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O’Reilly Automotive, Inc. (NASDAQ:ORLY) Q4 2022 Earnings Call Transcript February 9, 2023 Operator: Welcome to the O’Reilly Automotive, Inc. Fourth Quarter and Full Year 2022 Earnings Call. My name is Paul and I will be your operator for today’s call. I will now turn the call over to Jeremy Fletcher. Mr. Fletcher, you may begin. […] O’Reilly Automotive, Inc. (NASDAQ:ORLY) Q4 2022 Earnings Call Transcript February 9, 2023 Operator: Welcome to the O’Reilly Automotive, Inc. Fourth Quarter and Full Year 2022 Earnings Call. My name is Paul and I will be your operator for today’s call. I will now turn the call over to Jeremy Fletcher. Mr. Fletcher, you may begin. Jeremy Fletcher: Thank you, Paul. Good morning, everyone and thank you for joining us. During today’s conference call, we will discuss our fourth quarter and full year 2022 results and our outlook for 2023. After our prepared comments, we will host a question-and-answer period. Before we begin this morning, I would like to remind everyone that our comments today contain forward-looking statements and we intend to be covered by and we claim the protection under, the Safe Harbor provisions for forward-looking statements contained in the Private Securities Reform Act of 1995. You can identify these statements by forward-looking words such as estimate, may, could, will, believe, expect, would, consider, should, anticipate, project, plan, intend or similar words. The company’s actual results could differ materially from any forward-looking statements due to several important factors described in the company’s latest annual report on Form 10-K for the year ended December 31, 2021 and other recent SEC filings. The company assumes no obligation to update any forward-looking statements made during this call. At this time, I would like to introduce Greg Johnson. Greg Johnson: Thanks, Jeremy. Good morning, everyone and welcome to the O’Reilly Auto Parts fourth quarter conference call. Before we begin our discussion on our results and our plans for 2023, I’d like to take a few moments to discuss the announcement we made in January regarding the promotion of Brad Beckham and Brent Kirby to Co-Presidents. Our company is extremely focused on identifying and developing leaders who in turn are relentless in building the very best team in our industry. Our long-term commitment to succession planning is a critical component of our human capital strategy. In line with that strategy, we are extremely pleased to have Brent and Brad assume the elevated positions of Co-Presidents. Brad and Brent are exceptional leaders and are both driven by their passion for perpetuating our O’Reilly culture and providing excellent service to our customers. Brad and Brent bring diverse and broad experience to their roles of Co-President. Brad’s career with O’Reilly began 26 years ago when he joined the company as a parts specialist in Wagoner, Oklahoma. He has progressed through every leadership role in our store operations group, from Store Manager through Executive Vice President of Store Operations and Sales, before assuming the role of EVP and Chief Operating Officer and now Co-President. Brad’s leadership has been instrumental in the growth and expansion of our company and his impact is evident throughout the leadership ranks of our operational teams, many of whom have been mentored and promoted directly by Brad. As Co-President, Brad is responsible for the company’s domestic and international store operations and sales, real estate and expansion, human resources, training, legal, risk management, loss prevention and finance. Like Brad, Brent brings decades of retail leadership experience to his role as Co-President. Brent began his 35-year retail career with Lowe’s Companies and progressed through their ranks, ultimately serving in the roles of Senior Vice President of Store Operations, Chief Omnichannel Officer, and Chief Supply Chain Officer. Brent joined Team O’Reilly in 2018 as our Senior Vice President of omnichannel and made an immediate impact in that role before assuming leadership of our supply chain and distribution efforts. His extensive experience and significant DIY and professional retail industry knowledge is critical to our efforts to enhance our industry-leading inventory position, leverage technology investments to deliver powerful tools for our team, and drive deep connections with our DIY and professional customers. As Co-President, Brent is responsible for the company’s distribution operations, logistics, merchandising, inventory management, pricing, advertising, omnichannel, customer satisfaction, program management, electronic catalog, and information technology. Again, I am very pleased to have Brad and Brent step into these new roles and I am excited about the leadership they will provide to Team O’Reilly as Co-Presidents. Brad and Brent are participating on the call with me this morning, along with Jeremy Fletcher, our Chief Financial Officer. Greg Henslee, our Executive Chairman; and David O’Reilly, our Executive Vice Chairman, are also present on the call. I am once again pleased to begin our call today by congratulating Team O’Reilly on another record-breaking year in 2022. We finished the year with incredible momentum, posting a comparable store sales increase of 9% in the fourth quarter, representing an increase of almost 35% on a 3-year stack basis. For the full year of 2022, our team generated a robust 6.4% comparable store sales growth, which came in above the revised guidance range of 4.5% to 5.5% we provided last quarter and above the midpoint of our original comp range of 5% to 7% we said at the beginning of 2022. Even more impressive, our 6.4% comparable store sales growth in 2022 followed record-setting sales growth in 2021 and 2020 when we delivered comps of 13.3% and 10.9% respectively, resulting in 3-year stacked comps exceeding 30%. These strong top line results drove another year of record earnings per share as diluted EPS increased 8% to $33.44, representing a 3-year compounded annual growth rate of 23%. Our ability to continue to grow our business and capture market share year-in and year-out is a testament to our team’s commitment to providing excellent customer service and we couldn’t be more pleased with how our team finished 2022. Entering 2023, we remain bullish on the opportunities we see ahead of us and are anticipating another strong year of sales and earnings growth. For earnings per share, we have established the guidance for 2023 at $35.75 to $36.25, representing an increase of 8% versus 2022 at the midpoint. Achievement of our 2023 guidance would result in us doubling our EPS over the last 4 years, representing a compounded annual growth rate over 19%. This impressive performance and challenging target is a testament to the quality of our team and their commitment to our customers. Brad, Brent and Jeremy will walk through the rest of our detailed outlook in their prepared comments. But for now, I will just say that we are excited about the aggressive plans we have to invest in our business and continue to take market share and drive industry-leading results. Before I turn the call over to Brad, I want to share a little bit about the incredible culture building experience our team just had in January at our Annual Leadership Conference in Dallas. Each year, we bring all of our store managers, field leadership as well as our sales and DC management team members together in one place at one time to build leadership skills, enhance product knowledge, share best practices across our company, and celebrate our award-winning performance. The theme of this year’s conference was: One Team, Reunited. And it was definitely an appropriate rallying cry for our first in-person leadership conference in 3 years. The passion and energy displayed by our company leaders was infectious and it gives us even more confidence in the Team O’Reilly’s ability to drive future success through their unwavering commitment to our customers and fellow team members. To wrap up my prepared comments, I want to thank each of our team members for their dedication to our company’s long-term success and their outstanding performance in 2022. I am extremely proud of all of you and I am confident 2023 will be another record-setting year for Team O’Reilly. I will now turn the call over to Brad. Brad Beckham: Thanks, Greg and good morning everyone. I would also like to begin my comments this morning by congratulating Team O’Reilly on another great year in 2022. Our team’s focus on providing consistent, excellent customer service allowed us to generate the outstanding results we reported yesterday and we were excited about the opportunities we see to continue to grow our business. Now I’d like to provide some additional color on our fourth quarter comparable store sales results and outline our guidance for 2023. As we discussed on our third quarter conference call, we started the fourth quarter with strong sales volumes in line with trends we saw as we exited the third quarter. Those robust sales volumes continued through the end of the year, delivering results solidly above our expectations on both the professional and DIY sides of our business each month of the quarter. From a cadence perspective, the monthly comp was steady throughout the quarter with December being the strongest month of the quarter on a 2 and 3-year stack basis. As we finished the year, we saw broad-based strength across all of our markets in weather-related categories, such as batteries, cooling and antifreeze as well as our other core non-weather-related categories. We saw strength in both our DIY and professional businesses, with professional again leading the way with double-digit comparable store sales growth on robust increases in both ticket counts and average ticket size. As we finished 2022, we were very pleased with our professional performance and we believe the momentum we have created is the direct result of our team executing our proven business model at a high level and providing industry-leading customer service. We were also pleased to see the improved performance in our DIY business, which accelerated on a 1, 2 and 3-year comparable store sales growth basis, driven by our strong average ticket growth. As anticipated, DIY ticket counts were a partial offset to our comp growth due to difficult comparisons from strong traffic growth in the previous 2 years, but improved sequentially in quarter, continuing the trend we saw in the third quarter and exceeding our expectations. As we saw throughout 2022, growth in average ticket values drove our total comparable store sales growth in the fourth quarter. Average ticket size grew in the high single-digits on both sides of our business, supported primarily by the mid single-digit growth in same SKU inflation and augmented by a benefit from increasing clean improved quality and design of new parts. On a year-over-year basis, we saw a moderation in the same SKU benefit after peaking in the second and third quarters as we lap the acceleration of higher inflation in 2021 and saw modest increases in selling prices as we finished out 2022. The moderation in selling price increases correlate with what we are seeing in product acquisition costs as industry pricing has remained rational on both sides of the business and we have been successful in passing through cost increases. Now, I want to transition to a discussion of our 2023 sales guidance and our outlook for this year. As we disclosed in our earnings release yesterday, we are establishing our annual comparable store sales guidance for 2023 at a range of 4% to 6%. And we want to provide some color on the factors that are driving our expectations as it relates to both our outlook for our industry as well as the specific opportunities we see for our company. I will begin with our view of the prospects for our industry, which we believe are still very favorable. The health of the automotive aftermarket continues to be supported by strength in the core fundamental drivers of demand and the last few years have further reinforced the compelling value proposition that motivates consumers to invest in their vehicles. Since the onset of the pandemic, the scarcity of vehicles has forced many consumers to keep their vehicles longer. These investments consumers have made to keep their vehicles well maintained have paid off and we expect to see a continued willingness by consumers to invest in their high-quality vehicles at higher and higher mileages. We also have a positive outlook on the strength of the consumer in our industry and their ongoing willingness to prioritize their transportation needs. We continue to view the health of our customers as strong, supported by extremely low unemployment and robust growth in wages over the past 2 years. We think these factors provide a solid backdrop for growth in miles driven in our industry and solid demand over the next year. While miles driven still remain below pre-pandemic levels, we have seen growth in this key fundamental for our industry over the past 18 months. We believe we will see a continuation of the long-term industry trend of steady growth in miles driven resulting from population growth and an increase in the size of the U.S. car park. As we think about the broader macro factors that could impact the U.S. economy in the coming year, we remain cautious in our outlook for €“ outlook concerning ongoing headwinds from inflation and the potential for deterioration in economic conditions. Negative trends in the broader economy can €“ it can influence demand in our industry in the short-term, but we have consistently seen over time that consumers adjust quickly in challenging environments. In fact, in 2022, it was a good illustration of how this can play out. The pressure we saw from elevated gas prices, broad-based inflation and global economic shocks weighed on our results versus our expectations in the first half of the year. However, our customers adjusted as conditions stabilized and our business rebounded to meet our full year sales growth expectations. Our experience through multiple economic cycles in our company’s history is that consumers will prioritize the maintenance and the repair of their existing vehicles as a means to avoid a car payment and save money in the face of economic pressures. Ultimately, due to the non-discretionary and value-driven nature of our business, we have confidence our industry will perform well in 2023, even if we end up facing challenges in the broader economy. As confident as we are in the strength of our industry, the most important driver for our outlook for 2023 is the opportunity we see to outperform our competition and gain market share by out-executing €“ or excuse me, by executing our business model and providing the best customer service in the industry. To this end, I would like to spend a few minutes discussing our outlook on both sides of our business. We expect both our DIY and professional businesses to be positive contributors to our comparable store sales growth in 2023, with professional again expected to outperform. We are excited about the strength we built in 2022 in our professional business and we believe this will continue to accelerate our growth on this side of the business. We remain highly committed to being the industry leader in the quality of service and inventory availability we provide to the professional customer and our focus moving into 2023 is to aggressively lever these strengths to further consolidate this side of the market. We also see significant opportunity to grow our DIY business, but are more cautious in how we view our ability to increase ticket counts on a year-over-year basis. Our DIY ticket counts in 2022 were pressured in comparison to 2021 as we were still calendaring the impact of government stimulus and faced headwinds from gas price shocks and inflation. We feel like we have now completely lapped the artificial spikes in demand and are pleased with the steady DIY traffic we saw in the back half of the year. While there has been a lot of volatility in our comparisons over the past 3 years, our overall growth in DIY ticket counts has been solidly positive in total during that timeframe. We have clearly taken market share since the onset of the pandemic through consistent execution and excellent service even as we face the long-term industry trend of pressure to DIY ticket counts. For 2023, we will continue to face this industry dynamic where increased complexity and quality of parts extend service and repair intervals. As a result, we anticipate DIY traffic down will be down slightly in 2023 with an expectation that we will continue to gain market share to partially offset the normal industry drag on ticket counts. We expect the pressure to DIY traffic to be more than offset by increased average ticket. We anticipate average ticket on both sides of our business to benefit from low single-digit inflation arising from the carryover benefit on a year-over-year basis as we compare against price levels that ramp throughout 2022. Consistent with our historical practice, we are including only modest increases in price levels from this point forward in 2023. We do not expect to see growth in average ticket values above and beyond same-SKU inflation, resulting from increased product complexity and our ability to trade customers up to a higher quality product on the good-better-best spectrum. As we move through 2023, we anticipate comps in the first half of the year to be stronger than the back half as a result of the year-over-year same-SKU inflation benefit as well as easier comparisons in professional ticket counts, which ramped throughout 2022, and to a lesser degree, DIY ticket counts which faced more pronounced pressure in the first half of last year. We are off to a strong start thus far in 2023 and we are pleased to see continued momentum on both sides of our business. Now I want to spend some time covering our SG&A and operating profit performance in 2022 and our outlook for 2023 before turning the call over to Brent who will provide color on our gross margin. Fourth quarter SG&A expense as a percentage of sales was 32.2%, in line with the fourth quarter of 2021. As we noted in our press release yesterday, this number includes a $28 million charge associated with our transition to an enhanced paid time-off program for our team members. Average per store SG&A for 2022 was just €“ was up just over 4.8%, driven by incremental variable operating expenses on better-than-expected sales volumes and cost inflation in fuel, wage rates and team member benefits. Over the last several years, our teams have demonstrated an ability to drive an enhanced level of profitability and productivity on our SG&A spend as we are pleased with the finish to 2022. As we look forward to 2023, we are planning to grow average SG&A per store by approximately 4.5%. This level of spend is a step change higher than we would normally forecast in our initial SG&A guidance. While we anticipate facing some pressures to costs from ongoing inflation, the majority of our incremental spend anticipated in 2023 reflects deliberate decisions we are making to invest in our business. We are targeting initiatives we believe will enhance the value proposition we offer to both our team members and customers by investing in our professional parts people and our customer service levels, in turn, driving both long-term sales and operating profit dollar growth. We plan to deploy these resources to enhance our long-term operational strength with specific emphasis on strengthening our team member experience and benefits, upgrading our store vehicle fleet, refreshing and improving our store image and appearance, and deploying incremental technology projects as well as investments in infrastructure. We believe we have an opportunity to capitalize on our strong competitive position in our industry and further separate ourselves as we consolidate the market. We are highly confident our investment in these initiatives will provide strong long-term returns, but anticipate we will face initial pressure to our SG&A as a percentage of sales in 2023. Based on these expectations, coupled with the normal drag from new store expansion and our anticipated gross margin rate, which Brent will discuss in a minute, we are setting our operating profit guidance range at 19.8% to 20.3% of sales. At the midpoint of our guidance, we are expecting operating profit to increase over 4%. Ultimately, our leadership team is focused on enhancing the excellent customer service and overall value that creates strong relationships with our customers on both sides of the business that, in turn, drive long-term growth in operating profits. To finish up my prepared comments, I want to add to what Greg has already said about the incredible experience we had as a leadership team in Dallas and the enthusiasm our team showed for our business and the O’Reilly culture. This was my 26th Leadership Conference, my first being in 1998 when I first became a Store Manager and there is no doubt in my mind, it was our best one yet. Since there was €“ since this was our first in-person conference since 2020, the last two being virtual, there was certainly a lot for us to celebrate, but I was blown away by the commitment I saw from our team to not rest on our laurels or be satisfied with our past success. Instead, our team was passionate about the opportunities we have in front of us. As we look forward to 2023 and set an ambitious plan to outperform the competition and gain market share, we will be aggressive in supporting our teams and equipping them with the tools and resources to drive our company to an even higher level of performance. I want to once again thank Team O’Reilly for their continued dedication to our company. Now I will turn the call over to Brent. See also 25 Largest Apparel Companies in the world and 30 Best Stocks for Retirement. Brent Kirby: Thanks, Brad, and good morning, everyone. I would like to begin my remarks today by congratulating Team O’Reilly on yet another strong year. Once again, your commitment to consistent, excellent customer service drove outstanding results in 2022. As Greg and Brad have already shared, it was a privilege to be able to get together with our industry-leading team professional parts people at our leadership conference in January, and we are all incredibly excited about the strength of our business moving forward in 2023. Today, I’m going to discuss our fourth quarter and full year gross margin and supply chain results and our outlook for 2023 and provide color on our capital investments. Starting with gross margin. Our fourth quarter gross margin of 50.9% was 183 basis point decrease from the fourth quarter of 2021, but in line with our guidance expectations. For the full year, gross margin came in at 51.2%, which was 145 basis point decrease from last year. Our year-over-year margin results were primarily impacted by the rollout of our professional pricing initiative, combined with anticipated comparison headwinds to the LIFO benefits that we realized in 2021. We are pleased to generate a full year gross margin rate in the upper end of our guidance range. However, we’re even more excited to drive strong gross profit dollar growth. Our price investments and superior execution of our business model paid off in a solid 5% increase in gross profit dollars in 2022, which represents a 3-year compounded annual growth rate of 11%. I want to thank our supply chain store operations and sales teams for their hard work in driving these results in a dynamic and very challenging market environment. For 2023, we expect gross margin to be in the range of 50.8% to 51.3%, which is consistent with how we viewed our margin guide throughout 2022. Even though we aren’t anticipating a significant year-over-year change, there are a few puts and takes that I want to call out that we expect to impact our gross margin in 2023. To begin, we will face some remaining incremental pressure in the first quarter from our professional pricing initiative as we lap a higher gross margin run rate at the beginning of 2022 before we fully rolled out the initiative in the middle of the first quarter. We also will face headwinds from a number of other factors, including comparisons to temporary benefits in the first half of 2022 from the timing of selling price increases, a higher planned mix of professional business in 2023 as that side of the business continues to grow faster, the calendaring of the remaining LIFO benefit that we realized in 2022, and pressure on distribution costs as we continue to stabilize our network after the disruptive periods we have seen during the pandemic, and face headwinds in the fixed cost we capitalized in inventory driven by a significantly smaller planned inventory build in 2023. Offsetting these headwinds, our gross margin outlook also includes an anticipated benefit from modest acquisition cost improvements. On balance, we still expect to see inflationary pressure in acquisition cost in 2023, driven by rising labor and raw material costs in the supply chain. These are specific areas that we have seen some relief in from cost pressure that were passed along to us over the course of the last 2 years, specifically in freight and transportation costs. Beyond what we have built into our outlook for next year, we remain very cautious regarding the prospect for incremental reductions in acquisition costs as most of our supply chain partners continue to face broad inflationary pressures. On an individual basis, none of the discrete factors I just outlined represent a significant impact to our gross margin. And candidly, we normally don’t dig in at this level of detail in discussing the puts and takes that impact our margin. However, we think it’s important to provide additional color since there are so many moving pieces. Over the last several years, we have seen variability in our quarterly margin results that are not typical of the normal cadence for our business, driven by significant cost inflation, the reversal of our LIFO debit balance and the implementation of our professional pricing initiative. In 2023, we anticipate quarter-to-quarter gross margins to be more consistent, with only first quarter being slightly below our full year guidance, driven by product mix. However, since some of our comparisons are more challenging, in the first half of the year, we do expect to see some pressure on gross margin rate on a year-over-year basis in the first two quarters. Inventory per store at the end of 2022 was $730,000, which was up 15% from the end of last year, which is significantly above the target that we set for inventory growth at the beginning of 2022. Over the course of much of the last 3 years, it has been our intent to aggressively add incremental inventory dollars, and we have been constrained by supply chain challenges and the necessity to keep up with the strong sales volumes and replenishment needs of our stores. As we move through the back half of 2022, our supply chain distribution and store operations teams made tremendous progress in deploying additional inventory. We also proactively took advantage of opportunities to incrementally add inventory to our network as we saw upside in capitalizing on strong sales demand as supply constraints begin to ease. For 2023, we are planning per store inventory to increase approximately 2%, which is below our historical run rates. This is primarily because of the inventory additions that we accelerated at the end of 2022. Our ongoing inventory management is geared to deploy the right inventory at the optimal position within our tiered distribution network. While our expected incremental additions in 2023 are modest, our plans include continued adjustments to push out and pull back inventory to ensure that we’re offering the best possible local inventory assortments. A key part of our inventory deployment strategy is our ongoing evaluation and modification of all aspects of our hub store network, including the number of hub stores, sizing of inventory assortments and market positioning. A substantial amount of increased inventory that we deployed in 2022 and the dollars we plan to roll out in 2023 are targeted in our hub stores to further enhance our industry-leading inventory position. Our AP to inventory ratio at the end of the fourth quarter was 135%, which sets an all-time high for our company, and was heavily influenced by extremely strong sales volumes and inventory turns along with the impact from increased inflation and product acquisition costs. While we deployed significant incremental inventory into our distribution centers and stores in 2022, we actually saw a decrease in net inventory investment of $513 million. We anticipate our AP to inventory ratio to moderate slightly as we move through 2023 and currently expect to finish the year with a ratio of approximately 133%. Our capital expenditures in 2022 were $563 million, which fell short of our original plan by approximately $140 million. The lower CapEx was driven by a few different factors, including a heavier weighing of leased versus owned stores, the delay of certain store DC and headquarter projects and planned maintenance, and the timing of expenditures related to distribution expansion projects. Included in our expectations for 2023, our plan to deploy capital for the initiatives that were delayed in 2022 as well as support new store and DC development to support our long-term growth strategies in the U.S. and Mexico. For 2023, we are setting our capital expenditure guidance at $750 million to $800 million. We have also established a target of 180 to 190 net new store openings with a planned heavier mix of owned versus leased locations. Our CapEx outlook also includes significant investments in our distribution network as we will complete and open our newest distribute center in Guadalajara, Mexico and expect initial expenditures for future projects. We have identified several exciting projects and initiatives in 2023 to enhance our service levels and provide customers an improved efficiency and product availability. Our CapEx guidance includes planned investments in significant DC and store fleet upgrades, store projects to enhance the image, appearance and convenience of our stores, and strategic investments in information technology projects. Before I turn the call over to Jeremy, I want to again thank Team O’Reilly for their unwavering commitment to our customers and dedication to going the extra mile to deliver outstanding business results in 2022. Now I’d like to turn the call over to Jeremy. Jeremy Fletcher: Thanks, Brent. I would also like to congratulate Team O’Reilly on another outstanding year. Now we will fill in some additional details on our fourth quarter results and guidance for 2023. For the fourth quarter, sales increased $353 million, comprised of a $288 million increase in comp store sales, a $65 million increase in non-comp store sales, a $2 million increase in non-comp non-store sales, and a $2 million decrease from closed stores. For 2023, we expect our total revenues to be between $15.2 billion and $15.5 billion. Brent covered our gross margin performance and guidance earlier, but I want to provide a quick reminder on how we view the application of LIFO in our gross margin results. We view our reported gross margin as the best measurement of our performance. Since the GAAP cost of goods sold under the LIFO method most closely matches our current acquisition costs, as a result, we don’t view the normal application of LIFO as a discrete charge in our evaluation of gross margin. In the first quarter of 2022, we did receive a limited benefit of just under $10 million, resulting from the reversal of our historic LIFO debit balance and the final sell-through of inventory purchased prior to acquisition cost increases. This comparison headwind is a component of our gross margin expectations that Brent outlined earlier. Our fourth quarter effective tax rate was 18.2% of pretax income, comprised of a base rate of 19.9%, reduced by a 1.7% benefit for share-based compensation. This compares to the fourth quarter of 2021 rate of 19.4% of pretax income which was comprised of a base tax rate of 20.4% reduced by a 1% benefit for share-based compensation. The fourth quarter of 2022 base rate as compared to 2021 was lower as a result of an increase in certain state tax credits. For the full year, our effective tax rate was 22.4% of pretax income, comprised of a base rate of 23.3%, reduced by a 0.9% benefit for share-based compensation. For the full year of 2023, we expect an effective tax rate of 22.9%, comprised of a base rate of 23.4%, reduced by a benefit of 0.5% for share-based compensation. We expect the fourth quarter rate to be lower than the other three quarters due to the tolling of certain tax periods. Also, variations in the tax benefit from share-based compensation can create fluctuations in our quarterly tax rate. Now we will move on to free cash flow and the components that drove our results and our expectations for 2023. Free cash flow for 2022 was $2.4 billion versus $2.5 billion in 2021. The decrease of $178 million was driven by higher capital expenditures in 2022 versus 2021, and differences in accrued compensation. For 2023, we expect free cash flow to be in the range of $1.8 billion to $2.1 billion. As Brent discussed earlier, the expected year-over-year decrease is due to a planned increase in net inventory in 2023 versus the benefit we realized in 2022 as well as the planned increase in CapEx. These headwinds are expected to be partially offset by a benefit of $300 million in 2023, resulting from favorable timing of tax payments and disbursements for renewable energy tax credits. Moving on to debt, we finished the fourth quarter with an adjusted debt to EBITDA ratio of 1.84x as compared to our end of 2021 ratio of 1.69x, with the increase driven by our successful issuance of $850 million of 10-year senior notes in June, offset by the September retirement of $300 million of maturing notes. We continue to be below our leverage target of 2.5x, and plan to prudently approach that number over time. We continue to execute our share repurchase program. And for 2022, based on the strength of our business, we were able to purchase 5 million shares at an average share price of $661.66 for total investment of $3.3 billion. Since the inception of our share repurchase program in 2011, we have repurchased 91 million shares at an average share price of $224.8 for a total investment of $20.4 billion. We remain very confident that the average repurchase price is supported by the expected future discounted cash flows of our and we continue to view our buyback program as an effective means of returning excess capital to our shareholders. As a reminder, our EPS guidance includes the impact of shares repurchased through this call, but does not include additional share repurchases. Before I open up our call to your questions, I would like to thank our team for your hard work and dedication to our company and our customers. This concludes our prepared comments. At this time, I would like to ask Paul, the operator, to return to the line, and we will be happy to answer your questions. Q&A Session Follow O Reilly Automotive Inc (NASDAQ:ORLY) Follow O Reilly Automotive Inc (NASDAQ:ORLY) We may use your email to send marketing emails about our services. Click here to read our privacy policy. Operator: Thank you. And the first question today is coming from Michael Lasser from UBS. Michael, your line is live. Michael Lasser: Good morning. Thanks a lot for taking my question. So prior to the pandemic , O’Reilly would consistently guide its comp in the 3% to 5% range. This year, that outlook calls for 4% to 6% increase. Are you backing into that based on the investments that you’re making in SG&A such that you need this sales level in order to drive leverage to cover the buildup of cost? And if so, does that create some downside comp risk kind of similar to how last year played out? Greg Johnson: Yes, Michael, this is Greg. I mean, the answer to your question is absolutely not. Brad and €“ talked a lot about our bullish thesis on both the industry and what we expected from our company in 2023. And the fact that miles driven has improved, not to the point of pre-pandemic levels, fuel prices have stabilized, new car sales and used car sale prices have been elevated, and overall sales have been softer over the past few years, I think there’ll be some recovery there in 2023, but we still see a tremendous opportunity just because new car sales may improve, that doesn’t mean that the millions of cars that are on the road today will just simply vanish. Cars are built better, they are lasting longer. And for all those reasons that Brad laid out. We’re very, very optimistic about the future. But as always, we’re cautious. First and fourth quarters are more volatile. And I don’t know what’s going to happen with the economy. The onset of spring impacts our volumes. But overall, on an annual basis, we remain very bullish for our future. Jeremy Fletcher: Michael, maybe the only thing I would add there is we continue to expect to an average ticket benefit that’s greater than normal years as we roll over some of the pricing changes that happened within our business and our industry last year. But even as we step behind or beyond some of those macro factors, we feel very positive about how we think about the opportunities we have from a share perspective as we move through next year. And those are things that we have confidence in because of the trends that we’ve seen for the last couple of quarters as we’ve seen the €“ I think our customer base be really resilient and respond, and we’ve seen traction and momentum on both sides of our business. Michael Lasser: That makes sense. My follow-up question, and you’ve gotten this a lot recently, is that costs have come down quite a bit, whether it’s supply chain costs in the form of lower containers, petroleum prices. Can you quantify the savings that O’Reilly is experiencing from these lower input costs? And are you passing along the savings in the form of lower prices or is that helping the profitability in offsetting some of the other pressures that you had identified? Jeremy Fletcher: Yes, Michael, maybe let me answer your question backwards and the second part first. Yes, we’re absolutely €“ whenever we see any potential benefits, we’re €“ we’ve been able to take that to the bottom line. We have not seen to date any market movements to roll back some of the increases that we’ve seen and if there is been any relief on pressures. And Brent talked about that as a positive within his prepared comments. We do expect some benefits there this year. I think to the first part of your question, we haven’t quantified €“ we won’t. And I would maybe caution a little bit to treat that as a big factor moving in one direction. There continues cost pressure on balance. We think that we will see more cost increases this year than decreases as our suppliers continue to stay under pressure. And while we’ve seen some reductions, and those are good, and we’re positive about that. We’re very cautious in how we think about that moving forward and the benefits that we would bake in. And I think you see that reflected and really how €“ I think we’ve talked about this for the last couple of quarters, but then also as we’ve laid out our outlook. Michael Lasser: Thank you so much and good luck to Brad and Brent in their new roles, and the entire team. Brad Beckham: Thank you, Michael. Brent Kirby: Thank you, Michael. Operator: Thank you. The next question is coming from Simeon Gutman from Morgan Stanley. Your line is live. Simeon Gutman: Hey, guys. I’m going to ask the one and a follow-up now. The first question on SG&A growth. Is this a 2023 event or €“ are the spending on the stores and people? Or do you foresee some of this spilling into next year? And then to clarify, if product the second is to follow up, if product acquisition costs start coming down, because you didn’t record a charge, does that create €“ does that €“ do we start creating a new debit balance? Just I think that, that won’t help the gross margin then since you didn’t create a charge you just build up another reserve. I just want to make sure that’s right. Greg Johnson: Yes. Simeon, I will take €“ I will start the SG&A response here, and then maybe Jeremy or Brent will want to chime in. We haven’t changed our focus. Our focus continues to be growing operating margin dollars. Our focus continues to be to grow top line faster than we grow SG&A. None of that’s changed. We still talk about our core culture value of expense control day-in and day-out. This change this year was a deliberate and a prudent effort to try to position us for future growth. There is a lot that’s changed over the past 2 years in the retail market and industries as a whole across all industries, actually. And we faced wage pressures, there is no secret there. We faced turnover. And we really looked ourselves in the mirror this year and had conversations with our team members about what is important. We want to stop the turnover, get back to normalized rates, make sure we have the ability to recruit, promote and retain the best talent, which is what we have been successful with for also €“ so part of that initiative, and I am not going to go into all of it, perhaps Brent or Brad would want to go into more detail. We called out the initiative on the PTO. That’s one example of us listening to our team members as to what’s important to them and an effort for us to position ourselves for future growth. I don’t know, Jeremy, if you had anything to add? Jeremy Fletcher: Yes. Maybe the only thing I would say is we establish our SG&A guidance 1 year at a time, and I don’t want to guide from a pure dollar perspective, what we look like beyond that. I think what Greg points to, though, is that we remain highly committed to making sure that we are driving the right results out of every part of what we invest in our business from an expense control standpoint. And so as we move beyond this year, we intend that these investments pay off, that we lever SG&A as a result of them. And I think what you would expect to see from that perspective hasn’t changed from a long-term standpoint. Does that mean we won’t find other things as we continue to move forward and invest in, we will continue to evaluate that. It is our intent to do what we can do to build the long-term strength of our business. And I think what you see in our guidance and what we talked about matches up with that. Maybe just briefly to address your second question around the LIFO perspective, to the extent we see cost decreases in the coming year, we again, don’t expect that on balance substantially. They are going to offset cost increases. It would require a magnitude of change there that’s far in excess of what we would expect for our LIFO accounting to push back into a debit balance. So, we will be on a credit LIFO for the foreseeable future and the impact of that is as we see cost increases that will get reflected pretty rapidly within our reported results. Simeon Gutman: Thank you. Jeremy Fletcher: Thanks. Operator: Thank you. The next question is coming from Greg Melich from Evercore ISI. Greg, your line is live. Greg Melich: Great. Thanks. I guess my first question was on wages. What was the inflation in average hourly wage that you saw last year? And what are you expecting this year in the guidance? Jeremy Fletcher: Yes. It was significant in 2022. It was in the mid to high-single digit range for inflation. It depends on market and type of position for us. We expect that to moderate off of those levels. We will have some carryover impact there from a comparative situation evolves. But we are still building in an expectation of somewhere in mid-single digit range from a wage perspective because of those factors. What I would tell you is that we see that is the ongoing regular management of our business. And we expect that, as we saw in 2022, that we will have the ability to pass along the cost increases to the extent that we have planned. And if that number ends up being different than what we foresee at this point in time, we will have the ability to pass it along as well. Greg Melich: Got it. And then my second question is on mix shift. You mentioned that as being a slight headwind to gross margin, I would love to have a little more detail on that and color within DIY and pro. Is there any trade-down occurring? What sort of behaviors are you seeing from your customers on both sides of the house? Brent Kirby: Yes. Greg, this is Brent. I can start on that and then others can chime in. We really €“ net overall, we haven’t seen a lot of trade-down. In some categories, we have actually seen trade up as cars become more sophisticated and OE requirements on batteries as an example, with AGM, and some of the higher price points that are required on a lot of replacement batteries today. So, we have seen a lot of that actually move the consumer from the best to the better in a lot of cases €“ or better to best, rather. We have seen a little bit a category where we still had some €“ a lot of inflation in the oil category, and we have had majors that have still struggled with their supply chain. In some cases, we have seen customers trade-down to some of our proprietary brands on oil. And quite frankly, they are happy with what they are getting and we are seeing some stickiness there with those customers with some of our proprietary brands, which long-term is a good thing for us. But net-net, we haven’t seen any violent move, one way or the other, in terms of trade-up or trade-down. Greg Johnson: And Greg, maybe specifically to your question, in Brett’s prepared comments, when you talked about some modest headwinds there, that’s really on the professional versus DIY mix, because we anticipate professional and our top line grows faster in that that creates just the mathematical pressure on Greg Melich: That’s a category mix effect, not within the two sides. Greg Johnson: That is side of business mix effect, not within each side from a category. Brent Kirby: The expectation is that the DIFM is going to outperform DIY. Greg Melich: Got it. Perfect. Well, good luck and thanks. Brent Kirby: Thanks Greg. Operator: Thank you. The next question is coming from Seth Basham from Wedbush. Seth, your line is live. Seth Basham: Thanks a lot and good morning. And my question is around the DIY side of the business. You mentioned that you see some opportunities for ticket growth, but you are more cautious. Now, even with the easier comparisons there in the first half of the year, would you expect ticket growth €“ ticket account growth, I should say, in the first half of 2023? Greg Johnson: Yes. Just to clarify, Seth, in Brad’s comments, we said we expect DIY tickets to be slightly down. Now, we see some benefit as we continue to perform well against the marketplace, we are gaining share on the DIY side of our business. And we will have some easier comparisons in the first part of the year because of the pressures we saw last year that you mentioned. That’s really all partial offsets against the longer term industry trend that we and others have talked about that pressures ticket count comps because of the increasing costs and complexity of vehicle parts that supports the average ticket price, but possibly lead to service intervals and repair cycles that extend out. So, we anticipate that, that is a bigger impact for us as we move through the year. But €“ and that is kind of consistent with how we would normally think about DIY tickets. Seth Basham: Got it. Okay. So, a little bit less pressure in the first half of the year and then more normal thereafter? Greg Johnson: Correct. Seth Basham: Thank you very much. Greg Johnson: Thanks Seth. Operator: Thank you. The next question is coming from Brian Nagel from Oppenheimer. Brian, your line is live. Brian Nagel: Hi. Good morning. Thanks for taking my questions. Congratulations on the promotions. Greg Johnson: Thanks Brian. Brent Kirby: Thank you, Brian. Brian Nagel: So, the first question, I guess it’s pretty simple, but the business did accelerate just from the comp perspective, even stacked up nicely here in Q4. And then the commentary you made suggests that strength has continued here to Q1. You mentioned weather is a driver. Is there €“ I guess, can we maybe quantify the benefits of weather within that acceleration? And are there other factors that could help to explain why the business has strengthened further off of already strong levels? Jeremy Fletcher: Yes. Brian, thanks for the question. The weather is a part of the acceleration, I would tell you, it’s not all of the acceleration. So, we continue to see traction. And maybe I will start here and the other guys can jump in. We continue to see strong traction within our professional business and the trends there we have seen, we are very encouraged by. From a DIY perspective as we move further out in the middle part of the year when we saw pressure that, that customer has proven to be resilient and stabilized quite a bit. And we have seen some incremental improvements there that are positive. Obviously, as we think about those things, we look at them on a stack basis because of the comparison questions. But those types of things were positive. As we got to the last couple of weeks of the year, we had a cold snap that stretched across a lot of the country and we can see that pretty clearly. But even in that period of time, what we saw was broad-based across a lot of our regions and markets and customers. And we have been pleased with how we continue to see strength in the first quarter. Greg Johnson: Brian, I think one of the things we called out that I think you are referencing is the strength in winter categories. And we did see €“ actually it was the expected strength where we saw cold weather, snowy weather. Obviously, up in North, snow is probably better for us than it is in the South, but the recovery component after the snow gets cleared in the South helps us out as well. Brian Nagel: Got it. And then helpful. Then my second question, look, I know it’s early. We have been talking about it as an investment community inflation and within your business for a while. But maybe as you are starting to see those inflationary pressures begin to abate and recognizing you are not lowering prices, but prices may not be going up as much as they once were, are you seeing consumers react favorably to that? In other words, I am asking, are you starting to see the early indications of what may be sort of say, an elasticity of demand here? Jeremy Fletcher: Yes. It’s kind of tough to see that, Brian. I think it lays into a lot of other factors with the consumer. We don’t see the same types of pressure on our customers when we have those things pass through. The shocks are a big deal. We saw shocks in 2022. But pretty quickly, our consumer adjusted to that. They have a real non-discretionary need for what they buy from us. They got to keep their car on the road to be able to get to work, to take their kids to activities, to do so many things that are part of American life. So, as we move past that, we have, I think some benefits. Before we were a little bit more constrained, maybe we have more of an opportunity to add items to a job or to sell them up on the value perspective, and we feel positive. But I think our positivity is just around the overall strength of how we view that consumer. Greg Johnson: Brian, and to Brent’s earlier comments about a trading up, trading down, we just really haven’t seen evidence of a significant trade-down to drive us to think that there was tremendous cost pressure on the consumer. Some of the trade-up, trade-down, trade-across, as I have said in previous quarters, was about inventory availability. Perhaps we didn’t have the particular brand they wanted. But a lot of that subsided with the improvement in our supply chain. So, really haven’t seen any evidence of elasticity or trade-down. Brian Nagel: Got it. Alright. Guys, congrats again. Thank you. Greg Johnson: Thanks Brian. Operator: Thank you. And the next question is coming from Mike Baker from D.A. Davidson. Mike, your line is live. Mike Baker: Okay. Thanks guys. We sort of danced around this, I think a little bit, but I wanted to ask you about any concern about a price war or aggressive pricing? We talked about it a year ago, there was a big concern. It never really materialized. But now as auto is talking about getting more investment in pricing, your gross margin, the midpoint is down, can you just address how you talk about or think about pricing amongst your close-end competitors? Thanks. Greg Johnson: Yes, Mike. We €“ as we said last year when we introduced this concept of adjusting our prices, it was a very scientific process we went about. It was thought out, it was tested, it was evaluated. And it wasn’t across the board. It was directed to individual SKUs across individual categories. And we did not see any movement from our competitors at that time. Since then, we have clearly taken some market share. So, what our competitors do going forward, we don’t know. We have no control over it. But we have seen no evidence of that today. Brad, you live this day-in and day-out. What are your thoughts? Brad Beckham: Yes. Hi, good morning Mike. Yes. As you know, as we talked for a long time, all of us here have been in this industry a long time. We have been with the company a long time. That’s the first time in my 26-year career that we have really moved our framework down the way we did. And we have no plans to do that again. We felt like, as you know, there was a huge opportunity. We work in a $130 billion industry, and we do €“ we have 10% share. And as you know, on the professional side, it’s so much more fragmented. And with the disruption we saw the last couple of years in supply chain and some other things that hit the independents and some of the smaller players harder, especially some of the weaker ones, it was very strategic for us to make the decision we made. And we feel not only as good as we did a year ago, but we feel better in the decision we made. But it’s made, we did it, we rolled it out. And there is no plans to do that again. And just to remind you, Mike, our team’s pro-price initiative is probably fifth or sixth down the list when our operational and sales teams go to market. They are focused on having relationships with the installers. They are focused on having relationships with the decision makers, given the best delivery service in town, helping them turn their base. And I don’t necessarily contribute a large portion success last year to just pricing, it’s backing up the pricing with the top two, three, four things that make the pricing pay-off. And we feel really good about how that’s going to continue to build in 2023. Mike Baker: Yes. Sorry, go on. Brent Kirby: Yes. This is Brent. I was just €“ the only thing I would add to the comments Greg and Brad have already made on professional pricing is the framework remains intact and we monitor it on an ongoing basis. We monitor all our pricing on an ongoing basis. But we have stayed very rigorous around being competitive, but winning on service and parts availability. That’s how we win. Mike Baker: Yes. Makes perfect sense. Appreciate the color. Greg Johnson: Thank you. Operator: Thank you. The next question is coming from Chris Horvers from JPMorgan. Chris, your line is live. Chris Horvers: Thanks for squeezing me in. Dovetail on a couple of earlier questions. I guess on that DIY acceleration, you got past €“ gas prices came down, you had some favorable weather in December. But I guess as you would look at DIY, do you think your share gains accelerated sequentially? Like, to what degree was the acceleration some more of like non-specific to O’Reilly factors versus share gains that you have been driving? Jeremy Fletcher: Yes. Really hard to say, Chris. And I think, especially on the DIY side of the business, the pace of what we see from a ticket perspective, more modest than on the professional side. I think we talked about where it’s very clear that we know we are outperforming the market. We think that likely throughout the course of all of €˜22 and, frankly, 2021 and 2020, we have been outperforming the market and taking in share gain. So, I don’t know that we have seen a net incremental acceleration there. I think it would be hard to see. And maybe you would have to watch it for a few more quarters. I do think that a lot of what we have seen is our customers just continued to be strong and healthy. And the industry continues to prove out that there is a lot of value in investing in your vehicle at higher mileages that it’s €“ there is a good payback on that for customers. And I think that’s been a positive as well for us. Chris Horvers: And so I have sort of a two-part follow-up. So, one is, I guess on the PTO program, to what extent is this sort of a competitive need where direct competitors, companies like Walmart are €“ had a higher PTO option that you are reacting to in the environment? And then just second, as you think about the first half, obviously, weather always has an impact. It hasn’t been that great of a winter so far. Is the expectation as you lap that gas shock that is essentially muting what’s been a relatively warm winter? Brad Beckham: Hi Chris, this is Brad. I will touch on the PTO and then kick it over for the other. But as you know, Chris, we work in a people business. You have heard us talk for a long time about the importance of having tenure and knowledge and professional parts people. And quite frankly, we are very proud. When Brent and I talk, whether it’s the store teams or DC teams, we are very proud of our ability to retain and cut down on turnover amongst everything that’s happened in the last couple of years. But frankly, Chris, we are getting ahead. We are going to invest in our people. We are looking at human capital. We are looking at things that we are less looking at what maybe competitors do or other parts of retail is we feel like this is very strategic. We feel like our people value their time off. We feel like we need to be more flexible in the way we give them that time off. And so really, this for us is getting ahead, not following anybody. We are being proactive and we are going to invest in our people. Jeremy Fletcher: And then maybe on the weather part of your question Chris. I would say, obviously, we have had some positives there at the end of our fourth quarter just maybe more on balance, we would view weather as neutral. I think depending upon market, we see things, plus or minus, there is nothing from a significant change perspective that at least at this point, we would call out as having an overhang effect as we move through to the next couple of quarters as we think about cadence during the year, and I know Brad mentioned it in his comments. We do expect more strength in the first half of the year because of some of the opportunities on average ticket in the comparisons from a DIY and professional ticket count perspective is as we run up against some more opportunities there. But on balance, I think weather, we would say it’s favorable constructive for the type of demand we would like to see in 2023. Chris Horvers: Thanks so much. Have a great spring. Greg Johnson: Thanks Chris. Operator: Thank you. And the next question is coming from Scot Ciccarelli from Truist. Scot, your line is live. Scot Ciccarelli: Hi guys. Scot Ciccarelli. Thanks for squeezing me in as well. Just €“ I guess one more question regarding kind of the same SKU inflation comments you guys have already made. Are some vendors actually reducing product costs, or are we just talking about reducing the magnitude of increases, because obviously, that’s two different things. Brent Kirby: Yes. Chris, this is Brent €“ Scot, rather, this is Brent. I would tell you it’s a little bit of a mixed bag out there. There are some suppliers that have been more impacted by wage rates and raw material costs than others, obviously. We are always going to negotiate hard. We are always going to negotiate for best first cost. None of that stopped. We are relentless with that. We are going to continue to be. I hit on in the prepared comments, we have seen transportation costs abate from what they were from the peak. We have seen some benefit from that. So, we have also still seen some continued inflation even later in the cycle on petroleum products. So, it’s a mixed bag out there, but our guide anticipates that we are not going to see any tailwinds from acquisition costs. We are going to negotiate hard, and we are going to do everything we can to control cost. And then where we do have to absorb any increases, we will be able to pass those along to our customers. Jeremy Fletcher: And just to be completely clear on that one, Scot, when we say our guide, it does include some benefit from cost reductions. I think what Brent is saying there is that we are not anticipating a lot of incremental things versus what we haven’t seen already. Scot Ciccarelli: Got it. Okay. That’s very helpful. And then just clarity on the $28 million PTO charge in SG&A. Was that treated as a charge because that was like an accrual catch-up of some sort and then we are basically on a run rate basis for €˜23? Jeremy Fletcher: Yes. Scott, we did have an accrual catch-up. As we converted to the plan, we had some existing balances and some other types of sick and personal time items that as we enhanced, we had a one-time catch-up for team members. And then our run rate will be higher as a result of what we have seen. On a comparative basis, it will have normal comparisons there with the difference, obviously, that it will be a run rate throughout €˜23 as opposed to a fourth quarter charge in €˜22. Scot Ciccarelli: Very helpful. Thanks guys. Greg Johnson: Thanks Scot. Operator: Thank you. We have reached our allotted time for questions. I will now turn the call back over to Mr. Greg Johnson for closing remarks. Greg Johnson: Thank you, Paul. We would like to conclude our call today by thanking the entire O’Reilly team once again for their unwavering commitment to our customers and for our strong results we have posted in 2022. We look forward to another strong year in 2023. I would like to thank everyone for joining our call today, and we look forward to reporting 2023 first quarter results in April. Thank you. Operator: Thank you. This does conclude today’s conference call. You may disconnect your phone lines at this time and have a wonderful day. Thank you for your participation. Follow O Reilly Automotive Inc (NASDAQ:ORLY) Follow O Reilly Automotive Inc (NASDAQ:ORLY) We may use your email to send marketing emails about our services. Click here to read our privacy policy......»»

