Janet Yellen Really Messed Up

Welcome to This Week’s Leyendecker View

Old Twitter was essentially an arm of the government.
–Elon Musk on Joe Rogan’s podcast this week

A BIG THINK

Our Obsession With Obsessions

When and where did our world of obsessing over obsessions begin? Here’s just a few ideas to whet your appetite of curiosity.

Elizabeth Holmes invented nothing yet was able to draw billions in investment dollars from very well-healed and sophisticated investors. The mainstream and business news media crowned her as a technology and entrepreneurial darling. Her company, Theranos, was a complete scam yet it got Walgreens into a giant contract. Today, the company no longer exists and Ms. Holmes is in prison.

Adam Neumann reinvented the commercial real estate world with his game-changer, WeWork, while managing to convince the world it was somehow a tech company. Sophisticated property owners around the world gave him contracts, backed by billions of investor dollars raised by Wall Street’s blue bloods. The company did little new outside of putting beer kegs in break rooms while signing expensive, long-term leases that were paid by short-term renters. Like Elizabeth Holmes, Neumann became a mainstream and business media darling. Neumann was eventually kicked out of WeWork with a couple hundred million dollars in severance. The company will likely soon evaporate.

Sam Bankman-Fried and a host of other “inventors” created a new group of digital currencies. They built global infrastructures to manage this new digital payments world that they envisioned would soon replace money as we know it. Yet you couldn’t buy so much as a latte at Starbucks with any crypto (but global criminals could hack and steal digital currencies all day long). Along the way, billions of investor dollars poured in, evil doers were able to hide their money, and again the mainstream and business media became infatuated with this alleged new world order. Meanwhile, there was no there there. Today SBF, as he’s nicknamed, looks likely to follow Elizabeth Holmes to prison.

These are just a few of the most outrageous obsessions many people fell for over the last decade. But several others are in our midst that are proving quite disruptive, maybe even dangerous to society and the global economy.

Perhaps the most dangerous obsession dominating the conversation is climate change and global warming. For years now, we’ve been bludgeoned daily—by the media, the UN, Western governments, activists, a teenager we’ve somehow decided is old and experienced enough to dictate global policy—with the message that human behavior is killing the earth. Well, you know what? Researchers at Norway’s official data agency have just released a report with the following conclusion:

“Using theoretical arguments and statistical tests we find, as in Dagsvik et al. (2020), that the effect of man-made CO2 emissions does not appear to be strong enough to cause systematic changes in the temperature fluctuations during the last 200 years.”

Unfortunately, this obsession is so strong there may be no way to stop it. Western governments have committed hundreds of billions to supposedly stop the climate from changing. Even when studies debunk current climate science, they are mostly ignored. It seems little different from the 300 or so years when (1450 to 1750) it was common knowledge that witches were real.

Brings to mind that old quote:

“Repeat a lie often enough and it becomes the truth.” This is the law of propaganda, often attributed to Nazi Joseph Goebbels.

THE ECONOMIC VIEW

Economy creates 150K new jobs in October
Will the Fed breathe easier now?

What’s keeping consumption robust?
Besides YOLO and FOMO?

Consumer confidence hits 5-month low
Consumers hold off on big purchases
A sign of things to come?
Fed holds rates steady

Interest rates may go higher
Suggests JPMorgan’s Jamie Dimon.

THE INFLATION BOGEYMAN

Workers keep getting big raises
Unions are winning big
The new union movement hits colleges
A wage-price spiral could still happen.

McDonald’s raising prices in California
After state-mandated wage increase.
Chipotle has to do the same as wages rise

Global rice prices at 15-year high
A strain on developing economies.

THE LABOR VIEW

Job openings unexpectedly rise
The Fed won’t like this.

UAW strike provides labor momentum
Auto unions getting what they want today
Toyota bumps US factory pay 9%
Will prices rise after wages do?
Portland teachers strike for more pay

Workers are doing less work for same pay
Oopsie doopsie!

MEANWHILE IN EUROPE

Euro inflation falls to 2.9%
Prices naturally fall in a weak economy.
Germany’s inflation lowest in two years
As their unemployment rises
And their GDP growth goes negative

EU considers gas price cap extension
In case it’s a cold winter.

Denmark tries a grand social experiment
Forcing integration by bulldozer.

GLOBAL

The world is becoming more African
By 2050, it will have 25% of the world population.

Nigeria has a big dollar problem
They don’t have enough of them.

Iranian teenager punished for showing her hair
The “encounter” has resulted in her death.

THE UKRAINIAN FIRE

The Ukraine war may be stalling out
According to the Ukrainian armed forces chief.
Russian drones are proving a big success
Russia nationalized Carlsberg’s Russian assets
The future of globalization?

Billions in Western profits
Are trapped in Russia

THE GAZA FIRE

Is Russia about to help Hezbollah?
This would not be good.
When Iran says “death to Israel”
They mean it.
Hezbollah likely to enter the conflict

Netanyahu lays it all out.
It is time to defeat evil

Saudi Arabia under attack by Houthi rebels
And who backs the Houthis?

EVOLVING GEOPOLITICS

China has wiped Israel from the map
Israel removed from China’s largest map platforms.
Are they using TikTok to sway Americans?

The UN’s new chairman of Human Rights Council
Wait for it…Is an Iranian

Japan juices up military spending
Their military industries are ready to grow.

China wants more dialogue with the US
So they can distract us from what?

FINANCE

Higher rates pummel dealmaking
The old PE may be broken.

Janet Yellen made biggest blunder in Treasury history
So says investor Stanley Druckenmiller.

