“We Will See Spectacular Failures”

Welcome to This Week’s Leyendecker View

The safest way to try to get what you want
 is to try to deserve what you want.
– Charlie Munger

THOUGHTS FROM DOUG

The new tech wreck could be around for several years. There are tons of unprofitable tech companies. “We will see spectacular failures,” said VC Par-Jorgen Parson at the 2022 Web Summit tech conference.  

TSMC chairman just dropped a bombshell: “Globalization is almost dead. Free trade is almost dead. And a lot of people still wish they would come back, but I don’t think they will be back.”

Maybe this is how things work: Inflation drives up prices and the cost of living. After workers start to feel the economic pain of inflation, they ask for raises. When wage costs rise, companies have to raise prices again—and then we are in a wage-price spiral. This seems only natural: You think workers are NOT going to ask for a raise after they feel the pinch of inflation? Why, how and when does this cycle stop?

Maybe growing unemployment will cause workers to stop demanding higher wages. But then they will be stuck with higher prices but without the higher wages to match.

Inflation is a rate of change, not a level. Inflation looks to be falling from here on, although we’ll see if China’s reopening changes that. But even if the inflation rate falls, the absolute level of many prices probably won’t. 

A friend of mine told me at breakfast a couple days ago that nanny prices in his neighborhood have gone from $20 an hour to at least $27 an hour over the last couple of years. You think nannies will go back to $20 an hour?

Facebook is threatening to pull news from its feeds if governments keep passing legislation mandating that Facebook pay publishers for news. I wonder if such regulation would kill newsletters like this.

Hawaii’s Mauna Loa is erupting. Indonesia’s Semeru is erupting. New studies suggest there is more magma under Yellowstone. Maybe this theory on the earth’s exothermic cycle has some influence on climate change. 

Ya think there is more than one influence on the earth’s weather and climate besides hydrocarbons? 

Cheap Chinese labor: gone. Cheap global capital: gone. Cheap energy: gone. Now how are we going to get inflation back down to 2%? And what’s going to be our next economic driver?

THE ECONOMIC VIEW

Not just another recession
Suggests former PIMCO head.

Economic soothsayer Larry Summers
Says interest rates must go higher

The savings rate plunges
Lowest level since 2005.

THE INFLATION BOGEYMAN

This stock strategist
Sees 5% inflation for a decade.

Home heating oil prices
Almost at a record high.
While gas prices keep falling

Globalized food chains
Bring more risk to food prices.

THE LABOR VIEW

The 4-day workweek
Does it actually work?

Going to work 5 days a week
Is it a thing of the past?

The robots are coming
It doesn’t look good for workers.

Delta pilots win 34% raise
The new pay raise benchmark?

MEANWHILE IN EUROPE

A winter cold snap
Is about to test Europe.

New LNG infrastructure in just 5 months
German ingenuity makes it happen

France bans short haul air flights
Switzerland could ban EV use
Europe, our role model.

BREXIT MESS

The Brits are going on strike
Like they don’t have enough problems.

London’s global financial clout
Looks about to disappear.

Soaring UK mortgage rates a problem
Most mortgages are variable and reset.

PLAYING WITH FIRE

Russia keeps attacking Ukraine civilians
Someone teach these guys a lesson.

The sanctions against Russia
Are not working—yet.

Ukraine hits Russian targets
Drones can go almost anywhere.
Here come the naval drones

GLOBAL

Is Turkey playing both sides
To purchase F-16s from the US?
And possibly purchase missiles from Russia?

Iran abolishing morality police
Will this stop the protesting?
Did they really abolish this group?
Freezing bank accounts is next strategy
Supreme leader’s sister
Calls to overthrow the caliphate

Poor countries are in trouble
Does a global debt bomb loom?
Is $65T of non-USD debt at risk?

THE FINANCE WORLD

Vanguard backs off net zero
Removing politics from investing.

Investors are fatigued
Stocks and house values will go lower
Suggests Goldman’s CEO.

Bonds have been rallying
But wage increases may be their nemesis.

