Watching through a telescope from atop the Citadel, waiting for an opportunity to tell Rictus what to do. All to build a better world, of course.

USA/Hexagon
Joined October 2020
"Do not my friends become addicted to water. It will take hold of you and you will resent its absence." - Immortan Joe. Not financial advice.
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$HBCP news after the close: unhappy quarter and CEO change.
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CorpusColossus retweeted
J’ai entendu dire que la France était finie, qu’il était trop tard pour la sauver. Mais la France est toujours aussi belle, enviable même. Sa grandeur n’a pas disparu, elle ne demande qu’à renaître. Nous avons surmonté en un an un problème cent fois plus grave, sans avoir les moyens dont dispose la France. La France pourrait y arriver en une semaine.
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I'm an American bank guy who goes to rural France 4-5x/year. My academic background is European History. The conservative forces of rural France have crushed urban liberalism many times since the Revolution (1848, 1871, 1959 and one could argue Vichy in 1940 as well). That's why they're on the 5th Republic. It's setting up for that again next year. Background: France is run by highly educated mandarins for the benefit of the retiree class. There is little economic growth or job opportunity for the young because taxes and regulation are so high. President Macron's mild attempts to reverse this have been very unpopular with the retiree class. The school funding protest is really about lack of opportunity post-graduation, which is valid. The Stalinist LFI and the essentially unemployed immigrant youth are exploiting the government's unwillingness to unleash its experienced and violent but not numerous riot police on the students. Near-term, if the students stay home tonight, the police can start breaking heads with less fear of repercussions. If they don't, the govt is waiting for a spectacular outrage to justify it. Long-term, the next Presidential election is in the spring. One should assume that National Front will win by a lot with dire consequences for the immigrant community. Financially, France's social spending and still very capable (and conservative) military can not be maintained, yet the National Front wants to increase them. A financial crisis and EU exit can't be ruled out. Nor can a transition to a new form of government. TLDR - we haven't yet seen the guys that Gerard Depardieu used to play in cop and detective movies. They about to come on to the stage.
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I'm surprised the reaction to $NRIM's miss is so mild. Not even heavy volume in the stock.
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The KYC rules are no joke. Even if your friendly neighborhood bank branch isn’t paying much attention, somebody at HQ probably is. Hilarity never ensues.
The Month I Ran My Hedge Fund from the Local Chase Bank After Enron went bankrupt in 2001, I decided to start a hedge fund. Until then, I’d spent my entire career at a large company, trading off its balance sheet. I knew how to trade, but knew little about the logistics of launching and running a fund. Plus I had no peers in Houston who could help guide me through the process. I found out-of-town legal help. My clearing broker was a NY investment bank, Smith Barney. I knew I needed two bank accounts: one for the business to pay rent, salaries, etc and one for the investor money that supported the trades. I figured, incorrectly it turned out, that I could stay local for the latter. I figured I needed a national, sophisticated bank so I went to my closest Chase branch and asked to open a business account. They were very accommodating and asked some basic questions. Suffice it to say, they were as new to hedge fund finances as I was. But they were happy to have the new accounts, especially since one would be funded with a 6-figure deposit and the other would eventually be funded with millions. In the spring of 2002, I opened the first account. I used it to pay for normal business expenses: rent, office equipment, legal fees, etc. All was fine. In August, I called my external investors and told them to send their funds to join my personal investment in the fund to the second Chase account, the limited partnership account. They did. Chase confirmed they received the funds and had no problem. Quick aside, energy trades in 2002 could be done on an exchange or over-the-counter directly with a counterparty. Most trades could be executed on exchange and be relatively capital efficient but some instruments only traded directly with counterparties. Today, exchanges clear almost any nat gas product one would want to trade but it was less so back then. I had friends at another trading house, Sempra, who fast-tracked a credit arrangement for me to trade OTC there. I would have to post cash as margin to support my trades given I was not a so-called “credit-worthy counterparty,” but it was fine. I wasn’t planning on taking large net positions given my small capital base, though sometimes I might be long on the exchanges and short to Sempra, or vice versa. I