Private debt funds have a $500B problem.
Can they find enough places to invest?

Assets under management fall 13.7%
Rates are higher, and excess liquidity is shrinking.

REAL ESTATE

Home prices set record as sales fall
Now how does this happen?

Jury says realtors conspired on commissions
Could this lead to a reduction of them?

Construction loans are on the decline
Money has stopped flowing to commercial real estate.

TECHNOLOGY

Sam Bankman-Fried found guilty
Will he be keeping company with Elizabeth Holmes?

Chip demand shows signs of returning
What happens after all the new chip plants are built?

China plays hardball with Apple supplier
Time to reshore, friendshore or nearshore.

The US lags in hypersonic missiles
Why are we behind Russia and China?

THE CHAT ON AI

Microsoft just released their new AI assistant.
Here’s a breakdown of what it does
AI will make rich tech companies even richer

AI could cause catastrophic harm
Suggests global leaders.
Even the Chinese are worried

Biden issues order for AI safeguards
Federal bureaucracies will police it, hmm…

THE NEXT NORMAL

Florida schools ban cell phones
And student engagement increased.

How about a global billionaire tax?
The EU is pondering it.

After humans
Is a future of different humans coming?

THE WAR ON CARBON

Concrete has a big carbon footprint
Can green technology fix it?

EU gas storage is at capacity
So now they’re storing it in Ukraine.

The forest carbon offset market is collapsing
African carbon offset market is close to chaos
Countries are falling short of climate goals
Way way off, says the UN
How long before the earth is destroyed?

THE NEW ENERGY TRANSITION

NJ offshore wind project canceled
Developer says its cost is prohibitive.
NY wind farm also imperiled
Yet Biden administration approves a new project

Goldman Sachs and FedEx chairman say
Society won’t function without fossil fuels

The future history of fusion
When will fusion light our homes?
And a fusion rocket may travel at 500K mph

THE EV DREAM

Norway has second thoughts about EVs
What, I thought they went all in?!?!

Toyota to invest $8B in NC battery plant
For EVs or hybrids?

Ford postpones $12B EV investment
EV battery maker cuts production
Reality of low consumer demand starting to set in.
Hertz pulls back on EV plans

THE CHINA SYNDROME

Evergrande gets one more restructuring chance
Before it’s liquidation time.

China’s economy is still slowing down
As direct Western investment in China is collapsing
Do they fear their assets may be nationalized one day?
China’s factory activity declines

Does China’s stock market have snowball risk?
Surely Xi will Band-Aid over any trouble.

THE WASHING-TONE

Biden gave Venezuela a deal two weeks ago
Looks like they’ve already broken it

Trump has a plan to slash government spending
It might even work.

Biden and Xi are having a summit
Will it be another Xi headfake?

MAKING A BETTER YOU

Disengage
Good to do in today’s overwhelming world.

Finally, the real secret to living to 100?
Good genes.

The play deficit
Today’s children need more play.

HOW ABOUT A BREAK

Octopus intelligence is amazing.
How did it develop through natural selection?

Incidences of dementia are declining
Better cardiovascular health seems the reason.

The pollution you’re not noticing
That can also impact life expectancy.

SONG OF THE WEEK

The Beatles new Now and Then” song
Just released yesterday.
Some lyrics are poetry, ya know.

CASTING AROUND THE PODS

A World Spinning Out of Control
Bari Weiss interviews Walter Russell Mead.

VIDEOS OF THE WEEK

Next Goal Wins
Taika Waititi’s humor strikes again!

Why are university endowments so large?
From The Good Work Investigative News team.

The bioluminescent world of cell life
We are truly amazing creatures.

FROM THE HEADHUNTER’S KITCHEN

Perfect pot roast
Cold weather comfort food.

Easy and tasty French onion soup
Yum yum!

The history of the donut
Thank you, Salvation Army!

THE RANDOMS

A quote from UC Berkeley professor Stuart Russell: “We need to stop thinking about how to make AI safe and start thinking about how to make safe AI.”

Good idea, but will that make billionaire tech bros more billions?

A sentence from a recent article in The Financial Times made me chuckle: “President Joe Biden issued regulations that require AI companies to notify the government if they are developing models that pose a security risk.”

You think AI companies are going to report to the government that their efforts pose a security risk? Maybe the most productive strategy for AI companies is to report that ALL the models they are developing contain security risks. It just goes with the territory.

If Saudi Arabia is serious about diversifying their economy beyond just oil and gas, then they likely need to become good friends with Israel. No other country in that region has innovation and an economy as robust as Israel’s. Put that into your Gaza war calculator. 

Could the Gaza situation lead numerous Arab nations to realize that the primary barrier to the Middle East’s economic success and global geopolitical influence is Iran’s leadership?

Is China changing from a country seeking economic opportunity to a country seeking control of everything? Maybe Xi will change his tune when he meets Biden. Or maybe he’ll just headfake him into enacting new trade policy that will benefit China and not the US.

How long before cheap Chinese EVs put the pain on Western auto makers? Oops, it’s already happening.

This paper suggests each EV’s real cost in the US is $50K higher than people are paying for them. Without government subsidies, well, few people could afford them.

So much for the return of the IPO boom. Birkenstock went public at $46 a share. It’s now trading around $38. Instacart went public at $30 a share. It’s now trading around $25.

I just looked at a chart of the last 100 companies to go public: 78 out of 100 are down from their IPO price, and a meaningful number of them are down by double digits. What’s Wall Street selling these days?

IN CASE YOU MISSED IT

There’s Good News
October 27, 2023

Welcome to War
October 20, 2023