TheChek News Flow

- Olezarsen met the primary endpoint with statistically significant reduction of fasting triglycerides and showed substantial, clinically meaningful reduction in acute pancreatitis events

- Results demonstrate olezarsen may represent a novel treatment option for this rare, life-threatening disease, for which there are no approved treatments in the U.S.

- Data presented today at ACC 2024 and published in The New England Journal of Medicine

- Ionis to host webcast on Monday, April 8 at 10:00 am ET

- Today announced full results from the Phase 3 Balance study of Ionis' lead independent investigational medicine, olezarsen, for the treatment of adults with familial chylomicronemia syndrome (FCS).

- The olezarsen 80 mg monthly dose met the primary endpoint of significantly reducing triglycerides (TGs) in patients with genetically validated FCS at six months.

- In addition, olezarsen demonstrated robust and sustained reductions in TGs and serum apolipoprotein C-III (apoC-III) levels. Importantly, olezarsen reduced the incidence of acute pancreatitis (AP) events over the 12-month treatment period compared to placebo.

- Olezarsen also demonstrated a favorable safety and tolerability profile.

- These results were presented in an oral presentation at the 2024 American College of Cardiology (ACC) Annual Meeting in Atlanta, Georgia and published simultaneously in The New England Journal of Medicine (NEJM). Based on these data, Ionis is pursuing regulatory approval of olezarsen as a potential breakthrough treatment for adults with FCS.

Any acquisitions companies such as Apple, Amazon or Microsoft attempt will bring scrutiny and delays

Having more money than you know what to do with used to be a high-quality problem. Now it is just a problem.

The largest tech companies in the world are also the richest. Apple AAPL 0.45%increase; green up pointing triangle, Amazon AMZN 2.82%increase; green up pointing triangle, Microsoft MSFT 1.83%increase; green up pointing triangle and the parent companies of Google and Facebook META 3.21%increase; green up pointing triangle now collectively sit on a little more than $570 billion in cash, short-term and long-term investments. That is more than double the collective pile of the next five richest nonfinancial companies on the S&P 500 index, according to data from S&P Global Market Intelligence.

This is mostly attributable to business models that sell widely used products and services without the sky-high fixed costs common to other industries. Apple, Microsoft and Alphabet GOOGL 1.31%increase; green up pointing triangle each produced more than $100 billion in cash from operations last year. Oil giant Exxon Mobil’s operating cash flow was a little past $55 billion for the same period.

That is an awful lot of capital to have to put to work. And doing so effectively has become an even bigger challenge over the past couple of years, as regulators in the U.S. and around the world have zeroed in on Big Tech, with the determination to keep it from getting bigger. Amazon, Adobe and Intel have had to spike acquisition attempts over the past year because of resistance from global regulators. And the deals that do get through are taking longer and require costly lobbying efforts. Microsoft’s acquisition of Activision Blizzard took nearly two full years to close. Its next largest deal—the 2016 acquisition of LinkedIn—took a little under six months.

Still, piles of unused cash might be burning a hole in some pockets. Google is reportedly considering a bid for HubSpot, a provider of cloud-based software used for email marketing and other advertising-related functions. The price of such a deal would likely come to more than $40 billion—a 30% premium to HubSpot’s market value from before Reuters reported Google’s interest in the company on Thursday. That would be more than three times the size of the company’s largest deal to date—the $12.5 billion acquisition of Motorola Mobility in 2012.

Such a move seems foolhardy, particularly because it could be seen as Google further buttressing a $238-billion-a-year advertising empire that the U.S. government already feels is too dominant. But Google also has the most dry powder—even compared with the other superflush tech companies—with nearly $98 billion in cash net of debt on its books as of its latest quarter. That is double the net cash of archrival Meta Platforms and well above Apple’s net cash balance of $64.5 billion.

Google might also be feeling more confident following Microsoft’s success in finally clearing its Activision purchase. Speaking at a Bloomberg Intelligence conference on Thursday night, Google general counsel Halimah DeLaine Prado declined to comment on questions about a HubSpot deal. But she said Google approaches both products and deals “with the notion that we need to be bold and responsible,” according to a transcript from the event. Prado added: “That does not mean that road is always going to be easy.”

Google’s pursuit of a $40 billion deal in the advertising space most definitely won’t be easy. Alphabet’s stock price lost nearly 3% Thursday following Reuters’ report, though it gained back some of that ground on Friday. “We question the rationale of this talked-about deal and whether this is the best use of capital,” wrote Brent Thill of Jefferies in a note to clients Friday, citing both the high odds of “fierce antitrust pushback” and the fact that HubSpot’s software runs on Amazon Web Services—Google’s biggest competitor in cloud computing.

