Month: February 2022

The Little Tyrant Has Put the World On Alert.

After my previous posts touched on serious topics, I thought I would lighten things up this week. Then, my prediction regarding the Russians invading Ukraine unfortunately came to fruition. For various and personal reasons, and without diving into politics or religion, here is my take on the invasion of Ukraine. Do I have a level of bias? Yes, I do, as my family lineage includes Ukraine.

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• We will start with the collapse of the Soviet Union. Made up of the republics of Ukraine, Georgia, Belarus, Armenia, Azerbaijan, Kazakhstan, Kyrgyzstan, Moldova, Turkmenistan, Tajikistan, Latvia, Lithuania, Estonia, and Uzbekistan, the Soviet Union’s demise was fueled by a substantial number of radical reforms. At that time, the Soviet Union’s president, Mikhail Gorbachev, had followed the paths set by Vladimir Lenin and Joseph Stalin, with totalitarian controls including administering over all industrial activity as well as controlling most aspects of political and social life.

Late in 1991, after a never-ending bad economy, the repressed and frustrated republics of the Soviet Union, one by one, declared their independence from Moscow and the Soviet Union. Gorbachev, under immense pressure, resigned on Christmas Day of that same year. Many governing protocols with the former republics were initiated, but one ended up sacrificing tremendous leverage.

Though Ukraine inherited a large number of nuclear weapons after the Soviet Union’s collapse, three years after declaring themselves an independent country, they decided to fully denuclearize under the 1994 Budapest Memorandum, which offered Ukraine security assurances from the United States, the United Kingdom, and Russia. It is now obviously clear, that twenty-eight years ago, the Ukrainians could not foresee the impact of their decision to forego their nuclear weapons. The Budapest Memorandum was authorized at the highest level by the heads of state with the implication that Ukraine would not be left to stand alone to face the threat and onslaught that started last week.

There are a few reasons that Russia’s president, Vladimir Putin, decided to invade neighboring Ukraine. None of the reasons coming out of Moscow are valid, including Putin stating that this his war on Ukraine is a peacekeeping mission, a “denazification” of the country. This is simply a ‘power grab’ by a narcissistic henchman who shaped his persona as a long time KGB operative and FSB leader. There is no doubt that his insecurity stems from Ukraine’s alliances in the West, and the idea that another neighboring country being a NATO member unnerves him, but what type of leader invades another sovereign country? I’m sure the ‘napoleon complex’ plays into his thought process, a so-called leader of Russia with the following on his resume:

• The murders of Putin’s critics, including Boris Nemtsov and Anna Politkovskaya. Nemtsov attempted to expose corruption involving Putin and the state-controlled natural gas conglomerate Gazprom.
• Imprisoning hundreds of dissenters due to their political beliefs.
• Supporting the murderous regime of Syria and their president, Bashar al-Assad.
• Instigating the Russia-Ukrainian War early on in 2014, centering on the status of Crimea and parts of Donbas, republics that were internationally recognized as part of Ukraine.
• Kickback schemes and unqualified elections.
• The poisoning of anti-corruption activist Alexei Navalny.

Last week’s invasion of a sovereign country, as I stated last week, has shocked financial markets and energy derivatives. The harm already done to Ukraine and its citizens is incomprehensible. NATO is frozen, with Article 5* in place, afraid of the ramifications of escalation. Putin is a tyrant, unstable, and has put the world on alert. * The most serious section of the treaty is Article 5, which is known as the “commitment clause.” Within this clause, every member of NATO agrees that it will consider an armed attack against any member state, whether in Europe or North America, as an attack against all 30 members of the organization.

Putin must be dealt with by whatever means necessary to end this invasion – yes, by whatever means necessary. This situation reminds me of two favorite quotes from former United States General Norman Schwarzkopf, Jr., who also served as the commander of the United States Central Command: “You can’t help but… with 20/20 hindsight, go back and say, look, had we done something different, we probably wouldn’t be facing what we are facing today.” “I believe that forgiving them is God’s function. Our job is to arrange the meeting.”

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• On a brighter note, we are two weeks from the start of daylight savings time, March Madness gets going soon, the NBA and NHL seasons are in their late stages, and Major League Soccer’s 27th season kicked off yesterday. Godspeed to all Ukrainians and others whose lives have been turned upside down.

Adios, pay it forward, be safe, and have a Funday Sunday!

Global Markets React. The Numbers Are Still Staggering. Hippos. My Takes.

