The Oopsie Doopsie

Welcome to This Week’s Leyendecker View

Let everything happen to you: beauty and terror. Just keep going. No feeling is final.
–Rainer Maria Rilke

THINKING OUT LOUD

The Oopsie Doopsie

It seems amazing that we will soon be five years from the moment when the World Health Organization characterized the Covid outbreak as a pandemic.

The virus first originated in Wuhan, China in December 2019. Wowsville, eh? Almost five years since the start of what proved to be many crazy days.

Those days included a lockdown of major economies and social activities around the world. Different gears in different parts of the global economy came to a screeching halt. Trade collapsed. Business activities collapsed. Social activities collapsed. Schools were closed. Going out in public was frowned upon. Everyone had to wear a mask.

As links in the globalization chain broke, globalization suffered greatly. Automakers couldn’t get parts. Electronics makers couldn’t get chips. Grocery stores couldn’t get food and home supplies.

Remember the run on toilet paper? That one item tells the whole story. We were in a panic.

To stave off economic depression, the US government started giving money away like candy at Halloween. People got free money. Then people got more free money. Companies got free money. Then companies got more free money.

During Trump’s presidency, the federal government spent $3.6 trillion on Covid relief. Then Biden showed up and added another $1.85 trillion. All told, federal Covid relief money added up to almost $5.5 trillion dollars.

As the federal government was dropping thousand dollar bills from helicopters, the Federal Reserve was quickly dropping interest rates to add more stimulus to the US economy. The federal funds rate went from around 2.4% before Covid to 0.2% in March 2022. During the same period, the Fed added about $5 trillion dollars to its balance sheet.

Add the Fed’s balance sheet growth to the Trump/Biden Covid relief and, over a two-ish year period, the US economy got about $10.5 trillion dollars of free money, plus interest rates at 50-year lows.

The obvious result was inflation—not just because of the $10.5 trillion of free money that went toward the consumption of tons of stuff but also because lockdown-snarled supply chains shrunk supply of certain goods, which further drove up their prices.

To “tame” inflation, our Federal Reserve and other central banks around the world started to push up interest rates. The theory was that by driving up the cost of money, inflation would fall and thereby increase the likelihood of a soft landing. As expected, we’ve seen consumer inflation growth fall measurably.

But while consumer goods and services inflation may have receded, financial asset inflation has not. Just check the stock market. Just check home values. Yay, us! If pre-Covid you owned a home and/or some stock in the stock market, your wealth may have doubled in less than a handful of years. Woohoo!

But there’s a festering problem with some of the other private financial asset classes, particularly venture capital and private equity. As the Fed started raising interest rates, these asset values entered very fragile territory.

During the Covid era, the valuation of private financial assets rose considerably, not just because interest rates fell fast and far but also because the economy had so much extra free money falling into the pockets of consumers and companies. Interest rates are now starting to fall, but the free money that showed up during Covid likely won’t return and support some venture capital and private equity investment values.

THE ECONOMIC VIEW

It’s getting harder to be middle class
As inflation trumps wage gains.

Boeing to cut 17,000 jobs
Has the recession started?
JPM thinks we’re in a soft landing

Consumer spending lifts hiring
Go, consumers, go!
But manufacturing is weak

INFLATION, DEFLATION, OR BOTH?

Health care costs keep rising
Will they hit the CPI?

Food prices are easing.
But consumers are still stretched

PE mints blue-collar millionaires
Expect home services inflation to rise.
But Gen Z may come to our rescue

THE LABOR VIEW

Unions are getting aggressive
Why have union petitions doubled under Biden?

Gallup’s latest employee survey
Why they leave, what they seek, and more.

TikTok eliminating hundreds of jobs.
And replacing them with AI
Which jobs will Tesla’s new robots take?
AI is coming for wealth management
We need more Starbucks jobs.

MEANWHILE IN EUROPE

ECB cuts interest rates
The EU needs stimulus.

The EU has terrible water
But let’s talk about climate change.

European car makers are in trouble.
China is cleaning their clock

THE GLOBAL GAME

Canada and India have a problem
Kicking out each other’s diplomats.

The world’s poorest countries
Are deeply in debt
Defaults are coming

Narco violence leaves 200 dead
As Mexico’s new president pledges action

THE UKRAINE FIRE

Zelensky wants Ukraine in NATO
He thinks it would end the war.

Russia sets up North Korea battalion
Ukraine confirms they’re involved

Russia has a “shadow fleet”
How did they get and manage it?
France wants more oversight on LNG

THE GAZA FIRE

US bombs Houthi weapons cache
Hey, Iran, check our bombers out!

Israel takes out Hamas leader
Will this end the war?

Hezbollah follows Hamas’ strategy.
Put the innocent in harm’s way

THE SLIPPERY SLOPE

North Korea blows up train tracks
Severing ties with the South.

Scale of Chinese spying
Is overwhelming Western governments

Mystery drones swarm US base
No one knows where they came from.

FINANCE

Wall Street is ringing the cash register
Rate change is their best buddy.

