Cancel the Recession: Soaring Gold No Longer Means Economic Doom
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Today’s Agenda
Gold?Rush
In the summer of 1971, Richard Nixon?shocked?the world — not by?eating cottage cheese with ketchup, but by chopping the dollar’s connection to gold.?Gold prices skyrocketed, and soon after the economy wilted, with a recession followed by stagflation followed by?this. Ever since,?economists?have warned that when gold’s value?ascends to the heavens, death is near — the death of the economy, that is:
Tyler Cowen ?says?the?precious metal has been considered?“a?harbinger of disaster for both fiat currency and Western civilization.”?But not anymore, Tyler?argues: “Gold is no longer a good hedge against bad times, as it correlates with both low interest rates and global economic growth.” Instead, he assures readers, having high gold prices?is perfectly fine because gold is now just like any other?cyclical economic asset.?But if gold can’t ring the economic alarm bells anymore, then how the heck are we supposed to tell if we’re about to have?a “richcession”? Or a “rolling recession”? Or no recession at all?
“Waiting for this recession feels ever more like?Waiting for Godot. When is it coming? Could it even ...?be?time to say openly that it’s been canceled?”? Isabelle Lee ?asks.? Jonathan Levin ?is?of the belief that yes, we should just stop?with this “economic downturn”?nonsense:?“These just aren’t the sorts of numbers you see in an economy careering toward a recession,” he writes. In other words, its not the economy that’s dying, it’s?the prospect?of a recession itself. Read?the whole thing.
Area 52
Sometimes the best meals are the ones you randomly throw together at home using whatever stuff you’ve got in your kitchen. Call it what you want: A?girl dinner,?a?Big Little Recipe, an?everlasting meal?or?The Cheese Thing. But when you are able to transform your?pantry into a party in your mouth without taking a trip to the grocery store, it is?incredibly satisfying. And although?this proposal?by retired Navy captain Jerry Hendrix has nothing to do with dinner, it hits at that same idea: That the US Navy should use what they’ve got in their kitchen to make something out of nothing. In an essay for the US Naval Institute, he writes:
Activities at Area 51 have remained highly obscured for nearly 70 years. An “Area 52”?could do the same for unmanned/autonomous naval systems ... Lake Michigan and the midwestern tech corridor present the Navy with an ideal location to build a future force.
Admiral James Stavridis ?—?a retired US?Navy admiral himself —?says?Hendrix makes a great point. Lake Michigan has long been sitting in the back of America’s kitchen cabinet: It doesn’t get the same buzz as, say, Lake Tahoe. Yet it’s one of the most massive freshwater bodies?in the world, and James says?it has every ingredient needed for?a?top-secret drone-testing site?that’s far from the prying eyes of enemies.?
The Upper Midwest has a lot of flavor to add to this recipe: For starters, it’s?brimming with geniuses. They’ve got the engineering wizards from Purdue, sure. But they also have the University of Chicago, Northwestern University and the Universities of Michigan and Wisconsin. That’s plenty of brain power to fuel “a new Midwestern high-tech zone focused on naval drone systems,” James writes. Even the?ice-cold winters could come in handy, since that would force the unmanned vehicles to adapt to a colder climate. Together, these ingredients will make a Midwestern military meal that is oh so satisfying, no trips to the Caribbean needed.
Hot Air
Speaking of the Midwest: How come when?New York City?gets engulfed in a blanket of Canada’s smoke, it’s like the entire world needs to know about it, but when?Chicago?gets wrapped up in the same BBQ flavor-blasted air, we hear nary a peep:
Perhaps Chicagoans?were more prepared for the?hell?that was coming their way. But?wildfire smoke?isn’t the only health hazard we’re?battling these days: As you read this newsletter, “tens of millions of Americans from Texas to Florida are?suffering under relentless record heat and humidity,”? Mark Gongloff ?writes.
The trouble is, the Sunbelt states that are stuck under a?Heat Dome of Doom?are also the country’s most popular places for those looking to move. “People have come seeking jobs, affordable lifestyles or maybe just an end to shoveling snow and having to talk to Democrats,” Mark quips. But natural disasters —?and insuring against them —can quickly become?costly?for homeowners. Despite this, lawmakers in denial want?to?plow ahead?with efforts to kill renewable energy projects.
Making matters worse is?the?incongruity?in perceived public opinion versus actual beliefs. Mark points out that while “66% of Americans want to see more action to fight climate change, those same Americans believe support for such policies is actually closer to 40%.”?He adds?that “if you’re a Texan worried about climate change, then there’s a good chance your neighbor is, too, and you just don’t know it.” Meanwhile?in the UK, the citizenry is a bit ahead of the curve, with?85% of people agreeing with the statement, “If everyone does their bit, we can reduce the effects of climate change.”
But? Lara Williams ?says the UK —?once a climate leader —?is regressing, largely for the same reason?as the US: a?failure of leadership. “The government is doing itself and the country a disservice by not tackling decarbonization with greater urgency,” she writes, saying that reaching its 2030 emissions target is far from a political priority. At a time when both the?UK?and?Texas?are bracing for June to be the hottest on record, the people —?and the planet — deserve?more support from the government.
Telltale Charts
The tagline on Creed’s?website?— “handcrafting uncommon perfumes for?royal houses?and?discerning patrons?for over 250 years” — screams of old money and?aristocratic blood. But the unwashed masses?want?$495?bottles?of perfume!? Andrea Felsted ?says?Kering’s purchase of?Creed?— for an undisclosed sum of money, likely in the billions — is smart business, plain and simple: “Creed operates at the very highest echelons of the perfume market,” AKA the “haute parfumerie” segment, which she says “is expanding at least three times the rate of premium and mass-market categories, as consumers trade up to luxury, artisanal fragrances.” Perhaps all Kering needs to gets its shares up is to pass the smell test:
领英推荐
At first glance, you might look at China’s increasingly concentrated auto market and go uh-oh:?Why have so many of?their EV startups kicked the bucket??But? David Fickling ?just says it’s a sign that the?sector is maturing. Roughly a third of all cars sold in China?now come with a plug — a figure that?should pass 50% by 2030, David explains. The big player on the scene is BYD, which spent years making meh profits before experiencing explosive growth in?2020. Its free cash flows are closely tracking those of Tesla, and between them, the two companies take up nearly half the market.
Further Reading
The Bank of England’s?big “shock”?isn’t much of a shocker. —?Bloomberg’s editorial board
Putin can’t lock up all his enemies at once. But he’s got?about 6,000 nukes?—?and that’s a terror in it of itself.?—? Andreas Kluth
Private equity is?going to war?… over a pump-maker. —? Brooke Sutherland
Republicans who choose to?prop up Robert F. Kennedy Jr.?are playing with fire. —?Jonathan Bernstein
Odey’s #MeToo saga?mirrors the decline in fortunes of the Oxford-educated elite. —? Matthew Brooker
Brazil’s President is risking a big loss in?the Amazon?rainforest. —? Eduardo Porter
ICYMI
Biden is using a machine to treat?sleep apnea.
Madonna was?hospitalized?for an infection.
AI-generated books?are taking over Amazon.
Meat-eating?hit?a record low in Germany.
Kickers
The ultimate?beach accessory.
The planet that?cheated death.
The?rare “omega sun.”?(h/t?Ellen Kominers)
Notes:?Please send cola-infused ketchup?and feedback to Jessica Karl?at?[email protected].
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This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.