We Are Change TV.US

Prior to Silicon Valley Bank’s collapse, US funding markets were already facing difficulties, with startup CEOs concentrating on cutting expenses and protecting their dwindling cash reserves. The downturn in IPOs directly resulted from Fed Chair Powell’s aggressive interest rate hikes. With the added impact of the SVB debacle, the US and global IPO markets have come to a standstill. 

Bloomberg data shows companies worldwide raised a paltry $19.7 billion via IPOs in 2023. That’s down a staggering 70% year-on-year and the lowest comparable amount since 2019. The most significant decline was in the US, where only $3.2 billion has been raised. The subdued activity will likely remain locked in place until easier monetary conditions are seen. 

“Rates is the number one issue, and there is a clear debate around how long the tightening lasts or changes direction and at what speed,” Udhay Furtado, co-head of ECM, Asia Pacific at Citigroup Inc., told Bloomberg. 

“There are a number of things people will need to see, including central bank direction, to ascertain whether it’s the second, third, or fourth quarter,” Furtado said, referring to when IPO deals might restart. 

Last week, we pointed out that funding challenges for startups pose a problem for venture capital funds that paid record-high prices for these companies, as they cannot offload their positions to retail in the secondary market. 

For the last year, readers have been well-informed about the drought in offerings (recall: “IPOs Vanish As Market Mayhem Saps Deal Appetite”). 

Turmoil in the IPO markets is creating massive problems:

“We’ve been stalled for more than a year.

“It caught people off guard because they didn’t expect to not have the ability to IPO in this amount of time,” said Patricia Adams, a partner at Vinson & Elkins LLP. 

On a positive note, secondary offerings have surged $76 billion this year, a 48% increase from a year ago, Bloomberg data show. Companies have also turned to convertible bonds, which allow them to borrow more cheaply, given the securities have a call option. 

Returning to SVB, the bank had been a major player in the venture debt space, offering loans to high-risk, early-stage companies. However, with SVB no longer in the picture, it is widely anticipated that such capital will be scarcer and more costly. We spoke with one Wall Street firm about the changing landscape of funding in the VC space — who said large investment banks, such as Goldman, are now stepping in to fill the gap left by SVB, providing funding lines to cash-strapped startups at deep valuation discounts. 

Authored by David Stockman via InternationalMan.com,

The Wall Street Journal recently brought word that a professor Efraim Benmelech of the finance department at Northwestern University thinks the Fed is hurting housing and the consumer too much.

Opined he,

….those higher interest rates are making mortgages more expensive and leading to fewer home sales. That leads to less spending on appliances, paint and other home goods, because people commonly buy those items ahead of a sale and after moving.

“The actions of the Fed are leading to lower consumption,” he said.

You don’t say!

Then again, has it occurred to the good professor that the years and years of ultra low mortgage rates engineered by the Fed were totally unnatural, uneconomic and not sustainable?

The evidence for that is in the chart below. It shows that for most of the last three decades, the Fed drove the after-inflation or “real” interest rate on 30-year mortgages steadily lower until it actually turned negative.

Inflation-Adjusted Interest Rate on 30-Year Fixed Rate Mortgages, 1990 to 2023

Stated differently, the unfolding recession is a long overdue and necessary purge of artificial economic activity stimulated and subsidized by the central bank’s own financial repression policies.

The Fed’s belated attempt to “normalize” interest rates, therefore, is not a mean-spirited policy to deliberately cause labor, manufacturing capacity and other economic resources to be idled. To the contrary, it’s a belated attempt to unshackle markets from the excesses, bubbles, malinvestments, inefficiencies and unsustainabilities that were the inherent results of decades of reckless money-printing.

One of the many bubbles created by the Fed’s relentless monetary expansion of recent years might be termed the “labor bubble”. By that we are referring to the madcap hiring undertaken by corporate HR departments in the aftermath of the Covid Lockdown disruption.

