Martians

Martians

You had choices Thursday when it came to what deserved your attention.

Remember: Barring significant scientific advances over the next several decades, your time is limited. As such, you should accord it (the time you have left, I mean) the utmost respect.

With that in mind, you could have spent the day reading about the crisis in Texas and pondering the possible ramifications for the future of US energy policy and, secondarily, the future of the Republican party in the state. That would have been a decent use of a few hours.

Also on the docket Thursday: NASA’s attempt to land a rover on Mars. As The New York Times noted, “NASA’s latest robotic explorer [was] the third spacecraft to arrive at the planet this month after visitors from the United Arab Emirates and China.” The rover’s destination was the Jezero Crater. For those unfamiliar (a group which included myself until Thursday), planetary scientists believe the crater is “an ideal place to find preserved signs of life from several billion years ago, if life ever did arise on Mars,” the same article said.

Alternatively, you could have spent more than three hours watching Robinhood CEO Vlad Tenev, Ken Griffin, and Reddit hero Keith Gill, better known as “Roaring Kitty,” explain to US lawmakers exactly what happened last month when extreme volatility in shares of a left-for-dead, brick-and-mortar video game retailer upended financial markets.

In a testament to the sad state of humanity, far too many Americans chose to tune in to the GameStop hearing, as evidenced by, among other things, obsessive real-time coverage by the financial media. A team of Bloomberg bloggers, for example, recounted the proceedings in hundreds of short posts separated in most cases by just seconds.

I’m not criticizing anyone. Well, maybe a little. But financial media outlets were obligated to cover the farce on Capitol Hill. And reporters were just doing their jobs. I certainly spilled copious amounts of digital ink in these pages documenting the GameStop saga as it unfolded a few weeks back. It was funny. And it did have ramifications for the broader market.

My point, though, is that it often feels like humanity is wasting precious time and energy on things that, in the final analysis, don’t really matter all that much. Yes, GameStop exposed the fragility of markets, but how many times have we seen markets essentially break over the past several years? I can count at least a half-dozen. If you go back a decade, you find that “fragility events” (as they’re sometimes described by analysts with a skillful pen), arrived at semi-regular intervals, and affected assets far more systemically important than GameStop.

Lest anyone should forget, it was just 11 months ago when the US Treasury market briefly “snapped” amid the pandemic panic, underscoring an important point that speaks (loudly) to everything said above: In the face of existential crises, most people would rather just sell everything they have for US dollars, knowing that if everyone perishes, it won’t matter, and if not, they can always use the dollars to repurchase whatever was sold.

Relive the drama: March Madness — How The Treasury Market Blew Up

In any case, I implore folks to broaden their horizons. Watch a little “Roaring Kitty” if you like. But spare a thought for “Perseverance,” which, as I wrote these lines, was descending through the Martian atmosphere. I imagine that was even more perilous than being grilled by dozens of clueless US lawmakers.

Markets meandered into the afternoon in the US. Equities trimmed fairly steep early losses, and investors were compelled to grapple with a disconcerting spike in jobless claims alongside mixed housing data which seemed to suggest that surging prices may be starting to erode demand.

One other notable was Walmart, which had a terrible go of it after making the “mistake” of saying it plans to raise pay to an average of more than $15 per hour, which will affect (read: help) nearly a half-million US employees. On the face of it, that sounds good for labor and good for the country, which almost by definition means it’s bad for capital. Hence the worst single-session decline for the stock since the early days of the pandemic.

Investors were also perturbed by the company’s plans to invest in automation. Net sales, operating income, and EPS are expected to decline in the new fiscal year, “primarily due to the impact of anticipated divestitures,” Walmart said.

Speaking in an interview with Bloomberg, CFO Brett Biggs described the pay raises as an initiative that will “help us fulfill our strategy around online pickup, delivery, and e-commerce.” For rational people (and shareholders aren’t always rational) that sounds like a good idea given prevailing trends.

In addition, Biggs mentioned a desire to offer what he called a “ladder of opportunity” for workers at a time when some new employees are coming from unrelated occupations where jobs were lost to the virus.

That’s important. Some economists believe that depression associated with losing jobs in higher paid occupations and being forced into menial work has contributed to rising mortality rates among disaffected white Americans, the same demographic that comprised Donald Trump’s base. The pandemic has the potential to create a second wave of such employment “downgrades.” The first was from good-paying factory jobs to the services sector. Now, workers are being forced into the open arms of Walmart, which is at least trying to create something like a hospitable environment for them.

Anyway, I don’t want give anyone too much credit. Whenever I do that (i.e., whenever I ascribe too much altruism to corporate management) at least a few readers remind me that the C-suite is inherently nefarious. As if I’m a guy who needs reminding of such things. CNN was quick to pounce, for instance. “Walmart announced pay bumps Thursday that will bring its average hourly wage to over $15 an hour, but the move still falls short of the $15 minimum wage announced by some of its largest competitors,” the network remarked. “Overall, approximately half of Walmart employees— around 730,000—will earn at least $15 an hour.”

