Authored by Mark Jeftovic via BombThrower.com,

The Oracle of Omaha’s second banana has pronounced judgement on crypto.

It was even more unhinged than previous attacks (“rat poison”), as Munger applauded communist China’s technocratic dictatorship as a sensible ideal we should be following here in the West.

“the communist government of China recently banned cryptocurrencies because it wisely concluded that they would provide more harm than benefit…What should the U.S. do after a ban of cryptocurrencies is in place? Well, one more action might make sense: Thank the Chinese communist leader for his splendid example of uncommon sense.”

The fact that Munger is able to aggrandize a communist police state that maintains concentration camps, engages in organ harvesting and forced labour with impunity is a testament to his insular position (not to mention the lopsidedness of our political zeitgeist).

Munger is a Cantillionaire – after Richard Cantillion who wrote one of the first economic treatise in the eighteenth century describing how proximity to the monetary inputs of a society confer special advantages at the expense of wider populus.

The Cantillon Effect

Munger’s crocodile tears for those who lose out in the economic game of life are ironic, given that Berkshire Hathaway’s mantra (and Westco, Munger’s sidecar conglomerate) for decades has been to buy often distressed businesses that are out of fashion but have a “durable competitive advantage ” or “moat”.

Those are euphemisms for monopolies, and both Buffet and Munger love owning them. They don’t seem to care if those monopolies draw rentier like returns on monetizing low income housing or opioid addiction.

Munger and Buffet’s dynastic wealth was built on the crest of three structural tailwinds:

If there is such thing as “structural inequality”, it has more to do with the way the monetary system is constructed to benefit people who are already super-wealthy than anything else. “Fix the money, fix the world”.

The first of these pillars below is more of a dynamic than a structure, and one that there’s nothing wrong with, actually.

But it seemed odd to hear Munger, a man who made his fortune exploiting valuation gaps in publicly traded companies, singing on the virtues of  England’s “bann[ing of] all public trading in new common stocks and kee[ping] this ban in place for about 100 years.” .

That happened back in the 1700’s when Richard Cantillon was figuring out that the monetary system was structurally rigged, even then.

So while Buffett and Munger’s investing acumen is not in dispute, these three forces acted as the lubricant, if not steroids, for their astonishing returns over the decades:

1) Value investing

…is the foundation upon which Buffett (and Munger) built Berkshire. It is buying companies or assets below their perceived intrinsic value.  The fact that other investors have lost money on it is a prerequisite, otherwise they wouldn’t be “value plays”. “All this wild and wooly capitalism”  that Munger is ruminating about in his WSJ op-ed is what created the valuation asymmetries that Berkshire Hathaway has exploited ever since the duo took it over, in 1965.

2)  Fiat currency debasement

The Cantillon Effect makes inflation acutely pernicious, widening wealth inequality as the asset values of the ultra-wealthy get higher, it drives up the cost of living for everybody else.

Buffett and Munger have been playing inflation like a fiddle for decades. They both know that all fiat currencies are headed for zero, so they gravitate toward “inflation proof” assets with “pricing power” and “moats” (…because inflation-proofing goes better with monopolies.)

Then when things run too hot, they can play the populists and urge government to raise taxes on the wealthy (suggesting tax structures which would barely impact themselves, if at all) and chide the central bank to “reign in inflation, even if it causes a recession”. Like nearly all super-wealthy elites, they love to make policy recommendations that impact everybody else, yet put them in a position capitalize on the second-order effects: Recessions cause unemployment, bankruptcies and a plethora of valuation asymmetries where they can reload on durable assets and businesses at discounted prices.

3) A 40-year decline in cost-of-capital

At the age of 52, Warren Buffett’s net worth was 0.3% of what it is today, and the correlation of Munger’s personal wealth to Buffett’s is basically 1.

That was 1982, which marked the beginning of a bond super-cycle that saw the cost of capital decline to zero by the end of it.

Real rates are still negative today, and all of this compounded with the fiat currency debasement that lifted Buffett and Munger’s boats and accentuated their returns for decades.

