We all know that prediction is hard, especially about the future. But divining the global economic outlook in recent times has become increasingly difficult. Inflation continues to race ahead, defying economists' forecasts for a slowdown. Meanwhile, the recession that's been just around the corner for several quarters remains, well, just around the corner. The problem, according toAllison Schrager, is that this time really is different - unpredictably different.
The economic lockdown imposed during the pandemic was unprecedented. "We have never before turned the economy off, then turned it back on again," Allison writes. The war in Ukraine was unexpected and has exacerbated the rise in consumer prices, which is itself coming from novel directions, including supply chain disruptions, a ton of Covid-inspired fiscal stimulus, and interest rates that remain at historically abnormally low levels.
"If there has been one thing consistently true over the past two years, it is that what everyone consistently predicted has turned out to be wrong," Allison writes. "That's because we're in uncharted territory." As a result, the inflection point that the economy is expected to reach may prove illusory. "In this world, the economy is just sort of blah for a long while and we slog along full of uncertainty."
Tech Reckoning
It's been quite a week for the big US technology companies, which have suffered whatJohn Authersdescribes as "a Wile E. Coyote moment."
CNBC stock-market pundit Jim Cramergot quite emotionalabout the collapse in Meta Platforms Inc., the company formerly known as Facebook.Amazon.comInc., Microsoft Inc. and Google owner Alphabet Inc. have also plummeted, with Amazon's market capitalization dropping below $1 trillion when US markets opened on Friday, down from a peak of $1.9 trillion in July 2021.
"The fall from grace has been staggering," John writes. "For investors who thought they were betting on the next big thing, it won't be surprising if they are starting to think twice. For more than a year, investors worked on the assumption that these companies would benefit from the pandemic, which they unquestionably did - but it is only now that investors have fully grasped that they shouldn't be valued as though the pandemic conditions would continue for ever."
Further Tech Stock Reading: Even Apple will need toeke out some growth. - Tim Culpan
The Secret of Red Bull's Success? Bull's Testicles Unconventional Marketing
Taurine is an amino acid found in many energy drinks, withsome studies suggestingit improves athletic performance. "Is taurine made from bull's testicles?,"the website of the world's dominant pep-me-up beverage asks. "No. The taurine in Red Bull is not derived from animals. It is produced synthetically by pharmaceutical companies."
The fact that Red Bull GmbH feels the need to even pose the question harks back to rumors about where the power of its fizzy drinks comes from. While the real secret of the company's success may be more prosaic, its 41% share of the US energy drinks market is testament tothe marketing prowess of its founder Dietrich Mateschitz, who died last week aged 78, writes Chris Bryant.
Mateschitz eschewed traditional print advertising, instead pioneering an event-oriented approach. "We don't bring the product to the people, we bring people to the product," he told the Economist in 2002. The company owns several soccer teams, and its main Formula One team has dominated auto racing this season. Red Bull spent about one-quarter of 2020 revenue on marketing; in years not disrupted by the pandemic, the percentage was closer to 30%.
Red Bull is insanely profitable, with an operating return on sales in 2020 of 26%. Mateschitz marketed the drink as "a boundary-pushing, hip lifestyle brand rather than a blue-collar pick-me-up, and priced it accordingly," Chris writes. "As a private company, Red Bull isn't beholden to pressure from external investors and its capital structure is decidedly old-fashioned: It uses cash flow to fund investments, not borrowings."
Telltale Charts
Bank of Japan Governor Haruhiko Kuroda is sticking to his guns, even though inflation is ticking up. "Kuroda will be hoping that by resisting calls to raise rates and staring down the markets, he's timed things better than those others who have occupied his role before him," writeDaniel Mossand Gearoid Reidy. "With just one more monetary policy meeting left this year,he may have weathered the storm of elevated inflationand the weak yen."
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started by Javier E on 17 Dec 22
This is Bloomberg Opinion Today, a cartoon cliffhanger of Bloomberg Opinion's opinions. Sign up here.
Today's Agenda
Through a Glass, Darkly
We all know that prediction is hard, especially about the future. But divining the global economic outlook in recent times has become increasingly difficult. Inflation continues to race ahead, defying economists' forecasts for a slowdown. Meanwhile, the recession that's been just around the corner for several quarters remains, well, just around the corner. The problem, according to Allison Schrager, is that this time really is different - unpredictably different.
The economic lockdown imposed during the pandemic was unprecedented. "We have never before turned the economy off, then turned it back on again," Allison writes. The war in Ukraine was unexpected and has exacerbated the rise in consumer prices, which is itself coming from novel directions, including supply chain disruptions, a ton of Covid-inspired fiscal stimulus, and interest rates that remain at historically abnormally low levels.
