Pondering the Future
January 19, 2024
Leyendecker Executive Search
Welcome to This Week’s Leyendecker View
Physics is the law, and everything else is a recommendation.
–Elon Musk
A BIG THINK
Pondering the Future
From around 1980 to around 2020, the world was “flat,” or “flattening” according to Thomas Friedman’s 2005 book. During this period, increased trade between a growing number of countries dominated our economic, social and geopolitical structures. Poor countries were joining the modern economic ranks. Disparate nations were coming together to work collectively toward a better economy for as many people as possible. The whole world was becoming one giant melting pot.
Well, friends and neighbors, it appears that era has come to an end.
Nations are fracturing into new, sometimes troubling geopolitical alliances, which has brought an end to the decades of most countries working toward the same economic goal—a shared and better economic future. This means we’ll likely be without known trend lines that help us make economic, investing and even personal decisions.
What will our next new era look like? Unfortunately, at the moment we really don’t know. But, let’s explore what’s changed…
From 1980 to 2020, we experienced:
Furthermore, to keep economies afloat during recessions over the past forty years, we had reasonably easy and constantly available fiscal stimulus, in which governments “invested” money to prop up prosperity. In 1980, US debt to GDP was about 31%. Today, it is close to 120%.
Today we have:
And after decades of massive fiscal and monetary stimulus, we now have an unprecedented amount of global government and private sector debt. Because of the massive growth of debt over the last forty years, we need an ever larger amount of capital to support debt service. This will naturally reduce the capital available for consumption and investment.
So what will the possible results be of this transition?
Deflating, or, at minimum, stagnating values for financial assets. Japan’s decades-long stagnation could be an example.
Higher interest rates, as investors demand higher returns to support existing massive debt.
More inflationary influences, which would naturally keep interest rates high.
Bouts of deflation may surface as global capacity built over forty years of globalization exceeds global demand. That said, the trend toward reshoring, nearshoring and friendshoring should reduce everything global to a more narrow group of trading partners. This should tighten up capacity.
A forty-year globalization trend just might be over. But the new trends of this new era are not yet evident. What does this mean? It means we’re likely in for some years of general uncertainty.
THE ECONOMIC VIEW
US retail sales grow well in December
Americans might not be done shopping
But frugality may be an emerging trend
Does the economy influence consumer sentiment?
Or does consumer sentiment influence the economy?
The cost of money is going up
How will this change the world?
THE INFLATION BOGEYMAN
With Red Sea conflict, the price of oil is rising
The conflict is also disrupting supply chains
Shipping could be disrupted for months
We have a Panama Canal problem, too
Is inflation about to grow again?
Or will China export more deflation?
Argentina’s inflation tops 200%
Come on, really, 200%?!?!
Canada’s inflation rises again
Inflation also rises in the UK
Maybe the inflation era isn’t over.
THE LABOR VIEW
We’re just not that into you
McKinsey says workers are disengaged.
Is worker pay growing faster than inflation?
If so, would this cause prices to rise?
Want to work from home?
Good luck getting promoted
MEANWHILE IN EUROPE
Europe’s growth engine is broken
Germany has weakest major global economy
Poland says no more logging
In 10 of their oldest forests
The EU worries about China’s EV subsidies
So China hits EU’s spirits industry
Tit for tat?
THE GLOBAL GAME
The world’s GDP growth champion
Is about to be India.
Why India isn’t the new China
Well, heck!
The age of stability is over
So thinks the World Economic Forum.
THE DAVOS DREAM
Trump will win the election
Believe the Davos crowd.
AI is “fundamentally labor replacing”
Co-Founder of Googles’ DeepMind, Mustafa Suleyman.
AI will start destroying jobs this year
Per the Davos “kings.
The West has lost its way
Suggests Argentina’s new president.
THE UKRAINE FIRE
China cashes in on Ukraine war
US tightens banking sanctions.
