Looking Backwards …
at a Thanksgiving week that has left me in a fantastic mood this morning as sensibility and accountability are starting to be restored on this little blue marble, after too much wondering “what the hell is going on around here?” let’s explore…
LB #1
The people of the globe are starting to push back on their governments and their spendthrift ways and I am delighted. Argentina elected a new president and I will write in more depth on that subject during the next Bygone Relics coming out Wednesday, but Germany is having its own moment as their court and the law is slowing down the ridiculous spending by their government. Remember when we discussed in the last few weeks that Siemens was going hat in hand to the government for billions in bailouts for the wind energy disaster, well the government was funding their electrical and gas price issues with some dubious accounting. I’ve attached two articles from Politico, both by Hans Von Der Burchard who is nailing his coverage on this. The first came out Tuesday, “Germany’s finance ministry has imposed a spending freeze on all federal ministries, deepening a budget crisis that has rocked the ruling coalition since a bombshell ruling by the country’s top court last week.
The finance ministry decision, which halts most new spending authorizations, followed a ruling by the constitutional court last week that blew a €60 billion hole in the government’s coffers.
The government is now bracing for the potential of far wider financial implications stemming from the ruling that may limit its ability to draw money from a variety of special funds that have been established to circumvent the country’s debt brake, which restricts the federal deficit to 0.35 percent of GDP, except in times of emergency.”
The court ruled that the government can’t use leftover Covid money to finance their green agenda and ruled it unconstitutional. The debt brake was put into law in 2009 and now the Green Party isn’t happy as the article quotes Green Economy Minister Robert Habeck “The debt brake, he added, was “made in a different time, when we always had cheap gas from Russia, when China was always … our purchasing market, and when the Americans were always reliable, loyal friends and took the military burden off our shoulders because there was no war in Europe.”
Well Robert, you are right about that. Try paying for your own military, China has now hamstrung your auto industry by being able to produce EV cars cheaper than you can. Your laws are now saying that only EVs are going to be allowed to be driven in the future, but you also forgot that you have no source of energy because it is cloudy in Germany and the wind doesn’t always blow and you have pissed off Russia. What did they do? What did the government do you ask?
It took two days for Habeck to come out and call for a contemporary update of the debt brake on Thursday and for the Finance Minister to announce that the government was going to suspend the debt brake again and basically announcing that Germany is again in emergency. This will require a majority of parliament to approve and could lead to another legal challenge. It seems like another government’s leaders won’t stop spending, although the court might try and make them. For those keeping score, this is the fourth year in a row that Germany is suspending the debt brake. This isn’t a brake, it’s an accelerator into irrelevance.
German freeze desperately being thawed
LB#2
We have spoken about how in a low interest rate environment many far-off unprofitable ideas can be financed because debt is cheap and the prospect of future discounted cash flows are more attractive than when rates are higher. Well, with inflation comes realism and realism is starting to bite companies and ideas that should be going broke and will be soon. The Wall Street Journal Amrith Ramkumar writes that there are companies out there just waiting for a government hand out and they can’t get it because they couldn’t raise enough money to get their project to a level that would trigger these government handouts. It seems they lacked the credit of a German Siemens huh? Ramkumar writes “Many clean-energy companies have filed for bankruptcy in recent months, including electric-vehicle makers Proterra and Lordstown Motors and sustainable-farming company AppHarvest. Other upstart electric-car companies, such as Faraday Future, Arrival, Canoo and charging firm Tritium, are in danger of joining the list.” It isn’t just EV companies though, Biotech is feeling the pinch as well. Ana Mulero writes in Biospace that 28 Biotech companies have filed for bankruptcy in 2023 after 20 last year. The ten year high before last year was just 13. In the article, she writes Cody Powers, a partner and principal for portfolio and pipeline at management consulting services company ZS Associates, pointed to the rapid rate of innovation and evolution as another factor. “The bankruptcy protection allows companies to raise the cash needed to pay off creditors, while generally fending off enforcement action and suspending the statute of limitations to collect.