I’m not saying that currency debasement and secularly suppressed cost-of-capital are the sole factors for Berkshire Hathaway’s success.

But they were indisputably beneficiaries of the fiat system structure over decades. Also during periods of dislocation, like when it was weaponized against the plebes during lockdowns and the Fed started buying up Berkshire’s debt (along with every other billion and trillion dollar juggernaut) while lending rapidly devaluing dollars to small and independent businesses (that is, if they weren’t simply banned from operating).

Berkshire Hathaway was built atop a system that Bitcoin was created to destroy

Many years ago I found myself sitting in a Bay St. conference room at one of Canada’s “Big Four” banks. There was a representative there from three of those Big Four, plus an Entrepreneur-in-Residence from the Business Development Bank of Canada (BDC) who shall remain nameless, and had organized the meeting at the behest of another BDC contact.

We were there to talk Bitcoin.

He told me a story. More of a parable. Maybe it was just the facts of life.

He said, basically this (paraphrasing),

“when a new disruptive technology comes along, you want to be out front with big investment money behind you, you want to engage with government, the banks and policy makers right away, from the start – and you develop your relationships and your platform, all the while you are engaging with policy makers and the system incumbents to develop the rules.

When the government finally moves on regulating the new space, you are already there and you are on the right side of it, because you helped shape the policies.

Then the regulatory hurdles keep getting higher, and you’re always on the right side of it, while all the later entrants are playing catch up or falling behind.

In other words (and I remember this exactly, along the with the big, smug smile he had on his face when he said it):

“You get to turn around and pull the ladder up behind you!”

I left that meeting not sure what had just happened and nothing more ever came of it, at least with me.

But Bitcoin is more than a disruptive technology. It’s a decentralized counter-attack against a structurally unsustainable and predatory financial system.

Whenever I hear Buffett, Munger, Jamie Dimon, Larry Fink or any other High Priests of the Gerontocracy complaining about Bitcoin specifically, or crypto-currencies in general, I feel like that’s what I’m listening to: a bunch of super-rich Sith Lords frantically  trying to pull up the ladder behind them.

Because the last thing they want or can fathom, is to wind up back on a level playing field.

*  *  *

Follow me on Nostr , Gettr, or Twitter. Sign up for The Bombthrower mailing list to get updates straight into your inbox and get a free copy of The Crypto Capitalist Manifesto while you’re at it.

If you had “Netflix partnering with GM” on your unlikely corporate tie-up Bingo card for 2023, you can now cross that square off.

That’s because last week it was announced that the streaming giant would be partnering with General Motors to get more of the Detroit automaker’s electric vehicles in movies and television shows that are featured on Netflix. 

Netflix said it will increase the presence of electric vehicles in its original programming “where relevant”, Yahoo Finance reported this week. 

Netflix Chief Marketing Officer Marian Lee said last week: “At Netflix, we create shows and films that can influence culture and spark meaningful conversations. From the TikTok dance trends inspired by Wednesday to thoughtful discussions about climate change with Don’t Look Up, we know that entertainment can drive fandom and inspire connections.”

Because saying “we need the cash” doesn’t quite have the same nice ring to it…

Nevertheless, models like the Chevrolet Bolt EUV, GMC HUMMER EV Pickup, and Cadillac LYRIQ will all be slated to appear in a slate of Netflix shows that sound like a Democratic party diversity and inclusion seminar: Love is Blind, Queer Eye and Unstable.

The companies are also going to be launching a joint commercial during the Super Bowl on February 12 that will not only feature their products, but also (of course) their “commitment to a more sustainable future.”

Because what’s good old fashioned capitalism and marketing without slathering it in faux-ESG virtue signaling, right? We all know that NFL fans are hard left environmentalists to begin with, after all. 

And if you’re a Netflix creator, prepare to have your creative plans altered. The streaming giant says it is going to help its creators “better understand how EVs can complement and enhance their stories.” 

In other words: “Put this EV in your movie or you’re fired”. 

