Musings: Opportunities Abound, From India to Turkey
Alex here with your latest Friday Macro Musings…As always, if you come across something cool during the week, shoot an email to alex@macro-ops.com and we’ll share it with the group.Latest Articles/Podcasts/Videos — Your Monday Dirty Dozen [CHART PACK] — I look at signs of slowing growth here in the US along with data pointing to a rebound elsewhere. Plus, we take a look at where the money is flowing, check-in on sentiment, discuss a potential major bottom in a LatAm country, see what’s going on in Japan and point out the massive compression regime in major FX pairs, and more…Value Hive: Pubs vs. Tourists, Spin-offs and Interviews — Brandon shares some of the latest Q3 investor letters he’s reading along with a number of other great investing nuggets he came across this week.Lessons From 24 Years of Operating: Bowl America, Inc. (BWL.A) — Brandon shares what he learned reading through 24-years of shareholder letters from an incredible yet little known business operator, Leslie Goldberg.Invest Like the Greats: Fox Corporation, Inc. (FOX) — Brandon lays out the value case for Fox.Articles I’m reading — Linda Bradford Raschke released a free ebook on trading this week titled “Building a Trading Foundation”. To download, just go to her site here and you’ll see the option in the right-hand column. It’s 59 pages of some great stuff with wisdom in there that traders of all skill levels can appreciate. And it’s free… so I highly recommend giving it a read. Here’s an excerpt from the book.
“Anytime that you’re in a trade and you start to have questions like, “Well, what should I do now? Should I get out now? Should I take profits now? Should I stay in a little longer? Should I add to the position?” Anytime you have a question like that, you have no business being in that market. You have lost your edge because you don’t have any control or game plan in that market. So, first, before you start swing trading, realize that you never want to put yourself in a position where you’re going to be reacting to that market.”
Brookfield (BAM), an asset management firm, made some interesting remarks during their recent earnings call regarding the long-term investment opportunity for India (h/t to Collective member Jon K.). You can find the transcript here and to save time you can just jump to the section where managing partner, Anuj Ranjan, lays out the major shift they’re seeing on the ground.Here’s a clip from the call.
“For the first time ever, we're seeing a transformation in which India 2 [middle class] and India 3 [rural poor] are becoming included in the formal economy, and this is happening for 3 reasons: data penetration, reforms targeting inclusion and a strong government that's driving change. Let's start with data. India has risen from being 150th to the first ranked country in the world in mobile data consumption in only the last 3 years. This explosive growth has been brought about by affordable data plans and falling smartphone prices. India now has 600 million Internet users, but what is shocking is this is only 40% of the population, implying a sustained and continued growth in the future. This digitization has contributed substantially to the inclusion of India's large population, and it is translating to high growth across most businesses. We're excited about this trend and actively evaluating opportunity in data infrastructure, including the acquisition, I earlier mentioned, of the country's largest telecom portfolio.”
India’s set to become the fastest-growing major economy over the next 10+ years. A country of over 1bn people will soon be hitting the Wealth S-Curve. This is going to have profound impacts on markets and commodity demand around the world. Pay attention…Lastly, Kuppy wrote up a great piece outlining the difficulties of being a small-cap value investor in this environment (link here).Charts I’m looking at— India’s CLI is squarely in the slowdown quadrant as the country, along with much of the emerging world, wrestles with an economic slowdown and a painful liquidity crunch.
Video I’m watching — The GOAT of investing, John Malone, was on CNBC this week for an hour-long interview where he talked about the streaming wars, which companies he likes best in that space, big tech and much more. Malone is a wellspring of wisdom. Give the interview a watch, it’s worth your time (link here). Here’s what he had to say about Disney (DIS), which is our biggest position (h/t @bluegrasscap). Also, I really enjoyed this talk that Peter Thiel recently gave titled “The End of the Computer Age” at the Manhattan Institute. Peter talks about the current challenges facing the country, how we can better compete with China, and structural changes that are coming to the global economy. His talk starts around the 10min mark (here’s the link).Book I’m reading — This week I started reading Robert Shiller’s new book “Narrative Economics: How Stories Go Viral & Drive Major Economic Events”. I’m halfway through and thoroughly enjoying it. Shiller walks us through some economic history, a little neurolinguistics, and psychology, even some epidemiology… all to profer up a new way of approaching the study of economics. It’s good stuff.
Here’s an excerpt from the book:
“Narratives appear in constellations partly because their credibility relies on a set of other narratives that are currently extant. That is, they sound plausible and interesting in the context of the other narratives. The storyteller does not need to refute the other narratives to set the stage for the current one. Also, the narrative may be based on certain assumed facts that the teller and the listener do not know how to test. Some narratives are contagious because they seem to offer a confirming fact. We can say with some accuracy that most people put on a show of their own knowledgeability and try to conceal their ignorance of millions of facts. Hence narratives that seem contrary to prevailing thought may have lower contagion rates that do not result in epidemics.”
Trade I’m looking at — I have no position and probably won’t put one on since there are more interesting trades out there right now, like in shipping. But… The Turkey MSCI Country ETF (TUR) is breaking out of a basing wedge pattern (chart below is a weekly).
It’s been a while since I last checked in on what the mad ruler Erdogan is up to, so I may study up over the weekend. For what it’s worth, inflation there is normalizing and the lira (USDTRY) looks like it may be about to break out against the dollar. Also, the bond market has been catching a bid with Turkish gov 5yr yields dropping to multi-year lows along with CDS’s pricing in less risk relative to earlier in the year. Quote I’m pondering —
Every limitation has its value, but a limitation that requires persistent effort entails a cost of too much energy. When, however, the limitation is a natural one (as, for example, the limitation by which water flows only downhill), it necessarily leads to success, for then it means a saving of energy. The energy that otherwise would be consumed in a vain struggle with the object is applied wholly to the benefit of the matter in hand, and success is assured. ~ The I Ching, circa 8th century B.C.
That’s it for this week’s macro musings.If you’re not already, be sure to follow me on Twitter: @MacroOps. I post my mindless drivel there daily.Have a great weekend.
