The Longer the Party Lasts…

Welcome to This Week’s Leyendecker View

Three things in human life are important. The first is to be kind. The second is to be kind. And the third is to be kind.
–Henry James

THINKING OUT LOUD

The Longer The Party Lasts…

Where would our economy be today if not for the billions of dollars being thrown at AI and the billions of dollars made in the stock market on the magnificent seven, or is it eight, or is it six, or maybe five. Okay, it’s mostly all about Nvidia, which this forecaster predicts will one day be worth $50 trillion dollars. In case you don’t know, Apple today is worth a bit more than $3.5 trillion.

Imagine the wealth effect of Nvidia being worth $50 trillion dollars. All of us would likely be living in hundred-million-dollar mansions. And I guess our servants would be the people whose jobs were replaced by AI. Oh me, oh my!

Yes, AI is in a gold rush and big tech is in a gold rush and the stock market is in a gold rush and government support of all things green is also in a gold rush. But, all gold rushes eventually end in a bust. And when the bust comes, there’s usually economic hell to pay.

For those who haven’t been paying attention, this country has been in a Keynesian stimulus gold rush for decades maybe. More and more fiscal and monetary stimulus have kept our economy juiced enough to keep the wheels on, all the while our federal debt level has about doubled in the last 10 years.

As I wrote a few months ago, we are in a Keynesian trap, where the only way our economy can keep “growing” is by throwing more fiscal and monetary stimulus at it. We just can’t make our economy “go” without government’s financial support. It’s how today’s consumers afford the luxury lifestyle to which so many have become addicted. Remember, around 70% of US GDP comes from consumption.

“Hey mom and dad, I can’t pay the rent this month so can you help out. Promise, I’ll get financial discipline next month. Promise! I just need this new Apple gadget. Everyone has one, and if I don’t get one then I’ll look stupid. Next month I’ll get it together. Promise!”

As the old saying goes, the longer the party lasts, the worse the hangover. How many of us know this experience personally?

Our fiscal and monetary stimulus party has been going on at least twenty years, if not longer, so imagine the hangover coming our way.

Is the stock market going up forever? Is the decades-low affordable housing index telling us something? 

Odds seem good an economic hangover, maybe a terrible economic hangover, is going to show up no matter who is elected president. It is likely when, not if. So if Trump does win, all those anti-Trumpers are going to be screaming at the top of their lungs, “We told you so! We told you he was a numskull! We told you he was going to destroy the country!”

What a perfect set of circumstances for the Democrat party. What a perfect set of circumstances for the entrenched bureaucracy that has captured so much control of the private sector because “it knows better.”

The best thing that could happen for the Democrats and the lifelong politicians and for our entrenched “know better” bureaucrats, is for Trump to win. Then they can sit back and watch the economy collapse. Go on vacation from leading the country! Let Trump and the Republicans take the fall! Sweet justice for the Washington elite ecosystem! 

The chance that Trump will be able to navigate our tsunami of economic challenges is virtually nil. But then he did miss death by not more than an inch the other day. Could his election really be a divine providence?

THE ECONOMIC VIEW

Retail sales grew last month
Excluding autos.

Big banks’ consensus
Lower-income consumers are stressed

Evictions rising rapidly in some cities
Car repos surge 23%

INFLATION, DEFLATION, OR BOTH?

The cost of electricity is going up
Power costs are embedded everywhere.

Cotton prices tumble
More demand than supply.

Consumer inflation may look better.
But wholesale inflation has picked up

THE LABOR VIEW

Female workforce participation
Is just below all-time high.
While women’s earnings lag men’s
And men do less housework
While kids’ mental health is in crisis
Hmmm…

Robot-packed frozen food is coming
Where will that displaced labor go?

Will they ever receive Social Security?
Young workers fear they won’t.

MEANWHILE IN EUROPE

Europe may add immigration hurdles
Voters are moving the needle there.

France is in a political pickle
Who will run the country?

Europe having record tourism year
Some are ready for tourists to leave

THE GLOBAL GAME

The IMF worries about tariffs
They could keep inflation and rates high.

Thailand to dole out free money.
$13.8B to spur consumer spending

Iran’s new president gives his view
It is his view, right. Really, it is. His only.

THE UKRAINE FIRE

Russia and Ukraine to swap prisoners
UAE brokered the deal.

44% of Ukrainians want peace talks
But that’s not a majority.

Russia has a growing crime problem
And a growing population problem

THE GAZA FIRE

Houthis up naval attacks
It’s having a global effect

Netanyahu takes hard stance
Cease-fire talks may go nowhere.

Israel goes after Hamas chief
Israel thinks they got him
As Hamas goes into guerrilla mode

THE SLIPPERY SLOPE

China halts arms control talks
Not happy with US sales to Taiwan.

Finland approves US defense treaty
Putin will not be happy.

Iran financed US campus protests
The aim is to grow division and disruption.

FINANCE

Investment banking is back.
Just had the best quarter in two years

Private equity, watch out below
Stresses are mounting.
Big Texas pension fund lowers PE funding

Private equity bought Subway sandwich chain
Now they are piling on massive debt
A recipe for price increases and quality decline?

REAL ESTATE

Office market starts to melt down
WFH and high rates challenge market.

Distressed apartment loans surge
Earlier rates were much cheaper.

The city that banned short-term rentals
Have they really gotten out of hand?

TECHNOLOGY

Software update paralyzes global tech
How fragile is the web?

The giant AT&T hack is bad
Here’s what customers need to know
Google goes big on cybersecurity

Apple’s Vision Pro is a dud
They should have seen it coming.

THE CHAT ON AI

Big tech is stealing IP to train AI
Where is Washington’s regulation?

