ASX News LIVE | ASX Rallies, Apple Falters, Jury Finds Sam Bankman-Fried Guilty

Will the #RBA raise rates next week? #auspol #ausbiz #ASX

— Fat Tail Daily (@FatTailDaily) November 3, 2023

Earlier, I posed the question.

What will the RBA pay attention to more: the trend-breaking September quarter lift in retail volumes or the history-making 12-month per-capita fall?

AMP’s chief economist Shane Oliver thinks retail sales growth has ‘arguable added to pressure on the RBA to hike again’.

Added pressure despite the perverse fact retail sales per capita are down a record 4% year on year.

That’s because the Reserve Bank focuses on overall demand, not per capita demand.

You can see that in Michele Bullock’s answers during a recent Q&A.

Asked about consumption, Bullock stressed that aggregate consumption is ‘still at a reasonable level’:

‘I know that a lot of people talk about the fact that per capita consumption is declining. Aggregate consumption is still at a reasonable level, but population is keeping that up, but per capita, people are spending less. So those are indications to us that spending is slowing, that demand is slowing and it’s not just interest rates that are doing that, it’s also inflation which is doing that. And that suggests to us that monetary policy is having an impact. We are seeing inflation slow. Having said that, again, these savings buffers, they’re sitting there. Do people use them to support their consumption or not? That’s one uncertainty. I mentioned housing prices again – housing prices are on the rise again and we know from history that rising housing prices tend to result in high consumption, so there’s that as well which is impacting things. So it is a balancing act and they’re the sorts of things we’ll be looking at, the inflation numbers obviously and our new set of forecasts.

‘Again, I want to qualify it by saying that I know that there are differences of experience here, that there are some people doing it much more tougher than others, but monetary policy is an aggregate demand sort of concept rather than individuals. We know it impacts people very differently. So, you’ve got that happening.’

> exp retail sales grth has arguably added to pressure on the RBA to hike again…which is rather perverse given real retail sales per person r down a record 4%yoy.
Of course rapid pop grth is playing a big role here & the RBA is focussed on overall demand not per capita demand!

— Shane Oliver (@ShaneOliverAMP) November 3, 2023

Is the Federal Reserve done hiking?

Is the Reserve Bank done?

Maybe.

My What’s Not Priced In colleague Greg Canavan thinks the RBA will be fools to raise next week.

But he also thinks investors shouldn’t care.

Leave the rate guessing to macro nerds and day traders.

Value investors have more productive things to do.

Like finding oversold opportunities.

As we discuss in the episode, markets are not at a capitulation low yet. Don’t be surprised by further falls.

But opportunities still lurk.

Greg, for one, is buying some ‘smashed up’ sectors.

Markets Haven’t Bottomed Yet | What’s Not Priced In

AMP’s Shane Oliver said the US reporting season is so far strong.

More companies are reporting earnings beats.

So far its been a strong US reporting season. pic.twitter.com/wckbdZ6SCv

— Shane Oliver (@ShaneOliverAMP) November 2, 2023

I do wonder how meaningful this is, though.

It’s not the number of beats but the size of the beats that matters.

100% of stocks could beat expectations. But if the beat was 1%, who cares?

If 50% of stocks beat expectations but the divergence with forecasts was over 20%, that’s meaningful.

Australian retail volumes rose 0.2% in the September quarter, according to seasonally adjusted figures from the ABS.

While the quarterly rise was small, it followed three consecutive quarterly falls.

Retail volumes fell 0.6% in the June quarter, 0.7% in the March quarter, and 0.6% in the December 2022 quarter.

Despite September’s rebound (even a dad cat can bounce), retail volumes are still down 1.7% on last year.

That’s despite ‘strong population growth’, noted ABS’s Ben Dorber.

Dorber continued:

‘Volumes are lower despite a period of strong population growth. On a per capita basis, retail volumes are down 4.0 per cent compared to this time last year, the largest 12-month fall in the history of the series.’

The largest 12-month fall in the history of the series!

