias: Kyla, do you follow any investors, like do you follow Druckenmiller or any of the macro guys?
Kyla: Oh, I follow more people on Twitter.
Tobias: So, no. [laughs] [unintelligible [00:43:29] on Twitter.
Kyla: No, there are. But in terms of big names, I just tried to learn from as many people as possible. I don’t really have– this is probably bad to admit, but I don’t really have a philosophy that I’m super aligned with at the moment. Buffett, I just watch him afar. But there’re a lot of good investors on Twitter, who tweet really good thoughts and you just have to sort through everything else to find them.
Tobias: Yeah, that’s fair.
Bill: I don’t disagree.
Tobias: The Drucks been out front and center a little bit more recently, not saying anything different to what he normally says, but I’m following the Druck.
Bill: He’s a hard guy to follow, because he’ll say one thing one second, and then flip around, and turn it around the next.
Tobias: Yeah, he could fade himself really quickly.
Tobias: That’s one of the things I like about him.
Bill: Yeah, I think that’s cool.
Tobias: I had a tweet about something that he said last week, where he was like, “I’ve always made money in credit. But I make money in credit, because I’ve just eight times in my entire investing career, it’s completely dislocated. When it dislocates, then I go in and have a look at it. But if I was a credit investor, I’d have lost money eight times as well. I just so happen to. I don’t go there until it’s dislocated.” I thought that was an interesting take.
Kyla: Is he implying that credit is dislocated right now?
Tobias: That’s a good question. I don’t know why he was discussing. I think it was just a broad ranging interview where they brought that up. But it’s possible. The way that it’s running up– Has anybody blown up in this space yet? Somebody was de-levering in oil, the nickel guys blowing up. What about credit?
Kyla: I don’t know of any specific names. I know Evergrande. That’s not really credit specific– [crosstalk]
Tobias: Are they blown up? They’re on the edge. They just keep on getting–
Kyla: It’s the slowest blowup ever.
Public vs Private – Marking Your Own Homework
Kyla: Yeah, but things are looking super bad. But they’ve got a big bailout probably waiting for them. But in this credit specific sector, I don’t think so. I did see an interesting statistic. This is a credit, but there’s been pretty much a dry up in IPOs, which I thought was interesting for the past month or so, which I guess makes sense relative to the war.
Bill: Yeah, well, private markets are trading at a premium. So, it’s tough to take an IPO out below your last mark.
Kyla: Do you all have thoughts on that, broadly like when that all reconnect to reality, if it will?
Tobias: Oh, you need some things to fail privately.
Bill: Yeah, I had a lot of thoughts. Some are dumb.
Kyla: Privately? Okay.
Kyla: Did you say talk about it privately?
Tobias: I think things need to fail. The reason that the marks don’t move, because the marks are just somebody writing, marking their own homework, and they all give themselves full marks for their own homework. But you need some failures, which is a third party saying, “Oh, you can’t pay your debt or they’re unlikely to be livid most of these things.” I think it’s just third party saying, “Yeah, there’s no way you’re worth anywhere near that and you’re going to liquidate anyway.” I think when that happens, then they get reality, because I think that the public markets are much closer to reality than the private market are.
Bill: Well, was it on your podcast that Cliff was talking about, when he was at Goldman and I think he was saying his book would move around a bunch, and then the guys that were on private assets are like, “Oh, our books aren’t moving–.”
Tobias: There’s no volatility.
Bill: Fuck, they are not. [crosstalk] But I think that helps allocators, I think everybody can say that they’re doing their job if they’re not being marked all the time and public guys or participants can’t say that. I think there’s a lot of incentives to continue the behavior, because a lot of public investors are getting waxed by the index, and a lot of people are trying to figure out how to keep their jobs, and I think that’s driving a lot of allocation to private.
Tobias: That was Charlie Munger’s observation that when the allocators like the fact that there’s no volatility in the book, you only get a mark once a month. [crosstalk]
Bill: Did Charlie say that?
Tobias: I think it was Charlie. Yeah, he said that they’ve observed that when you’re marking your own homework, you don’t see as much volatility as you do in the public markets. We look at the public markets all the time and say, it’s crazy that that price is there and you either take advantage of it or you cry about it if you already own it.
Kyla: and Bill: Yeah.
Tobias: Mostly the latter.
Bill: Or, you say that’s a dollar, but there must be something that I don’t understand, and then you watch it rip, and you say, “Ah.”
50% Moves In Chinese Stocks
Tobias: Speaking of things that are ripped, Alibaba, back from the dead. Charlie Munger, this year, greatest investor ever.
Bill: Yeah. Smartest man alive.
Tobias: I think it’s up 10% today or something crazy like that.
Bill: Well, I’m just glad it was margined. His position was up like, what is it?
Tobias: 12.65 now, today.
Kyla: Just today? Do you know what the China internet sector is doing?
Tobias: Give me a–
Kyla: I think it’s KWEB.
