There is only one recipe for a best seller and it is a very simple one. You have to get the reader to turn over the page. […] If you look back on the best sellers you have read, you will find that they all have this quality. You simply /have/to turn over the page.
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My contribution to the art of thriller-writing has been to attempt the total stimulation of the reader all the way through, even to his taste buds. For instance, I have never understood why people in books have to eat such sketchy and indifferent meals. English heroes seem to live on cups of tea and glasses of beer, and when they do get a square meal we never hear what it consists of. Personally, I am not a gourmet and I abhor food-and-winemanship. My favorite food is scrambled eggs.
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What I aim at is a certain disciplined exoticism. I have not re-read any of my books to see if this stands up to close examination, but I think you will find that the sun is always shining in my books—a state of affairs which minutely lifts the spirit of the English reader—that most of the settings of my books are in themselves interesting and pleasurable, taking the reader to exciting places around the world, and that, in general, a strong hedonistic streak is always there to offset the grimmer side of Bond’s adventures. This, so to speak, “pleasures” the reader
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I can recommend hotel bedrooms as far removed from your usual “life” as possible. Your anonymity in these drab surroundings and your lack of friends and distractions in the strange locale will create a vacuum which should force you into a writing mood and, if your pocket is shallow, into a mood which will also make you write fast and with application.
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I never correct anything and I never go back to what I have written, except to the foot of the last page to see where I have got to. If you once look back, you are lost. How could you have written this drivel? How could you have used “terrible” six times on one page? And so forth. If you interrupt the writing of fast narrative with too much introspection and self-criticism, you will be lucky if you write 500 words a day and you will be disgusted with them into the bargain.
Cullen Roche – CIO of Discipline Funds
-Merrill Lynch asset management
-2008 financial crisis transformed his view of world – how macro can dominate everything, while micro doesn’t really matter
–Japan had been going through a similar transformation for 20 years – learned a lot from it
-Japan’s financial system modeled after Fed, US – Japan’s lessons taught him that what would happen would be the opposite of MSM narrative
-Beat the drum that post GFC would be sluggish dis-inflation
-At Discipline – hyper focused on financial planning as foundation for portfolio (more bottoms-up); “more Vanguard than Cathy Woods”
Doesn’t believe now will be like 70s style stagflation, more like 2008
Structural trends – globalization, technology, demographics – all long-term disinflationary anchors
Big lesson of Covid – fiscal policy can cause big inflation, it’s the Treasury not Fed that has the bazooka
Cyclical trends – short term inflation bump due to that fiscal policy; will come down if government doesn’t splurge
Debt cycle not consistent with high inflation environment
High inflation can only come from private sector (consumer / corporate borrowing), or public sector (government spending)
Low likelihood of big fiscal spending
In 3-4 years, we’ll realize inflation was transitory
Fed outlook
-they’ve been more aggressive than he expected
-“Fed’s kinda screwed” – look bad coming off 2021 inflation
-should have moved earlier in 2021 – eg, a modified Taylor rule
-too much focus on lagging indicators – eg, employment
–Fed is old school monetarists / Keynesians – don’t wanna live thru 1970s again
He believes today looks more like 2008, not 1970s
Big worry of real housing market downturn
Monetary policy will function through housing market and mortgage rates
As rates > 5%, “something’s gotta give” – not enough housing demand at that level
Last 10 years was one cycle, a blowoff / FOMO effect
Economy now digesting this excess, the bust component
Housing is slow moving animal
Concerned Fed will create more downside than we expect
If in 2023, inflation ticks steadily lower, housing falls fast, unemployment rises faster than expected – Fed will walk a lot back, have a mini 2008
Could be 2008 credit style disinflation rather than runaway inflation of 70s
Nik: hyper focused on housing sector, outsized impact on US economy, 3 months of home price declines
10% decline in home prices is like a flesh wound – only takes us back to middle 2021
If home prices are volatile, balance sheets become volatile Housing has become an important economic asset – more than previous generations
We don’t understand knock on effects – like 2008
Outlier risk of housing prices falling 25%, risks lurking in shadows
“2008 humbled me a lot” – thought he had a bullet proof macro framework
