14 Comments

Thank you. This also implies that a good chunk of debt issued to finance share buybacks is "fake", i.e. accounting identity, as cash is parked in another pocket. But I'd say it's only about large cap IG companies, so you can sell CDS on these till the cows come home.

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"Capitalists hate free markets. Capitalist prefer monopolies and the ability to set the value of companies through share buybacks."

Sociopaths of whatever stripe prefer games which are rigged in their favor.

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Really interesting piece here. thanks

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Thank you Russell ,what do you think is the macro bet warren buffet is taking in japan in these five trading companies.yes they are trading at low multiples but this has been the case for long time why in the last two years buffet turned bullish on japan my feeling is that he see secular macro moves there.

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Does you "revelation" affect your views on food price inflation?

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Great piece! I'm curious if you see any effect in NIIP after the Trump tax cuts, which led to some profits overseas being repatriated? From your graph I don't see any obvious trend reversal.

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Brilliant. That totally pulled it together. I see this as a sectoral war between services and manufacturing. That also somewhat parallels main st and workers vs tech and global.

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Bank of Japan has a very large balance sheet (much larger than the Fed relative to GDP), but Nikkei 225 price to book ratio is around 1. Argentina has hyperinflation, but Msci Argentina IMI price to book ratio is under 1. S&P 500 price to book ratio is over 4 and Nasdaq 100 one is near 9 (ratios that have been supported by mergers and acquisitions at questionable prices, so that the tangible ones are far higher). So, Us corporations have a very thin (and decreasing) capital that produces an astounding amount of earnings, but Us total factor productivity growth is in constant decline (and in recent quarters negative). For all these reasons I think that the share buyback model stands on shaky ground. I don't know what could kill it: increasing rates on Us Treasuries (you can't go on forever with 6% budget deficit with no consequences)? Central banks decoupling? Insiders that sell their shares and turn their back on buybacks?

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What are your thoughts on the implementation of universal basic income as a way to deal with diverging income between corporate structures and individuals?

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Japan's Lost Decade? Not according to the Nikkei 😉 phenomenal writeup btw!

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