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$KKR was a negative catalyst for the entire financial sector today with its announced convertible raise. Price talks have this 3 year convert at 6.5% coupon and it was rated BBB+ vs KKR's A rating. Deteriorating credit picture.

S&P 500 earnings estimates have been falling since Aug'24 and index trades on 21x P/E. NASDAQ EPS estimates just started to roll over. Feel free to buy the dip.

$FTAI Stock +11% in pre on 8-K filing announcing positive outcome to Audit Committee's independent review of short-seller claims. Earnings and 10-K will be released on schedule (post-close on 26 Feb). As expected, Muddy Waters report just another smash-and-grab.

Morgan Stanley revising down '25/'26 GDP growth (1.9->1.5% and 1.3->1.2%), raising inflation estimates by 20bps, and getting more negative on credit, which has demonstrated abnormally low beta in recent risk asset correction. We agree and have been short $HYG

$BABA / 9988 HK Pushing higher on Q325 earnings (BABA FY25 ends on 31 Mar 2025). How awesome were earnings? BOTTOMLINE first: FY25e EPS growth of 3.6% --> 13% in FY26e. Did you expect more spice? Or is that what growth looks like in 2025? Taobao/Tmall CMR rev +9% vs. street +5% (also better EBITDA mgn 45% vs. 43% exp) ; Ali Cloud rev +13% vs. street +10% (in-line 9.9% EBIT mgn) Cloud growth was capex-driven: After 3 years of falling investment, FY25e capex tripled to CNY95bn (>2x street est.) and will stay at a similar level in FY26. This led Cloud rev growth to accelerate 6%/7%/13% in Q1/Q2/Q3. Now analysts are looking for 23% rev growth in FY26. Cloud rev exp to grow 11% in FY25e and 23% in FY26e (this growth is extrapolated into out years by most analysts) with EBIT margin expanding from 9.8% (FY25e) to 12% (FY26e). e-Commerce rev growth (full year FY25e) will probably grow 5% and optimistically stabilize at this level. EBITDA margin is expected to decline 150-200bps YoY. e-Commerce is growing in line with the economy with shrinking margins while cloud/AI is expected to drive most earnings growth for BABA. BABA and peers saw stagnant cloud growth for the past 3 years as investment also stagnated. In the past 12 months, they have primed growth by reinvesting. Thus far the results are positive, but where is the growth coming from (startups?) and will margins be sustainable/expandable as is currently being forecast? We ask these questions because, historically, Chinese businesses and consumers have not been willing to pay for cloud services. They still are not willing to pay for AI services. Thus, one can deduce that most demand for cloud services is coming from other large internet businesses and startups. Who may or may not want to use Ali Cloud vs. building their own capacity in VNET/GDS data centers. BABA is trading on 14x FY26e P/E vs. AMZN 35x/GOOGL 20x. Historical discount has been 50% on political risk (govt control of BABA) and lack of growth. Based on the optimism reflected in the BABA estimates at this point, I think 14x is fair to slightly expensive, particularly if growth delta will peak with investment growth delta. Bonus tidbit for perspective: BABA has fired abt 60K employees in past 3 years! All hail the new economic model! (report snippet credit to Ronald Keung of GS, some very nice detail in this earnings note)

Bought some 9023 JP Tokyo Metro; selling HKEX 388 HK and 3908 HK CICC. Baidu dying after not getting invited to Xi's corporate shindig yesterday (and generally failing as a company); BABA losing steam on Grok news; Southbound retail buying flow from China into HK now falling BAIDU (9888 HK)

$KKR was a negative catalyst for the entire financial sector today with its announced convertible raise. Price talks have this 3 year convert at 6.5% coupon and it was rated BBB+ vs KKR's A rating. Deteriorating credit picture.

S&P 500 earnings estimates have been falling since Aug'24 and index trades on 21x P/E. NASDAQ EPS estimates just started to roll over. Feel free to buy the dip.

Morgan Stanley revising down '25/'26 GDP growth (1.9->1.5% and 1.3->1.2%), raising inflation estimates by 20bps, and getting more negative on credit, which has demonstrated abnormally low beta in recent risk asset correction. We agree and have been short $HYG

$BABA / 9988 HK Pushing higher on Q325 earnings (BABA FY25 ends on 31 Mar 2025). How awesome were earnings? BOTTOMLINE first: FY25e EPS growth of 3.6% --> 13% in FY26e. Did you expect more spice? Or is that what growth looks like in 2025? Taobao/Tmall CMR rev +9% vs. street +5% (also better EBITDA mgn 45% vs. 43% exp) ; Ali Cloud rev +13% vs. street +10% (in-line 9.9% EBIT mgn) Cloud growth was capex-driven: After 3 years of falling investment, FY25e capex tripled to CNY95bn (>2x street est.) and will stay at a similar level in FY26. This led Cloud rev growth to accelerate 6%/7%/13% in Q1/Q2/Q3. Now analysts are looking for 23% rev growth in FY26. Cloud rev exp to grow 11% in FY25e and 23% in FY26e (this growth is extrapolated into out years by most analysts) with EBIT margin expanding from 9.8% (FY25e) to 12% (FY26e). e-Commerce rev growth (full year FY25e) will probably grow 5% and optimistically stabilize at this level. EBITDA margin is expected to decline 150-200bps YoY. e-Commerce is growing in line with the economy with shrinking margins while cloud/AI is expected to drive most earnings growth for BABA. BABA and peers saw stagnant cloud growth for the past 3 years as investment also stagnated. In the past 12 months, they have primed growth by reinvesting. Thus far the results are positive, but where is the growth coming from (startups?) and will margins be sustainable/expandable as is currently being forecast? We ask these questions because, historically, Chinese businesses and consumers have not been willing to pay for cloud services. They still are not willing to pay for AI services. Thus, one can deduce that most demand for cloud services is coming from other large internet businesses and startups. Who may or may not want to use Ali Cloud vs. building their own capacity in VNET/GDS data centers. BABA is trading on 14x FY26e P/E vs. AMZN 35x/GOOGL 20x. Historical discount has been 50% on political risk (govt control of BABA) and lack of growth. Based on the optimism reflected in the BABA estimates at this point, I think 14x is fair to slightly expensive, particularly if growth delta will peak with investment growth delta. Bonus tidbit for perspective: BABA has fired abt 60K employees in past 3 years! All hail the new economic model! (report snippet credit to Ronald Keung of GS, some very nice detail in this earnings note)

$FTAI Stock +11% in pre on 8-K filing announcing positive outcome to Audit Committee's independent review of short-seller claims. Earnings and 10-K will be released on schedule (post-close on 26 Feb). As expected, Muddy Waters report just another smash-and-grab.

Bought some 9023 JP Tokyo Metro; selling HKEX 388 HK and 3908 HK CICC. Baidu dying after not getting invited to Xi's corporate shindig yesterday (and generally failing as a company); BABA losing steam on Grok news; Southbound retail buying flow from China into HK now falling BAIDU (9888 HK)