Spooky Torts: The 2022 List Of Litigation Horrors Authored by Jonathan Turley, Here is my annual list of Halloween torts and crimes. Halloween of course remains a holiday seemingly designed for personal injury lawyers around the world and this year’s additions show why. Halloween has everything for a torts-filled holiday: battery, trespass, defamation, nuisance, product liability and more. Particularly with the recent tragedy in South Korea, our annual listing is not intended to belittle the serious losses that can occur on this and other holidays. However, my students and I often discuss the remarkably wide range of torts that comes with All Hallow’s Eve. So, with no further ado, here is this year’s updated list of actual cases related to Halloween. In October 2021, Danielle Thomas, former exotic dancer known as “Pole Assassin” (and the girlfriend of Texas special teams coach Jeff Banks), found herself embroiled in a Halloween tort after the monkey previously used in her act bit a wandering child at the house of horror she created for Halloween. Thomas considers the monkey Gia to be her “emotional support animal.” Thomas goes all out for the holiday and converted her home into a house of horrors, including a maze. She said that the area with Gia was closed off and, as for petting, “no one is allowed to touch her!”  She publicly insisted “No one was viciously attack this a lie, a whole lie! She was not apart of any haunted house, the kid did not have permission to be on the other side of my property!” She even posted a walk-through video of the scene to show the steps that a child would have to take to get to the monkey. Don’t worry folks I got the #MonkeyGate video pic.twitter.com/TAy6leBqDS — Christian Sykes (@ctsykes13) November 2, 2021 She insists in the video that she knows all of the governing legal rules and shows the path in detail. It is not helpful on the defense side: it is not a long path and easy to see how a child might get lost. She later deleted her account (likely after her attorney regained consciousness). The case raises an array of torts including animal liability, licensee liability, negligence, and attractive nuisance claims. In 2022, we often added conversion to the usual torts where multiple versions of the new giant skeleton were stolen, including one particularly ham-handed effort in Austin, Texas caught on video tape: * * * In Berea, Ohio, the promoters of the 7 Floors of Hell haunted house at the Cuyahoga County Fairgrounds appreciate realism but one employee took it a bit too far. An actor brandished this real bowie knife as a prop while pretending to stab an 11-year-old boy’s foot. He then stabbed him. The accident occurred when the actor, 22, approached the boy and stabbed at the ground as a scare tactic. He got too close and accidentally cut through the child’s shoe, piercing a toe. The injury was not serious since the boy was treated at the scene and continued through the haunted house. The case raises an interesting question of “respondeat superior” for the negligent acts by employees in the course of employment. The question is what is in the scope of employment.  The question is often whether an employee was on a “detour” or “frolic.”  A detour can be outside of an employer’s policies or guidelines but will be the basis for liability as sufficiently related to the employment.  A frolic is a more serious deviation where the employee is acting in his own capacity or for his own interests. In this case, the actor was clearly within his scope of employment in trying to scare the visitors. However, he admitted that he bought the knife in his personal capacity and agreed it “was not a good idea” to use it at the haunted house, according to FOX 8. That still does not negate the negligence — both direct and vicarious liability. There was a failure to monitor employees and safeguard the scene. His negligence is also likely attributable to the employer. Finally, this would constitute battery as a reckless, though unintended, act. * * * In 2020, parents in Indiana were given a warning in a Facebook post that the Indiana State Police seized holiday edibles featuring packaging that resembles that of actual name brands — but with the word “medicated” printed on the wrapper along with cannabis symbols. The packaging makes it easy for homeowners to confuse packages and give out drugged candy.  Indeed, last year, two children were given THC-infused gummies while trick-or-treating, according to police in Waterford, Conn.. Such candies include the main active ingredient linked to the psychedelic effects of cannabis – the plant from which marijuana is derived. Even an accidental distribution of such infused candies would constitute child endangerment and be subject to both negligence and strict liability actions in torts. * * * I previously have written how the fear of razor blades in apples appears an urban legend. Well, give it enough time and someone will prove you wrong. That is the allegation of Waterbury, Connecticut police who say that Jason A. Racz, 37, put razor blades in candy bags of at least two trick-or-treaters. Racz’ razor defense may not be particularly convincing to the average juror. According to police, “Racz explained that the razor blades were accidentally spilled or put into the candy bowl he used to hand out candy from.” However, police noted that he “provided no explanation as to how the razor blades were handed out to the children along with the candy.” The charge was brought soon after Halloween in 2019. Racz is now charged with risk of injury to a minor, reckless endangerment and interfering with a police officer. He could also be charged with battery and intentional infliction of emotional distress, but it is not clear if any children were injured. *  *  * Steven Novak, an artist from Dallas, Texas, believes that Halloween should be a bit more than a traditional plastic pumpkin and a smiling ghost.  Police were called to his home in Texas over a possible murder. They found a dummy impaled on a chainsaw with fake blood; another dummy hanging from his roof; a wheelbarrow full of fake dismembered body parts and other gory scenes.  Neighbors called the display too traumatizing.  Police responded by taking pictures for their families. A tort action for intentional infliction of emotional distress is likely to fail. There must be not just outrageous conduct but conduct intended to cause severe emotional distress. Courts regularly exclude injuries associated with the exercise of free speech or artistic expression . . . even when accompanied by buckets of fake blood. *  *  * The Dorney Park and Wildwater Kingdom in Pennsylvania tells customers that, if they come to their Halloween Haunt, “Fear is waiting for you.” In 2019, a new case was filed by Shannon Sacco and her daughter over injuries sustained from “unreasonable scaring.” They are seeking $150,000. The Allentown Morning Call reported that “M.S.” went with friends to the amusement park and was immediately approached by costumed characters. She said that she told them that she did not want to be scared and backed away. A little further on into the park however a costumed employee allegedly ran up behind her and shouted loudly. The startled girl fell forward and suffered what were serious but unspecified injuries. She alleges ongoing medical issues and inability to return to fully functioning activities. The lawsuit also alleges that the park failed to inform Sacco or her daughter that they could buy a glow-in-the-dark “No Boo” necklace to ward off costumed employees. The obvious issue beyond the alleged negligence of the Park is the plaintiffs’ own conduct. Pennsylvania is a comparative negligence state so contributory negligence by the plaintiffs would not be a bar to recovery. See Pennsylvania General Assembly Statute §7102. However, it is a modified comparative negligence state so they must show that they are 50 percent or less at fault. If they are found 51 percent at fault, they are barred entirely from recovery. Even if they can recover, their damages are reduced by the percentage of their own fault in going to a park during a Halloween-themed event. *  *  * In 2019, there is a rare public petition to shutdown a haunted house that has been declared to be a “torture chamber.” The move to “shut down McKamey Manor” that has been signed by thousands who believe Russ McKamey, the owner of McKamey Manor, has made his house so scary that it constitutes torture, including an allegation of waterboarding of visitors. The haunted house requires participants to get a doctor’s note and sign a 40-page waiver before they enter. People are seeking the closure of the houses located in Summertown, Tennessee and Huntsville, Alabama. McKamey insists that it is just a “crazy haunted house” and stops well short of the legal-definition of torture. The question is whether consent vitiates any extreme frights or contacts. He is also clear in both the waiver and the website that the house is an “extreme haunted attraction” for legal adults who “must be in GREAT HEALTH to participate.” Not only do people enter with full knowledge but there is no charge. McKamey owns five dogs and only requires a bag of dog food for entry. Presumably the food is cursed. *  *  * An earlier case was recently made public from an accident on October 15, 2011 in San Diego. Scott Griffin and friends went to the Haunted Trail in San Diego. The ticket warns of “high-impact scares” along a mile path with actors brandishing weapons and scary items. Griffen, 44, and his friends went on the trail and were going out of what they thought was an exit. Suddenly an actor jumped out as part of what the attraction called “the Carrie effect” of a last minute scare. While Griffen said that he tried to back away, the actor followed him with a running chain saw. He fell backwards and injured his wrists. The 2013 lawsuit against the Haunted Hotel, Inc., in the Superior Court of California, County of San Diego, alleged negligence and assault. However, Superior Court Judge Katherine Bacal granted a motion to dismiss based on assumption of the risk. She noted that Griffin “was still within the scare experience that he purchased.” After all, “Who would want to go to a haunted house that is not scary?” Griffen then appealed and the attorney for the Haunted Hotel quoted Hunter S. Thompson: “Buy the ticket, take the ride.” Again, the court agreed. In upholding the lower court, Justice Gilbert Nares wrote, “Being chased within the physical confines of the Haunted Trail by a chain saw–carrying maniac is a fundamental part and inherent risk of this amusement. Griffin voluntarily paid money to experience it.” *  *  * In 2018, a case emerged in Madison, Tennessee from the Nashville Nightmare Haunted House.   James “Jay” Yochim and three of his pals went to the attraction composed of  four separate haunted houses, an escape room, carnival games and food vendors.  In the attraction, people are chased by characters with chainsaws and other weapons.  They were not surprised therefore when a man believed to be an employee in a Halloween costume handed Tawnya Greenfield a knife and told her to stab Yochim.  She did and thought it was all pretend until blood started to pour from Yochim’s arm. The knife was real and the man was heard apologizing “I didn’t know my knife was that sharp.” It is not clear how even stabbing with a dull knife would be considered safe. The attraction issued a statement: “As we have continued to review the information, we believe that an employee was involved in some way, and he has been placed on leave until we can determine his involvement. We are going over all of our safety protocols with all of our staff again, as the safety and security of all of our patrons is always our main concern. We have not been contacted by the police, but we will cooperate fully with any official investigation.” The next scary moment is likely to be in the form of a torts complaint.  Negligence against the company under respondeat superior is an obvious start. There is also a novel battery charge where he could claim that he was stabbed by trickery or deceit of a third person. There are also premises liability issues for invitees.  As for Greenfield, she claims to have lacked consent due to a misrepresentation.  She could be charged with negligence or a recklessness-based theory of battery, though that seems less likely.  Finally, there is an interesting possible claim of negligent infliction of emotional distress in being tricked or misled into stabbing an individual. *  *  * Last year, a 21-year-old man surnamed Cheung was killed by a moving coffin in a haunted house in Hong Kong’s Ocean Park.   The attraction is called “Buried Alive” and involves hopping into coffins for a downward slide into a dark and scary space. The ride promises to provide people with the “experience of being buried alive alone, before fighting their way out of their dark and eerie grave.” Cheung took a wrong turn and went backstage — only to be hit by one of the metal coffins.  The hit in the head killed Cheung who was found later in the haunted house. While there is no word of a tort lawsuit (and tort actions are rarer in Hong Kong), the case is typical of Halloween torts involving haunted houses.  The decor often emphasizes spooky and dark environs which both encourage terror and torts among the participants.  In this case, an obvious claim could be made that it is negligence to allow such easy access to the operational area of the coffin ride — particularly in a dark space.  As a business invitee, Cheung would have a strong case in the United States. *  *  * A previous addition to the Spooky torts was the odd case of Assistant Prosecutor Chris White. White clearly does not like spiders, even fake ones. That much was clear given his response to finding fake spiders scattered around the West Virginia office for Halloween. White pulled a gun and threatened to shoot the fake spiders, explaining that he is “deathly afraid of spiders.” It appears that his arachnophobia (fear of spiders) was not matched by a hoplophobia (fear of firearms). The other employees were reportedly shaken up and Logan County Prosecuting Attorney John Bennett later suspended White. Bennett said “He said they had spiders everyplace and he said he told them it wasn’t funny, and he couldn’t stand them, and he did indeed get a gun out. It had no clip in it, of course they wouldn’t know that, I wouldn’t either if I looked at it, to tell you the truth.” It is not clear how White thought threatening the decorative spiders would keep them at bay or whether he was trying to deter those who sought to deck out the office in a Halloween theme. He was not charged by his colleagues with a crime but was suspended for his conduct. This is not our first interaction with White. He was the prosecutor in the controversial (and in my view groundless) prosecution of Jared Marcum, who was arrested after wearing a NRA tee shirt to school. *  *  * Another new case from the last year involves a murder. Donnie Cochenour Jr., 27, got a seasonal break (at least temporarily) on detecting his alleged murder of Rebecca J. Cade, 31. Cade’s body was left hanging on a fence and was mistaken by neighbors as a Halloween decoration. The “decoration” was found by a man walking his dog and reported by construction workers. A large rock was found with blood on it nearby. Donnie Cochenour Jr., 27, was later arrested and ordered held on $2 million bond after he pleaded not guilty to murder. Cade apparently had known Cochenour since he was a child — a relationship going back 20 years. Cochenour reportedly admitted that they had a physical altercation in the field. Police found a blood trail that indicates that Cade was running from Cochenour and tried to climb the fence in an attempt to get away. She was found hanging from her sleeve and is believed to have died on the fence from blunt force trauma to the head and neck. Her body exhibited “defensive wounds.” When police arrested Cochenour, they found blood on is clothing. *  *  * In 2015, federal and state governments were cracking down on cosmetic contact lenses to give people spooky eyes. Owners and operators of 10 Southern California businesses were criminally charged in federal court with illegally selling cosmetic contact lenses without prescriptions. Some of the products that were purchased in connection with this investigation were contaminated with dangerous pathogens that can cause eye injury, blindness and loss of the eye. The products are likely to result in a slew of product liability actions. *  *  * Another 2015 case reflects that the scariest part of shopping for Halloween costumes or decorations may be the trip to the Party Store. Shanisha L. Saulsberry sued U.S. Toy Company, Inc. after she was injured shopping for Halloween costumes and a store rack fell on her. The jury awarded Saulsberry $7,216.00 for economic damages. She appealed the damages after evidence of her injuries were kept out of the trial by the court. However, the Missouri appellate court affirmed the ruling. *  *  * The case of Castiglione v. James F. Q., 115 A.D.3d 696, shows a classic Halloween tort. The lawsuit alleged that, on Halloween 2007, the defendant’s son threw an egg which hit the plaintiff’s daughter in the eye, causing her injuries. The plaintiff also brought criminal charges against the defendant’s son arising from this incident and the defendant’s son pleaded guilty to assault in the third degree (Penal Law § 120.00 [2]). However, at his deposition, the defendant’s son denied throwing the egg which allegedly struck the plaintiff’s daughter. Because of the age of the accused, the case turned on the youthful offender statute (CPL art 720) that provides special measures for persons found to be youthful offenders which provides “Except where specifically required or permitted by statute or upon specific authorization of the court, all official records and papers, whether on file with the court, a police agency or the division of criminal justice services, relating to a case involving a youth who has been adjudicated a youthful offender, are confidential and may not be made available to any person or public or private agency [with certain exceptions not relevant here]” (CPL 720.35 [2]). This covers both the physical documents constituting the official record and the information contained within those documents. Thus, in relation to the Halloween egging, the boy was protected from having to disclose information or answer questions regarding the facts underlying the adjudication *  *  * We discussed the perils of pranks and “jump frights,” particularly with people who do not necessarily consent. In the case of Christian Faith Benge, there appears to have been consent in visiting a haunted house. The sophomore from New Miami High School in Ohio died from a prior medical condition at the at Land of Illusion haunted house. She was halfway through the house with about 100 friends and family members when she collapsed. She had an enlarged heart four times its normal size. She also was born with congenital diaphragmatic hernia, which prevents the lungs from developing normally. This added stress to the heart. In such a case, consent and comparative negligence issues effectively bar recovery in most cases. It is a terrible loss of a wonderful young lady. However, some fatalities do not always come with liability and this appears such a case. Source: Journal News *  *  * As discussed earlier, In Franklin County, Tennessee, children may want to avoid the house of Dale Bryant Farris, 65, this Halloween . . . or houses near him. Bryant was arrested after shooting a 15-year-old boy who was with kids toilet-papering their principal’s front yard. Bryant came out of his house a couple of houses down from the home of Principal Ken Bishop and allegedly fired at least two blasts — one hitting a 15-year-old boy in the right foot, inner left knee, right palm, right thigh and right side of his torso above the waistline. Tennessee is a Castle Doctrine state and we have seen past cases like the notorious Tom Horn case in Texas where homeowners claimed the right to shoot intruders on the property of their neighbors. It is not clear if Bryant will argue that he was trying to stop intruders under the law, but it does not appear a good fit with the purpose or language of the law. Farris faces a charge of aggravated assault and another of reckless endangerment. He could also face civil liability from the boy’s family. This would include assault and battery. There is a privilege of both self-defense and defense of others. This privilege included reasonable mistaken self-defense or defense of others. This would not fit such a claim since he effectively pursued the boys by going to a neighbor’s property and there was no appearance of a threat or weapon since they were only armed with toilet paper. The good news is that Farris can now discard the need for a costume. He can go as himself at Halloween . . . as soon as he is out of jail. *  *  * As shown below, Halloween nooses have a bad record at parties. In 2012, a club called Pink Punters had a decorative noose that it had used for a number of years that allowed party goers to take pictures as a hanging victim on Halloween. Of course, you guessed it. A 25-year old man was found hanging from the noose in an accidental self-lynching at the nightclub in England. The case would appear easy to defend in light of the assumption of the risk and patent danger. The noose did not actually tighten around necks. Moreover, this is England where tort claims can be more challenging. In the United States, however, there would remain the question of a foreseeable accident in light of the fact that patrons are drinking heavily and drugs are often present at nightclubs. Since patrons are known to put their heads in the noose, the combination is intoxication and a noose is not a particularly good mix. *  *  * Grant v. Grant. A potential criminal and tort case comes to us from Pennsylvania where, at a family Halloween bonfire, Janet Grant spotted a skunk and told her son Thomas Grant to fetch a shotgun and shoot it. When he returned, Janet Grant shined a flashlight on the animal while her son shot it. It was only then that they discovered that Thomas Grant had just shot his eight-year-old cousin in her black and white Halloween costume. What is amazing is that authorities say that they are considering possible animal gaming charges. Fortunately, the little girl survived with a wound to the shoulder and abdomen. The police in Beaver County have not brought charges and alcohol does not appear to have been a factor. Putting aside the family connection (which presumably makes the likelihood of a lawsuit unlikely), there is a basis for both battery and negligence in such a wounding. With children in the area, the discharge of the firearm would seem pretty unreasonable even with the effort to illuminate “the animal.” Moreover, this would have to have been a pretty large skunk to be the size of an eight-year-old child. Just for the record, the average weight of a standard spotted skunk in that area is a little over 1 pound. The biggest skunk is a hog-nosed skunk that can reach up to 18 pounds. *  *  * We also have a potential duel case out of Aiken, South Carolina from one year ago. A 10-year-old Aiken trick-or-treater pulled a gun on a woman who joked that she wanted take his candy on Halloween. Police found that his brother, also ten, had his own weapon. The 28-year-old woman said that she merely joked with a group of 10 or so kids that she wanted their candy when the ten-year-old pulled out a 9 mm handgun and said “no you’re not.” While the magazine was not in the gun, he had a fully loaded magazine in his possession. His brother had the second gun. Both appear to have belonged to their grandfather. The children were released to their parents and surprisingly there is no mention of charges against the grandfather. While the guns appear to have been taken without his permission, it shows great negligence in the handling and storage of the guns. What would be interesting is a torts lawsuit by the woman for assault against the grandfather. The actions of third parties often cut off liability as a matter of proximate causation, though courts have held that you can be liable for creating circumstances where crimes or intentional torts are foreseeable. For example, a landlord was held liable in for crimes committed in his building in Kline v. 1500 Massachusetts Avenue. Here the grandfather’s negligence led to the use of the guns by these children. While a lawsuit is unlikely, it would certainly be an interesting — and not unwarranted — claim. *  *  * Tauton High School District The Massachusetts case of Smith v. Taunton High School involves a Halloween prank gone bad. A teacher at Taunton High School asked a 15-year-old student to answer a knock on the classroom door. The boy was startled when he came face to face with a man in a mask and carrying what appeared to be a running chainsaw. The student fell back, tripped and fractured a kneecap. His family is now suing though the state cap on such lawsuits is $100,000. Dussault said the family is preparing a lawsuit, but is exploring ways to avoid a trial and do better than the $100,000 cap when suing city employees. This could make for an interesting case, but would be better for the Plaintiffs as a bench versus a jury trial. Many jurors are likely to view this as simply an attempt at good fun by the teacher and an unforeseeable accident. Source: CBS *  *  * In Florida, a woman has sued for defamation, harassment and emotional distress after her neighbor set up decorations that included an insane asylum sign that pointed to her yard and a fake tombstone with an inscription she viewed as a reference to her single status. It read, “At 48 she had no mate no date/ It’s no debate she looks 88.” This could be a wonderful example of an opinion defense to defamation. As for emotional distress, I think the cause of the distress pre-dates Halloween. *  *  * Pieczonka v. Great America (2012) A family is suing Great America for a tort in 2011 at Great Falls. Father Marian Pieczonka alleged in his complaint that his young daughter Natalie was at the park in Gurnee, Illinois for the Halloween-themed Fright Fest when a park employee dressed in costume jumped out of a port-a-potty and shot her with a squirt gun. He then reported chased the screaming girl until she fell and suffered injuries involving scrapes and bruises. The lawsuit alleges negligence in encouraging employees to chase patrons given the tripping hazards. They are asking $30,000 in the one count complaint but could face assumption or comparative negligence questions, particularly in knowingly attending an event called “Fright Fest” where employees were known to jump out at patrons. *  *  * A lawsuit appears inevitable after a tragic accident in St. Louis where a 17-year-old girl is in a critical condition after she became tangled in a noose at a Halloween haunted house called Creepyworld. The girl was working as an actress at the attraction and was found unconscious. What is particularly chilling is that people appeared to have walked by her hanging in the house and thought she was a realistic prop. Notably, the attraction had people walk through to check on the well-being of actors and she was discovered but not for some time after the accident. She is in critical condition. Creepyworld employs 100 people and can expect a negligence lawsuit. *  *  * Rabindranath v. Wallace (2010) Peter Wallace, 24, was returning on a train with fellow Hiberinian soccer fans in England — many dressed in costumes (which the English call “fancy dress.”) One man was dressed as a sheep and Wallace thought it was funny to constantly flick his lighter near the cotton balls covering his body — until he burst into flames. Friends then made the matter worse by trying to douse the flames but throwing alcohol on the flaming man-sheep. Even worse, the victim Arjuna Rabindranath, 24, is an Aberdeen soccer fan. Rabindranath’s costume was composed of a white tracksuit and cotton wool. Outcome: Wallace is the heir to a large farm estate and agreed to pay damages to the victim, who experienced extensive burns. What is fascinating is the causation issue. Here, Wallace clearly caused the initial injury which was then made worse by the world’s most dim-witted rescue attempt in the use of alcohol to douse a fire. In the United States, the original tortfeasor is liable for such injuries caused by negligent rescues. Indeed, he is liable for injured rescuers. The rescuers can also be sued in most states. However, many areas of Europe have good Samaritan laws protecting such rescuers. Notably, Wallace had a previous football-related conviction which was dealt with by a fine. In this latest case, he agreed to pay 25,000 in compensation. The case is obviously similar to one of our prior Halloween winners below: Ferlito v. Johnson & Johnson *  *  * Perper v. Forum Novelties (2010) Sherri Perper, 56, of Queens, New York has filed a personal injury lawsuit due to defective shoes allegedly acquired from Forum Novelties. The shoes were over-sized clown shoes that she was wearing as part of her Halloween costume in 2008. She tripped and fell. She is reportedly claiming that the shoes were dangerous. While “open and obvious” is no longer an absolute defense in such products cases, such arguments may still be made to counter claims of defective products. In most jurisdictions, you must show that the product is more dangerous than the expectations of the ordinary consumer. It is hard to see how Perper could be surprised that it is a bit difficult to walk in over-sized shoes. Then there is the problem of assumption of the risk. *  *  * Dickson v. Hustonville Haunted House and Greg Walker (2009) Glenda Dickson, 51, broke four vertebrae in her back when she fell out of a second story window left open at the Hustonville Haunted House, owned by Greg Walker. Dickson was in a room called “The Crying Lady in the Bed” when one of the actors came up behind the group and started screaming. Everyone jumped in fright and Dickson jumped back through an open window that was covered with a sheet — a remarkably negligent act by the haunted house operator. She landed on a fire escape and then fell down some stairs. *  *  * Maryland v. Janik (2009) Sgt. Eric Janik, 37, went to a haunted house called the House of Screams with friends and when confronted by a character dressed as Leatherface with a chainsaw (sans the chain, of course), Janik pulled out his service weapon and pointed it at the man, who immediately dropped character, dropped the chainsaw, and ran like a bat out of Halloween Hell. Outcome: Janik is charged with assault and reckless endangerment for his actions. Charges pending. *  *  * Patrick v. South Carolina (2009) Quentin Patrick, 22, an ex-convict in Sumter, South Carolina shot and killed a trick-or-treater T.J. Darrisaw who came to his home on Halloween — spraying nearly 30 rounds with an assault rifle from inside his home after hearing a knock on the door. T.J.’s 9-year- old brother, Ahmadre Darrisaw, and their father, Freddie Grinnell, were injured but were released after being treated at a hospital. Patrick left his porch light on — a general signal for kids that the house was open for trick and treating. The boy’s mother and toddler sibling were in the car. Patrick emptied the AK-47 — shooting at least 29 times through his front door, walls and windows after hearing the knock. He said that he had been previously robbed. That may be so, but it is unclear what an ex-con was doing with a gun, let alone an AK-47. OUTCOME: Charges pending for murder. *  *  * Kentucky v. Watkins (2008) As a Halloween prank, restaurant manager Joe Watkins of the Chicken Ranch in Paris, Kentucky thought it was funny to lie in a pool of blood on the floor. After seeing Watkins on the floor, the woman went screaming from the restaurant to report the murder. Watkins said that the prank was for another employee and that he tried to call the woman back on her cell phone. OUTCOME: Under Kentucky law, a person can be charged with a false police report, even if he is not the one who filed it. The police charged Watkins for causing the woman to file the report — a highly questionable charge. *  *  * Mays v. Gretna Athletic Boosters␣95-717 (La.App. 5 Cir. 01/17/96) “Defendant operated a haunted house at Mel Ott Playground in Gretna to raise money for athletic programs. The haunted house was constructed of 2×4s and black visqueen. There were numerous cubbyholes where “scary” exhibits were displayed. One booster club member was stationed at the entrance and one at the exit. Approximately eighteen people participated in the haunted house by working the exhibits inside. Near and along the entrance of the haunted house was a bathroom building constructed of cinder blocks. Black visqueen covered this wall. Plaintiff and her daughter’s friend, about 10 years old, entered the haunted house on October 29, 1988. It was nighttime and was dark inside. Plaintiff testified someone jumped out and hollered, scaring the child into running. Plaintiff was also frightened and began to run. She ran directly into the visqueen-covered cinder block wall. There was no lighting in that part of the haunted house. Plaintiff hit the wall face first and began bleeding profusely from her nose. She testified two surgeries were required to repair her nose.” OUTCOME: In order to get the proper effect, haunted houses are dark and contain scary and/or shocking exhibits. Patrons in a Halloween haunted house are expected to be surprised, startled and scared by the exhibits but the operator does not have a duty to guard against patrons reacting in bizarre, frightened and unpredictable ways. Operators are duty bound to protect patrons only from unreasonably dangerous conditions, not from every conceivable danger. As found by the Trial Court, defendant met this duty by constructing the haunted house with rooms of adequate size and providing adequate personnel and supervision for patrons entering the house. Defendant’s duty did not extend to protecting plaintiff from running in a dark room into a wall. Our review of the entire record herein does not reveal manifest error committed by the Trial Court or that the Trial Court’s decision was clearly wrong. Plaintiff has not shown the haunted house was unreasonably dangerous or that defendant’s actions were unreasonable. Thus, the Trial Court judgment must be affirmed. *  *  * Powell v. Jacor Communications␣ UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT 320 F.3d 599 (6th Cir.2003) “On October 15, 1999, Powell visited a Halloween season haunted house in Lexington, Kentucky that was owned and operated by Jacor. She was allegedly hit in the head with an unidentified object by a person she claims was dressed as a ghost. Powell was knocked unconscious and injured. She contends that she suffered a concussion and was put on bed rest and given medications by emergency-room physicians. Powell further claims that she now suffers from several neuropsychological disorders as a result of the incident.” OUTCOME: Reversed dismissal on the basis of tolling of statute of limitations. *  *  * Kansas City Light & Power Company v. Trimble␣ 315 Mo. 32; 285 S.W. 455 (1926) Excerpt: “A shapely pole to which, twenty-two feet from the ground is attached a non-insulated electric wire . . Upon a shapely pole were standard steps eighteen inches apart; about seventeen feet from the ground were telephone wires, and five feet above them was a non-insulated electric light wire. On Halloween, about nine o’clock, a bright fourteen-year-old boy and two companions met close to the pole, and some girls dressed as clowns came down the street. As they came near the boy, saying, “Who dares me to walk the wire?” began climbing the pole, using the steps, and ascended to the telephone cables, and thereupon his companions warned him about the live wire and told him to come down. He crawled upon the telephone cables to a distance of about ten feet from the pole, and when he reached that point a companion again warned him of the live wire over his head, and threatened to throw a rock at him and knock him off if he did not come down. Whereupon he turned about and crawled back to the pole, and there raised himself to a standing position, and then his foot slipped, and involuntarily he threw up his arm, his hand clutched the live wire, and he was shocked to death.” OUTCOME: Frankly, I am not sure why the pole was so “shapely” but the result was disappointing for the plaintiffs. Kansas City Light & Power Company v. Trimble: The court held that the appellate court extended the attractive nuisance doctrine beyond the court’s ruling decisions. The court held that appellate court’s opinion on the contributory negligence doctrine conflicted with the court’s ruling decisions. The court held that the administrator’s case should never have been submitted to the jury. The court quashed the appellate opinion. “To my mind it is inconceivable that a bright, intelligent boy, doing well in school, past fourteen years of age and living in the city, would not understand and appreciate the fact that it would be dangerous to come in contact with an electric wire, and that he was undertaking a dangerous feat in climbing up the pole; but even if it may be said that men might differ on that proposition, still in this case he was warned of the wire and of the danger on account of the wire and that, too, before he had reached a situation where there was any occasion or necessity of clutching the wire to avoid a fall. Not only was he twice warned but he was repeatedly told and urged to come down.” *  *  * Purtell v. Mason␣ 2006 U.S. Dist. LEXIS 49064 (E.D. Ill. 2006) “The Purtells filed the present lawsuit against Defendant Village of Bloomingdale Police Officer Bruce Mason after he requested that they remove certain Halloween tombstone “decorations” from their property. Evidence presented at trial revealed that the Purtells placed the tombstones referring to their neighbors in their front yard facing the street. The tombstones specifically referred to their neighbors, who saw the language on the tombstones. For instance, the tombstone that referred to the Purtells’ neighbor James Garbarz stated: Here Lies Jimmy, The OlDe Towne IdioT MeAn As sin even withouT his Gin No LonGer Does He wear That sTupiD Old Grin . . . Oh no, noT where they’ve sent Him! The tombstone referring to the Purtells’ neighbor Betty Garbarz read: BeTTe wAsN’T ReADy, BuT here she Lies Ever since that night she DieD. 12 feet Deep in this trench . . . Still wasn’T Deep enough For that wenches Stench! In addition, the Purtells placed a Halloween tombstone in their yard concerning their neighbor Diane Lesner stating: Dyean was Known for Lying So She was fried. Now underneath these daises is where she goes crazy!! Moreover, the jury heard testimony that Diane Lesner, James Garbarz, and Betty Garbarz were upset because their names appeared on the tombstones. Betty Garbarz testified that she was so upset by the language on the tombstones that she contacted the Village of Bloomingdale Police Department. She further testified that she never had any doubt that the “Bette” tombstone referred to her. After seeing the tombstones, she stated that she was ashamed and humiliated, but did not talk to Jeffrey Purtell about them because she was afraid of him. Defense counsel also presented evidence that the neighbors thought the language on the tombstones constituted threats and that they were alarmed and disturbed by their names being on the tombstones. James Garbarz testified that he interpreted the “Jimmy” tombstone as a threat and told the police that he felt threatened by the tombstone. He also testified that he had concerns about his safety and what Jeffrey Purtell might do to him.” OUTCOME: The court denied the homeowners’ post-trial motion for judgment as a matter of law pursuant to and motion for a new trial. Viewing the evidence and all reasonable inferences in a light most favorable to Officer Mason, a rational jury could conclude that the language on the tombstones constituted threats, that the neighbors were afraid of Jeffrey Purtell, and that they feared for their safety. As such the Court will not disturb the jury’s conclusion that the tombstones constituted fighting words — “those which by their very utterance inflict injury or tend to incite an immediate breach of the peace.” *  *  * Goodwin v. Walmart 2001 Ark. App. LEXIS 78 “On October 12, 1993, Randall Goodwin went to a Wal-Mart store located on 6th Street in Fayetteville, Arkansas. He entered through the front door and walked toward the sporting goods department. In route, he turned down an aisle known as the seasonal aisle. At that time, it was stocked with items for Halloween. This aisle could be observed from the cash registers. Mr. Goodwin took only a few steps down the aisle when he allegedly stepped on a wig and fell, landing on his right hip. As a result of the fall, Mr. Goodwin suffered severe physical injury to his back, including a ruptured disk. Kelly Evans, an employee for appellee, was standing at the end of her check-out stand when Mr. Goodwin approached her and informed her that he had fallen on an item in the seasonal aisle. She stated that she “saw what he was talking about.” OUTCOME: Judgment affirmed because the pleadings, depositions, and related summary judgment evidence did not show that there was any genuine issue of material fact as appellant customer did not establish a plastic bag containing the Halloween wig which allegedly caused him to slip and fall was on the floor as the result of appellee’s negligence or it had been on the floor for such a period of time that appellee knew or should have known about it. *  *  * Eversole v. Wasson␣ 80 Ill. App. 3d 94 (Ill. 1980) Excerpt: “The following allegations of count I, directed against defendant Wasson, were incorporated in count II against the school district: (1) plaintiff was a student at Villa Grove High School which was controlled and administered by the defendant school district, (2) defendant Wasson was employed by the school district as a teacher at the high school, (3) on November 1, 1978, at approximately 12:30 p.m., Wasson was at the high school in his regular capacity as a teacher and plaintiff was attending a regularly scheduled class, (4) Wasson sought and received permission from another teacher to take plaintiff from that teacher’s class and talk to him in the hallway, (5) once in the hallway, Wasson accused plaintiff of being one of several students he believed had smashed Wasson’s Halloween pumpkin at Wasson’s home, (6) without provocation from plaintiff, Wasson berated plaintiff, called him vile names, and threatened him with physical violence while shaking his fist in plaintiff’s face which placed plaintiff in fear of bodily injury, (7) Wasson then struck plaintiff about the head and face with both an open hand and a closed fist and shook and shoved him violently, (8) as a result, plaintiff was bruised about the head, neck, and shoulders; experienced pain and suffering in his head, body, and limbs; and became emotionally distraught causing his school performance and participation to be adversely affected . . .” OUTCOME: The court affirmed that portion of the lower court’s order that dismissed the count against the school district and reversed that portion of the lower court’s order that entered a judgment in bar of action as to this count. The court remanded the case to the lower court with directions to allow the student to replead his count against the school district. *  *  * Holman v. Illinois 47 Ill. Ct. Cl. 372 (1995) “The Claimant was attending a Halloween party at the Illinois State Museum with her grandson on October 26, 1990. The party had been advertised locally in the newspaper and through flier advertisements. The advertisement requested that children be accompanied by an adult, to come in costume and to bring a flashlight. The museum had set up different display rooms to hand out candy to the children and give the appearance of a “haunted house.” The Claimant entered the Discovery Room with her grandson. Under normal conditions the room is arranged with tables and low-seated benches for children to use in the museum’s regular displays. These tables and benches had been moved into the upper-right-hand corner of the Discovery Room next to the wall. In the middle of the room, there was a “slime pot” display where the children received the Halloween treat. The overhead fluorescent lights were turned off; however, the track lights on the left side of the room were turned on and dim. The track lights on the right side of the room near the tables and benches were not lit. The room was dark enough that the children’s flashlights could be clearly seen. There were approximately 40-50 people in the room at the time of the accident. The Claimant entered the room with her grandson. They proceeded in the direction of the pot in the middle of the room to see what was going in the pot. Her grandson then ran around the pot to the right corner toward the wall. As the Claimant followed, she tripped over the corner of a bench stored in that section of the room. She fell, making contact with the left corner of the bench. She experienced great pain in her upper left arm. The staff helped her to her feet. Her father was called and she went to the emergency room. Claimant has testified that she did not see the low-seating bench because it was so dimly lit in the Discovery Room. The Claimant was treated at the emergency room, where she was diagnosed with a fracture of the proximal humeral head of her left arm as a result of the fall. Claimant returned home, but was unable to work for 12 to 13 weeks.” OUTCOME: “The Claimant has met her burden of proof. She has shown by a preponderance of the evidence that the State acted negligently in placing furnishings in a dimly-lit room where visitors could not know of their location. The State did not exercise its duty of reasonable care. For the foregoing reasons, the Claimant is granted an award of $20,000.” *  *  * Ferlito v. Johnson & Johnson 771 F. Supp. 196 “Plaintiffs Susan and Frank Ferlito, husband and wife, attended a Halloween party in 1984 dressed as Mary (Mrs. Ferlito) and her little lamb (Mr. Ferlito). Mrs. Ferlito had constructed a lamb costume for her husband by gluing cotton batting manufactured by defendant Johnson & Johnson Products (“JJP”) to a suit of long underwear. She had also used defendant’s product to fashion a headpiece, complete with ears. The costume covered Mr. Ferlito from his head to his ankles, except for his face and hands, which were blackened with Halloween paint. At the party Mr. Ferlito attempted to light his cigarette by using a butane lighter. The flame passed close to his left arm, and the cotton batting on his left sleeve ignited. Plaintiffs sued defendant for injuries they suffered from burns which covered approximately one-third of Mr. Ferlito’s body.” OUTCOME: Ferlito v. Johnson & Johnson: Plaintiffs repeatedly stated in their response brief that plaintiff Susan Ferlito testified that “she would never again use cotton batting to make a costume.” Plaintiffs’ Answer to Defendant JJP’s Motion for J.N.O.V., pp. 1, 3, 4, 5. However, a review of the trial transcript reveals that plaintiff Susan Ferlito never testified that she would never again use cotton batting to make a costume. More importantly, the transcript contains no statement by plaintiff Susan Ferlito that a flammability warning on defendant JJP’s product would have dissuaded her from using the cotton batting to construct the costume in the first place. At oral argument counsel for plaintiffs conceded that there was no testimony during the trial that either plaintiff Susan Ferlito or her husband, plaintiff Frank J. Ferlito, would  have acted any different if there had been a flammability warning on the product’s package. The absence of such testimony is fatal to plaintiffs’ case; for without it, plaintiffs have failed to prove proximate cause, one of the essential elements of their negligence claim. In addition, both plaintiffs testified that they knew that cotton batting burns when it is exposed to flame. Susan Ferlito testified that she knew at the time she purchased the cotton batting that it would burn if exposed to an open flame. Frank Ferlito testified that he knew at the time he appeared at the Halloween party that cotton batting would burn if exposed to an open flame. His additional testimony that he would not have intentionally put a flame to the cotton batting shows that he recognized the risk of injury of which he claims JJP should have warned. Because both plaintiffs were already aware of the danger, a warning by JJP would have been superfluous. Therefore, a reasonable jury could not have found that JJP’s failure to provide a warning was a proximate cause of plaintiffs’ injuries. The evidence in this case clearly demonstrated that neither the use to which plaintiffs put JJP’s product nor the injuries arising from that use were foreseeable. But in Trivino v. Jamesway Corporation, the following result: The mother purchased cosmetic puffs and pajamas from the retailer. The mother glued the puffs onto the pajamas to create a costume for her child. While wearing the costume, the child leaned over the electric stove. The costume caught on fire, injuring the child. Plaintiffs brought a personal injury action against the retailer. The retailer filed a third party complaint against the manufacturer of the puffs, and the puff manufacturer filed a fourth party complaint against the manufacturer of the fibers used in the puffs. The retailer filed a motion for partial summary judgment as to plaintiffs’ cause of action for failure to warn. The trial court granted the motion and dismissed the actions against the manufacturers. On appeal, the court modified the judgment, holding that the mother’s use of the puffs was not unforeseeable as a matter of law and was a question for the jury. The court held that because the puffs were not made of cotton, as thought by the mother, there were fact issues as to the puffs’ flammability and defendants’ duty to warn. The court held that there was no prejudice to the retailer in permitting plaintiffs to amend their bill of particulars. OUTCOME: The court modified the trial court’s judgment to grant plaintiffs’ motion to amend their bill of particulars, deny the retailer’s motion for summary judgment, and reinstate the third party actions against the manufacturers. Tyler Durden Mon, 10/31/2022 - 19:05.....»»