The trend is new for the biotech world, he explains, “Biotech is not a world where people are used to thinking about bankruptcy,” Powers said. This is because “bankruptcy means you can’t pay your debtors, and biotech is not majority debt-financed. Most of biotech is equity financed.” But since the start of COVID-19, companies have been more apt to take on debt, he noted.” The bankruptcies are just beginning in this space as well. This reminds me of 1900 and the 2,000 car companies that all tried to produce the automobile that would capture the hearts of America. That got whittled down eventually to a big 3. Speaking of those big 3 and GM, Kyle Vogt resigned after leading the Cruise vehicle disaster we covered in San Francisco. He burned through $1.9B before he left and if GM isn’t careful there will be another bankruptcy in its future.
Green Companies are going broke
LB#3-
In Barron’s this week, a technical analyst named Andrew Addison threw up some nice charts in his article exploring the susceptibility of the American consumer. Nothing pisses me off more than the line, “Never underestimate the American shopper.” I say “never underestimate the stupidity of the American shopper.” People will buy Pelotons if you give them money, and they will buy NFTs if you let them, and hell they will buy a house if you let them. Remember 2007?
Addison shows that the US economy is hurtling toward recession because of the increase in credit card delinquency. US credit card delinquencies overdue by 30+ days and 90+ days are rising quickly, and this usually leads to a forced reduction in spending. He also wrote that this is why the speculation is that the Fed interest rate rising cycle is nearing an end and why gold is approaching all-time highs in the US and making all-time highs in other countries. His work projects gold to advance to $3500 an oz which is pumpkin pie to my yellow metal loving hardened heart.
Looking Forwards…
LF#1
So as we approach the end of the year and look forward to 2024, I am anxious to see if some trends continue. Jai Hamid writes in Cryptopolitan that Egypt and India are now setting up trade relations between the two countries that would eliminate the use of the dollar altogether. “This bold move is a part of a growing trend among BRICS nations to reduce dependence on the US dollar in international trade, and it signifies a significant shift in the global economic landscape.” The BRICS were supposed to announce their new gold backed or gold reserved currency in August, but they didn’t. I think it was because they didn’t need to yet. They need to build these types of relationships first. He continues, “The discussions between Egypt’s Finance Minister, Mohamed Maait, and India’s Ambassador to Cairo, Ajit Gupte, are not just routine diplomatic exchanges.
They represent a concerted effort to devise strategies that would bolster investment and economic diversification between the two nations.
The talks also covered the use of Egypt’s substantial bond issuance in China for potential utilization in India’s financial markets, showcasing a complex web of financial maneuvers aimed at decreasing dependency on the US dollar.” That is the most important part of the entire article, not the avoiding the dollar part. These other countries need to develop their own capital markets and be able to lend and repay each other to develop the trustworthiness of trading partners. The US is losing trust after freezing the Russian foreign reserves and other countries are building alternate channels which once didn’t seem to be necessary. These things take time, but not as long as it used to.
LF#2
Shane Shifflett writes for the Wall Street Journal that investors pulled more than $14B from ESG funds this year. It looks like the craze might be behind us. By craze, I mean crazy. “In 2021, Hartford Funds inserted “sustainable” into the name of its core bond product and subsequently saw investors pour $100 million into it. But after missing its own performance targets last year, Hartford is switching gears again.
Later this month, the bond fund will be known as the Core Fixed Income Fund and potentially sell some of the holdings that made it sustainable when it pivots to a conventional investment strategy, according to company filings. Hartford declined to comment on why it is rebranding the fund.”
Missing performance targets is one reason but another could be political pressure or the go woke go broke factor. Florida pulled $2B out of a BlackRock fund due to its support of ESG. Money talks and bullshit walks.
Trouble brewing in the consumer
LF#3
Speaking of go woke and go broke, we come to the plight of some companies that seem down on their luck and are perplexed when I say they are just getting their own Bud Light comeuppance. Just down the hallway from the “Poop Hall” we covered last week over at Disney there are the Marvel studios which continue to put out films with disappointing numbers, Captain Marvel had the lowest earning weekend in the history of Marvel. Disney is scrambling to find heads to roll over at the Marvel Studio, but the issue might be with Disney itself. It seems that the woke media doesn’t want to cover a common theme for why these companies are struggling so badly.