But there are also only so many ways to put such a large amount of cash to work. Google’s parent spent $61.5 billion on share buybacks last year and $59 billion the year before, according to FactSet. And even those are becoming controversial. In its antitrust lawsuit against Apple last month, the Justice Department noted the company’s $77 billion in share buybacks last year—more than double the nearly $30 billion it spent on R&D—as evidence that “Apple itself has less incentive to innovate because it has insulated itself from competition.”

Apple also spends about $15 billion a year now on its dividends. But the iPhone maker has long eschewed major deals; its $3 billion buyout of Beats Electronics in 2014 remains its largest ever. At Apple’s annual meeting in 2010, co-founder and then-CEO Steve Jobs joked about blowing the company’s then-record $40 billion cash pile on a huge toga party. That might actually be among the least controversial uses of excess capital these days.

Tom Thalmann has put 700,000 miles so far on his daily driver, a 2003 Porsche 911 Turbo

When I was growing up in Rhode Island, around this time of year, my parents’ tax attorney used to show up at our house in an early ’70s Porsche 911. It was chocolate brown with a light-tan interior. I would stand in the driveway staring at the lines of that car for hours. When I was in high school, I hung a Porsche logo in my locker. I just always wanted a 911.

In July of 2003, there was a silver 911 Turbo at my local Porsche dealer. At that point, I was working locally, but I knew my job was going to take me up to the Boston area for commutes. I love the ocean and didn’t want to leave Rhode Island, so I was going to spend long hours in my car. I walked into the dealership and asked the mechanic about the 911 Turbo.

I asked, “Have you seen anything about this car I need to worry about?” He said, “This car is bulletproof. Just change the oil. That’s all you have to do.” When I told the salesman that I wanted the 911 Turbo, he said, “Most of my clients are repeat customers and they keep trading up to the Turbo. But not you.” I was going straight for the top.

Now nearly 21 years later, this car is still my daily driver. It has over 700,000 miles, and I have calculated that I have spent 1.33 years of my life in the driver’s seat going an average of 60 mph. When I am not going to work, I love the experience of getting in the car and just going. I will go out for a gallon of milk and return two hours later. I will find some restaurant and stop for a bite, and chat up some people about the car. They’ll hear the mileage and go, “Wait, how many miles did you say?”

The 911 Turbo is its own model with its own heritage. Porsche came out with the Turbo in the mid-’70s, basically a high-performance version of the flagship 911. The company still makes the 911 Turbo today. My car is of the 996 generation, the first liquid-cooled 911. It has all-wheel drive and a 3.6-liter twin-turbo flat six-cylinder engine. If you have never put snow tires on a 911 Turbo and taken it out in 10 inches of fluffy snow, you don’t know what you’re missing. It’s probably one of the most capable snow cars I have ever driven.

Anyone can sit in the driver seat, take the key in your left hand, stick it in the slot and, as you’re turning it to the right, the smile comes onto your face. When I sit in the car, I become part of it and it becomes part of me. It’s a surreal experience, even after over 20 years. I upgraded the radio about four years ago, so now I have a touch screen, Android and Spotify. The world is at my disposal.

I have made friends with some people at the Porsche factory in Germany. When I get to one million miles, my dream is to ship the car back to where it was born, let them do a restoration dance on it, and have them put it in the Porsche museum for however long they want. Then I will take delivery of my new million-mile Porsche and drive it for three months through Switzerland, Austria and Germany. I’ll have it shipped back to the U.S., and I will drive it until I can’t drive anymore.

Nippon Steel pitches new investment in aging plants to help win union’s support for planned deal; union leaders say they are unconvinced

United States Steel’s X 0.29%increase; green up pointing triangle Mon Valley Works mill in recent years has endured a debilitating fire and millions of dollars in regulatory fines. The steelmaker abandoned plans for a $1.2 billion upgrade, and analysts have speculated that the mill could eventually close.

Now, the collection of aging plants along the Monongahela River southeast of Pittsburgh is taking on a central role in Nippon Steel’s 5401 0.20%increase; green up pointing triangle $14.1 billion gambit to acquire 123-year-old U.S. Steel X 0.29%increase; green up pointing triangle, whose shareholders are set to vote on the deal Friday.

Union workers who staff U.S. Steel’s last production sites in the region of what was once America’s Steel City have been stewing over the company’s 2021 decision to shelve the planned upgrade, which would have been the biggest investment in Mon Valley in decades.

Stung by U.S. Steel’s decision to expand production at a nonunion plant in Arkansas, the United Steelworkers union has accused executives of turning their backs on plants that have served the company for more than a century.

