Mid-Week Updates, No 10

Poland, Ukraine, Trump and Markets

Yesterday a missile that landed in the Polish border town of Przewodów killed two people. Within short order the blame fell on Russia with interpretations ranging from a deliberate attack to the possibility that Ukrainian air defence systems took a missile down and that the debris inadvertently landed in Poland. From Bali, Joe Biden weighed in arguing that there was no information to confirm that this was indeed a Russian missile. It was a decent attempt to play down the incident as this is exactly the sort of scenario that many were afraid of: the intentional or accidental launch of hostilities on NATO territory. And Poland in particular has, given its tragic history, reason to be on edge. Also some over-enthusiastic Ukrainian voices spoke up yesterday arguing that this was the moment they had been waiting for and that NATO was now to get involved by invoking its famous Article 5. Too keen and way too fast I think.

Question to ask: why would Russia even think of doing this if it is already decisively losing against Ukraine, why on earth take on NATO? It is now confirmed that we are dealing with an accident and it could well be a botched take out of Russian missile with some inadvertent Ukrainian fingerprints on it. That however does bring the focus back to more surface-to-air support for the embattled nation as it continues to be under a vicious barrage of missiles and drones targeting civilian areas.

Trump

I kid you not, seriously. Even sitting behind my desk I managed to fall asleep watching Trump announcing he is running for president again. Apparently I was not the only one, most commentators highlighted the low energy and pretty boring speech. There was little new in terms of ideas and policies, the audience in the room was far from excited and it droned on for way too long, well past the hour. Many networks tuned out. More or less concurrent with this uninspired event came news that Rupert Murdoch was no longer supportive of a Trump bid, his daughter Ivanka announced she was not going to be involved this time and even Laura Ingraham failed to spend meaningful time and enthusiasm on the event. My bet is that it is indeed over and that a DeSantis coalition is starting to build for 2024. The old man will of course not go without a fight, much like Russia he will drag this out for as long as he can. He will keep dominating the news. A sad, but given the political dynamics, interesting spectacle.

Markets

So hey, there is life in a bear market after all. The past week has given us some strong gains on the markets as some early clues have started emerging that inflation may be tapering off. It is interesting to note that the Dow Jones is off for the year by only 7.28% whereas the tech heavy NASDAQ lost 37.74% based on my back-of-the-envelope calculations. If you have a balanced portfolio the damage may therefore be limited and you can find some rewards and pick up some value here and there. The big losers in tech this year are Amazon, Meta (Facebook) and Tesla, although the latter’s collapsing share value is likely the result of Elon having to keep selling stock to keep the Twitter venture alive.

It is also evident to me that the supposed meltdown is not nearly as bad in the area of private deals as some had initially expected. I continue to see deals being done at reasonable albeit somewhat lower valuations, but the pace of new companies getting funded continues. The vast amounts that were raised during the recent boom years will need to be deployed, in particular if we are entering an environment where the approach to interest rate hikes will be less aggressive. It is actually a great environment to do new investments much like it was in 2008/09 crisis years. The hype and FOMO instincts are now gone, and so will be the many start-ups that benefited from these incredibly frothy conditions. What is left standing is often great quality at somewhat reduced prices. I happen to be working on a few right now. Enjoy and invest wisely. And don’t ever get involved in stuff like this.

Trudeau and Xi

Woke up to this fascinating conversation. Xi not happy and being dismissive, Trudeau equally unhappy but at least standing his ground. Caption it!