Vladimir Putin has indicated he sees NATO’s expansion as an existential threat, and the prospect of Ukraine joining the Western military alliance a “hostile act.” The situation is complicated and has already spooked global markets, as the prospects of spiking costs of gas, electricity, and oil are highly likely once the Russians clamp down on Ukraine. Energy prices were up 29% annually in December and will continue to rise should a war break out. I obviously have no inner circle of intel, other than my friend, Samir, but I predict the Russians enter Ukraine later this morning, two hours after the Beijing Olympics closing ceremony. I hope my prediction is very wrong.

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• For two years, we have focused on viruses. There is no doubt coronaviruses, namely Covid-19, woke up the world with the rate of infection, hospitalizations, and unfortunately over 927,000 people passing away. Pharmaceutical entities around the world went into action to quickly develop, produce, and distribute vaccines way outside of usual regulatory protocols, resulting in millions around the world electing to be vaccinated. The world of modern medicine took action – against a virus and its variants to help people.

I now wonder why another virus, first discovered forty-one years ago, did not have the same sense of urgency from the CDC and the World Health Organization (W.H.O.)? Maybe I am wrong, and that pharmaceutical companies that have so successfully and so quickly brought vaccines to the market to combat Covid-19, at that time did not have the same technologies in place to develop and produce vaccines to help people who are dealing with HIV. Here are staggering facts: “…after 41 years, the W.H.O. reports that 1.5 million more people were infected with HIV in 2020, and nearly half of them died, despite a commitment to end AIDS by 2030. Worldwide, 38 million people have HIV, and about 73% are receiving treatment with antiretroviral drugs.“

The ignorant consider discussion around HIV taboo, which is ridiculous considering infection numbers are still staggering. Is there any path to a cure, which is viewed as the only way to end the decades-long HIV pandemic? Possibly, as last week, a woman with HIV who received an umbilical cord blood transplant has become the third person in the world to be cured of the HIV virus. The woman was diagnosed with HIV in 2013 and took antiretroviral drugs to keep her virus levels low. The path to a cure may lie with hematopoietic stem cells, which are used to treat more than seventy types of diseases, including diseases of the immune system, genetic disorders, neurologic disorders, and some forms of cancer, including leukemia and lymphoma.

More than 36 million people have died from AIDS-related illnesses since the start of the epidemic but there is now some good news: Since 2004, AIDS-related deaths have been reduced by 65% with patients receiving treatment with antiretroviral drugs. Hopefully, the hematopoietic stem cell procedure will finally lead to a clear path of a cure. Let us all hope that the great news from last week continues.

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• As if Colombia needs more socio-economic issues: Colombia’s government plans to sign a document declaring hippos an exotic invasive species, according to Environment Minister Carlos Eduardo Correa. This means coming up with a plan for how to control their population, which has reached 130 and is projected hit 400 in eight years if nothing is done as they flourish in Colombia’s rivers. I asked the same question you are now asking: “Why and how are there hippos in the rivers of Colombia?” We can thank drug lord Pablo Escobar, who thought it would be a great idea to bring a few that were imported illegally from Africa in the 1980’s. Nice work Pablo. Why could you not stick to the thing you did so well?

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A Few Short Takes:

• It was awesome to see former UGA quarterback Matt Stafford lead his Los Angeles Rams to a Super Bowl victory.
• This could only happen in the state of Florida. The headline: Officer chases woman riding motorized suitcase in Orlando airport. And to reinforce the world of the weird:

• Kanye and Kim – please stop; please go away.
• With the pending invasion of his country, why did the Ukrainian President decide, of all times, to fly to Munich yesterday? Maybe he knows something we do not?
• I have had little time and for the first time a lack of interest in watching a great amount of Olympics coverage. I am not alone as NBC’s ratings are down 40%. I guess the main reasons for this ratings slide include the thirteen-hour time difference between Beijing and the U.S. eastern time zone, China’s controversial human rights record, and viewer fatigue due to the short timeframe with the Winter Olympics following last summer’s Olympic Games.
• I try to be millennial-relevant, so can someone please explain this headline to me?: Call of Duty now lets you destroy cheaters with your own automatic god mode.
• BA.2 is a new subvariant of Omicron. Please be a variant with little to no severity.
• The price-earnings ratio, for many years, was the barometer many used to gauge the future success of various business entities. That metric is no longer the case – especially with the technology sector and their start-ups. Many say that we are now in a market that is NOT rewarding non-profitable tech names with long pathways to profitability. At market close on Friday, many tech stocks took a bath, including the once-prospering Roku, whose shares are 77% off their highs from July 27th of last year.
• I am still not finished with the Ted Lasso series – so well done, and at times so damn funny:

Adios, pay it forward, be safe and have a Funday Sunday!