Leaders of the union, which represents about 10,000 hourly U.S. Steel workers, are opposing Nippon Steel’s planned takeover of the company. After years of plant closures and workforce reductions under U.S. Steel, the union and its allies in Congress have said that the deal could lead to further underinvestment in plants and undermine U.S. national security.

To change their minds, Nippon Steel has told union leaders that it would consider reviving U.S. Steel’s plans for Mon Valley as part of an offer to the union to invest $1.4 billion in upgrading U.S. Steel’s older mills. Nippon Steel executives have pledged to refrain from layoffs and plant closings through the end of the United Steelworkers’ current contract in 2026.

So far it isn’t enough.

“I don’t believe it. Prove it,” said Don Furko, president of the union local for U.S. Steel’s coking coal plant for Mon Valley. “They would have to give us some details about what they plan on doing.”

United Steelworkers leaders said they want a formal commitment from Nippon Steel for its planned investment and other changes.

Opposition formed quickly after Nippon Steel and U.S. Steel announced their deal in December, and it hasn’t budged. Democratic and Republican lawmakers have called for the deal to be stopped. President Biden signaled opposition to foreign ownership of U.S. Steel last month, though he didn’t say explicitly that he would block the deal, which is now under national-security review by the Committee on Foreign Investment in the U.S., under the Treasury Department.

That review is expected to take months. Opponents cite Nippon Steel’s business in China as potential grounds for blocking the sale. The committee can recommend that the president block a deal, but it usually prescribes remedies to alleviate potential national-security problems. Consultants and lawyers said it would be unprecedented for a president to overrule Cfius if its review finds no security risks.

Nippon Steel said its business in China accounts for less than 5% of its total global production capacity. “The entities in which we invest in China have no control over our operations or business decisions outside of China,” the company said.

Behind the scenes, a rival steel company, Cleveland-Cliffs—which itself tried to acquire U.S. Steel last year with a lower bid—has been urging lawmakers to fight the deal. Cleveland-Cliffs Chief Executive Officer Lourenco Goncalves continues to proclaim his interest in taking another run at U.S. Steel if the Nippon Steel deal collapses.

The United Steelworkers union endorsed Biden’s re-election on March 20, about a week after the president said U.S. Steel should remain domestically owned.

Winning over the steelworkers union could help Nippon Steel neutralize many of the political obstacles to a deal. “The minute Nippon Steel and the steelworkers reach an agreement, all the opposition comes off the boil and goes away,” said Elena McGovern, managing director for Washington-based Capstone, a national security and business policy consulting firm.

That partly hinges on convincing the union that U.S. Steel will be a different company under Nippon Steel’s ownership.

When the deal was struck in December, Executive Vice President Takahiro Mori said the Japanese company found a “life partner” in U.S. Steel and expected to largely continue its business strategies. To U.S. Steel’s union critics, that suggested little change to the frayed relationship with the company. U.S. Steel in recent years has closed large steel mills near Detroit and St. Louis, shrinking the union workforce by about 4,000 jobs.

Contract negotiations in 2022 between U.S. Steel and the union dragged on for months before an agreement was reached. U.S. Steel agreed in the contract to invest $1 billion in unionized plants, less than half the amount in the previous contract.

U.S. Steel has had a checkered environmental record, particularly at Mon Valley, where a 2018 fire damaged the Clairton coke plant, knocking out emissions-control equipment for months. The episode drew safety complaints from the United Steelworkers and millions of dollars in environmental fines.

U.S. Steel said in 2021 its need to invest in steelmaking with lower carbon-dioxide emissions and difficulty in obtaining local permits caused it to shelve the $1.2 billion upgrade of the Mon Valley Works, which would have reduced the production time for sheet steel with a new caster and a new rolling line.

“We know that this difficult decision is the right one for the business,” CEO David Burritt told analysts in April 2021. U.S. Steel redirected money and equipment for the Mon Valley upgrade to a new, nonunion mill in Arkansas. As that mill’s production capacity has expanded, U.S. Steel has closed older mills.

Nippon Steel said it would honor the terms of the 2022 labor contract. The United Steelworkers union doesn’t have the right to simply reject Nippon Steel as a buyer, but the contract contains a successorship clause requiring the company to maintain benefits, pensions, profit-sharing and other provisions specified in the existing labor agreement.

The union filed a grievance against U.S. Steel, saying the company didn’t keep the union informed about acquisition offers. U.S. Steel said it complied with all requirements in the labor agreement and called the Nippon Steel deal the best path forward for employees.

The union on April 2 said it rejected a draft of a binding commitment to the labor agreement offered by Nippon Steel, because the company included conditions or exceptions that the union said could be used to avoid commitments.

