June 22, 2022 | ± 4 minutes
New here? The WC is a random mix of useful / interesting / notable stuff that gets pumped into your inbox every Wednesday.
And yes, I know WC also means toilet. I’ve had to live with these initials for 43 years.
How long will the recession last?
Here’s a great chart putting our current drawdown in context relative to other recessions / the Depression:
If we assume this will look something like 2000 and 2008 (and I do), there are three key takeaways:
- We’ve got something like five or six years before returning to the all-time highs achieved in December 2021.
- We’re only down 25% off all-time highs. The Dotcom bubble and Great Recessions shed 50% and 56%, respectively, which leaves a lot more to lose (for equities at least).
- We have another eight to twelve months before we hit that bottom and start to recover.
In 2022 we have completely new assets classes to deal with – crypto and NFTs. During the 2018 crypto winter, Bitcoin shed around 83% from its all-time high, and it took a year to do it. Today it’s shed about 70% over the last seven months.
If 2018 is a guide, Bitcoin could hit $10k before creeping back out.
Putting your money where your mouth is
Lately, I’ve been playing with Kalshi, a prediction market. Prediction markets let you bet real money on real life events. Like betting on the winner of the Super Bowl except predicting what inflation is going to be. These markets are often more accurate than what “scientists” and “smart people” say in the press because there’s real money behind them.
Here are a few key predictions:
- Inflation in 2022 will be more than 8%? 53% say yes
- What will interest rates be in the US after the December Fed meeting? 75% say 3.5% or higher
- What will mortgage rates be in December 2022? 57% say 7% or higher.
- Will humans go back to the moon before 2025? 9% chance
- Will there be (are we in a) recession in Q2? 94% say yes
- Will Congress get rid of daylight savings time? 83% say no
You can bet on lots of other things, including the daily high temperature in NYC, what inflation will be like in China this year, job numbers, the price of oil this week, Covid-19 cases, and more.
I’ll keep tracking this to see how efficient the market is. Could be useful.
Elon is getting sued for $258B (lol)
Remember when Elon bid $44B for a company that’s now only worth $29B? And that he’s stuck with that bid unless he wants to pay billions of dollars to walk away?
Things keep getting worse (more hilarious) for him.
Now a bunch of butt-hurt crypto bros have brought a class action case against the billionaire because they say he’s responsible for tricking them into thinking the dog-themed meme coin was a solid investment.
And they’re not wrong. Elon did pump the sh*t out of the joke coin.
Do you want Tesla to accept Doge?— Elon Musk (@elonmusk) May 11, 2021
I think he did it as a joke rather than to profit, but sometimes pranks can ruin real lives.
He’s been bit by ill-thought-out tweets before. Let’s see if it happens again.
The first YouTube billionaire?
My kids love Mr Beast, and I’ve got to admit, his videos are entertaining and well-made. And they’re actually pretty wholesome – he’s usually just giving money away to random people.
But is he worth $1B? According to this thread, he could be, and soon.
Mr Beast revolutionized YouTube.— Adam Ryan 🤝 (@AdamRy_n) June 9, 2022
He first went viral when he gave $10k to a homeless person.
Now, he’s on his way to being the first YouTube billionaire: pic.twitter.com/DEL6FmwGE6
He’s got nearly 100m subscribers, which translates into nearly $100m of revenue per year.
And the craziest part is that he funnels almost all of it back into his videos. When he gives away an $800k island, it’s an island he bought with revenue from his videos. It seems that what he cares about most is growing and making actually good videos.
Texas is trying to secede again
The Texas Republican party published its statewide platform this week, and among many other notable positions the party has taken, it’s included a referendum on seceding from the United States.
Texas retains the right to secede from the United States, and the Texas Legislature should be called upon to pass a referendum consistent thereto.
According to the Texas Nationalist Movement, over 400k Texans support the measure.
It’s sort of a myth that Texas has always had the right to secede if it chose to, but in 1869, the Supreme Court ruled in Texas v White that states can’t, in fact, unilaterally decide to secede from the Union.
I’ll keep a close eye on Texit, so you don’t have to.