Tre Goins-Phillips wrote about why over a year ago but it was never discussed in the mainstream because he wrote it for Christian Broadcast News
“Aside from that one outlier, which was helped by a Christmastime debut, it seems the post-Iron Man MCU is following the leftist cues from its parent company, Disney.
“Eternals,” which premiered in November 2021, featured the MCU’s first openly gay superhero. Then came “Doctor Strange in the Multiverse of Madness,” which featured leftist talking points, an embrace of occultism, and a main character, America Chavez, who wears an LGBT pin throughout the film and briefly talks about her “two moms.” And the storyline of “Thor: Love and Thunder” alludes to two same-sex relationships and was lauded by its stars as “super gay.”
Around the same time, as CBN’s Faithwire previously reported, Disney released its Pixar film “Lightyear,” which faced criticism for portraying a romantic kiss between two female characters in a movie geared toward children. In response to the concern, Buzz Lightyear star Chris Evans — known for playing Captain America in MCU films — said critics of the kiss are “idiots” and will “die off like dinosaurs.”…
All of this comes as Disney CEO Bob Chapek, whose contract was recently renewed for another five years, has vowed to be a “better ally for the LGBTQ+ community” and Karey Burke, president of general entertainment for Disney wants to see “many many, many LGBTQIA character” in shows and films moving forward.” Well, I don’t know what QIA is but what might be MIA is your customers Karey and then you in your job. You see, Bob Chapek has already been fired.
Target is another company trying to identify why their business is cratering. They have pointed out that they are struggling with theft, but Wal-Mart stock’s is at a record high so what could be the difference? From the New York Post, “The latest big corp to feel the pain of going woke and going broke? Mega-retailer Target.
Monday saw the giant post its first quarterly sales drop in six years, after customers revolted when Target went all-in on woke merchandise for Pride Month — including LGBTQ-themed gear for babies and “tuck-friendly” swimsuits for trans women and even, it seemed to many, for kids.
All that junk got yanked after consumers protested. But the damage was done.
Target knows it messed up big-time, too: “Traffic and top line trends were affected by the reaction to our Pride assortment,” saidCFO Michael Fiddelke.”
First of all, you shouldn’t use junk got yanked when referring to Target anymore because they offer bikinis with marsupial pouches for penii, is it penii or penises? Whatever, so that is a bad use of wording by the New York Post or very clever…
Lastly, I come to a company that I never expected would go there. Moneywise had an article by Serah Louis this week which was sad. She writes that the older consumer is particularly price conscious and that higher inflation has caused value conscious Cracker Barrel guests to skirt away from their former ways. She also opines on another reason why traffic is dropping at the Cracker Barrel, “When the chain introduced plant-based breakfast sausage last year in an effort to accommodate more consumers, there was a mix of praise and backlash on social media.
“Stop pushing this woke garbage,” wrote one outraged user in response to a Cracker Barrel Facebook post promoting the new product. “We go to Cracker Barrel for Traditional Values and Traditional Country Cooking… If you want to serve Lefty food, open an alternative store.”
A few people also got fired up over Cracker Barrel posting a photo of a rainbow-colored rocking chair in celebration of Pride month this year.
“BYE BYE CRACKER BARREL! I will NEVER eat there again!!” Ronny Jackson, Republican representative for Texas’s 13th congressional district, wrote in response on X (formerly Twitter).”
These companies are being destroyed by leftist policies. The response isn’t being covered because that would require the leftist media to acknowledge that their leftist platform is a problem as well. It is also why ratings for mainstream media continues to drop, but that conversation is for another week.
Disney, Target, and Cracker Barrel stocks are down over 50% in the last two years. The silent majority is speaking, will these companies listen? America is sick of this bullshit.
Money talks and bullshit walks.
Thank you for listening today and you can find all of our articles and more on our website cthomasprinter.com.