“For every commitment that the Nippon parties purport to make, the proposal envisions a way to release Nippon from these pledges,” United Steelworkers International President Dave McCall wrote in a letter to Mori.

From the Baltimore bridge collapse to chaos at Boeing, what look like discrete problems are in fact part of a wider dysfunction

Transport in America is having a crisis moment. You can see it in the headlines — from the debacle at Boeing, through to the collapse of Baltimore’s Francis Scott Key bridge, to the fact that the US can’t even build its own commercial ships anymore.

Adding to this list of woes are longer term problems like the lack of good overland train travel, poorly maintained roads and post-pandemic declines in the safety and reliability of city transit systems. More recently, there’s a sense that the electric vehicle revolution is stalling as Tesla slumps, China gains and Donald Trump threatens to pull the plug on the entire clean energy transition if he becomes president again.

These stories are often put in separate baskets. But like so many things in complex systems such as transport and logistics, they are in fact connected, often in unexpected ways.

Consider, for example, the container ship accident that resulted in the collapse of the Baltimore bridge. You could easily argue that it is part of a larger story about America’s old and decaying infrastructure. After all, this hasn’t been updated in a significant way since the Eisenhower era — although the Biden administration has made a start with its fiscal stimulus programme.

The direct weekly economic impact of the Baltimore port closure is about $1.7bn, and the indirect impact of supply chain shifts may be far greater. Already, this has raised concerns about additional inflation that could stem from the disaster.

But you can also argue, as some risk analysts have, that the economic impact might have been far greater had America been properly leveraging the port of Baltimore, which is situated at the mouth of the Chesapeake Bay, one of the largest estuaries in the world. It is also sits in the country’s most densely populated area, with easy links to major manufacturing hubs across the South and Midwest.

Shipping by water is cheaper and cleaner than by truck or air. But the Jones Act, a 1920 law, requires any maritime vehicle transporting goods between two American ports to be built, owned and crewed in the US for security reasons.

Since the US shipbuilding industry has shrunk dramatically over the past several decades, the transport of goods by water in the US is highly constrained. America even has limits on transporting its own liquefied natural gas between domestic ports, because of the lack of domestically made tankers.

Some would say the US should simply allow allies like Japan and South Korea, which build what many consider to be the best ships in the world, easier access to the US market. But that requires clear rules of the road for “friendshoring”, which have yet to be worked out, as evidenced by the Biden administration’s recent pushback against Nippon Steel’s attempt to acquire US Steel.

That in turn brings us to the issue of strategic industries and national champions. China has them in any number of areas of its economy, including, for example, EVs. It also has a coherent industrial strategy to support its goals. The US, meanwhile, is playing catch-up. There are now American subsidies for EVs, but they don’t address broader supply chain chokepoints (like access to critical minerals needed for green batteries).

Nor do they get at the ongoing problem of Chinese dumping and how to partner with allies to push back against it. In short, there isn’t a fully coherent approach to dealing with a very complex systems challenge.

What the US has instead is in some cases the worst of both worlds — hyper-concentration in key industries in the name of security, combined with all the perils of short-term financial market pressures which trump (no pun intended) any particular national interest.

The case in point here is Boeing, which was allowed to purchase the only other US domestic producer of commercial airplanes, McDonnell Douglas, in 1997. As United Airlines chief executive Scott Kirby recently noted, innovation and quality have been on the decline ever since. Research and development budgets have gone down relative to Airbus, while share buybacks have gone up. Massive outsourcing resulted in highly complex and vulnerable supply chains. Workforce training languished, as labour was tallied as a cost not an asset.

Meanwhile, as Federal Trade Commission chair Lina Khan pointed out in a March speech warning against the dangers associated with promoting national champions, concentration and financialisation in the airline industry have not only led to safety issues — they have also cost US taxpayers a bundle, and created economic vulnerability rather than stability or security.

One could say the same thing about America’s inability to build its own ships, or figure out how to work with allies to do so. Likewise the failure to understand all the domestic and foreign policy levers that must be pulled in order to accomplish the clean energy transition.

The point here is that these seemingly disparate transport crises point to larger issues in corporate governance, trade and national security — even the nature of the US political economy and how it works (or doesn’t) in a changing world. There are big signals in all the noise. Policymakers and business leaders should listen carefully to what they are telling us.

Economic convergence is back and will affect the politics of the bloc’s next budget

Within the overall misery of eurozone stagnation — the bloc’s economy has flatlined since the autumn of 2022 — there are glimpses of good news. The fact that southern Europe has kept up a decent growth pace while the northern core has been slipping is getting well-deserved, if still insufficient, attention.