A Haunted Headcount. Mid-February Thoughts. A Goalkeeper For The Ages.

• The desire to scale quickly has presented some very interesting scenarios for start ups across the world. The pressure to scale comes from institutional and private investors who want to see their positions with these companies yield positive returns – sometimes to the point of ad nauseum. The spectrum of financial metrics have expanded over the years, especially considering the level of sophistication some private equity firms have instituted to garner weekly, monthly, quarterly, and annual financial data. Here are a few financial metrics to ponder:

Gross Profit Margin. Runway. LTV.
Return on Sales. Operating Margin.
Net Profit Margin. Operating Cash Flow Ratio. CAGR.
Current Ratio. MRR. Working Capital. EBITDA.
Quick Ratio. Acid Test. CAC. COGS.
Gross Burn Rate. IRR.

Now that I have you Dazed and Confused (Milla Jovovich was memorable in that 1993 movie), I am a bit confused as well. My case in point is Peloton. Once the darling of Wall Street, this “fit-tech” company scaled quickly but now has fallen on hard times. They have taken a beating after peaking early in the pandemic as homebound consumers turned to Peloton’s bikes to stay in shape, but sales have since turned to a trickle with the stock falling 80% from its all-time high in early 2021. I do understand that people returning to gyms, the supply chain, and competitive pressure have slowed Peloton sales down, but what I do not understand is how their Board and senior executives allowed headcount to grow exponentially, leading to the span of control actually spiraling out of control.

Peloton is expecting a $313 million operating loss – and better late than never finally took action last week by replacing CEO John Foley…and unfortunately terminating 2,800 employees, which was 20% of their workforce. So, while the consistent spiral of Peloton resulted in the Board finally taking action, can someone please explain to me how a company can cut 20% of its workforce and maintain operating efficiencies?

If I am Peloton investor, my first and big question is WHAT THE HELL WERE THOSE 2,800 PEOPLE DOING AT PELOTON IN THE FIRST PLACE, IF YOU COULD JUST CUT THEM FROM YOUR PAYROLL? I’m not the sharpest pencil in the stack so can someone please enlighten me? Here is a side note just to add a bit of fuel to the fire: Last December, while Peloton’s stock continued to plummet, former CEO Jim Foley bought a $55 million home in the Hamptons. He hosted an invite-only holiday party for Peloton instructors, though he had canceled a company-wide holiday event and froze hiring. Foley is laughing all the way to the bank while 2,800 people are looking for a job. Disgusting behavior.

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Some mid-February things I think I think:

• Amazing that it had not happened earlier, but there was finally a failure with a private space entity. Last Thursday, space exploration company Astra had their first launch result in the rocket spiraling out of control and losing its payload of satellites. I’m sure Astra will be back bigger and better very soon.
• I’m a decent athlete but to date I have not conquered the art of ice skating. Then I watch what Nathan Chen does to earn a gold medal. I cannot imagine having that type of ability while wearing ice skates. My friend Richie can…he is a big Brian Boitano fan. 🙂
• What exactly is Russia’s end game with their buildup of troops on the Ukrainian border? Let’s hope the Russians pull their troops off the border soon before this escalates into all-out war.
• LSU’s Joe Burrow against the University of Georgia’s Matt Stafford in tonight’s Super Bowl. I am hoping that this game follows the thread of those crazy-fun playoff games.
• Inflationary woes continue to be top of mind. Some of this is due to the supply chain issues, which certainly are not getting any better with Canadian truckers blocking entry points into and out of the United States…but that is a story for another time. On September 25th of last year, I posted about the number of cargo ships that were in queue off the coast of California, waiting to offload their cargo at the ports of Los Angeles and Long Beach. That number was sixty-two. Almost five months later, this update comes to us from the Wall Street Journal: As of February 8th, the number of container ships queuing to enter the ports of Los Angeles and Long Beach declined to 78 vessels, down from the peak of 109 ships reached a month earlier, according to the Marine Exchange of Southern California. C’mon…there must be a way to speed up this process. Maybe we should employ SpaceX and NASA to help solve our supply chain issues? Moving the new StarShip spacecraft prototype to Kennedy Space Center’s 39A launch pad is a logistical nightmare:

• The day originated as a Western Christian feast day, to honor one or two early saints named Valentinus. That means tomorrow is Valentine’s Day – have fun and enjoy!

