Mic Drop

Tomorrow marks two years since the Taliban took control of Afghanistan, and the $7B in Afghan central-bank funds that the Biden admin froze are still in limbo. Half is being held in a Swiss trust fund until the central bank can show it’s free from Taliban influence. The other $3.5B is in New York, where a judge turned down an effort by families of 9/11 victims to seize it. While releasing the billions to Afghanistan could risk = recognizing the Taliban as a legitimate gov’t, over a third of Afghans face severe hunger as the country’s economy crumbles.

As more Americans ditch discretionary splurges and bargain-hunt for groceries, retailers are boosting their food offerings. Target recently added 100+ new items to its Good & Gather private label, but it’s tough to compete with Walmart’s grocery game: America’s largest retailer makes up over quarter of all US grocery spend.

Food prices have risen faster than other goods over the past year (#AisleAnxiety). Groceries were up 3.6% in July from a year ago, led by cereal and bakery staples, as the likes of General Mills, Kellogg, Hershey’s, and Kraft Heinz bumped prices (Kraft alone hiked prices 11% last quarter). While food companies point to higher commodity and labor costs, some consumers blame corporate “greedflation.” Now that shoppers are trimming back on pricier brand names, Coke, Pepsi, and others said they’ll ease off the hike pedal.

Fun fact of the day....

Turns out it did become a problem: Amazon is said to be ditching all but 3 of its 30 clothing brands. It’s faced scrutiny from regulators and lawmakers who think private labels could conflict with its platform service for non-’Zon brands.

Novo Nordisk, the maker of Ozempic and Wegovy, became Europe’s second-most-valuable company as people seeking to lose weight rushed to its drugs. Now it’s struggling to meet demand.

Now it appears to be getting real... China’s global exports sank at their steepest pace since early 2020. That’s bad news for the world’s second-largest economy, which has been struggling to recover after unwinding its zero-Covid policy. Western consumers have been spending less on electronics and clothes (often made in China) and more on travel and restaurants (not in China). Last week, UPS said its revenue took a hit from weaker China demand. Meanwhile, China tipped into “deflation” (falling prices) — an ominous sign for the global economy.

WeWork rents nearly 20M square feet of office space — more than any other US biz — and one industry analyst said its collapse could serve as a “systematic shock” to major cities’ commercial real estate markets. If WeWork stops paying its landlords, they might struggle to pay their debts. Still, WeWork has argued that hybrid work will benefit its flex-working model — if it can keep chugging along.

Office-leasing leviathan WeWork told investors last week that it had “substantial doubt” it could remain in business as customers continued to bail. The once buzzy biz said it lost nearly $400M last quarter, and the stock’s plunged 99% since its SPAC-tastic debut in 2021. It’s a far cry from 2019, when WeWork was valued at $47B and occupied more office space in Manhattan and London than any other company. Rowdy: In its private-company era, WeWork’s culture of free-flowing booze and wild employee parties helped lead to it losing $219K/hour for an entire year. After layoffs and the ousting of cofounder/CEO Adam Neumann, it needed a $9.5B SoftBank bailout. Empty: WeWork has reined in its spending since those Coachella-esque days, but now it’s losing customers as hybrid work takes over. Office-space availability hit an all-time high in April (picture: 1B square feet of empty cubicles). Not just a We problem… A US commercial real estate crisis is brewing. 70%+ of US employers are hybrid, and surveys suggest flexible work is here to stay. Now analysts predict a 35% drop in office values by 2025. Already, forced sales of commercial properties spiked in Q1 (owners couldn’t make mortgage payments), and office-loan delinquencies hit 5%. The one-two punch of lower occupancy + higher interest payments could bring about even more trouble. Morgan Stanley estimated that $1.5T in commercial real estate debt will come due in the next two years.

Gary Gygax was an American game designer and author who co-created the pioneering tabletop role-playing game Dungeons & Dragons (D&D) with Dave Arneson in 1974. He also founded the Gen Con gaming convention and the company Tactical Studies Rules (TSR). He wrote many manuals and modules for D&D and other role-playing games. He is widely regarded as the “father of role-playing games”123

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