Hello Pezz, last week’s report, part 2 of 2, what I thought about and miscellaneous matters:
(i) We made definitive arrangement to welcome son Jack on August 21st, and so I must short some puts on GDX between now and then to pay for the expected expenses of the following days, else I would be long responsibilities and short on expenses. Conveniently, the market is either believing in diaper deflation or not yet convinced of hyper inflation. Speaking of which, we must do a check on YTD GLD vs QCOM ... aha, up 10% against down 30% YTD ;0/
BTW, do you have a guess as to why Maurice MQ did not sell QCOM and buy Gold?
(ii) I dined on Friday night with 11 folks including the VIP host and hostess from the State of Israel and partook in good food (roasted lamb, Mediterranean salad enhanced with elsewhere beets and whatnot, couscous, pita bread, very extremely good Israeli boutique red wine, … home-made dates-filled cake with geewhizbangohwhoawee ice cream, and all chased down with yummy mint leaf infused boiling water ‘tea’) and lots of fascinating conversation. Other than the guest of honor and my wife and myself, the other 3 pairs of guests were all true Chinese and Jewish tycoons of the greater china region, representing the pinnacle of global trading, Asian gaming, and Greater China industry. Each of the weighty players and their equally material wives are also substantive Hong Kong political king-makers, controllers of listed companies, and otherwise savvy observers of the real world. Of the 11 folks around the table, 4 were of the Jewish faith and one of whom is in his late 70s.
I reflected on the delicious and civilized meal, the humorous and cultured conversations, and I note to having learned quite a bit, much more so than when I was a member of the ZBT fraternity and acted as its astutely observant steward.
I observe that:
- The globalized conflict of the middle east will last a long time, arraying a rag tag counterparty loosely associated by the Moslem religion, progressively radicalized by USA actions to Islam reactions which in turn is action-ed … ad infinitum since a whole lot of eons ago;
- The conflict has only one reasonable but to one side and the other side totally unacceptable solution, and so can only continue until exhaustion or much worse;
- There are good, bad and ugly fellows and innocent as well as guilty fellowettes on both sides of the equation, and all for good enough reasons. The determination of righteousness is at best a thankless task, and the judgment of the guilty at worst an impossible work;
- For the one truly fragile but very strong side, there is no strategic depth unless one takes into account of global Diaspora, and certainly no room for errors. For the other massive but so far very disorganized side, there is the luxury of time, but the clock may well run out once the money spigot flows dry;
- For the Great Powers, they do what they need to do, and would always do so, even as needs change and imperatives impact; and
- For both sides of the middle east equation, they must engage with other friends today, or fight alone tomorrow, as they seem unable to make friends of each other.
- The bottom line? I do not have a good feeling about the conflict that in truth is an open sore which one day may well get massively infected.
- Should infection happen, we will have to choose sides, else we all could go down for the count. Ready or not, on 3, 2, ...
(iii) On macro, imo, it is all about diaper deflation and hyper inflation, the choreographed sequencing, elapsed time, and the possibilities for exogenous shock laying waste to what must burn to cinder.
(iv) On diaper deflation, it will happen, terribly.
(v) On hyper inflation, it will also happen, and horribly.
(vi) On real estate, committed to a land consolidation and redevelopment opportunity on co-investment basis, where success depends on continuing China renaissance, and happiness depends on sustained Hong Kong one-country-two-systems. The project is situated in Causeway Bay of Hong Kong, one of the most expensive retail real locations of the planet.
(vii) Given that the timing can only be guessed at on all possible happenings, and so we must compensate for lack of timing feel by way of positioning.
On positioning, I marked to market on rentals so as to give myself a undistorted picture; and I left private equity at give-away 50% below cost so as to manage my expectations, and am at
Cash: 28% (Cad 8%, HKD/USD 17%, Chf 3%)
Metals: 27% (58:42 physical / paper)
Rental and speculative RE: 38%
Equity: 7% (mostly energy and paas and some this and some that)
(viii) Must travel to Europe this coming Wednesday, midnight departure, and plan to be back in Hong Kong the immediate Saturday, afternoon arrival, so the week should go by quickly, I plan to catch up on reads, and catch up on sleep.
Cheers, tj |