More analysts now forecasting larger price drops in housing – more expected volatility in 2023, 2024
Argument that covid boom was sorta fake – driven by government spending
If housing falls 25%, causes a lot more collateral damage than anyone expects
Nik: in 2007-2008, analysts argued we’ve never seen national housing price declines YoY, only regional declines – surprised everyone
This isn’t like 1987 crash – it’s not a single event
It’s a structural event – because housing is long drawn-out process, and so core to US economy
Construction still in boom period – lots of supply coming online, but don’t have demand or new construction
We’re probably in 4th inning of housing market downturn – still relatively early
Fed sorta oblivious to it, they don’t realize damage that 6-7% mortgage rates do to housing market
No idea what stocks will do in next 6-12 months
His duration framework for investment assets:
-Cash / Treasuries are Zero duration
-Bonds are 5 year duration instruments
-Stock market is 18 year instrument
–Bitcoin is 100 year duration instrument (gold is 40 year)
Stock market riskier today – valuations high, less attractive relative to other instruments, still high levels of irrational exuberance
Multiples need to come in / move sideways for longer period High multiples —> Lower risk adjusted returns
Do you want stocks at 30 P/E with high volatility or 4.5% treasury bill with no volatility? Stocks in 18-24 months – would be shocked if up significantly
Scenario: housing prices slowly grind down 10-20%, no real credit event —> would have stagnant stock market, and maybe 2025 it takes off
Risk is a real credit event – more like 2008 than 1970s – if Fed reverses, would be because real deterioration in balance sheets and economic environment
Fed will likely slowly walk rates back, ease off language, but rates will remain high and cause demand destruction – maybe late 2023 – likely to be behind curve again
At that point, credit has deteriorated, stock markets fallen 40%
Lots of starts and stops until then Higher probability of hard landing outcome than Fed finding a soft landing
Bitcoin is a technology – more like VC than equity
Public markets are boring 18 year instruments, companies are more stable boring value
VC is much younger, standard deviations larger, thus much longer duration Bitcoin is weird blend of digital gold + VC + payment system
Bet is it becomes alternative payment system – will take very long time to come to fruition
Will work in parallel with traditional fiat / credit system
Takes time for people to adopt the new mindset
He works with people who have already made good money, closer to retirement, more conservative
Results in shorter duration instruments (eg, Treasuries, equities)
Bitcoin, like VC, has too much potential downside for them For a true efficient market theorist – maybe 0.5-1% bitcoin allocation (eg, if you put 1% in bitcoin in 2015, could be 20% of portfolio today)
Big advocate of re-balancing in counter-cyclical manner to reduce skew – reduce outsized risk in any single instrument
Don’t want golden handcuffs that you can’t sell, too much capital gains, help control your behavior, don’t wanna become a forced seller
Loved Nik’s book Layered Money and its hierarchical thinking approach
In a letter to his older brother Alexander, dated 10 May 1886, Anton Chekhov set out his six principles of writing: ‘truthful descriptions of persons and objects; total objectivity; extreme brevity; compassion; no political-social-economic effusions; audacity and originality: eschew cliché.
…no depiction of reality is realistic unless it include an empathic account of all perspectives, which might be the defining characteristic not only of Chekhov as a writer but of any great storyteller.
Here are his 6 rules, with a few examples pulled from his classic short story, The Lady with the Dog (1899):
1. Absence of lengthy verbiage of a political-social-economic nature
Repeated and bitter experience had taught him that every fresh intimacy, while at first introducing such pleasant variety into everyday life, and offering itself as a charming, light adventure, inevitably developed, among decent people (especially in Moscow, where they are so irresolute and slow to move), into a problem of excessive complication leading to an intolerably irksome situation.
2. Total objectivity
3. Truthful descriptions of persons and objects
He could remember carefree, good-natured women who were exhilarated by love-making and grateful to him for the happiness he gave them, however shortlived; and there had been others — his wife among them — whose caresses were insincere, affected, hysterical, mixed up with a great deal of quite unnecessary talk, and whose expression seemed to say that all this was not just love-making or passion, but something much more significant
4. Extreme brevity
When the Christmas holidays came, he packed his things, telling his wife he had to go to Petersburg in the interests of a certain young man, and set off for the town of S. To what end? He hardly knew himself. He only knew that he must see Anna Sergeyevna, must speak to her, arrange a meeting, if possible.
