The Dangers of Over-Tightening

Welcome to This Week’s Leyendecker View

To make the best better.
– The 4-H motto

THOUGHTS FROM DOUG

Oaktree’s Howard Marks admits that most investment gains of the last 40 years came about because of the constant fall of interest rates. He thinks that era is now over. Read his recent letter.

It appears that Sam Bankman-Fried and all these crypto folks may have thought they were living in a video game. It was all great fun while it lasted.

If crypto proves to have been nothing but the modern version of tulip mania, what other narratives are we bombarded with today that are also delusions?

With crypto out, who is now going to pay the big bucks for Super Bowl advertising?

I read an essay last week suggesting we need to regulate crypto in order to prevent massive investor losses. But if we regulate away losses, how will investors ever learn to make better decisions?

Looks like billionaire and new end-of-the-world pundit Ray Dalio is now investing in submarines for the rich. Not sure what to think about this.

Why was the fusion breakthrough story preempted by so many media outlets before it was officially released? Why did the media need to create a story that a story was coming? 

Lest you get too excited, it appears the real breakthrough on fusion is still decades away. The supposedly great breakthrough announced this week has almost no commercial potential.

Chinese interest in drinking wine is falling. Is this a canary in the coal mine for global wine enthusiasm? 

Remember: Inflation is a rate of change, not a level. Prices are compared to a year ago, when they could have already been high. Inflation looks to be falling for now, 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. 

When the going gets tough, the tough get excited about all the coming opportunities.

THE ECONOMIC VIEW

CEO economic outlook
Keeps falling
Retail sales are falling, too

Is consumption about to get ugly?
The Kansas City Fed takes a look.

The dangers of over-tightening
Investors want the Fed to stop.

THE INFLATION BOGEYMAN

The dollar is falling.
So the price of oil is rising

US CPI falls to “only” 7.1%
UK’s rate falls to 10.7%

The Fed raises rates
And says more raises are coming.

Drought caused veggie prices to soar
But snow now means more water later

THE LABOR VIEW

Jobless claims are falling
Shouldn’t they be rising?

Will AI replace human workers?
First physical labor, now cognitive labor?

Telework available to 10.6% of workers
According to the Labor Department.

Citi predicts 2MM job losses
That’ll change the Fed’s path.
The tech wreck hits college grads

MEANWHILE IN EUROPE

Is EU corruption widespread?
Here’s what the citizens think.

French birth rate plummets
Getting busy is not fun anymore.

Britain has a productivity problem
Work is for ambitious people.

PLAYING WITH FIRE

“I have a similar personality to yours.”
Xi tells Putin.
Russia and Iran are also buddies

US Patriot missiles may go to Ukraine
The Russians have new cruise missiles
But old, dangerous ammo
Are we headed to an arms escalation?
Who will run out of missiles first?
Ukraine’s stockpile is depleting

US to train more Ukraine forces
Who is really at war?

GLOBAL

Where wages are falling
A by-country comparison. 

North Korea is in a pickle
They desperately need dollars.

The most and least expensive cities
The Economist has the numbers.

THE FINANCE WORLD

$65T of foreign exchange swaps exposed
Is a domino going to fall here?

The average retail investor
Is down 30% this year
The illusory appeal
Of bear market rallies.

Has PE avoided the fall in values?
No, they just aren’t yet admitting it.
Private valuations are hard to determine
Investors not keen on continuation funds

REAL ESTATE

That once hot company, WeWork
Is about to default on its debt

Nearly half of Americans aged 18-29
Still live with parents
1 in 4 millennials are back at home
Real estate costs are just too high.

Cities have a problem.
Shrinking office values mean lower property tax revenues
New York office market teeters

TECHNOLOGY

Here comes the TikTok ban
Starting with government workers.

The miracle molecule
Early days in improving our brains?

The great chip war
And the challenge for global diplomacy.

THE CRYPTO MEME

“Literally,. there’s no record keeping whatsoever”
FTX was a complete sham.
Binance’s finances remain a mystery

Can crypto survive this latest winter?
Finding a good use would help.

How Bitcoin mining destroyed a town
All they care about is cheap energy.

THE NEXT NORMAL

Revolting against technology
Kids are leading the way.

Is cellular medicine the future?
This physician thinks so.

Why we need contrarians
Because groupthink is overpowering.

THE WAR ON CARBON

The carbon capture power plant
Is this the game changer?

HSBC to stop financing oil & gas
Which banks will follow their lead?

Europe to implement carbon import tax
This will become a giant problem.

THE NEW ENERGY TRANSITION

Australia caps domestic gas price
Protecting their own citizens and industry.

US power use to hit a record
Can renewables keep up?

Oil demand in China
Could explode from their reopening
China turns on the tap
To new and more Russian gas.

THE CHINA SYNDROME

China has a funding problem
It asks banks to step in.
As they look for a new growth policy

Here comes the China covid explosion
What kind of mess will this create?
It’s ripping through their finance workers

China complains to WTO about US chip policy
The US are the bad guys.
As China prepares $143B chip stimulus
China to support domestic chip designers
China blocked from leading chip designs
The West’s silicone fence is almost complete

THE WASHING-TONE

Biden supports Trump’s tariffs
On steel and aluminum.

US proposes a Green Steel Club
Steel tariffs would be inflationary.

South Korea doesn’t like Biden’s IRA
Like Europe, they want concessions. 
Europe has a plan

MAKING A BETTER YOU

Life is hard
And that’s good.

Your brain is not a computer
Well then, what is it?

The tamer the animal, the smaller the brain
Stay feral, my friends.

HOW ABOUT A BREAK

The best of what’s new, 2022 edition
100 best innovations of the year.

Pew Research’s 2022 findings
What’s America thinking?

The top 100 toys
From the last 100 years.

SONG OF THE WEEK

“Christmas All Over Again”
Tom Petty and the Heartbreakers
Lyrics are poetry, you know.

VIDEOS OF THE WEEK

Slow Horses trailer
A disgusting Gary Oldman charms.

Psychedelics are “freakishly safe”
Suggests Johns Hopkins professor.

Born to be mild
Celebrating the ordinary.

CASTING AROUND THE PODS

“Trusting Your Instincts”
Leadership guru Diana Chapman.

FROM THE HEADHUNTER’S KITCHEN

20 festive Christmas cocktails
For the party crowd.

2022’s top inexpensive NYC restaurants
Inexpensive in NYC?

Want a new party treat?
Try this giant grilled cheese

IN CASE YOU MISSED IT

“We Will See Spectacular Failures”
December 9, 2022

12 Lessons on Money
December 2, 2022