Crypto influencers have stepped up to offer advice to millions of people, and even though their advice is often wrong, they still profit off fans. Welcome back, readers. The year is 2022, and our social media feeds are filled with influencers.There are water park influencers, pet influencers, and LinkedIn influencers. And in another corner of the internet, there is a burgeoning generation of crypto influencers, whose work, in many cases, can blur ethical lines.I'm your host, Jordan Parker Erb. Today, I'm giving you a glimpse at my colleagues' story on the emergence of crypto hype-men.Let's get to it.If this was forwarded to you, sign up here. Download Insider's app here.Rebecca Zisser/Insider1. Crypto influencers are touting questionable advice — and there's not much that can stop them. As cryptocurrencies gain mainstream popularity, an overnight generation of influencers has stepped up to offer advice to millions of people. And even though their advice is often terribly wrong, they still profit off loyal fans. Most cryptocurrency analysts rarely have any certifications or financial training, but they've amassed huge followings of people looking for guidance. And even as their predictions have faltered, many use other revenue streams to pad their own wallets.  Some heavily promote referral links for cryptocurrency exchanges, sell crypto-branded T-shirts and other merch, or offer fans online classes that promise to make viewers crypto-millionaires.Together, these revenue streams mean crypto influencers profit off their viewers — no matter which way the market turns.Inside the rise of crypto hype-men.In other news:Elon Musk.Andrew Kelly/Reuters2. The 20-year-old who tracks Elon Musk's private jet says he would stop if the billionaire took him on a flight. Jack Sweeney, who runs Twitter accounts tracking celebs' jets, said he would shut down the account that tracks Musk's travels if the Tesla boss meets his conditions. Here's what else Sweeney is asking for. 3. Linktree said it'd go "above and beyond" for laid-off staffers, but some felt cast off by the firm. When the $1.3 billion startup cut 17% of its workforce, CEO Alex Zaccaria said the company would help workers who were let go — but some "Linkers" say that hasn't been their experience. What laid-off LinkTree employees told us.4. Netflix is weighing plans to charge $7 to $9 per month for its ad-supported subscription. According to Bloomberg, Netflix's ad-supported subscription tier could be less than half the price of its most popular standard plan. What we know so far.5. A 19-year-old YouTube video editor shares how much he earns. Mathew Rhyze began working for a YouTuber with 4 million subscribers in 2021, and is earning about $6,400 a month. Rhyze breaks down his income and what the job is like. 6. Scammers are recruiting, staging interviews with, and "hiring" employees to steal their identity. The elaborate identity theft scheme targets new grads and young job seekers on sites like LinkedIn and AngelList. How to avoid getting swindled.7. We have 18 book recommendations to round out your summer reading list. Insider asked venture capitalists for book recommendations for personal growth, professional development, and fun. From sci-fi series to books about CEOs and founders, these are their top picks. 8. Elon Musk's mom says she sleeps in a "garage" when she visits him. Musk's mom, Maye, told The Times UK that the unusual sleeping arrangement is because "you can't have a fancy house near a rocket site." What else she said.Odds and ends:The Tesla Model Y.Tesla9. Thinking about buying your first EV? Here's what to know before you do. With more drivers than ever considering an electric vehicle, we asked experts the most important things to think about before taking the plunge. Four things to consider before buying an electric car. 10. A new AI tool pokes fun at LinkedIn by creating cringy, aspirational posts. Type in an activity and a clichéd piece of inspirational advice, and the Viral Post Generator will churn out a mock LinkedIn post. More on the AI tool the internet can't get enough of.What we're watching today:NASA's deep space exploration system Artemis I is scheduled to launch this morning. Here's how to watch.Elon Musk and Volodymyr Zelenskyy will speak at the ONS Conference.VMware Explore takes place through Sept. 1 in San Francisco.It's Airbnb CEO Brian Chesky's birthday.Keep updated with the latest tech news throughout your day by checking out The Refresh from Insider, a dynamic audio news brief from the Insider newsroom. Listen here.Curated by Jordan Parker Erb in New York. (Feedback or tips? Email jerb@insider.com or tweet @jordanparkererb.) Read the original article on Business Insider.....»»

     The transcript from this week’s, MiB: Graham Weaver, Alpine Investors, is below. You can stream and download our full conversation, including the podcast extras on iTunes, Spotify, Stitcher, Google, Bloomberg, and Acast. All of our earlier podcasts on your favorite pod hosts can be found here. ~~~ ANNOUNCER: This is Masters in Business… Read More The post Transcript: Graham Weaver appeared first on The Big Picture.      The transcript from this week’s, MiB: Graham Weaver, Alpine Investors, is below. You can stream and download our full conversation, including the podcast extras on iTunes, Spotify, Stitcher, Google, Bloomberg, and Acast. All of our earlier podcasts on your favorite pod hosts can be found here. ~~~ ANNOUNCER: This is Masters in Business with Barry Ritholtz on Bloomberg Radio. BARRY RITHOLTZ, HOST, MASTERS IN BUSINESS: This week on the podcast, I have an extra special guest. Graham Weaver is the founder and partner at Alpine Investors, a private equity firm, focusing on software and services. Graham has a really interesting background, both engineering at Princeton and essentially launching a PE firm while he was a graduate student at Stanford. Everybody knows the story about Michael Dell launching a computer business out of his dorm room in Texas. This could be the first PE firm I’m familiar with, that got started in a dorm room. What makes Graham so interesting is while everybody else in the world of private equity is focused on the analytics and crunching numbers and creating econometric models that will tell you where to invest, I think they’ve found a very different model that has been extremely successful for them, where the key focus is on talent. How do we find the best talent, put them in place running our investment companies and allow them to generate the sort of returns that you don’t really generate by just looking at a model? I found our conversation absolutely fascinating and I think you will also. With no further ado, my discussion with Alpine Investors’ Graham Weaver. Let’s jump right into this, starting with your background. When I hear someone has an engineering degree, I tend to think of venture capital, not private equity. Tell us a little bit how you went the PE route instead of the VC route. GRAHAM WEAVER, FOUNDER AND CEO, ALPINE INVESTORS: Well, I actually started in private equity right out of undergrad. I really didn’t know the difference between private equity or consulting, or anything. I had zero knowledge of that. And I was fortunate to end up in Morgan Stanley’s private equity group, I loved it and I’ve kind of been at it ever since. RITHOLTZ: Really interesting. So is it from Princeton to Morgan Stanley, and then Stanford, or am I getting the order right? WEAVER: Yeah. When I was at Princeton then I went to Morgan Stanley in their private equity, then I worked at a firm called American Securities for a couple years, and then went to went to business school after that. RITHOLTZ: And somewhere in the middle of this, there’s a pig farm in Missouri that I am having a hard time figuring out what a pig farm has to do with private equity. WEAVER: So the very first deal I worked on, so I come out of school, I’m wearing my Cross pen and my lapel, and I’m like wearing a tie and — RITHOLTZ: All buttoned down. WEAVER: Exactly. And I think I’m a big shot being on Wall Street, and I get shipped out to this pig farm in Missouri which was a deal Morgan Stanley had invested in. They’ve invested a total of a billion, almost a billion dollars of debt and equity, and then suffice to say was not going well. So not that I was going to go save it as a 22-year-old analyst, but I’ve got shipped out. I lived in a CFO’s basement for about five months, and we did everything we could, but it turned out not to be a great investment. RITHOLTZ: So there’s not big money in pigs? WEAVER: Well, it turns out hog prices are wildly cyclical. And you know, there’s the expression, how does a six-foot man drowned in a river that averages five feet? You know, it’s because there’s parts of the river that are deeper. Well, you know, we build our whole model on hog prices being $47 and when we then — RITHOLTZ: And that’s what they average, right? WEAVER: That’s what they average. RITHOLTZ: But that doesn’t tell you how much they swing up and down. WEAVER: It turns out — yeah, they went to $18 and we had $700 million of debt, and that didn’t — RITHOLTZ: $18? WEAVER: That didn’t go well. So yeah. RITHOLTZ: That’s the old joke. It’s not the price, it’s the volatility. WEAVER: Yeah, it was rough. But it was a — that was my introduction to the glamorous business of private equity. RITHOLTZ: And you didn’t turn around and say, “I want nothing to do with this?” WEAVER: I had the time of my life. RITHOLTZ: Really? WEAVER: It was so fun. RITHOLTZ: How was — how was sleeping in the CFO’s basement — was his house on the pig farm? WEAVER: It was. Yeah, it was. The whole entire town smelled like a pig farm and everyone — RITHOLTZ: Which was not especially delightful? WEAVER: It’s not. No, it turns out. And pretty much everyone in the town worked and had some affiliation with the pig farm. The CFO was also a Morgan Stanley guy, and he was probably 27. So neither of us had any idea — RITHOLTZ: So many years, years of experience over you? WEAVER: Yeah, yeah. Exactly. Neither of us had any clue what we were doing. But it really wouldn’t have mattered when your revenue gets cut by like 80%, there’s just not a lot you’re going to do to turn that around. RITHOLTZ: So there’s a cliche about tech firms being started in dorm rooms. How does a private equity firm start in a dorm room? WEAVER: So I show up at Stanford, and I’m in my first week of class. And then similar as today, you have to take these core classes in your first year, which are just not that — you know, they’re just fundamental. They’re not that exciting. So the first class I sit down, and there’s this 25-year-old who’s never worked a day in his life. He’s a PhD student. He’s never taught before, and he’s kind of just reciting out of this strategy book. And I just thought to myself, oh, my God, what have I signed up for? So I had this idea that I was going to go try to buy a business. And I had — you know, in your first three years as an analyst, you basically build a financial model. But I had the confidence of someone I thought I was much more — much better than I was. So I convinced an owner — I started cold calling companies in a sector that I had looked at previously, and I convinced this owner to sell me his business, and then I had to go raise the money, most of which was debt and the little bit of equity that was needed. I financed with credit cards. So that was literally how I started, not your typical private equity founding story. RITHOLTZ: How did that initial PE transaction work out? WEAVER: I did a total of three labeled deals with some add-ons, lost money on one, made money on — or lost a little bit of money on — loss — made a little bit of money on the second one. And then the third one was a total homerun, which actually just sold this year, 20 years later. So that that one turned out well. RITHOLTZ: 20 years? That’s impressive. That’s not the typical private equity holding period. WEAVER: Yeah, well, it was just me. I was the — it was just my — RITHOLTZ: So you could afford to be patient. WEAVER: And it was awesome. It was great. That one — RITHOLTZ: What space was that at? WEAVER: It was the — we had these companies that made these little labels that went on products, like for example in Trader Joe’s private labels things, we made all those labels. It’s a totally unsexy business. RITHOLTZ: Right. WEAVER: But it was very consistent and — RITHOLTZ: And it’s profitable. WEAVER: It was really profitable. And no one wakes up and says, “You know, I’m going to be a hero because I’m going to save half a cent on my label.” So it tends to kind of like just clip along like a bond. RITHOLTZ: Right. WEAVER: So it turned out — it turned out well, but I mean, I had absolutely no idea what I was doing. And so I made every mistake you can imagine. RITHOLTZ: And it still worked out. When you launched in 2001, you started with $50 million, $55 million, something like that? WEAVER: Yeah. RITHOLTZ: And now it’s up to $8 billion close to eight funds. WEAVER: Yeah. RITHOLTZ: And your most recent fund just closed about $2 billion, more or less? WEAVER: Yeah, about 2.4. Yeah. RITHOLTZ: All right. So that’s real money, 2.4. Obviously, you’re doing something right. The track record has to be attractive. Is it the same investors rolling over, or new and different investors? Who is the clientele for this? WEAVER: In the very early days, it was a number of individuals because no institution was going to back — RITHOLTZ: Right. Well, you have to have a certain track record, be around for certain length of period, be able to check all of their due diligence boxes, and that takes time and money. WEAVER: Yeah. And I checked zero of those boxes. RITHOLTZ: Right. Dorm room, check. What else? What else we got? WEAVER: Yeah. Track record. RITHOLTZ: How old is he? 22? WEAVER: No. RITHOLTZ: Sure. Let’s write him a big check. WEAVER: Exactly. I checked no boxes. And that took me like almost a year to figure out. I went to all these institutions and I never got past the first meeting anywhere. And then I found a number — really two individuals who, thank God, I still owe everything to these two. One, I don’t know if I can — RITHOLTZ: Sure. You can say whatever you like. WEAVER: So, one was Tom Steyer, who ran for president. RITHOLTZ: Oh, sure. WEAVER: He was one of the early ones. And then Doug Martin from the Stephens family. And they were just the two best investors you could ever have. They were supportive. And most importantly, they were supportive after Fund I which was not a good fund. So that’s the reason we’re still in business today. RITHOLTZ: Why not good fund, just performance wise, or was it — because when you launch in ’01, we’re still in the early days of a massive downfall in technology, media, Internet straight across the board. Not — you know, it’s not — unless it’s a distressed fund, that’s not the ideal time to launch. WEAVER: Yeah. I would love to say that it was the market, but it wasn’t. It was self-inflicted. RITHOLTZ: Yeah. WEAVER: It was me making a lot of dumb mistakes, being overconfident, you know, and just investing in companies that looked great in the spreadsheet and didn’t — what looks great in the spreadsheet is low purchase price and a lot of leverage. That looks — always looks good in a spreadsheet, but the — RITHOLTZ: Leverage is the problem. WEAVER: The qualitative — yeah, the leverage is the problem and the qualitative things about is it a quality business? Those things you can’t model in a spreadsheet. And so, I just made a lot of dumb mistakes. And actually the whole fund, overall, lost money. I would highly, Barry, not recommend having your first fund when you launched and lose money. It was a — RITHOLTZ: Probably not the best long-term strategy? WEAVER: Yeah. It was anchored around our neck for pretty much a decade. RITHOLTZ: So that raises the question, if the first fund was a bit of a stiff, how did you raise money for the second fund? WEAVER: Well, thankfully, we were — I really communicated a lot with Doug and Tom, and they understood. They could see us getting better. You know, they could see us making a lot of improvements, fixing a lot of the things that we got wrong. And both of them were pretty seasoned investors, both of them had had mistakes they’ve made before. And so they, you know, thank God, were really supportive. And then it wasn’t like immediately we started knocking out of the park either, but we started getting better and better. And then really around the time of the recession was when we really completely transformed and became kind of the business that we are today. RITHOLTZ: And it’s a little bit of a cliche, they’re not so much investing in a fund as they’re investing in you as the manager. Obviously, they saw something that was, “Hey, needs a little seasoning, but there’s a lot of potential here.” WEAVER: Yeah. They saw someone who was willing to literally run through walls and run through a burning building to make it work, and I almost literally did. I mean, it was that — we were — and not just me, but our whole team was really committed to try and make it work, and I think they saw that. RITHOLTZ: Quite interesting. (COMMERCIAL BREAK) RITHOLTZ: I have to talk a little bit about your growth rate. You began with $54 million. All-in, you’re $8 billion in assets totally. Obviously, a lot of that is not just growth, but new investors coming along. But still that’s a — as a PE company, Alpine has really seen quite a corporate growth trajectory. Tell us what led to this success rate. WEAVER: Yeah. So when the recession hit, we were in — we were not well positioned. We didn’t — RITHOLTZ: Now, when you say recession — WEAVER: Yeah. RITHOLTZ: — because some of our audience is, you know, older than 25, I’m assuming you mean, ’08. ’09, the financial crisis? WEAVER: ’08. ‘0. RITHOLTZ: Okay. WEAVER: Yes. RITHOLTZ: Not the one in 2020. WEAVER: Right. RITHOLTZ: And not the one that maybe happened sometime in 2022 and certainly not 2000. WEAVER: That’s right. RITHOLTZ: So the great financial crisis — WEAVER: So great financial crisis happens. We were — we invested the last dollar from our third fund two weeks before — two weeks before Lehman Brothers blew up. RITHOLTZ: Wow. WEAVER: And so we were out of money and we had — it took us forever to raise the next fund. But that period, where we didn’t have any money, turned out to be the most important period for us. RITHOLTZ: Why? WEAVER: Because we started deciding we were going to look at our own business, you know, kind of like rather than working in the business, we’re going to start working on our business. So I hired an executive coach — RITHOLTZ: Really? WEAVER: — and he helped — he really helped me kind of redefine the business that I truly was in, which I’ll come back to. We hired a consulting and coaching firm for our whole organization. And so, we really started doing some soul-searching for lack of a better word. And then — and from that, we really, you know, changed our strategy and developed kind of a new playbook. RITHOLTZ: So let me interrupt you there because that you raise something that I’m fascinated by. So first, what leads you to say, “We need a pro to come in and show us how to do this?” And second, how do you even go about finding an executive coach? That sounds like, man, that’s a consulting field fraught with, you know, let’s be polite and just say high risks. WEAVER: Yeah. It’s a great question. And I am a huge fan of executive coaching. I’ve had a coach since 2009. RITHOLTZ: Wow. WEAVER: I talk to a coach every week or every other week since ’09. RITHOLTZ: No kidding? WEAVER: And we, at Alpine, have 23 coaches that are part of our — they’re 1099 folks, but they’re part of our ecosystem that’s available to our people at Alpine and our executive. So I’m just a huge fan of coaching. And basically what I love about coaching is you create space away from the busyness of the day to day. You ask yourself a bunch of really important questions. You know, what do I want? What success look like? What do I want in — what does a five-year plan look like? And you actually have to really burn some energy and some thinking time, thinking about those answers, which are really hard answers, which most of us never spend time thinking about. RITHOLTZ: Was it just in the midst of the crash and recession that you said, “Hey, maybe we just need a little help. We’re not — we don’t have the professional background to run the business. We know the investing side, but the business side is something very different.” How did you get to that — WEAVER: Yeah, 100%. I mean, I think one of the benefits of phase planning in your first fund is that you get some humility. RITHOLTZ: Right. WEAVER: And you — I’ve always just been open to learning from people that are smarter and better than I am. And so, coaching was an exercise — back then in 2009, it was not very well known and it was definitely an exercise in humility of saying, “I think I need some help.” RITHOLTZ: That’s the old joke. Experience is what you get when you don’t get what you want, right? WEAVER: Yeah. Exactly. Yeah. RITHOLTZ: So once you make the decision, “Hey, we want to bring in a professional to show us ways to improve our business methods,” how does one go about finding a business coach? WEAVER: So I had an introduction from a friend and then we had a number of lunches, and his business wasn’t going well in ’09 either, as you could imagine, so — RITHOLTZ: Well, who’s on — and other than people doing distressed debt investing, whose business was going great in ’08? WEAVER: Yeah. Exactly. Nobody. So — RITHOLTZ: Then in short sellers, everybody else was in trouble. WEAVER: So we had this awesome conversation. I can still — it’s one of these conversations you can still remember where you are and what you — you know, exactly the moment. So we had — this is actually after I brought him on. We have this awesome conversation where I said, “Hey, I have to” — his name is JP Flaum, and I said, “Hey, I have to cancel our coaching engagement. I’m just too busy,” which was like we’ve already decided ahead of time that that was no go. I had to stick with the — we made an agreement. RITHOLTZ: Right. WEAVER: So he texts back immediately says, “No, we’re having it.” So I get on the phone, he says, “Well, what’s — you know what’s so crazy that you’re so stressed?” I said, “Oh, my God, JP, you know, I got to fly to Dallas and fix this. And then I got to — you know, we got to deal we’re about to lose and then we lost a huge customer in Chicago. And then I got to go to D.C.” and then, you know I’m going on and on. And he said, “Okay, well, let’s kind of slow down and chill out. Let’s talk about Dallas. What’s going on there?” “Well, we — you know, we just missed our bank projections a second time,” and I’m going on and on. And he starts saying, “Well, tell me about the CEO in Dallas.” I’m like, “What does that have to do with anything? You know, we’re in the middle of the Great Recession,” like, blah, blah, blah. You know, it’s not — you know, it’s the markets or whatever. Anyway, it comes to points, he says — well, eventually, he says, “Well, how would you — how would you rate that CEO, you know, A, B, C?” I was like, “Oh, he’s probably a B.” He said, “Well, Graham, in one of our engagements, you said you wanted to build the greatest private equity firm of all time. Are you going to — are you going to do that with a B CEO?” And I just — it like hit me between the eyes. And then he asked me another question, he said, “And Graham, if you’re someone who keeps a B CEO” — RITHOLTZ: What does that make you? WEAVER: — “how would you rate yourself as a CEO?” RITHOLTZ: Right. WEAVER: and I just — like, it stopped me dead in my tracks. And that was really this light bulb that went off, that ended up having us — having me realize I’m actually in the talent business. That’s the fundamental business that I’m really in. And that was like ’09 that we came to that realization, and then started completely redesigning our firm to like build our companies around talent, build our firm around talent, build our investment strategy around talent. So that was just a huge turning point. RITHOLTZ: So let’s talk about that because all of your investments eventually get a CEO that’s been trained at Alpine and has the benefit of all of this coaching, all of this training, all of this expertise. It’s not that you’re just looking for attractive balance sheets, it’s where can we put someone in charge to move the needle by taking our expertise and applying it to this business model. Is that what you mean by when you say, you’re in the talent business? WEAVER: Yeah. I think that’s what I mean. There are two parts of it. One is our investment strategy, which is what you described the others, how we run our own firm. But sticking with what you were talking about, Barry, the investment strategy, we found that the single most important investment decision we make is the management team. And it’s more important than the price we pay. It’s more important than the leverage levels. It’s more important than the prior growth rate. And so, we just said, “Well, if that’s really the most correlated, most effective, or most important criteria, you know, let’s make sure we get that right. And so let’s actually kind of build our own CEOs and put our own CEOs in so that we can make sure that we’re getting a world-class person to run each one of our companies.” RITHOLTZ: So in some ways, this is almost parallel in the public markets to activist investing, where they identify a very attractive business that isn’t quite living up to potential, right? WEAVER: Yeah. RITHOLTZ: And they say, “Hey, with a few management changes, we can turn this into a really good business.” On the private equity side, I’m assuming the conversation is something like, “We want to either buy 30%, 40% of your business or your entire business. But regardless, we want one of our professionals to come in and manage it.” WEAVER: Yeah, that’s right. A lot of the companies we’re buying don’t have management. You know, it might be a corporate carve-out. It might be a management team that wants to retire, or exit. And that’s great. So there’s never any conflict. We’re totally transparent. We’re not doing hostile deals, nothing like that. It’s always the transaction that the seller wants to do is they want to retire. So it’s always very friendly. But we — there aren’t a lot of private equity firms that want to go through the process of changing management because it’s very, very hard to do. RITHOLTZ: And that’s the value add that you guys bring. WEAVER: That’s a big part of it. Yeah. RITHOLTZ: Yeah. That’s really quite fascinating. So there’s a quote of yours I have to lead with, which I find really intriguing quote, “People create returns, not deals, not price.” That’s a huge statement, considering most of the analyst community, especially private equity, is so analytical and modern driven. You’re saying this is a people business. WEAVER: Yeah, 100%, Barry. I think that if you want to do something different than people, you have to have some fundamental belief that’s different than what other people believe. And our belief is that returns come from people. They come from talent. And I think maybe one of the reasons why people shy away from that is it’s hard to analyze, it doesn’t fit in a spreadsheet, and it’s incredibly hard to manage. It’s a lot easier to manage the hard numbers, the financial statements and things than it is to, you know, really manage a team of people. RITHOLTZ: So we were talking earlier that you appoint the CEO at these purchased businesses that you’ve trained yourself. Tell us a little bit about what that in-house training looks like. WEAVER: So a lot of the CEOs we’re hiring, we’re bringing right out of MBA programs, and they have five years of experience typically before they go into business school. And that could be anything, that could be they’re in the military. They could have been in consulting firm. They could have been in investment banking. And we have success with any of those — any and all those backgrounds. So — and they’ve just been in two years of business school, so we don’t want to put them back in business school. But what we’re really teaching them, the fundamental thing we’re teaching them is how to hire, how to build their team, how to set a vision, how to create priorities, how to get everyone in their organization excited and aligned behind what they’re trying to do. Those are things that not a lot of business schools teach. It’s one of the things I try to teach in my class, but it’s something that we bring in — it’s the biggest thing we bring in that training program that we do. RITHOLTZ: Hiring has been described as the most difficult aspect of building a company versus everything else. WEAVER: 100%. RITHOLTZ: How do you teach good hiring? WEAVER: You can actually, to some extent, make hiring a science. And the simple — I could talk for you — I could talk for three hours about this, but I’ll try to do it in about two minutes, which is you build a scorecard for what you want that role — in that role, a specific list of outcomes you want that role to do. And then as you’re assessing a candidate, you’re looking for very specific evidence that they’re going to be able to perform against that scorecard. And you have two things, you’re looking for attributes and experience. Those are the two different parts of the interview process. RITHOLTZ: But we all know what experience is. Define what attributes mean. WEAVER: So attribute is about who somebody is versus what they’ve done. So an example for us, when we’re hiring young people to become CEOs, we’re looking at, you know, do they have a will to win? Do they have emotional intelligence and self-awareness that they can get along with people? And then did they have grit? Can they — are they going to be able to see things through after getting kicked in the teeth, because they’re going to get kicked in the teeth. So those are the three attributes that we’re looking for. Those are wildly more important than experience, because they’ll get experienced quickly. And you can teach experience, you can’t teach those three things. You can’t teach, you know, the will to win. They’re kind of coming to us with that or not. RITHOLTZ: That’s an — that’s an intrinsic aspect of the personality. You either have it or you don’t. There’s no way you’re going to learn that. WEAVER: Not in a period of time, or we don’t know how to teach it if it is writable. RITHOLTZ: Right. WEAVER: Yeah. RITHOLTZ: Really, really interesting. So you mentioned your class, let’s talk about the management course that seems to be related to that, CEOs-in-Training. Tell us about that. WEAVER: Yeah. So the CEO-in-Training is the — that’s the name for the people that we’re hiring. Did you want to talk about that, or the class itself? RITHOLTZ: Both, either/or. WEAVER: Okay. All right. So the CEO-in-Training is the name we give to those people we’re hiring right out of business school. We’re giving them that experience — training that I mentioned, and then we’re putting them right in. A lot of them are CEOs on day one of add-on acquisitions, and they get the reins and they’re — you know, they’re off to the races. And you know, there aren’t a lot of positions out of business school that you can become a CEO within — you know, right when you graduate. So we’re — we’ve designed that and it’s been — it’s been a homerun. We — I underestimated how amazing these students would do and the roles that they’ve done. And it’s been fantastic. RITHOLTZ: Do you end up hiring people right out of your classes or — WEAVER: Yeah. I mean, I don’t — RITHOLTZ: So this is really devious recruitment. WEAVER: I don’t interview anybody from Stanford, period. I don’t even know if they applied. I keep a wall between — RITHOLTZ: Right. WEAVER: — you know, my teaching and recruiting. But I will say probably teaching there has helped the Alpine brand. RITHOLTZ: Sure. WEAVER: And helped me — and more importantly, helped me understand what students are capable of, which is a lot, and what they want, which is they want to be the boss right away. And I think — so it’s helped — it helped me learn a little bit more about how to build a program that the students want to actually do. RITHOLTZ: So one of the things the CIT program does is to try and increase underrepresented individuals in PE. Tell us a little bit about what diversity does for your business. WEAVER: Yeah. Well, it’s awesome what we can do. If you — the great thing about hiring for attributes over experience is that we can actually have a huge impact on diversity. So for example, if I said we’re hiring a CEO to run a healthcare software business and our criteria is they have to have done it for 20 years. RITHOLTZ: Right. WEAVER: Then I’m — that battle has been won or lost 20 years ago. RITHOLTZ: Right. WEAVER: Yeah. I could hire someone who’s a diverse candidate from one of my competitors, but I haven’t really created any value. If I hire someone right out of business school, let’s just use women as an example and that woman wouldn’t have necessarily seen a path to become a CEO, and I can provide her a clear path, then I can actually increase the number of women that become CEOs, which is exactly what we’ve done. We have over 50% of our CEOs-in-Training that we’ve hired have been women. About 30% to 35% have been underrepresented minorities. And so we have — we can have a — we can really move the dial on creating more diversity in CEO ranks. RITHOLTZ: That’s really kind of interesting. Let’s talk a little bit about software and services, why focus on those areas in particular? WEAVER: So one of the things that we figured out, which probably took us way too long to figure out, is if you buy recurring revenue, there’s just a lot fewer things that go wrong. So we’re not unique in focusing on recurring revenue, but that we turn the dial in around that Great Recession time, and decided that was all we were going to do. RITHOLTZ: And so it’s less focused on winning that one big sale and it’s more about building a business that has a fairly steady revenue stream? WEAVER: That’s right. And then if you marry that with what I was saying before, about putting young people to run them, recurring revenue is really helpful because in the first year, they have a big learning curve. And you — RITHOLTZ: Right. WEAVER: You know, they — we need them to have a little bit of a cushion for them to get up to speed. So recurring revenue helps a ton because it does take a little while to learn how to be a CEO. RITHOLTZ: That’s really interesting. Software obviously has been really hot over the past couple of years. Any chance that that changes or slows down, or is software just the driver of the future? WEAVER: I mean, I think software is the driver of the future. And I think anything, even the driver of the future can get overpriced. RITHOLTZ: Sure. WEAVER: And you can overpay for any asset. And I think in the last few years, you know, people have gotten a little ahead of themselves with some of the multiples that were paid. But I don’t think that changes fundamentally that I think software — you know, software is here for a long time and it’s got a lot of really exciting trends. (COMMERCIAL BREAK) RITHOLTZ: I’m going to ask you a question. I’m going to have you put this back earlier in the hiring discussion because I missed something and I want to come back to it. You’ve discussed episodic versus programmatic hiring. Explain the difference between the two. WEAVER: Yeah, great question. So I might have made up those two terms, but — RITHOLTZ: Well, that’s why it jumped out at me. I don’t know what either those things are. I have to ask that question. WEAVER: I think I did make them up, but — so episodic hiring is what everyone does. Okay. We need a — RITHOLTZ: We have an opening. WEAVER: Yeah. RITHOLTZ: Fill this — go to LinkedIn — WEAVER: Exactly. RITHOLTZ: — put out an ad, get me somebody here. WEAVER: Exactly. Or yeah, we’ll hire Russell Reynolds to get us a CFO, whatever. That’s how everyone hires. That is two problems — well, a number of problems. One is it’s slow, and two is it’s expensive. And three is it actually doesn’t even work that well. Like, the hit rate is pretty low. The hit rate across the board in hiring statistically is about 50%, but that’s measured as are they still there in three years? Not this they — were they successful? So it’s even worse than that. So that’s the problem with episodic hiring. So programmatic hiring is you’re going to hire the same role a lot, and so how do you make that more of a program? So for example, you know, we’re hiring 17 people from business schools that start next month, or we’re hiring 27 undergrads to be interns who will matriculate into full time roles. And so, there’s a group of people that are graduating. You can kind of have a class of folks. You can give them way more training. You can build a whole program using the — to use the programmatic term around that, and it’s just a lot more effective. That’s two roles that we do at Alpine, the CEOs-in-Training and then the analysts. But then in our companies, you know, in some cases, that’s engineers, technicians, where that’s their recurring hire that they’re doing. And we’re helping them build programs to start with people who don’t know how to do those functions, and bring them up, you know, through training to learn those. RITHOLTZ: Really quite interesting. WEAVER: And you can scale — you can just scale a lot better, and you have a way higher hit rate doing that. RITHOLTZ: So you’re constantly maintaining a pool of either potential hires or actual employees that you’re waiting to promote? WEAVER: Absolutely. Yeah. RITHOLTZ: Before we get into the current market environment for private equity, I have to circle back to you teaching at Stanford, at the graduate school, tell us a little bit about the courses you teach and what students learn. WEAVER: So I teach two courses there. I teach — they’re both — they’re both basically similar. One is for first years, and one is for second years, but they’re both centered around entrepreneurship. And the idea of the courses is that there’s lots of classes on analysis and accounting and finance; and there aren’t a lot of classes around how to actually manage people, lead people. And I’m talking the nitty-gritty stuff of literally like what to say, if you have to fire someone. My students have to rule — my students will say, “Oh, I would just fire that person.” I said, “Okay, great. I’ll be them and you tell me.” RITHOLTZ: Right. Fire me. WEAVER: Fire me, and then they have to do it and they realize — RITHOLTZ: It’s harder than it looks. WEAVER: It’s a lot harder than it looks. So they’ll say — RITHOLTZ: That’s why people just cheat and send email. He’s so mortified. WEAVER: Yeah. That would not be something we teach. We do not — we not teach people to send an email. RITHOLTZ: So tell us about the role-playing. What does that — WEAVER: So we — so the student will actually play the protagonist in the case, and I’ll play the antagonist for lack of a better word of the other characters. And then they’ll fire me, or they’ll have to demote me, or they’ll have to tell me that they no longer want to be my partner, or whatever the situation is that they’re trying to get through. And then we’ll play around with it. And they’ll realize, you know, some things they do right, some things they do poorly. And then the entrepreneur about whom we’ve written the case is in the class, and so then they’ll chime in and say, “Well, wow, this is — you did this this way, this is why I didn’t do that,” or “I wish I would have done it that way. Instead, I did this.” So it’s a really — it’s a really, really fun class. It’s — and it’s something that they don’t get anywhere else where they actually have to kind of implement the stuff they’re talking about. RITHOLTZ: So aside from firing, what else do you teach them? WEAVER: So everything, we actually teach a lot on hiring. We have whole modules and playbooks and videos and things I’ve made and we do a class on that, which is really important. We talk about complex partnership issues, things with your board. They have to sell stuff. They have to fundraise, how to make an offense and defense deck to sell — to sell something, you know, a whole list of basically things that entrepreneurs are going to have to face in their life. RITHOLTZ: Really intriguing. I have to imagine having been a graduate student at Stanford, it’s deeply satisfying teaching there. WEAVER: It’s a blast. I started off as a case guest, where they wrote a case about me buying stuff in my dorm room, and I was a case guest and I kept — I would come home all energized. And it was my favorite day of the year. And then when the — Irv Grousbeck, who wrote the case about me, who’s a legend at Stanford, when he — he called me one day and said, “Hey, you know, I’m going to stop teaching this class, would you want to teach in?” And my first response was, “No, I have a job, you know, and I can’t,” but I didn’t say that. I said, “Hey, I’ll think about it.” And then, thankfully, everyone I was around was like, “Graham, you have to do this. And it’s your favorite thing you do.” And we figured out a way to make it work. So it’s a blast. RITHOLTZ: That sounds like — that sounds like it’s a lot of fun. WEAVER: One more thing I would just add is what I realized after a few years is I’ll teach students all about entrepreneurship, and we have this great class. And then they go take a job, you know, in consulting or investment banking; they never become entrepreneurs, even though that was what they wrote their essay about and that was what they’re excited about. So I added to the class a whole part on, okay, wait a second, what is it you really want to do with your life? You know, what’s holding you back? How’d you make a plan to go do that? What are your limiting beliefs? What are the things — what are your fears? So we have a whole thread, probably 25% of the class is on those things because I’m like what’s the point of teaching people to be entrepreneurs if they don’t become entrepreneurs? RITHOLTZ: Right. WEAVER: So I’ve invested a lot into, like, personal growth. And that’s a really, really fun part of us, too. RITHOLTZ: Are any of those skill sets transferable to consultants who arguably — WEAVER: Oh, 100%, a 100%. RITHOLTZ: — they’ll be working with other entrepreneurs and maybe haven’t been exposed? WEAVER: Yeah, a 100%. It wasn’t so much that I have anything against consulting, it was just that the student at the beginning of the class said, “My goal is to do X, and then they don’t do X.” That was all. RITHOLTZ: So tell us a little bit about your approach, what’s your process like to finding a potential acquisition target. And since we look at both private and public markets, what do you think of in terms of valuation? How do you come up with a number? WEAVER: Yeah. Yeah, great questions. We have a large team that looks for potential companies. We have actually 52 people at Alpine and in our portfolio companies that are looking for deals. RITHOLTZ: 52? WEAVER: 52. RITHOLTZ: So that’s a lot of people. WEAVER: Yeah. RITHOLTZ: How big is the firm overall? WEAVER: Overall, if you include the CEOs-in-Training and we have — RITHOLTZ: And your 1099 consultants. WEAVER: We probably have roughly 200. RITHOLTZ: All right, so that’s a — WEAVER: Yeah. RITHOLTZ: That’s a decent size. WEAVER: The 52 also includes a number of people that are working at the company who’s doing sourcing, but they’re doing the same thing. They’re calling companies, looking for investments. So we have 52 people looking for deals, and then a lot of those conversations are directly with founders. And what we’re trying to do is figure out — the way we think about it is we can pay a price, that we can hit our target returns, which I can’t talk about on, you know — RITHOLTZ: Right. WEAVER: But if we can hit our target — RITHOLTZ: We all have compliance departments. WEAVER: So we can pay a price so we could hit our target returns with like a 70% base case. And then we need there to be a lot more upside to that than downside. So we want there to be like a case where we could hit many multiples of our target returns. And so based on that, we kind of back into a price. And then where we get in trouble or where things get turned down at Investment Committee is when everything in the world has to go perfectly to hit that target. RITHOLTZ: Right. WEAVER: Because I’ve been in this business for 28 years, and when you start pricing in perfection, that’s a time when you realize you’re overpaying. RITHOLTZ: Right. WEAVER: So that’s — it’s that 70% probability and less a margin of safety thing that you really — as someone who’s like a little bit more senior at our firm, I have to bring that to the discussions. RITHOLTZ: Yeah. That perfect 10 stuck at landing, those are the outliers. You certainly can’t rely on that. WEAVER: Exactly. You can’t underwrite to that, for sure. RITHOLTZ: Yeah. So when you look at this macro environment, it seems to be pretty supportive of economic expansion generally. How closely do you pay attention to things like, hey, the Fed is raising rates pretty rapidly, maybe they’re going to cause a recession next year? WEAVER: We pay attention to it to some extent. If you go back to the ’08 crisis — RITHOLTZ: Now, that’s a recession. WEAVER: Yeah. And we’re just in a very different position. I think we’re way underbuilt on housing. So you know, I don’t see — RITHOLTZ: Wildly. WEAVER: Wildly underbuilt on housing, so I don’t see — you know, I don’t see things happen — you know, crashing there. I think we have — the consumer isn’t as leveraged as they were back in 2008. Businesses aren’t as leveraged as they were. I just think it’s a lot healthier. On the flip side, we also don’t have — the Fed can’t print money like they did in ’08 because of inflation. But I think, generally, it just feels like we’re a lot healthier than we were back then. RITHOLTZ: Right. You’re singing my song. I’m in the exact same place. I’m kind of perplexed by all the recession chatter. I mean, what are we? 27, 28 million new jobs in this year? That’s not what you usually see. Although, to be fair, some past recessions, we were creating jobs right until the moment it stopped and the bottom dropped out. But you know, it really depends on how aggressive the powers that you’re going to get about inflation. So here’s the question related to that in ’08, ’09, let’s say the naysayers are right and the end of this year or 2023, we see something more than just a mild shallow recession, we see a real recession. How does that affect the companies you look at? And do you start doing, for lack of a better phrase, distressed private equity investing? WEAVER: You know, I think that what we’ve been trying to do over the last 14 years is underwrite companies that would do well in a recession. So hopefully, we’re going to — our company is going to hold up well in that time. In terms of what we look for, it does open up the door when — you know, when there is a recession, there’s a lot more different things that are for sale at different prices. And I think one of the great assets is if you have a whole team of managers that you can put in to run distressed things, you have a lot of options open to what you can look at. So there — you know, there will be a lot more interesting things to do with, you know, if that happens. Certainly, we don’t wish that on the economy. RITHOLTZ: On anybody else. And then, finally, I have to ask about the way you score software companies and services companies, you use a metric. I really am not familiar with eNPS. Can you tell us a little bit about that? WEAVER: Yeah. So I think in general, that there are leading indicators and lagging indicators. Lagging indicator is revenue EBITDA. Those are lagging indicators. But yet, a lot of managers, they try to manage to lagging indicators. It’s like — and that’s just not very effective. So what we try to do is develop what are the leading indicators that are going to predict success. And the number one most important leading indicator, you’re not going to be surprised to hear me say, is talent. So if you tell me, “I’m on the board of your business, and we’re starting to build the world-class management team, I can tell you in two years, we’ll have a homerun investment.” So one of those leading — two of those leading indicators related to talent are employee net promoter score, which is the eNPS. RITHOLTZ: Meaning how employees rate their employee? WEAVER: Exactly. Yeah. Would they — would they recommend this company to a friend? And we measure that every quarter for every one of our companies. We measure it at Alpine. We measure it for a whole bunch of different groups within Alpine. And then retention is the other big one. So if we can be managing those and getting those right, those are leading indicators that are going to help us set up, you know, the revenue EBITDA that come later. And those are hard things to manage. Getting those metrics right takes a lot of work. That’s actually where I spend most of my time at Alpine, believe it or not, is making sure that we’re creating an environment where the best people want to be and stay. And most people again in the finance world, they don’t think about kind of squishy, soft metrics like that, but they should be. RITHOLTZ: Well, because they have a really outsized impact on the performance of a company. WEAVER: Absolutely. That’s my view is they have — they have the biggest impact. RITHOLTZ: And my last question before I get to our favorite questions we ask all our guests, so a little bit of a curveball, you are a captain on a national championship rowing team. WEAVER: I was. Yeah. RITHOLTZ: Tell us about that. WEAVER: So — RITHOLTZ: You look like you row. WEAVER: So I came to college not even knowing anything about rowing. I didn’t even know that the boats went backwards till I got in a boat. RITHOLTZ: Well, it’s not that they’re going backwards. It’s just that you’re facing backwards. WEAVER: Exactly. Yeah. I didn’t even know that. So I started as a novice, I walked on the team. And it seemed like everyone else on the team had rowed before, so I was horrible, absolutely horrible. I got cut, and then just kept kind of — and so there’s a funny story where the coach says, “Okay, these are the people who are going to boats. The rest of you are, quote, “land warriors.” And you’re a land warrior means you go on the rowing machines. And so that night when he kind of posted the boats and I wasn’t in the boat, he said, “All right.” So I did this calculus, and I’m like, okay, well, gosh, all the land warriors are going to show up before class. You know, classes — first class is at 9:00. So they’re going to show up at 8:00, but — so I got to show up at 7:00. No, no, no, everyone is going to think that, so I’ll show up at 6:00. So I show up the next morning, zero people. And one of the guys is like, “Hey, idiot, land warrior is another way to say you got cut.” But I still stayed as a land warrior, and kept getting better at — getting my Erg times better and better over time. And it was one of the greatest things I ever did. I had a great time and — RITHOLTZ: And when were they national champions? WEAVER: My senior year, I was — RITHOLTZ: So by then, you’re on the team? WEAVER: By my — yeah, by my senior year, I was pulling one of the best Erg times in the nation at the rowing machine — RITHOLTZ: Erg time? WEAVER: On the concept to rowing machine like you see in the gym, they actually have a standard test, which is 2000 meters which you submit, you know, nationally. And by my senior year, I had one of and maybe a few times the number one Erg time in the country, and I was elected captain by my teammates of our team. And then that year, we were supposed to have a rebuilding year because we lost all these seniors and we actually won the whole thing. RITHOLTZ: That’s amazing. WEAVER: So it was awesome. RITHOLTZ: Wow. That’s really amazing. (COMMERCIAL BREAK) RITHOLTZ: Let’s jump to our favorite questions that we ask all of our guests, starting with what kept you entertained during the pandemic lockdown? Tell us what you were streaming. WEAVER: I went on this whole Buddhist thing during the pandemic and I started reading a lot about Buddhism and streaming Buddhism, and it was — it was amazing. RITHOLTZ: Meditating or — WEAVER: Meditating and just kind of learning about Buddhism, and you know, why we all suffer and how to — you know, how all these thoughts we have in our head, our own imagination. And I went on this whole kick during the pandemic, which was phenomenal. I highly recommend it. And basically, the concept is that your reality is going through a filter. And everything that’s happened externally, you’re telling yourself a story about what that means, and whether that’s good, or whether that’s bad. And that that’s really — your reality isn’t what’s happening, it’s the story you’re telling yourself and that you have complete control over that story. RITHOLTZ: Right. That’s the classic narrative fallacy. WEAVER: Yeah, that’s the narrative fallacy. And that’s kind of the fundamental premise of Buddhism, which is your suffering is coming, not from what’s happening, but the story you’re telling yourself. So I went on this long, you know, meditating and reading, and kind of journaling about that. And that was — that was a lot of fun. RITHOLTZ: So the — we had this old joke about, we had a softball team here over in Central Park and we had the Buddhists playing the stoics and the game never finished. Everybody just sat down instead of having a long conversation. But I’m right there with you. You mentioned your — two of your mentors, who were some of your earliest investors. Are there anybody else you want to mention as mentors? The professor at Stanford you referred to also. WEAVER: Yeah. I’ll — both of those, Tom Steyer. Doug Martin and Irv Grousbeck were super important in my life. I’ll talk about Irv. He is probably if you had — there’s probably literally, Barry, a hundred people you could have on this podcast that would list Irv as one of their most important people. RITHOLTZ: Really? WEAVER: Yeah. RITHOLTZ: Wow. WEAVER: He a professor at Stanford and just, you know, makes time for folks. He built an incredible business. And he just has this, you know, unwavering moral code. He was an early investor. He’s the one who asked me to teach at Stanford. And I just — I just find the way he set up his life and his — just the way he treats other people, you’re always the most important person in the world when you’re with him. And so, I’ve definitely learned a lot from him. RITHOLTZ: Really interesting. Let’s talk about books. What are some of your favorites and what are you reading currently? WEAVER: I — it’s funny, I ended up rereading like the same 10 books. In terms of my favorites, I read — I have some I read currently too, but “Good to Great,” Warren Buffett’s Biography “Snowball,” Steve Jobs biography by Isaacson, Walt Disney’s biography by Neal Gabler, “Switch” by Dan and Chip Heath, “Made to Stick” by Dan and Chip Heath, Buffett’s annual letters. Like, those are like — I reread those and every time I reread them, I get kind of reenergized. And we’ve modeled a lot of our business and a lot of my life around some of the things I learned in some of those books. And a lot of those required reading and help. RITHOLTZ: I can imagine. What are you reading currently? WEAVER: And right now, I started getting on this Brene Brown kick. I don’t know if you’ve read some of her stuff, but “The Gifts of Imperfection” I’m reading right now, which is just phenomenal. She is — I actually downloaded it on Audible so I get to hear her talk about it. But she has just this incredible way of talking about things that other people don’t talk about, like shame and how to — how to deal with the things you’re not good at, and how to be intellectually honest and admit when you don’t know things. And she’s — I love her work. RITHOLTZ: What’s the title of the book you’re reading currently? WEAVER: “The Gift of Imperfection.” RITHOLTZ: It sounds really — WEAVER: Yeah, it’s phenomenal. It’s phenomenal. RITHOLTZ: Before I forget, just as an aside and you could edit this out. So I went to law school with a guy named Lawrence Cunningham, who was the first person who recognized, hey, all these letters from Warren Buffett, they’re really fascinating, deep stuff. He bound them. WEAVER: Yeah. I bought that book. I own that book. RITHOLTZ: That book has been like a perennial bestseller. WEAVER: Yeah. RITHOLTZ: And it’s — you know, the old joke about the two economists walking down the street. One says, “Is that a $100 bill on the floor?” And the other says, “No, if it was a $100 bill, someone would have picked it up.” It’s the same theme with that. WEAVER: He picked it up. Yeah. RITHOLTZ: These have been around for literally — WEAVER: Yeah. RITHOLTZ: I mean, I think he first started in like ‘90 or ‘92, something like that. And Buffett had been around for 30 years by then already, or 25 years, nobody had thought of doing that. WEAVER: And you know what, like, it doesn’t matter if it’s crypto or software valuations or the Internet. The stuff Buffett writes about is still the right stuff. RITHOLTZ: Fundamental common sense, block and tackling. WEAVER: You’re going to discount the cash flows back and decide what you can pay. You’re going to put a premium on the discount rate if the stuff is a lot more uncertain. It’s this — it is exactly the right formula today and it was 50 years ago, and it will be 50 years from now. And anytime that there’s something new, where people says this time, it’s different, you should be really skeptical. RITHOLTZ: Always. All right. Our final two questions, what sort of advice would you give to a recent college or business school graduate interested in a career in private equity? WEAVER: Well, I’ll start with the first part, just general advice, and then I’ll go the private equity. But, you know, as you can imagine, I actually give this advice all the time teaching. But the first thing that I think a lot of people graduating don’t ask is like, what they — what do I want? What is five years from now, 10 years from now, if I could — if I knew I wasn’t going to fail, what would I want to do with my life? And they can start with that question. And then start working backwards from that about what job you should take now and next year and five years from now. Instead, a lot of people just think, “Oh, these firms are interviewing on campus, and I’ll go here, I’ll go here.” And that’s okay. But if you know where you want to be 10 years from now, it will inform which firm you go to work and what skills you’re trying to acquire. So I think — I think that would be my advice is like, in 10 years, you will — you can do almost anything you set your mind to and so give yourself permission to really answer that question, what do I want to do in 10 years? RITHOLTZ: Why does it matter if you quote, “know you wouldn’t fail?” WEAVER: Yeah. RITHOLTZ: Just to open the set of possibilities or — WEAVER: Because — yeah, I always frame it as if you knew you wouldn’t fail, what would you do? Because without that, people already jumped to, “I can’t do this,” like subconsciously in the mind. RITHOLTZ: Fear of failure, is that big really? WEAVER: Fear of failure is so powerful. RITHOLTZ: Even amongst really high performing talent — WEAVER: I think it’s even — RITHOLTZ: I mean, Stanford graduate students, I have to think that’s the cream of the crop out there. WEAVER: In some ways, it’s almost more prevalent because they have had so much success, and they don’t — you know, they have this incredible track record. But I would say the number one thing that Stanford Business School students or really just about anyone in the world, it’s the same thing, which is their subconscious mind defaults to fear and fear of failure. RITHOLTZ: That’s fascinating because when I have discussions like this with colleagues or friends in Europe, the thing — or even Asia, the thing that makes United States so unique in the developed economy world is that failure isn’t a scarlet letter, especially in Silicon Valley. It’s almost a badge of honor. Look at all the VCs that list all, “Hey, we missed Apple and Cisco. We invested money in Pets.com. Look how terrible we are, except for our 40% compounded returns.” It’s a badge of honor to say, “We tried this face planted, brush yourself off and moved on.” WEAVER: But when you’re starting out your career and you don’t have anything to fall back on, and you haven’t yet had the success that you can look back, it’s really scary for people. And the thing that they miss is they underestimate what they could really do in 10 years and they underestimate themselves. They forgot what got them in that seat at Stanford Business School. RITHOLTZ: Sure. WEAVER: And they compare themselves to, you know, their roommate or their classmate or something. RITHOLTZ: So the other half of the question is advice about private equity. WEAVER: Yeah. I would say — I would say if someone is interested in a career in private equity, I would — I would say all private equity is not created equal. And there are — literally, like probably a thousand different models, and figure out, you know, go talk to a bunch of companies that are doing private equity in a whole bunch of different ways, and figure out what resonates with you and your interests and your superpowers, and where are you going to line up because it’s, it’s a very diverse industry. And you know, there are some firms that are making their money based on, you know, hardcore fundamental analysis. You know, we’re making our money on talent. There’s others that are, you know, doing cost cutting. There’s a whole bunch of different ways and one or more of those is going to line up a lot better with what you’re excited about. RITHOLTZ: And our final question, what do you know about the world of software services in private equity today that you wish you knew 28 years or so ago, when you were first getting started? WEAVER: Well, two things. The first thing is I wish I knew that it was going to work out fine. So I was so stressed and I put so much pressure on myself, that I wish — if I could go back and tell myself anything, it would be like, “Hey, Graham, you know, it’s going to be okay,” because I went through a lot. RITHOLTZ: That’s a really — that’s a really interesting answer because, you know, we just don’t realize how much we freak ourselves out and very often, unnecessarily. What’s the second thing? WEAVER: The second thing would be I would — if I could have realized earlier on just how important the world of talent is, and how that was really the thing that drove performance because that that would have saved me a decade. RITHOLTZ: It sounds really like you’ve honed in on exactly what makes your business work and really quite fascinating. Graham, thank you for being so generous with your time. We have been speaking with Graham Weaver, founder and partner at Alpine Investors. If you enjoyed this conversation, well, be sure to check out any of our previous 400 discussions that we’ve had over the past eight and a half years. You can find those at iTunes, Spotify, wherever you feed your podcast fix. We love your comments, feedback and suggestions. Write to us at mibpodcast@bloomberg.net. Sign up for my daily reading list @ritholtz.com You can follow me on Twitter @ritholtz. I would be remiss if I did not thank the crack team that helps put these conversations together each week. Robert Bragg is my audio engineer. Atika Valbrun is my project manager. Sean Russo runs all of our research. Paris Wald is my producer. I’m Barry Ritholtz. You’ve been listening to Masters in Business on Bloomberg Radio. END   ~~~   The post Transcript: Graham Weaver appeared first on The Big Picture......»»