Chinese banks back away from Russia
Russia’s economy is growing well
Ukraine proposes peace plan at Davos
UK PM pledges unwavering Ukraine support
Okay Putin, what’s your play?
Russia making winter gains
They have more soldiers and weapons.
Weapons supplied by North Korea and Iran
THE GAZA FIRE
Arab nations are working on a plan
To end the war and bring about peace.
450 miles of tunnels
That’s what Israel has found so far.
Iran launches its own missiles
Some hit Pakistani targets
Pakistan retaliates
US seizes Iranian weapons bound for Houthis
US searches for soldiers and strikes Yemen
Is war with Iran inevitable?
Iran says they aren’t backing down
THE NEW COLD WAR
China wants to ditch the dollar
They also held back on Covid information
We are your friends, really!
Japan, Britain and Italy join forces.
To develop a next-generation fighter jet
2023 China-Russia trade set a record
Hmmm…
FINANCE
Private equity is in a pickle.
Can they make money the old-fashioned way?
PE investors want their money back
The median holding period hits 6.4 years.
It’s official, JPMorgan makes all the money
As other big commercial banks stumble.
Citi to cut 20,000 jobs
But Goldman has a good Q4
New funds raised to buy cheap tech start-ups
Exactly how do they determine cheap?
REAL ESTATE
Mansion taxes are catching on
Get ready for more luxury taxes.
Will home prices drop in 2024?
What Zillow’s founder sees ahead
Millennials are “carpooling for homes”
It’s one way to afford homeownership.
THE CES TECH FAIR
Samsung’s Ballie robot
Is it a gotta-have-it gadget?
You need a transparent TV, too, right?
And a Rabbit R1?
Who needs another gadget to carry?
What about Apple’s Vision Pro?
Gadgets make us cool and smarter, right?
TECHNOLOGY
Apple overtakes Samsung in smartphone sales
While Samsung’s new products integrate AI
Meta gives up on the metaverse
Will Meta change its name to AI something?
“The era of spatial computing has arrived”
Good luck with that, Tim Cook! You own it.
THE CHAT ON AI
AI sucked up one-third of VC $$$ in 2023
The next billionaire’s club, or will it be a bust?
AI will impact 40% of jobs and worsen inequality
Says the IMF.
Where is AI leading us?
MIT makes six predictions.
Judges, not politicians, may determine AI rules
THE NEXT NORMAL
Israeli women fight on the front lines for the first time
A big win for gender equality?
Americans are volunteering less
Because we can’t do it from our phones?
The era of bigger taxes may be here
Rich countries are collecting more taxes.
THE WAR ON CARBON
2024 global crude demand expected to jump
China demand takes top spot.
OPEC chief says peak demand is an illusion
California, canary in the coal mine
Adding more solar power is in question.
A green investor calls out Biden’s IRA
For mainly benefiting investors and consultants.
THE NEW ENERGY TRANSITION
A clean-energy bet goes bad.
Offshore wind is not really feasible
2024 US battery storage to almost double
Making the grid more reliable? At what price?
Billions in clean energy tax credits are claimed
You think they’ll be any fraud here?
THE EV DREAM
Are EVs cheaper to own?
Maybe not.
They are a big risk in cold weather
Yet billions are being invested to make EV commercial trucks
Ford’s electric truck isn’t selling
China looks to dominate the EV future
Fast, good looking and cheap!
EU carmakers not happy with China
Tesla cuts prices in Europe
Hertz sells one-third of their EVs
They’re going back to ICE cars.
Automakers walk back their EV plans
THE CHINA SYNDROME
China tells investors when to sell stocks
As they issue billions of new flexible bonds
Managing through their free fall
As their population decline accelerates
China shadow bank files bankruptcy
Wait, their economy grew 5.2% last year?
The US banned Nvidia chips to China.
But they’re still getting them
China despises Taiwan’s new president elect Lai Ching-te.
“We do not support independence.”
