Pete

[Pete @CompoundRich]

That’s because pre GFC they were bolstering their earnings by engaging in interest rate arbitrage by levering up with debt to buy higher yielding, sub-prime mortgages. The G-fee’s are where they are now because that is compensatory for the level of balance sheet & credit risk they have. Unless you understand insurance underwriting pricing please don’t flippantly comment on where the G-fee’s should or can be for the GSE’s. It’s painful. Regards from a $FNMA shareholder.

@JonOksenholt @CaliRefugee1 @BillAckman

[Pete @CompoundRich]

@HormuzLetter Wtf does that have to do with Hormuz? lol. Clearly a foreign propaganda account.

[Pete @CompoundRich]

@CaliRefugee1 Well said. $FNMA $FMCC

[Pete @CompoundRich]

Well said Jon! Total twaddle from these morons.

Their comments are akin to suggesting an insurance company should just cut their premiums by 75% whilst taking on the same risk.

@1gregsher & @360coby suggestion would result in a much riskier and more unstable mortgage market, which would fall on taxpayers.

Socialist nonsense.

All of this is making @BillAckman ‘s point.

[Pete @CompoundRich]

@360coby @1gregsher Do you two have any idea how the GSE’s business model works? Guarantee fee’s are akin to insurance. What on earth makes you think an insurance company can lower what they charge on a whim whilst taking on the same level of risk? You would inherently be creating more risk in the system for the largest guarantor of mortgages in the world. And you think they wouldn’t undertake less business as a result?

These suggestions are on par with the likes of democrats wanting to cap credit card fee’s - which would instantly create a credit crunch.

The GSE’s are not a socialist piggybank tool. Just stop. Jesus.

[Pete @CompoundRich]

@jaysyoon I would add that if capex is actually $39M / MW as guided, and revenue per MW is actually $10-15M, and useful life is actually sub 10 years, this is a negative return business.

[Pete @CompoundRich]

Here;

Capex: $30M / MW (generously low)
5 yr contract revenue: $100M ($20M / MW)
Ebitda margin 60% = $60M 5 year ebitda
5 yr Depreciation (on 10 year life) = 15M
Minus interest cost of 10% (on only 30% of total capital invested, ie $9m of debt) = 4.5M interest cost

= $40.5M pre tax operating profit over the life of a 5 year contract / 30M invested = 35% / 5 years = 7% pre tax annualised ROIC

Minus SBC is how he gets to his 2-3%.

[Pete @CompoundRich]

With the conspiracy hat on - Maybe they are well aware the only way to get rates down sustainably is to hike enough to invert the curve and make a ‘policy error’ in order to cut down to 2-3? With that in mind they need to make excuses as to why they are hiking. It’s always escalator up, and elevator down.

If not, they get stuck with a 4-5% 10 yr for years with nominal gdp at 4-5… ?

[Pete @CompoundRich]

@jukan05 Logically SpaceX will cancel earlier then? If ANT are already stating they will cancel.

[Pete @CompoundRich]

@Austan_Goolsbee - Services cost MORE when rates go up. Why? Because;

A) Debt servicing costs for all indebted service based companies go up, so they raise their prices, and;

B) The top 10% of cohorts get MORE income on savings, so they spend & consume more.

How is this not economics 101?

@SecScottBessent @KevinWarsh

[Pete @CompoundRich]

@AbdulElSayed The bond market will fire you @AbdulElSayed

[Pete @CompoundRich]

@elonmusk @KatieMiller What about polysilicon?

[Pete @CompoundRich]

@AndreasSteno I don’t usually agree with you but this is spot on. His bravado of stopping forward guidance looks stupid when all the fed speakers go on CNBC like they are celebrities.

[Pete @CompoundRich]

@pulte @StephenM @SecScottBessent @BillAckman

[Pete @CompoundRich]

@pulte @pulte - you’ve gone from ‘the biggest IPO of all time,’ to ‘expanding title insurance with an update by December.’ Come on….

The radical left takeover in one month. You need radical action!!! $FNMA $FMCC

@StephenM @pulte @SecScottBessent

[Pete @CompoundRich]

@DrJStrategy Absolutely correct. Makes no sense not to speak and then let all the fools run wild on CNBC like celebrities.

[Pete @CompoundRich]

@TaiwanMonitor @Jkylebass

[Pete @CompoundRich]

@DrJStrategy Correct. Fed could hike and invert the curve into a slowdown in inflation promting a sustained cutting cycle. Maybe a classic cycle for once?

[Pete @CompoundRich]

@biancoresearch Now do the same graph but with diesel

[Pete @CompoundRich]

@MIA95629998 Absolutely spot on.