The hot new global stock market
Is in India.

REAL ESTATE

Current US housing affordability
Is the worst on record.
Here’s the Fed chart

Short-term home rentals
Are collapsing.

Real estate investors head for the exits
Limiting withdrawals holds back redemptions.

TECHNOLOGY

Amazon is creating a TikTok clone
They’re not named Amazon for nothing.

TSMC to invest $40B in Arizona
More evidence of a reshoring trend.

Cutting off China from chip tech
Looks to be happening.

The tech wreck
Could bring us better innovation

THE FACEBOOK FACE-PLANT

The metaverse will be our slow death
Says an anonymous employee.
Meta’s ad model under siege in Europe
Facebook threatens to pull news

The EU throws a $400K metaverse party
Only 6 people showed up.

THE CRYPTO MEME

FTX’s customers were global.
Here’s the graph
Here’s the graph on contagion

Is Goldman sniffing around crypto?
Buy low, but what’s the real value?

Crypto companies claim to be stable
But their assets are what and where?

THE NEXT NORMAL

Is internet culture dying
Are we getting tired of TMI?

Child mental health is so bad
We need 5X more psychiatrists

Anticapitalism
Is now being taught at top B-schools

There are over 1MM kinless seniors
Who is going to care for them?

THE WAR ON CARBON

Renewables to dominate power by 2027
Suggests the IEA.

KLM airline CEO tells people
Take the train

We’re not investing enough in oil
To meet demand, says Aramco CEO.

THE NEW ENERGY TRANSITION

UK approves new coal mine
First one in 30 years.

The big winner in Europe’s energy crisis
Is Saudi Arabia

Europe’s wind industry is stumbling
Turbine makers can’t make a profit.
GE to exit renewables industry

THE EV DREAM

EVs require lots of scarce parts
Can the global supply chain keep up?

More and more EVs hit the street.
Yet gasoline consumption stays the same

Iron-based batteries are the new thing
But China dominates the market.

THE CHINA SYNDROME

China backs off Covid policies
Here’s their new 10-point plan
Protests now in decline
Do citizens now have more power?
Be careful what you wish for?
Will 90% of Chinese get Covid?
Exports had been falling hard
Will inflation now flare again?

Chinese solar cheaters
Put US solar plans at risk.

Apple to move production out of China
How many other companies will follow?

THE WASHING-TONE

It’s time to ponder economic policy
Should the West follow the East’s lead?

After keeping the Georgia seat
The Democrats lose a Senator
In Senator Sinema’s own words

Houses wants more military spending
Including filling vaccine company pockets.

MAKING A BETTER YOU

Become an excellent gift giver.
Here’s how

A sense of humor, even a dark one
Is a moral virtue.

How to protect your memory
Tips from a neurologist.

HOW ABOUT A BREAK

Looking for a new hobby?
How about meteorite hunter?

Ready for a brand new life?
The most beautiful small towns in the world

The weirdest Texas roadside attractions
Time for a road trip!

SONG OF THE WEEK

Sticking with Fleetwood Mac.
“The Chain”
Lyrics are poetry, ya know.

VIDEOS OF THE WEEK

The Navy’s indoor ocean
Can make any wave they want.

Movies we missed…

A sweet, quirky love story.
Marcel The Shell With Shoes On

The Cannes Jury Prize Winner
EO

CASTING AROUND THE PODS

The Munk Debate on Mainstream Media
Can we really trust the MSM?
Audience says the duo who debated “no” won hands down
Most Americans also say “no,” according to Gallup

FROM THE HEADHUNTER’S KITCHEN

When it’s cold, it’s time for…
Chicken and dumplings
Sausage and tortellini soup
Slow cooker beef stew
Creamy chicken tortilla soup
Chicken ala king

Or just make this great
Hummus

Campbell’s earnings prove 
Soup is good food.

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IN CASE YOU MISSED IT

12 Lessons on Money
December 2, 2022

Everything in Tech Is Collapsing
November 25, 2022