May is Asian American and Pacific Islander Heritage Month. These are some of the best new and upcoming books by AAPI authors, according to Goodreads. Prices are accurate at the time of publication.When you buy through our links, Insider may earn an affiliate commission. Learn more.May is Asian American and Pacific Islander Heritage Month. These are some of the best new and upcoming books by AAPI authors, according to Goodreads.Amazon May is Asian American and Pacific Islander Heritage Month. A great way to celebrate and honor AAPI heritage is by supporting AAPI authors. We used Goodreads to rank the best new and upcoming books by AAPI authors. May is Asian American and Pacific Islander (AAPI) Heritage Month, an opportunity to recognize, honor, and celebrate the history and culture of Asian Americans and Pacific Islander Americans. There are many great ways to celebrate AAPI Heritage Month, such as supporting artists, musicians, and authors, and we've collected some of the best new books by AAPI authors in 2022.These titles have been ranked by how often they've been added to readers' "Want to Read" shelves on Goodreads — the world's largest platform for book reviews — and must have either been published in 2022 or will be published this year. If a book hasn't been published yet, we've included its publication date and you can still preorder them now. 19 of the best new and upcoming books by AAPI authors in 2022 so far, according to Goodreads:"To Paradise" by Hanya YanagiharaAmazon"To Paradise" on Amazon and Bookshop, from $20.01From the author of the brilliant and devastating "A Little Life" comes "To Paradise," a bold and expansive blend of historical and science fiction that spans from 1893 to 2093. Though each of the three main settings, characters, and situations may appear vastly different, each story is united by the theme of what makes us human from love and loss to regret and the decisions that make us who we are. “The School for Good Mothers” by Jessamine ChanAmazon"The School for Good Mothers" on Amazon and Bookshop from, $18.19From her career to her cheating husband, Frida Liu already feels like she's struggling in nearly every aspect of life — when one lapse in judgment makes everything so much worse. Now, Frida is in the hands of a government reform program for mothers where she must prove she's a good and devoted enough mother (or risk losing custody of her daughter) in this new science-fiction dystopia. “How High We Go in the Dark” by Sequoia NagamatsuAmazon"How High We Go in the Dark" on Amazon and Bookshop from, $17.99In 2030, researchers uncover the remains of a girl who appears to have died of an ancient virus and accidentally unleash an Arctic Plague that reshaped humanity and the Earth for generations. With tenderness and expansive imagination, this science fiction novel highlights stories that face tragedy with resiliency from an employee at a theme park for terminal children to a widowed painter and her teenage granddaughter. “The Swimmers” by Julie OtsukaAmazon"The Swimmers" on Amazon and Bookshop from, $19.99From casual backstrokers to fast-lane kickers, the swimmers are generally unknown to each other, though they gather at their local pool every day for recreational swimming. When a crack appears at the bottom of the pool, the swimmer's routine is upended in this equally fun and emotional story of community, family, and what we know about those around us. “The Cartographers” by Peng ShepherdAmazon"The Cartographers" on Amazon and Bookshop from, $9.80When Nell's father is found dead in his office, she ignores their rocky past to investigate what could have happened. She soon discovers the rarity and value of the seemingly worthless map found in his desk and sets out on an adventure to uncover why someone has been destroying copies of this map and eliminating anyone who gets in their way. “Disorientation” by Elaine Hsieh ChouAmazon"Disorientation" on Amazon and Bookshop from, $20.54Ingrid Yang cannot wait to be done with her dissertation on the poet Xiao-Wen Chou and complete her PhD, but when she finds a strange note in the Chou archives, it unravels an explosive discovery and ignites chaos in Ingrid's life and her college campus. The rabbit hole into which Ingrid falls leads her through a roller coaster of adventures, an upheaval of her identity, and a series of startling revelations. “Time Is a Mother” by Ocean VuongAmazon"Time Is a Mother" on Amazon and Bookshop from, $21.36Known for "On Earth We're Briefly Gorgeous", Ocean Vuong returns with a poetry collection spurred by his mother's death as he challenges his grief with a determination to survive it. With a clear and incredibly resounding voice, Vuong's poetry is emotionally devastating, clever, and deeply memorable. "Honor" by Thrity UmrigarAmazon"Honor" on Amazon and Bookshop from, $17.13Though her family left India long ago, Smita, an Indian American journalist, is sent there on assignment to cover the case of a Hindu woman who was attacked by members of her own village for marrying a Muslim man. As Smita tries to help the woman, she's also drawn to an Indian man in this new dual love story that's also about familial love, hope, and sacrifice. “Peach Blossom Spring” by Melissa FuBookshop"Peach Blossom Spring" on Amazon and Bookshop from, $16.99"Peach Blossom Spring" follows three generations of a Chinese family beginning in 1938 when Meilin and her son Renshu are forced to flee their home and seek refuge as the Japanese army encroaches. A generation later, Renshu lives in America as Henry Dao and refuses to speak about his childhood, no matter how desperate his daughter is to understand him and her family's history in this moving new novel about family, heritage, and the importance of telling our stories. “Kaikeyi” by Vaishnavi PatelAmazon"Kaikeyi" on Amazon and Bookshop from, $21.99Kaikeyi is desperate for independence from her family when she turns to the library's scrolls and unearths her power, transforming from an overlooked princess into a warrior and favored, feminist queen. Yet as Kaikeyi carves out her legacy, her family's destiny clashes with her own order could mean devastating destruction. “Portrait of a Thief” by Grace D. LiAmazon"Portrait of a Thief" on Amazon and Bookshop from, $19.99Will Chen is a senior at Harvard when he's approached by a mysterious benefactor with an impossible, dangerous, and illegal offer to lead a heist that will steal back five pieces of museum art once looted as spoils of war from China. Armed with a unique crew of other Chinese Americans, each of whom has their own complicated relationship with their identity, Will sets out to make history in this novel that is equal parts thriller and an examination of colonialism. “Four Treasures of the Sky” by Jenny Tinghui ZhangAmazon"Four Treasures of the Sky" on Amazon and Bookshop from, $18.69Daiyu was named after the tragic heroine from "Dream of the Red Chamber" but never wanted to be like her, until she is kidnapped and smuggled from her home in China to America, forced to reimagine her life, future, and identity over and over again. Set against the backdrop of the Chinese Exclusion Act, Daiyu faces great personal and social trials as she works to survive and honor her own name and story. “Counterfeit” by Kirstin ChenAmazon"Counterfeit" on Amazon and Bookshop from, $21.99Ava Wong seems to have built a perfect life with her surgeon husband, young son, and successful law career, but beneath the surface, everything is crumbling until Winnie Fang, Ava's old college roommate comes back into her life. More confident and wealthy than ever before, Winnie approaches Ava in need of help with her wildly successful business-selling counterfeit luxury handbags. Though Ava agrees, Winnie disappears when a challenge arises and leaves Ava to deal with the aftermath in this exciting and dazzling upcoming novel.Publication Date: June 7, 2022“Siren Queen” by Nghi VoAmazon"Siren Queen" on Amazon and Bookshop from, $24.29"Siren Queen" is a historical fantasy set in 1930s Hollywood where the beautiful and talented Luli Wei is desperate to make it big but refuses to play the stereotypical parts the studio has for her. Meanwhile, the studio controls her life and runs on a system of blood, ancient magic, and sacrifices that force starlets to earn their fame at a steep and horrifying price. “Nuclear Family” by Joseph HanBookshop"Nuclear Family" on Amazon and Bookshop from, $23.92Set in the months leading up to the false missile alert of 2018, a Korean American family living in Hawai'i has a bright future as their restaurant business improves, their daughter finishes college, and their son, Jacob, moves to Seoul to teach English. When Jacob is detained by the South Korean government for attempting to run across the Demilitarized Zone into North Korea (and going viral for it), the family is forced to confront what has separated them in this upcoming novel of family history and healing. Publication Date: June 7, 2022“Kismet: A Thriller” by Amina AkhtarAmazon"Kismet: A Thriller" on Amazon and Bookshop from, $22.95When Ronnie leaves Queens for Arizona and her wellness guru, Marley Dewhurst, she's ready for a life of juice cleanses and yoga. But when bodies of Sedona glam gurus begin to turn up, "Kismet" transforms into a wild and suspenseful ride of murder, smoothies, and even neighborhood ravens, who narrate a few chapters from their spectating point of view. Publication Date: August 1, 2022“Gods of Want: Stories” by K-Ming ChangAmazon"Gods of Want: Stories" on Amazon and Bookshop from, $24.84This upcoming collection of short stories is divided into three sections — Mothers, Myths, and Moths — in which K-Ming Chang highlights the relationships, bodies, and memories of Asian American women. In "Gods of Want" Chang weaves queerness, migration, and corporeality into stories of power and memory. Publication Date: July 12, 2022"Babel, or The Necessity of Violence: An Arcane History of the Oxford Translators' Revolution" by R.F. KuangAmazon"Babel" on Amazon and Bookshop from, $25.19"Babel" is an upcoming dark academia fantasy novel set in 1828 when Robin Swift is brought to London and trained in languages until the day he will attend the Royal Institute of Translation at Oxford University, also known as Babel. For Robin, serving Babel means betraying his motherland and, caught between the school and this powerful society, must decide how far he will go to bring Babel down. Publication Date: August 23, 2022“The Many Daughters of Afong Moy” by Jamie FordAmazon"The Many Daughters of Afong Moy" on Amazon and Bookshop from, $25.76Dorothy Moy is used to channeling her mental health challenges into her art but when her five-year-old daughter begins to exhibit similar behaviors and seems to remember things from their ancestors' lives, Dorothy reaches out for help in the form of an experimental treatment specially designed for inherited trauma. "The Many Daughters of Afong Moy" is a historical fiction novel interwoven with magical realism as Dorothy connects with past generations and seeks to break the generational trauma that has already plagued her and her daughter. Publication Date: August 2, 2022Read the original article on Business Insider.....»»

CryptoWhy the crypto market is at a crucial juncture. (thereformedbroker.com)A normie's guide to the cryptocurrency crash. (slate.com)On the knock-on effects of a stablecoin wipeout. (ft.com)BitcoinThe case for Bitcoin being 'digital gold' is looking pretty shaky. (papers.ssrn.com)MicroStrategy's ($MSTR) big bet on Bitcoin is increasingly underwater. (tker.co)Bitcoin is trading like a tech stock. (nytimes.com)CompaniesDisney's ($DIS) theme park business has bounced back. (variety.com)Airbnb ($ABNB) is making it easier to search for long-term rentals. (wsj.com)Instacart has filed to go public. (protocol.com)FinanceAffirm ($AFRM) looks more and more like a traditional lender. (ft.com)Leveraged loans have an important feature in this market environment. (institutionalinvestor.com)WorkOnly 8% of Manhattan office workers are back in the office full-time. (nytimes.com)The key to employee retention is effective onboarding. (hbr.org)EconomyIs the Fed making a big mistake? (pragcap.com)Continuing unemployment claims are at historical lows. (bonddad.blogspot.com)What's behind the baby formula shortage? (theatlantic.com)Used car inflation is finally easing. (businessinsider.com)Earlier on Abnormal ReturnsLongform links: appetite control. (abnormalreturns.com)If YOU are the product, how do you ever take a break? (abnormalreturns.com)Two thoughts on nostalgia. (abnormalreturns.com)What you missed in our Wednesday linkfest. (abnormalreturns.com)Personal finance links: good ideas taken too far. (abnormalreturns.com)Are you a financial adviser looking for some out-of-the-box thinking? Then check out our weekly e-mail newsletter. (newsletter.abnormalreturns.com)Mixed mediaA deep dive into the current business of publishing. (erikhoel.substack.com)13 strategies to read better including 'Read before bed.' (ryanholiday.net).....»»

The No Tax Breaks for Radical Corporate Activism Act comes as companies such as Disney and Amazon have spoken out on social issues. Sen. Marco Rubio, a Republican of Florida, speaks during the Conservative Political Action Conference at The Rosen Shingle Creek on February 25, 2022 in Orlando, Florida.Joe Raedle/Getty Images The Supreme Court is poised to overturn Roe v. Wade, according to a leaked draft. In response, some large corporations said they'd pay for workers' abortion travel costs. Rubio has introduced a bill to prevent companies from deducting the travel in their taxes.  Employers wouldn't be allowed to deduct travel expenses for their workers' abortions under a bill Sen. Marco Rubio introduced Wednesday. The Florida Republican's bill, the No Tax Breaks for Radical Corporate Activism Act, comes as several major corporations including Citi, Apple, Yelp, Lyft, Levi's, and Amazon announced they'd reimburse travel costs for employees to access abortion if they live in a state where it becomes illegal.The bill would also extend to transgender care for minors as Disney is considering ways to help employees and their children receive coverage. "Our tax code should be pro-family and promote a culture of life," Rubio said in a statement announcing his legislation. "Instead, too often our corporations find loopholes to subsidize the murder of unborn babies or horrific 'medical' treatments on kids. My bill would make sure this does not happen."Under current tax law, businesses can deduct benefits from an employee compensation package, including for healthcare plans or medical expenses.Other companies are likely to follow in offering coverage for abortion or transgender care travel, Rubio wrote in an editorial he published in Newsweek. "These corporations may be able to help their employees kill their unborn children or transition their son into a daughter tax-free," he wrote, adding later in the piece, "If executive elites think they can force the rest of the country to support their insane policies, they have another thing coming."The legislation contains exceptions for workers who receive care because they would otherwise face serious health problems or death.Rep. Brian Mast, a Republican of Florida, is introducing the House version of the bill. In a statement, Mast said corporations "should not be allowed to use taxpayer funds to support dangerous procedures that harm our kids and kill innocent babies."GOP and Big Business clashThe new bill represents an escalation by Rubio against Big Business.The two-term senator introduced another bill in September that would require corporate directors to prove that certain social initiatives he calls "woke" are in the best interest of shareholders.Rubio has also called for other Republicans to break against big businesses who are pushing for "woke policies" that will lead to "Marxism." Rubio is the son of Cuban parents who immigrated to the US just ahead of Fidel Castro's rise, and has often invoked his personal story in explaining his position against large businesses' policies. Rubio ran for the GOP nomination for president in 2016 but lost to Trump. If he wins reelection in November — when he's likely to face off against Democratic Rep. Val Demings of Orlando — he is expected to be in the mix for the 2024 presidential nomination.Clashes between Republicans and corporations have become more common. For decades, the GOP was aligned with American corporations and delivered them millions of dollars worth of federal tax breaks. But former President Donald Trump frequently attacked large companies and their CEOs, shaking up the GOP playbook and ushering in an era of populist ideology.Businesses, too, have evolved as younger employees are demanding that their bosses take stronger stances on social and political causes, from Black Lives Matter to the climate crisis and even abortion. The calculus over how far to wade into such topics is risky for businesses, who risk losing employees or customers, or drawing the ire of lawmakers.Last month, top CEOs paid attention when Disney spoke out against Florida's controversial sex education bill. In response, Florida Gov. Ron DeSantis, a Republican, signed a bill into law to terminate the theme park and entertainment company's special tax district. The latest corporate push for abortion access in particular comes after a leaked draft opinion Politico obtained from the Supreme Court showed the justices were poised to overturn Roe v. Wade. In response, the Senate is preparing to vote on a bill that would codify Roe into law and undo all state restrictions on abortion. Rubio opposes abortion and voted against the legislation when it came to the floor in February.  Rubio told reporters at the Capitol on Tuesday that he hadn't read the Supreme Court's draft opinion. "I'm not going to read a leaked document," he said. "It's not the final opinion of the court."Read the original article on Business Insider.....»»

