Are We Heading into a Chip War?

September 2, 2022
Leyendecker Executive Search

September 2, 2022

We need to use oil and gas in the short term
because otherwise civilization will crumble.

Elon Musk at Norway energy conference

THOUGHTS FROM DOUG

In today’s economically challenged world, which countries are growing wealthy?  It’s the ones with natural resources. How is this any different over the long history of humanity?

Productivity keeps falling and wages keep rising. This means company profits will fall, layoffs are coming, or both.

From one of my dailies: “Finally, current electricity rates for new customers from our current electricity provider in Houston/Dallas are 26.9c/25.9c per KWh (KH’s current plan through 01/24: 13.8c/KWh). Should rates in the mid-20s represent a new baseline (and not some temporal aberration), the implications would be positive for resi solar in TX in coming years.”

These electricity rates, as well as gasoline prices, are an enormous burden on the majority of Americans. What do higher energy costs mean for our economic future?

The IRS is going to hire 87,000 new agents to collect taxes from 735 billionaires and 8,600 centi-millionaires. That’s 87,000 new employees to collect more taxes from 9,335 very wealthy taxpayers. Just saying.

Singapore’s sovereign wealth fund just made a bet on suburban office space. The theory is that workers will go back to the office if they don’t have to sit in traffic. But can they go to work in their jammies?

Are we missing an obvious geopolitical transition? Iran and North Korea are aligned with Russia. China is also supporting Russia, and, it hopes, avoiding Western wrath. China is significantly expanding its influence in Africa. They’re also working to do the same in the Middle East. Russia is working to gain Africa’s support. India is non-stop buying Russian oil.

Europe and the US are working hard to implement dramatic climate policies that will increase our cost of energy and likely keep prices for goods and services high. Meanwhile, Russia and China are working toward a new global alignment. Do Western countries have their heads in the sand?

Wouldn’t it be nice if we found our heroes in neighborhoods and communities rather than in professional sports and media?

THE ECONOMIC VIEW

Payrolls up 315,000 in August
This likely doesn’t stop QT.

Time to think about holiday shopping season
Will consumers stay in their turtle shells?
Sales are rising at the big liquidation chains
Even the wealthy are pinching more pennies
Retailer Bed, Bath & Beyond in trouble again
Freight demand is slowing

Home values declined 0.1% in July
The first value decline in 20 years
The start of a new trend?

Consumers trade down during a recession
Chicago’s Booth School provides insight.

THE INFLATION BOGEYMAN

22% inflation in the UK
Could happen next year.
Striking UK workers want higher pay

The US has another year or two of inflation
Suggests an IMF economist.

The Fed can’t fix fiscal stimulus inflation
So suggests a paper from Jackson Hole.

THE LABOR VIEW

Hiring is slowing down fast
Are more layoffs around the corner?

In response to the Great Resignation
Companies ordered a record number of robots

Who can work from home, and who can’t?
Here’s the chart

California may set fast food worker wages
Will they set food prices soon?

MEANWHILE IN EUROPE

Rising China espionage
Is worrying Europeans.

Europe may ration energy for years
Says Shell’s CEO.
While China throws them an LNG lifeline
Russia keeps the gas squeeze on
Shuts down pipeline again

Energy prices start falling
Germany’s ahead on its winter gas storage target.
While inflation hits 40-year high

THE NEW ENERGY TRANSITION

Middle East countries are getting rich
What will they do with all this new money?
How about putting it into private equity?

New England’s winter could be tough
Heating oil is in short supply.

China coal power generation
Nears record level.
Yet carbon emissions drop 8%

PLAYING WITH FIRE

G7 plans to cap Russian oil price
Can the West win the economic war?

Japan gets more focused on arming itself
Seeks to boost long-range missiles inventory.

Germany pledges to support Ukraine
For “as long as it’s necessary”
The Ukraine war could last years

The US is running low on ammo
You think China is paying attention?

