Is There a New Dotcom Bubble?

[Juan]

I hope these guys are more effective than Margrethe Vestager in tackling the corruption of Big Tech:

FTC sues Amazon over 'deceptive' tricks to enroll consumers in Prime

 

[Juan]

If the EU only made Google pay the taxes that are already in force in the EU...

Brussels ramps up Google antitrust case with break-up threat

Margrethe Vestager, after years of posing, pretending, and advertising her role at social media never got FAANG to pay the fines levied on them... and now is fleeing to sit her ass at the EIB doing nothing (as usual).

 

[Juan]

Obvious: interest rates will need to go higher for longer.

IMF warns central banks of 'uncomfortable truth' in inflation fight

 

[Juan]

It looks like everything is ripe for a new interest rate hike:

US housing market shows resilience as house prices and new home sales rise

 

[Juan]

 

[Juan]

There is excessive debt everywhere. It will end up blowing up.

Bank of America nurses $100bn paper loss after big bet in bond market

 

[Ed209]

There is excessive debt everywhere. It will end up blowing up.

Bank of America nurses $100bn paper loss after big bet in bond market

Bundesbank might need bailing out after they lost on bonds as well.

The fiat system is irreparable because most currencies are designed to lose significant value over time. Money has to have a certain degree of scarcity to retain its value but governments have been printing exorbitant amounts for so long now that they no longer know what to do and are out of ideas. They made money far too accessible and productivity took a backseat to counterfeiting (central bank printing) and now it's coming back to bite us all in the ass. Actual value and growth is achieved through real work and a sound monetary system. We all farmed out our labour to third world countries and sat back on our laurels taking on excessive debts. Sooner or later, the debts have to be paid.

We need to raise our productivity so that we can support our budgets without the need for excessive borrowing every single year. It's not rocket science, but it's also not what the public want to hear and it's not what they will vote for because it involves making cuts now whilst we are still afloat. There needs to be a rebuilding process and a shift in mentality.

Meanwhile, the SEC is going after crypto because they see it as a threat rather than a solution and one can see this based upon their actions. All they need to do is put the correct regulatory framework in place to help drive innovation, but they don't even want to do that. The world is turning into a crazy place.

 

[Juan]

Interest rates have to go up much more. And the balance sheet reduction by central banks has to accelerate.

 

[Juan]

The EU needs to ENFORCE its laws and make Meta and the rest of FAANG pay all the taxes they owe in Europe, and make them respect privacy and data protection laws:

Facebook suffers fresh setback after EU ruling on use of personal data

 

[Juan]

Huge bubble:

Investors spend $200mn on 'worthless' Bed Bath & Beyond shares

Trading in bankrupt US retailer's stock has continued in 'mutation of meme stock phenomenon'.

 

[Juan]

Samsung forecasts 96% quarterly profit fall to 14-year low due to chip glut

 

[Juan]

It seems the FED and the ECB are falling behind:

Markets price in UK interest rate of 6.5% by next March

Powell and Lagarde should be fired.

 

[Juan]

"Fintech" or a total scam?

Revolut's US payment flaws allowed thieves to steal $20mn

 

[Ed209]

It looks like everything is ripe for a new interest rate hike:

US housing market shows resilience as house prices and new home sales rise

The US debt has soared by over a trillion dollars in the last month alone. A single month! The current rate is not sustainable. Every conceivable metric is pointing towards rate cuts next year, otherwise the current financial system will go into oblivion. All the manufacturing indexes are down; the yield curve is still deeply inverted; the banks lack liquidity and are in a crisis, and there are huge debt bubbles brewing all over the place.

The market is already pricing in cuts because the current situation can't get much worse. The debt issues are much more problematic than inflation right now because if something significant breaks, then the dominoes will fall because the contagion will be everywhere. We're talking about a possible systemic collapse.

I know most people here don't really follow the markets, but I've got my finger on the pulse when it comes to this sort of stuff and it's not looking great right now. The last thing the world needs is further rate hikes, in my opinion.

 

[Juan]

Every conceivable metric is pointing towards rate cuts next year, otherwise the current financial system will go into oblivion.

I don't think anyone expects rate cuts next year. Central banks are playing the same game they did for 10 years of non-stop money printing: delaying, using their typical blah blah, "we might do this thing or that thing..." but central bankers know they will not cut rates.

Food inflation in the UK is at 18%. That's just enough to give you an idea of the inflation problem. Central banks will continue raising rates in 2024.

 

[Ed209]

I don't think anyone expects rate cuts next year. Central banks are playing the same game they did for 10 years of non-stop money printing: delaying, using their typical blah blah, "we might do this thing or that thing..." but central bankers know they will not cut rates.

Food inflation in the UK is at 18%. That's just enough to give you an idea of the inflation problem. Central banks will continue raising rates in 2024.

The economic data are very weak. The PMI, which shows the health of manufacturing, is currently at 46%, and that is not good. The data are so weak, across the board, that the market is pricing in cuts (based on the current price action).

The problem with this idea is that investors are expecting a recession to sort inflation out, but the only tool central banks have left to get the economy out of a recession/depression is QE and a huge ballooning of their balance sheet. This is not how you solve an inflation problem as it leads to easy money, but what else can they possibly do when the shit hits the fan? The levels of debt are unprecedented and I don't think people fully comprehend and grasp how dire this situation is. Talking about more rate hikes without looking at the entire picture is very shortsighted.

The US has suspended their debt ceiling until 2025, and yet in the last month, its debt has surged by over a trillion dollars. That figure alone is extremely alarming and the chart shows a near vertical line out of nowhere. Jay Powell must be shitting his pants right now as the pressure of a default is intensifying by the minute.

