Good Friday Morning! And a special Friday morning to the Texas Tech Red Raiders security/grounds crew, who got tasked with tracking down an opossum running around on the field. They ended up grabbing the little guy and dragging him out at the end of a pole while he screamed and hissed the whole way. The videos and pictures are great, but the internet memes will be priceless.
This week, I’m jumping into some of the latest economic data and walking through why this remains a very weird economy — links to follow.
- The WSJ is reporting that Russia’s paramilitary group Wagner, who you might remember from its failed coup, is sending Russian SA-22 anti-aircraft defense systems to Hezbollah, an Iranian terrorist proxy in Lebanon. While the leadership structure of Wagner is in flux at the moment, they aren’t sneezing without Putin’s direct involvement. The read here is that Putin is sending military through his own proxies to aid Iranian proxy groups. Ever since Barack Obama stepped away from Syria, Russia has stepped in to fill the void. Russia has obvious security interests in Syria and Iran. Historically, there’s no real love of Jews in Russia, either. We get the word pogrom from Russian history, where multiple purges of Jews emanated. The ultimate question is whether or not this is Russia simply shoring up a flank or actively aiding Hezbollah in opening up a second front. There’s no way to tell for now.
- In these quick hits, I’ve often written about the impacts this year from conservative protests against companies like Bud Light, Target, and more. That has shifted considerably. The hardened hatred of Jews in higher education has triggered a donor revolt. CNBC reports, “Billionaire Marc Rowan has been in touch with what one finance executive quipped was ‘half of Wall Street’ about halting donations to some of the country’s most prestigious universities.” CNBC details multiple other billionaires who are pausing funding while looking at cutting it altogether long-term. It’s not hard to see the difference in how these same institutions handled the George Floyd protests in 2020, where they had ample things to say, versus now, when Jews are murdered, antisemitism runs wild, and these same institutions lose their voices or actively side with Hamas. If Wall Street pulls its money from these institutions, that would make the Bud Light and Target demonstrations look like a ripple in a puddle.
- Israel created a new website called hamas-massacre.net. On that site, they’ve posted all the videos, pictures, and evidence of what Hamas did on October 7, 2023. It’s a gruesome website, but also needed. Michael Brendan Dougherty made an excellent point in National Review when he observed that what Hamas did on October 7 is already being memory holed: “Even though it was the equivalent of a dozen per-capita 9/11s, even though it was the most fatal day for worldwide Jewry since the Holocaust, and even though it has kicked off a worldwide wave of popular antisemitic expression unseen in decades, the October 7 massacre of Jews by Hamas in southern Israel is being actively, willfully forgotten.” People may wipe their memories, but websites like this new one help force what happened to Israel into the collective consciousness of all. I keep thinking of what Jamie Weinstein said about this too, “The sadistic Oct. 7 massacre was the easiest moral test of our time. But since so many people are failing it, it has become the most clarifying moral moment of our time.”
Where you can find me this week
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End The Pro-Palestine Charade – These Mobs Hate Jews – Conservative Institute
The Government Must End Anti-Jew Mobs – Conservative Institute
The US And Israel Must Reject All Ceasefires – Eradicate Hamas and Save The Hostages – Conservative Institute
The Weird Economy Continues…
Earlier this week, I had a chance to listen to a person in the bankruptcy industry. He said business was booming for him and hadn’t been this good since the 2007/2008 financial crisis. He didn’t mean just dollars earned—he was including volume. It was a line that caught my attention and that of everyone else. He’s not a minor player in that industry, either.
In terms of measuring reality, though, it’s not a surprising anecdotal story. Back in May, multiple reports said that bankruptcies would surge as 2023 went along. At the beginning of October, the Wall Street Journal reported that this surge had arrived:
Small-business bankruptcy filings are rising this year, a signal that increased interest rates, tighter lending standards and higher operating costs are straining entrepreneurs. At the same time, some government aid programs that helped entrepreneurs through the Covid-19 pandemic have ended.
The increased bankruptcies are coming from filings under Subchapter V, a newer provision in federal bankruptcy code that makes it easier for financially stressed small businesses to restructure.
Nearly 1,500 small businesses filed for Subchapter V bankruptcy this year through Sept. 28, nearly as many as in all of 2022, according to the American Bankruptcy Institute.
One of the biggest companies to declare bankruptcy happened this week: WeWork, the office-sharing company that had a valuation of $47 billion at its peak. “As of June, WeWork maintained 777 locations across 39 countries, including 229 locations in the U.S., according to securities filings. WeWork has an estimated $10 billion in lease obligations due starting from the second half of this year through the end of 2027 and an additional $15 billion starting in 2028, according to public filings.”