Gordon Chang: What To Do About China Authored by Gordon Chang via The Gatestone Institute, Since about 2018, Chinese officials have been talking about the moon and Mars as sovereign Chinese territory, part of the People's Republic of China. This means that China considers those heavenly bodies to be like the South China Sea. This also means that China will exclude other nations from going to the moon and Mars if they have the capability to do so. We do not have to speculate about that: Chinese officials say this is what they are going to do. [W]hen Biden says, "Oh, the Chinese just want to compete with us," he is wrong. They do not want to "compete" within the international system. They do not even want to change that system... They want to overthrow it altogether, period. Is Xi Jinping really that bold... to start another war? ... First, China considers the United States to be its enemy. Second the United States is no longer deterring China. China feels it has a big green light to do whatever it wants. We Americans don't pay attention to propaganda... After all, these are just words. At this particular time, these words... [suggest] to me that China is laying the justification for a strike on the United States. We keep ignoring what Beijing is saying. We kept ignoring what Osama bin Laden was saying. We have to remember that the Chinese regime, unlike the Japanese, always warn its adversaries about what it is going to do The second reason war is coming is that America's deterrence of China is breaking down. Di's message was that with cash, China can do anything it wants, and that all Americans would take cash. He mentioned two words in this regard: Hunter Biden. In February, [Biden] had a two‑hour phone call with Xi Jinping. By Biden's own admission, he didn't raise the issue of the origins of COVID‑19 even once. If you are Xi Jinping, after you put down the receiver, your first thought is, "I just got away with killing hundreds of thousands of Americans." We have news that China is building something like 345 missile silos in three locations: in Gansu, Xinjiang, and in Inner Mongolia. These silos are clearly built to accommodate the DF‑41. The DF‑41 has a range of about 9,300 miles, which means that it can reach any part of the United States. The DF‑41 carries 10 warheads. This means that China could, in about two years..., have a bigger arsenal than ours. ...we have to assume the worst because Chinese leaders and Chinese generals, on occasion, unprovoked, have made threats to nuke American cities. In July, 2021 China tested a hypersonic glide warhead, which circled the world. This signals China intends to violate the Outer Space Treaty, to which China is a party. As of today, more than eight million people have died outside China. What happened? No one imposed costs on China. For at least a half‑decade, maybe a little bit longer, Chinese military researchers have been openly writing about a new type of biological warfare....They talk about a new type of biological warfare of "specific ethnic genetic attacks." In other words, pathogens that will leave the Chinese immune but sicken and kill everybody else, which means that the next disease from China can be a civilization killer. A lot of military analysts talk about how the first seconds of a war with China are going to be fought in outer space. They are going to blind our satellites, take them down, do all sorts of stuff. Those statements are wrong. The first day of war against the United States occurs about six months earlier, when they release pathogens in the United States. Then we are going to have that day in space. The war starts here, with a pathogen ‑‑ a virus, a microbe, a bug of some kind. That is where it begins. The One‑China policy is something many people misunderstand. Probably because Beijing uses propaganda to try to fuzzy up the issue.... China has a One‑China principle: that Taiwan is part of the People's Republic of China, full stop. We have a One‑China policy..., that the status of Taiwan is unresolved.... that the resolution of the status of Taiwan must be with the consent of people on both sides of the Strait. We need a policy of "strategic clarity," where we tell China that we will defend Taiwan. We also say we will extend a mutual defense treaty to Taiwan if it wants it, and we will put American troops on the island as a tripwire. We are Americans. We naturally assume that there are solutions, and good solutions, to every problem. After three decades of truly misguided China policy, there are no ... solutions that are "undangerous." ...The current trend of policy is unsustainable. There will be no American republic if we continue to do what we are currently doing and if we continue to allow China to do what it does. I do not think that enforcing a trade deal will start World War III. China has not met its obligations. As of a few months ago, China had met about 62% of its commitments..... We should be increasing the tariffs that President Trump imposed under Section 301 of the Trade Act of 1974. Remember, those tariffs are meant to be a remedy for the theft of US intellectual property. China has continued to steal US IP. As matter of fact, it has gotten worse... I do not think that we should be trying to foster integration of Wall Street into China's markets.... Do not take it from me, just look at their failure to comply with very simple, easy‑to‑comply-with requirements. It was a mistake. The best response would be if we hit them with everything at once because China right now is weak. If we were going to pick the number one thing to do, I would think trade. China now has a debt crisis, so they are not going to invest their way out of this crisis, which means the only way they can save their economy is net exports. We should stop buying their stuff. China has bought the political establishment in the Solomon Islands, except for one brave man named David Suidani. Recently, somebody got the bright idea of publishing all of the specific payments that Beijing has made to Solomon Islands politicians.... We should be doing this with payments to American politicians, we should be doing this across the board. What bothers me is that, although their assumptions about China have demonstrably been proven wrong, American policymakers still continue with the same policies. There is, in some people's mind, an unbreakable view that we have to cooperate with China.... This is what people learn in international relations school when they go to Georgetown, and they become totally stupid. Clearly, Nike and Apple and other companies are now, at this very moment, trying to prevent Congress from enacting toughened rules on the importation of forced‑labor products into our country. Moreover, the Chinese regime is even more casualty‑averse than we are. Even if Beijing thinks it can take Taiwan by force, it is probably not going to invade because it knows an invasion would be unpopular with most people in China. It is not going to risk hundreds of thousands of casualties that would result from an invasion. Unfortunately..., we taught the Chinese that they can without cost engage in these dangerous maneuvers of intercepting our planes and our ships. That is the problem: because as we have taught the Chinese to be more aggressive, they have been. [W]e should have made it clear to the Chinese leadership that they cannot kill Americans without cost. Hundreds of thousands Americans have been killed by a disease that China deliberately spread. From October 2020 to October 2021, more than 105,000 Americans died from fentanyl -- which China has purposefully, as a matter of state and Communist Party policy -- sold to Americans... we have to change course. I would close China's four remaining consulates. I would also strip the Chinese embassy down to the ambassador and his personal staff. The thousands who are in Washington, DC, they would be out. I would also raise tariffs to 3,600%, or whatever. This is a good time to do it. We have supply chain disruptions. We are not getting products from China anyway. We can actually start to do this sort of stuff. I would... just hammer those guys all the time verbally. People may think, "Those are just words." For communists, words are really important, because they are an insecure regime where propaganda is absolutely critical. I would be going after the Communists on human rights, I would be going after them on occupying the South China Sea, on Taiwan, unrelentingly -- because I would want to show the world that the United States is no longer afraid of China.... State Department people, they are frightened. We need to say to the Chinese regime, like Dulles, "I'm not afraid of you. I'm going after you, and I'm going to win." Is Xi Jinping really that bold... to start another war?... First, China considers the United States to be its enemy. Second the United States is no longer deterring China. China feels it has a big green light to do whatever it wants. All the conditions for history's next great war are in place. Jim Holmes, the Wiley Professor at the Naval War College, actually talks about this period as being 1937. 1937 was the year in which if you were in Europe or America, you could sense the trouble. If you were in Asia in 1937, you would be even more worried, because that year saw Japan's second invasion of China that decade. No matter where you lived, however, you could not be sure that the worst would happen, that great armies and navies around the world would clash. There was still hope that the situation could be managed. As we now know, the worst did happen. In fact, what happened was worse than what anyone thought at the time. We are now, thanks to China, back to 1937. We will begin our discussion in Afghanistan. Beijing has had long‑standing relations with the Afghan Taliban, going back before 9/11, and continuing through that event. After the US drove the Taliban from power and while it was conducting an insurgency, China was selling the group arms, including anti‑aircraft missiles, that were used to kill American and NATO forces. China's support for killing Americans has continued to today. In December 2020, Indian Intelligence was instrumental, in Afghanistan, in breaking up a ring of Chinese spies and members of the Haqqani Network. The Trump administration believed that the Chinese portion of that ring was actually paying cash for killing Americans. What can happen next? We should not be surprised if China gives the Taliban an atomic weapon to be used against an American city. Would they be that vicious? We have to remember that China purposefully, over the course of decades, proliferated its nuclear weapons technology to Pakistan and then helped Pakistan sell that Chinese technology around the world to regimes such as Iran's and North Korea's. Today, China supports the Taliban. We know this because China has kept open its embassy in Kabul. China is also running interference for the Taliban in the United Nations Security Council. It is urging countries to support that insurgent group with aid. It looks as if the Taliban's main financial backers these days are the Chinese. Beijing is hoping to cash in on its relationship in Central Asia. Unfortunately, there is a man named Biden, who is helping them. In early August, Biden issued an executive order setting a goal that by 2030, half of all American vehicles should be electric‑powered. To be electric‑powered, we need rare earth minerals, we need lithium. As many people have said, Afghanistan is the Saudi Arabia of rare earths and lithium. If Beijing can mine this, it makes the United States even more dependent on China. It certainly helps the Taliban immeasurably. Unfortunately, Beijing has more than just Afghanistan in mind. The Chinese want to take away our sovereignty, and that of other nations, and rule the world. They actually even want to rule the near parts of the solar system. Yes, that does sound far‑fetched, but, no, I'm not exaggerating. Chinese President Xi Jinping would like to end the current international system. On July 1, in a landmark speech, in connection with the centennial of China's ruling organization, he said this: "The Communist Party of China and the Chinese people, with their bravery and tenacity, solemnly proclaim to the world that the Chinese people are not only good at taking down the old world, but also good in building a new one." By that, China's leader means ending the international system, the Westphalian international system. It means he wants to impose China's imperial‑era notions of governance, where Chinese emperors believed they not only had the Mandate of Heaven over tianxia, or all under Heaven, but that Heaven actually compelled the Chinese to rule the entire world. Xi Jinping has been using tianxia themes for decades, and so have his subordinates, including Foreign Minister Wang Yi, who in September 2017 wrote an article in Study Times, the Central Party School's influential newspaper. In that article, Wang Yi wrote that Xi Jinping's thought on diplomacy ‑‑ a "thought" in Communist Party lingo is an important body of ideological work ‑‑ Wang Yi wrote that Xi Jinping's thought on diplomacy made innovations on and transcended the traditional theories of Western international relations of the past 300 years. Take 2017, subtract 300 years, and you almost get to 1648, which means that Wang Yi, with his time reference, was pointing to the Treaty of Westphalia of 1648, which established the current system of sovereign states. When Wang Yi writes that Xi Jinping wants to transcend that system, he is really telling us that China's leader does not want sovereign states, or at least no more of them than China. This means that when Biden says, "Oh, the Chinese just want to compete with us," he is wrong. They do not want to "compete" within the international system. They do not even want to change that system so it is more to their liking. They want to overthrow it altogether, period. China is also revolutionary with regard to the solar system. Since about 2018, Chinese officials have been talking about the moon and Mars as sovereign Chinese territory. In other words, as part of the People's Republic of China. This means that China considers those heavenly bodies to be like the South China Sea: theirs and theirs alone. This also means that China will exclude other nations from going to the moon and Mars if they have the capability to do so. We do not have to speculate about that: Chinese officials say this is what they are going to do. Let us return to April 2021. Beijing announced the name of its Mars rover. "We are naming the Mars rover Zhurong," the Chinese said, "because Zhurong was the god of fire in Chinese mythology, " How nice. Yes, Zhurong is the god of fire. What Beijing did not tell us is that Zhurong is also the god of war—and the god of the South China Sea. Is Xi Jinping really that bold or that desperate to start another war? Two points. First, China considers the United States to be its enemy. The second point is that the United States is no longer deterring China. China feels it has a big green light to do whatever it wants. On the first point, about our enemy status, we have to go back to May 2019. People's Daily, the most authoritative publication in China, actually carried a piece that declared a "people's war" on the US. This was not just some isolated thought. On August 29th 2021, People's Daily came out with a landmark piece that accused the United States of committing "barbaric" acts against China. Again, this was during a month of hostile propaganda blasts from China. On the August 29th, Global Times, which is controlled by People's Daily, came right out and also said that the United States was an enemy or like an enemy. We Americans don't pay attention to propaganda. The question is, should we be concerned about what China is saying? After all, these are just words. At this particular time, these words are significant. The strident anti‑Americanism suggests to me that China is laying the justification for a strike on the United States. We keep ignoring what Beijing is saying. We kept ignoring what Osama bin Laden was saying. We have to remember that the Chinese regime, unlike the Japanese, always warn its adversaries about what it is going to do. Jim Lilley, our great ambassador to Beijing during the Tiananmen Massacre, actually said that China always telegraphs its punches. At this moment, China is telegraphing a punch. That hostility, unfortunately, is not something we can do very much about. The Chinese Communist regime inherently idealizes struggle, and it demands that others show subservience to it. The second reason war is coming is that America's deterrence of China is breaking down. That is evident from what the Chinese are saying. In March of 2021, China sent its top two diplomats, Yang Jiechi and Wang Yi, to Anchorage to meet our top officials, Secretary of State Antony Blinken and National Security Advisor Jake Sullivan. Yang, in chilling words, said the US could no longer talk to China "from a position of strength." We saw the same theme during the fall of Kabul. China then was saying, "Look, those Americans, they can't deal with the insurgent Taliban. How can they hope to counter us magnificent Chinese?" Global Times actually came out with a piece referring to Americans: "They can't win wars anymore." We also saw propaganda at that same time directed at Taiwan. Global Times was saying, again, in an editorial, an important signal of official Chinese thinking, "When we decide to invade, Taiwan will fall within hours and the US will not come to help." It is probably no coincidence that this propaganda came at the time of incursions into Taiwan's air-defense identification zone. We need to be concerned with more than just the intensity and with the frequency of these flights, however. We have to be concerned that China was sending H‑6K bombers; they are nuclear‑capable. Something is wrong. Global Times recently came out with an editorial with the title, "Time to warn Taiwan secessionists and their fomenters: war is real." Beijing is at this moment saying things heard before history's great conflicts. The Chinese regime right now seems to be feeling incredibly arrogant. We heard this on November 28th in 2020, when Di Dongsheng, an academic in Beijing, gave a lecture live-streamed to China. Di showed the arrogance of the Chinese elite. More importantly, he was showing that the Chinese elite no longer wanted to hide how they felt. Di, for instance, openly stated that China could determine outcomes at the highest levels of the American political system. Di's message was that with cash, China can do anything it wants, and that all Americans would take cash. He mentioned two words in this regard: Hunter Biden. Unfortunately, President Joe Biden is reinforcing this notion. China, for instance, has so far killed nearly one million Americans with a disease that it deliberately spread beyond its borders. Yet, what happened? Nothing. We know that China was able to spread this disease with its close relationship with the World Health Organization. President Trump, in July of 2020, took us out of the WHO. What did Biden do? In his first hours in office, on January 20th, 2021, he put us back into the WHO. In February, he had a two‑hour phone call with Xi Jinping. By Biden's own admission, he didn't raise the issue of the origins of COVID‑19 even once. If you are Xi Jinping, after you put down the receiver, your first thought is, "I just got away with killing hundreds of thousands of Americans." Then there's somebody named John Kerry. Our republic is not safe when John Kerry carries a diplomatic passport, as he now does. He is willing to make almost any deal to get China to sign an enhanced climate arrangement. Kerry gave a revealing interview to David Westin of Bloomberg on September 22, 2021. Westin asked him, "What is the process by which one trades off climate against human rights?" Climate against human rights? Kerry came back and said, "Well, life is always full of tough choices in the relationship between nations." Tough choices? We Americans need to ask, "What is Kerry willing to give up to get his climate deal?" Democracies tend to deal with each other in the way that Kerry says. If we are nice to a democracy, that will lead to warm relations; warm relations will lead to deals, long‑standing ties. Kerry thinks that the Chinese communists think that way. Unfortunately, they do not. We know this because Kerry's successor as Secretary of State, Hillary Clinton, in February 2009, said in public, "I'm not going to press the Chinese on human rights because I've got bigger fish to fry." She then went to Beijing a day after saying that and got no cooperation from the Chinese. Even worse, just weeks after that, China felt so bold that it attacked an unarmed US Navy reconnaissance vessel in the South China Sea. The attack was so serious that it constituted an act of war. The Chinese simply do not think the way that Kerry believes they do. All of this, when you put it together, means that the risk of war is much higher than we tend to think. Conflict with today's aggressor is going to be more destructive than it was in the 1930s. We have news that China is building something like 345 missile silos in three locations: in Gansu, Xinjiang, and in Inner Mongolia. These silos are clearly built to accommodate the DF‑41. The DF‑41 has a range of about 9,300 miles, which means that it can reach any part of the United States. The DF‑41 carries 10 warheads. This means that China could, in about two years, as some experts think, have a bigger arsenal than ours. China has built decoy silos before. We are not sure they are going to put all 345 missiles into these facilities, but we have to assume the worst because Chinese leaders and Chinese generals, on occasion, unprovoked, have made threats to nuke American cities. This, of course, calls into question their official no‑first‑use policy, and also a lot of other things. China will not talk to us about arms control. We have to be concerned that China and Russia, which already are coordinating their military activities, would gang up against us with their arsenals. In July, 2021 China tested a hypersonic glide warhead, which circled the world. This signals China intends to violate the Outer Space Treaty, to which China is a party. It also shows that in hypersonic technology, which was developed by Americans, China is now at least a decade ahead of us in fielding a weapon. Why is China doing all this now? The country is coming apart at the seams. There is, for instance, a debt crisis. Evergrande and other property developers have started to default. It is more than just a crisis of companies. China is basically now having its 2008. Even more important than that, they have an economy that is stumbling and a food crisis that is worsening year to year. They know their environment is exhausted. Of course, they also are suffering from a continuing COVID‑19 epidemic. To make matters worse, all of this is occurring while China is on the edge of the steepest demographic decline in history in the absence of war or disease. Two Chinese demographers recently stated that China's population will probably halve in 45 years. If you run out those projections, it means that by the end of the century, China will be about a third of its current size, basically about the same number of people as the United States. These developments are roiling the political system. Xi Jinping is being blamed for these debacles. We know he has a low threshold of risk. Xi now has all the incentive in the world to deflect popular and regime discontent by lashing out. In 1966, Mao Zedong, the founder of the People's Republic, was sidelined in Beijing. What did he do? He started the Cultural Revolution. He tried to use the Chinese people against his political enemies. That created a decade of chaos. Xi Jinping is trying to do the same thing with his "common prosperity" program. The difference is that Mao did not have the means to plunge the world into war. Xi, with his shiny new military, clearly does have that ability. So here is a 1930s scenario to consider. The next time China starts a conflict, whether accidentally or on purpose, we could see that China's friends -- Russia, North Korea, Iran, Pakistan -- either in coordination with China or just taking advantage of the situation, move against their enemies. That would be Ukraine in the case of Russia, South Korea in the case of North Korea, Israel in the case of Iran, India in the case of Pakistan, and Morocco in the case of Algeria. We could see crises at both ends of the European landmass and in Africa at the same time. This is how world wars start. *  *  * Question: Why do you believe China attacked the world with coronavirus? Chang: I believe that SARS‑CoV‑2, the pathogen that causes COVID‑19, is not natural. There are, for example, unnatural arrangements of amino acids, like the double‑CGG sequence, that do not occur in nature. We do not have a hundred percent assurance on where this pathogen came from. We do, however, have a hundred percent assurance on something else: that for about five weeks, maybe even five months, Chinese leaders knew that this disease was highly transmissible, from one human to the next, but they told the world that it was not. At the same time as they were locking down their own country ‑‑ Xi Jinping by locking down was indicating that he thought this was an effective way of stopping the disease -- he was pressuring other countries not to impose travel restrictions and quarantines on arrivals from China. It was those arrivals from China that turned what should have been an epidemic confined to the central part of China, into a global pandemic. As of today, more than eight million people have died outside China. What happened? No one imposed costs on China. For at least a half‑decade, maybe a little bit longer, Chinese military researchers have been openly writing about a new type of biological warfare. This was, for instance, in the 2017 edition of "The Science of Military Strategy," the authoritative publication of China's National Defense University. They talk about a new type of biological warfare of "specific ethnic genetic attacks." In other words, pathogens that will leave the Chinese immune but sicken and kill everybody else, which means that the next disease from China can be a civilization killer. Remember, Xi Jinping must be thinking, "I just got away with killing eight million people. Why wouldn't I unleash a biological attack on the United States? Look what the virus has done not only to kill Americans but also to divide American society." A lot of military analysts talk about how the first seconds of a war with China are going to be fought in outer space. They are going to blind our satellites, take them down, do all sorts of stuff. Those statements are wrong. The first day of war against the United States occurs about six months earlier, when they release pathogens in the United States. Then we are going to have that day in space. The war starts here, with a pathogen ‑‑ a virus, a microbe, a bug of some kind. That is where it begins. Question: You mentioned 1939. Taiwan is the Poland of today. We get mixed signals: Biden invites the Taiwanese foreign minister to his inauguration, but then we hear Ned Price, his State Department spokesman, say that America will always respect the One‑China policy. Meaning, we're sidelining defending Taiwan? Chang: The One‑China policy is something many people misunderstand. Probably because Beijing uses propaganda to try to fuzzy up the issue. China has a One‑China principle: that Taiwan is part of the People's Republic of China, full stop. We have a One‑China policy, which is different. We recognize Beijing as the legitimate government of China. We also say that the status of Taiwan is unresolved. Then, the third part of our One‑China policy is that the resolution of the status of Taiwan must be with the consent of people on both sides of the Strait. In other words, that is code for peace, a peaceful resolution. Our policies are defined by the One‑China policy, the Three Communiques, Reagan's Six Assurances, and the Taiwan Relations Act. Our policy is difficult for someone named Joe Biden to articulate, because he came back from a campaign trip to Michigan, and he was asked by a reporter about Taiwan, and Biden said, "Don't worry about this. We got it covered. I had a phone call with Xi Jinping and he agreed to abide by the Taiwan agreement." In official US discourse, there is no such thing as a "Taiwan agreement." Some reporter then asked Ned Price what did Biden mean by the Taiwan agreement. Ned Price said, "The Taiwan agreement means the Three Communiques the Six Assurances, the Taiwan Relations Act, and the One‑China policy." Ned Price could not have been telling the truth because Xi Jinping did not agree to America's position on Taiwan. That is clear. There is complete fuzziness or outright lying in the Biden administration about this. Biden's policies on Taiwan are not horrible, but they are also not appropriate for this time. decades, we have had this policy of "strategic ambiguity," where we do not tell either side what we would do in the face of imminent conflict. That worked in a benign period. We are no longer in a benign period. We are in one of the most dangerous periods in history. We need a policy of "strategic clarity," where we tell China that we will defend Taiwan. We also say we will extend a mutual defense treaty to Taiwan if it wants it, and we will put American troops on the island as a tripwire. Question: You think he is not saying that because he has no intention of actually doing it, so in a way, he is telling the truth? Chang: The mind of Biden is difficult to understand. We do not know what the administration would do. We have never known, after Allen Dulles, what any administration would do, with regard to Taiwan. We knew what Dulles would have done. We have got to be really concerned because there are voices in the administration that would give Taiwan, and give other parts of the world, to China. It would probably start with John Kerry; that is only a guess. Question: You mentioned earlier the growing Chinese economic problems. Would you use taking action on the enormous trade deficits we run with China to contribute to that problem? Chang: Yes, we should absolutely do that. Go back to a day which, in my mind, lives in infamy, which is January 15th, 2020, when President Trump signed the Phase One trade deal, which I think was a mistake. In that Phase One trade deal, it was very easy for China to comply, because there were specific targets that China had to meet in buying US goods and services. This was "managed trade." China has not met its obligations. As of a few months ago, China had met about 62% of its commitments. That means, they have dishonored this deal in a material and significant way. If nothing else, China has failed to meet its Phase One trade deal commitments. We should be increasing the tariffs that President Trump imposed under Section 301 of the Trade Act of 1974. Remember, those tariffs are meant to be a remedy for the theft of US intellectual property. China has continued to steal US IP. As matter of fact, it has gotten worse: for instance, these Chinese anti‑lawsuit injunctions, which they have started to institute. We need to do something: China steals somewhere between $300 to $600 billion worth of US intellectual property each year. That is a grievous wound on the US economy, it is a grievous wound on our society in general. We need to do something about it. Question: As a follow‑up on that, Japan commenced World War II because of the tariffs Roosevelt was strapping on oil imports into Japan, do you think that might well have the same effect on China, where we do begin to impose stiffer tariffs on American imports? Chang: That is a really important question, to which nobody has an answer. I do not think that China would start a war over tariffs. Let me answer this question in a different way. We are Americans. We naturally assume that there are solutions, and good solutions, to every problem. After three decades of truly misguided China policy, there are no good solutions. There are no solutions that are "undangerous." Every solution, going forward, carries great risk. The current trend of policy is unsustainable. There will be no American republic if we continue to do what we are currently doing and if we continue to allow China to do what it does. I do not think that enforcing a trade deal will start World War III. The point is, we have no choice right now. First, I don't think the Chinese were ever going to honor the Phase One agreement . This was not a deal where there were some fuzzy requirements. This deal was very clear: China buys these amounts of agricultural products by such and such date, China buys so many manufactured products by such and such date. This was not rocket science. China purposefully decided not to honor it. There are also other issues regarding the trade deal do not think that we should be trying to foster integration of Wall Street into China's markets, which is what the Phase One deal also contemplated. Goldman Sachs ran away like a bandit on that. There are lot of objections to it. I do not think we should be trading with China, for a lot of reasons. The Phase One trade deal, in my mind, was a great mistake. Do not take it from me, just look at their failure to comply with very simple, easy‑to‑comply-with requirements. It was a mistake. Question: Concerning cybersecurity, as we saw in the recent departure of a Pentagon official, ringing the alarm on how we are completely vulnerable to China's cyberattacks. From your perspective, what would an attack look like on China that would hurt them? What particular institutions would be the most vulnerable? Is it exposing their secrets? Is it something on their financial system? Is it something on their medical system or critical infrastructure? What does the best way look like to damage them? Also, regarding what you mentioned about Afghanistan, we know that China has been making inroads into Pakistan as a check on American hegemony in relationships with India and Afghanistan. Now that the Afghanistan domino is down, what do you see in the future for Pakistan's nuclear capability, in conjunction with Chinese backing, to move ever further westward towards Afghanistan, and endangering Middle East security? Chang: Right now, India has been disheartened by what happened, because India was one of the main backers of the Afghan government. What we did in New Delhi was delegitimize our friends, so that now the pro‑Russian, the pro‑Chinese elements in the Indian national security establishment are basically setting the tone. This is terrible. What has happened, though, in Pakistan itself, is not an unmitigated disaster for us, because China has suffered blowback there. There is an Afghan Taliban, and there is a Pakistani Taliban. They have diametrically‑opposed policies on China. The Afghan Taliban is an ally of China; the Pakistani Taliban kill Chinese. They do that because they want to destabilize Pakistan's capital, Islamabad. Beijing supports Islamabad. The calculation on part of the Pakistani Taliban is, "We kill Chinese, we destabilize Islamabad, we then get to set up the caliphate in Pakistan." What has happened is, with this incredible success of the Afghan Taliban, that the Pakistani Taliban has been re‑energized -- not good news for China. China has something called the China‑Pakistan Economic Corridor, part of their Belt and Road Initiative. Ultimately that is going to be something like $62 billion of investment into Pakistani roads, airports, electric power plants, utilities, all the rest of it. I am very happy that China is in Pakistan, because they are now dealing with a situation that they have no solutions to. It's like Winston Churchill on Italy, "It's now your turn." We should never have had good relations with Pakistan. That was always a short‑term compromise that, even in the short term, undermined American interests. The point is that China is now having troubles in Pakistan because of their success in Afghanistan. Pakistan is important to China for a number of reasons. One of them is, they want it as an outlet to the Indian Ocean that bypasses the Malacca Strait -- a choke point that the US Navy ‑‑ in their view ‑‑ could easily close off, which is correct. They want to bypass that, but their port in Gwadar is a failure in many respects. Gwadar is in Pakistan's Baluchistan. The Baluchs are one of the most oppressed minorities on earth. They have now taken to violence against the Chinese, and they have been effective. Pakistan is a failure for China. The best response would be if we hit them with everything at once because China right now is weak. If we were going to pick the number one thing to do, I would think trade. Trade is really what they need right now. Their economy is stalling. There are three parts to the Chinese economy, as there are to all economies: consumption, investment, and net exports. Their consumption right now is extremely weak from indicators that we have. The question is can they invest? China now has a debt crisis, so they are not going to invest their way out of this crisis, which means the only way they can save their economy is net exports. We should stop buying their stuff. We have extraordinary supply chain disruptions right now. It should be pretty easy for us to make the case that we must become self‑sufficient on a number of items. Hit them on trade. Hit them on investment, publicize the bank account details of Chinese leaders. All these things that we do, we do it all at the same time. We can maybe get rid of these guys. Question: In the Solomon Islands, they published China's under-the-table payments to political figures. Should we do the same thing with China's leaders? Chang: Yes. There is now a contest for the Solomon Islands, which includes Guadalcanal. China has bought the political establishment in the Solomon Islands, except for one brave man named David Suidani. Recently, somebody got the bright idea of publishing all of the specific payments that Beijing has made to Solomon Islands politicians. This was really good news. We should be doing this with payments to American politicians, we should be doing this across the board. Why don't we publish their payments to politicians around the world? Let's expose these guys, let's go after them. Let's root out Chinese influence, because they are subverting our political system. Similarly, we should also be publishing the bank account details of all these Chinese leaders, because they are corrupt as hell. Question: Could you comment, please, on what you think is the nature of the personal relationships between Hunter Biden, his father, and Chinese financial institutions. How has it, if at all, affected American foreign policy towards China, and how will it affect that policy? Chang: There are two things here. There are the financial ties. Hunter Biden has connections with Chinese institutions, which you cannot explain in the absence of corruption. For instance, he has a relationship with Bohai Harvest Partners, BHR. China puts a lot of money into the care of foreign investment managers. The two billion, or whatever the number is, is not that large, but they only put money with people who have a track record in managing investments. Hunter Biden only has a track record of being the son of Joe Biden. There are three investigations of Hunter Biden right now. There is the Wilmington US Attorney's Office, the FBI -- I don't place very much hope in either of these – but the third one might actually bear some fruit: the IRS investigation of Hunter Biden. Let us say, for the moment, that Biden is able to corrupt all three of these investigations. Yet money always leaves a trail. We are going to find out one way or another. Peter Schweizer, for instance, is working on a book on the Biden cash. Eventually, we are going to know about that. What worries me is not so much the money trail -- and of course, there's the art sales, a subject in itself, because we will find out. What worries me is that Hunter Biden, by his own admission, is a troubled individual. He has been to China a number of times. He has probably committed some embarrassing act there, which means that the Ministry of State Security has audio and video recordings of this. Those are the things that can be used for blackmail. We Americans would never know about it, because blackmail does not necessarily leave a trail. This is what we should be most concerned about. Biden has now had two long phone calls with Xi Jinping. The February call, plus also one a few months ago. We do not know what was said. I would be very worried that when Xi Jinping wants to say something, there will be a phone call to Biden, and it would be Xi doing the talking without note takers. Question: Please tell us about the China desk over the 30 years, the influence of the bureaucracy on politics; what can they affect? Chang: I do not agree with our China policy establishment in Washington, in general, and specifically the State Department and NSC. This a complicated issue. First, there is this notion after the end of the Cold War, that the nature of governments did not matter. You could trade with them, you could strengthen them, and it would not have national security implications. That was wrong for a number of reasons, as we are now seeing. What bothers me is that, although their assumptions about China have demonstrably been proven wrong, American policymakers still continue with the same policies. There is, in some people's mind, an unbreakable view that we have to cooperate with China. You hear this from Blinken all the time: "We've got to cooperate where we can." It is this formulation which is tired, and which has not produced the types of policies that are necessary to defend our republic. That is the unfortunate thing. This is what people learn in international relations school when they go to Georgetown, and they become totally stupid. We Americans should be upset because we have a political class that is not defending us. They are not defending us because they have these notions of China. George Kennan understood the nature of the Soviet Union. I do not understand why we cannot understand the true nature of the Chinese regime. Part of it is because we have Wall Street, we have Walmart, and they carry China's water. There are more of us than there are of them in this country. We have to exercise our vote to make sure that we implement China policies that actually protect us. Policies that protect us are going to be drastic and they will be extreme, but absolutely, we have now dug ourselves into such a hole after three decades of truly misguided views on China, that I don't know what else to say. This is not some partisan complaint. Liberals and conservatives, Republicans and Democrats, all have truly misguided China policies. I do not know what it takes to break this view, except maybe for the deaths of American servicemen and women. Question: Is the big obstacle American businesses which, in donations to Biden, are the ones stopping decoupling of commerce, and saying, "Do not have war; we would rather earn money"? Chang: It is. You have, for instance, Nike. There are a number of different companies, but Nike comes to mind right now, because they love to lecture us about racism. For years they were operating a factory in Qingdao, in the northeastern part of China, that resembled a concentration camp. The laborers were Uighur and Kazakh women, brought there on cattle cars and forced to work. This factory, technically, was operated by a South Korean sub‑contractor, but that contractor had a three‑decade relationship with Nike. Nike had to know what was going on. This was forced labor, perhaps even slave labor. Clearly, Nike and Apple and other companies are now, at this very moment, trying to prevent Congress from enacting toughened rules on the importation of forced‑labor products into our country. One of the good things Trump did was, towards the end of his four years, he started to vigorously enforce the statutes that are already on the books, about products that are made with forced and slave labor. Biden, to his credit, has continued tougher enforcement. Right now, the big struggle is not the enforcement, but enhancing those rules. Apple and all of these companies are now very much trying to prevent amendment of those laws. It's business, but it's also immoral. Question: It is not just big Wall Street firms. There are companies that print the Bible. Most Bibles are now printed in China. When President Trump imposed the tariffs, a lot of the Bible printers who depended on China actually went to Trump and said, "You cannot put those tariffs in because then the cost of Bibles will go up." Chang: Most everyone lobbies for China. We have to take away their incentive to do so. Question: What are the chances that China's going to invade Taiwan? Chang: There is no clear answer. There are a number of factors that promote stability. One of them is that, for China to invade Taiwan, Xi Jinping has to give some general or admiral basically total control over the Chinese military. That makes this flag officer the most powerful person in China. Xi is not about to do that. Moreover, the Chinese regime is even more casualty‑adverse than we are. Even if Beijing thinks it can take Taiwan by force, it is probably not going to invade because it knows an invasion would be unpopular with most people in China. It is not going to risk hundreds of thousands of casualties that would result from an invasion. The reason we have to be concerned is because it is not just a question of Xi Jinping waking up one morning and saying, "I want to invade Taiwan." The danger is the risk of accidental contact, in the skies or on the seas, around Taiwan. We know that China has been engaging in hostile conduct, and this is not just the incursions into Taiwan's air-defense identification zone. There are also dangerous intercepts of the US Navy and the US Air Force in the global commons. One of those accidents could spiral out of control. We saw this on April 1st, 2001, with the EP‑3, where a Chinese jet clipped the wing of that slow‑moving propeller plane of the US Navy. The only reason we got through it was that George W. Bush, to his eternal shame, paid China a sum that was essentially a ransom. He allowed our crew to be held for 11 days. He allowed the Chinese to strip that plane. This was wrong. This was the worst incident in US diplomatic history, but Bush's craven response did get us through it. Unfortunately, by getting through it we taught the Chinese that they can without cost engage in these dangerous maneuvers of intercepting our planes and our ships. That is the problem: because as we have taught the Chinese to be more aggressive, they have been. One of these incidents will go wrong. The law of averages says that. Then we have to really worry. Question: You don't think Xi thinks, "Oh well, we can sacrifice a few million Chinese"? Chang: On the night of June 15th, 2020, there was a clash between Chinese and Indian soldiers in Ladakh, in the Galwan Valley. That was a Chinese sneak attack on Indian-controlled territory. That night, 20 Indian soldiers were killed. China did not admit to any casualties. The Indians were saying that they killed about 45 Chinese soldiers that night. Remember, this was June 15th of 2020. It took until February of 2021 for China to admit that four Chinese soldiers died. TASS, the Russian news agency, recently issued a story reporting that 45 Chinese soldiers actually died that night. This incident shows you how risk‑averse and casualty‑averse the Chinese Communist Party is. They are willing to intimidate, they are willing to do all sorts of things. They are, however, loath to fight sustained engagements. Remember, that the number one goal of Chinese foreign policy is not to take over Taiwan. The number one goal of Chinese foreign policy is to preserve Communist Party rule. If the Communist Party feels that the Chinese people are not on board with an invasion of Taiwan, they will not do it even if they think they will be successful. Right now, the Chinese people are not in any mood for a full‑scale invasion of Taiwan. On the other hand, Xi Jinping has a very low threshold of risk. He took a consensual political system where no Chinese leader got too much blame or too much credit, because everybody shared in decisions, and Xi took power from everybody, which means, he ended up with full accountability, which means -- he is now fully responsible. In 2017, when everything was going China's way, this was great for Xi Jinping because he got all the credit. Now in 2021, where things are not going China's way, he is getting all the blame. The other thing, is that Xi has raised the cost of losing a political struggle in China. In the Deng Xiaoping era, Deng reduced the cost of losing a struggle. In the Maoist era, if you lost a struggle, you potentially lost your life. In Deng's era, if you lost a struggle, you got a nice house, a comfortable life. Xi Jinping has reversed that. Now the cost of losing a political struggle in China is very high. So there is now a combination of these two developments. Xi has full accountability. He knows that if he is thrown out of power, he loses not just power. He loses his freedom, his assets, potentially his life. If he has nothing to lose, however, it means that he can start a war, either "accidentally" or on purpose. He could be thinking, "I'm dying anyway, so why don't I just roll the dice and see if I can get out of this?" That is the reason why this moment is so exceedingly risky. When you look at the internal dynamics inside China right now, we are dealing with a system in crisis. Question: China has a conference coming up in a year or so. What does Chairman Xi want to do to make sure he gets through that conference with triumph? Chang: The Communist Party has recently been holding its National Congresses once every five years. If the pattern follows -- and that is an if -- the 20th National Congress of the Communist Party will be held either October or November of next year. This is an important Congress, more so than most of them because Xi Jinping is looking for an unprecedented third term as general secretary of the Communist Party. If you go back six months ago, maybe a year, everyone was saying, "Oh, Xi Jinping. No problem. He's president for life. He's going to get his third term. He will get his fourth term. He will get his fifth term, as long as he lives. This guy is there forever." Right now, that assumption is no longer valid. We do not know what's going to happen because he is being blamed for everything. Remember, as we get close to the 20th National Congress, Xi Jinping knows he has to show "success." Showing "success" could very well mean killing some more Indians or killing Americans or killing Japanese or something. We just don't know what is going to happen. Prior to the National Congress, there is the sixth plenum of the 19th Congress. Who knows what is going to happen there. The Communist Party calendar, as you point out, does dictate the way Xi Jinping interacts with the world. Question: Going back to the wing-clip incident, what should Bush have done? Chang: What Bush should have done is immediately demand the return of that plane. What he should have done was to impose trade sanctions, investment sanctions, whatever, to get our plane back. We were fortunate, in the sense that our aviators were returned, but they were returned in a way that has made relations with China worse, because we taught the Chinese regime to be more aggressive and more belligerent. We created the problems of today and of tomorrow. I would have imposed sanction after sanction after sanction, and just demand that they return the plane and the pilots. Remember, that at some point, it was in China's interests to return our aviators. The costs would have been too high for the Chinese to keep them. We did not use that leverage on them. While we are on this topic, we should have made it clear to the Chinese leadership that they cannot kill Americans without cost. Hundreds of thousands Americans have been killed by a disease that China deliberately spread. In one year, from 2020 to 2021, nearly 80,000 Americans died from fentanyl, which China has purposefully, as a matter of state and Communist Party policy -- sold to Americans. China is killing us. We have to do something different. I'm not saying that we have good solutions; we don't. But we have to change course. Question: Biden is continuing this hostage thing with Huawei, returning the CFO of Huawei in exchange for two Canadians. Have we taught the Chinese that they can grab more hostages? Chang: President Trump was right to seek the extradition of Meng Wanzhou, the chief financial officer of Huawei Technologies. Biden, in a deal, released her. She did not even have to plead guilty to any Federal crime. She signed a statement, which I hope we'll be able to use against Huawei. As soon as Meng was released, China released the "two Michaels," the two Canadians who were grabbed within days of our seeking extradition of Meng Wanzhou. In other words, the two Michaels were hostages. We have taught China that any time that we try to enforce our own laws, they can just grab Americans. They have grabbed Americans as hostages before, but this case is high profile. They grabbed Americans, and then they grabbed Canadians, and they got away with it. They are going to do it again. We are creating the incentives for Beijing to act even more dangerously and lawlessly and criminally in the future. This has to stop. Question: On the off-chance that the current leader does not maintain his position, what are your thoughts on the leaders that we should keep an eye on? Chang: There is no one who stands out among the members of the Politburo Standing Committee. That is purposeful. Xi Jinping has made sure that there is nobody who can be considered a successor; that is the last thing he wants. If there is a change in leadership, the new leader probably will come from Jiang Zemin's Shanghai Gang faction. Jiang was China's leader before Hu Jintao, and Hu came before Xi Jinping. There is now a lot of factional infighting. Most of the reporting shows that Jiang has been trying to unseat Xi Jinping because Xi has been putting Jiang's allies in jail. Remember, the Communist Party is not a monolith. It has a lot of factions. Jiang's faction is not the only one. There is something called the Communist Youth League of Hu Jintao. It could, therefore, be anybody. Question: Double question: You did not talk about Hong Kong. Is Hong Kong lost forever to the Chinese Communist Party? Second question, if you could, what are the three policies that you would change right away? Chang: Hong Kong is not lost forever. In Hong Kong, there is an insurgency. We know from the history of insurgencies that they die away -- and they come back. We have seen this in Hong Kong. The big protests in Hong Kong, remember, 2003, 2014, 2019. In those interim periods, everyone said, "Oh, the protest movement is gone." It wasn't. China has been very effective with its national security law, but there is still resistance in Hong Kong. There is still a lot of fight there. It may not manifest itself for quite some time, but this struggle is not over, especially if the United States stands behind the people there. Biden, although he campaigned on helping Hong Kong, has done nothing. On the second question, I would close China's four remaining consulates. I would also strip the Chinese embassy down to the ambassador and his personal staff. The thousands who are in Washington, DC, they would be out. I would also raise tariffs to 3,600%, or whatever. This is a good time to do it. We have supply chain disruptions. We are not getting products from China anyway. We can actually start to do this sort of stuff. The third thing, I would do what Pompeo did, just hammer those guys all the time verbally. People may think, "Those are just words." For communists, words are really important, because they are an insecure regime where propaganda is absolutely critical. I would be going after the Communists on human rights, I would be going after them on occupying the South China Sea, on Taiwan, unrelentingly -- because I would want to show the world that the United States is no longer afraid of China. We have taught the world that we are afraid of dealing with the Chinese. State Department people, they are frightened. We need to say to the Chinese regime, like Dulles, "I'm not afraid of you. I'm going after you, and I'm going to win." Tyler Durden Sun, 05/01/2022 - 23:20.....»»

