Dana Blankenhorn

What I Learned on my European Vacation

Regular readers have missed me, I hope.

I took a two-week break to take my bride of nearly 46 years to Europe. Specifically, we flew to Germany, where my father’s people came from. On our first day we saw a ruin called Castle Blankenhorn, built in the 12^th century. Folks who came from that castle, which was controlled by the Hohenstaufen dynasty, took its name when they moved on.

We moved on, too, in a 2022 VW Tiguan with a 6-gear stick shift, along Autobahns which at times had no speed limit. We saw the Neuschwanstein Castle, the fairy tale accompaniment to an older pile built on a ruin like “da castle a my fadder.” We saw a statue dedicated to Carl Laemmle, the founder of Universal Studios (and 20^th century Hollywood). We went to a soccer game in Ingolstodt, visited its street festival, and explored the “Romantic Road,” created after World War II specifically to lead tourists to medieval sites (and extract their money). I do wish they extracted a little more of mine, in the form of hats, t-shirts and the like, but they’re still into books, postcards and refrigerator magnets.

Lean Into $100 Oil

Markets are being spooked right now by Saudi Arabia’s decision to join Russia in cutting oil supplies. 

If oil prices stay high or go higher, analysts say, the economy may go into recession, and President Biden’s re-election will be threatened. 

I think there’s one weird trick that can prove a decisive point in world history.

Lean into it.

Accept higher oil prices. Note that American oil companies benefit. Explain that higher prices, and lower consumption, are essential in the fight against climate change. Highlight the growing cost disparity between fossil fuels and renewable energy, which continues to grow.

The Sauds and Russians think they have us over an oil barrel.

We should make this a decisive moment for putting them over one. 

There will be short-term pain because the analysts are right. Higher oil prices could tank the economy. They could cause a recession.

But, like the song says, your creature comforts aren’t the only things worth fighting for. The point of Biden’s economic policy has been to create American supply chains in energy, transportation, and manufacturing. The money to build these supply chains is being spent, supported by billions in private investment.

Sell Nvidia, Buy Amazon

These are heady days for Nvidia, and profitable ones for my retirement account.

I bought 100 shares of Nvidia about 5 years ago, which soon turned into 300. I sold one-third of them to get my money out, but the remaining shares are worth nearly $500 each.

Nvidia is the chief arms merchant to the cloud. Its GPUs are essential to AI applications. More important, so is its software. It’s the Nvidia software stack that keeps chip rivals like AMD and Intel from gaining traction.

I also own stock in Amazon.Com If you’re into AI, Amazon.com is the better opportunity.

While Nvidia is at the front-end of AI, Amazon is at the back end of it. It’s Amazon that will reap AI’s rewards, in its supply chain, in its warehouse operations, and in its media business. Imagine if you could speak to Alexa casually and get real answers.

Amazon’s AWS cloud still has one-third of the market. Its approach in AI is to offer a wide range of tools, rather than insist companies buy any particular one. This makes sense to me.

Twitter to Mastodon

Over the last months I’ve been spending a lot less time on Twitter, now called X, and more time on Mastodon, its open source doppelganger.

The difference between the two can be summed up in two words. No algorithm.

When you use Twitter, or any commercial social media site, an algorithm encourages you to stay online. You like fluffy bunnies? Here are posts on fluffy bunnies. You can quickly fall into a fluffy bunny rabbit hole, where fluffy bunnies are all that matters, and anyone who doesn’t like fluffy bunnies is some sick pervert. This is especially true on TikTok.

At Twitter, this is found under the tab marked “for you.” The tab doesn’t exist in Mastodon. Instead, there are other tabs. “Home” is like Twitter’s “following” tab. Federated shows the most recent posts on any site, no matter where they come from. You can input a hashtag to get news on any topic of interest, like #Ukraine. There’s also a local tab featuring messages placed on Mastodon server you are part of.

This last is important. There is no central control in the “Fediverse,” which includes many other social services, including a Facebook clone and an Instagram clone. Instead, anyone can spin-up a server or “instance” and choose who to connect or “federate” with. In practice, while Meta’s “Threads” is compatible with Mastodon, many Mastodon servers won’t link to it, fearing the force of the algorithm, the coming firehose of content, or just Mark Zuckerberg’s right hook.

Productivity Explosion

Soon after being given a high tech beat at the Atlanta Business Chronicle, in 1982, I bought my first computer. (The picture was taken in 1981.)

I could suddenly write up an interview or press event in an hour. I would read it out loud and make corrections. Then my super-loud C. Itoh dot-matrix printer would buzz it up onto fanfold paper.