It was about time too. In Europe’s integrated economy, poorer countries should be steadily catching up with richer ones. Economic convergence was one of the big promises of both the single market and the common currency. Yet after 2009, ill-conceived policy responses to debt crises caused divergence rather than convergence for southern Europe (although not, fortunately, for eastern member states). The combined size of Italy, Spain, Portugal and Greece’s economies is today exactly the same, relative to Germany’s, as at the euro’s birth in 1999.

The importance of the return of convergence cannot be overstated: it underpins EU member states’ sense of a common destiny, without which political cohesion is impossible. It is from this perspective that we must see the extraordinary decision in 2020 to create a pandemic recovery fund through which EU states would borrow in common to support investments disproportionately in poorer members.

It was the threat of fatal divergence that made Germany accept the “eurobonds” and “transfer union” that had long been anathema for Berlin. Poorer EU nations, it was feared, would not be able to match Germany’s deep-pocketed Covid subsidies to its companies. The resulting advantage for German exporters would undermine faith in the single market itself.

Similarly, the convergence we are now seeing must to a large extent be attributed precisely to the recovery fund, which has relieved pressure on poorer countries’ public finances, promised support for productive investments and incentivised long-needed reforms.

How leaders judge the experience with the recovery fund is going to loom over a lot of big political decisions to be made in the EU in the next few years. So what are the lessons to be taken on board?

First, that the bold decision four years ago has paid off. For all the instances of alleged waste and fraud, the recovery fund has worked as intended. The bigger recipients of the funds have seen the higher growth rates, which have restarted — at least for now — the economic convergence both the single market and the single currency promised. Sustaining this is a prerequisite for Europe as a whole to strengthen its performance as both a political and economic actor.

The second lesson is that while the original motivation for the recovery fund may have disappeared along with Covid and its barrage of furlough and business support schemes, something very much like the original argument looks set to stay. The political determination to decarbonise, digitise and defend Europe’s economies will require stronger public incentives for business investment. While there are many dumb ways of doing subsidy policy, the dumbest is not to have any subsidy policy at all, and there is a real risk that the richer and bigger countries will again spend more than others can match.

So long as poorer countries feel outspent in the subsidy race, the political sustainability of the single market is at risk. That is, after all, why the EU has a world-class subsidy control system. But like it or not, we live in a world where more of our political goals and challenges are ones that markets on their own are not able to meet, no matter how competitive and level the playing field is. The need for greater public spending on investment is increasingly clear — the question is whether it will be national or common spending.

Third, the recovery fund has proved that it is possible to do things differently, and better. While it was the first large-scale transfer to poorer member countries funded by borrowing, it was not the first such transfer at all. There have long been “cohesion funds” which direct funds to the least economically developed regions of the EU, and which make up one-third or so of the bloc’s budget.

Some of the largest net contributors to the EU budget are discreetly suggesting the recovery fund’s model of strict and specific “milestones”, which need to be achieved for promised funds to be paid out, is a better way to govern transfers between EU countries. The European Commission has reportedly drawn up plans for making cohesion funding more performance-based.

So don’t heed the denials that either cohesion funding could change or the recovery fund be renewed or expanded. As the EU approaches its next seven-year budget cycle, there is more to play for than in a very long time.

Wall Street institutions press for French labour law reforms to bring down high redundancy payouts

Wall Street banks have warned that their next wave of hiring in France may be stunted without restrictions on dismissal costs for highly paid traders, a flagship measure that has been left out of a reform package intended to bolster Paris as a financial centre.

Paris has emerged as the main winner among European cities vying to become Europe’s top financial centre post Brexit, and the caps were meant to be part of an “attractiveness bill” discussed in parliament this week. However, they have not been included for now as the French government and lawmakers seek legal workarounds for implementation under the country’s protective labour laws.

US investment banks such as JPMorgan, Morgan Stanley, Citi, Goldman Sachs and Bank of America, which have hired or transferred hundreds of people to Paris since Britain left the EU, have led lobbying for the changes in recent months, although French banks would benefit too.

Some said their future expansion partly depended on a further loosening of labour laws, including around traders defined as “key risk takers”.

“We’d only really consider going much further in our hiring if French labour rules became truly adapted to these kinds of cyclical activities,” said one executive at a US bank in Paris.

Redundancy payouts to traders earning more than €1mn a year in Paris can end up being more than five times that of London, although there is less of a difference between France and the rest of Europe.

“This is really a measure mainly driven by the US investment banks and with the idea that it’s really a Paris-London issue,” said Jean-Charles Simon, the chief executive of Paris Europlace, which promotes the French capital as a financial centre.

Even with a broader, existing cap on dismissal payouts brought in by President Emmanuel Macron, “when it applies to people with seven-figure salaries, it creates significant amounts”, Simon added.