OpenAI sets up benchmarks.
On its path to “human-level” performance

Too much spend, too little benefit
Goldman Sachs opines on AI.
Top analyst expects AI bubble to burst

OUR GOOD FRIEND, FAILURE

HR lobby scraps the “E” in DEI
Microsoft drops DEI team, but promises “DI”
Do two letter acronyms resonate?

The hot weight loss drugs
Come with anesthesia risks

More space junk is crashing down
Who will pay for the damage?

THE NEXT NORMAL

NY banned phones in schools.
And now students love it

The US is sliding into chaos.
Say 4 out of 5 Americans

Newsom signs controversial bill
Schools can keep LGBTQ+ matters secret from parents.
This loss of parents’ rights is Elon’s final CA straw
He’s moving more companies to TX.

THE WAR ON CARBON

Kuwait has giant O&G discovery
Argentina ready to export more O&G
China finds a big field
More hydrocarbons are coming.
OPEC sees demand increases

US natgas output is declining.
While demand hits record high

THE ENERGY TRANSITION

Big US solar company stumbles badly
They may have to shut down.

Europe’s hydrogen goals not realistic
Says the European Court of Auditors.

Ranking state energy costs
It’s cheaper to live in hot states.

THE EV DREAM—OR DELUSION

US automakers back away from EVs
And doubling down on gas-powered cars.

Here come the sodium-ion batteries
Lithium has a competitor.

EV boosters can’t do math
Household power needs would be huge.

THE CHINA SYNDROME

China is using AI
To ensure citizens toe the line
Leadership wants stronger social control

China home prices fall sharply
Time for another big stimulus.

Trillions in debt fueled China’s growth
Now it threatens China’s future.
Is Xi over his head with China’s issues?

THE INDIAN TIGER

Apple’s India sales jump 33%
Indian equity issuance sets record
The Indian tiger is roaring.

Tesla’s once touted India factory
Doesn’t look like it will happen

Is India the next China
For US-outsourced manufacturing?

THE WASHING-TONE

Biden proposes national rent control
But wouldn’t that undermine development?

Biden wants to change the Supreme Court
It’s supposed to be independent, right?

Will a stock trading ban pass?
Lawmaker investing beats the market
Why are they so good at investing?

THE ELECTION DISTRACTION

What President Trump would do in 2nd term
He lays it out for Businessweek.

Covid to keep Biden from public view
Well, of course.
Democrats scramble to replace him

Judge dismisses Trump documents case
Biden’s documents don’t matter

After the assassination attempt
Musk to donate $45MM monthly to Trump
More billionaires jump on the train
UAW chief thinks Trump will win

MAKING A BETTER YOU

Is extroversion a cheat code for life?
You can even fake it.

Hard conversations are hard.
But can be easier than you think

Intermittent fasting has been criticized.
Here are 4 debunked myths

HOW ABOUT A BREAK

Surviving Orca Alley
What’s up with orcas’ aggression?

Some interesting things
About the ancient Olympic games

Why do humans dance?
Is it “collective effervescence”?

PLANNING VACATION?

52 places to go in 2024
Only 52, eh?

Want a low-density vacation?
Check out state parks

America’s great lake towns
Now that’s more like it.

MUSIC BOX

World music from…
Radio Castell’Umberto
An eclectic Albanian mix.

Bonus concert…

Willow’s tiny desk concert
Is more complex music making a comeback?
Willow is Will Smith’s daughter

CASTING AROUND THE PODS

Better ways to raise kids
Insightful interview of Michaeleen Doucleff.

VIDEOS OF THE WEEK

You can teach a fish to drive
Really, you can. Really!

The Touch trailer.
An old-school tear jerker.

The Convert trailer.
Intrigue in 1830s New Zealand.

FROM THE HEADHUNTER’S KITCHEN

Some cool summer recipes…

Tomato, peach and burrata salad
Marinated zucchini salad
Nicoise salad
Italian pasta salad
Asian noodle salad
Spicy cold noodles
Mexican street corn salad
Lemon blueberry bars
Homemade ice cream sandwiches

THE RANDOMS

Given the Trump assassination attempts, does the Secret Service suffer from Boeing-itis? If so, how many other government bureaucracies are in the same shape?

There is no shortage of articles about populism. But what is the opposite of populism? Is it elitism or pluralism? Of course, most people likely don’t favor elitism, but can’t pluralism exist under the umbrella of populism? Are not numerous disparate groups also involved in populist movements?

A great quote from a great mind—David Ogilvy, an advertising legend:

“I doubt if more than one campaign in a hundred contains a big idea. I am supposed to be one of the more fertile inventors of big ideas, but in my long career as a copywriter I have not had more than 20, if that. Big ideas come from the unconscious. This is true in art, in science and in advertising. But your unconscious has to be well informed, or your idea will be irrelevant. Stuff your conscious mind with information, then unhook your rational thought process. You can help this process by going for a long walk, or taking a hot bath, or drinking half a pint of claret. Suddenly, if the telephone line from your unconscious is open, a big idea wells up within you.”

It may not be the best example, but here’s why mothers are so important.

Years ago, I used to think women ruled the world. But, for some reason, now they want to be equal to men.

According to this Substack essay, since the adoption of the Paris Agreement in 2015, the world has increased fossil fuel consumption by 33.5 EJ and carbon-free consumption by 30.6 EJ (an EJ is an exajoule, which is a lot of energy). To be on track for net zero by 2050, unabated fossil fuel consumption would need to be reduced by about 25 EJ per year, or about the same reduction that occurred in 2020 during the pandemic.

52% of Americans own stock. They likely think the economy is in great shape. But what about the other 48%?

IN CASE YOU MISSED IT

Why We Fall for “The Narrative”
July 12, 2024

America the Beautiful
July 5, 2024