✨ Value Investing Substack NEWS - McKinsey Interview with Marc Andreessen
Zimbabwe Hikes Rates to 200%, EY Fined $100M For Cheating, Michael Burry Issues Fed Warning, Goldman Warns US Forecasts Optimistic, Malaysian Politics In Shambles (Again), Indonesia: The Next China?
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> Notice how ratio of capex to depreciation going forward is only barely >1x? And it used to be 3-4x in 2011-2014. These were the producers that caused the oil and gas price crash in 2014 and 2015. Also notice how they generated little to no free cash flow in 10 years?
> So I think buying stocks that sell commodities or more commodified products in the right regions, that are trading at >10% FCF yields are going to be a good bet in the coming 5 or so years.
Because:
-More capital discipline because of sour shareholders that have seen little to no FCF in the past.
-ESG.
-Overly bleak outlooks because of two recent major commodity crashes.
-Consolidation.
-China shutting down lower value add industries like coal, steel, various chemicals due to pollution and shrinking work force.
-Sustained higher LNG prices.
LINKS
Stock Markets:
Michael Burry of ‘The Big Short’ Fame Warns Fed May Alter Course | Bloomberg
Michael Burry's 'Bullwhip' Tweet Deserves Serious Attention | Bloomberg
US Profit Margin Estimates Are Too Optimistic, Goldman Strategists Say
JPMorgan names Tammi Yong as head of investment banking for Malaysia
MR DIY expands retail presence (Malaysia - Retail)
Rafidah Aziz resigns as chairman of AirAsia X (ASEAN - Airlines)
Macro
ASEAN:
LONG-READ: What the Fed’s 75bps hike and near 4% terminal rate mean for the OPR (Malaysia - Economics)
In first, PKR admits court cluster support for Anwar’s bid for power (Malaysia - Politics)
Many wanted Zahid to quit (Malaysia - Politics)
“The observers reported that the May elections showed a higher level of failure of the electronic voting system than ever before, along with a higher level of blatant vote-buying, a disturbing level of red-tagging of candidates and parties, as well as a number of incidents of deadly violence. A large number of voters did not get to cast their vote, and many had to trust that election officials would later put their marked ballot paper through a Vote Counting Machine, thus undermining the secrecy of the vote,” said Lee Rhiannon, former Australian Senator and Commissioner of the IOM.
Rest of World:
World’s Most Aggressive Central Bank Raises Key Rate to 200% | Bloomberg (Zimbabwe - Economics)
It no longer surprises us that our elected representatives betray people’s mandate by switching sides midstream (India - Politics)