Over the weekend I attended a birthday party for one of my best friends. After things wound down, we reflected on the day’s festivities. Overall, it was a success. But, he did confide to me that he wasn’t too keen on the number of gift cards he received. Of course, he was grateful for the […] Over the weekend I attended a birthday party for one of my best friends. After things wound down, we reflected on the day’s festivities. Overall, it was a success. But, he did confide to me that he wasn’t too keen on the number of gift cards he received. Of course, he was grateful for the sentiment. And, some of these cards could come in handy, others not so much. For example, he got a card from a clothing store that never patronizes. But, his main gripe was that he forgets he has them. As a consequence, they go unused. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Henry Singleton Series in PDF Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q4 2021 hedge fund letters, conferences and more This isn’t a problem exclusively for my friend. According to a Bankrate poll, more than half of U.S. adults (51 percent) forget to use their gift cards. The result is a loss of $15.3 billion in value nationwide, which amounts to roughly $116 worth of value per person. There is some good news, though. This is a decrease from $167 in January 2020. More than half (56 percent) of millennials haven’t spent their gift cards, worth an average of $139 per person, compared with 52 percent of boomers ($113), 47 percent of Gen Xers ($112), and 46 percent of Gen Zers ($81). When Will People Use Their Gift Cards? Ninety-five percent of respondents who said they did not use unused gift cards, vouchers, or store credits hope to use them at some point. Of those, more than half are planning to use them all (51 percent), and fewer (30 percent) are planning to use most of them. In terms of planning to use them most, boomers accounted for the largest share of respondents (63 percent). Generation Xers (54 percent), millennials (42 percent), and Gen Zers (32%). But, here’s the problem. If you wait too long, you may be disappointed to find out that the gift card has expired. It is estimated that nearly half (49%) of adults lost free stuff at one time or another. The Problem With Expiring Gift Cards Personally, the thing that grinds my gears with expiring gift cards is that it’s a lose-lose situation. For one, it’s got to be a bummer for the person who purchased the gift card. Let’s say that my friend never used that $50 gift card to that clothing store? The person who gave him that card could have just taken a $50 bill and flushed it down the toilet. And, if they found out about this, that would understandably upset them. But, what if he does decide to use the gift card eventually only to be told that it’s expired? There’s a very good chance that this won’t paint the business in a good light. In other words, this isn’t going to improve the customer experience. And, since he rarely goes to this store in the first place, that doesn’t motivate him to ever go back. Now, to be fair, unused gift cards do present an accounting issue for businesses. Some large corporations, for instance, show that these unused gift card liabilities can amount to significant amounts; Walmart: $1.9B (2019) Amazon: $2.8B (2018) Starbucks: $1.6B (2018) Target: $727m (2018) But after a certain amount of time (typically between six and 24 months), companies can also convert these liabilities into what’s called breakage income. That’s how much money the company says will never be redeemed from gift cards. So that’s basically free money the company is getting. Despite this, it may be in the business’s best interest to not let gift cards expire. Aside from the bad PR, it’s been found that 75% of people who redeem gift cards end up spending more than they planned. Gift card Expiration Laws and Gift Card State Laws Thankfully, gift certificates and store gift cards don’t expire for five years because of the Credit CARD Act of 2009. At the same time, if you don’t use your card within a year, issuers can charge you an “inactivity fee.” All 50 states are subject to this rule. In addition, the recipient of the gift card needs to be aware of the terms and conditions. These rules include information on the expiration date. The receiver must, however, follow certain specific circumstances to this rule in some states. A few states have enacted laws regulating gift certificates and gift cards. Store gift certificates and gift cards aren’t allowed to expire or charge dormancy fees in California (except under certain circumstances), and if the balance is under $10, you can use it for cash. As for fees, this also varies from state to state. In some states, for example, the card packaging must include a disclosure of any fees. The fees should not begin to apply until one year after inactivity, and there should only be one fee per month if states allow post-sale fees. A few states, however, govern the issue of post-sale fees for gift cards using their own legislation. During the purchase process, there are fees charged for maintenance, activation, and transactions. In addition to this, the gift card must include a statement describing the fees associated with it. Check State Statutes for Gift Cards and Certificates published by the National Conference of State Legislatures to find out whether your state has laws covering gift cards and certificates. Additionally, you can get information about the state’s consumer protection laws from a local lawyer. Ways to Maximize Gift Cards By keeping track of your gift card usage in a timely manner you can prevent confusion over expiration dates or fees. And, most importantly, you can maximize your gift cards. Tips When You Get a Gift Card Treat your gift card like cash. If you got a crisp $20 bill in a birthday, holiday, or retirement gift card, you’d immediately put it in your wallet. As such, it will be accessible the next time you go shopping. Use the same concept with gift cards. That means instead of throwing your gift card in a drawer, place it in a spot that’s more visible. Or you can set up a reminder on your phone to remind you to use the gift card sooner than later. Plan on using it this month. It’s a good idea to make an appointment or a reservation right away if it’s an experience gift card, such as one for a restaurant, movie theater, or spa. It shouldn’t be left unused for more than a year. While you do have five years to use the gift card before it expires, that doesn’t mean it will last that long. For example, if you have a gift card to a restaurant it could close in three years. Obviously, that means that the gift card can’t be used. Add it to an app, if applicable. If you have gift cards from Dunkin’ Donuts, Uber, Apple, or Amazon, these can be redeemed as credits on your account so that they can be used as you wish. As a result, you won’t have to worry about losing the physical card or not having it with you when you need it. Sell your gift card. It’s possible to cash out your gift card at the company where it was issued if your state allows it or sites like Raise. If your gift card balance is under $10, you can normally cash it out, though you can ask the retailer if you can. Another option? Instantly trade unwanted gift cards at Target for store credit. Be strategic. Using gift cards strategically is another way to save money when redeeming them. If the store is already offering a special promotion with your gift card, you are more likely to get a discount or bonus gift. Tips When You Give a Gift Card Consider what the person likes. The likelihood of a gift card going unused is higher if it is for a store or service that the recipient just doesn’t like or cannot use. Shop at a store that offers many items, like Target, when in doubt. Or, even better, an option like a Visa gift card that they can use wherever they want. You should get them something that is convenient for them. If the recipient lives far from the location, theme park gift cards or museum memberships are unlikely to be used. In the same vein, avoid giving gift cards that will require the giftee to spend more than their budget allows. A $25 gift voucher to upscale restaurants or designer stores, for example, isn’t going to cut it. Buy on sale. You can save money on gift cards by buying them at a discount. Although you’ll be buying them for less, their value remains the same. So, in a way, it’s like getting free money. Earn rewards. In addition to earning some bonus rewards points, you can also earn them when you buy gift cards. Most rewards programs allow you to buy gift cards using your rewards points. When you buy gift cards, you should buy them from retailers where you are a rewards member, so you can earn points. You can then redeem these points for extra savings or free products at a later date. Moreover, you can also use this trick for credit card rewards programs as well. With your credit card, you can earn cashback or miles even if you are not a loyalty or rewards member of the retailer. Consider an e-gift card. People who are digitally native will appreciate the ease of loading a gift card right into their wallets and apps by sending it directly to their emails or texts. Shop local. Buying gift cards from your favorite small businesses can be a great way to support them. Despite the fact that it may not save you money, it’s an excellent way to ensure that your money supports your community and local businesses. In addition, if you personally know the family or individual, this is a great way to give them an extra boost in revenue and business. Frequently Asked Questions About Gift Cards How do gift cards work? Gift cards can be used to buy things at restaurants, gas stations, and retail stores. Gift cards can be redeemed at places that accept them after you load a specific amount of money onto the card. There are two types of gift cards: open-loop and closed-loop. A gift card that can be used around at any location can be described as an open-loop card. As an example, a Visa gift card can be redeemed wherever Visa is accepted. Conversely, a closed-loop card can only be used at a particular merchant. In other words, if you purchased a gift card from Starbucks or Amazon, you could use it only at the retailer that issued it. How long do gift cards last? Federal law stipulates that gift cards can only expire five years after purchase. Its value can be diminished if it’s not used within 12 months, as fees can be charged for inactivity, dormancy, and service. There can be no more than one charge per month, and the fees must be disclosed in advance to the user. Be sure the recipient and you are aware of the fees so they can use their cards to the full value. Can I get cash from a gift card if I have a PIN? Gift cards used to have to be treated as credit cards at the point of sale because they didn’t come with a PIN. Since prepaid cards typically have PINs, they can be used either way. As of 2013, the Federal Reserve required that all people be able to get a PIN for a general-purpose gift card, so they could choose what type of transaction to make. However, this law led some consumers to believe they could withdraw cash from their Visa gift cards using the PIN at an ATM or through a merchant’s point of sale. But they can’t. A PIN simply allows debit transactions to be performed on gift cards. While you can not withdraw money from an ATM or get cashback from a retailer with gift cards this law does permit these transactions like a Visa reloadable prepaid card. Where can I sell a gift card? You can exchange your gift card for cash. Or another gift card or cryptocurrency through online gift card resellers And, also through very select retailers. Ideally, you want to work with reputable gift card resellers that offer consumer protection such as Raise, CardCash, or Gift Card Bin. Article byJohn Rampton , Due About the Author John Rampton is an entrepreneur and connector. When he was 23 years old while attending the University of Utah he was hurt in a construction accident. His leg was snapped in half. He was told by 13 doctors he would never walk again. Over the next 12 months he had several surgeries, stem cell injections and learned how to walk again. During this time he studied and mastered how to make money work for you, not against you. He has since taught thousands through books, courses and written over 5000 articles online about finance, entrepreneurship and productivity. He has been recognized as the Top Online Influencers in the World by Entrepreneur Magazine, Finance Expert by Time and Annuity Expert by Nasdaq. He is the Founder and CEO of Due. Updated on Apr 1, 2022, 4:34 pm (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//mixi.media/data/js/95481.js"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

The first-ever artificial plane wreck in North America is a Boeing 737-200 that was submerged off the coast of Canada. Boeing 737 sunken off the coast of Canada.Sea Proof TV Some countries have intentionally sunken aircraft to promote diving tourism and create coral reefs.  Among the sunken planes are a handful of airliners, like the Boeing 747 and the smaller Convair 240. Aircraft are submerged with an OK by local authorities so all harmful pieces are removed beforehand. Scuba diving is one of the fastest-growing recreational activities in the world, having become a multibillion-dollar industry since its development in 1967.Thompson family scuba diving near Nabucco Island in Borneo, IndonesiaCourtesy of Don ThompsonSource: Future Market InsightsAccording to data from Future Market Insights, diving tourism sales have grown over 6% since 2015 and are expected to rise another 5% in the coming decade.Max Altman scuba diving on reefs effected by climate changeMax AltmanSource: Future Market InsightsScuba enthusiasts will travel thousands of miles to experience the most unique and thrilling dives out there. One type of dive site that has become increasingly popular is sunken aircraft.Snorkler looking at old wrecked airplane near Norman's Cay in the Bahamas.Onne van der Wal/Getty ImagesThere are several crashed airplanes that have been located and used as scuba sites, like a WWII-era Japanese Navy seaplane off the coast of Palau in Micronesia...An Aichi E13A Japanese "Jake" seaplane sitting on a reef in Palau.Eric Lemar/ShutterstockSource: Scuba Diver LifeAnd a Corsair aircraft off the coast of Hawaii.WW-II era Corsair plane off the coast of Hawaii.Mr. James KelleySource: Scuba Diver LifeHowever, there are a handful of large jets that have been intentionally sunk to create artificial coral reefs and give divers a unique experience exploring an aircraft underwater, including airliners and military planes.Scuba divers near the corroded jet engine of an underwater plane wreck.Richard Whitcombe/ShutterstockIn June 2016, one of the largest underwater planes was sunk — an Airbus A300. The aircraft was submerged by the Turkish government off the Aegean coast in Kuşadası and is 177 feet long with an impressive 144-foot wingspan.Airbus A300 being prepared to sink.Anadolu Agency/Getty ImagesSource: The GuardianThe huge jet took two and a half hours to sink and was done to draw more diving tourism to the country. At 75-feet deep, the A300 is easily reachable by experienced divers.Airbus A300 being prepared to sink.Anadolu Agency/Getty ImagesSource: The Guardian"Our goal is to make Kuşadası a centre of diving tourism," Özlem Çerçioğlu, mayor of Aydin province, said in a video. "Our goal is to protect the underwater life. And with these goals in mind, we have witnessed one of the biggest wrecks in the world."Divers at the A300 dive site.Anadolu Agency/Getty ImagesSource: The GuardianThe first-ever artificial plane wreck in North America is a Boeing 737-200 that was submerged off the coast of Canada by Artificial Coral Reefs. The jet was featured on Discovery's Megabuilders series.Boeing 737 sunken off the coast of Canada.Sea Proof TVSource: Artificial Reef Society BCThe plane was donated by Air Canada in 2002 and was placed 90 feet deep at the bottom of the Georgia Strait off Chemainus in 2006, which is a community on Southern Vancouver Island in British Columbia.Boeing 737 donated by Air Canada that was sunk off the coast of Canada.Artificial Reef Society BCSource: Artificial Reef Society BCArtificial Coral Reefs President Howard Robins told Insider that the plane did not come with landing gear, and he explained he did not want to put the belly on the seafloor, so the team had to get creative.Boeing 737 sunk off the coast of Canada.Artificial Reef Society BCSource: Artificial Reef Society BCAs a solution, Robins explained the organization designed a unique cradle system mounted on 11-foot stands built with marine-friendly aluminum material. The system was attached to the aircraft and sunk as one unit.Special stands and cradle system used to mount the plane.Artificial Reef Society BCSource: Artificial Reef Society BCThe organization used a specially engineered contraption that it calls a "placement" that involves a barge and a crane."Placement" contraption specially-designed to sink the jet.Artificial Reef Society BCSource: Artificial Reef Society BCAs far as environmental concerns, Robins told Insider that all coatings and parts on the vessel that were considered harmful to the ocean were stripped, and what was left was the bare metal and the overhead bins.Boeing 737 sunken off the coast of Canada.Artificial Reef Society BCSource: Artificial Reef Society BC"This is recycling and repurposing, and those are key words," Robins told Insider. "This is not ocean-dumping or disposal, this is a thoughtful, carefully planned out game plan that requires marine stewardship, permitting, and approvals."Boeing 737 sunken off the coast of Canada.Artificial Reef Society BCSource: Artificial Reef Society BCTwo other notable Boeing aircraft were sunk in the past decade, including a mammoth Boeing 747 jumbo jet off the coast of Bahrain intended to attract divers from around the world.Boeing 747 submerged off the coast of Bahrain.Dive BahrainSource: Dive BahrainThe 747 aircraft is the largest aircraft to be used as an artificial reef and was sunk by Falcon Aircraft Recycling in 2019. The company specially modified the structure of the aircraft, notably the wings, for the project.Falcon Aircraft Recycling specially modified the structure of the plane.Falcon Aircraft RecyclingSource: Dive BahrainToday, it is managed by Dive Bahrain and is part of the company's "underwater theme park," which will span 100,000 meters and include ships and other structures when complete.Boeing 747 sunken off the coast of Bahrain.Dive BahrainSince its debut, the 747 has attracted professional divers from over 50 countries.Boeing 747 sunken off the coast of Bahrain.Dive BahrainSource: Dive Bahrain, The National NewsAnother impressive sunken Boeing aircraft is a 727 submerged in Mermet Springs in Illinois. The plane is a piece of Hollywood memorabilia from 1997's "US Marshals."Mermet Springs Boeing 727 sunken plane.Mermet SpringsSource: Mermet SpringsIn the movie, the 727 "crashed" with actor Wesley Snipes inside and rolled into the Ohio River outside Bay City, Illinois, though Snipes' character got away. After filming, Mermet Springs owner Glen Faith purchased the jet for $1 and moved it 12 miles west to its new home in 1998.Robert Downey Jr in 1997's US Marshalls after the plane crash.Warner Bros.Source: Mermet SpringsThe 22-ton plane is submerged in the hazel-green waters using a barge, two cranes, two low-boys, and two police escorts. The nose sits 50-feet deep while the tail sits at just 15.Boeing 727 sunken in Mermet Springs.Mermet SpringsSource: Mermet SpringsAccording to the company, the plane was cut in half for transport and then resewn before it was submerged. The 120-foot fuselage is hollowed out for divers who can see "charred cockpit controls, missing wings and open hatches throughout."Boeing 727 sunken in Mermet Springs.Mermet SpringsSource: Mermet SpringsSmall airliners have also been internationally sunk to become a reef, including a Convair 240 off the coast of Aruba. The 40-seater plane was sunk to 45 feet but has moved down to 80 feet after being disrupted by Hurricane Lenny in 1999.Convair 240 off the coast of Aruba.ChrisDagSource: Leisure ProThe hurricane also broke the plane into two pieces, but it is still easy to navigate and can be explored by divers.Convair 240 off the coast of Aruba.ChrisDagSource: Leisure ProIn addition to airliners, a WWII-era plane was intentionally sunk in 2009 for diving tourism. The Dakota DC-3 was a former transporter for parachutists in the Turkish air force and was donated after its retirement.Plane wreck of a Douglas DC-3 Dakota in the Mediterranean Sea, Kas, Turkey.Andrey Nekrasov/Getty ImagesSource: Diver AdvisorToday, the aircraft sits on its belly on the seafloor at a depth of 55 feet off the coast of Turkey and acts as an artificial reef and dive site.Dakota DC3 plane wreck in Kas, Turkey.Andrey Nekrasov/Getty ImagesSource: Diver AdvisorAccording to the company, the engines, wings, cockpit, rudder, and landing gear are all intact, and the large door used to jump provides an entrance inside.Dakota DC3 plane wreck in Kas, Turkey.Andrey Nekrasov/Getty ImagesSource: Diver AdvisorInside the main cabin is pretty bare, but the cockpit shows the workspace of the pilot who manned the plane over 85 years ago.Plane wreck of a Douglas DC-3 Dakota in the Mediterranean Sea, Kas, Turkey.Andrey Nekrasov/Getty ImagesSource: Diver AdvisorRead the original article on Business Insider.....»»

Disney superfans Holly and Cody Cole have even visited the Florida theme park twice in one day, going in the morning and again for the fireworks. Holly and Cody Cole moved to Florida in December.Holly Cole A married couple moved from Tennessee to Florida to live closer to Disney World. Holly and Cody Cole now visit the resort about three times a week with their two-year-old. The couple says moving saved their marriage and helped them get away from family conflict.  Holly Cole has been visiting Disney World since she was five years old and has always wanted to live nearby one day.She finally took the plunge last year with her husband Cody after they'd experienced family conflict and wanted a new start.The couple, both 29, left Nashville, Tennessee and moved more than 700 miles to Auburndale, Florida in December. They can now drive to the resort in less than an hour. "We just wanted to leave Tennessee, but this is always where I wanted to end up," Holly Cole told Insider. "We've been here almost four months now and get to visit Disney around three times a week and we absolutely love it."The Disney superfan says leaving Tennessee has saved their marriage and they get to go to the resort all the time with their two-year-old daughter Willow. "A couple of days ago we went twice a day – we came home after going in the morning and then went back later for the fireworks. That's normal for us," Holly said. Holly and Cody Cole says moving near the resort has helped save their marriage.Holly ColeThe family has an annual season ticket called a Pixie Dust pass that costs $400 plus tax, which lets them visit whenever they want. The pass is only available for Florida residents and they opted out of water park access which costs more."At first I thought it was a scam because it was so cheap," Holly said. "Going to Disney before that has always been so expensive and would cost no less than $5,000 for the week, so once we set up our passes we were there the next day." Holly says she's been a "huge" Disney fan since she was a child and she enjoys being able to create fun memories with her daughter, who is now well-known by some of the cast members. The Navy veteran has a leg injury and says walking around the resort helps with her mobility as well as dealing with anxiety and depression. Now that she's no longer serving in the navy she said she can visit the resort any day of the week."I just have to go into the app and make a reservation, we can pretty much go whenever we want," Holly said. "My daughter will wake up and say 'mommy I want to see Mickey Mouse,' and we'll make a quick reservation and drive down." Read the original article on Business Insider.....»»

Futures Tumble, Treasuries And Rate Cut Odds Soar Amid Panic That Deutsche Bank Is The Next To Go Yesterday, while attention was still focused on the US banking system and the ongoing botched response by the Fed and especially the Treasury's senile Secretary, who more than two weeks after SIVB collapsed, have still not been able to stabilize confidence in banks - thereby assuring the US is about to slam head first into a brutal recession, just as Biden ordered to contain inflation, as US consumer spending is now in freefall - we pointed out that something bad was taking place in Europe: the credit default swaps of perpetually semi-solvent banking giant Deutsche Bank were quietly blowing out to multi-year highs. oh... pic.twitter.com/vNXc8ZE3Nm — zerohedge (@zerohedge) March 23, 2023 Well, we didn't have long to wait before everyone else also noticed and this morning it's official: the crisis has shifted to Germany's and Europe's largest TBTF bank, with even Bloomberg now writing that Deutsche Bank "has become the latest focus of the banking turmoil in Europe as ongoing concern about the industry sent its shares slumping the most in three years and the cost of insuring against default rising." The bank - which has staged a recovery in recent years after a series of crises that nearly brought it down - said Friday it will redeem a tier 2 subordinated bond early. And while such moves are usually intended to give investors confidence in the strength of the balance sheet, though the share price reaction suggests the message isn’t getting through, and the stock plunged 13% in German trading... ... while DB's CDS has exploded to level surpassing the bank's near-collapse in 2016, and is about to take out the covid wides. “It is a clear case of the market selling first and asking questions later,” said Paul de la Baume, senior market strategist at FlowBank SA. “Traders do not have the risk appetite to hold positions through the weekend, given the banking risk and what happened last week with Credit Suisse and regulators.” It wasn't just Deutsche Bank: UBS Group AG shares also dropped as Bloomberg reported that it’s one of the banks under scrutiny in a US Justice Department probe into whether finncial professionals helped Russian oligarchs evade sanctions, according to people familiar with the matter. In any case, the sudden, violent spike in DB default risk which quickly carried over to all big European banks, and which will not reverse until first the ECB then the Fed both cut rates... ... sent broader risk sentiment reeling with S&P 500 futures at session lows, sliding 1% to 3940. While there was no one big story setting off these moves. It could be a rush to havens heading into the weekend as traders wait for another shoe to drop — which has been a theme during recent weekends. In any case, the latest global equity rout and bank crisis which is now spreading to TBTF banks has sent bond yields crashing with the 2-year US yield plumbing new session lows, breaking down as low as 3.55%, and the resulting shockwave has collapsed odds of another rate hike in May to just 28% while the odds of a rate cut in June have exploded to 83% as the Fed's pivot finally arrives just on time: with the Fed having again broken the global financial system. In premarket trading, First Republic Bank swung between gains and losses as investors digested Treasury Secretary Janet Yellen’s comments about regulators being prepared to take additional steps to guard bank deposits if warranted. Fellow regional banks and bigger lenders decline, and after a volatile session on Thursday took the stock’s March slump to 90%. Block fell another 5%, extending Thursday’s 15% plunge as it announced potential legal action against short seller Hindenburg Research for its report on the payment processor.  Here are some other notable premarket movers: US cryptocurrency-exposed stocks decline, taking a pause from recent gains as the price of Bitcoin falls amid broader risk-off sentiment. Marathon Digital (MARA US) slid 0.9%, Hut 8 Mining Corp (HUT US) -1%, Coinbase (COIN US) -1.9%, Riot Platforms (RIOT US) -1.4%. ReNew Energy Global gains 12% after Bloomberg reported, citing people familiar with the matter, that the Canada Pension Plan Investment Board is exploring buying the shares of the power producer that it doesn’t already own and taking the Nasdaq- listed firm private. Joann slumped 6.2% in extended trading on Thursday after the fabric and crafts retailer reported adjusted earnings per share and Ebitda that missed the average analyst estimates, even as sales topped expectations. Oxford Industries fell 5.5% in postmarket trading after the owner of Tommy Bahama and Lilly Pulitzer issued a forecast for net sales in the current quarter that trailed the average analyst estimate at the midpoint of the guidance range. “Confidence is fragile, market volatility is likely to stay high, and policymakers may have to go further to make sure faith in the global financial system stays solid,” said Mark Haefele, chief investment officer at UBS Wealth Management. “Financial conditions are also likely to tighten, which increases the risk of a hard landing for the economy, even if central banks ease off on interest-rate hikes.” “Credit and stock markets too greedy for rate cuts, not fearful enough of recession,” a team led by Michael Hartnett wrote in a note. The strategist, who was correctly bearish through last year, said investment-grade spreads and stocks will be taking a hit over the next three to six months. Global cash funds had inflows of nearly $143 billion, the largest since March 2020 in the week through Wednesday — adding up to more than $300 billion over the past four weeks, according to the note citing EPFR Global data. European stocks are also plumbing lower, with European bank stocks sliding for a third day, and erasing weekly and yearly gains, as sentiment remains fragile on the sector. Deutsche Bank slumped nearly 15% as credit-default swaps surged amid wider concerns about the stability of the banking sector. The Stoxx 600 Banks Index is 5.3% lower as of 11:20am in London, erasing earlier weekly gains; the index is now -2.8% YTD. Meanwhile, UBS, which is not in the banking sector index, slumped as much as 8.4% as Jefferies cut its rating to hold from buy and it was among the banks under scrutiny in a US Justice Department probe into whether financial professionals helped Russian oligarchs evade sanctions. European oil stocks are also underperforming on Friday, dragging down the regional benchmark, as crude prices slump under pressure from a stronger dollar and concerns about the impact on growth of a fresh bout of stress facing the banking sector. The Energy sub-index slid as much as 4.3%, the most since March 15, while the Stoxx Europe 600 benchmark fell about 2%. Here are some other notable European movers: Casino Guichard-Perrachon SA fell as much as 6% to a fresh record low after Moody’s cut its long-term debt rating on the company further into junk territory Dino Polska drops as much as 5%, after its 4Q report showed that the Polish food supermarket chain is unable to maintain profitability amid inflation pressures Smiths Group gains as much as 2.1%, after the industrial firm beat expectations on Ebita, while also surpassing projections on its full-year sales outlook JD Wetherspoon jumps as much as 9.3% after the British pub operator posted a revenue beat for 1H, with Jefferies analysts noting resilience in like-for-like sales Earlier in the session, Asia equities were set to snap a three-day rally as lingering concerns over the health of the banking sector pushed a gauge of the region’s financial shares lower. The MSCI Asia Pacific Index fell as much as 0.5% before trimming losses, with its 11 sectoral sub-gauges showing mixed moves. Most markets declined, led by Hong Kong’s Hang Seng Index, while Chinese tech shares extended their rally on the back of positive earnings.  An index of Asian financial stocks dropped as much as 0.9%, tracking overnight declines in a measure of US financial heavyweights to the lowest since November 2020. Treasury Secretary Janet Yellen’s comments that authorities can take further steps to protect the banking system if needed failed to fully assuage concerns.  “The unease in the financial space will continue to weigh on the Asian financial sectors,” said Hebe Chen, an analyst at IG Markets Ltd. “The flip-flop in the market this week is seeing overwhelmed investors scratching their heads in the face of the mixed bag from Fed.”  Even with Friday’s lackluster moves, the MSCI Asia benchmark was set to notch its best weekly performance in about two months. The shares rose earlier in the week thanks to assurances from regulators in the US and Europe over protecting the banking sector and the Federal Reserve’s dovish tilt.   Meanwhile, a gauge of tech stocks in Hong Kong advanced for the fourth day close at its highest in a month. Lenovo led the gain, with JPMorgan lifting its recommendation on a bottoming of PC demand. “We like the internet sector, especially within China right now,” Marcella Chow, JPMorgan Asset Management’s global market strategist, said in an interview with Bloomberg TV. “China tech sector is attractive given improving regulatory outlook, leaner and more cost effective cost structure, improving margin.”  Japanese stocks Inched lower as worries linger over the financial sector while investors assess statements made by US Treasury Secretary Janet Yellen. The Topix Index fell 0.1% to 1,955.32 as of market close Tokyo time, while the Nikkei declined 0.1% to 27,385.25. Mitsubishi UFJ Financial Group Inc. contributed the most to the Topix Index decline, decreasing 1.1%. Out of 2,159 stocks in the index, 976 rose and 1,039 fell, while 144 were unchanged. “Assuming that the fallout from the US financial sector woes doesn’t spread significantly, Japanese stocks will likely stop its decline and pick up as the earnings period starts next month,” said Takeru Ogihara, a chief strategist at Asset Management One Australian stocks slumped to post a seventh week of losses; the S&P/ASX 200 index fell 0.2% to close at 6,955.20, with financials the biggest drag, as the malaise hanging over the global banking sector continued to damp sentiment. The benchmark erased 0.6% for the week, the seventh straight decline, maintaining the longest losing streak since 2008.  In New Zealand, the S&P/NZX 50 index fell 0.1% to 11,580.82. Indian stocks declined for a third straight week in the longest losing streak since December spurred by a late selloff in key gauges amid risk-off sentiment in global equities. The Nifty 50 index ended just shy of entering a so-called technical correction given the index’s near 10% drop from its December peak. For the week, the Nifty 50 fell 0.9% while the Sensex declined 0.8%. The S&P BSE Sensex fell 0.7% to 57,527.10 as of 3:30 p.m. in Mumbai, while the NSE Nifty 50 Index declined 0.8% to 16,945.05.  The selloff in small and mid cap counters contributed to the broader losses, with the Nifty Mid cap 100 and Nifty Small Cap 100 indexes ending nearly 2% lower each. Stocks of asset management companies were hammered after the government dropped the benefit of long-term capital gains tax for debt mutual funds in order to ensure parity in tax treatment with other such products. Shares of HDFC AMC dropped 4.1%, Aditya Birla AMC -2%, UTI AMC -4.8% and Nippon Life India AMC -1.2%. Reliance Industries contributed the most to the index decline, decreasing 2%. Out of 30 shares in the Sensex index, six rose and 24 fell In FX, the dollar’s recent weakness, which had supported the outlook for the region’s currencies and other assets, also took a breather on Friday. The Bloomberg dollar index rose 0.3% after a six-day run of declines. The yen rallies to the highest in six weeks amid demand for haven assets due to concerns over the health of the global banking sector. The yen was the biggest gainer versus the greenback among the Group-of-10 currencies. Treasury yields continued to decline reflecting expectations for Federal Reserve rate cuts this year “JPY’s strong performance we believe is driven by the return of its safe haven appeal, especially given that we see that Japanese banks are in a relatively better standing,” said Alan Lau, a strategist at Malayan Banking Bhd in Singapore. “Falling UST yields have also given the JPY support recently. Overall, we are positive on the yen and see the spot being on a downward trend this year with our year-end forecast at 122” In rates, Treasuries front-end adds to Thursday’s gains, with 2-year yields richer by over 20bp on the day, as the yield continues to plumb new session lows, breaking as low as 3.55%, dropping below th 2023 lows, and steepening the curve as traders continue to price out rate-hike premium for the May meeting and start pricing for cuts as early as June. Yields were near lows of the day while rest of the curve is richer by 17bp across belly to 9bp out to long-end; front-end led gains steepens 2s10s, 5s30s by 10bp and 8bp on the day. SOFR white-pack futures surge higher, with gains led by Dec23 contract which rallied 27bp vs. Thursday close; Fed-dated OIS shows just 4bp of rate hike premium for the May policy meeting with almost a full cut then priced into the June policy meeting — around 120bp of rate hikes are then priced into year-end In commodities, oil slipped the most in over a week, with Brent below $75, tracking a slide in equity markets and feeling the effects of a stronger dollar. Aluminum and copper headed toward their biggest weekly gains in more than two months on increasing demand in China and bets on looser Federal Reserve policy. Uranium Energy is among the most active resources stocks in premarket trading, falling about 9%. Gold traded just shy of $2000 and is about to break solidly higher. To the day ahead now, and data releases include the March flash PMIs from Europe and the US, along with UK retail sales for February, and the preliminary US durable goods orders for February. Otherwise from central banks, we’ll hear from the ECB’s De Cos, Nagel and Centeno, the Fed’s Bullard and the BoE’s Mann.   Market Snapshot S&P 500 futures down 1% to 3,940 MXAP down 0.2% to 160.13 MXAPJ down 0.5% to 515.46 Nikkei down 0.1% to 27,385.25 Topix down 0.1% to 1,955.32 Hang Seng Index down 0.7% to 19,915.68 Shanghai Composite down 0.6% to 3,265.65 Sensex down 0.2% to 57,801.12 Australia S&P/ASX 200 down 0.2% to 6,955.24 Kospi down 0.4% to 2,414.96 STOXX Europe 600 down 0.7% to 443.10 German 10Y yield little changed at 2.11% Euro down 0.4% to $1.0791 Brent Futures down 0.6% to $75.46/bbl Gold spot down 0.3% to $1,987.17 U.S. Dollar Index up 0.30% to 102.84 Top Overnight News A Federal Reserve facility that gives foreign central banks access to dollar funding was tapped for a record $60 billion in the week through March 22: BBG Deutsche Bank AG was at the center of another selloff in financial shares heading into the weekend: BBG Credit Suisse Group AG and UBS Group AG are among banks under scrutiny in a US Justice Department probe into whether financial professionals helped Russian oligarchs evade sanctions, according to people familiar with the matter: BBG Japan’s headline national CPI for Feb cools to +3.3% (down from +4.3% in Jan and inline w/the St) while core ticks higher to +3.5% (up from +3.2% in Jan and ahead of the St’s +3.4% forecast). RTRS Copper prices will surge to a record high this year as a rebound in Chinese demand risks depleting already low stockpiles, the world’s largest private metals trader has forecast. Global inventories of the metal used in everything from power cables and electric cars to buildings have dropped rapidly in recent weeks to their lowest seasonal level since 2008, leaving little buffer if demand in China continues to pace ahead. FT Authorities this week raided the Beijing offices of Mintz Group, detaining all five of the New York-based due diligence firm’s staff members in mainland China, the company said—an incident likely to unnerve global businesses operating in the country. WSJ China’s top diplomat Wang Yi urged Europe to play a role in supporting peace talks for Russia’s war in Ukraine, though the US has warned Beijing’s proposals would effectively freeze the Kremlin’s territorial gains. BBG Ukrainian troops, on the defensive for months, will soon counterattack as Russia's offensive looks to be faltering, a commander said, but President Volodymyr Zelenskiy warned that without a faster supply of arms the war could last years. RTRS Europe’s flash PMIs for March were mixed, with upside on services (55.6, up from 52.7 in Feb and ahead of the St’s 52.5 forecast) but downside on manufacturing (47.1, down from 48.5 in Feb and below the St’s 49 forecast). “Inflationary pressures have continued to moderate, with input prices falling sharply in manufacturing… overall input costs rose at the slowest rate since March 2021…the record easing of supply constraints marks a major reversal from the record delays seen during the pandemic” S&P Deutsche Bank was at the center of another selloff in financials. The bank tumbled 11% in Frankfurt and default-swaps on its euro, senior debt surged to the highest since they were introduced in 2019, when Germany revamped its debt framework to introduce senior preferred notes. Other banks with high exposure to corporate lending also declined. Commerzbank slid 9% and Soc Gen 7%.  BBG The Swiss authorities and UBS Group AG are racing to close the takeover of Credit Suisse Group AG within as little as a month, according to two sources with knowledge of the plans, to try to retain the lender's clients and employees. RTRS Citizens Financial is set to submit a bid for SVB's private banking arm, Reuters reported. Customers Bancorp is also said to be exploring a deal for all or part of SVB. Carson Block said depositors at SVB and Signature Bank should have taken haircuts after regulators seized the firms. BBG A more detailed look at global markets courtesy of Newsquawk APAC stocks were mostly subdued after the recent bout of central bank rate hikes and choppy performance stateside where Wall Street just about closed higher amid a dovish market repricing of Fed rate expectations.     ASX 200 was lower with risk appetite sapped by weak PMI data which returned to contraction territory. Nikkei 225 lacked conviction after the latest inflation data printed mostly in line with estimates. Hang Seng and Shanghai Comp. retreated after the central bank drained liquidity and as participants digest earnings releases, while it was also reported that the US added 14 Chinese entities to the red flag list. Top Asian News HKMA said Hong Kong has very little exposure to the European and US banking situation, while it needs to monitor the situation carefully for any further volatility but is not concerned about risks to the Hong Kong banking sector. China is to extend some tax relief measures, according to local media. Equities are back under marked pressure as banking sector concern re-intensifies within Europe, Euro Stoxx 50 -2.3% & ES -0.8%. Specifically, the European banking index SX7P -5.0% is the standout laggard amid broad-based pressure in banking names as CDS' for the stocks continue to rise alongside focus on the redemption of notes by Deutsche Bank and Lloyds; currently, Deutsche Bank -12% is the Stoxx 600 laggard. Stateside, futures are pressured in tandem with the above price action though with the magnitude less pronounced ahead of the arrival of US players and as we await potential updates to the regions own banking names. Apple (AAPL) supplier Pegatron (4982 TW) is reportedly looking to open a second factory within India, to construct the latest iPhone models, via Reuters citing sources. Top European News ECB is likely to reassure EU leaders regarding bank stability on Friday and is to call for EU deposit insurance, according to Reuters. ECB's Nagel says it is necessary to increase policy rates to sufficiently restrictive levels, whilst the APP wind down should accelerate from Q3. Domestic price pressures are likely to last for longer, whilst underlying inflation is increasingly concerning. There are signs of second-round effects from inflation-induced higher wage increases. ECB's Nagel says there is often a bumpy road after similar instances in the banking sector, not surprising there have been market moves. On Deutsche Bank's share slide, ECB's Nagel will not comment. BoE's Bailey says rates will rise again if firms hike prices, via BBC; "If all prices try to beat inflation we will get higher inflation," Bank headlines Deutsche Bank (DBK GY) announces a decision to redeem its USD 1.5bln fixed to fixed reset rate subordinated Tier 2 notes, due 2028. Lloyds (LLOY LN) has issued a notice of redemption for the entire outstanding principal amount of the USD 1bln 0.695% senior callable fixed-to-fixed rate notes due 2024. In terms of the accompanying risk-off price action, the desk notes the early redemption(s) can perhaps be taken as a negative if we assume the justification is that the bank(s) expect to see more dovishness/risk-off before the next fixed-to-fixed rate adjustment. UBS Wealth Management head Khan offered a retention package to Credit Suisse's Asia staff in Hong Kong town hall which focuses on stabilising the Credit Suisse Asia team and boosting banker confidence, according to sources. Credit Suisse (CSGN SW) and UBS (UBSG SW) are among the banks facing a US Russia-sanctions probe. Fed Balance Sheet: 8.784tln (prev. 8.689tln); Total factors supplying reserve funds 8.784tln (prev. 8.689tln); Loans 354.191bln (prev. 318.148bln); Bank Term Funding Program 53.669bln (prev. 11.943bln); Other credit extensions 179.8bln (prev. 142.8bln). FX The USD is benefitting from the marked risk-off move with the index surpassing 103.00 from a 102.50 base in short-order and extending further to a 132.25+ peak since. Action which comes to the detriment of peers ex-JPY, as USD/JPY has been lower by roughly a full point at worse (best) given its haven allure and with JPY repatriation factoring. Notably, CHF is outperforming its peers, ex-JPY, but is still softer overall as its proximity/exposure to the European banking situation continues to overshadow traditional haven status vs USD though it is markedly outperforming the EUR as the focus is on EZ banks this morning. As such, EUR is the standout laggard with EUR/USD down to a 1.0722 trough vs initial 1.0830 best, antipodeans are similarly hampered given their high-beta status and after Thursdays firmer action. Cable failed to see a lasting benefit from the morning's retail data while the subsequent PMIs were slightly softer than expected; but, again, the action is very much USD-driven. PBoC set USD/CNY mid-point at 6.8374 vs exp. 6.8367 (prev. 6.8709) Fixed Income Core benchmarks are experiencing a marked bid given the risk-off price action that we are seeing with an accompanying dovish re-pricing being seen for Central Banks. Specifically, Bunds have surpassed 139.50 and USTs above 1.17 with the respective 10yr yields down to 2.02% and 3.29% with market pricing in favour of an unchanged outcome at the next ECB and Fed meetings as such. Gilts are moving in tandem with EGB/UST peers and have eclipsed 107.00; BoE pricing is now heavily in favour of an unchanged outcome at the May meeting. Commodities Commodities diverge given the marked risk-off action with crude and base metals pressured while precious metals glean incremental support as the USD offsets the benefit of haven demand. Specifically, WTI and Brent are under USD 68.00/bbl and USD 74.00/bbl respectively which places them at the mid/lower-end of the current WTD USD 64.12-71.67/bbl and USD 70.12-77.44/bbl parameters. Spot gold is incrementally firmer though is yet to convincingly surpass USD 2k/oz while base metals are dented by the aforementioned tone with 3-month LME Copper slipping further below 9k to a USD 8940 low. Russia could recommend a temporary halt to wheat and sunflower exports, via Vedomosti; due to the sharp decline in prices. US base at North-east Syria's Al-Omar oil field has been targeted in an attack, according to security sources cited by Reuters. UBS maintains a positive outlook on Gold and targets USD 2050/oz by the end of the year. Geopolitics Ukraine's top ground forces commander said Ukrainian troops are to launch a counterassault soon as Russia's large winter offensive weakens without capturing the eastern city of Bakhmut, according to Reuters. Russian Security Council Deputy Chairman Medvedev says cannot rule out that Russian forces will need to reach Kyiv or Lviv to 'destroy the infection', according to RIA. US Pentagon said the US conducted air strikes in Syria which targeted an Iranian-backed group in response to a deadly UAV attack, according to Reuters and Wall Street Journal. US Treasury Secretary Yellen said sanctions on Iran have created a real economic crisis in that country and the US is constantly looking at ways to strengthen Iran sanctions but added that sanctions may not be sufficient to change a country's behaviour, according to Reuters. China's Defence Ministry said it monitored and drove away a US destroyer which entered the South China Sea Paracel Islands on Friday again and sternly demands the US to immediately stop such provocations, according to Reuters. North Korea said it conducted an important weapon test and firing drill from March 21st-23rd, while it added that it conducted a new underwater attack system in which it tested a new nuclear underwater attack drone and launched strategic cruise missiles. Furthermore, North Korea said its leader Kim guided the military activities and that Kim seriously warned enemies to stop reckless anti-North Korea war drills, according to KCNA. South Korean President Yoon said they will step up security cooperation with the US and Japan against North Korea's nuclear and missile provocations, while he said they will make sure North Korea pays the price for its reckless provocations, according to Reuters. US Event Calendar 08:30: Feb. Durable Goods Orders, est. 0.2%, prior -4.5% 08:30: Feb. -Less Transportation, est. 0.2%, prior 0.8% 08:30: Feb. Cap Goods Orders Nondef Ex Air, est. -0.2%, prior 0.8% 08:30: Feb. Cap Goods Ship Nondef Ex Air, est. 0.2%, prior 1.1% 09:45: March S&P Global US Manufacturing PM, est. 47.0, prior 47.3 09:45: March S&P Global US Services PMI, est. 50.2, prior 50.6 09:45: March S&P Global US Composite PMI, est. 49.5, prior 50.1 10:00: Revisions: Wholesale Inventories 11:00: March Kansas City Fed Services Activ, prior 1 DB's Jim Reid concludes the overnight wrap There's a bad bout of conjunctivitis going round the school at the moment and every member of the family has now had it with the last hold out being me until yesterday. So my eyes are a bit blurry this morning looking at screens. One of the twins believes he has conjunctiv"eye-test" as he thinks it's called. If he hadn't given it to me I'd think he was quite sweet. As I was looking at screens last night through weepy eyes, markets looked like they were trying to normalise. However late weakness in financials again was a big drag on the last couple of hours of US trading. Just after the European close, the S&P 500 was up over +1.2% and looked set to reverse a good portion of the previous day’s losses. However by the end of the session, further weakness in banks and cyclicals more broadly left the index only +0.30%, but having been down nearly half a percent with 30 minutes left in trading. The VIX, which intraday was near its lowest level (20.18) since the SVB issues became prominent, ended the day 0.35pts higher at 22.6. Today we'll see if the flash PMIs around the world are impacted by the early part of the mini banking crisis we've seen in the last two weeks. So watch the European and US numbers carefully. The renewed weakness in banks yesterday actually started in Europe with the STOXX Banks index down -2.27%. The STOXX 600 recovered from an intraday low of almost -1.0% to finish -0.21% lower overall. CDS markets highlighted the stress in European financials as the Subordinated Financial CDS index widened (+20bps) for the first time since last Friday – before the CS-UBS merger news – while the Senior CDS index was +9bps wider. In the US, the Regional bank ETF, KRE, was down -2.78% yesterday whilst the broader KBW Bank index was -1.73% lower as liquidity concerns of the smaller banks continue to permeate. Staying with bank liquidity, after the US close last night, the Fed’s weekly balance sheet data showed that the use of the Fed’s discount window was down from $153bn to $110bn, while the credit deployed to SVB and Signature was up from 143bn to 180bn, and lastly the new emergency bank lending facility (BTFP) was up from $12bn to $54bn. So net of the two failed banks there was little change, indicating that banks were not finding it necessary to access cheap capital. The market should look favourably on that from a contagion standpoint. Overnight S&P and Nasdaq futures are both up around +0.2% and 2 and 10yr UST yields are both around -4.5bps lower as we go to press. Far before that balance sheet data came out the S&P 500 opened much stronger, up +1.8% and stayed buoyant through the first three hours of trading, before the weakness in regional banks weighed on overall sentiment throughout the US afternoon. This was most pronounced with a bout of selling just before Treasury Secretary Yellen spoke in front of a House of Representatives subcommittee an hour or so before the US close. The selling might have been nervousness ahead of her remarks, given the negative market reaction to her comments before the Senate on Wednesday. Regardless, the S&P actually saw a +1.0% whipsaw move when Yellen said that the US government was “prepared for additional deposit action if warranted.” This was quickly faded, with the index continuing to trade between smaller gains and losses until it ended the day +0.30% higher. Despite the weakness in banks and Energy (-1.4%) on the back of lower oil prices, the S&P finished in the green thanks to Tech stocks outperforming on the lower rate outlook. The FANG+ index surged by +2.53%, whilst the NASDAQ 100’s gains (+1.19%) mean it’s now up nearly 20% from its lows at the end of December, almost meeting the traditional definition of a bull market. On the rates side, 10yr Treasury yields held up for the most part, with the 10yr yield -0.08bps to 3.427%. Short-dated rates were another story, with 2yr yields -10.4bps lower to 3.833% fully on the back of lower inflation expectations (-13.3bps), while 5yr rates were -7.2bps lower. This saw the 2s10s yield curve normalise a further +9.4bps yesterday to -41.3bps, which is the least inverted the curve has been in over 5 months. This drop in yields led by inflation expectations was also borne out in fed future pricing, where the market now only sees a 40% chance of a 25bp hike during the May meeting. In Europe there was a sharp decline in longer dated yields that accelerated later in the session, with yields on 10yr bunds (-13.3bps), OATs (-12.3bps) and BTPs (-10.4bps) all moving lower. Furthermore, those moves came in spite of some of the ECB’s hawks calling for further tightening. For example, Austria’s Holzmann said that the ECB would “probably have to add” to its rate hikes at the next meeting in May. And the Netherlands’ Knot said that “I still think that we need to make another step in May, but I don’t know the size of that”. Speaking of central banks, we had the Bank of England’s latest decision yesterday, who hiked rates by 25bps as expected. That takes the Bank Rate up to a post-2008 high of 4.25%, and 7 of the 9 MPC members were in support, with the other 2 preferring to remain on hold. Looking forward, the BoE said that they still expected inflation “to fall significantly” in Q2, aided by falling energy prices and the government’s move to extend the Energy Price Guarantee in last week’s budget. And when it comes to inflationary pressures, they said that if “there were to be evidence of more persistent pressures, then further tightening in monetary policy would be required.” In his review (link here), our UK economist writes that while he sees some upside to growth and pay, there are downsides to services CPI and credit conditions, making the next meeting in May a difficult decision to call. On balance, he sees more downside risks than upside, and holds onto his call for the Bank Rate to remain where it is at 4.25%, with the risks tilted to one further hike. Whilst we’re on central banks, yesterday also saw the Swiss National Bank hike rates by 50bps, taking the policy rate up to 1.5%. There were a number of hawkish-leaning details, including an upgrade in their inflation forecast relative to December, and their statement said that inflation was “still clearly above the range the SNB equates with price stability.” In the meantime, SNB President Jordan said that a “Credit Suisse bankruptcy would have had serious consequences for national and international financial stability and for the Swiss economy” and that “taking this risk would have been irresponsible.” This morning in Asia equity markets are lower with the KOSPI (-0.72%) the biggest underperformer with the Nikkei (-0.41%), the Shanghai Composite (-0.54%), the CSI (-0.27%) and the Hang Seng (-0.21%) trading in negative territory. Data from Japan has shown that consumer price inflation (+3.3% y/y) slowed in line with forecasts but for the first time in 13 months in February, compared to a +4.3% increase in January, mainly due to the effect of government’s energy subsidy program. At the same time, core-core CPI (excluding both fresh food and fuel costs) advanced further to +3.5% y/y in February (v/s +3.4% expected), notching the fastest y-o-y gain since January 1982. It followed a +3.2% increase in January highlighting the underlying inflationary pressures. Staying with Japan, the preliminary estimate for manufacturing PMI showed that sector activity remained in contraction for the fifth consecutive month in March after the reading came in at 48.6, albeit up from the previous month’s final reading of 47.7 as output and new orders remained under pressure. On the contrary, activity in the services sector expanded for the seventh straight month in March as the PMI edged up to 54.2, recording the fastest pace since October 2013, against prior month's reading of 54.0. Elsewhere, manufacturing as well as services in Australia slipped into contractionary territory as the manufacturing PMI fell to 48.7 in March from 50.5 in February with the services PMI deteriorating to 48.2 from the prior print of 50.7. When it came to yesterday’s data, the US weekly initial jobless claims came in at a 3-week low of 191k over the week ending March 18 (vs. 197k expected), pointing to continued strength in the labour market. Continuing claims saw a small increase to 1694k (1690k expected) and remains in a slight up-trend but not at a concerning level yet. Meanwhile, the new home sales data for February showed a modest rise to an annualised rate of 640k (vs. 650k expected), taking them up to a 6-month high. Over in the Euro Area, the European Commission’s preliminary consumer confidence data for March showed a decline to -19.2 (vs. -18.2 expected), marking a reduction after 5 consecutive monthly improvements. To the day ahead now, and data releases include the March flash PMIs from Europe and the US, along with UK retail sales for February, and the preliminary US durable goods orders for February. Otherwise from central banks, we’ll hear from the ECB’s De Cos, Nagel and Centeno, the Fed’s Bullard and the BoE’s Mann. Tyler Durden Fri, 03/24/2023 - 08:09.....»»

