Inflation, defanged tigers, GM pulls the Cruise plug, and Tom Cotton
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Senator Tom Cotton is a miserable roaster
After the House passed the PRESS Act, a bill that would “create a federal statutory privilege to protect journalists from being compelled to reveal confidential sources and to prevent federal law enforcement from abusing subpoena power,” in the words of one of its sponsors, it was up to the Senate to pass the same.
This week Cotton blocked its passage in the Senate, saying that it would create “a federally protected cabal of legacy media at a time when the people are becoming the journalists on platforms such as X.”
Yes, this is the stuff that will get you permanently installed in the upper chamber of the legislative branch of our Federal government. Bear in mind that the PRESS Act would protect the very people that Cotton cites as the future of media. So, yes, the PRESS Act would — by my read — ensure that the industry-leading reporting of CatTurd2 and EndWokeness remain unmolested.
Here’s the bill’s text on who would be covered as a journalist under its aegis:
(1) COVERED JOURNALIST.—The term “covered journalist” means a person who regularly gathers, prepares, collects, photographs, records, writes, edits, reports, investigates, or publishes news or information that concerns local, national, or international events or other matters of public interest for dissemination to the public.
Inflation
This morning, the U.S. Bureau of Labor Statistics dropped November inflation data. As expected, inflation picked up to 2.7% (all items, not seasonally adjusted) in the month, with prices rising 0.3% in the month. More narrowly, the BLS reports that the “all items less food and energy index rose 3.3 percent over the last 12 months.”
Both figures appear in-line with street expectations.
The 2.7% figure was the highest since June, and there’s still work to be done, but I don’t see anything in the data that will shake market expectations for a rate cut on the 18th. CME data indicates that investors are currently around 90% confident that another 25 bips will get sliced from rates, but past that I struggle to put much confidence in projections.
Why? Because the incoming administration has made loud noises about quickly enacting new, steep, and broad tariffs after taking power. If that does happen, I doubt any of us have a good model today for what will happen to inflation, and, therefore, rates.
What happens if you spray and pray, and god says no?
Marina Temkin over at TechCrunch found returns data for Tiger’s 15th fund, a vehicle worth nearly $13 billion raised and invested at the height of the 2021-era technology boom. As you might expect, investing in nosebleed valuations at a pace that may have limited diligence capacity isn’t working out that well.
Here’s Temkin:
As of June 30 2024, the paper losses on Tiger Global PIP 15 stand at more than 15%, according to a recently released report from California State Teachers’ Retirement System (CalSTRS), one of Tiger’s investors. Such steep losses places the fund in the bottom 10 percent of all venture funds raised in 2021, according to the latest PitchBook Benchmarks.
Savvy readers know that many private-market capital pool post negative results initially, and stronger, more positive results later on. It’s called the J-Curve. What matters in Temkin’s reporting is that even amongst funds that should be on the same part of the J-Curve, Tiger’s 15th fund is a stinker.
That said, I bet deploying it at rocket ship speed felt amazing at the time.
GM gives up
Yesterday, GM announced that it will stop trying to build a robotaxi business and instead fold its Cruise project “and GM technical teams into a single effort to advance autonomous and assisted driving.”
At a moment when we’re seeing Waymo accelerate, WeRide and Pony.AI list, and Tesla continuing work on its own self-driving vision, giving up on a project that had already cost so very much money feels incredibly backwards.
Here’s GM’s logic:
Consistent with GM’s capital allocation priorities, GM will no longer fund Cruise’s robotaxi development work given the considerable time and resources that would be needed to scale the business, along with an increasingly competitive robotaxi market.
That screaming sound you just heard was me. The way that I read the above paragraph is GM is giving up because the challenges it was tackling were too hard.
GM spent over $10 billion on Cruise, and as Reuters notes, is also “scaling back plans for electric vehicles.” This, from a company that, in its third-quarter earnings, hailed “progress on EV profitability, along with rising sales and market share growth.”
GM is not giving on up self-driving full-stop, but it certainly seems that the project, as with electric cars, is being curtailed. Certainly, it’s expensive to pursue self-driving and a swap to EVs. To pull off both would require steadfast leadership, and lots of cash. The good news for GM was that it had the money:
With our strong third quarter results, we now expect our full-year EBIT-adjusted to be in a range of $14 billion - $15 billion and we are raising our guidance for adjusted automotive free cash flow and earnings per share.
That’s GM in October. If you were sitting on that pace of profit, would you back away from your two megaprojects?
GM is de-derisking itself against an autonomous future in which car ownership is less common than it is today. And levering itself against Americans buying a never-ending and expanding run of huge ICE trucks. I would personally not wish to wager my company along those lines, but perhaps that’s why I am not the CEO of a major American car company.
Meanwhile, over in China, electrification and self-driving are pounding ahead. Alas.