Authored by Caden Pearson via The Epoch Times (emphasis ours),

Facebook and Instagram have threatened to restrict or ban Project Veritas from their platforms, both owned by Meta, after a journalist confronted a senior YouTube official about the removal of a video about Pfizer’s COVID-19 vaccines.

On Friday, the nonprofit journalism organization Project Veritas published footage that appears to show one of its reporters confronting YouTube’s vice president of Global Trust and Safety, Matt Halprin.

The video shows the reporter approaching Halprin in public regarding YouTube’s removal of a video featuring a senior Pfizer official, unaware he was being recorded, discussing how the company is considering mutating the COVID-19 virus to develop new vaccines proactively.

Halprin refused to answer the reporter’s inquiries and instead told the reporter not to touch him while also threatening to call the police, before walking away.

“YouTube took down our Pfizer exposé. YouTube gave us a strike and will not let us post for a week,” said James O’Keefe, head of Project Veritas, in a video.

Facebook and Instagram warned Project Veritas that its video of Halprin violates “Community Standards.”

“We have these standards because we want everyone to feel safe, respected, and welcome,” the warning said. “If your content goes against our Community Standards again, your account may be restricted or disabled.”

Project Veritas also announced Friday that it had been “wrongfully locked out” of its Twitter account for two hours over a post that featured the video of one of its journalists questioning Halprin. The organization said it received a warning from Twitter that the post was “abuse and harassment.”

Twitter later apologized for the move, calling it an “error,” according to a screenshot shared by O’Keefe.

Halprin Video

Halprin appeared to be out for a walk or run on a suburban street when he was confronted by Project Veritas journalist Christian Hartsock.

When Hartsock introduced himself as a reporter from Project Veritas, Halprin immediately seemed to recognize the organization and quickly walked away.

“Why did you ban our videotape of a Pfizer director talking about mutating viruses?” Hartsock asked, following Halprin. “How much is Pfizer paying you to run cover for them? Is YouTube brought to us by Pfizer?” he added, getting no responses.

Halprin, who was dressed in a hooded sweatshirt, pulled the hood over his mouth.

“Matt, you’re the global head of trust and safety at YouTube. Why don’t you trust the public with a matter that absolutely concerns their safety?” Hartsock asked.

Hartsock told Halprin that millions would see this interview and “your cowardice,” challenging him to “be brave” and answer some of the questions. Halprin batted away the microphone, remaining silent.

“They’re going to see your absolute contempt for the public trust and they’re going to see your absolute disregard for public safety. Are you sure this is how you wish to portray yourself?” Hartsock asked while walking alongside Halprin.

Hartsock asked Halprin if he knows how much ad revenue YouTube takes in from Pfizer. “How much was at stake?” he asked.

“A Pfizer director talking about mutating viruses, and you don’t want the American public or the world to know about it. Why not?” Hartsock asked, following the question up by asking if Halprin has “any ethical responsibility” to people all around the world.

“Why does the public not deserve to see that videotape?” Hartsock asked.

Halprin remained silent throughout the inquiries, only speaking at one point to say: “You touched me. That’s not something you want to do.” Hartsock asked if that was a threat, to which Halprin responded: “No. I just said I’d call the police if you accost me.”

Walker Video

The Project Veritas video that YouTube removed was originally released on Jan. 25. It showed Dr. Jordon Walker, a director of research and development at Pfizer, telling an undercover reporter for Project Veritas that the pharmaceutical company was exploring the idea of mutating COVID-19 to preemptively develop new vaccines.

However, Walker acknowledged the risk and noted that scientists at Pfizer were being cautious in their approach.

“One of the things we’re exploring is like, why don’t we just mutate it ourselves so we could create—preemptively develop new vaccines, right?” Walker said.

“If we’re going to do that though, there’s a risk of like, as you could imagine—no one wants to be having a pharma company mutating [expletive] viruses,” he added.

Walker suggested that the company was proceeding slowly and being controlled, so as not to advertise its intentions and avoid creating an unintended mutation. He also stated his belief that COVID-19 would continue to be a source of revenue for Pfizer.