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• With an ownership group that includes Magic Johnson and Will Ferrell, the Los Angeles Football Club (LAFC) plays in the Western Conference of Major League Soccer. The club began play in the 2018 season at the beautiful Banc of California Stadium, and over the last few years one member of the ownership group is well known to insert himself into the thread of the team. Will Ferrell attends most home games, some away games, and is serious about soccer and his club. I can’t explain the nuances of Will Ferrell, and after he made another appearance at a team training session, I am sure the LAFC players feel the same as I do. The player front and center is Carlos Vela, who before joining LAFC, played with the Mexican National Team as well as big clubs in England and Spain. Vela’s smile and wonderment with Ferrell is priceless.

Adios, pay it forward, be safe, enjoy the Super Bowl, and all of you have a very nice Valentine’s Day.

Integrity. T-Minus Cruise Ship. Road Charge. Age Is Just A Number.

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• I’m a football fan. From my days watching the Miami Dolphins win back to back Super Bowls to the Atlanta Falcons epic collapse in Super Bowl LI, the NFL has always been must-see TV for me. There have been many controversies with the NFL as the socio-economics of the league, the owners, the teams, and the players are no different than what happens within major corporate entities around the world.

Brian Flores, the former head coach of the Miami Dolphins, has made some very serious allegations stemming from his tenure as the Dolphins’ head coach, and including interviews he was asked to participate in as many teams look to fill their head coaching vacancies. I am not going to comment on NFL hiring practices and the “Rooney Rule” – that is a subject that stands on its own as one of the League’s major failures. What I will comment on is Flores’ allegation that the Miami Dolphins owner, Stephen Ross, trying to position the Dolphins with a higher draft pick, offered Flores a $100,000-per-game bonus for every loss by the Dolphins in the 2019 season, Flores’ first as the team’s head coach. Would Brian Flores lie as a backlash for Ross firing him after this past season? Would Stephen Ross actually attack the integrity of the game by offering his head coach money to lose games?

The commissioner of the NFL, Roger Goodell, works for the NFL team owners and is reportedly paid a base salary of $63 million annually. He has dealt with many issues with teams and their personnel – but this issue is not about player personnel issues. It is about the integrity of the game. In so many ways I hope Brian Flores is lying…but why would he? What is your take?

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• As if the cruise ship industry has not suffered enough, another faux paus puts the Royal Caribbean brand in a bit of disarray. About fifty five miles east of where I live in Orlando, Florida, sits Port Canaveral. Just a few miles away from the port is Kennedy Space Center, which has never been more active with the private space exploration companies seeming having a launch once a week.

After three previous attempts were delayed due to poor weather, last Sunday’s SpaceX Falcon 9 launch was aborted just seconds before launch. No, not due to weather or a hardware/software issue, but because a Royal Caribbean cruise ship, against any and all protocols, sailed into the NASA “hazard area” off the Florida coast. Seriously people, are you telling me that the NASA/SpaceX and Royal Caribbean/Port Canaveral peeps had a failure to communicate? All indications are that NASA/SpaceX followed the proper communication advisory protocols, and that Royal Caribbean and the ship’s captain failed to stay away from no-go zone. NASA and SpaceX have not taken this failure lightly and the U.S. Coast Guard has launched their own investigation into this serious breach of protocol. As I have been told a few times…you can’t fix stupid.

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• Just when we think the never-ending saga of interstate highway construction finally completed, for example the section of I-4 that cuts through Orlando, we learn that there is a possibility that many interstate highways may have to be replaced or retrofitted. No way, you say?

While I have written about the stake in the ground from Ford and other car makers with their commitment to electric vehicles, there has not been much discussion about electrical load factors servicing the onslaught of vehicles needing electricity to run. So some very smart people have decided that similar to placing your phone on a charging pad, constructing highways with electrical charging capabilities is the “road of the future.” In a few years, cars going down a road in a historic section of Detroit will theoretically be able to charge their batteries as they drive. That’s the goal of an Israeli company that is finalizing an agreement with the state of Michigan’s Department of Transportation to build the roughly one mile long experimental roadway.

If an electric car is capable of wireless charging journeys on powered roads, the thinking goes, it would be able to drive with virtually unlimited range, its batteries never running out of juice. Does anyone else predict some very interesting issues with this road technology?

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• On Friday night, a group of us had dinner at the local trattoria, when one of our friends sent a group text. The look on everyone’s face, including mine, was one of puzzlement. I just don’t know what to say about this comparison.

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The countdown continues: five weeks to Daylight Savings Time!

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Adios, pay it forward, be safe, and have a Funday Sunday.