Economy Is Not in the Chips

November 4, 2022
Leyendecker Executive Search

November 4, 2022

I did it to help humanity, whom I love.
Elon Musk on why he bought Twitter

THOUGHTS FROM DOUG

A repeat from last week. Maybe this is how things work: First comes higher interest rates. Then corporate earnings decline because of higher-interest costs. Then employment declines after corporate earnings decline. Then corporate earnings decline further because more unemployment means lower consumption. Then employment declines again. Then the Fed steps in with lower rates. 

Is the UK economy and its political chaos the canary in the coal mine for the rest of the world?

Commodity prices have been slumping lately. But if China backs off its strict covid policies and provides stimulus to its economy, wouldn’t that drive up demand for commodities, which would drive up their prices and thus drive up inflation?

If Republicans take back Congress, we likely won’t have any new massive government spending bills. That may sound good. But keep in mind that the more the government spends, the more money people have to spend, the more profits grow at companies, and the more employees they can hire.

Yes, it sucks when the government is too important to the economy.

Is the Fed really trying to “adjust” the long-standing bubbles in financial assets, like the stock market and housing values? Financial asset inflation has been a great boon to financial asset owners, but the massive rise in housing costs has certainly challenged everyone in the middle- and lower-income parts of the economy. And since 58% of the country is invested in the stock market, that leaves 42% of the county left way far behind in this form of wealth accumulation.

We haven’t even officially entered a recession, yet more than a third of US small businesses could not pay their full rent in October.

Does a bear market end when everyone is still trying to guess the bottom or when everyone has finally given up trying to guess the bottom?

Morningstar suggests that if we’ve seen this bear market’s low, it would be the most expensive bear market low in history.

Life is a 162 game season. The goal is to be in first place at the end of the season. Strive to improve every day. Be patient and persistent. Do good things.

THE ECONOMIC VIEW

The Fed hikes rates by 0.75%
And reaffirms they will go higher.
UK follows with a 0.75% rise

Overall construction spending is falling
But it’s up big time in manufacturing
Can anyone say “reshoring”?

More than a third of US small businesses
Couldn’t pay their full rent in October.

THE INFLATION BOGEYMAN

Can inflation fall
When consumption is still strong?

The diesel market is a mess
Reserves are at 1951 low.

Car prices are starting to cool
I’m still waiting for recession prices.

Steel maker profits are falling
Goods inflation is in retreat.

THE LABOR VIEW

Economy adds another 261,000 jobs
But the layoff wave has started
Layoffs 48% higher than last October.

Tech companies are doing layoffs
And freezing hiring.

Managers at Salesforce
Are scored by their direct reports

MEANWHILE IN EUROPE

Here comes another refugee crisis
As Europeans sour on immigration.

Eurozone inflation almost 11%
Consumers are tightening their belts
German workers want more pay
Protests are growing in Europe

German energy giant loses $39B
Is EU energy nationalization coming?

Germany depended too much on Russia.
Now it’s depending too much on China

A trade war with the US is brewing
Europe doesn’t like the protectionist IRA act.

PLAYING WITH FIRE

Ukraine goes dark
Conserving energy for winter.

Russia keeps pounding Ukraine
Destroying infrastructure seems the strategy.
It’s the war of the drones
And Ukraine has some unique ones

Putin speaks!
Suggests war could last a decade
“No room for old dreams”
Says Germany’s president.

WILL THE FIRE SPREAD?

Russia and Iran to sign new accord
Birds of a feather…

US to send B-52s to Australia
They are nuke capable.
India now has its own nuke missile

Tensions grow in SE Asia.
US and South Korea announce joint drills
North Korea keeps launching missiles
One falls close to the South Korean coast

GLOBAL

Vietnam is bulking up infrastructure
It wants to steal China’s tech industry.

Colombia and Venezuela cozy up
After Colombia elects leftist president.

