300MM Job Losses Coming

April 7, 2023

Leyendecker Executive Search

Welcome to This Week’s Leyendecker View

Our Lord has written the promise of resurrection, not in books alone,
but in every leaf in springtime.
– Martin Luther King, Jr.

THOUGHTS FROM DOUG

Former President Trump was indicted. Welcome to the land of third-world politics.

New York’s governor tried to push back their climate law in order to keep higher energy prices from harming the economy and lower-income citizens. Pressure from academics, environmentalists and lawyers forced her to back off.

Maybe democracy has already died and been replaced by bureaucracy.

California’s snowpack this winter has equaled the record set in 1952. Guess we didn’t understand climate change back in 1952.

Nice to see a story from the NY Times a few days ago that praised The Chosen. It’s a great series. Something has to reboot a sense of community in this country. Maybe there’s no better place to start than in churches, where communities still exist.

Deposit outflows from banks since the SVB collapse have totaled around $200B. That sounds like a big number, but bank deposits still sit at more than $16T.

To hold onto deposits, banks will have to pay savers more interest, which means their earnings will go down unless they charge their borrowers more, which means loans are going to be more expensive in the future.

Real estate and PE investors are likely going to be asked to put more equity in assets and companies that need refinancing. The key for banks, shadow banks and investors is when refinancings need to happen. This is why everyone in financial assets wants rates to drop soon and quickly. If not, financial asset values will have to drop.

Are we at the beginning of a giant value reset for financial assets?

AppleTV+ recently debuted Tetris, a movie about the video game, which was created by a Soviet programmer. A Western entrepreneur goes to Russia to negotiate a Tetris license. In one scene, the two main characters are at a bar filled with young Russians, where it is announced that Estonians have taken to the street in protest. The crowd cheers. The announcer then says, “All of us are tired of hypocrisy and the career politicians.” Wait, wait, wait…This was the Soviet Union, right?

We are what we consume. What sort of information and media are you consuming? What are you feeding your mind?

THE ECONOMIC VIEW

US job openings dropped in February
But not enough to be worrisome.
While job gains exceeded expectations

For several reasons
US capital investment is making a comeback

The Conference Board Economic Survey
Suggests we still might pull off a soft landing.

A BANKING CRISIS???

Banks have $25B of junk debt
Who’s going to buy it?
Decline in loan values is widespread

Small banks lose $100MM+ in deposits
As big banks see a boost in deposits.

Credit Suisse was a mess.
But China’s banks may be worse

THE INFLATION BOGEYMAN

Second-hand goods sales boom
Inflation changes consumer behavior.

The Fed’s Global Supply Chain Index
Is now in deflationary territory