As it happened, they failed to meet staffing needs in the early days of the re-opening in 2021 owing to the fact that millions of workers had left the active labor force thanks to massive stimmies, early retirements and other welfare state inducements, along with mom and dad’s basements and checkbooks. So HR departments plunged into hiring “just in case” the re-opening boom of 2021 and early 2022 continued. In effect, they began to hoard labor.

Spotify CEO Daniel Ek admitted as much in a recent missive to employees announcing a 6% cut in the company’s workforce:

“In hindsight, I was too ambitious in investing ahead of our revenue growth. And for this reason, today, we are reducing our employee base by about 6% across the company. I take full accountability for the moves that got us here today,” the exec said.

Of course, the re-opening and stimmy boom didn’t last—notwithstanding the Fed’s massive money-pumping and monetization of the public debt issued to finance the $6 trillion of Covid bailouts.

Since the spring of 2021 when the stimmies peaked, the US economy has actually been slouching toward idle. In fact, once you strain out of the GDP numbers the one-time inventory rebuilding, which was necessitated by the drastic depletion of merchandise stocks triggered by the stimmy based consumer spend-a-thons, there is hardly any organic growth left.

As shown in the chart below, the combination of Dr. Fauci’s Virus Patrol and the Washington spenders did a real number on the business economy. First, the normal business inventory-to-sales ratio exploded to the upside during the initial lockdowns and spending collapse, and then plunged to unprecedented lows as the stimmy-fueled boom in Amazon orders drained the system of its working inventories.

Whipsaw of Business Inventory-to-Sales Ratio, 2018 to 2022

Since reaching bottom in October 2021 inventories have been rebuilt to nearly normal levels, but that’s just the problem. The GDP gain reflected in the inventory rebuild is just a case of “one and done”. In fact, with the interest cost of carrying inventories now rising rapidly it is likely that the business sector restocking is over.

As we indicated, once you peel back the effect of inventory restocking, the stagnation of the US economy is starkly apparent. For instance, in the case of the industrial production index, which covers all of manufacturing, energy, mining and utility output, the level in March 2022 stood at 103.5.

As it happened, the index posted at a nearly identical 103.4 in December. Call it nine months of “growth” to nowhere!

Industrial Production Index, March to December 2022

Needless to say, none of this madness would have happened without the enabling hand of the Federal Reserve.

*  *  *

The truth is, we’re on the cusp of an economic crisis that could eclipse anything we’ve seen before. And most people won’t be prepared for what’s coming. That’s exactly why bestselling author Doug Casey and his team just released a free report with all the details on how to survive an economic collapse. Click here to download the PDF now.

Former President Trump on Saturday suggested that the Manhattan DA was tricked by “Star” witness Michael Cohen, Trump’s former lawyer who was disbarred after pleading guilty in 2018 to multiple felony charges, including 5 counts of tax evasion, lying to a financial institution, lying to congress, and two campaign finance violations.

In addition to Cohen’s credibility issues, a 2018 letter emerged last week in which Cohen’s lawyer tells the Federal Election Commission that Cohen used his own funds to make a $130,000 ‘hush’ payment to Ms. Stephanie Clifford (Stormy Daniels aka “Horse Face”), and that Trump did not reimburse him for it.

Following a Saturday night rally in Waco, Texas, Trump told reporters on his plane: “I think they’ve already dropped the case … they have absolutely nothing.”

“It’s a fake case. Some fake cases, they have absolutely nothing,” Trump continued.

The former president made a similar statement earlier Saturday, writing:

“The Manhattan D.A. Witch Hunt against me is DEAD, no evidence at all, & it has been conclusively proven that I did nothing wrong!”

“The evidence against their “Star” witness, however, is overwhelming. An already disbarred lawyer & convicted Felon, the only question left is will the D.A.s Office sue him for lying & fraud. They should!”

Trump also told reporters on the plane that he wasn’t trying to incite violence with a recent Truth Social post warning of “potential death and destruction” if he’s indicted.

“No, I don’t like violence and I’m not for violence. But a lot of people are upset.” he said.

