Insights on markets, emergent trends, history, innovation, risk management, global economics, strategy, policy, and other topics that catch our attention. Inspired by ongoing research, conversations and events. Written and edited by Osbon Capital Management and published every Thursday morning.
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Too much time is spent talking about price. Fundamentals are ultimately what drive equity prices higher over time. To say this another way, a company’s stock price can’t continue to rise unless it continues to be successful. The famous quote by Warren Buffett is, “In the short run, the market is a voting machine, but in the long run (...)
World, Land Value Tax, New Unicorns
World The ongoing events in Israel are horrific and tragic. The difficulty of predicting the onset and conclusion of acts of war is on par with predicting natural disasters. Conflict can end just as suddenly as it started or last a decade. The end of the conflict in Ukraine is similarly uncertain. In 2024, 50% of the world’s GDP will…
Treasury, Michael Lewis, Batteries
Impact of rate moves, serious but manageable For the past few weeks, we’ve been discussing how the increase in the long end of the treasury curve continues to create issues across financial markets. The 20-year treasury bond is currently over 5%, meaning a buyer at today’s prices earns 5% every year risk-free, and anyone stuck holding lower-yielding debt has lost…
Rates, Banks, Poker
Rates and Banks The 20 and 30-year treasury rates are now a hair under 5%, the highest level in 15+ years. TLT is the ETF that tracks the performance of the long-duration treasury bond market. It’s a decent proxy to see the impact of these rate hikes on current outstanding treasury assets. Treasury assets and long-duration bonds have a market…
Not Quite Austerity, OpenAI
Not Quite Austerity The Fed meeting yesterday left interest rates unchanged at 5.25-5.5%. Two more meetings in 2023 are scheduled for November 1st and December 13th. The most likely outcome is that we won’t have any more rate hikes, and the difference between another pause and another hike is marginal. More remarkable is that long-duration treasuries are now at or…
Google, Private Credit, Moon
Google getting competitive I’ve wondered for years why Google didn’t continue to add basic features to their most popular products like Google Docs, Calendar or Chat systems. It could be to avoid feature bloat or to focus only on the highest-priority opportunities. It’s not like they didn’t have the capital or the talent to add features. Still, they ignored particular…
Active Ownership
Osbon Capital launched in 2006 as an index boutique focused on ETFs and the emerging index strategy. At that time, Vanguard had just passed $1 trillion in assets under management and indexing and ETFs were still a relatively young concept. ETFs held just $300B in total assets at the time, and John had the foresight to predict that index ETFs…
Urban Housing Inflation, China, Nvidia
Urban Housing and Inflation This week, I wanted to address the housing component of the inflation calculation. Shelter represents roughly 35% of CPI inflation metrics and 20% of the core PCE inflation. Shelter is the slowest metric to change as landlords can often afford to be patient, and 12-month leases take time to roll over. Owner occupancy (people who own…
Interest, GLP-1s, AI
Interest Expense I’m not sure this story is going to get the coverage it deserves, especially as the election news begins to dominate news cycles over the next 18+ months. The US government’s interest expense has reached a $1 trillion annual run rate. This is the interest paid on Treasury securities. You can keep track of the reported figure here….
Rents, Credit, Divide, Data
Rents Softening + Global Inflation Issues The SF Fed recently produced a study on the potential for rent inflation to slow and even possibly turn negative by next year. Real estate owners are patient by nature and rents/shelter have been some of the slowest moving inflation metrics. Shelter represents around 40% of the official inflation statistics (CPI), so any movement…