CLOs are a hot market
Hot today, problems tomorrow?

European banks need to merge.
But there are lots of obstacles

REAL ESTATE

The death of Main Street
Efforts to save small towns.

Florida was gonna be paradise.
But now it’s time to leave

70 years of the changing home
Everyone needs a bigger space now.

IS TECH A WRECK?

Silicon Valley, the new lobbying monster
Leave our billions (monopolies) alone!

Taiwan makes majority of global chips.
But it’s running out of electricity

Tech giants are going all out
To dilute Europe’s AI Act.

THE CHAT ON AI

AI child sex abuse set to explode
Technology is so lovely these days.

Bain to sell ChatGPT to companies
“Here’s how many jobs you can cut!”

California AI safety bill is dead
Good luck, human beings!

OUR GOOD FRIEND, FAILURE

Americans’ trust in our institutions
Remains abysmal

Home schooling is booming
Because why?

A UK doctor complains.
Their socialized medicine is like the stone age

THE NEXT NORMAL

Here comes another new university
More billionaires want change.

Everyone wants to be an influencer.
And TikTok will pay people to do it

The coming age of depopulation
The implications are quite large.

THE WAR ON CARBON

China keeps building more coal plants
Let the West “enjoy” energy inflation.

Europe plans carbon import tax in 2026.
India doesn’t like the idea

Taking carbon out of steel processing
It’s very expensive to do so.

THE ENERGY TRANSITION

US energy storage jumps 86%
Is it profitable, economical or just subsidized?

Google backs nuclear energy
They need more power for AI!
Amazon wants nuclear, too

I thought tech voters wanted less carbon.
But now they need more carbon

THE EV DREAM—OR DELUSION

Europe’s battery champion is a mess
Probably too many regulations.

Used EVs are a bargain
You want one?

Tesla announces their robotaxi.
The world yawns

THE CHINA SYNDROME

China practices their Taiwan drills
Are they getting ready for something?

McKinsey changing China strategy
Tough place for business these days.

China to borrow more to prop up economy
Why not, everyone else is doing it.
Is a deflationary spiral coming?

THE WASHING-TONE

Who died and left the US $7 billion?
Maybe someone from Houston.

Boeing is a mess
Intel is a mess

Aren’t they both government darlings?

THE ELECTION DISTRACTION

Gambling on elections
Does it help or hurt them?

The current presidential election
Is all about promising free stuff

Obama lectures black men
Are his remarks racist?
Black voters drift from Democrats
So Harris brings up reparations

MAKING A BETTER YOU

Life’s short.
Stop trying to perfect it

Looking to lose weight?
Try these breakfast ideas

7 ways to love better
It’s not just mushy stuff.

HOW ABOUT A BREAK

The history of tailgating
Should we thank Henry Ford?

Consider your favorite film genres.
They tell a lot about your brain

Before modern Europe
There was an amazing Asian world

THE EXTRAORDINARY

We are in need of Renaissance people
We may be doomed without them.
Catching the SpaceX rocket

Annual wildlife photos of the year
Nature is so much cooler than tech.

More people can see the northern lights
Because of the current solar maximum

MUSIC BOX

Jon Batiste rocks!
“Für Elise”

“Peaceful Place”
Leon Bridges’ new album is cool.

Coldplay’s new album is cotton candy.
”Moon Music”

CASTING AROUND THE PODS

Are boys being left behind?
Yep, says Emily Oster on new podcast, Raising Parents.
What does this Fed chart tell you?

Want to be a great strategic thinker?
Master these 6 core skills

VIDEOS OF THE WEEK

The Apprentice trailer.
Getting good reviews.

Anora trailer.
A modern day Pretty Woman.

We Live in Time trailer.
Who’s up for a love story?

FROM THE HEADHUNTER’S KITCHEN

Broccoli is super good for you
Bring on George HW Bush!

Fall is the beginning of soup time…

Cowboy soup
Chicken and dumplings
Caldo de pollo
Loaded baked potato
Ham and bean
Minestrone
Creamy roasted cauliflower
Broccoli cheddar

THE RANDOMS

Why is being rich the ultimate goal? Why is Gen Z obsessed with becoming rich?

If we got into a war, how hard would it be for an enemy to destroy our offshore wind generation assets?

Will Obama’s support for Harris doom her campaign?

Maybe the current tension around returning to the office, working from home and working remotely is just part of the natural evolution of how we work. Technology has allowed more people to work remotely. Maybe we’re in the stage of using new technologies to find new patterns of work that optimize for productivity, not in-person time.

It is naive to give serious consideration to what presidential candidates promise during an election. Mostly they race to be the biggest promiser of free stuff.

If everyone is going to need to become an AI worker, where will the working class find jobs?

The collaborative and cooperative globalization movement brought us natural deflation for about 40 years. Now will the fragility of current geopolitics come with inflationary risk, instead?

As the old saying goes “power corrupts, and absolute power corrupts absolutely.” And most everyone in power has only one goal: to get more of it.

Should this newsletter have a weekly news wrap-up video? What do you think?

IN CASE YOU MISSED IT

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