Putin's Russia joined arms with China vetoing a UN Security Council proposition to impose sanctions on Zimbabwe's Mugabe.
The US and the UK are lashing out against this move this weekend, and they should.
The higher energy prices go, the more amplified Putin's geopolitical power becomes.
Don't think for one minute that the Russians have enjoyed being subservient to US rhetoric for the past 20 years. That was approximately the length of the bull market in US stocks too. When everyone is making money, a lot of risks can get swept under the rug - when people stop making money is when you realize they are still there.
It is global this time, indeed.
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Like most levered business models, Indy Mac's didn't end well. An old fashioned run on the bank is now a real time reality.
This is going to cost the FDIC $8 billion in bailout capital, which represents approximately 15% of the Federal Deposit Insurance Agency's "insurance" buffer.
Not long ago I wrote about traffic trends on deal in the QSR industry. It turns out that Subway is seeing a lot of price elasticity to the $5 price point. The 14% increase in traffic is nothing short of remarkable in this environment.
The problem for the industry lies in the fact that nearly every competitor is copying it; not just the sandwich guys but also the burger boys. The competition is trying its version of a $5 meal because it is such a good price point in this environment. The segment that could be hurt the most is fast casual. Fast casual chains are well positioned when people have money, but now people don't want to spend $8-$9 for lunch when they can spend $5.
As most of you know, I used to be a PM in the hedge fund business, following Global Consumer. Michael Zimmerman, who runs Prentice, has been a competitor of mine since his days working for SAC Capital. Playing at the highest level, I think we both had pretty good runs since 1999. In the past few years, past performance has seemingly provided us both with the opportunity to start our own firms.
Past performance in this business is never a predictor of long term future returns, unfortunately. How hard you play the game doesn't always equate to winning it either. That said, I'm always up for a game, and I get up early.
Michael played tennis at Harvard, so I'd have to line up with my intern Jeff Dawson (Captain of Yale's 2008 Tennis team), if he wants to dance with me on clay. We hockey players are really slow when off the ice. I'd have to play 2 on 1 to even come close!
The market game is a different one however. There I'm happy to play head to head. I called the Morgan Stanley Retail Index out as a short in mid May (see attached, MVR Index), and it has since lost 24% of its value.
Looking at this article in section C1 of the WSJ, Jenny Strasburg has Prentice down -46% year to date, with "almost half of that drop happened during June as the value of the firm's stock and debt investments in retailers plummeted."
There is a winner and a loser in every trade. Mine, fortuitously, has been to leave the hedge fund community, take the short side on the industry, and build a global macro research process that is transparent and saves people money.
Maybe Prentice can become a client!
Play hard, and shake hands when it's over. This game is one of the best in the world.
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