Paris’s position as a financial centre has been supported by lifestyle arguments in its favour, as well as a favourable tax regime for new arrivals. Nevertheless, some bankers have argued the rules needed to be made even more flexible so that they could poach people at rival banks in France and not lose the tax benefit.

Wall Street’s biggest banks have moved more than 1,600 people to the French capital and are still building out their operations with dozens of planned hires, with the broader number of moves in the financial sector exceeding the shift to other cities such as Frankfurt or Dublin.

The idea under review would be to put more specific limits on payouts to traders so that they don’t exceed a threshold of about half a million euros. Working such caps into the reform package is legally difficult, however, as it singles out individuals.

One person at a US bank that had to make cuts last year said: “Our critical mass in Paris has increased, but we need to be able to be reactive too.”

Those working on the law are discussing ways it could be written in as an amendment, including in consultation with France’s Council of State, which gives legal advice to the government. The bill would still need to get approval in the French parliament, where Macron’s party does not have a majority.

Alexandre Holroyd, a lawmaker who is leading the reform package, said France’s labour rules were meant to be protective, but had never been designed to overcompensate traders.

“A trading floor is somewhere where there is a lot of volatility and variations in headcount,” Holroyd said. “It’s the flipside of being paid sums of money that are completely disproportionate to more than 99 per cent of people.”

France’s latest “attractiveness” bill comprises far more than the remuneration issue. Like Britain did recently, France aims to improve the digitisation of the trade finance sector. Another measure involves introducing multi-voting rights as part of initial public offerings, so that founders of start-ups do not have to lose control of their companies, a rule meant to help Paris compete with the likes of Amsterdam for listings.

Finance minister Bruno Le Maire headed to Wall Street at the end of last year, partly in a push to get more investment firms to follow US banks to Paris. He is due to do the same in the Gulf in the coming months, a French official said.

Hedge funder famous for his ‘black swan’ strategy says there’s ‘something immoral’ about America’s reliance on debt — and future generations ‘will bear the burden for this’

Mark Spitznagel, co-founder and CIO of the private hedge fund Universa Investments, is known for making juicy returns for wealthy investors with his patented tail-risk hedging strategy, a form of market “insurance” that pays handsomely during times of economic and market turmoil. But when it comes to his generation’s debt obsession, Spitznagel sounds more like a social activist than a hard-nosed money manager.

For years, the 53-year-old has warned that the national debt—which recently surged over $34.5 trillion—is unsustainable.

He argues that, when that rising debt combines with decades of loose monetary policy that lifted asset prices ever higher, growing piles of consumer debt, and businesses’ penchant for leaning on credit during times of stress, it creates a “tinderbox economy” that could go up in flames in a moment’s notice. It’s the “greatest credit bubble in human history,” Spitznagel told Fortune last year, warning that “it will have its consequences.”

With this in mind, we decided to ask Spitznagel, who has two teenagers of his own, what this credit bubble will mean for future generations, and how he feels about his cohort’s debt-laden legacy. As usual, he didn’t pull any punches.

“We have been just incredibly irresponsible to future generations. They played no part in this, and yet they will bear the burden for this,” the hedge funder told Fortune. “We should all feel really, really bad about it—like really bad about it. It's gonna hurt people that aren't even alive today. How is that right?”

For Spitznagel, the U.S.’ unsustainable federal debt is outright unethical. He argues it’s merely a way to kick the can down the road to the next generation whenever problems emerge, particularly problems that could hurt investors’ market returns. From spending billions to save “too big to fail” banks during the Great Recession of 2008 to pumping trillions into the economy to prevent a terrible recession during the COVID era, the federal government has for decades now managed to prevent large swaths of America from experiencing economic pain during trying times. These spending policies, which have typically come in tandem with near-zero interest rates from the Federal Reserve, have helped juice markets and enable incredible post-recession recoveries in the 21st century. That’s a good thing in the short term, but avoiding worst-case scenarios via hefty deficit spending comes at a cost for future generations, in Spitznagel’s view.

It’s essentially a “massive, massive transfer of wealth brought forward from the future,” he argued. “There’s something immoral, just very simply, about public debt—that individuals can take on debt for their own benefit to be paid for by people who had no say in that debt.”

Spitznagel’s concerns about the U.S.' mounting debts aren’t without merit. A mix of costly spending bills, COVID-era rescue packages, and weak tax revenues have helped push the U.S. national debt 28% higher since 2020 alone, from $26.9 trillion to over $34.5 trillion. That left the U.S.’s debt-to-GDP ratio, which serves as an indicator of a country’s ability to repay its debts, at a record 123% in January, according to the International Monetary Fund.