GLOBAL

Iran steps up uranium enrichment
More powder added to the keg.

Floods kill over 1,000 Pakistanis
Corruption caused the problem
They are asking everyone for money
The world enables their bad habits.

The richest people in Africa
Gotta get me into the cement and sugar business.

A NEW WORLD ORDER?

Are we going to have a chip war?
The US restricts some exports to China.

South Korea to do business with Russia
Purchasing nuclear power plant parts.

Western sanctions had limited influence
On Russia’s oil output.
As Russia rakes in the cash

THE FINANCE WORLD

Another PE dirty little secret
Many low-profile funds inflate their value.

There’s a succession battle underway
In private equity.

The new canary in the coal mine
$1T+ of floating rate leveraged loans.

Here comes the Fed’s quantitative tightening
How will it affect financial asset values?

TECHNOLOGY

Who will win the Musk-Twitter battle?
The lawyers will

Electronic gear sales are falling
HP, Dell, Intel, Best Buy are all slumping.

Google’s quantum computer
Has been dethroned by a normal computer

THE CRYPTO MEME

California passes crypto regs
The industry isn’t happy.
Singapore also clamps down on crypto

Over half of bitcoin trades are fake
Well, let’s all jump right in!

Pew crypto survey reveals
Lots of losses and no investor market growth.

THE NEXT NORMAL

Getting stoned
Happens more than smoking cigarettes
Can CBD help with insomnia?

Nude beaches are on their way out
Young folks are not so interested.

US life expectancy falls again
Thank Covid and more.

THE WAR ON CARBON

California passes big climate bill
More effort to eradicate o&g energy.
But now they limit EV charging

Why the energy transition will fail
It’s never going to provide cheap energy.

US solar maker to ramp up
Thanks to the new IRA bill.

THE EV DREAM

Copper thieves are becoming a menace
They’re stealing EV charging station cords.

California needs nuclear power
Mad scramble to keep the last plant open.

Guess who’s betting big on EVs?
Saudi Arabia, believe it or not.
As they get even richer off oil sales

THE CHINA SYNDROME

China committed crimes against humanity
According to a new UN report.
Of course China disagrees vehemently

China’s property market in severe depression
Says its largest developer.
Developer profits down 87%
As manufacturing output shrinks again
No bottom in sight for China’s economy

After cutting a deal with China
The Solomon Islands bans all naval ships

THE WASHING-TONE

The CHIPS Act may sound great
But our energy policies will impede its potential.

The IRA act
May have started a new trade war

Who knew?
Trump passed tax on wealthy colleges’ endowments
And they’re not happy about it

MAKING A BETTER YOU

The most powerful healer
Could just be water.

Why we’re so bad at predicting the future
Because we only focus on what we know.

Getting angry at yourself
Is it useful? And if so, when?

HOW ABOUT A BREAK

Wildlife photographs of the year
Amazing work of an amazing world.

Well heck, we missed all the fun
At the World Gravy Wrestling Championship
Check out the saucy action here

New Jupiter photos
Are really stunning.

SONG OF THE WEEK

Livestream jazz
Perfect for when you’re wanting mellow vibes.

VIDEOS OF THE WEEK

Meet Hershel Woody Williams
WWII Medal of Honor recipient.

New Lord of the Rings series is out.
The Rings of Power
Amazon spends over $700MM to make it

What if it’s a bust?
A visual history of light
That’s human-made light.

CASTING AROUND THE PODS

“Luke Burgis: The Power of Mimetic Desire”
Are we pursuing the wants of those around us—or our own?

FROM THE HEADHUNTER’S KITCHEN

The best way to cook salmon
Perfection after several different approaches.

Wine bottles are a climate problem
What doesn’t create a climate problem?

The world’s greatest ice cream stores
Baby oh baby!

IN CASE YOU MISSED IT

Biden’s College Loan Cancellation to Cost $1 Trillion
August 26, 2022

Is Climate Change Really from Hydrocarbons?
August 19, 2022

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