The Fed has cut their rates on average by 5-6% for an average recession. During Volcker's first recession in 1980, the Fed quickly reduced the rate by over 10%. From March 26th to April 20th in 1980, the rate averaged 18.8%, but it rapidly dropped to a mere 8.6% by early June.

There will be carnage if we go into a depression with all these debt bubbles, and the labour markets will go to shit. It'll be like Mad Max with a lot of people out of work with bills to pay.

 

[Juan]

Today Germany has reported higher than expected inflation.

So there will be more interest rates in the eurozone. I think at least 4 rises more.

 

[Juan]

'I am not a robot': Why Amazon UK workers are striking on Prime Day | Amazon | The Guardian

 

[Juan]

A few writers have sued ChatGPT and Microsoft too for allowing the IA models to train with their writing material, protected by copyright, without their consent.

It is about time Big Tech pays for all the damage it's doing, and abides by the law once and for all.

ChatGPT maker investigated by US regulators over AI risks

 

[Juan]

German taxpayers must be delighted after being informed they will have to shell out 10.000 million euros as "subsidies" to Intel. It's the most absurd move a government has made. Subsidising a company with outdated technology on the hopes they catch up and get up to date. It seems no one takes into account that (i) it will take time to get up to date and in that time technology will evolve and Intel will be again behind and (ii) any potential benefits will go to the US while the cost is borne by German taxpayers.

 

[Juan]

Netflix, Disney etc will have to pay them more:

Lights, camera, industrial action: Hollywood's biggest strike in 60 years

 

[Juan]

As always, this will go nowhere:

Microsoft to face EU competition probe over Teams and Office bundling

The EU must enforce its laws and make Big Tech PAY TAXES!

 

[Juan]

If Threads is even worse than Twitter, then it has a very dark future:

Mark Zuckerberg's Threads? The app is vapid, boring and destined to fail | Siva Vaidhyanathan | The Guardian

 

[Juan]

Zuckerberg will "testify" using his best "idiot face" like always. He will mumble some excuses. He never knows anything. Haha.

Zuckerberg asked to testify on Meta's role in human trafficking in Florida | Meta | The Guardian

 

[Juan]

Bad news for chip producers and Big Tech: it seems people prefer to spend their money travelling and going to the beach.

 

[Juan]

My workmate crashed his Tesla yesterday and apparently he will have to wait months for spare parts, to get it repaired... that's the problem of owning a car with poor after-sales service.

If he had owned a Toyota, he would have had the car repaired in just a few days.

 

[lymebite]

If he had owned a Toyota, he would have had the car repaired in just a few days.

I think Spain is in better shape than the US for car repair. I crashed my Nissan last summer. Nissans are simple, not like Teslas, any auto body shop can repair damage from crashes to a Nissan. But due to a continuing labor shortage in the US, all the auto body repair shops were backed up at least 3 months. So I got on the wait list with one of them. Several months later they were able to repair the damage from the crash. They did a nice job. But the continuing labor shortage and delays are frustrating.

 

[Juan]

I think Spain is in better shape than the US for car repair. I crashed my Nissan last summer. Nissans are simple, not like Teslas, any auto body shop can repair damage from crashes to a Nissan. But due to a continuing labor shortage in the US, all the auto body repair shops were backed up at least 3 months. So I got on the wait list with one of them. Several months later they were able to repair the damage from the crash. They did a nice job. But the continuing labor shortage and delays are frustrating.

If there's really a labour shortage, then salaries must be really high now, and that will fuel inflation.

If one looks at ballpark figures for US per capita incomes and per capita GDP, those figures have increased a lot in the last year and a half. The per capita GDP is in the region of +$15K USD per year.

Data for the US is interesting as it is so different from Spain. I read hurricane and flooding insurance for properties in Florida has also gone through the roof, and people are paying over $6K USD per year just to get home insurance, and some people are having trouble insuring.

Florida rocked by home insurance crisis: 'I may have to sell up and move' | Florida | The Guardian

 

[lymebite]

If there's really a labour shortage, then salaries must be really high now, and that will fuel inflation.

I was reading an article recently, apparently auto repair salaries have not been skyrocketing the way positions such as fast food have (McDonald's now pays $20 an hour more often than not, far more than prior to COVID-19). So the auto folk are grumbling they now make the same as McDonald's entry level. And I'd have to agree 100 percent with their grumbling, auto mechanic is a far more skilled and difficult job than McDonald's and IMHO deserves better pay.

A friend emailed me yesterday and said his home insurance is up 47 percent over 3 years, and in my opinion was that reasonable? I told him sadly probably yes, home insurance has been skyrocketing for most people.

 

[Juan]

I was reading an article recently, apparently auto repair salaries have not been skyrocketing the way positions such as fast food have (McDonald's now pays $20 an hour more often than not, far more than prior to COVID-19). So the auto folk are grumbling they now make the same as McDonald's entry level. And I'd have to agree 100 percent with their grumbling, auto mechanic is a far more skilled and difficult job than McDonald's and IMHO deserves better pay.

A friend emailed me yesterday and said his home insurance is up 47 percent over 3 years, and in my opinion was that reasonable? I told him sadly probably yes, home insurance has been skyrocketing for most people.

I find the US job market interesting. Employers pay a ton of money to their employees so that they get into endless debt and pay hefty prices for absolutely everything, from healthcare to basic home insurance... it's a shocking country.

In the end someone may be better off in Latvia haha... although they do have rampant inflation too and crazy real estate speculation.