Tobias: ED–. Yeah, KraneShares, that’s 9%. Yeah. Coming up on nine.
Kyla: Man. Last week, that was down with 60%.
Kyla: Yeah. Oh, man. Yeah. Really big moves there.
Tobias: Yeah. It’s up almost 50% since the bottom on March 14th, Monday, last week.
Bill: This chart is stupid. This is something that I do hear for those on YouTube that want to see it. Go from 100 down to 31 and what was it last week? It was down at 25 or whatever. I could see how if you were a China focused investor, you might argue that things have gotten disconnected from reality. Yeah, it hit 24. Geez.
Tobias: Yeah, that’s a big run over a week. That’s a 50% run over a week. It’s 21 bottom on March 14 to 31 today.
Kyla: The weird thing is, is all they did was come out and be like, “We’re going to take care of it. Don’t worry.” There wasn’t really anything that– [crosstalk]
Tobias: People have a lot of faith in the Chinese government.
Tobias: They believe they can do.
Bill: And they say like 10 times, though.
Bill: So, that matters.
Kyla: Oh, my gosh.
Tobias: What’s the significance of saying it three times?
Bill: I don’t know. It’s like a wish. [crosstalk] You say it three times, something happens–
Tobias: In the mirror.
Kyla: Yeah, better.
Bill: Yeah. Bloody Mary comes out. No, it’s still down 66%. I’m pretty sure that’s how the math works. So, it hasn’t been great.
Tobias: Baba is still down or [crosstalk]?
Bill: Oh, I don’t know. I was talking about that KWEB.
Kyla: Yeah, Baba– [crosstalk]
Bill: just circling back, I pulled up these tax receipts. Shoutout to my man, Bill, who got me looking at this. The Federal tax deposits, year to date, withheld income and employment taxes are 1.5, what is my units? It’s got to be trillion.
Tobias: Trillion, surely.
Bill: Yeah. Whereas in 2019, they were 1.2. So, it’s 1.562 year to date. In 2019, it was 1.208. That’s a lot of growth-
Tobias: That’s good growth.
Bill: -in what people are actually getting paid.
Kyla: It’s impressive.
Tobias: What does that include? So, it’s just salary data?
Bill: Yeah, well, it’s withheld income and employment tax. Individual income taxes are at a hundred– I think this is billion, $117.5 billion. Sorry if my units are off. Then in 2019, it was only $44.3 billion. So, that’s up a lot. Corporate income taxes are up almost 70-ish percent. Looks like from 83.2 to 141.5. I don’t know. The tax receipts are pretty good. So, [crosstalk] some of the customer data [crosstalk]
Tobias: What’s the significance of the 19 comp because it’s pre-COVID? Because it’s not 2020-2021?
Bill: Yeah, I just think 2020 was super wonky and I just–
Tobias: It makes sense.
Bill: I just look at everything for 2019. Maybe because I don’t want to admit that the real world is messed up.
Tobias: Those two years happened, those two years have just been stricken from the books.
Bill: That’s right. Yeah.
Tobias: You can do that. The LME is just let that those two years to– [crosstalk]
Bill: Yeah, that’s right.
Kyla: That’s amazing.
Tobias: We’ve got Kyla for another eight minutes. So, shoot some questions in– Somebody had a nice comment back here. I will just see if I can–
Kyla: Oh, good. I love nice comments.[laughter]
Bill: What are you up to now?
Kyla: Like, what am I doing with my life?
Tobias: No, how many Twitter followers–? I’m just kidding.
Bill: No, no, not that. But you’re partnering with brands and what’s going on in your life?
Kyla: Yeah, still doing that. Consulting with different brands, helping with media, doing a lot of research. My newsletter has been a big focus. I really love writing. So, I’ve been doing a lot of research there. Still doing the YouTube videos, still doing the podcast, still doing the daily TikToks that are now posted on Instagram and get mixed in with other algorithms, I guess.[laughter]
Kyla: Yeah. I’m building a financial education company in the background. So, that gets a little bit of time during the day as well.
Bill: That’s cool. Where can people find you if they are interested?
Kyla: Oh, I just– Google Kyla Scanlon. I’m on Twitter, Instagram @kylascan. Yeah, so.
Bill: Do you have a sense of engagement data on Instagram versus TikTok and whether or not reels adopting that format has helped you?
Kyla: Oh, yeah. Instagram has been actually, pretty nice. I’ve grown faster on there than I would expect it. So, a smallish account like 18k, but that’s been good. I get about the same amount of views on Instagram as I do TikTok and TikTok have– [crosstalk]
Kyla: Yeah, and I have about 119k on TikTok. The engagement is a little bit higher caliber I would say on Instagram. The audience, I’m not sure if different people use Instagram versus TikTok, I’d imagine. But the conversation is a little bit different within the comment section, too, which is always cool to see how different people think about stuff versus TikTok is so inflammatory, and there’s so much anger. [laughs] So, that’s been nice.
Bill: Is that better on your psyche then? I would think so.