Even worse, the University of Pennsylvania’s Wharton School economists found in a 2023 study that the U.S. has about 20 years left for “corrective action” to fix the national debt before it hits 200% of GDP. After that, “no amount of future tax increases or spending cuts could avoid the government defaulting on its debt,” they warned.

While the U.S. defaulting on its debts is a very unlikely scenario, and something that couldn’t happen for decades, the impact of the rising national debt is already being felt to some degree. The U.S. federal government is projected to spend $870 billion, or 3.1% of GDP, on interest payments for its debt this year, according to the Congressional Budget Office — more than the entire Department of Defense budget. For the last two decades, the U.S. has spent an average of just 1.6% on servicing its debt, about half of this year’s projections. And the CBO is forecasting the government’s interest expenses to rise to 3.9% of GDP over the next 10 years. To illustrate just how extreme the interest payments are, it should be noted that U.S. federal, state, and local governments combined spent a total of just $810 billion on education in 2023.

In total, net interest payments on the federal debt will be around $12.4 trillion over the next decade, according to the Peter G. Peterson Foundation, a conservative think tank. That’s money that could be spent on a number of far more useful things.

For Spitznagel, this expensive reality means politicians need to take action immediately to get the U.S.’ national debt back on a sustainable path. But unfortunately, he predicts, it might already be too late to do so painlessly.

The hedge funder argued that after decades of loose monetary policy and soaring debts, it may be impossible for the next generation to end the cycle of indebtedness without incurring serious consequences in the form of an epic recession. That means when today’s youth comes of age and a crisis hits, they will likely “have to do more of the same,” racking up debt to avoid worst-case scenarios.

But you can’t keep borrowing forever, Spitznagel says—and he’s afraid we’re well past the point of needing to cut back. “One can make the case that at some point it stops working,” he said.

Hedi Slimane, Celine’s star designer, is getting ready to part ways with the storied French brand, several sources close to the label and its parent LVMH say. It’s the talk of le tout Paris in fashion. The timing of his exit is unknown. It could be tomorrow, or it could take a year or more, depending on how quickly LVMH finds a replacement or whether the Arnaults get angry enough to kick him out from one day to the next, the sources say.

The Arnault family, who control and run LVMH, cannot put up with Slimane’s whims anymore. There is only so much they can stand, several senior industry sources have said. That includes not just LVMH CEO Bernard Arnault but also his daughter, Delphine, who runs Dior and has a say on designer nominations and changes.

If Slimane leaves Celine, there is one obvious place he could go: Chanel. Fashion experts have predicted it for years, partly because he has a lot in common with Karl Lagerfeld, the designer who made Chanel and with whom he was quite close. Slimane’s last Celine fashion show, which was themed around Paris’ Arc de Triomphe, was very Chanel-like, with a 1960s twist.

Chanel designer Virginie Viard has given Chanel a girl-power, rock-chic vibe that Slimane could easily continue. Also, the Wertheimers, Chanel’s owners, are used to dealing with designers’ antics. The late Karl Lagerfeld demanded the impossible and always obtained it.

But as opposed to Slimane, Lagerfeld was a team player who got the best out of his colleagues, something for which they remain grateful to this day. Slimane, in contrast, is a solitary figure who rarely ventures out of his first circle of colleagues and friends. He’s also not into celebrating other people’s work and can be quite mean and aggressive if staff don’t do what he asks. That’s been particularly the case since January as pressure has been mounting on Slimane due to the brand’s sales growth declining.

“A member of his first circle told me that Hedi was leaving but we don’t know when,” a senior manager at Celine told Miss Tweed on condition of anonymity.

Viard, who stepped into Lagerfeld’s big shoes after he passed away in February 2019, embodied continuity. She was his right hand for many years. Viard has powered Chanel’s growth and helped it remain one of the industry’s most desirable brands. Now 61, the designer may want to move on and enjoy life, sources close the brand say. Or she may be asked to leave to allow Slimane to join and give Chanel fresh impetus and momentum. Slimane would centralize and coordinate the brand’s image and communication, which has been going in different directions recently, industry insiders find. Viard sticks to design. Clearly, you sense there are other sensibilities than hers behind the brand’s communication beyond its clothes. When Lagerfeld was in charge, he decided everything. All of the brand’s messages were coherent.

If Slimane joined Chanel, which is far from certain, it would not happen overnight. It may take several years, industry insiders predict. The Wertheimers are known for taking their time before making important decisions such as this one. Also, they would have to be ready to give Slimane the same amount of power and control he currently has at Celine, which is not a given either.