would need to post initial margin and maintenance margin both at my clearing broker and with any direct counterparty to account for the daily price swings at both places. This meant I would have to move money between my prime broker, where I kept my exchange trades, and Sempra, several times a week. The second week of August I started trading. The first thing I needed to do was send more than half of the LP account funds to my prime broker, where most of my trades would be. The neighborhood Chase branch executed this wire with no problem. Trading at first was small. The second week I did my first trade with Sempra. I had to post margin with them. Chase executed that wire with no problem. By the third week my trades were picking up. I ended up long with Sempra and short on the exchanges. When the market went up, I had a surplus at Sempra and would ask them to send me those funds, as the credit agreement allowed to me to do. I needed that money to cover the offsetting exchange losses. Very quickly I was moving hundreds of thousands through my local Chase branch several times a week. Red flags quickly went off at the bank. Suffice it to say, I had not prepared them for this level of activity. The following week the market fell. I needed to send money to Sempra hundreds of thousands of dollars. I told my prime broker to send some of my account surplus there to Chase, and asked Chase to send some of that to Sempra. That’s when my 4 week old hedge fund was hit by an almost fatal blow. Chase accepted the wire from Smith Barney, but I found out the next day that they did not send the wire out. Sempra was calling to ask where the margin money was. I didn’t know. I called Chase and they told me there was a hold on it but it would go out later that day. I checked in the late afternoon. It had not gone out. I was at the bank went it opened the next morning. I explained how I needed this wire to go out. The account had been frozen, they said, until they got a green light from their compliance department. They didn’t properly “know your customer” and froze my account until they could understand what was going on. This level of activity out of a new account of this size was not something this branch had ever seen before. Nor did they understand an energy hedge fund with over-the-counter trades. I was furious they had not explained this the previous day and asked them to just send out this one wire and then we’d sort it out. I’d move to another bank asap. They declined. I pleaded, just send this one. It wasn’t working. I panicked. I had failed to meet my Sempra margin call. They could close my trades. I called Sempra from the bank, explained the issue, and convinced them to give me a 24-hour grace period. But if I didn’t meet my cash call by the next business day, they would close my trades. Then I would be imbalanced on the market with my just my short trades on the exchange. With a sharp market move in the wrong direction, my little hedge fund would have been toast within a month of opening. Throughout this, normal bank customers were flowing in/out of the bank. I told them I wasn’t leaving the bank branch until they sent the wire. It was my money. I started to raise my voice and cause a scene, the best I could. I hoped they would send the wire just to get me to quit disrupting their normal flow of customers. I’m normally a quiet guy but my business, and maybe career, depended on convincing the branch manager to send this wire out. After two hours and a lot of calls with higher-ups, they consented, but they said they had to send a team to my office the next day to inspect my “business.” The office space I had was nothing to fancy, to say the least. The building was fine, an 11-story class A. The office, a sublease, was 3 rooms. Open the door and you were immediately on the “trading floor”, which was one row of desks where the 5 of us sat. It had a small kitchen and a tiny conference room to the side. There were a lot of computers but of course no receptionist, no art, no waiting area, just a handful of 20 or 30 something year olds in shorts (August in Houston) with a football nearby. Chase sent 3 bankers in suits. It was… awkward. I led them to the conference room and tried to explain what we did and why the funds had the velocity they did. They quickly told me that they were not equipped to handle my account and I needed to find another bank by the end of the week. I asked them to facilitate the wires for another couple days until I could, which they agreed to. I called Smith Barney, my broker in NY, and explained the situation. They immediately understood and helped me open a bank account there. In retrospect, I should have had my investment account there from the beginning. I’d already had my business account at the local Chase and figured they were my bank. I had not properly distinguished between local Chase and JPMorgan Chase. I didn’t know any better. As I later learned more about banking regs and KYC rules, I realized the local branch acted exactly as to be expected given the circumstance. It was my fault. Luckily, it got straightened out and I can laugh about it now. I still think about how naive I had been every time I drive by the bank branch.