The fanfold would go to typesetters, who created long sheets they would paste onto boards, which became the paper. Plastic squares would be turned into pictures at the printer. The pictures would be clipped to each board and the whole collection driven 50 miles. Most papers were then mailed to subscribers, but some were bound for retail sale.

Back at the front end of this process I bragged I could do the work of three men. The noise, and my attitude, caused the paper to fire me the next year and hire the three men.

A few years later I visited my former boss in Houston and found everyone was working at terminals.

Could Xi Fall?

It’s a question no one is even asking.

Could Xi Jinping fall from power?

There is no evidence for this. He is in his third term as China’s President, and increasingly acts like Vladimir Putin. He’s committing genocide in Xinjiang, he has destroyed Hong Kong’s economy, and he is threatening to invade Taiwan. He has absolute impunity. He is the world’s strongest dictator.

But how secure is he?

Unlike every other dictator on this planet, Xi Jinping presides over a complex, post-industrial economy. As I’ve been writing for decades, such an economy relies on highly trained, educated, and motivated people. The secret to America’s success lies in our ability to create, encourage, and (when necessary) import such people. (I know Trumpism threatens all this, but that’s another story for another time.)

The E-Bike Life

I have been an urban cyclist for 45 years.  But age is real. At 68, a short ride can easily send my heart rate to places it shouldn’t be.

The answer is an e-bike.

I have been using an e-bike we bought for my son’s commute for several months now. The e-bike I chose is the Lectric XP 3. It cost $1,000, amazing because my old road bike cost me $800 in 1981.

The Lectric is foldable. It’s too heavy for a bike rack, but it breaks at the base and the handlebars so you can get it into the trunk of a Toyota Corolla. The battery is in the down tube. You plug it into the wall. (Unplug it as soon as the light goes green.) Top speed is 20, with pedal assist, but the weight lets it run down Atlanta’s hills at 25-30. Range is estimated at 20 miles but the way I ride, which is carefully, it’s closer to 30.

Detroit Gets a Clue

Two facts have stood out in my coverage of Chinese Electric Vehicles (EVs) for InvestorPlace.

First. The most successful luxury brand in China is a hybrid. Li Auto has surged past rivals Nio and Xpeng by using a gas engine to extend range. Its latest SUVs go far enough on a charge, a few hundred miles, to do daily chores, recharging overnight. There’s a gas engine powering the battery and electric drivetrain, however, that can deliver a range of 800 miles. The Plug-in Hybrid (PHEV) approach answers the objections of families who want an electric, but also want range and all the size, bells, and whistles they’re used to.

Second. The most successful Chinese EV company serves the mid-market. That would be BYD, whose electrics sell in the range of $25,000 each. They may outproduce Tesla this year.

Biden’s Plan Worked. Get Over It

Business reporting should be about telling people what they need to know, not what they want to know.

That’s not businesses are buying. Sad. It’s not what they’re getting, either.

Too many businessmen only want their egos massaged, and their political inclinations confirmed. This is true when it comes to reporting, my own field, where we have Forbes, Fortune, Business Insider, and a host of other Republican-leaning publishers spinning the news. It’s doubly true for CNN and CNBC. The latter has an on-staff “wealth reporter” specifically hired to fluff the egos of his betters.  

Sadly, it’s also true for economists, those “experts” hired by big banks and brokerages to figure out where things are headed.

Over the last month I’ve been treated on TV to a parade of so-called financial experts, each one confidently predicting that a recession is imminent, that it’s baked in, that it will likely be severe. These jamokes have insisted this will end the drive for working from home, that it will end demands for higher pay, that it will bring employees crawling on their knees to their bosses for a crust of bread, a revived dress code, and a two-hour daily commute.

It was all bullshit. It was spin. It was politics. It was telling people what they wanted to hear.

The evidence is in. GDP grew 2.4% in the last quarter. The economy isn’t slowing. It’s speeding up.

Want to know why? I’ll tell you.

The First AI Crash

No technology trend goes straight up. There are always crashes along the way, as subsets of the trend fall behind, while others prove their worth.

This was true with the Internet. Search engine companies were falling even before Google was created. It’s why Wall Street wanted Yahoo to become a “portal.” (Wall Street knows nothing.)

This will be true for A.I. as well. It’s starting right now.

The “consumer side” will crash first. Things like ChatGPT were fun for a while, but the mass market is deciding it’s more like Pokemon Go than “the Google.”

For any technology to gain legs, it must prove its utility. It must create productivity. It must not only do things that weren’t available before, but it must make money doing it, and make doing other things easier.