“Obviously they don’t want to accelerate it too much. I think they are also just trying to do it as an exploratory thing because you obviously don’t want to advertise that you are figuring out future mutations,” Walker said. “You have to be very controlled to make sure that this virus that you mutate doesn’t create something that just goes everywhere. Which, I suspect, is the way that the virus started in Wuhan, to be honest,” he also said, adding that COVID-19 is going to be “a cash cow for us for a while going forward.”

Read more here…

After a US stealth fighter jet shot down the Chinese surveillance balloon off the South Carolina coast on Saturday afternoon, the reaction from Beijing abruptly changed from expressing regret to being defensive and outraged.

China’s Foreign Ministry published a statement on Sunday morning, stating its “strong dissatisfaction and protest against the US’s use of force to attack civilian unmanned airships.”

“China will resolutely uphold the relevant company’s legitimate rights and interests, and at the same time reserving the right to take further actions in response,” the ministry said.

The ministry continued: 

“The Chinese side clearly requested that the US appropriately deal with this in a calm, professional and restrained manner.”

It added:

“For the United States to insist on using armed force is clearly an excessive reaction.”

As early as Wednesday, President Biden wanted to blast the balloon out of the sky, though Pentagon officials persuaded him to wait until the balloon was safely over the Atlantic Ocean. 

Beijing has stated the balloon accidentally veered off course and was primarily used for “meteorological purposes.” But not according to US Defense Secretary Lloyd Austin, he accused China of using the balloon to “surveil strategic sites in the continental United States.” 

The incident forced US Secretary of State Antony Blinken to postpone his weekend trip to Beijing, indicating high-level talks between both countries to calm tensions won’t happen for some time. 

“This incident tells us we haven’t found the floor of the relationship,” Drew Thompson, a visiting senior research fellow at the Lee Kuan Yew School of Public Policy in Singapore, told Bloomberg. 

Thompson added:

 “The relationship is not heading in a positive direction and could deteriorate further.” 

Even before this weekend, President Biden was ramping up a tech war against China to ensure their chipmaking capabilities were capped. 

Meanwhile, General Mike Minihan, head of the US Air Mobility Command, last week predicted a major conflict between the US and China might occur in “2025” — as a result of a Chinese invasion of Taiwan.  

And Republicans have spent the last several days criticizing the Biden administration’s balloon response. 

“Would Trump have let China fly a spy balloon over our country?” Rep. Jim Jordan tweeted. “Would Reagan? JFK? Truman? No, no, and no.”

Would Trump have let China fly a spy balloon over our country?

Would Reagan?

JFK?

Truman?

No, no, no, and no.

So why’s Biden letting China off the hook?

— Rep. Jim Jordan (@Jim_Jordan) February 3, 2023

South Carolina Republican Senator Tim Scott also tweeted, “the balloon should have been shot down before it crossed the continental United States, not after,” adding that the incident was a “dereliction of Biden’s duty.”

The balloon should have been shot down before it crossed the continental United States, not after. We still don’t know what information was collected and where it was sent. This was a dereliction of Biden’s duty, and let’s hope the American people don’t pay a price.

— Tim Scott (@SenatorTimScott) February 4, 2023

However, Bussiness Insider pointed out suspected surveillance balloons breached US airspace during the Trump years though US officials never made it public until the last week. 

Authored by Katie Spence via The Epoch Times (emphasis ours),

The Biden administration’s new Department of Labor (DOL) rule allowing 401(k) managers to invest in Environmental Social Governance (ESG) funds will harm two-thirds of America’s retirement accounts, according to Kansas Attorney General Kris Kobach in an interview that aired on Newsmakers by NTD and The Epoch Times on Feb. 1.

Kobach said that the Jan. 30 change was being done “in the name of this left-wing partisan agenda.”

He said, “There should be no partisan agenda when it comes to investing our funds. It should be done based purely on financial return without any regard to whether it helps left-wing causes or right-wing causes.”

Kansas is one of the 25 states suing the Biden administration over its rule allowing 401(k) managers leeway to invest in ESG funds by stipulating that the managers can decide to invest by considering “nonpecuniary benefits.”

Meaning they can make investing decisions where the benefits aren’t related to financial gain.

