"Is the whole ecosystem crumbling before our eyes?!"
PAXLOVID REBOUND WINTER!
"The key to the wealth gap is ensuring a barbell class system. The middle class must be small enough to be politically inconsequential." - @thirdgenwidget, Sept. 2021
Today’s CNBC drinking word is, as always, “ecosystem.”
Today’s title is a Kelly Evans quote, I think about a large asteroid heading for New York any day now, or crypto something, not sure.
Hopefully Kelly was simply reading mindlessly from the notorious CNBC teleprompter.
Not sure yet what will get me first, “crypto contagion” (aka “The Great Crypto Unwind,” and various other hysterical CNBC word salads) or Monkeypox. Also, I have no metaverse strategy, which is, of course, unsettling.
Being old, I never really got crypto, but have nothing against it. I recently mentioned Celsius a few times - look, if you think you can get a safe 20% yield in crypto, or Emu farms, I can’t help you. I guess every generation has to learn.
I notice we never see headlines on CNBC about the stocks they formerly pumped every day that either get destroyed, or worse go off to money heaven: e.g., No “The Great GoPro Unwind!” stories.
…built into the speculative episode is the euphoria, the mass escape from reality, that excludes any serious contemplation of the true nature of what is taking place.
Contributing to and supporting this euphoria are two further factors little noted in our time or in past times. The first is the extreme brevity of the financial memory. In consequence, financial disaster is quickly forgotten. In further consequence, when the same or closely similar circumstances occur again, sometimes in only a few years, they are hailed by a new, often youthful, and always supremely self-confident generation as a brilliantly innovative discovery in the financial and larger economic world. There can be few fields of human endeavor in which history counts for so little as in the world of finance. Past experience, to the extent that it is part of memory at all, is dismissed as the primitive refuge of those who do not have the insight to appreciate the incredible wonders of the present.
I see the airlines are back in the news, including Delta Airlines:
December 3, 2020: A growing number of junk-rated corporations including Delta Air Lines Inc. and Royal Caribbean Cruises Ltd. are losing money even before they pay interest and other necessary expenses like taxes.
Delta spent a total of $11.5 billion on stock buybacks between 2013 and 2019…The carrier received $5.44 billion through the CARES Act’s payroll support program. Only $1.6 billion of that is a low-interest loan that needs to be paid back.
One year later:
"For most of the 20th century, stock buybacks were deemed illegal because they were thought to be a form of stock market manipulation." Sadly, Cliff Asness and I never got to debate this.
Is this a joke? Yes, it is. The Fed is still monetizing bonds.
"No, that's not what is happening, and that will not happen. Monetizing the debt means using money creation as a permanent source of financing for government spending." - Citadel Ben Bernanke, October 2012.
For fun, here’s Pimco Ben in 2010.
The Global Inflation Farce
Datadog, still double April 2020.
Mercadolibre, still $50+ more pricy than April 2020.
Docusign, back to September 2019 levels. Meh.
Advanced Micro, back to year-ago levels, still double 2019 levels
Match Group, back to May 2020 levels
US Average New Home Sales Price/Per Capita Disposable Income
CoreLogic reports that the investor share of single-family homes sold in the first quarter of 2022 hit 28 percent, well above the 19 percent share a year earlier and the 16 percent share averaged in 2017–2019. Not surprisingly, investors focused on markets with rapid home price appreciation, accounting for especially high shares of sales in Atlanta (41 percent), San Jose (38 percent), Phoenix (36 percent), and Los Angeles (34 percent) at the end of 2021.
1.3 million Californians are late on their rent, Census says “That means 13% of the state’s rental population wasn’t caught up with their landlord during the June 1 to June 13 period” Here’s the Census website.
The latest from Jeff Snider: US Economic Data Keeps Suggesting Recession Coming. I like Snider, even though every time I hear him say “there’s no inflation” I want to throw something at him. We have semantic differences in that way. I still have to give him credit for one of the greatest quotes about the Federal Reserve ever:
The Federal Reserve is not a cabal of evil geniuses dedicated to bringing down the global order so as to create a new one with its Wall Street masters in complete control. They are instead a clown-show, a remedial class of halfwits and empty suits opining on topics they would in a just society be banished from entirely.
I was talking to a business owner who imports heavy stuff in containers from China. He said he used to pay $3000 per container, it went as high as $25k, and now they’re $10k. I guess that’s the deflation I often hear about.
Fairy tales, then, are not responsible for producing in children fear, or any of the shapes of fear; fairy tales do not give the child the idea of the evil or the ugly; that is in the child already, because it is in the world already. Fairy tales do not give the child his first idea of bogey.
What fairy tales give the child is his first clear idea of the possible defeat of bogey. The baby has known the dragon intimately ever since he had an imagination. What the fairy tale provides for him is a St. George to kill the dragon.
I hope that guy with the barbell has a spotter. Excessive income inequality has a way of getting lopsided.
"When there is a want of a proper number of men of middling fortune, the poor extend their power too far, abuses arise, and the government is soon at an end." -- Aristotle, Politics 5
Galbraith wrote one of my favorite business of all time . . . in the form of a novel: A Tenured Professor.