My Investing Muse (15Dec25)
Layoffs, Bankruptcy & Closure news
New Fortress Energy, a company that builds liquified natural gas terminals, is reportedly in big financial trouble. Bloomberg reports the company has missed interest payments on its loans and says it can’t repay large chunks of debt due soon. To avoid immediate collapse, lenders have agreed to temporarily hold off demanding their money until January 9, 2026.
Ford LAYOFFS: 1,600 people at a factory that barely opened. Why? Because EVs didn’t make money... and apparently AI data centers do. They spent $5.8B building the Kentucky EV battery plant. So now, 1,600 workers laid off, EV production cancelled, Plant converted to serve AI data centers & utilities, $19.5B EV profit hit - X user Amanda Goodall
Howard’s Appliances, a 79-year-old appliance retailer, has shuttered all of its remaining locations and filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Central District of California. - Mass Live
News about layoffs, closures and bankruptcies continues into the end of the year. There are always layoffs, closures and bankruptcies. However, these are approaching previous crisis levels. This does not mean that we WILL enter into a crisis but it is good to be prepared.
AI - a bubble?
These are some of the news items in the past week regarding AI. Do you think that it is a bubble?
AI is part of our present and future. AI is not a silver bullet. AI is a great assistant. Not everyone will survive. Will Microsoft take over OpenAI?
US electricity prices are at record highs. After your electric bills doubled, it’s will double again because you have to pay for AI data centers. In the next 10 years, AI power demand will QUADRUPLE. That’s 4.4% of ALL electricity on Earth. If AI data centers were a country, they’d rank 4th in electricity use behind only China, the US, and India. - X user Andrew Lokenauth
Reuters story on AI (another reality check) titled: “AI promised a revolution. Companies are still waiting” Lots of great anecdotal stories in here on GenAI implementation. Below is one of my favorites. Come on...a 100-page document of rules should be cut and dried... but it isn’t “But Cando ran into a surprising stumbling block: the models couldn’t consistently and correctly summarize the Canadian Rail Operating Rules, a roughly 100-page document that lays out the safety standards for the industry. Sometimes the models forgot or misinterpreted the rules; other times they invented them from whole cloth. AI researchers say models often struggle to recall what appears in the middle of a long document. Cando has dropped the project for now, but is testing other ideas.”
The entire AI bubble is propped up by a company that is on $13 billion revenue btw. They just tried to raise at 750 BILLION valuation. - X user Zoomer
Godfather of AI Warns of an AI Bubble. Geoffrey Hinton says the AI boom risks becoming a bubble, not because the tech fails, but because companies are ignoring the social shock from mass job losses. “These guys are really betting on AI replacing a lot of workers,” Hinton said. “I don’t think people are factored in enough, the massive social disruption that will cause.” With Big Tech set to spend hundreds of billions on AI, Hinton warns their models assume society can absorb unemployment without political backlash or a collapse in demand. “If you do get huge increases in productivity, that will be great for everybody if the wealth was shared around equally,” he said. “But it’s not going to be like that. It’s going to cause huge social disruption.” - X user Daniel Romero
My Final Thoughts
Is time in the market better than timing the market? So long we make money?
RAY DALIO WARNS: “Its not a recession which is going to hit US & the World but a total breakdown of the Monetary System” - CNBC “Meet the Press”
Inflation and CPI Data
Recent news reports have highlighted a “lowered” inflation rate based on the latest Consumer Price Index (CPI) data. However, it is important to note that this assessment may not be entirely accurate, as several item updates are missing from the CPI release. The incomplete data could result in a misleading representation of the true inflationary environment. Despite these concerns, market participants are optimistic about the possibility of a Santa Claus Rally in the coming weeks, and many are wondering if this trend will repeat in 2025.
Mixed Market Signals
As additional economic data emerges, the market is experiencing a combination of positive and less favourable news. Notably, the Bank of Japan (BoJ) has increased its interest rate, which raises ongoing concerns about the yen carry trade. Meanwhile, precious metals such as gold and silver have reached new highs, reflecting increased investor interest in safe-haven assets. In contrast, Bitcoin has faced challenges in recovering its previous highs, particularly the $100,000 mark.
Approach to Current Market Conditions
Given the current uncertainty and the mixed signals from various sectors, exercising caution remains a prudent approach during this period. The interplay of economic indicators, central bank actions, and asset price movements suggests that vigilance is necessary when making investment decisions in the present climate.
Financial Strategy and Outlook
Let us spend within our means, invest only what we can afford to lose, and avoid leverage. Let us review our current holdings with the intention of divesting from businesses that are losing their competitive advantages. Additionally, I will consider adding both hedging strategies and defensive positions to our portfolio to mitigate risk.
As we move forward, it is crucial to conduct thorough due diligence before assuming any new responsibilities.
Wishing everyone a successful week ahead.
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