5. Audacity and originality: flee the stereotype
Anna Sergeyevna was accompanied by a tall, round-shouldered young man with small whiskers, who nodded at every step before taking the seat beside her and seemed to be continually bowing to someone. This must be her husband, whom, in a fit of bitterness, at Yalta, she had called a “flunkey.” And there really was something of the lackey’s servility in his lanky figure, his side-whiskers, and the little bald spot on the top of his head. And he smiled sweetly, and the badge of some scientific society gleaming in his buttonhole was like the number on a footman’s livery.
6. Compassion
And it seemed to them that they were within an inch of arriving at a decision, and that then a new, beautiful life would begin. And they both realized that the end was still far, far away, and that the hardest, the most complicated part was only just beginning.
i only have 6 fingers but i’m just a regular guy nothing to see here
Report comes from the BIS, which is like the Central banks’ Central bank. It also releases the best research, but Powell gets 100x more msm coverage, because Amurica.
Hidden leverage…liquidity issues…10x more debt than capital…reminds me of something 🤔. Only we’re talking TRILLIONS here, not a measly bankman fraud scam of just billions.
The missing dollar debt from FX swaps/forwards and currency swaps is huge, adding to the vulnerabilities created by on-balance sheet dollar debts of non-US borrowers. It has reached $26 trillion for non-banks outside the United States, double their on-balance sheet debt. Moreover, it has grown smartly since 2016, despite the often significant premium demanded on dollar swap funding. For banks headquartered outside the United States, dollar debt from these instruments is estimated at $39 trillion, more than double their on-balance sheet dollar debt and more than 10 times their capital.
Dollar dominance is striking in this FX market segment, greater than in any other aspect of dollar use. As a vehicle currency, the US dollar is on one side of 88% of outstanding positions – or $85 trillion. An investor or bank wanting to do an FX swap from, say, Swiss francs into Polish zloty would swap francs for dollars and then dollars for zloty.
Off-balance sheet dollar debt may remain out of sight and out of mind, but only until the next time dollar funding liquidity is squeezed. Then, the hidden leverage and maturity mismatch in pension funds’ and insurance companies’ portfolios – generally supposed to be long-only – could pose a policy challenge. And policies to restore the flow of dollars would still be set in a fog.
Worth watching in full. I’ve heard Stephanopoulos’s interview was harder hitting but haven’t watched it yet.
I downloaded an MP3 version of it, so the reactions below are based on his voice and replies alone and not body language, though I’m notably handicapped when it comes to eq:
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Repeatedly distanced himself from Alameda, made clear he ran FTX but claimed not to know what was going on in detail at Alameda — beggars belief considering he owned 90% of Alameda and every prior Alameda CEO was Sam’s close personal friend or *perhaps cough cough* more
Tries to blame the collapse on leverage, which I assume is a hot button issue with regulators and easier to understand by the general public, but annoying that Sorkin doesn’t dig deeper into the obviously fraudulent evidence (like systemic co-mingling and improper usage of customer funds; Alameda front-running / VIP status on FTX exchange; taking out multiple BILLIONS in personal loans, where did those funds go?; the role of close senior execs including Nishad and Gary)
Within FTX structure, shifts blame to regulators (repeatedly claims FTX US and FTX Japan, etc, were ok and solvent because there were stringent regulations). It’s sorta like saying I stole my classmate’s lunch money because the teacher wasn’t in the room
With two Stanford law professors as parents, he clearly understands the importance and practice of “plausible deniability”
His public track record proves beyond a doubt that he is a very effective and disciplined communicator. Just read his many tweet threads. So why would we suddenly assume he’s NOT being disciplined and purposeful in conducting these interviews, despite his *claims* that his lawyers don’t want him to do this?
Hilarious bit at the end where he complains about hypocritical “do-gooderism”, when his publicly stated life’s work was to promote an over-intellectualized neo-facade of do-gooderism known as ineffective altruism. Merriam Webster literally defines a “do gooder” as “an earnest often naive humanitarian or reformer” gtfo of here
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I hope he ends up in jail. I hope it takes many years before he steps foot in a cell, so he has to spend time and brain cells and stress and money defending himself in court and outside it.
But knowing how the American penal system works he’ll probably receive a light sentence served in a cushy minimum security getaway with plenty of utilitarian philosophy books and vegan couscous or whatever the f he pretends to eat
