Taylor Swift Concerts and A Story

By Jeff Kelly on September 1, 2023

“You play stupid games you win stupid prizes.”

– Taylor Swift

I have been doing my job for a very long time. One of the best things about my job is getting to talk to many people across the political, social, and economic landscape. I can say through my totally unscientific research, Taylor Swift is the single most unifying figure of this generation.

I’ve spoken to many moms and many daughters. Many went to a concert. They loved it. They loved the energy; the performance and they loved the association with others in the audience who were there only because of how this performer had touched them.

As Ms. Swift performed and explained where she was in her life as she performed this song or that song, they too were taken to that part of their lives and experiences. A comradery of association through one of the greatest performers of all time.

The numbers are staggering. The tour will likely gross 2.2 billion dollars. The total economic effect will exceed 5 billion dollars. The Federal Reserve said the tour is boosting national tourism.

Imagine if we could find a leader with universal appeal. A uniter not a divider. Someone is out there who will tap into this energy stream.

AI and its components continue to be a topic of conversation and investor interest. Nvidia reported earnings last week.

Nvidia reported a big beat on revenues when they reported their numbers, 13.51 billion vs. 11 billion forecast. Despite this huge beat in revenue, the company reported almost no increase in cost to produce this revenue.

The increase in revenue was driven by the data center business – 39% of the 2nd quarter revenue and 32% of 1^st half revenue come from 2 customers. One is a distributor. This looks like pulling forward revenue.

One customer, CoreWeave bought 2.3 billion worth of chips. This is almost the exact amount of the revenue beat in the 2^nd quarter. CoreWeave paid for the goods with a loan from Blackrock. BlackRock holds a lot of stock in Nvidia stock. CoreWeave secured the loan by using the goods they were buying as collateral for the loan.

Nvidia repurchased 2 million shares for 998 million. This works out at $499 per share. The shares only traded at 499 a share on one day.

This chain of stories is very interesting. As they say, truth is stranger than fiction. And as Taylor Swift sings “You play stupid games you win stupid prizes.” We’ll see if there are any prizes awarded at the end of the day for this one.

Oh, an FYI for all those who say folks can’t pay their student loans.

Student Loan Payments Are Now Above Pre-COVID Levels: Student loan bills get sent out this week, but student loan payments this week eclipsed their pre-COVID level. Borrowers are already paying their student loans and the estimates of student loan payments are tracking higher than the consensus expects. These new payments are coming just as real disposable income is beginning to slow.

CHARTS FROM THE WEEK PAST

Real disposable income is well below the trend of the last few years.

Spending below as well. This won’t improve as student loan payments begin.

Luxury Consumption: Still no mojo across the luxury/high end discretionary consumption proxy = -8.3% Y/Y and negative for a 10^th consecutive month despite progressively easier comps. Source: Christian Drake, Hedgeye, 08/31/2023

30-year real yields have been well below the S&P dividend yield for the last 15 years.

It’s now above. Stocks or yields are likely to decline.

September seasonality isn’t good.

 5-year average is -3.51%.

The decline in JOLTS Job Openings – which fell -338K while logging the largest 3 month decline in history.

Available worker per job starting a move higher.

Corporate profits -6.5% year over year, In 2023.

This is an acceleration to the downside from -1.8% last quarter. This is the worst drop since the pandemic.

We are close to having the longest yield curve inversion ever.

Ever is a long time. The chart below shows recessions in the shaded grey area. Many don’t realize recessions begin when the inversions end, not before. We may be starting to see the curve normalize. If we are going to have a recession, that’s when it would begin.

Another look at inversions.

This is the 10-year/1-year treasury Spread.

Huge snap back for Information sector job openings rate in July … jump from 4.9% to 7.8% was largest 1-month change on record.

Redbook Retail Sales have been terrific over the past 2 weeks.

Back-to-school looks strong.

Cash holdings below average.

Asian demand is weak.

China has many problems, but they are widely known.

Oil supply deficit continues further into deficit.

Iron ore usually follows the action in the Chinese market.

It has not broken lower, at least not yet. This could be a precursor to China’s market having a rally.

Job openings are lower by a magnitude greater than the initial fall off entering the financial crisis.

Investor purchases of homes are much lower than last year.

Bad for real estate numbers, good for those looking to buy a home.

Despite much publicity to the contrary, the U.S. Dollar was more popular as a payment mechanism in July.

Here is the gap with the Euro.

Chinese stocks have not performed worse vs. the U.S. in the past 20 years.

Banks total return has been poor relative to U.S. Large Cap stocks.

Not what’s usually seen if we expect markets to perform well.

Consumer confidence comes in at 106.1 vs. 117 previously and 116 expected.

Germany loves burning dirty coal, hates clean Nuclear.

Go figure.

U.S. Dollar looks higher despite many who wish it weren’t so.

We had a great chance to lock in low rates on long term debt.

We didn’t. Now, 32.3% of our debt is funded with the shortest-term instruments.

The second half of 2023 oil supply deficit is showing up in the global inventory numbers.

Hedge fund exposure to technology has seldom been higher.

In the 98^th percentile for the last 12 months.

Freight net changes very negative.

From the Daily Tar Heel at the University of North Carolina…

WEEKEND HOMEWORK

The Saudi’s buying lots on Companies, Influence and Trying to wash their hideous culture.

How Saudi Arabia is buying the world

Saudi court sentences man to death for posting on Twitter-Saudi are part owners of twitter…Elon, Mr. free speech champion apparently doesn’t see a problem here.

Saudi man receives death penalty for posts online, latest case in wide-ranging crackdown on dissent

Months after passing permit less carry – a deadly law that makes it easy for criminals to get guns – the Florida legislature is making taxpayers pay $61.6 million to put bulletproof windows in their workplace.

Florida is spending $61.6 million to bulletproof Capitol windows

A very good book. However, it’s not a pretty story.

Peter Turchin, one of the most interesting social scientists of our age, has infused the study of history with approaches and insights from other fields for more than a quarter century. End Times is the culmination of his work to understand what causes political communities to cohere and what causes them to fall apart, as applied to the current turmoil within the United States. 

Back in 2010, when Nature magazine asked leading scientists to provide a ten-year forecast, Turchin used his models to predict that America was in a spiral of social disintegration that would lead to a breakdown in the political order circa 2020. The years since have proved his prediction more and more accurate, and End Times reveals why.

The lessons of world history are clear, Turchin argues: When the equilibrium between ruling elites and the majority tips too far in favor of elites, political instability is all but inevitable. As income inequality surges and prosperity flows disproportionately into the hands of the elites, the common people suffer, and society-wide efforts to become an elite grow ever more frenzied. He calls this process the wealth pump; it’s a world of the damned and the saved. And since the number of such positions remains relatively fixed, the overproduction of elites inevitably leads to frustrated elite aspirants, who harness popular resentment to turn against the established order. Turchin’s models show that when this state has been reached, societies become locked in a death spiral it’s very hard to exit.

Have a terrific Labor Day weekend.