“What this latest rule does is it basically says you can consider these non-pecuniary factors when deciding where to invest the retirees’ funds,” Kobach said.

“And our lawsuit says, ‘Hey, wait a minute, that violates the express terms of [the Employee Retirement Income Security Act] ERISA,’ which is the 1973 Act that President [Gerald Ford] signed into law that is designed to protect the employee retirement savings in these funds.

“And we’re saying, ‘Look, you, as an agency—and it’s the Department of Labor under Biden that’s doing this—as an agency, you can enact regulations, but your regulations cannot contradict the exact express terms of the law.

“Section 404 A of the law says very clearly that [401(k) managers] have to act for the economic benefit of the retiree, for the person whose assets are being invested.”

An ‘Illegal Rule’

According to Kobach, the new ESG rule is illegal as it didn’t go through Congress.

“It’s illegal … an agency cannot contradict the terms of the law that gives the agency the authority to act,” Kobach said.

“If President Biden wanted to do this, he should try to change the law. He should try to change the terms of the ERISA statute and allow ESG considerations to weigh into the investment of these funds.

“I think that would be a horrible idea because it would mean we would gain less return on our retirement assets. But he can’t do this unilaterally. As an executive, he can’t use his agency’s regulatory authority to do this. He has to go through Congress to do it.”

Circling back to the impact of the ESG rule, Kobach added, “[The rule] basically means that [fund managers] can take into account things other than financial value, financial return, or pecuniary interests.

Financial Return Only

“So, it opens up the door for the investment adviser who thinks, ‘Well, you know, I think, you know, saving the Earth from climate change is a long-term interest that my investment strategy ought to consider.’

“Well, that’s not what they’re supposed to be doing. They’re supposed to be looking at the financial return and the financial return only.”

Kobach added about the impact on retirement accounts, “What that means in real terms is that companies that have anything to do with oil or fossil fuels, anything to do with firearms, anything to do, increasingly now with things like agriculture, and the beef industry, are going to be excluded.

“And that means that in almost every case, the return on investment for those funds is going to be lower because you’re taking investment options off the table.”

Kobach said he’s confident the states’ case against Biden will succeed.

Bipartisan Pushback

In addition to the states’ lawsuit challenging the legality of the Biden administration’s new ESG rule, every GOP Senator—plus Democrat Joe Manchin (W.Va.)—signed on to a disapproval resolution, protesting against the DOL directive.

The resolution alleges that the Biden administration is putting the pensions of 152 million Americans at risk to support “climate and social justice.”

“A number of studies have shown that ESG investing policies have worse rates of return. For example, a study by UCLA and NYU found that over the past five years, ESG funds underperformed the broader market, averaging a 6.3 percent return compared to 8.9 percent return respectively.

“Additionally, in comparison to other investment plans, ESG investors generally end up paying higher costs for worse performance,” a statement from Senator Mike Braun (R-Ind.) says.

Read more here…

Update (1150ET):

Reuters confirmed “internet outages and glitches” across Italy on Sunday. The problem appears to be an “international link.”  

“An international interconnection problem impacting the service at the national level was detected. Analyses are underway to resolve the problem,” a Telecom Italia (TIM) spokesperson said.

Italy’s ANSA News agency reported there are no signs yet that hackers were responsible for the widespread outage. 

*   *   *

Network data from NetBlocks shows widespread disruption to internet service across Italy on Sunday. It’s been reported that the telecommunications blackout might stem from leading operator Telecom Italia.

NetBlocks’ real-time network data shows that national connectivity plunged from around 100% to 26% this morning. 

ℹ️ Update: Metrics show that the ongoing internet disruption affecting #Italy‘s international connectivity has impacted several major cities; the incident has frustrated users including those planning to stream to today’s #InterMilan match #TIMDown pic.twitter.com/cDFG7fAWNy

— NetBlocks (@netblocks) February 5, 2023

Another internet disruption tracking website shows a heatmap of the outages that appear to be nationwide. 