"If there has been one thing consistently true over the past two years, it is that what everyone consistently predicted has turned out to be wrong," Allison writes. "That's because we're in uncharted territory." As a result, the inflection point that the economy is expected to reach may prove illusory. "In this world, the economy is just sort of blah for a long while and we slog along full of uncertainty."
Tech Reckoning
It's been quite a week for the big US technology companies, which have suffered what John Authers describes as "a Wile E. Coyote moment."
CNBC stock-market pundit Jim Cramer got quite emotional about the collapse in Meta Platforms Inc., the company formerly known as Facebook. Amazon.com Inc., Microsoft Inc. and Google owner Alphabet Inc. have also plummeted, with Amazon's market capitalization dropping below $1 trillion when US markets opened on Friday, down from a peak of $1.9 trillion in July 2021.
"The fall from grace has been staggering," John writes. "For investors who thought they were betting on the next big thing, it won't be surprising if they are starting to think twice. For more than a year, investors worked on the assumption that these companies would benefit from the pandemic, which they unquestionably did - but it is only now that investors have fully grasped that they shouldn't be valued as though the pandemic conditions would continue for ever."
Further Tech Stock Reading: Even Apple will need to eke out some growth. - Tim Culpan
The Secret of Red Bull's Success? Bull's Testicles Unconventional Marketing
Taurine is an amino acid found in many energy drinks, with some studies suggesting it improves athletic performance. "Is taurine made from bull's testicles?," the website of the world's dominant pep-me-up beverage asks. "No. The taurine in Red Bull is not derived from animals. It is produced synthetically by pharmaceutical companies."
The fact that Red Bull GmbH feels the need to even pose the question harks back to rumors about where the power of its fizzy drinks comes from. While the real secret of the company's success may be more prosaic, its 41% share of the US energy drinks market is testament to the marketing prowess of its founder Dietrich Mateschitz, who died last week aged 78, writes Chris Bryant.
Mateschitz eschewed traditional print advertising, instead pioneering an event-oriented approach. "We don't bring the product to the people, we bring people to the product," he told the Economist in 2002. The company owns several soccer teams, and its main Formula One team has dominated auto racing this season. Red Bull spent about one-quarter of 2020 revenue on marketing; in years not disrupted by the pandemic, the percentage was closer to 30%.
Red Bull is insanely profitable, with an operating return on sales in 2020 of 26%. Mateschitz marketed the drink as "a boundary-pushing, hip lifestyle brand rather than a blue-collar pick-me-up, and priced it accordingly," Chris writes. "As a private company, Red Bull isn't beholden to pressure from external investors and its capital structure is decidedly old-fashioned: It uses cash flow to fund investments, not borrowings."
Telltale Charts
Bank of Japan Governor Haruhiko Kuroda is sticking to his guns, even though inflation is ticking up. "Kuroda will be hoping that by resisting calls to raise rates and staring down the markets, he's timed things better than those others who have occupied his role before him," write Daniel Mossand Gearoid Reidy. "With just one more monetary policy meeting left this year, he may have weathered the storm of elevated inflation and the weak yen."
Further Reading
The mystery of America's millions of missing oil barrels. - Elements by Javier Blas
Don't exaggerate the cracks in the relationship between French President Emmanuel Macron and German Chancellor Olaf Scholz. - Lionel Laurent
Rishi Sunak walks right into a lose-lose immigration policy. - Therese Raphael
Sunak illustrates the growing influence of Indian talent in the West. - Tyler Cowen
The Chips Act won't work without including every part of the semiconductor supply chain. - Thomas Black
ICYMI
Elon Musk's $44 billion buyout of Twitter caps nine years of largely unfulfilled promise on the NYSE.
How the battle between Netflix and HBO forged a new era of television.
Xi's $6 trillion rout shows that Chinese markets serve the party first.
Retirement apartments with pools and cinemas are London's next property hotspot.
Kickers
Rihanna released Lift Me Up, her first solo track for six years, which will feature on the soundtrack to Black Panther: Wakanda Forever.
A British cross-Channel kayaker was rescued after surviving on seaweed for two days after capsizing.
Eat mushrooms, cut back on meat and use the microwave to save the planet one forkful at a time.
This Piet Mondrian panting has been hanging upside down for 75 years.
Notes: Please send microwaved seaweed and feedback to Mark Gilbert at magilbert@bloomberg.net.
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