Berlin Wall Collapse, Rising Rates Expectations, & the Age-Old Confusion Between a Montepulciano Grape from Abruzzo & a Town with the Same Name.

At 227 meters above sea level, between the valleys of the Tordino and Salinello rivers , where the hills are designed by splendid vineyards that define the entire landscape, lies the Tenuta De Sterlich .

The historic property now has twenty hectares of vineyards. The vineyards aim to be an authentic example of land worked with the right attention to sustainability, a place where the great native classics Montepulciano and Trebbiano are grown .

The owners have divided the vineyards into lots, according to the year of planting, with structures dating back to 1970 with Abruzzese pergola , together with more recent ones with simple guyot rows .

The soil is medium textured, tending to blue clay over a meter deep. The vineyards are worked in organic conversion with a holistic approach. Fertilization is with manure and green manure only: the goal is to obtain rows that are always grassy.

2022 Tenuta De Sterlich, Cerasuolo D'Abruzzo

Abruzzo, Italy 2022

In 1798 the Marquis Rinaldo De Sterlich, ancestor of Diego De Sterlich, whose memory the estate today harks back to, purchased the proceeds of a large liquidation of the assets of the Dukes of Acquaviva, ordered by the Kingdom of Naples.

This imposing plot of land – including the current territory of Mosciano Sant'Angelo, Selva dei Colli and Piane Tordino – was destined for the cultivation of vineyards by order of the Marquis Rinaldo. Hills now dedicated to viticulture, as rugged as they are generous, which extend as far as the eye can see and tenaciously preserve their memory.

After more than two centuries from that noble acquisition, in 2017 we took over the historic vineyard from an ancient Teramo family, returning to produce the great native wines of Abruzzo. Today, the Estate passes on the mystery and creative identity of these places: and the personal idea of viticulture is realized, through the vision of an ideal bridge between land, cultural heritage, memory and wine.

Diego De Sterlich Aliprandi (1898-1976), known to the crowds of the 1920s by his pilot nickname “ Marquis Volante ”, was the last descendant of the Austrian-born De Sterlich family of the Marquises of Cermignano branch . He inherited, from his father and paternal uncle, an immense fortune made up of thousands of hectares of land, palaces, castles and towers. But please hold this thought...

Now, we can try answering a seemingly unrelated question of what does the collapse of the Berlin Wall has to do with investors, who are increasingly taking their chances on higher $ Price MBS.

Regardless of the Fed's sentiment and macro data directionality, there remains a non-insignificant universe of committed H4L-ers. To be sure, their logic deserves attention. Throughout the history of the Western civilization, we have gone through cycles of centralization and decentralization. An example of the latter began at the end of WW2, with two great Empires (that of Britain and France) promptly collapsing, setting the forces of decentralization in motion.

Then, there was the Berlin Wall and the collapse of the Soviet Empire, which served as a culmination of the most recent decentralization cycle. Aside from the obvious and well-publicized events (such as the collapse of the Berlin Wall), the decentralization cycle within Western Countries themselves led to an unprecedented re-distribution of power away from the central governments and towards states, localities, provinces, and municipalities, where many (though not all) government functions can be performed much more efficiently.

Sadly, we are now moving in an opposite direction, kicking off another global cycle of centralization. Historically, that suggests a rise in populism, increased spending by the "Federal" governments, specifically military spending, as well as intensification of military confrontations (big and small). Clearly, if this logic were to play out at the present time, it will inevitably lead to an increase in rates throughout the world.

While recognizing some sad validity of this argument, the only reason we brought them up in the context of MBS valuations is to show why a large group of H4L investors continues to be an important source of market liquidity (especially in higher coupons).

For these investors, we suggest going as high UIC as they can (without a significant liquidity give up), which in the present moment means buying 30-yr 7s, that look rather attractive on the OAS basis, despite fast projected speeds. And regardless of the strength of their convictions, most H4L PMs still wish to hedge their bets by buying some call protection, provided that it can be obtained at relatively low pay-up levels.

And now it is time to drink some serious Montepulciano (not to be confused with Montepulciano region).

Cerasuolo d’Abruzzo is one of those rare wines that defies simple categorization. Yes, it’s technically a rosato, but the best versions have so much structure, depth, and savory complexity that they can easily take the place of a lighter red. The most famous version is that of Valentini, and those bottles easily fetch into the triple digits. It’s a remarkable wine, but here’s a little secret: I like today’s brand new discovery from de Sterlich better!

From a small, two person estate that is just a few years old, this vibrant, magenta hued wine is bursting with wild strawberries, rosewater, and tons of earthy, spicy complexity. It’s a genre busting, deliciously untamed wine that easily bridges seasons, meals, and almost any occasion. In truth you really must try this wine to believe it, and then you’ll want to have cases of it on hand at all times!

Tenuta de Sterlich was founded way back in 2017 by two enterprising friends, Roberto Fracassa and Alessandro Massacesi, who grew up in the nearby “city” of Teramo. The name of the estate is a tribute to Roberto’s ancestors who came to the region from Austria 500 years ago. As i mentioned earlier, the last relative to carry that name was Diego de Sterlich, a renowned winemaker, bon vivant and racing enthusiast who helped establish the Maserati brand. Roberto’s father, no slouch himself, founded a very successful salumeria whose products are coveted throughout Italy and beyond, and through him he became acquainted with one Professore Seghetti, a highly regarded enologist who was a consultant for many years at . . . Valentini! The Professore continues to work with Roberto and Alessandro to this day.

The estate sits on 23 hectares of pristine land in the Abruzzi hills, nestled between the Adriatic and the Gran Sasso mountains. There are 19 hectares of vineyards here, the oldest of which date back to 1960, mostly planted to Montepulciano, Pecorino, and Trebbiano but also a bit of Chardonnay and Sauvignon Blanc. Roberto and Alessandro have always farmed the entire property using organic and biodynamic methods, and will soon be certified biodynamic. The Montepulciano d’Abruzzo is definitely their flagship cuvée, but a small amount of fruit is set aside every year to make today’s mind bending Cerasuolo.

Everything at De Sterlich is hand harvested, and for the Cerasuolo the fruit is de-stemmed before undergoing 24 hours of skin contact and a wild yeast fermentation in cement tanks. That extra bit of skin contact is what gives this Cerasuolo its shimmering magenta hue with hints of blood orange at the rim. Serve cool to cold: it will be crisp and refreshing at 48-50 degrees and then gain depth, complexity, and savory spice as it warms up.

Notes of wild strawberries, crushed raspberries, dried roses, fennel, sage, orange zest, white pepper, and damp earth surround a mineral, salty core that finishes dusty and dry with just a tiny hint of tannin. It’s so versatile: a classic pairing is a spread of charcuterie, aged sheep's milk cheeses, olives and pickled vegetables, but don’t stop there as it is also perfect for pulled pork, carne asada, tuna crudo, any iteration of pizza, or go super traditional with some Abruzzese lamb skewers, aka arrosticini. The world is your oyster–oh ya, it would be great with barbecued oysters too!

Thank you so much for taking the time to read & drink

Sincerely,

Kirill A Krylov, CFA, PhD