⚡ Moderato #disservizio Internet rilevato: #TIM in #Italia dalle 14.05

🇮🇹 Mappa e analisi live
👉 https://t.co/wIZ5umBKBb

Retweet se è down anche per te#tim_official #TIMdown #problemiTIM #senzainternet #Italy pic.twitter.com/sARKmufgi9

— Fing Internet Alert (@outagedetect) February 5, 2023

If you were wondering whether or not Ford was going to embrace Rivian further as part of its plans to take on the EV market, it looks as though the answer is a resounding “no”.

That’s because Ford sold almost all of its stake in EV company Rivian last year, according to the company’s newly-released annual report submitted to the Securities and Exchange Commission on Friday.

Ford offloaded a total of 91 million shares of Rivian in 2022, according to CNBC. This amounts to about $3 billion in total proceeds, representing about a $1.8 billion gain from the original $1.2 billion investment the company made in the competitor. 

The company sold 25.2 million shares in Q2 for about $700 million in proceeds. It then sold another 51.9 million shares during Q3 for proceeds of about $1.8 billion, the annual report confirms. 

At the end of last year, the legacy Detroit automaker held only about 11 million of its initial 101.9 million share stake in the company. Ford “declined to comment on plans for the remaining shares”, CNBC reported. 

The company first invested in Rivian back in 2019 before the company went public. Plans to use Rivian’s “skateboard” platform that now underpins Rivian’s R1T pickup and R1S SUV in the production of Ford vehicles never panned out. 

Despite the sales, Ford still remains one of the largest shareholders in Rivian.

Recall, just days ago we wrote that Morgan Stanley had expected more “EV deflation” after Ford’s recent price cuts on its electric Mach-E. 

In a note out last Tuesday, Morgan Stanley wrote: “In our opinion, cutting price on Mach-E is relatively minor (approx. $100mm on price/mix prior to volume offsets). The more significant question for Ford and other Tesla challengers is what are they doing on the cost side to create enough room to follow Tesla’s current and future price cuts without compressing margins.”

The Mustang Mach-E GT Extended Range has seen its price fall to $64,000 from $69,900 before, according to CNN Business. The price of the standard Mach-E model has moved from $46,900 down to $46,000, the same report says. The move comes after Tesla lowered prices as much as 20% on many of its models to start 2023. 

“We expect to see a flurry of subsequent price cuts across EV competition throughout the year from startups and legacy players. In a year defined by slower growth, rising rates and consumer austerity we believe manufacturing and design innovation will separate EV winners from the pack,” the note concluded.

Authored by Charles Hugh Smith via OfTwoMinds blog,

What’s truly valuable has no price and cannot be bought.

If all investments are being cast into Treacherous Waters, our investment strategy must adapt accordingly. Once we set aside denial and magical thinking as strategies and accept that we’re in treacherous waters, a prudent starting point is to discern the most consequential contexts of all decisions about where and how we invest our time, energy and capital.

The most consequential global context is to first and foremost “invest in yourself”: invest in forms of capital that cannot lose value (for example, integrity, skills and experience) and assets that are not dependent on fluctuations in valuations for their utility. This is the essence of Self-Reliance.

For example, tools retain their utility regardless of their current market value, and so does a house as shelter and yard to grow food. Whether the value drops to $1,000 or soars to $1 million, the property provides the same utility of shelter and sustenance.

In other words, the mindset of speculation–buy low and sell high to accumulate as much money as possible–is not the only context to consider.

A second global context is that speculative winners–assets that rise sharply in value–will increasingly be targets for “windfall” and/or wealth taxes, as well as capital controls, such as limits on selling. If you log a 500% gain, then paying a wealth tax is a small price to pay for such a handsome gain. But such enormous gains will very likely be far more scarce going forward as speculative bets become net drains on capital and speculators exit because their gambling chips are gone or they realize they better conserve what capital is still left.

Meanwhile, back on the Government Ranch, the crying need for more tax revenues will become increasingly dire. As speculative bubbles pop, capital gains will dry up and blow away, and this rich source of tax revenues will have to be replaced with higher taxes and junk fees on whatever income and assets are available for “revenue enhancement,” ahem.