Kyla: Yeah, I think covering Russia-Ukraine since November. Pre-invasion and have dealt with Russian bots, I guess, I’m not sure and it’s just difficult. Having people tell you that you’re stupid, and dumb, and that you should go jump off a bridge, that’s just not fun to deal with.
Bill: That’s seems like a harsh punishment for an Instagram video or TikTok video, but–
Tobias: I get a lot of that on Twitter, but I think it’s all true. Nothing gets all earned.[laughter]
Kyla: No, I don’t think anybody earns like it should have [unintelligible [00:54:59] them. Yeah, social media is really strange how it allows people to say those things.
Tobias: I’ve just turned whole safety settings these days. So, I just don’t look at any of it.
Kyla: Yeah, I probably blocked more people in the past month than I have in my entire time on social media. It’s just not worth it.
Tobias: It’s exponential growth. You just get exponentially biggie, you get exponentially more trolls.
Kyla: I guess, so.
Tobias: There’s good advertisement for using it.
Bill: Sorry to dominate the questions, but how do your comments on Instagram compared to your Twitter conversations?
Kyla: Oh, I love Twitter. Yeah, I love Twitter. I would say, I’m more of a lurker on Twitter. I like to see what other people are saying, because I’m still learning. That’s my main goal is to help people learn alongside me. I would say, Twitter’s the highest caliber conversation depending on what threads you’re in. I’d say that I probably learned more from Twitter than I did. I really enjoyed college, but I learned more from reading people’s thoughts on Twitter and the papers that they link than I did in college. But I still think college is important. [giggles]
Bill: Yeah, got to drink somewhere.
Kyla: Yeah, exactly. Got to party.
Tobias: Did you say get more engagement on– Sorry, more views on TikTok, but more engagement on Instagram?
Kyla: Yeah, I would say so.
Tobias: That’s interesting.
Tobias: What are areas that are really ugly negative prices like oil?
Kyla: What are the areas or like that.
Kyla: Oh, commodities in general?
Tobias: Are there any commodities that are selling off? There anything it’s cheap, it’s all the other way around?
Kyla: Oh, I think there’s one, but I’m not going to be able to remember it. I guess, nickel. Nickel has sold off a little bit. There is one thing that’s been moving. I want to say palladium, but that is not correct, because Russia is a huge supplier of palladium. But yes, I think there’s one commodity in the bunch that is not– Yeah, I’d imagine.
Tobias: Is it lumber?
Kyla: No. Lumber is [crosstalk] too.
Bill: Yeah, a little bit. A little, not a ton.
Homebuilders Are Cheap
Tobias: Why if everybody is so happy to all of my homebuilders get keep on getting beaten up?
Bill: Because everybody thinks that it’s the end of the cycle. I have in the past do not buy cyclicals at low valuations and I still think that that is sound advice. However, the homebuilders do look cheap.
Tobias: I’m wary of that, too. But I think they look cheap and I think that we’ve been under– to steal Mike Mitchell’s thesis. They’ve been underbuilding for the last decade. In that data, if you pulled up the Fred website, it’s clear that it’s like they’re just underbuilt by like half.
Kyla: Yeah. There’s a chart going around that and I wish I’d liked it. Where it shows, I think it’s 2019 bills maybe and it’s like the rest. It’s a huge disparity and how they’ve been building partly, because of supply chains as you all know, but–
Bill: We started over one-seven, last month was the print and building permits were over one-eight last month. I don’t know. I tell you what. The pump and dump crowd on the lumber thesis has been mighty quiet over the past six months and the homeboy, Mike got levered long. So, he wins and they lose, which is nice to see.
Vale Michael Price
Tobias: Mike doesn’t lose. I vale Michael Price, speaking of Mike, Michael Price passed away over the last week. I don’t think we call that out last week.
Bill: Yeah, I think we missed that.
Tobias: Sad to see Mike Price go. Folks, we’re coming up on time. Kyla, thanks so much for helping us with all the macro stuff. If folks were like follow along with what you’re doing and get in touch with you, what’s the best way for them to do that?
Kyla: Yeah. I’m on Twitter @kylascan. My DMs are open, but I have to take a little bit of time to respond. So sorry about that. Yeah, @kylascan across my social media, and then Substack, kyla.substack.com, YouTube is just Kyla Scanlon. Yeah, my name is just Kyla Scanlon. So, if you google that, most things come up, because I think there’s only three other Kyla Scanlon’s in the world. So, yeah.
Bill: S-C-A-N-L-O-N for those at home.
Kyla: Correct. Yeah. Scantron [crosstalk]
Tobias: What’s your, BB? You want to do a shoutout? Where can people for you?
Bill: Who? Me?
Tobias: You. Yes, you, BB.
Bill: No, man. People don’t need to follow me. I need less [crosstalk] life.
Tobias: The Brew, Business Brew.
Bill: I appreciate the opportunity, but they can find me if they want to.
Tobias: Well, thanks very much, Kyla. Thanks, folks–
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