Bezos. Jeff Bezos

Bezos. Jeff Bezos

By Michael Every of Rabobank

Who Has Got Any Talent?

Amazon is going to buy MGM studios for USD9bn. Not for love of ‘Ars’ or ‘Artis’, but for the gratis intellectual property that can be switched to its streaming service. Coverage of this deal is accompanied by pictures of James Bond, because he is MGM’s. Yet given the Bond films have aged badly, and there is not that much excitement for the ‘new’ one, we can probably expect spin-offs like ‘Young James Bond’; Woody Allen’s Jimmy Bond from the 1967 Casino Royale, which also starred Peter Sellers as James Bond; and Roger Moore, the actor himself, as the post-plastic surgery Inspector Clouseau. Such gems will soon be Amazon’s. In short, while there is a critical shortage of content for the streaming screen time we are all embracing, I am not sure if the real solution comes from the supply side, rather than just watching less rubbish.

Meanwhile, such imbalances, and which side to solve them from, remain true all over. In US/Western labor markets there is also a mad search for talent – and a critical shortage: yet the average SME can’t pony up USD9bn to encourage bar-staff to come back. So does that mean the economy is weak or strong? And on the goods front, it is still unclear how we are going to get more supply at all for some things. The lag time in many cases is long, and in the interim demand patterns can shift towards expecting scarcer goods, and so to hoarding. We’ve seen it with toilet roll, for just one example that luckily has been resolved. But does this mean the economy is weak or strong?

For now, aggressive jawboning from China is seeing commodity prices cool, suggesting a sweet spot. Yet until we see structural shifts, like the Fed tapering, they are likely to pop back up again. Don’t lower prices create demand for things there is questionable supply of? And while hoarding and speculation are being threatened with a hard crackdown, Premier Li Keqiang also just urged further strengthening of commodity imports, storage, and transportation(!) Moreover, while a Chinese official suggested, then deleted, the idea that a stronger CNY might help to curb inflationary pressures, won’t this just make commodities cheaper, and so push up demand further? Yet if they let the currency stay “basically stable”, then what is actually being done on inflation? As Bloomberg argues “Central Banks Running Out of Options as Recovery Falters in Asia”: and they are all feverishly working through their back catalogue for intellectual property and talent as to what to do next.

A down-up dynamic is evidently also true of crypto. Despite further US officials warning why they are not the soup for you, and China reiterating its opposition to mining, prices just surged again. Elon Musk is naturally involved (for the nth time, like Bond), now pretending US Bitcoin miners have a choice over the ‘green-ness’ of the electricity they use. On which note, a perfect description of Bitcoin, relying on UK comedy intellectual property, is ‘a bunch of computers all shouting: “Is this Numberwang?

So, rebound or death-rattle? The Wall Street Journal ran an article yesterday arguing “Yes, Bitcoin Is Useless. Many Will Say: So What?”, arguing while crypto has no intrinsic value, humanity’s love for useless things means they aren’t necessarily worth nothing. I suppose if cinematic dross like ‘Curse of the Pink Panther’ is part of a package worth USD9bn then they have a case, but it’s hardly the early ‘We are the future!’ promise. And if you thought the fight over crypto was fun, Bloomberg also has a story today noting: “A slew of newer and lesser known reference rates are staking their claim to a share of the post-Libor landscape as the outlook for the space grows increasingly fractured.”  

So we don’t know when our workers will agree to come back; or where our goods supply will come from; or what demand will do; or what currency things should be priced in; or what benchmark interest rate to borrow at. But all else is fine. Where’s a British secret agent to sort this chaos out when needed?

More so when we have the nefarious games being played by Belarus: which, Russia retorts, was a dirty trick first used by the US/EU to stop President Morales of Bolivia flying to Moscow to pick up Edward Snowden in 2013. Roman Protasevich, the Belarussian dissident taken from the skyjacked Ryanair flight, has appeared on TV to confess to crimes against the state in Stalinist fashion. The EU has demanded his immediate release; planes are diverting around Belarus airspace; new economic sanctions are to be imposed; and a ban on the Belarussian national airline entering EU airspace.

However, there appears no sign that Belarus or Russia are concerned. Rather, President Lukashenko just approved legislation to ban journalists from providing live coverage of mass protests, and to shut down media outlets without even going through a rubber-stamp court. After all, this litmus test for the EU’s “open strategic autonomy” is happening while Germany races to locks itself in to Russian gas for the foreseeable future, and as French officials talk about the need for “dialogue” with Moscow “to enable Belarus to become a democracy”(!!) What was I just saying about the global lack of talent?

German addiction to buying Russian gas and selling Russians cars aside, the overall zeitgeist now suggests the hypothetical, multipolar, fractured, more illiberal ‘World in 2030’ we discussed last year might instead be the ‘World at 20:30’ (as in later this evening). Adding to which, New Zealand’s foreign minister has just told The Guardian:

“We cannot ignore, obviously, what’s happening in Australia with their relationship with China. And if they are close to an eye of the storm or in the eye of the storm, we’ve got to legitimately ask ourselves – it may only be a matter of time before the storm gets closer to us. The signal I’m sending to exporters is that they need to think about diversification in this context – Covid-19, broadening relationships across our region, and the buffering aspects of if something significant happened with China. Would they be able to withstand the impact?

That’s a watch-the-tail-risk message repeated here (and directly in New Zealand) since 2017, but to hear it openly from a key member of the government is something else entirely. At least they are starting to deal with real problems, rather than looking at screens as a distraction.

Tyler Durden
Tue, 05/25/2021 – 08:00

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