Cohen’s credibility is shot

As the Epoch Times notes, former Trump attorney Robert Costello said he told the grand jury in the Manhattan case that Cohen was a tainted witness against Trump.

Cohen’s testimony against the 45th president in the investigation, which reportedly is connected to so-called hush money payments that were given to adult performer Stormy Daniels during the 2016 presidential campaign. A lawyer for Cohen, when reached for comment, declined to issue a statement, although Cohen told MSNBC last week that Costello never represented him and disputed his testimony.

Bragg’s has not returned a request for comment, and The Epoch Times cannot verify the authenticity of Trump’s claims. Previous Epoch Times requests for comment from the DA’s office have gone unanswered.

Over the past week, Bragg’s office has issued one public statement on the case, and that came in response to a House Republican letter seeking testimony and information about the DA’s case or whether his office would arrest Trump. A letter sent by his general counsel said that it was Trump who created a “false expectation” he would be indicted last week, although he provided no other details.

During Saturday night’s rally in Waco, Trump declared that his “enemies are desperate to stop us,” and that “our opponents have done everything they can to crush our spirit and to break our will.”

He also told the crowd that Bragg was investigating him “for something that is not a crime, not a misdemeanor, not an affair.“

“Not a crime. Not a misdemeanor. Not an affair. I never liked ’Horseface.’ That wouldn’t be the one” – Donald Trump, at Waco rally, on NYC investigation pic.twitter.com/zY4abOPTsu

— Politics1.com (@Politics1com) March 26, 2023

“But they failed. They’ve only made us stronger. And 2024 is the final battle, it’s going to be the big one. You put me back in the White House, their reign will be over and America will be a free nation once again.”

President Trump in Waco: “It’s no coincidence that the Deep State is coming after me even harder since I pledged to swiftly end the war in Ukraine.”

pic.twitter.com/jfr7fN1jIY

— Alex Bruesewitz 🇺🇸 (@alexbruesewitz) March 26, 2023

The race to provide global high-speed internet through space-based networks is underway, heralding the potential beginning of a new era in communication.

London-based company OneWeb launched the final 36 satellites of its initial 616-satellite “constellation” via an Indian LVM3 rocket from the Sriharikota spaceport in Andhra Pradesh on Saturday. 

“It’s the fruition of an enormous amount of hard work, and obviously, we’ve been through some geopolitical issues over the last year or so, and the team has proven to be extremely resilient and caught up,” Chief Executive Officer Neil Masterson told Bloomberg ahead of the launch. 

LVM3-M3🚀/OneWeb 🛰 India-2 mission
is accomplished!

All 36 OneWeb Gen-1 satellites injected into the intended orbits

In its 6th consecutive successful flight, LVM3 carried 5805 kg of payload to Low Earth Orbit@OneWeb @NSIL_India

— ISRO (@isro) March 26, 2023

“This launch will be one of the most significant milestones in OneWeb’s history so far, with the launch adding an additional 36 satellites to the OneWeb fleet, the first ever completed global LEO constellation,” OneWeb wrote in a press release. 

Glimpses!
More in our other media. pic.twitter.com/saInoOQpt6

— ISRO (@isro) March 26, 2023

OneWeb’s space-based internet will provide high-speed, low-latency solutions to communities, enterprises, and governments worldwide through its constellation of satellites. 

Besides OneWeb, there is only one other company flying more satellites in space today and a competitor: Elon Musk’s Starlink system. 

However, OneWeb is different from Starlink because it’s not selling broadband connections to individuals but rather to telecom companies that will then provide this internet service. 

Bloomberg noted OneWeb had a rocky past, filing for bankruptcy in March 2020, only to be rescued by the UK government and Indian telecom tycoon Sunil Mittal’s Bharti Group. The company has attracted investments from Hughes Satelite Systems and SoftBank Group. 

More importantly, there’s a space race to provide satellite internet worldwide. Musk’s Starlink happens to be the leader.