🐂 Stuck in the mud

Markets

The closure of the stock exchange on Labor Day might have been a beneficial break, considering that September historically tends to be a challenging month for US stocks. Nevertheless, despite a rocky August, the stock market has experienced substantial growth this year, largely attributed to the success of companies like Nvidia and the broader AI industry boom.

Labor Is a Terrible Guide to Inflation, but Nobody Wants to Admit It

In a world marked by fluctuating commodity prices, congested supply chains, and government stimulus efforts, central banks find solace in the reliability of the labor market as their primary guide to achieve inflation levels below 2%. Unfortunately, this guiding star seldom points in the desired direction.

Following the release of U.S. data for August, which showed a slowdown in hiring and wage growth along with a rise in unemployment, financial markets have largely dismissed the likelihood of the Federal Reserve continuing to raise interest rates. When coupled with a substantial decrease in inflation this year, it might appear as though there is a resurgence of faith in the conventional economic theory linking a less tight labor market to reduced wage demands and, consequently, slower price inflation.

Culture

Burning man attendees got stuck in mud

This year's Burning Man event bore a striking resemblance to the famous and rain-soaked Woodstock festival. Unexpectedly, a monsoon descended upon the counterculture gathering in the Nevada desert, bringing with it an extraordinary two to three months' worth of rainfall, leaving approximately 72,000 Burners stranded at the site over the weekend. The deluge caused flash flooding and turned the sandy terrain into a quagmire, making the only exit road impassable for most vehicles. It wasn't until yesterday that organizers finally permitted attendees to depart in large numbers.

In a noteworthy indication of Burning Man's increasing mainstream appeal, the President of the United States was briefed on the situation unfolding in the makeshift Black Rock City.

During the downpour, organizers advised participants to shelter in place on Saturday and Sunday, emphasizing the importance of conserving essential resources like food, water, and fuel. Those with ample supplies were encouraged to uphold the event's communal spirit by sharing with others. Local authorities investigated a death that occurred during the heavy rainfall but determined it was unrelated to the weather.

For those seeking to leave while the roads remained waterlogged, the only option was to trudge through miles of mud to reach a bus or catch a ride to the nearest city, Reno, in larger vehicles. Among the impatient travelers making this trek were DJ Diplo from the music trio LSD and comedian Chris Rock.

For those who chose to stay, they eventually had the opportunity to witness the postponed burning of "the man," a colossal effigy traditionally set ablaze on the festival's penultimate night. Nevertheless, once the green light was given yesterday, thousands opted to depart immediately, resulting in massive traffic congestion.

Looking at the bigger picture, the scale of the crowd affected by the storm highlights how much Burning Man has evolved from its origins as a low-key, bohemian gathering into a must-attend event for tech magnates and celebrities. However, this transformation has led some to question the festival's commitment to its progressive ideals, particularly considering the environmental impact of a massive desert celebration. It's worth noting that traffic congestion marred the initial days of the festival when climate activists blocked the same road that nature disrupted a few days later.

Health

Weight loss drugs are the new luxury

Not only due to their steep pricing but also because of the recent achievement by Novo Nordisk, the manufacturer of Ozempic and Wegovy, in becoming Europe's most valuable company, surpassing the luxury conglomerate LVMH. As European markets closed yesterday, the Danish pharmaceutical firm was valued at $428 billion, outshining LVMH's $419 billion market capitalization, placing it at the forefront. The introduction of Wegovy into the UK market, where it is priced considerably lower than in the United States, contributed to a surge in Novo Nordisk's share price. This success story has had a significant impact on Denmark's economy, prompting the nation to revise its economic growth projections for the year upward.

Environment

Invasive species cost the global economy a fortune

Similar to a resilient flower sprouting in a crack on a concrete sidewalk, nature's ability to thrive where it seemingly shouldn't can be both inspiring and concerning. According to a report backed by the United Nations, over 3,500 invasive plants and animals inflict global economic damages of at least $423 billion each year. This surpasses the economic impact of natural disasters experienced in the previous year. Alarmingly, nearly no region remains untouched by this issue. For instance, grass seeds have even found their way to Antarctica, raising the possibility that rising temperatures could transform parts of its icy terrain into green fields. Invasive nonnative grasses also contributed to the spread of wildfires in Maui last month. Across the globe, large snails, hornets harmful to bees, spotted lanternflies, and other invasive species pose threats to local ecosystems, human health, agriculture, and fishing.

Further key findings from the report include:

1. Economic damages resulting from invasive pests have quadrupled in each decade since 1970, partly due to the introduction of 200 additional invasive species annually via ships and aircraft.

2. Presently, the most pervasive invasive species is water hyacinth, which overruns lakes and rivers, obstructing boat traffic and depleting water resources.

3. Invasive species have played a significant role in causing 60% of documented plant and animal extinctions.

What can be done to address this issue? Scientists suggest that strengthening border controls represents the most effective approach to combat the global invasion of these biodiversity disruptors. Additionally, selectively releasing natural predators of invasive species can sometimes prove effective.

Finance

Money-for-Nothing Lawsuits Against Private-Equity Founders Get Boost

The founders of major private-equity firms have amassed billions of dollars in earnings over the years. Recently, payouts related to complex tax arrangements, which added nearly a billion dollars more to their wealth, have come under scrutiny in a Delaware courtroom.

Prominent private-equity giants, including Apollo Global Management and Carlyle Group, disbursed over $900 million to insiders as part of these tax deals. These additional windfalls have prompted legal action from investors who allege that these firms compensated their founders without receiving anything in return.

Now, a judge's decision on a related case involving another leading private-equity firm, KKR, lends more weight to these lawsuits and may instigate discussions for potential settlements between the firms and their investors.

The legal disputes revolve around what are known as tax-receivable agreements, or TRAs. Companies with TRAs have a specific corporate structure that can generate valuable tax assets when founders and early investors sell their shares following an initial public offering. Subsequently, both the company and the sellers share the benefits of these tax assets.

Sports

We missed you football

The NFL season commences on Thursday night with a match-up featuring the reigning champions, the Kansas City Chiefs, taking on the Detroit Lions. Following that, Americans will revert to their customary state, seated on the couch with a bag of Ruffles in hand, as Sunday brings a complete lineup of Week 1 games.