The WeWork bankruptcy plays into the growing issues in commercial real estate space. WeWork depended on people working in offices. Work-from-home, along with high debt, crushed that entire business model. In the past, I’ve written about various tensions pulling at the post-pandemic economy: high interest rates, student loan repayment, and empty offices hampering commercial real estate. We’re getting higher-for-longer interest rates, student loans have returned, but offices remain empty. All the threats around forcing workers back into the office have failed.
Office attendance in big cities is still barely half of what it was in 2019, and company get-tough measures are proving largely ineffective at boosting that rate much higher.
Most employees go into offices during the middle of the week, but floors are sparsely populated on Mondays and Fridays. In Chicago, some September days had a return rate of over 66%. But it was below 30% on Fridays. In New York, it ranges from about 25% to 65%, according to Kastle Systems, which tracks security-card swipes.
These are not the numbers you want as a commercial landlord. Businesses face a reckoning with continuing to pay rent, with people not using the spaces.
But even with all this, the economy remains strong, according to GDP reports. Q3 GDP was measured at a blistering 4.9% on the first read. Consumers are still spending like crazy, which is boosting the economy. Additionally, workers continue to get larger raises. Those raises are smaller than the last few years but still above average. The increased wages are fueling more spending, which gives fuel to the Federal Reserve’s inflation fears and boosts the economy.
The Federal Reserve held interest rates steady, with no sign of bringing them down. Employment remains strong. Every signal you’d want for strong economic data is there. Yet, everyone believes it’s a poor economy because prices are still high.
In short, it’s a weird economy. There are contradictions everywhere. Strong economic growth is countered by the busiest bankruptcy period since the previous financial crisis.
The contradictions in this economy exist because we’re in the “last mile” of the Fed’s fight against inflation. Greg Ip noted in his column that inflation has effectively stabilized at 3%:
There is also evidence inflation might have stopped falling. After filtering out noisy components, several analysts find underlying inflation has stabilized around 3%, a full percentage point higher than the Fed’s 2% target. That last mile of inflation reduction will likely require more slack opening up in the economy, and it seems unlikely to happen entirely through a continued supply-side boom.
So we’re sitting here with increasing bankruptcies, high growth, inflation above target, and job growth hitting in all the ways to make things even more complicated. It’s anyone’s guess how long the Fed tries to hold things here or if they’ll get comfortable with higher inflation. They’ve said all along that 2% is the real goal. If that’s true, they’ll either need to raise rates more or try to suffocate that number by staying at a high level of interest rates for a more extended period of time.
Right now, they’re choosing higher for longer. That’s giving us all this weird economic data. And it’s all occurring against a backdrop of an increasingly complicated geopolitical picture. Israel has to respond to Gaza. Iran is rattling its saber. Russia continues its war in Ukraine. And China has every incentive to push up a timetable for war in Taiwan. Any one of these things could tilt the economic picture on its head.
I don’t have any answers here. I can only observe that as things move along, the contradictions in the economy, geopolitics, and more are getting sharper and more defined. Eventually, there has to be a break on one side or the other. The tensions and contradictions can’t be at odds forever; they ultimately must be resolved. Our political system is under the belief things will naturally calm down and resolve without having to do anything. In the past few decades, that was a safe bet.
It doesn’t feel like a safe bet now.
Links of the week
Democrats Play Deranged Word Games With a Deadly Serious War – Seth Mandel, Commentary
Why Do Young Americans Support Hamas? Look at TikTok: The app is digital fentanyl made by China. And it is brainwashing our youth against the country and our allies, argues Rep. Mike Gallagher. – Rep. Mike Gallagher, The FP
China denies censoring Israel on maps – Semafor
Horrific video shows subway carriage chanting ‘F*** the Jews, long live Palestine, we are Nazis and proud’ on Paris metro as France sees surge in anti-Semitism following Israel war: Over 800 antisemitic markings have been recorded in France since October 7 – Daily Mail
Joe Biden raged against The New York Times in a private White House meeting early last week, after the Times amplified a Hamas claim that an Israeli airstrike was behind the Oct. 17 bombing of a Gaza hospital – Semafor
X/Twitter Thread(s) of the week
Satire of the week
Kinda Sad: 30-Something Still Quoting Videos From Ebaum’s World – The Hard Drive
Accountant Likes To Let Off Steam By Blasting Coldplay Well Within Recommended Audio Levels – Waterford Whispers News
Thanks for reading!