Walmart of course benefited handsomely during the pandemic, as shoppers sought cheap staples and necessities. Comps surged, and the company easily beat estimates in Q4 on that front (8.6% versus consensus 5.7%).

Also worth mentioning Thursday was an interesting juxtaposition from the Philly Fed survey.

I’ll frame it as a question: What happens when input prices rise at a time when passing along costs to end consumers is difficult due to recessionary dynamics?

The prices paid index on the February Philly Fed survey rose to 54.4 from 45.4 the previous month. The prices received gauge, on the other hand, dropped to 16.7 from 36.6.

“Nearly 55% of the firms reported increases in input prices, compared with 47% last month,” the color accompanying the survey said. “The current prices received index, reflecting manufacturers’ own prices, decreased 20 points to 16.7 [with] 18% of the firms reported increases in prices of their own manufactured goods, compared with 38% in January.”

“This brings into question the ability to pass-through cost increases to the end-user and provides a challenge to the reflationary story,” BMO’s US rates team remarked. In special questions for this month’s survey, respondents were asked to “forecast the changes in the prices of their own products and for US consumers over the next four quarters.” Firms’ median forecast was for a 3% price hike for their own prices and a matching increase for overall inflation.

By the time it was all said and done Thursday, US stocks were solidly lower, with the Nasdaq underperforming. Treasurys were cheaper, albeit not by much. Yields on 10s and 30s didn’t manage to breach recent highs.

After nearly four hours of “Roaring Kitty” (and related coverage), Bloomberg finally went to Mars: “NASA NAILS HISTORIC MARS ROVER LANDING IN HUNT FOR ANCIENT LIFE,” a red hed declared. “NASA SAYS MARS ROVER HAS LANDED ON SURFACE OF MARS,” said another.

On the off chance the rover finds any ancient hieroglyphs, I imagine they’ll translate as follows: “Where did GameStop close?”


 

11 thoughts on “Martians

  1. I think it might have been Toby Ord, or an intellect along his lines, I can’t remember, and I apologize for this, especially because of a possible mis-attribution, that said we can still call ourselves a civilization if we can launch satellites off our rock and explore faraway places. (Maybe it was Tainter…I really should check and get this straight.)

    The landing on Mars is a reminder just how satisfying it is when we are able to organize ourselves in a manner which works toward a goal worth achieving. Interestingly, organizing ourselves with the goal of tearing down and destroying perhaps the best form of human, political organization yet created is what some might call the opposite of civilization, an apostasy of civilization. The latter is actively underway and will, seemingly, given enough time, undermine the former.

    As for those, not included on this site, but perhaps in the comment sections of numerous sites today, who say we have problems on Earth and shouldn’t waste resources on space exploration (thinking about it and getting there), wasn’t it back in the the 16th century that this argument was put to rest?

    1. We have problems on Earth and shouldn’t waste resources on space exploration. No, this argument was not put to rest. Investigating space to understand the cosmos is fine. Near-earth satellites that enhance life on earth are fine. We can even explore Mars to understand the evolution of life in a hundred years or so when we have things going right here on Earth. The problem is that we have billionaires Bezos and Musk who are sucking up huge amounts of capital and resources and deploying it towards the goal of colonizing Mars and building space stations. And influencing politicians to put public resources towards Martian exploration. Aside from the obvious huge devotion of resources towards a goal that doesn’t actually help solve any concrete problems, it is symbolic of the idea of giving up on Earth as a habitable planet. It is inherently elitist, because not everybody is going to get a first class ticket on Elon’s little rocket to Mars (imaginary or otherwise). It gives people a false idol to worship as they continue to debase the only planet that can support life in any meaningful way that is within reach of our species.

      1. I don’t think you can blame Bezos or Musk. You look at Murdoch, you look at the Koch Brothers, at Fox, at Sinclair News Group, at Newsmax, at the success of the prosperity gospel churches/scams and the modern GOP and you say… “f*k this, I need to get out as fast as possible”.

        Having 200B isn’t enough to combat that much stupidity, greed, slavish slobbering imbecility. As the poet says, “They broke their backs lifting Moloch to Heaven! Moloch whose mind is pure machinery! Moloch whose blood is running money! Moloch whose fingers are ten armies! Moloch whose breast is a cannibal dynamo!”

        We can all think of a better world. But we cannot coordinate for it. Hence we wail in filth and those who can dream of escaping to a virgin Mars.

        But have no fear. In time, we’ll ruin that as well.

        Unless AGI gets real and we all become Lords of the End Times (as seen by Simak in City. Or the Culture by Ian Banks).