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$AXP gets hit with $350 AML fine. This is one financial crime which is still being strictly enforced. occ.gov/news-issuances/news-…
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Head of Commercial Lending at $TBBK goes away effective LAST WEEK with a $2.5 million package. Can't wait for the spin on that one.
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There's a huge amount of noise in the market, but it's not easy to discern an actionable signal or a undisputedly unjustified price disparity. The wisest course of action is to do nothing. But there's so much noise that it's very hard to do nothing. Consider trading small amounts on the fringes of your portfolio to make more strategic inaction palatable to your nervous system. Don't wear yourself out. The signal will come, don't be exhausted when it does.
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Are maritime flags of convenience on its way out? Attacks today in the Black Sea on ships "from" Togo, Palau and the Marshall Islands, none of which have navies to do anything. Events in Hormuz and Bab el Mandeb also indicate that freeriding on the US Navy is a dead strategy.
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Two hours after the market close $NBHC announces $50 million in credit losses tied to franchise lending and fintech activity. This should mean a loss for 3Q. But they reupped the buyback, so...
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What's going on at $FRME? CEO retiring at 55. Previous CEO was moved aside at age 60 to make room for this guy. Next CEO is 60 and came to bank along with first CEO. Health? Other personal issues?
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In retrospect, it's unbelievably crazy that the Truman Administration let Ted Williams fly combat missions in Korea in 1953 for a bloody war that was going nowhere. It would be like Trump calling up Mike Trout and sending him to Kharg Island. And Trout would get wounded.
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Pitchers with consecutive 10+ WAR seasons in the last 100 years: Bob Gibson in 1968-9 Lefty Grove in 1930-1 Randy Johnson in 2001-2 & Wilbur Wood in 1971-2 Bet you didn't see that one coming.
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I thought the $WAFD deal didn't make a ton of sense, but am frankly surprised by the vehemence of the market's loathing. Please explain it to me like I'm index-hugging golden retriever.
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My guess is $WAFd is (1) huge embedded losses on fixed rate loans meant ROE would drag for years (2) didn’t have stock price to buy others (3) CEO had plane crash and remarriage in last few years and so less patience for the grind ahead (4) so merge into a bigger market cap and trigger the change in control. The corollary to (1) is they had the embedded rate risk because that was the only way they added value for the customers.
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Extremely large interest rate marks in tonight's $WAFD deal. Got to respect the decision to punt rather than sell 25% new shares to bury their past mistakes.
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CorpusColossus retweeted
The reason people hate flock cameras is that they know the government will not use them to lock up the insane depraved criminals who will stab you while you walk through Times Square but will instead mail you a ticket for speeding on an empty highway at 2AM.
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Cooper Flagg is the only player in NBA history to have graduated from a Maine high school that was NOT Maine Central Institute. Make it make sense.
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I read a lot* of bank histories. The latest was the 1982 history of Citizens National Bank of Waco, TX. It was #2 in town then and was in process of selling to Republic of Dallas, which would fail into NCNB and change its name to NationsBank, then $BAC. Its archrival was FNB Waco, which was selling to MBank, survived M's failure, sold to Norwest and became $WFC. My point is that the #1 and #2 banks in Waco in 1982 are now #8 & #9 in town. #1-7 are local banks. The megabanks can meet the needs of megabusinesses and 9-5 drones. They lack the flexibility and decentralized decision-making to meet a lot of needs. Technology has accelerated this process. The future does not automatically belong to the megabanks. An interesting tangent in the book was the extent to which Texas cities bid on universities in the early 20th century to get them to move. Ft Worth stole TCU from Waco. Waco fought off Dallas to keep Baylor. * this is #499
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The corollary to this is that overall the talent at the megabanks in their secondary and tertiary markets is terrible because the ones with any talent get promoted to a bigger profit pool very quickly.
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