Joe Biden said what after Taiwan’s election? WTF?
Taiwan invasion could cost global economy $10T
THE WASHING-TONE
McKinsey’s government work at 9-year low
Has this reduced our deficit spending?
Nippon Steel wants to buy US Steel.
US regulators want a year to study it
The Federal Reserve sets a record
For its largest operating loss in history.
MAKING A BETTER YOU
Prescient thoughts for us all
A must read.
The too-much-talent effect
Known in sports, should it be applied in business?
Is a vaccine for depression coming?
Courtesy of ketamine.
HOW ABOUT A BREAK
Different cultures dream differently
Can VR give me Argentine dreams?
The most problematic invasive species
Is your sweet little kitty cat.
Millionaire builds 99 tiny homes for homeless
Anyone want to top that for charity?
SONG OF THE WEEK
“I Will Always Love You”
Happy Birthday, Dolly Parton!
Lyrics can be poetry, ya know.
CASTING AROUND THE PODS
Globalization fan Ian Bremmer looks at 2024
On Scott Galloway’s The Prof G Pod.
Bonus quick one…
CNBC interviews JPM CEO Jamie Dimon
“We have to control the borders”!!! And more.
Can we get a border-Ukraine deal done?
VIDEOS OF THE WEEK
The new Mean Girls trailer.
A silly, female-fest from Tina Fey.
Fingernails trailer.
Why did we miss this film?
How animals see the world.
It starts with the shape of their pupils
FROM THE HEADHUNTER’S KITCHEN
10% of US restaurants
Serve Mexican food.
11 facts about US Hispanics’ origins
When it’s frizzering outside
Make some soup!
Been captured by the sheet-pan craze?
Here are 18 recipes to try
THE RANDOMS
Today is my birthday, which I guess permits me to toss out an idea that has nothing to do with the usual topics discussed here. Today is the day my mother gave birth to me, so in a way she also has a “birth day.” This year, instead of going out to celebrate my birthday, I’m going to take my mother out to celebrate her birth day. She went through nine months of carrying me around, nine months of worry, then she went through the ordeal of childbirth. All I did was show up. So maybe we should all be thinking about this on our birthdays, that we should really celebrate our mother’s birth day. Mother’s Day is really not enough. Pass this idea around. Let’s change the world for the better! Mothers rock!
You know what would surely compel the Fed to drop interest rates? A stock market crash will.
Aren’t being an underdog, a fighter against injustice, an obvious patriot and being personally resilient traditional American values? So after this week’s Iowa results, are we going to see Trump steamroll his way back to the White House?
The problem today is that the ruling class thinks the working class is stupid, and the working class thinks the ruling class is corrupt. How else would Donald Trump be such a political force? Is this kind of reminiscent of the American and French Revolutions of the late 1700s?
Did you notice the linked article in last week’s newsletter that stated members of Congress outperformed the S&P index last year, and some by a huge margin? Sounds like members of Congress should start a hedge fund.
Iraq’s prime minister says they no longer need US troops in the country. Yet US troops remain in Germany, Japan and South Korea—countries that have become global economic powerhouses. So what’s behind Iraq’s prime minister’s thinking?
After seeing what it takes for Congress to pass a budget deal, it appears bipartisan “progress” is all about promising and delivering more free stuff. Who gets elected telling voters they need to sacrifice?
Green shoots have recently been spotted on Wall Street. But if the IPO and M&A markets don’t explode in 2024, will Wall Street start feeling some serious Glass-Steagall nostalgia?
Is Apple’s entry into the VR market, one where Facebook has lost billions, a sign that the tech boom is over? Maybe new AI-powered gadgets will reignite tech. You need a new gadget, right? Don’t have enough gadgets, right?
When and where do you feel bliss?
IN CASE YOU MISSED IT
Hope Is Now a Strategy
January, 12 2024
Is Leadership Overrated?
January 5, 2024
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