Industry veterans will tell you that an easy-to-manage designer is an oxymoron. It does not exist. Slimane is known for being one of the most difficult designers to work with, together with John Galliano at Margiela – but not for the same reasons. Galliano is very tough on his staff and changes his mind often, making them work long hours. Slimane’s story is slightly different. He is unapproachable. He interacts only with a small number of people. “There are only a few people who have access to the king,” one senior manager at the brand said. “With me for example, he communicates only via e-mail. I personally have only met him only once and he rescheduled our meeting many times before it happened.”

Celine’s ascent may have plateaued, but it has been one of LVMH’s biggest success stories. In 2018, when Bernard Arnault hired Hedi Slimane to take over from Phoebe Philo, he predicted the brand would more than double its annual sales. Back then, revenue stood at just under 1 billion euros. Arnault won his bet. Last year, Celine’s annual revenue surpassed the 2 billion euro mark.

Arnault’s ambition now is to make Celine reach 3 billion to 4 billion euros in annual sales. To get there, he may have to part ways with Slimane, people close to the brand say. If Slimane leaves, a source at Celine said, “life would be easier for us because we know what the brand is about and we could really improve its communication, which has been terrible.” Celine CEO Severine Merle has done a great job putting up with Slimane’s exacting demands. Staff are more loyal to her than to Slimane, Celine employees say, even though they admire the designer and think he is a genius.

Under Slimane, Celine launched its first perfume collection in 2019 and this fall it will unveil its first make-up line, starting with lipsticks – as brands usually do.

Prior to Celine, Slimane worked wonders at Kering’s Saint Laurent and stamped the brand with his dark seditious aesthetic, which remained after Anthony Vaccarello took over in 2016. Before Saint Laurent, Slimane made a name for himself as Dior’s menswear designer. Lagerfeld enjoyed saying he forced himself to remain slim to fit into Slimane’s Dior suits. Slimane has a cult following and knows it – perhaps too well. That’s why he thinks he can get away with anything – really anything.

During the pandemic lockdowns, Slimane moved the entire Celine studio to Ramatuelle, the village on the hill near Saint-Tropez. That move not only cost a lot of money but disrupted the lives of his team, who had no choice but to follow him. Then, Slimane got angry at Conde Nast’s new global content strategy launched three years ago. In reaction, he forbid Celine to feature in any of the company’s glossy magazines, whether in the form of advertising or features. These include all the various editions of Vogue, GQ and Vanity Fair. “Celine is not even allowed to give them a photo of a piece of clothing or bag,” a senior industry source said. “It takes balls to do what he did, but the problem is that it has significantly reduced the brand’s visibility and that’s just suicidal.” Celine’s shows also do not feature on Vogue Runway, the main platform for watching shows. “If you are not on Vogue Runway, you don’t exist,” the source said.

Enough is enough. The Arnaults are fed up with Slimane’s whims and costly decisions. The designer decides everything, shoots every film and photo, and charges big amounts for everything he does. Slimane is estimated to be paid several tens of millions of euros a year by the brand. He managed to negotiate royalties on the line of perfume he launched in 2019 and on every piece of furniture he designed featuring in the brand’s boutiques, industry sources say. Slimane also decides the layout and design of every one of the brand’s boutiques.

“For any photo he takes, he charges 50,000 euros,” one person who works with him said. Staff at the brand feel that its communication needs to evolve. Its black and white stern photos have become repetitive. Also, Celine models are always very young and ultra thin – which goes against the current inclusive trend of featuring older and plumper models.

“It’s always the same thing. We know that the brand’s communication needs to change but Hedi does not listen to anybody,” one person who works closely with him said. “He does not surprise clients anymore. In fashion, you constantly need to create excitement, that’s how it works. But he always wants things to be his way, with his codes that never change.”

The designer gives himself credit for every product he designs and every photo featuring on the brand’s website or social media account. During the last Paris Fashion Week, Slimane did not want to do a show. Instead, he produced a film called “L’Arc Triomphe” that he shot himself. At the end, the film says CELINE and then HEDI SLIMANE. That is usually a big no-no in the industry. Brands are supposed to be bigger than the designer. But Slimane thinks Celine is him and the world should know about it.

Relations have become particularly tense between the Arnault family and Slimane in the past six months. “War has been declared between Slimane and the Arnaults,” one person close to the brand said. Internally, there’s been recurring chatter about the designer’s departure. However, it may be some time before an announcement is made. Slimane designs collections the way he wants. In his last Arc de Triomphe collection, there are very few outfits ordinary people could wear since it featured mainly ultra-short skirts and tight-fitting looks. Not everyone has the figure to wear such clothes. But Slimane does not care. That’s one of the many reasons why the Arnaults think it’s time to show him the door.