A “special assessment” tax on those worth $100 million or more will be approved first. The bar will then be lowered to $10 million, and then $1 million, which will of course include all assets, the family home, 401Ks, pension plans, small businesses, etc., and any assets held overseas. Civil penalties for stashing assets in dodgy offshore tax havens will of course increase concurrently. Purchases of cryptos and precious metals will be closely monitored / scrutinized.

Yes, the billionaires and corporations will remain untouchable due to their heavy buying of influence on the Political Action Auction ™, but the plump medium-sized fish who can’t swing millions in political contributions and legal fees will be inviting targets.

This generalized increase in taxes and junk fees on the wealthy and high consumption households will favor those who figure out how to live well on less income and fewer high-value assets.

A third global context is that simple bets on sectors may not provide the easy, stable returns that characterized the past 40 years. Those who rotated into “hot sectors” and cashed out when everyone else jumped in did very well.

This mindset is still ubiquitous. Many are calling for a commodity super-cycle that will deliver reliable gains to anyone investing in energy/commodities for years or decades to come. Others are flooding back into Big Tech or emerging markets.

Such simple trend-following sector bets will not work as reliably going forward, for several reasons. One is that artificial scarcities tend to be followed by gluts that crush valuations.

Another is the emergence of asymmetries within sectors. In other words, a rising tide will no longer not raise all boats.

Per a quote from Nassim Taleb: “Finance has three simple rules: maintain a clear mind, figure out asymmetries, never talk to idiots.”

What are asymmetries? In shorthand, “winners take most.” Put another way, the winners in each sector may garner the majority of the gains within the sector, as the winners have figured out a strategy to navigate treacherous waters.

Those pursuing old strategies will either lose or reap meagre gains.

The most successful investors / speculators will dig into companies, looking for asymmetries in financial assets, expertise, management, etc.–the traditional tools of stock pickers.

Buying index funds and ETFs to ride the tide higher will mean losing as the speculative tide ebbs.

A fourth context is that speculations in assets with no real-world utility such as NFTs have run their course and the gains will flow to companies producing real-world goods/services with essential utility.

This may be seen as part of the global trend of re-industrialization / reshoring / friendshoring.

A fifth global context is that one tool to discern productive asymmetries is to ponder what the wealthy value. The wealthy have the means to buy the most experienced advice and the incentive to protect capital, so what they pursue is worthy of consideration. This doesn’t mean they will always be right, it simply means that just as keeping an eye on the herd is useful, so too is keeping an eye on the “some are more equal than others” group.

Real estate and housing is one example. The global housing bubble is finally popping, and house valuations have a long way to drop to reach historic trendlines.

That said, enclaves with all the attributes valued by the wealthy–safety, good schools and healthcare, local sources of energy and food, attractive natural settings and distance from decaying urban cores–will drop less, or could even retain their value due to the relative scarcity of places that meet these high standards.

A sixth global context is the value of maintaining a low profile that doesn’t telegraph your wealth, what’s known as the “gray person” strategy: blend in with neighbors, drive average-looking vehicles, avoid any ostentation. Blend into the background so no one will look at you twice.

A seventh global context is to invest in trusted personal networks, producing essentials others will value and your community of family, friends, neighbors, small enterprises and other local connections. These have value that cannot be assessed with a market price. As I’ve said many times, what’s truly valuable has no price and cannot be bought.

Or as I’ve put it previously: “In a world besotted with the artifice of consumerism, what matters is not what can be commodified and bought but what can’t be commodified and bought.”

My Mobile Creative credo also speaks to this: trust your network, not the corporation or the state.

Trust and integrity are high on the list of what cannot be bought, and these are assets we should all leverage as the waters become increasingly treacherous.

*  *  *

This essay was first published as a weekly Musings Report sent exclusively to subscribers and patrons at the $5/month ($50/year) and higher level. Thank you, patrons and subscribers, for supporting my work and free website.

My new book is now available at a 10% discount ($8.95 ebook, $18 print): Self-Reliance in the 21st Century. Read the first chapter for free (PDF)

Become a $1/month patron of my work via patreon.com.