The unions that represent workers at Walt Disney World said Thursday that they have reached an agreement with Walt Disney Co. DIS that will raise the minimum wage to $18 an hour this year. The agreement comes after almost 14,000 union members rejected Disney’s previous offer in February of a $17 minimum wage, the unions said in a news release. According to the Services Trades Council Union (STCU), which is made up of different unions representing 45,000 theme park workers, there will be a ratification vote on March 29. Representatives from Walt Disney did not immediately return a request for comment.Market Pulse Stories are Rapid-fire, short news bursts on stocks and markets as they move. Visit MarketWatch.com for more information on this news......»»

The Fed Proposes A 4th Function Of Money: Means Of Social Control Authored by Mike Shedlock via MishTalk.com, A Federal Reserve white paper has come up with a new function for money. Let's tune in... Docket No. OP - 1670 Please consider Docket No. OP - 1670 on Interbank Settlement of Faster Payments.  The Federal Reserve Board announced that the Federal Reserve Banks will develop a new round-the-clock real-time payment and settlement service, called the FedNow Service, to support faster payments in the United States.  This is a direct response to the threat posed by digital currencies and blockchain. According to one Fed official, "Last summer, the U.S. Treasury recommended that 'the Federal Reserve move quickly to facilitate a faster retail payments system, such as through the development of a real-time settlement service, that would also allow for more efficient and ubiquitous access to innovative payment capabilities."' We believe this effort requires a proof-of-authority quantum computing based blockchain system.  As we noted in our paper "Blockchain, Cryptocurrency and the Future of Monetary Policy," confidential, not-for-distribution research sent to select members of the House Financial Services Committee, it is critical to understand that bitcoin was created in direct response to the failure of global regulators to protect the public in the years leading up to the financial crisis of 2007/2008. Thus, the ethical and monetary functionality of cryptocurrency is superior to that of paper money. Eventually, cryptocurrency is going to dominate.  As also noted in our paper, "The main economic attributes of a technically effective currency rests on three functions: as a unit of account, a store of value and as a medium of exchange." But there is a fourth function of money: as a means of social control. The centralized monopoly over the functions of money held by sovereign governments and central banks has generated great income and wealth imbalances. Concerns about a lack of central bank performance with respect to financial inclusion, income inequality, economic system stability and the tendency of central banks to intermediate on behalf of large financial institutions supported the creation of cryptocurrency" As we noted in a second paper "Is FedCoin Feasible?" another confidential, not-for-distribution research paper sent to select members of the House Financial Services Committee, we suggest the Board focus on using an enhanced Bitcoin blockchain to "support depository institutions' provision of end-to-end faster payment services and would provide infrastructure to promote ubiquitous, safe, and efficient faster payments in the United States."  Confidential Not for Publication The Fed is sending "confidential, not-for-distribution research" to select members of the House Financial Services Committee espousing money as a means of social control. The confidential Fed research express concerns over income inequality and fears of Bitcoin. The link above was published in October of 2019, but it just came my way today.  The rest is confidential, sent no doubt to select Marxists on the House Financial Services Committee who want to address income inequality by income redistribution. What we don't know is how much further progress has been made towards income redistribution and social control. Nor do we know what other ideas regarding money are hidden in the papers. Seriously, WTF?! Fed Policy: It's Not Fractional Reserve Banking, It's ZERO Reserve Banking Meanwhile, please note Fed Policy: It's Not Fractional Reserve Banking, It's ZERO Reserve Banking There's nothing like a Fed-sponsored bank crisis coupled with zero reserves on deposits to help aid the goals of using money as a means of social control. *  *  * Please Subscribe to MishTalk Email Alerts. Tyler Durden Thu, 03/23/2023 - 07:20.....»»

With misinformation and scams involving cryptocurrency on the rise on Tiktok, dappGambl have analysed over 1,000 videos to find what information from crypto influencers can be trusted.  Key takeaways from the study found: The #Cryptok hashtag has over 1.6 billion views Over 1 in 3 videos on Cryptok were misleading Only 1 in 10 Cryptok […] With misinformation and scams involving cryptocurrency on the rise on Tiktok, dappGambl have analysed over 1,000 videos to find what information from crypto influencers can be trusted.  Key takeaways from the study found: The #Cryptok hashtag has over 1.6 billion views Over 1 in 3 videos on Cryptok were misleading Only 1 in 10 Cryptok profiles or videos contain disclaimers 47% of creators are trying to push services to make money 1 in 3 misleading videos mention Bitcoin Expert insight from daappGambl’s Eugene Abungana if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Walter Schloss Series in PDF Get the entire 10-part series on Walter Schloss in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues. (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q4 2022 hedge fund letters, conferences and more   The #Cryptok hashtag has over 1.6 billion views dappGambl analysed 1161 TikTok videos from 594 creators using a number of popular cryptocurrency hashtags, finding the videos have over 6 billion views. In an interview with crypto expert, Eugene Abungana, at dappGambl said, “Just because a video has many thousands of likes and views does not make the content legitimate and trustworthy.” Over 1 in 3 videos on Cryptok were misleading 37% (434) of all videos analysed were found not to feature a financial disclaimer and either encouraged users to invest their own money or implied a return on investment. Crypto expert at dappGambl explained, “Although the platform can be a great place to learn, It is important to note that cryptocurrency isn’t regulated and misinformation can easily spread.” Only 1 in 10 Cryptok profiles or videos contain disclaimers Of the 594 accounts studied, only 62 (10%) contained disclaimers or warnings around investing in cryptocurrency. Although this doesn’t necessarily mean the videos are misleading it could be seen as a less trustworthy source.  47% of creators are trying to push services to make money Nearly half of cryptok creators are using the platform to push their own services to make money. From eBooks and online courses to whatsapp trading groups, the more views these creators get on their TikTok videos, the more likely they are to make money from the services they are pushing. “If a creator is pushing their own advice or services they probably have an ulterior motive to create viral-worthy content. Take extra caution when clicking through to paid services,” says Eugene. 1 in 3 misleading videos mention Bitcoin On TikTok, 35% of misleading videos use Bitcoin to push misinformation. 53 different cryptocurrencies were mentioned in all the videos analysed by dappGambl, with Bitcoin, Ripple, Ethereum and Cardano featuring the most. Q&A with daappGambl expert, Eugene Abungana Q; As well as educational content, can TikTok provide useful financial advice or should users seek additional advice? A;  Although the platform can be a great place to learn, It is important to note that cryptocurrency isn’t regulated and misinformation can easily spread. Always do your own research before taking any advice from the platform.   Q; How can a user on TikTok avoid misinformation and spot a scam? A; Tiktok is built to promote videos to the user that interest them. If a user is interested in crypto content they are likely to be served crypto related videos via the for you page. However it is important to remember that no one can offer guaranteed returns. If it seems too good to be trust, it more than likely is is. Q; What signs should one be aware of when watching TikTok videos about cryptocurrency? A; Just because a video has many thousands of likes and views does not make the content legitimate and trustworthy. If a creator is pushing their own advice or services they probably have an ulterior motive to create viral-worthy content. Take extra caution when clicking through to paid services.  Q; Why is finance and cryptocurrency content so widely viewed on TikTok, with hashtags like #cryptok and #cryptocurrency having hundreds of millions of views? A; There are a few reasons why content related to crypto and investing is so popular on TikTok. One reason is that the platform's primarily young user base is becoming increasingly interested in their own finances and planning for their financial future. Furthermore, TikTok's short-form video format makes it easier for users to consume and understand crypto content. The hype around stock trading, crypto and other investment opportunities in recent times has also contributed to the popularity of such content. About dappGambl? We at dappGambl are a group of blockchain and casino enthusiasts that consider crypto casinos and other gambling dApps to be the future of online gambling......»»

The Amazon Echo Show 5 is a small smart display with Alexa. While it functions as a smart alarm clock, its small screen leaves a lot to be desired. When you buy through our links, Insider may earn an affiliate commission. Learn more.The Amazon Echo Show 5 is the company's smallest smart display with Alexa.Jenny McGrath/Insider The Amazon Echo Show 5 is the smallest Alexa smart display. It exceeds in being a smart alarm clock, and it can you give control of your smart devices. The small display and mediocre speakers don't make it ideal as an entertainment device. Petite and seemingly made for a nightstand, the Echo Show 5 is Amazon's smallest smart display. It's meant to function as a very smart alarm clock while giving you the ability to control your smart home, video chat, see pictures of cute animals, and stream video. It all works in theory, but the Echo Show 5's small screen and lackluster sound may not meet some people's expectations. If your smart home is built around Alexa, adding the Echo Show 5 could makes sense — it'll make controlling all your devices easier.But if you just want a smart bedside clock, you might want to check out our coverage of the best smart displays to consider other options. What worksCompact size perfect for a nightstand Physical camera shutterFrequently on sale Whisper Mode is usefulWhat needs workLimited uses beyond an alarm clockMedicore speakerSubpar video qualityCamera quality isn't the bestA decent bedside companion with sleep sounds and a sunrise alarmThe Amazon Echo Show 5’s mute button glows red when it’s on, and the camera shutter’s toggle switch is bright orange, too.Jenny McGrath/Business InsiderWith its 5.5-inch screen, compact wedge design, and single speaker, the Echo Show 5 was designed to live in your bedroom. And while it works as a decent smart alarm clock, it won't blow you away as anything beyond that. The Echo Show 5's single four-watt speaker is acceptable for casual listening but nothing to write home about. You'll get similar audio quality with the fifth-gen Echo Dot. The Echo Show 5's mediocre speakers really turn up when you play sleep sounds. During the pitter-patter of the City Rain setting, my husband asked why the bedroom sounded like a soccer stadium. Close to the device you could hear a light drizzle, but from further away it sounded like a dull roar. If you prefer to mute the device's microphone at night, it's worth noting that it's difficult to make the screen go completely dark. Night mode changes the face to a clock, but the display still beams a light glow. You can tell Alexa to turn off the screen, but if you press the mute-microphone button, the screen turns back on. You can't turn the brightness up via voice or the app, and when it's dim, it's really dim. Turning it back up might prove frustrating, depending on your eyesight. The Amazon Echo Show 5's sunrise alarm function may not be bright enough to wake everyone, including deep sleepers.Jenny McGrath/Business InsiderIt's nicer to wake up to the Echo Show 5 than to fall asleep with it. If you set an alarm between 4 a.m. and 9 a.m., it can serve as a pseudo-sunrise alarm clock, brightening a yellowish screen over the course of 15 minutes. It isn't quite as bright as a dedicated sunrise alarm clock, which may not be enough to wake everyone, either. You can tap the top of the clock to snooze your alarm. There are also routines so Alexa can tell you the weather, news, and traffic. For alarm sounds, there are over 20 options, including some free "premium" options, from Keith Morrison and other members of "Dateline" to "Blue's Clues." The Whisper Mode feature is also useful for a bedside device. If you speak softly to Alexa, the device whispers back. It's nice for when you're turning the lights off at night, for example. And Alexa integrates with such a large number of smart-home devices that if you do have smart bulbs, there's a good chance you can use voice commands to control them. While you can accomplish many tasks with voice control, there's a pull-down menu along the top with icons for settings, brightness, music, video, and communication. There are some settings, like privacy controls around voice recordings, that you'll need to change in the app. Multiple layers of privacy protectionYou can control a fair amount from the settings on the device, but many of the privacy settings are in the app.Jenny McGrath/Business InsiderWith any smart display, but especially one designed for the bedroom, privacy features should be robust.Along the top of the device, there's a button to disable the microphone for when you don't want Alexa listening. The button glows red and a red bar appears at the bottom of the screen to let you know it's activated. There are also volume buttons and a privacy shutter for the 2-megapixel camera. The shutter is white, and the slider is orange when it's in place. Even if you do make regular use of the mute button, Alexa still remembers your requests by default. You can ask the device to forget your most recent question, everything you asked that day, or everything you've ever asked. You can say, "Alexa, delete everything I've said," and it will erase all your recordings. You can adjust the privacy settings in the app, including erasing your query history. The app warns Alexa won't function as well, and it offers the same caveat if you choose not to save any voice recordings. You can also opt out of using your voice to train Alexa. A 2021 study found some third-party skills available on Alexa devices may make the device more vulnerable to privacy and security issues. A small screen that leaves some to be desiredThe small screen isn’t great for watching almost anything, but it’s particularly bad with vertical videos.Jenny McGrath/Business InsiderBeyond using it as an alarm clock and weather display, the Echo Show 5 doesn't have a ton of great uses for the screen. While it will show you a picture of a wallaby if you ask, and you could watch a cooking video in a pinch, the display is small and the 960-by-480-pixel resolution is low when compared to the larger Echo Show devices. Vertical YouTube videos were especially painful to watch. Technically, you can use the Echo Show 5 to make video calls, but I found it a bit awkward. On a video call, I wanted to be close enough to see the other person on the 5.5-inch screen, but I had to sit back about 16 inches to get my full head in the frame. The device's wedge design also means the camera is angled slightly up. It made it difficult to keep the camera at eye level to achieve a more flattering angle. The main issue I had with the Echo Show 5 was Alexa itself. Some questions elicited answers from questionable sources, like citing a movie website when I asked about a cooking substitution. When I asked Alexa, "Where is your content from?" the device told me where Allen Iverson is from. It also relies on crowd-sourced responses from "Alexa answers contributors." While the information seems correct, I often double-checked the answer, defeating the purpose of asking Alexa in the first place. When I first started up the Echo Show 5, I chose one of the included sets of photos for travel as the wallpaper. But for every desert pic with a camel, I seemed to see an advertisement for an "Avatar" theme or screen urging me to try a "Price Is Right" game. To slow the frequency of these interruptions, I deselected almost every option in settings under Home and Clock and then Home Content. There's also a Photo Frame mode, but this removes the clock and weather display.  There's an Echo Show 5 for kids, but it's probably unnecessaryThe Amazon Echo Show 5’s Kids setting limits much of what kids can access with the device.Jenny McGrath/Business InsiderThe Echo Show 5 may seem like a device that can "grow" with kids, offering younger ones some entertainment features while using the Amazon Kids setting to set some restrictions. There is an Amazon Echo Show 5 Kids edition that costs $10 and has the parental controls enabled by default. The Amazon Kids mode keeps the device fairly locked down. Try to play "Work It" by Missy Elliot, and Alexa will tell you that the explicit filter is on. Make a request to open YouTube, and you'll seem to stump the device: "Hm, I don't know that one." Ask where babies come from, and Alexa will suggest talking to a grown-up. But it also limits what adults can do with the machine as well. Some settings are disabled, like "do not disturb." You'll need your Amazon password to override it. While that's great for keeping kids from accidentally changing settings, it might get tiresome for you. Luckily, you can use the app to turn Amazon Kids on and off.  If you don't like the idea of having cameras and microphones in your kids' rooms, the Echo Show 5 isn't a good choice. While there is a mute button and a camera shutter, older kids will be able to figure out how to turn them off pretty quickly. Amazon Echo Show 5 specs at glanceSpecAmazon Echo Show 5Dimensions 5.8 (L) x 2.9 (W) x 3.4 (H) inchesScreen size5.5 inches (measured diagonally)Display960x480 LCD touchscreenCamera2-megapixelAudio1.65-inch speaker, dual microphonesProcessorMediaTek MT 8163ConnectivityBluetooth, WiFi (2.4 GHz, 5 GHz)Should you buy it?The Amazon Echo Show 8 offers a much larger screen and better speakers than the Amazon Echo Show 5.Jenny McGrath/Business InsiderIf you need a compact alarm for a small space and want extra capabilities, the Echo Show 5 is an OK choice. It's frequently on sale, and if you like your other Echo devices, it makes sense for smaller spots where you still want a display. Normally, we'd say the Alexa features make it more than just a great alarm clock, but between the many ads and Alexa's strange sources for its answers, that doesn't seem to be the case at the moment. The Echo Show 5's small screen makes watching videos a lackluster experience, and you might want to upgrade to the Echo Show 8 if you're going to use the display primarily for entertainment purposes. While we don't expect Amazon to shutter its device services, the company has cut jobs and investment in Alexa and other devices. It's something you might want to consider when deciding whether to purchase a new Amazon device.Read the original article on Business Insider.....»»