Japan announces new stimulus package
While trying to keep inflation low.

A NEW WORLD ORDER?

The messiness of a new global order
This time it is a new era.

The unraveling world order
Creates economic problems.

China-Russia trade is growing
Will a new trade block develop?

THE FINANCE WORLD

When a country nationalizes assets
Can investors sue their insurers?

Musk needs to make Twitter work
Or banks are gonna have a big problem

Exxon hits almost $20B in Q3 profit
How shameless!
Yet Apple made more than that
Not shameless?

REAL ESTATE

Pending home sales are collapsing
It’s crickets in the buyers’ market.

Mortgage rates exploded.
Who is to blame?

Office building values at risk
With rising interest rates
And low rate of return to office

TECHNOLOGY

FCC Commissioner speaks
He wants to ban TikTok.

Over $1B in ransomware
Was paid by US banks in 2021.

EU rewrites rules of the internet
Breaking down the walls of big tech.

IN THE CHIPS

Chipmaker Qualcomm not optimistic
Smartphone sales are worsening.

Japan to subsidize US’s Micron
They seek to diversify from China.

India wants to be chip-making center
Are we headed for a big chip glut?

THE CRYPTO MEME

You can put your 401(k) into crypto
Go baby go!

Why hasn’t crypto totally crashed?
The true believers are holding on.

More crypto hacking
More megamillions stolen.

THE NEXT NORMAL

Do you feel glum sometimes?
Then magic mushrooms are for you!

Get a top-school MBA in your pajamas
Many are launching online programs.

With AI and VR headsets
You may be able to visit Star Wars locales

THE WAR ON CARBON

Coal use is soaring
So much for climate change goals.

Copper producers issue warning
There’s not enough for climate policies.

ECB tells banks to get climate woke
Get ready for higher energy prices.

THE NEW ENERGY TRANSITION

Japan cannot survive without Russian oil
Warns Itochu trading house chief.

Poland to build first nuclear plant
They can’t depend on Russian gas.
While French nuclear plants underperform

Offshore wind in the US may not work
Has it become too expensive?
Major oil companies supposedly ready to invest

THE CHINA SYNDROME

The Uyghur internet has disappeared
Is China eliminating their identity and culture?

China’s Pacific funding collapses
Too many problems at home?
Investors are fleeing the yuan
Factory slowdown is huge
No one believes their numbers anymore

CCP says it’s a fact
That Taiwan is not independent

THE WASHING-TONE

Biden to provide $13B in energy subsidies
Announced just before the election.
While he threatens windfall profits tax

Voters think crime is a problem
Big increase in concern since 2020.
Here are the crimes that worry us

Illegal border crossings hit all time high
How is this better for America?

MAKING A BETTER YOU

Having trouble sleeping?
Stick your head in the freezer

A piano chord reduces nightmares
Is there a chord that helps overall sleep?

Digital detox
Can we actually do it?

HOW ABOUT A BREAK

9 stunning homes built into cliffs
Whoa!!!

Print book sales are booming
Who woulda thunk it?

Make My Drive Fun
Great site for planning a road trip.

SONG OF THE WEEK

“Carry Me Home”
Previously unreleased 1972 Beach Boys song.
Lyrics are poetry, you know.

VIDEOS OF THE WEEK

The Banshees of Inisherin
Is gloriously bonkers.

If Mozart were alive today
This might be him

Insects in flight
Up close and in slow motion. Whoa!

CASTING AROUND THE PODS

The reinvention of racism
Ready for a radical new view from some black Americans? WOW!!!

FROM THE HEADHUNTER’S KITCHEN

The fig old-fashioned
Can’t wait to try it.

Ooey-gooey mac and cheese
Probably a bad idea to click this one.

How food powers your body
Garbage in, garbage out.

IN CASE YOU MISSED IT

Is Work Dangerous for Workers?
October 28, 2022

The Great Unretirement
October 21, 2022

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