By Jonathan Maze of Restaurant Business

If the economy is really heading for a recession, Starbucks customers sure aren’t acting like it.

The Seattle-based coffee chain on Thursday said its same-store sales rose 10% in the U.S. Customers came in more often, as transactions rose 1%. But average check increased 9%, thanks to a combination of higher prices and customers ordering more food and customized beverages.

The company had eight of its 10 highest sales days in its history in the U.S. last quarter.

“At a time when people are generally trading down, and there’s a lot of discounting going on, we had the highest average ticket in our history in the month of December,” Interim CEO Howard Schultz told investors on Thursday. “We don’t see ourselves in a situation where we need to discount heavily, and we don’t see a situation where our customers are trading down.”

Starbucks’ sales came from a variety of sources. Higher prices certainly helped. But customers also ordered more food along with their beverages. The chain generated record sales of breakfast sandwiches and its Sous Vide Egg Bites.

But beverage sales increased 13% during the quarter as customers continued to order more customized beverages, which generate incremental sales through add-ons. Customized beverage sales rose 28% in the period.

Much of this is being driven by repeat customers who join the company’s loyalty program. The number of Starbucks Rewards members topped 30 million in the quarter, up by 4 million over the past year. And those members accounted for 56% of spending at the chain’s corporate locations.

Mobile order and pay, meanwhile, now account for 27% of transactions at corporate locations. Overall, 72% of Starbucks’ revenue came from mobile orders, drive-thrus and delivery.

Gift cards likewise continued to push sales. Customers loaded $3.3 billion onto Starbucks cards in the U.S. last quarter, a record for the company. “Our gifting business was so strong that unit sales of Starbucks cards were greater than the next four brands of gift cards combined,” CMO Brady Brewer said.

It’s not just corporate locations. Revenue from licensed locations in places like hospitals, retail shops and airports increased more than 30% in the quarter, due in part to increased travel. Those stores are now generating 140% of their pre-pandemic sales. The coffee chain recently introduced Starbucks Connect, enabling mobile orders at licensed locations. That’s generating “highly incremental” sales at the company. “We see great upside for it,” Schultz said.

Starbucks’ performance in the U.S. helped drive revenue at the coffee chain higher. Revenues rose 8% to $8.7 billion in the company’s fiscal first quarter ended Jan. 1. Global comparable store sales rose 5%. The company said it performed well in every market outside of China—where same-store sales plunged 29% in the quarter and 42% in December. The issues in China, which were related to COVID shutdowns, weighed on the company’s stock, which declined more than 2% in after-hours trading.

Starbucks’ success in the U.S., however, helped strained relations with employees, leading to $450 million in store upgrades, particularly with equipment.

Schultz said teams continue to work on the company’s “reinvention,” with turnover improving 5% over the past year and 8% compared with the highest turnover period. “Improved turnover correlates to more stable store environments, elimination of hire-related costs, particularly training, and measurable improvements in productivity, speed of service and [employee] customer experience scores.”

Network data from NetBlocks shows widespread disruption to internet service across Italy on Sunday. It’s been reported that the telecommunications blackout might stem from leading operator Telecom Italia.

NetBlocks’ real-time network data shows that national connectivity plunged from around 100% to 26% this morning. 

ℹ️ Update: Metrics show that the ongoing internet disruption affecting #Italy‘s international connectivity has impacted several major cities; the incident has frustrated users including those planning to stream to today’s #InterMilan match #TIMDown pic.twitter.com/cDFG7fAWNy

— NetBlocks (@netblocks) February 5, 2023

Another internet disruption tracking website shows a heatmap of the outages that appear to be nationwide. 

⚡ Moderato #disservizio Internet rilevato: #TIM in #Italia dalle 14.05

🇮🇹 Mappa e analisi live
👉 https://t.co/wIZ5umBKBb

Retweet se è down anche per te#tim_official #TIMdown #problemiTIM #senzainternet #Italy pic.twitter.com/sARKmufgi9

— Fing Internet Alert (@outagedetect) February 5, 2023

*Developing