Looking Backwards …
LB #1
On Dec 13, 2023, we wrote that we had our worries about AI living up to the hype calling it another inaccuracy, always insensitive, and as intended. That insightful piece about laziness and inaccuracy needs a refresher. Matt Barnum wrote for the Wall Street Journal about how AI is failing to deliver for elementary math. Khan Academy has developed a Khanmigo AI tutoring bot and here is what it responded with when asked what 343-17 is. 320. Khanmigo couldn’t do geometry either, it couldn’t respond with the right answer to the square root of 440. AI defenders say this is normal. That doesn’t help me when I am trying to build a corral and I find out I am two fenceposts short and have myself a second gate.
I have talked about mistakes in articles before and I am sure that they are being created with AI and not really being checked by competent humans, well I can’t prove this, but I have a hunch we might have seen something sinister happen this week. Lyft reported earnings this week on Tuesday, and after releasing their numbers the stock jumped more than 60%. Do you smell that, it smells like bubbilicious bubble gum, huh weird? ZeroHedge sums it up best, “the company guidance for adjusted EBITDA margin expansion, which the company said would be 500 basis points year-over-year – instead of the 50 bps it had meant to write – which is clearly insane for a company that has struggled for years to break even to positive EBITDA. In fact, any normal carbon-based human would have looked at the number and realized it was an error.” 50 basis or 500 basis points, they were off by a zero. The CEO came out and took responsibility for the error the next day, as a good CEO should, but I wonder if they weren’t a little too reliant on AI. If you can’t be accurate, I can’t use you is one of my favorite lines.
Don’t believe me though, let’s ask Chief Information Officer Sharon Mandell from Juniper Networks, a networking hardware company that has been testing Microsoft’s Copilot since November. Tom Dotan writes for the Wall Street Journal, and she told him, “I wouldn’t say we’re ready to spend $30 per user for every user in the company.” Dotan also writes that despite a flashy rollout from Microsoft, Bing isn’t taking market share from Google search even with Copilot and “Guido Appenzeller, a partner at investment firm Andreessen Horowitz, posted a thread on X showing the mistakes it makes when prompted to make a presentation. “It is a mess and not anywhere close to adding value,” Appenzeller said.”
Now folks, Microsoft’s market capitalization is over $3T now and up almost 50% since Chatgpt and CoPilot made their debuts. That is almost $1T in market cap for Microsoft alone, what about Nvidia which has added over $1T in market cap. I know everyone believes AI is the next big thing and they also believe in never never land. Do you remember the scene in The Big Short when Steve Carell’s character called back to New York and said, “We got a bubble!” The real-life trader was Steve Eisman and if he said the same thing today, I think he would be right again. If you are concerned about the magnificent 7 being too large a part of the equity of the S&P 500 weighting as I am, you had better hope and pray they get this thing working correctly and fast. If it doesn’t, you can forget the Dutch Tulip bulb comparisons, and instead just start bending over and putting two lips on your ass and kissing your retirement goodbye.
You want AI, have a little bit of this
Simple math, not so simple for AI
LB#2
Speaking of faulty AI, wasn’t AI the technology behind self-driving cars that Musk was yakking about in 2016 or was it 2015. Well, it turns out that they aren’t very accurate driving either and the humans have had enough. These are tough Texans with shotguns in their windows of their pickup trucks no these are the peace and love loving people of San Francisco. In Chinatown, the people lit a self-driving car on fire. NBC Bay area via ZeroHedge reports that 10-15 attacked the self-driving Jaguar last Saturday. Maybe they heard my F-U episode and decided to fight back against the machine. Highly doubtful, but angry burning they did. The Waymo vehicle also got a nice bit of graffiti before it burst into flames from a firecracker. A Jaguar, really the self driving cars are Jaguars? How much money is being wasted on these highway hazards? I don’t know, but evidently the people of San Francisco have spoken. Perhaps Google and GM need to invest in some decorative Jesus Fish.
LB#3- It seems everyone read a get rich quick real estate book during Covid, but they all read the wrong ones. The book is the US legal code, and it contains the secret. Don’t buy a home, simply possess it and possession is 90% of the law. That’s right, just be a squatter. Don’t save up for a down payment, don’t get a mortgage like those suckers in 2008, just move in. Everyone has so many houses that they can’t keep track anymore and the moron laws and lawyers will fight to keep you in the house and the owner out. Better call Saul! Hey hey, did you forget to mention that meth lab, haha it is my house now amigo.
Well, Michael Snyder writes about the 1,200 squatters in Atlanta alone. I can’t believe this is true, but it is in his article on his blog the Economic Collapse, “If you can believe it, there is even one company that has been running ads on social media offering to find a prime squatter home in Atlanta for you for a fee…” For a fee, the criminals are going digital! He continues “Squatters are ruining entire neighborhoods in Atlanta and police response to evict is so slow, some homeowners have resorted to paying nuisances to leave. Brazen squatters even opened an illegal strip club on a property they had taken over — one of the 1,200 homes which has been squatted in the city, according to the National Rental Home Council (NRHC) trade group. “I’d be terrified in Atlanta to lease out one of my properties,” Matt Urbanski, who manages a local home-cleaning company, told Bloomberg.” One of the few powers bestowed on the federal government was the protection of individual’s rights. It seems this along with not defending the border are adding to the long train of abuses and usurpations.