     The transcript from this week’s, MiB: Cliff Asness, AQR, is below. You can stream and download our full conversation, including any podcast extras, on iTunes, Spotify, Stitcher, Google, YouTube, and Bloomberg. All of our earlier podcasts on your favorite pod hosts can be found here. ~~~ ANNOUNCER: This is Masters in Business… Read More The post Transcript: Cliff Asness appeared first on The Big Picture.      The transcript from this week’s, MiB: Cliff Asness, AQR, is below. You can stream and download our full conversation, including any podcast extras, on iTunes, Spotify, Stitcher, Google, YouTube, and Bloomberg. All of our earlier podcasts on your favorite pod hosts can be found here. ~~~ ANNOUNCER: This is Masters in Business with Barry Ritholtz on Bloomberg Radio. BARRY RITHOLTZ, HOST, MASTERS IN BUSINESS: This week on the podcast, this will be my shortest introduction ever, Clifford Asness and I just go over the entire universe of quant factor and value investing. It is a masterclass. And if you don’t believe me, I’m just going to shut up and say, with no further ado, my conversation with AQR’s Cliff Asness. Let’s start out a little bit going over some of your background. You get your PhD at the University of Chicago, where you are the teaching assistant for some obscure prof named Gene Fama. Tell us a little bit about that. CLIFFORD ASNESS, CO-FOUNDER, AQR CAPITAL MANAGEMENT: Yeah, I basically discovered him. I ended up at the University of Chicago. I was an undergrad studying business and engineering. I decided I wanted to be a professor because I did a job just for money, coding up studies for three Wharton professors. I liked what they did. I said, how do I do what you’re doing? And they said, go get a PhD. I said, where should I go? And they said, close the door because we were at Wharton. And Wharton is a great school, but PhD program rankings can be different than — RITHOLTZ: Sure. ASNESS: And they and almost to a man because I went to about 10 professors, they said go to Chicago. RITHOLTZ: Really? ASNESS: I mean, I got in, I went, and Gene Fama was the man. RITHOLTZ: To say the very least. So your doctoral thesis asserted that consistently beating market averages was attainable by exploiting both value and momentum. In other words, you took Fama’s value factor and added your own twist which was momentum, which eventually became a Fama-French factor, right? ASNESS: Yeah. Fama-French still don’t include it in their official five-factor model. RITHOLTZ: Really? ASNESS: A lot of us think they should. I think that’s just a philosophical difference. The way I always describe it is one of the scariest moments of my life was going to Gene’s office. I was already his teaching assistant. He had kind of agreed to be my dissertation chair, even without a particular topic, and going in and saying, I want to write it. I wrote it. It was more than just this, but one of the main things I want to explore is the momentum strategy, and then mumbling. And by the way, it works very well. Because, you know, there’s this constant fight in academia, if you believe something works, does it work because markets are efficient in its compensation for risk, or for behavioral reasons? And momentum, inherently, and I think we all knew this instinctively back then, it’s very hard to come up with a rational story, a risk-based story. And I was nervous because he’s Mister Efficient Markets and rational. And to his credit and my relief, he said, if it’s in the data, write the paper, and he was very supportive of the paper. He works very closely with Dimensional, a firm I admire greatly. They don’t give as much weight to momentum as we do, but they use it in their trading process. So I feel like I’ve won half the battle on that — RITHOLTZ: Right. ASNESS: — over time. The only thing you said that I might take a small disagreement with is consistently. We think value plus momentum has a really good risk-adjusted return, makes money over the long term. But when you’ve gone through two-year periods like the tech bubble, and three-year periods like ‘18 through ‘20, I think myself, my family and some of my clients might take issue with the word consistently. RITHOLTZ: So let’s put a little more meat on those bones. To define what we’re talking about, you want to identify the cheapest value stocks, but only own those that seem to have started on an upswing. ASNESS: Yeah. RITHOLTZ: That seems to make some sense? ASNESS: Yeah. You’re accidentally waiting into yet another quant controversy, whether you need both these characteristics in every stock, or whether you can have some stocks that are great on one and simply average on the other and the portfolio comes out. But the intuition you’re saying is exactly right. Two things, at that point, the literature has advanced. This is like quant finance circa 1990. You may throw in the size effect, and that was about it. RITHOLTZ: Which we’re going to talk about in a little while — ASNESS: Sure. RITHOLTZ: — because I’ve read some papers that suggest — ASNESS: Yeah, we’re — RITHOLTZ: — it may not exist. ASNESS: We’re cynics about it. But value, momentum and size, in the opposite order that I just said, time-wise, size was kind of first and then value, then momentum were the three biggies, and they’re still very big in the literature. Around 1990, value says in the original metrics, and I think they’ve advanced since then, price-to-book was the famous one Fama and French use. RITHOLTZ: Right. ASNESS: They’ll be the first to tell you they do kind of like it, but it has no special standing. It’s basically price divided by any reasonable fundamental. RITHOLTZ: So it can be price-to-sales — RITHOLTZ: Yeah. ASNESS: — price-to-earnings, price to whatever. ASNESS: You’ll get people disagreeing like crazy. At our firm, we don’t think we’re particularly great at saying which one is the exact right way to do this. But if you buy low multiples and sell high multiples, either in a long-only beat the benchmark sense, whether over and underweight, and you did the same thing everyone does and call me a hedge fund manager. It’s about half our assets. RITHOLTZ: Okay. ASNESS: About half our assets are really traditional, where money managers beat, you know, plenty of things, don’t let a short, or lever, or any of those hedge fund kind of things. But the principle is exactly the same. The overweight in a value strategy would be low multiples, the underweight would be high multiples. If you’re running a pure momentum strategy, the overweight, and this is also momentum circa 1990, would be who’s doing better over the last year? It’s that simple. I used to dismissively call it the two newspaper strategy. You needed a newspaper, a recent one and one from a year ago. It’s better to have a computer because it’s a little faster than you, but you look up and you buy what’s going up. It turns out this part is surprising, both make money over any decent time horizon. Probably not surprising is they are in geekspeak negatively correlated. If you are a pure value person or I am a pure momentum person, occasionally we agree. We may get into this later, but right now we’re in more agreement than normal because value stocks kind of have the momentum. But more often than not, the cheap stocks are cheap because one of the reasons they’re cheap is they’ve been losing. So they’re negatively correlated strategies. And this doesn’t create a 10 Sharpe ratio, but a holy grail of quant finance is to try to find two things that, on average, make money that hedge each other. And value and momentum do, whether it’s relative outperformance against a benchmark or absolute performance in a hedge fund. RITHOLTZ: So let’s talk a little bit about how you ended up launching AQR. Following your PhD dissertation, you end up eventually heading out to Goldman Sachs to effectively establish their quantitative research group. ASNESS: That’s it, though, I’m going to amend the story slightly because a few of those things happened more simultaneously. I left the PhD program in late ’91 to take a year off. I’m now on year 32 of that year off — RITHOLTZ: Okay. ASNESS: — so it appears to have taken hold. RITHOLTZ: So you’re a PhD school dropout? ASNESS: No. I did finish the PhD. RITHOLTZ: Oh, okay. ASNESS: I went to Goldman. I had started my dissertation. I think a lot of people leave intending to write a dissertation from a job, and I don’t think anyone, including me, succeeds at that. But if you’ve already produced like a first draft, it can be a couple of years in this process to finish it. RITHOLTZ: Wow. ASNESS: But it’s more Yeoman-like work after the first draft. You’re just responding to things, running in new tests. So I had finished the first draft, went to Goldman I think a year, with the concept that an option can only be worth zero. I intended to be a professor when I started out, but let me see if I like this. After about a year, maybe about a year and a half, I stayed a little longer, I was really feeling like I should get back to some of the academic roots. I was a fixed income portfolio manager and trader, which is a ton of fun. I recommend anyone who does this stuff for a living, trade in OTC market for a while to learn the good, bad and the ugly of what happens there. But it wasn’t like whatever skills they taught me in the PhD. Program didn’t feel right. I then got just very lucky. PIMCO out on the West Coast, read the first thing I wrote in the Journal of Portfolio Management. The exciting title was Option-Adjusted Spreads and a Steep Yield Curve. There’s going to be a TV-movie, at some point. RITHOLTZ: Who’s going to play you in the movie? That’s the big question. ASNESS: I’m not going to be flattered whoever it is, let’s just say that. And they won’t have any hair, which will be annoying because when I wrote that paper, I had hair. RITHOLTZ: Right. ASNESS: They liked the paper. They talked to me. They didn’t even know I was writing a dissertation on quant equities at night. And they basically offered me a job to start a research group from scratch. Ironically, given what happened later, long-term capital helped my life because circa that time, they were doing extremely well. And suddenly, you know, all businesses, not just Wall Street, are something’s doing great there, we need one of those. RITHOLTZ: Right. ASNESS: So the notion that we should have some academics helping us out was greatly aided by them, and I actually think there’s some brilliant people, though, obviously didn’t end well there. So it’s a little bit of irony that they help, but PIMCO is looking to start a group. I went to Goldman Sachs and said, I think this is the perfect combination. I get to do academic work, but in the real world, both in the sense of seeing if it actually works, and you make more money. Anyone who tells you they do money management over being a professor and never considered that is probably not — RITHOLTZ: Never enters your mind for a second. ASNESS: — not telling the full truth. Goldman said, unbeknownst to you, we’re looking to start such a group. To this day, I think that’s probably true, but I don’t know if that was reactive to me. But they did say that and they offered me the job, and I decided the weather in New York City is way better than Laguna Beach Cal — RITHOLTZ: Newport Beach. ASNESS: — or Newport Beach, excuse me, California. I also chose Chicago over Stanford — RITHOLTZ: Right. ASNESS: — for PhD. RITHOLTZ: So you don’t care about weather, obviously. ASNESS: No. Chicago versus Stanford, I got into both. RITHOLTZ: Yeah. ASNESS: They offered a stipend. PhDs are very lucky. They actually pay you to go to school. Everything was the same except, Chicago had in its budget to give me money for airfare to go visit. RITHOLTZ: That was it? ASNESS: Stanford didn’t. And I had no money. So I visited Chicago, and not Stanford, and it was a beautiful spring day. RITHOLTZ: Right. ASNESS: So I’m fond of telling people I’m the world’s only person to choose the University of Chicago over Stanford on the — RITHOLTZ: Based on the weather. I’m more intrigued by the concept of you sort of Bruce Wayne in fixed income during the day, and at night, your equity work is your Batman. ASNESS: Yeah, that was tied for the craziest time in my life. The other time, my wife and I were, you know, more her than me, we had two sets of twins, 18 months apart. RITHOLTZ: Oh, my goodness. ASNESS: And it was a ton of fun, but it was ridiculous. RITHOLTZ: Yeah. ASNESS: Right? So the nocturnal activity was a little different than writing a dissertation. But working at Goldman, with four babies, was very similar to writing a dissertation which is kind of is your baby. RITHOLTZ: I can imagine. So we started talking about AQR. In ‘98, you leave Goldman to launch it. This is your 25th anniversary. ASNESS: Yeah. It’s amazing. RITHOLTZ: So first, congratulations. ASNESS: I like to say a quarter century, it has more ground of thought (ph). RITHOLTZ: Okay. It definitely does. It’s amazing how quickly the quarter century goes by. That’s the truly shocking thing. ASNESS: All the clichés, particularly about children, but about all of life, they’re clichés for a reason. RITHOLTZ: Right. ASNESS: You wake up one day and you go, what did I do for the last 25 years? RITHOLTZ: Right. How did this happen? ASNESS: I remember about three of those years. I’m fond of telling people, I have a really good memory that extends to two periods. RITHOLTZ: Right. ASNESS: The last two weeks in high school. RITHOLTZ: I think that’s probably true for a lot of people. It just depends on where you peaked — ASNESS: Yeah. RITHOLTZ: — personally. If you peak in high school or you peak in college, that’s where all your memories are most vivid. So given AQR has been around for 25 years, how has your investing philosophy evolved over that period, assuming it’s changed at all? ASNESS: Sure. RITHOLTZ: I imagine it has. ASNESS: It has, but more stayed the same than has changed. Adding new factors, measuring factor is better. I don’t think that’s a change in philosophy. That’s just applying the philosophy and digging deeper. Our general belief starting out with value and momentum at Goldman in the very early ‘90s, expanding along with the literature, some of our people have helped create, to other factors, low risk investing, quality investing, fundamental, not just price momentum. RITHOLTZ: So let’s define those. Like, I think we understand what quality investing is, but what is low risk investing? ASNESS: Low risk investing, at its simplest, again, all of these, you get to 10 quants in a room which sounds like the beginning of a bad joke. They’ll all have different ways and different sets of ways to measure this. But at its simplest, it’s a paper by two of my colleagues, Lasse Pedersen and Andre Frazzini, Andrea Frazzini, excuse me, I left out the last syllable of your name, Andrea. I will never do that again, wrote a paper called Betting Against Beta. And I forgot how many years ago. RITHOLTZ: BAB as it’s known. ASNESS: BAB, everything is three letters because Fama and French — RITHOLTZ: Right. ASNESS: — name their factors three letters. RITHOLTZ: Right. ASNESS: So now we all copy them. And there’ll be the first to tell you, they were essentially extending work of Fischer Black’s from, I don’t know, 10, 20 years ago, where he found that in basic theory, the capital asset pricing model, you know, we all kind of learned third week of an MBA finance class. RITHOLTZ: Bill Sharpe. ASNESS: Bill Sharpe. High beta stocks are supposed to return more, on average, than low beta stocks. And in fact, nothing else is supposed to matter at all. So it’s a one-factor model, and it’s admittedly simplistic. Even the people who created it won’t tell you it’s the be all end all, but it’s a very useful way to think of things. It gets you down to a very important concept, that diversifiable risk you shouldn’t get paid for because you don’t have to bear. You get bear for risk you can’t diversify away. Beta, being a risk you can’t diversify away because a lot of your portfolio is already long beta — RITHOLTZ: Right. ASNESS: — should be paid. So the problem, of course, is, in some sense, you can say beta is paid because stocks tend to be bonds over the long term. But within the market, the so-called security markets line is pretty much entirely flat and has been in sample and out of sample for a ridiculously long amount of time, in a ridiculously large amount of places. Meaning, low beta stocks have kept up with high beta stocks, which in the simplest theory, they’re not supposed to. You can use this in a number of ways. You can make your portfolio at a low beta stocks, earn as much money with smaller swings; or if you’re a hedge fund kind of person, and you can use this in long-only portfolios too which is a little more complicated. You can go long low beta, short high beta, but you better apply a hedge ratio. If you’re long a dollar of high beta of low beta, I sometimes get the sign wrong in interviews. I promise in real life, when we’re trading, we get the sign right like 3 out of 4 times. RITHOLTZ: Okay. And that’s a pretty good number. ASNESS: Hopefully everyone knows that 3 out of 4 is a joke. But you go long low beta, short high beta. If you did that on a dollar long and a dollar short, you just massively short the market. Long low beta and short high beta, betas work. RITHOLTZ: Right. ASNESS: So you apply a hedge ratio, you short less than you long, and you try to create something about zero beta. And that has created a very, you know, like all these things, imperfect, that goes through bad periods, but a very attractive risk-adjusted return in and out of sample, long term. And then you can get into theories as to why it works. RITHOLTZ: So what I was going to ask you is if low beta returns just about the same or almost the same as high beta, why the complexity? Why not just own low beta, and it will give you, on a risk-adjusted basis, a better return in high beta? ASNESS: Well, absolutely some do. But if you’re a hedge fund person, trying to create an alternative investment that’s truly uncorrelated, low beta stocks are still highly correlated to the market. RITHOLTZ: Right. ASNESS: So by going long low beta and shorting a smaller amount of high beta, and this depends on your preferences and how aggressive you want to be — RITHOLTZ: But you’re eliminating that correlation. ASNESS: Yes, you can create, I’m always leery in saying uncorrelated worries. I just want to put in — RITHOLTZ: That’s correlated? ASNESS: Well, I was striving for uncorrelated, but then the compliance officer in my head is saying sometimes it doesn’t come out to zero all the time. RITHOLTZ: Right. ASNESS: But it comes out close. So you can create a very diversifying stream of returns, where if you just want low beta stocks, you are creating a more attractive stream of returns but still extremely correlated to perhaps your other holdings. So it can be used in different ways. RITHOLTZ: So I think when most people think of AQR, they think value shop. But as I’m doing my homework to prep for our conversation, and finding all my previous note — ASNESS: You don’t just wing this? RITHOLTZ: No, I try not to. I’ve done it on, you know, Ray Dalio, I just winged it. But with you, I feel like I have to come in loaded for bear. ASNESS: That’s a good accidental Wall Street joke, right? RITHOLTZ: On purpose. Not so as then. ASNESS: Okay, good. RITHOLTZ: You know, I have all this — ASNESS: I got a million of them. RITHOLTZ: Right. I got them all teed up waiting for you. So people tend to think of AQR as a value shop. But really, you’re a deep quantitative shop with a lot of different strategies. Let’s talk a little bit about the various ways you guys invest money. ASNESS: Well, can I back up for a second — RITHOLTZ: Sure. ASNESS: — and talk about why people think of us as a value shop? RITHOLTZ: Absolutely. ASNESS: There are a few reasons. One is there was one point in the very distant past where it was much closer to truth. RITHOLTZ: Okay. ASNESS: Some of the things like betting against beta, quality or profitability, carry strategies were additions over time. So a lot of people follow us, but anyone who’s followed us from the beginning, that they started out thinking that. Also, I just wrote a piece maybe a few months ago on our website, with the highly defensive, worried title, We Are Not Just About Value, in parentheses, (Except Occasionally When We Are). Because you do get these periods and value seems to be the worst culprit, 99 — RITHOLTZ: So even half of your headlines — ASNESS: Yeah. RITHOLTZ: — are hedge. So you’re a half hedge fund? ASNESS: Well, you know, remind me where we work because I’ll go off on tangents like you do, but I do write a lot of hedge statements and I’m kind of famous for my footnotes both because I stick the humor there, but also, I put in all the ways I might be wrong. And it’s really not a compliance reason, I hope it’s more of an intellectual honesty reason. Anyone who’s sure they’re right is very, very dangerous. RITHOLTZ: The footnotes allow you to get past that point. ASNESS: Yeah. RITHOLTZ: I love saying, first of all, we hate to kill our darlings — ASNESS: Yeah. RITHOLTZ: — anybody who writes. But, secondly, you could very easily get stuck somewhere. Let me just throw this in a footnote — ASNESS: Yeah. RITHOLTZ: — be done with it and keep going. And it allows that — ASNESS: Yeah. RITHOLTZ: — okay, I’ve — ASNESS: No. RITHOLTZ: — cleared the road for the rest of my thought. ASNESS: The footnotes have three purposes to me, where I stick the humor. They are the hedges. Here are the ways that what I just said might have been bold blank and I could be wrong. And finally, there are sentences I love that my editor did not love. RITHOLTZ: Right. ASNESS: Where we can mutually agree that it’s worth a footnote. But this — RITHOLTZ: By the way, your editor just yes as you, God, I got to deal with Cliff today. Just throw it in the footnote and keep going. ASNESS: Yeah. It’s helpful to have a wastepaper basket like that. RITHOLTZ: I used to use a separate doc, that I would, whatever it was, something, something, something, edit. So when I would get stuck, let me just move this sentence — ASNESS: Yeah. RITHOLTZ: — this paragraph here because it’s interfering with the narrative. ASNESS: And almost anyone who writes will find, like, they want to make the argument seven different ways. RITHOLTZ: Right. ASNESS: Because you want to both kill the counterargument and then jump on its grave for a while. RITHOLTZ: Anticipate the clutter (ph) of that. ASNESS: A good editor will say pick your one or maybe two best arguments and go with those. RITHOLTZ: Right. ASNESS: And footnotes again are useful. RITHOLTZ: So digression aside, let’s go back to the multiple strategies. ASNESS: No, I’m not done. I got to finish on — RITHOLTZ: More digression. ASNESS: — why we’re not all value. RITHOLTZ: All right, let’s go. ASNESS: This could take the rest of the time. RITHOLTZ: I cleared my schedule through dinner. ASNESS: We are multi-strategy. We go through long periods, almost decade-long periods where we hardly talk about value. It’s a relatively important factor, frankly, but it’s not a majority of what we do. And we go through long periods, a good example would be post GFC through 2017 where values tough. RITHOLTZ: Past decade. Yeah. ASNESS: And we had a great almost a decade, because everything else we do work, profitability one; fundamental, momentum one; low risk one. We don’t need value to work. A lot of that is because value lost over that period for what I will call and Gene Fama will have to forgive me here, rational reasons. RITHOLTZ: Meaning? ASNESS: The expensive companies, by and large, outperformed not on price, which they did also, but they out-executed. They grew more in terms of earnings, sales, cash flows. If you’re a pure value investor in a quant sense, just buying low multiples, you win on average because, on average, the price goes too far. And there’s a risk-based explanation. RITHOLTZ: Sure. ASNESS: Again, I’m pissing off Fama constantly on this. But a big part of why you win, we think, is the expensive stuff is a better company usually, but not that much better, not what’s priced in. That’s on average. Sometimes, thankfully, less often than not, but still quite often, the expensive stuff ends up being worth it or more than worth it. And when that happens, the value factor, the quant value factor, very different than how a Graham and Dodd investor and we can get into this later, we’ll use the term value, that will suffer at those times. But pretty much the rest of the process, we do it all simultaneously. It’s not really like one first then the other. But you can think of it as trying to avoid a value trap. Is this thing high profitability, with things changing in the right direction and low risk, therefore someone should pay a high multiple? And you want to avoid value just shorting that. That works like a charm in a rational market, in a bubble. And here, again, I’ll try to make this the final time. I’m a Gene Fama heretic because I love the man. RITHOLTZ: Right. Who specifically says what’s a bubble. ASNESS: Yeah. I think I’m somewhere in between. I think I’ve seen a few in my career. I think they exist. I think they are far more rare than the way a lot of Wall Street refers to him. A lot of Wall Street will say a stock they think is expensive, is in a bubble. RITHOLTZ: Right. ASNESS: Single stock can’t be in a bubble. RITHOLTZ: Right. ASNESS: Though, I do think the tech bubble and certainly by mid COVID, we were in various kinds of bubbles. In a bubble, value loses. Of course, almost by definition, people want the darlings. But the darlings are not the ones who are outexecuting. They’re the ones with the greatest stories. So the rest of our process doesn’t protect us very much. That is incredibly painful period for our process that both this time, which I think we’re still in the midst of end ’99, 2000, we’ve more than recovered from the roundtrip. It’s been good, but has led to some really tough times to wait out. My Holy Grail would be to come up with something to add to our process that will do really well in bubbles, but not cost us money long term because I don’t think we can time this. RITHOLTZ: That’s interesting. ASNESS: I don’t really think I’ll find that. And by the way, this is self-serving, but if your worst times are going to be when everyone else is partying in a bubble, and your best times are going to be when that bubble is killing everyone because it’s coming down — RITHOLTZ: Yeah. ASNESS: — it’s not a terrible property you have. RITHOLTZ: No. No, it is absolutely not. So we’re going to talk more about value and growth later. But since you brought this up, I want to just throw a couple of ideas at you — ASNESS: Sure. RITHOLTZ: — about that decade that followed the financial crisis, where not only did growth outperform value, but really thoroughly trounced it. ASNESS: Yeah. RITHOLTZ: So there are a couple of theories I’ve heard that I think are worth discussing. First, the decade before, at least the eight, nine years before the financial crisis, value was winning — ASNESS: Yeah. RITHOLTZ: — and growth was getting killed. So you started from a relative uneven place. Maybe some of this was catch-up. But the theme I kind of find more interesting is that prior to the financial crisis, Wall Street and the markets had systematically undervalued intangibles — ASNESS: Yeah. RITHOLTZ: — like patents, copyright — ASNESS: Sure. RITHOLTZ: — algorithms, et cetera. How much of that 2010s rally was a catch-up by intangibles? ASNESS: It certainly could have been some of the early part. A lot of quants added adjustments for that along the way. Most of us are not purists saying we’re not going to change our model since 1990. RITHOLTZ: Right. ASNESS: The notion, for instance, that R&D that’s viewed as an expense, maybe all of it, may be part of it should actually be capitalized — RITHOLTZ: Right. ASNESS: — which would go into book value and make a firm look not as expensive. RITHOLTZ: So a company that spends a lot of money doing R&D is investing in the future. ASNESS: Exactly. So I think that may be part of it I think is overdone in a few ways. One, it applies to more than just price-to-book, but it applies most directly to price-to-book, where you’re not capitalizing things like R&D. It can apply to earnings. But plenty of valuation measures, it has no applicability for price-to-sales. Is — RITHOLTZ: Shouldn’t make any difference. ASNESS: I don’t see where you think about intangibles. RITHOLTZ: Right. ASNESS: What’s the price in that? What revenue is it generating? And those type measures did just about as bad as the ones that were contaminatable. Is that a word? I’m not sure it’s a word. RITHOLTZ: Sure. It is now. ASNESS: But it is now. So I definitely think you want to account for that in places like price-to-book in earnings. And I think collectively, not just AQR, that has been an improvement to how we measure value and the world has changed a bit. And caring about price versus anything, even if it were immune to intangibles, was not a very good thing until late 2020, since the GFC, so about 11 years. You know, the real world is always more complicated. Everyone is always looking for single explanations — RITHOLTZ: Right. It’s not that way. ASNESS: — when a lot of things have multiple explanations. So I think this can definitely be part of it. But I don’t think it’s the main driver. RITHOLTZ: Yeah. Nuance is wildly underrated in finance, to say the least. Let’s talk a little bit about your research and writing. And I want to quote, your favorite publication, the New York Times, who wrote about you, quote, “He built a public reputation for his willingness to write and say what’s on his mind. In academia, he’s known for witty biting papers he writes for such publications as the Financial Analysts Journal.” I know you don’t write to do branding, but what do you personally get out of a fairly steady stream of deep thoughtful academic papers? ASNESS: Well, first, you’re being too kind. Of course, I write to do branding. RITHOLTZ: Okay. ASNESS: I run a real world business and I prefer people to think we’re good at this, and I think that’s legitimate. RITHOLTZ: That’s fair. ASNESS: If I write something that people think is lousy, or they disagree with, or misses the point, it’s going to hurt our business. So I won’t pretend part of it is not a business decision, but it’s really not most of it. A lot of it is the DNA. Three of our four founders met at the PhD program at the University of Chicago. We consider writing, academic or often that kind of area in between academia and applied. You know, we’ve written a lot of papers in the Journal of Finance, the JFE, and that’s true academia. A lot of our work shows up in great places like the Financial Analysts Journal, in The Journal Of Portfolio Management, which is kind of the nexus between those two. This will sound childish, but a fair amount of this is just personal consumption. RITHOLTZ: Meaning what? ASNESS: We enjoy being part of that world. We grew up thinking part of the way you measure success is whether you influence the intellectual debate and how you’re regarded in those circles, and it’s just part of our utility function. I do think a few things. First, I always point out, I don’t know the exact breakdown, but a fair amount of what we do is public. But there’s a fair amount that we think is proprietary. And there are things that I would have AQR researchers hunted down and killed if they publish. RITHOLTZ: Oh, really? ASNESS: Yes. My compliance area would like you to know that I’m speaking in hyperbole, I would like you to know that I’m not. But, you know, even if there are things we think the world will discover, where you think you’re somewhat ahead on, and we do try to walk that line on. But a lot of what we do is, you know, is the value strategy cheap? Someone will write a paper saying the betting against beta strategy is really all only small cap stocks, and we’ll respond to that. So it’s really not giving away some of the stuff, which I think does exist, that is really unique. It does go to our taste. And I do think besides just the advertising aspect, I think one huge benefit to our business is we hire a lot of PhDs, including professors. We hire some full time, and we have very strong relations where they work kind of half time for us. Usually, they get to work full time for their school also to great deal. RITHOLTZ: To say, I can imagine. ASNESS: They get multiple jobs. And that’s because what they’re doing for us is also what they’re researching. It’s actually quite beautiful. I don’t think we get taken nearly as seriously in that world. RITHOLTZ: Meaning it would be a recruitment challenge. ASNESS: Yeah. RITHOLTZ: You can say to a professor, you could write for whatever you’re working on. You can help us. ASNESS: Yeah. RITHOLTZ: And if you ever want to publish with us, we can play with that also. ASNESS: Exactly. It’s absolutely twofold. They’re allowed, again, within the stricture of if it’s staggeringly proprietary, no. But broadly speaking, we’re helping their academic career also because we’re okay with them writing about a lot of this. And that’s very attractive versus a firm that says you can’t say a word. Second, I don’t think we could have even access to these people to the same degree if we weren’t producers as well as consumers of this research. You get a different respect level when you’re publishing, at least occasionally, in some of the same journals they are. RITHOLTZ: And you’ve become enough of an institution, that affiliation with AQR doesn’t look bad on anybody’s resume and vice versa. It allows you to have access to some of the top academics that are out there. ASNESS: Absolutely. There are exceptions. I think, you know, kind of near the end of 2020, maybe people were being quiet about that affiliation for a while. RITHOLTZ: That was a short-term performance. ASNESS: Yeah. No, I’m kidding. I’m kidding. RITHOLTZ: It has nothing to do with your research. ASNESS: I’m kidding. I am proud of the fact that I do think AQR on an academic resume at least doesn’t hurt and maybe even helps. RITHOLTZ: I would say you’re being humble beyond necessary. ASNESS: I can fake that a ton. RITHOLTZ: All right. Well, you know if you can fake sincerity, that’s all you need, right? ASNESS: You got me. RITHOLTZ: That’s right. So let’s talk about a couple of your publications that I was amused by. In late 2019, you wrote, bonds are freaking expensive. How do you invest around that thesis? Because going back to the bull market and bonds that began in 1981, it felt like bonds were expensive throughout the whole 2010s. ASNESS: Sure. RITHOLTZ: What made you finally cry uncle in 2019 and say, all right, no mas? ASNESS: Well, first of all, I’m going to somewhat disappoint you saying we do not take very big bets on views like timing asset classes based on valuation. Antti Ilmanen and I wrote a paper, I forget the exact title, I think one of them was called Sin a Little, where we say, timing the market, and this applies to the bond market as well as the stock market, is an investing sin. And ultimately, we recommend you sin occasionally and a little. RITHOLTZ: Not that I’ve done all my homework, but that was November 7th, 2019. ASNESS: You know so much better than me. RITHOLTZ: Quote, “It’s time to sin.” Well, I’ve researched it recently and you wrote it three years ago. ASNESS: I’m actually bad at keeping the catalogue of my own work. There’s a lot going on here. The one you’re referring to was about value timing. RITHOLTZ: Okay. As opposed to? ASNESS: And it’s really the same concept. We do believe that if you systematically follow a legit, meaning you’re not forward looking, you’re only looking at backward data, try to time the stock market, the bond market or even value based on how cheap or rich it looks, they usually have very, very modest positive, long-term risk-adjusted returns. As you said, you can go through long, long periods — RITHOLTZ: Long. ASNESS: — where they’re overvalued and get more overvalued. RITHOLTZ: Right. ASNESS: We do use valuation in concert with things like momentum and profitability and things where now it starts to be better because it’s negatively correlated to those and all else equal. If you have momentum and you’re not overvalued — RITHOLTZ: Timing is relevant, right? If you’re using momentum, how much does timing really matters — ASNESS: Yeah. RITHOLTZ: — as long as they’re your way. ASNESS: Because it’s been there with momentum. RITHOLTZ: Right. ASNESS: That piece on bonds being freaking expensive, which is going to eventually be a technical term, I’m going to push it. RITHOLTZ: Right. ASNESS: That I stressed in there, I don’t know how to time this. This is a 5 to 10-year view. I tried various methods of looking at bonds. This was well before the yield back up and well before the inflation spike. RITHOLTZ: Right, ASNESS: Compared to any forecast or trailing version of inflation and doing that consistently through time, bonds were about tied with giving you the least they’ve ever given you. And tied for worst is I think expensive. RITHOLTZ: That’s right. ASNESS: How someone reflects that if they are taking a long horizon. Now we can get into the TNA, there is no alternative, equities didn’t look great either. I think a lot of why we publish these long-term forecasts and my colleague, Antti Ilmanen is really the master of this, is both we’re interested in it and our clients really seem to value it. But we don’t trade on a 10-year forecast. RITHOLTZ: Right. ASNESS: Let me give you an example. A 10-year forecast, let’s say value has power and that’s even disputable, but we believe it does, to tell you is this going to be a better or worse than normal 10 years going forward. Very often, the answer will be we predict positive returns but considerably less than history. Okay. What do you do — RITHOLTZ: Are you just hedging, or is that a general projection? ASNESS: No, that’s genuinely often a prediction from a model. RITHOLTZ: So like the 40 percent number, what are the odds of this happening? 40 percent. ASNESS: Yeah. RITHOLTZ: You can’t be wrong when you say that. ASNESS: Yeah. This stuff is always wishy-washy. You know, statisticians never say we know this. They say the chance we’re wrong is small. But it’s also intellectually accurate. You don’t ever no saying. But imagine you have a forecast. Stocks usually make 10 percent a year, and don’t hold me to any of these numbers. We think they’re going to make 5 percent a year, but not negative. You know what? If someone who’s short for the next 10 years, or underweight against a benchmark, you know what happens if you short a positive, but smaller than historical return? RITHOLTZ: You lose money. ASNESS: You lose less than you would over history. And you get to go to your client after 10 years, well, I lost your money for a decade. But the good news is I lost you less than I would have lost over the average decade. And it’s a good example where forecasting the 10-year period can be interesting and can be vital, right? If you’re anywhere from an individual to a pension fund, saying how much do I have to save to retire? What you’re going to earn on that money is an important number. But it’s not necessarily timing actionable number. For years, my dad, it was in spreadsheet. It was a little piece of paper and it was probably calculated all wrong because believe it or not, my dad was innumerate. My mom was a math teacher so — RITHOLTZ: Okay. ASNESS: — I got it from somewhere. But he had that little sheet, what do I need to retire, which I think everyone has in some extent, including institutions. So we think that number is really important. But I do not recommend trading on just valuation, except that sin a little. I like to joke to the 120th percentile. The joke, of course, is there’s no such thing as 120th percentile. RITHOLTZ: Right. Meaning, this is beyond our lifetime experience of — ASNESS: Yeah. It’s beyond anything we’ve seen before. I would have been 20 percent above the prior 100th percentile, the new 100th percentile. And we’ve really tried hard and we can’t find any rational reason for it. A small move, don’t be a hero because again these things can get crazier and crazier. That’s the sin a little. We recommend sinning a little and occasionally. I recommend that, Barry, in your personal life also in a very different context. You can apply that any way you would like. And so, at that point in 2019, with bonds, I think we would have told people we probably want to drop less than normal on a really long horizon. But mostly we’re telling people assume you’re going to make less. Now, the late 2019, it’s time for a sin. I think I tried to use venial, a mild sin. RITHOLTZ: Venial. Veniality. ASNESS: You got two Jews here. RITHOLTZ: Yeah. ASNESS: We need a Catholic. RITHOLTZ: Right. ASNESS: When I basically said it’s time for, I’m going to say, venial value sin, a venial value timing sin, and I was looking at the spread between cheap and expensive. I want to say we created this. That is probably false. You never know who created things privately and didn’t share them. We were the first to publish on this and it was back in the tech bubble, the 24-year-old result from 1999, very similar period to particularly ‘19 and ’20. Value killed we think irrationally so the other parts of the process don’t help, extremely painful, huge recovery afterwards. But during the teeth of the pain, we wanted a measure of how extreme it is. And you can’t always just look at returns. Returns tell you the pain you’re in, but if those returns were, say, justified by massive, you know, earnings growth, if your earnings double, your PE stays the same and your return is a 100 percent. And that didn’t make you more expensive, it just was a great result. And some of that can always be in there, so you want to be prospective. So we built this measure that’s very simple. All the academic and applied work that was published at that time sorted stocks on valuation measures, generally went long or overweight the cheap and short or underweight the expensive, and really never addressed how cheap and how expensive. You always get a spread. I’m fond of saying otherwise your spreadsheet is broken, or every stock is coincidentally selling for the same price-to-sales. RITHOLTZ: Right. ASNESS: But sometimes that spread is huge, and sometimes it’s very tight, and it does correspond to times that would intuitively strike you as frothy. RITHOLTZ: So the wider the spread, the more attractive the valuation. ASNESS: Yeah. RITHOLTZ: The lower value stocks versus the growth stock. ASNESS: Value looks better versus growth on a three to five-year horizon. Also, pure value is never a great timing tool. I think you do put yourself on the right side of so-called catalysts when valuations are that extreme. Bad catalysts for you will hurt a little and good catalyst will help a lot. But still, I wrote this in late 2019 because spreads were approaching something I never thought I’d see again.’ RITHOLTZ: Back to ’99, though. ASNESS: They were approaching the tech bubble peaks. RITHOLTZ: Really? That’s shocking. In ’99, what do we have off the pandemic lows? 68 percent gain in the S&P, and then the next year another 28 percent on top of that. So this is late ‘19. ASNESS: This is late ’19. We were not there yet. RITHOLTZ: Yeah. ASNESS: And I’m talking about the spread between cheap and expensive, not the whole market. The entire market, if you like, a Shiller CAPE or something was much worse in ’99, 2000. It hit about 45, where it hit the low to mid 30s at the peak in 2020. RITHOLTZ: How do you use Shiller CAPE in your work? ASNESS: Same way. RITHOLTZ: Because I know a lot of people are kind of shrug emoji. ASNESS: Some indicator that when the Shiller CAPE is very high, the PE is very high, the 10-year prospective returns are low. We don’t actually go short something because of the Shiller CAPE. RITHOLTZ: Right. It seems like it’s been on the high side for decades. ASNESS: Yeah. That’s one of the main Antti and I look at and saying it’s pretty hard to make your money actively timing based on only the Shiller CAPE. It’s much more reasonable to have a valuable 10-year modification to historical norms, because the Shiller CAPE is high or low. But in late 2019, I wrote this, it’s time for a venial value timing sin. I wrote that I’m ignoring momentum or trend here, which is against a lot of our philosophy and largely because I thought this was epically crazy and it could come back very, very quickly, just because on average, trend and momentum work on average. You want to be able to do something that works on average, many, many times. You only had one shot at this, right? If this came back in a three-month melt-up for value stocks, you could miss a lot of it if you if you didn’t do this. So it turned out, if I listened to trend plus value, it has worked out well for us. It would have been even a little better. So there’s a little bit of a moral story. I give you my fault as well as my — RITHOLTZ: Right. ASNESS: But I wrote this thing. And then about, I don’t know, four or five months later, I wrote a follow-up piece saying no sin has ever been punished this violently and this quickly. RITHOLTZ: I recall that. ASNESS: I will make an excuse. But I think as excuses go, it’s one of the better ones. RITHOLTZ: Yeah. ASNESS: It’s called COVID. RITHOLTZ: Right. ASNESS: Certainly, that was not in my predictive power. Also, I think the market reacted ex-post certainly crazy to COVID. Basically, you remember, all you needed to own was peloton and Tesla, and value stocks were going to cease to exist in the lockdown. RITHOLTZ: Well, Tesla started running up in anticipation of being added to the S&P before COVID, and then just really went next level. ASNESS: Though, value, as we or almost anyone else measures it, was destroyed over the first six months of COVID, and it turned out not to even be directionally true. The value stocks fundamentals, what I call them executing outside of what the market cares about, just executing in their companies — RITHOLTZ: Right. ASNESS: — was actually strong, even including the pandemic. So the fear did not materialize. We thought those spreads got crazy. But as opposed to approaching tech bubble highs, never thought I’d see in my career again after the tech bubble, admit I got that wrong, they blew past it, well past it, when COVID hit. And we stuck to our guns and even added to that tilt a bit. Basically, any explanation that someone from the outside, a strategist, a pundit, a client, a consultant, or internal that we could come up with, for why we might be wrong. You know, the way I think of these is you got to keep a really open mind, consider what you might be wrong, tests that story. And if at the end of the day, there’s something that’s unprecedentedly crazy-looking, and you have, after keeping that open mind, rejected those stories, then you got to plant both feet and say I will not be moved. And I think we’ve gotten pretty good at that over time. I never wanted that. One thing you asked earlier about investment philosophy changing and we went off and 20 other fund tangents. One major way my investment philosophy has changed is at the beginning of my career, 30 years ago really, if you go back to the Goldman days, if you had asked me what will make a great investor, quantitative in my sake, but in general, I would have probably given you an arrogant answer that, oh, just being smarter than other people. You know, being smarter than other investors then the market as a whole. The arrogant part is the implicit assumption that kind of comes along that I’m one of those people. I still think this is a bold statement. Smart is good. I haven’t changed the sign on smart. But I now think long-term success, half the battle is after keeping that open mind, you can’t skip that step. If you decide you’re right, having an extremely ornery stick-to-itiveness to you is an equal partner to being smart. RITHOLTZ: All right. So I’m going to just edit what you just said for a moment because I understand exactly what you’re saying, but I want to rephrase it. So intelligence in the market, those are table stakes. You have to assume everybody you’re trading with and against — ASNESS: Yeah. RITHOLTZ: — is intelligent, even if it’s not true. You have to assume that that’s what’s on the other side, hey, I don’t know who’s on the other side of my trade, but I’m going to assume they know at least what I know, if not more. What you’re also sort of suggesting is you have to learn when your high conviction trades become I stick to my guns and ride this out, even if I’m wrong for a quarter or more or four, this will eventually work out. ASNESS: Or 11. RITHOLTZ: Right. ASNESS: Because I know these numbers precisely. Drawdowns have this amazing subjective, we borrow the term from physics, time dilation, even though we use it differently, where if you look at a back test, or even real life returns and you see a fairly horrible drawdown, but you know it ends well, you look at and go, of course, I’d stick with that. It’s a great process. Look at what it delivers. Two, three years, as some of these can take, they are an eternity. Everyone wants quarterly numbers which means you’ve gone back to people 11 times, 12 times and said, we stink again. It becomes a proof statement and you show a partial anecdote to this. But the financial media does a great job of coming up with stories why whatever is working is the truth and whoever is losing is — RITHOLTZ: Right. That shows what’s working right now. ASNESS: So you’re defending yourself. I do think we’ve done a great job of sticking our guns at these times. But I do worry that some years at the end of my life have been used up. RITHOLTZ: But what’s the quote? There are some days that lasts decades — ASNESS: Yeah. RITHOLTZ: — and some decades that go by in days. ASNESS: When we talk about children, that’s an example of decades that go by in days. Drawdowns are an example of days that go by — RITHOLTZ: Right. Days are long and decades are short. ASNESS: It feels far longer than it really is and what I might call, I don’t think there’s a real term, but statistical time. RITHOLTZ: Right. ASNESS: When can you actually say this is wrong? RITHOLTZ: It’s pain time. When you’re in pain, time goes much more slowly. Time flies when you’re having a good time. And this the inverse. ASNESS: And this is perhaps self-serving, but this raising of a rational, after being open-minded and cynical stick-to-itiveness to half the battle is also why I think some of these things last and don’t get arbitrage the way in the real. This latest 2017 which again was a bad period for value, but a very good period for us and our firm grew. Most common question I get, particularly in public forums, would be, and it’s an intelligent question, if this is as good as it looks like, why isn’t arbitrage the way? And literally, I did not expect or want to be as right as I was over the following three years. But I would say particularly having lived through the tech bubble, you have no idea how hard this can be to stick with at times. It is not that easy. It seems easy now over full cycles. And I am schizophrenic about this, half of me hates it because these times are hell, but half of me realizes that if they didn’t exist — RITHOLTZ: Right. ASNESS: Right? Every value manager on earth and this probably applies to non-value, but this is the people I talk — RITHOLTZ: Every discipline on Earth — ASNESS: Yeah. RITHOLTZ: — in finance. anyway, I’m going to steal your line, you don’t get the full glory of the upside without suffering through the out of favor downside. ASNESS: No. Wes Gray, someone you and I talked about before we started, I think it’s Wes’s term. RITHOLTZ: It is Wes’s. I know exactly where you’re going to go. ASNESS: No pain, no premium. RITHOLTZ: Oh, no, I was going to say even God would get fired as an active manager — ASNESS: Oh, okay. RITHOLTZ: — is a line from Wes. ASNESS: Maybe Corey Hoffstein said no pay, no premium. I’m good at offering attribution. I’m not always good at getting it right. RITHOLTZ: Right. ASNESS: But they’re both awesome so — RITHOLTZ: Yeah. ASNESS: But I do think there’s truth to that. My favorite story which I’m going to make you listen to now. RITHOLTZ: Okay. ASNESS: This is from the tech bubble. I am, probably late ‘99, early 2000, at home at night talking to my new wife, and I’m whining and worse than whining. I’m cursing up a blue streak about how stupid and crazy this world is, none of which I can repeat even with the laxer laws today on George Carlin’s seven words. I still wouldn’t go through — RITHOLTZ: Right. ASNESS: — what I was screaming that night. And she said to me, she only said one sentence, the rest was implied. She said, I thought you make your money because people have some behavioral biases and the rest is implied. She’s saying, but when those biases get really ugly and they make really big mistakes, you whine like a stuck pig. RITHOLTZ: So wait, you’re a quant and your wife is a behaviorist. Is that right? ASNESS: My wife has master’s in social work, so I guess behaviorist is accurate. And anyone who’s been happily married, which I’m going to search she is and she can rebut if you invite her on, to me, for a quarter century, it has to be a bit of a behaviorist. RITHOLTZ: Right. ASNESS: But what we all want, which we’ll never get, is a world where there are opportunities. We’re active investors. We think we make the market a more efficient place. We think we make capital markets better. That’s important for society. But we exist to a large extent to take the other side of errors and correct that. We don’t want a world with no errors because there’s nothing to do. We want a world where there are significant errors. And after barrier Cliff puts the position on, 11 minutes later, the market realizes we were right and hands us our money. RITHOLTZ: That doesn’t work that way. ASNESS: And it doesn’t work that way. RITHOLTZ: Right. ASNESS: It is almost perfectly calibrated and make sure most people can’t do it. RITHOLTZ: I like that phrase. I wouldn’t say it’s almost perfectly calibrated. The countryside is littered with people. By the way, I know you spend time on Twitter. We’ll talk about that. On investment TikTok, which has since shrunk dramatically, I love — ASNESS: I never got on investment TikTok. Thank God. RITHOLTZ: Well, I access it via Twitter. But — ASNESS: Do you, like, wrap your stuff on investment TikTok? RITHOLTZ: No, never. Never. ASNESS: You may put it to a Sinatra melody, it might be more appropriate for you. RITHOLTZ: No. What I love is what TikTok calls investing TikTok, I call it Dunning-Kruger TikTok. And my favorite is the young couple, both good-looking people. ASNESS: But why wouldn’t you choose good-looking people? RITHOLTZ: The way we make money is we only buy stocks that are going up. And once they stop going up, we sell them. And that’s how we subsidize our whole lifestyle. I am not paraphrasing. That is like a verbatim quote. RITHOLTZ: As one of Jagadish and Tippmann are the two academics who really deserve probably to play some momentum, but as one of the very early discoverers of momentum. There’s a little truth to what they’re saying. But they tend to do it in a very disciplined way. And very often, individuals and institutions and professional investors tend to be what I call momentum investors at a value time horizon. They look at something that’s been strong — RITHOLTZ: Okay. ASNESS: — for three, five years, and they go, it’s got to keep going. And at that time horizon, you want to be a contrarian, not a momentum investor. So I feel obligated as a co-author of some of the momentum stuff to defend that a little bit. But this is not adding up well for these people, I promise. One last thing about it, a running joke I’ve had for years, is people in describing this kind of thing, often subtly use the w.....»»

"The Biden administration's efforts to inject a centralized bank digital currency is about surveillance and control," Governor Ron DeSantis said. Ron DeSantis speaks during an election night watch party at the Convention Center in Tampa, Florida, on November 8, 2022.GIORGIO VIERA/AFP via Getty ImagesFlorida Governor Ron DeSantis proposed legislation banning digital currency from the US central bank.The Fed has been looking into the creation of a digital dollar at the direction of President Biden.DeSantis said a Fed-issued digital coin would promote surveillance and stifle innovation.Florida Governor Ron DeSantis is not on board with the potential launch of a central bank digital currency by the Federal Reserve.On Monday, DeSantis proposed legislation that would make Florida the first state in the country to ban the use of digital currencies issued by the Fed or any foreign central bank. The Fed has been studying the feasibility of a CBDC at the direction of President Joe Biden.A CBDC is a digital version of an existing currency that, like its physical fiat counterpart, would be backed by the full faith and credit of the issuing government. Talk of CBDC's heated up during the cryptocurrency boom of 2020 and 2021, which put pressure on governments to explore the potential issuance of their own digital currency.Proponents of CBDCs argue that a digital dollar would enable faster transactions with lower fees, improved efficiency with cross-border exchanges, and improved accessibility to the unbanked population.But according to DeSantis, a digital currency issued by the Fed "is about surveillance and control" and would ultimately hurt innovation."The Biden administration's efforts to inject a centralized bank digital currency is about surveillance and control. Today's announcement will protect Florida consumers and businesses from the reckless adoption of a 'centralized digital dollar' which will stifle innovation and promote government-sanctioned surveillance," DeSantis said.DeSantis also argued that any digital currency issued by the Fed would diminish the role of community banks, which have come into focus this month amid the ongoing regional banking crisis."A federally sanctioned CBDC as proposed by the Biden administration would diminish the role of community banks and credit unions in our financial system as CBDC currency would be a direct liability of the Federal government, rather than of a chartered financial institution, shrinking market lending power," DeSantis said. While there is no official timeline for the launch of a Fed-issued digital dollar, or even confirmation that the Fed will move forward with one, it is set to launch its FedNow Service in July. FedNow Service is a real-time payments system that is meant to eliminate the existing delays for clearing financial transactions between different institutions. Some view the launch of the FedNow Service as a potential precursor to the launch of a CBDC.DeSantis called on likeminded states to "join Florida in adopting similar prohibitions within their respective commercial codes to fight back against this concept nationwide." Read the original article on Business Insider.....»»

Sudeikis, who did an impression of Biden for years on Saturday Night Live, was appearing with Ted Lasso castmates to promote mental health awareness. Saturday Night Live Host Jason Sudeikis as President Joe Biden during the "Biden Meeting" Cold Open on October 23, 2021.Will Heath/NBC/NBCU Photo Bank via Getty Images The star of "Ted Lasso" made an appareance in the White House briefing room on Monday. Reporters asked to see another character played by Jason Sudeikis — Joe Biden — but Sudeikis turned them down. "No, I need fake teeth, and you know, injected with a lot more chutzpah to pull that off," he said. The star of "Ted Lasso" appeared in the White House briefing room on Monday but it was another of Jason Sudeikis' famous characters that reporters wanted to see."You don't have a little Joe Biden impression?" one reporter asked.Sudeikis, who once played Biden on Saturday Night Live, responded, "They've got the real one here now.""No, I need fake teeth, and you know, injected with a lot more chutzpah to pull that off," he continued while leaving the stage.Sudeikis was at the White House with members of the Ted Lasso cast to speak with President Joe Biden and First Lady Jill Biden about a theme of the hit show: the importance of addressing mental health to promote overall well-being.Before playing Coach Lasso, Sudeikis appeared as the affable, aviator-wearing Biden as vice president on Saturday Night Live. His character returned to the show in 2021 when the new Biden, played by James Austin Johnson, got a visit from the ghosts of his past, including Jason Sudeikis' Biden from 2013. "Where I'm from, we're still VP," Sudeikis, as Biden, told the "president." "Easiest gig in the world. We're like America's whacky neighbor. Just pop in with an ice cream cone, some aviator shades, do some finger guns. You know, shake a few hands, rub a few shoulders."  Read the original article on Business Insider.....»»