  2. Here is my nefarious concern:

    I think that in the future, due to continuing automation (checkout, inventory, shift from physical store to online, etc.), Walmart will need a smaller number of employees who earn more per hour vs. the present headcount and average pay.

    For example, I ordered an Egg McMuffin about 18 months ago in France. I ordered and paid at a kiosk, printed my receipt with a pickup number and collected my Egg McMuffin when my number was called.
    The entire restaurant, which was busy, only had about 4 employees. I remember thinking that when this model hits the US- what are all the unskilled workers going to do?

  3. “Some economists believe that depression associated with losing jobs in higher paid occupations and being forced into menial work has contributed to rising mortality rates among disaffected white Americans, the same demographic that comprised Donald Trump’s base. ”

    Some of Trump’s supporters are dying, sure. But not like Blacks and Hispanics:

    “Life expectancy in the United States dropped a staggering one year during the first half of 2020 as the coronavirus pandemic caused its first wave of deaths, health officials are reporting.

    Minorities suffered the biggest impact, with Black Americans losing nearly three years and Hispanics, nearly two years, according to preliminary estimates Thursday from the Centers for Disease Control and Prevention.” Associated Press, 2/18/2021

    1. You’re referencing the disproportionate effect of the pandemic on minorities, which is tragic. I’m talking about the dynamics associated with the spread of opioids and alcoholism among a specific demographic for very specific reasons over a specific, pre-pandemic timeframe with specific political ramifications. Specifically, I’m talking about this book, which is worth a read —-> https://press.princeton.edu/books/hardcover/9780691190785/deaths-of-despair-and-the-future-of-capitalism

  4. Mars exploration:

    “I read the news today, oh boy,
    Four thousand holes in Blackburn, Lancashire
    And though the holes were rather small
    They had to count them all
    Now they know how many holes it takes to fill the Albert Hall
    I’d love to turn you on…”

    (“A Day in the Life” by the Beatles)

  5. On space exploration, let us not forget that most of the major technological achievements we’ve made the past 60 years were a result of the work our science community did to get humans and/or equipment places in space. Regardless if we actually find signs of life on Mars, there is no doubt that project will teach our civilization (those that are paying attention anyway) something. It’s also important to remember that looking beyond our own homes, towns, counties, states, countries, continents, and even worlds; gives us the perspective that there is so much more to everything than we can even see. Our minute problems don’t even exist beyond the smallness of our world, so maybe we should just chill a bit on the drama?

    Walmart 15.00 minimum wages, see Seattle. When Seattle announced it was going to raise its minimum wage to 12.00 an hours people went ballistic about how it was going to wreck their economy. It didn’t wreck their economy, it in fact, grew their economy. People were happier, able to work less and spend more, which led to more job growth and more businesses. MIT has the current living wage in the US at 16.54 per hours. So 15 doesn’t even meet the standard of a living wage. If you’re a single mother trying to “work hard” to take care of your family, should you have to earn less than a living wage to do that? Let’s exercise some humanity and stop worrying about how to make C-suite execs richer while blaming marginalized and poor people for wanting to earn a living wage.

    The GME hearings, why pay attention? SEC already telegraphed their plans to us. Let’s attack the little guys who can’t afford high priced attorneys. We’ve seen this movie before, it was during the great recession. One guy went to jail for the collaborative effort to grow incredibly wealthy off of packaging shit debt together and calling it AAA. That led to half of the country’s wealth being shed, joblessness, tent cities, and Wall Street execs getting bonuses because “we have to retain talent” scoff. Watching any of that is an exercise in rage bating. We know who we are as a nation, and it’s not the underdog story. It’s the beat down the underdog so I can get re-elected story.

  6. As a young graduate student I thought the burgeoning space race was a complete waste of money. Then we got to the moon, something my wife and I stayed up late to watch on television. As Walter Cronkite “covered” the event and described what was going on I confess that I was overpowered by it all and my wife and I both wept quietly at the power of the moment. Upon reflection, it was not the accomplishment of reaching the moon that was so important but what we had to force ourselves to learn and do to make it happen. The scientific outcomes that were most important were the applications of all the required science that have made our lives what they are today. It is clear to me that it is not feasable to colonize Mars. We can’t afford it and that planet is no longer sufficiently hospitable. But if Musk and Bexos want to spend some of their treasure on the effort, so be it. To paraphrase, “It’s their money, let them use it when they need/want to.” It’s hard to begrudge them their fun. We (investors) gave them this money, after all. However long they have it they can spend it, as long as they share the technology and the discoveries I couldn’t care less. As an aside, I wonder how genius Musk feels about his all in move to Texas. Just sayin’

  7. If we don’t somehow figure out how to keep this wondrous orb we call home livable it won’t make any difference how amazing the space exploration discoveries are that will occur in the next hundred years. It will all be for naught. Think of the children.

Speak your mind

This site uses Akismet to reduce spam. Learn how your comment data is processed.