Looking Forwards…
LF#1
Moving from one crazy government policy to another, Joe Biden is now limiting Liquid Natural Gas permits from Texas. While some say this is in response to Texas not backing down on border security which we covered last week, the Wall Street Journal is calling this a gift to Putin. I dearly enjoy the shenanigans of our leader and despite thinking they should wrap him in bubble tape or nerf footballs, I think that this is a terrible policy decision whether it was made in revenge or incompetence. What exactly is Europe going to do now? We blew up the Nord Stream pipeline and Europe’s access to cheap Russian energy. Germany’s manufacturing sector is wrecked because their energy prices are too high. Germany and the UK are now in recession with other countries not far behind. Their energy costs are killing them and two years ago Europe backed America’s play and started investing in LNG conversion plants so they could use natural gas delivered from us as a substitute even though it was more expensive. If Biden cuts this cord, what are they going to do next? Europe has to be wondering if we are friend or foe at this point. Aleks Phillips writes for Newsweek, “The White House said in 2023 that roughly half of the U.S.’s LNG exports went to Europe, which would not be affected by the pause as it “remains unwavering in our commitment to supporting our allies around the world.” If the US as one of the world’s leading natural gas exporters remove shipments to the rest of the world what is the price of natural gas going to do? I can tell you, the price here in the US has been cut in half in a month. That isn’t a correction, that is a crash. So let’s say exports to Europe do stay unaffected, what are the other countries that used to get LNG from us going to do…Japan and much of southeast Asia were our biggest customers until we started exporting to Europe. Europe simply outbid these other countries and now they are talking about going back to coal. The reason that Biden halted this was due to climate concerns. We are going to exchange coal for natural gas folks…Dumb Dumb has got his head in his bum bum.
LF#2
Returning to a story we mentioned a few moths ago regarding the geopolitical sensitivity of the energy markets, Venezuela is again threatening Essequibo. Essequibo in the country of Guyana is a next-door neighbor to the oil- rich nation of Venezuela, but Venezuela is now moving light tanks, missile-equipped patrol boats and armored carries to the border. Juan Forero and Kejal Vyas write for the Wall Street Journal, “Since late last year, the Venezuelan government, which has an army of up to 150,000 active soldiers and modern armaments provided by its ally Russia, has ratcheted up claims to the Essequibo, a mostly jungle-covered region that makes up two-thirds of Guyana. The deployment and increasingly bellicose language from Caracas have come as Guyana emerges as one of the world’s hottest energy frontiers following offshore oil discoveries by an Exxon Mobil led consortium. The former British colony, population 800,000, has a defense force of only 3,000 service members, pushing the government to work more closely with the U.S. to enhance its defensive capabilities.” Do I have to tell you that I think this is going to be our third war we are going to have to try and support next or is it the 4th? Ukraine, Taiwan, Israel, Guyana. What do all of those places have in common? My money despite never visiting…
LF#3
The inflation is not behaving how the Biden administration, the Fed, or even the bond market would like. Readings came in hotter than expected this week and the experts are getting frustrated with the common folk. Justin Lahart and Nick Timiraos, the Fed whisperer, write for the Wall Street Journal, “And prices are still far above where they were before the pandemic—especially for items that most Americans buy often, like groceries.
The sting of those past price increases might be part of why so many Americans remain down on the economy. An analysis conducted by Goldman Sachs economists suggests that frustration with high price levels might have contributed to low confidence readings that persisted in the early 1980s even after inflation had slipped sharply.
It does seem like it takes a while for confidence to recover, in part because people are focused on levels rather than changes,” said Goldman chief economist Jan Hatzius. Excuse me Jan, I can’t remember going in to a store to buy groceries and buying groceries and paying 3.2% the current change or 9.1% the highest change from last year, no I pay a level. The cumulative level of all the price changes that have come before. It is like sleeping with an escort. I’m getting it all Jan. I’m six degrees of separation from Stormy Daniels Jan. Joe Pinsker knows and he writes in the Journal, “Car-insurance premiums rose 20.6% in January from a year earlier. A trip to the mechanic, the price of a parking space, and highway tolls are also up, offsetting the savings from one of the big exceptions, falling gas prices… Already, more Americans are feeling the strain. In the fourth quarter of last year, 7.7% of auto loans transitioned to delinquency on an annualized basis, according to the New York Fed—the highest rate in 13 years.” I guess that’s why they are called Goldman and not Bronzeman Sachs.
Before I go to bleeding heart on the little guy, there are some structural problems with our working man workforce. It seems that our men and women don’t want to work nearly as much as others do. Lance Roberts wrote in real investment advice something that I have been railing about for years and anyone that has to deal with FMLA, especially intermittent FMLA can relate to. “During an interview with Greg Hays of Carrier Industries, the reasoning for moving a plant from Mexico to Indiana during the Trump Administration was most interesting.
“So what’s good about Mexico? We have a very talented workforce in Mexico. Wages are obviously significantly lower. About 80% lower on average. But absenteeism runs about 1%. Turnover runs about 2%. Very, very dedicated workforce.” 1% absenteeism is amazing, these people want to work. FMLA allows 520 hours per year or 25% absenteeism, and by law there is almost nothing you can do about it. This is why jobs are disappearing, this is why foreign born workers are being rewarded in the US workplace. From Roberts again, “Since 2019, the cumulative employment change has favored foreign-born workers, who have gained almost 2.5 million jobs, while native-born workers have lost 1.3 million. This is why I admire the courage of the immigrants so much. I want a policy that allows them to work and pay taxes if they are going to be allowed to enter this country. I think they will prove to be good workers, productive citizens, and eventually assimilate as Americans. Until this can happen, they are an expense of the government and that is also inflationary. They are only making their own problem worse.
Sincerely Yours,
C Thomas Printer
The Dow Jones finished trading at …….38,627.
The 10-year Treasury bond is at …4.28%.
The price of Brent Crude is … $83.47 per barrel.
The price of gold is … $2,025/oz.
The price of silver is … $23.47/oz.
Thank you for listening today and you can find all of our articles and more on our website cthomasprinter.com.