What will the RBA pay attention to more: the trend-breaking September quarter lift or the history-making 12-month per-capita fall?

Household spending was up 4.9% on a year ago.

But the bulk of that spending went towards non-discretionary goods.

Non-discretionary goods spending rose 9.2%, with ‘households spending more on fuel as well as food and health services,’ said the ABS’s Robert Ewing.

Discretionary spending, however, only rose 0.3% over the year.

Michael Lewis was not the first to write a sycophantic love-piece about Sam Bankman-Fried.

Sequoia Capital beat him to it.

Unlike Lewis, it had the good sense to take its piece down. Lewis’s journalistic failure is still in every airport bookstore.

The piece was archived before Sequoia took it down, however.

Here are some of the best bits.

‘In 2017, when he was merely 25, SBF collapsed the so-called kimchi premium, an anomalous delta between the price of Bitcoin in much of Asia and its price in the rest of the world. It was a daring feat of arbitrage—SBF is the only trader known to have pulled this off in any meaningful way—one which quickly made him a billionaire and achieved the status of legend.’

‘SBF himself has amassed more wealth in a shorter period of time than anyone else, ever. The 2022 Forbes Billionaires List pegs SBF’s net worth at $24 billion. He’s now 30 years old. But we get ahead of ourselves.’

‘SBF, a physics major at MIT, had interned at Jane Street in the summer of 2013 and was one of the few such recruits invited back for a full-time job. He was put to work as a market maker trading global ETFs—more difficult than simply making a market for a single stock, in the same way Tri-Dimensional Chess is more difficult than the bog-standard variety.’

‘Highly mathletic, SBF breezed through Crystal Springs Uplands, an elite prep school in Hillsborough, California. Though he earned top marks, he kept to himself, spending most of his free time playing computer games (StarCraft, League of Legends) and a trading card game, Magic: The Gathering. But at MIT he found his tribe: fellow pledges at Epsilon Theta, a coed fraternity of supergeeks similarly interested in Magic, and video games. Thetans are fond of debating math, physics, computer science, linguistics, philosophy and logic problems—for fun—at alcohol-free parties.’

‘Still, when SBF analyzed the bright future that lay before him, something wasn’t right. He was, he realized, too secure. SBF’s mind had been trained almost from birth to calculate. As a schoolboy the hedonic calculous of utilitarianism had him trying to maximize the utility function (measured in “utils,” of course) for abortion. During his teenage gaming years, his mathematical abilities allowed him to sharpen his tactics—and win. And, of course, every trade SBF ever made at Jane was the subject of a risk/reward calculation.’

But the viral passage, immortalized by infamy, is this:

‘I’m satisfied with my meta-analysis until I realize that one can always increment the level of strategic play in this sort of game. It’s like poker. Level one is just thinking about how to strengthen your own hand. Level two is thinking about what your opponent’s hand is. Level three is thinking about what your opponent thinks your hand is. And so on. And, since SBF is obviously a genius, I should simply assume that, compared with me, SBF will always be playing at level N+1. Which makes my analysis of the intent behind SBF’s “books are for losers” idea spiral into infinity and crash, like a computer program stuck in a loop.’

SBF is guilty.

Is now a good time to remember Sequoia’s fawning hagiography of Sam Bankman-Fried?

Published in September 2022, the long piece talked up SBF’s smarts to the point of calling him a genius.

The venture capital firm took the article offline … but not before Internet historians archived it forever.

Sequoia has deleted its post titled, "Sam Bankman-Fried Has a Savior Complex—And Maybe You Should Too"

Here's a permanently archived link I made yesterday:https://t.co/OUKkOaAep6

— Edwin Dorsey (@StockJabber) November 10, 2022

Wow!

FTX’s Sam Bankman-Fried is done.

A jury found him guilty on all counts, likely condemning SBF to years in prison.

One of the biggest fraud cases ever — set to spawn dozens of books, films, and TV adaptions — concluded in a New York court room.

A jury of twelve unanimously convicted SBF on all seven charges laid.