The World is making history..

and reliving parts of the 1970’s

Prepared for a Global Recession, caused by record-level inflation and high interest rates, buttressed by energy shortages and food insecurity and here you are...

Globe /

G7 presents a counter to China’s Belt & Road Initiative with $600B infrastructure project. Lancet study indicates Myocarditis is quite rare due to mRNA vaccines. El Periodico reveals President of PharmaMar purchased fake COVID Passport in scandal linked to 2,000 Spanish celebrities and elites. Farmers overhead costs to plant this year may exceed returns.

MIT devise portable desalination units relying on Ion Concentration Polarization oppose to filters. Eindhoven University test ‘salt batteries’ in hopes of replacing oil and gas heating. MS treatments show promise by targeting Epstein-Barr virus.

Ghislaine Maxwell sentenced to 20 years, who’s next?

Europe /  

The defense of Russia’s invasion of Ukraine bumps up against an offensive backed by the West, signaling a long war guaranteed to weaken each country by the end. 4.5M Ukrainian refugees flee to Europe and Russia defaults on foreign debts. EU awards Ukraine and Moldova’s candidate status, Turkey accepts that Sweden and Finland will join NATO. Poland and Bulgaria are cut off from Russian oil & gas, with Germany striking up old coal plants for the winter. In France, Macron’s Renaissance loses its absolute majority, and in UK a workers movement rises under union head Mick Lynch.

North America /

Canada legalizes iGambling, bars foreigners access to real estate market for 2 years, and commits 4.9B to NORAD in line with new threats. The U.S. Supreme Court limits State oversight on concealed carry of handguns, and grants State oversight on Abortion by overturning Roe v. Wade. Tennessee law to challenge same-sex common law marriages. Of the 300(+) Mass Shootings in the U.S. in 2022, the worst in NYC subway history was driven by racism and xenophobia. The Jan 6th Commission distracts the public without much new information.

Jamaica plans to become a Republic by 2025. Mexico protests the ‘Summit of the Americas’ to garner future invites for Cuba, Nicaragua, and Venezuela.

South America /

Colombia changes political direction by electing left-wing former Guerilla fighter president Gustavo Petro. Former Bolivian interim president Jeanine Anez sentenced to 10 years for coup against Evo Morales. Chile faces water rationing in 13th year of continued drought. Argentina and Paraguay work to investigate 747 with Venezuelan and Iranian crew for terrorism ties.

Africa and Middle East /

With Russian and Ukrainian crop yields at bay Kenya, Somalia and Ethiopia are at risk of acute food insecurity. Amhara people are being targeted in Ethiopia, border tensions are rising with Ethiopia and Sudan, Rwandans in Democratic Republic of Congo are drawing ire for perceived support of M23.  Ivory Coast Prime Minister Achi resigns, 49 military and State agents linked to former Angolan President Jose Eduardo dos Santos on trial for corruption.

Asia /

Regime change in Pakistan as no-confidence vote ousts Imran Khan. Sri Lanka faces economic crisis resulting in protests of President Rajapaksa and his families responsibility. Pacific War games abound, with China strengthening ties with Russia in military exercises in May, Taiwan prepared tabletop strategies, and the U.S. led RIMPAC included 26 countries but did not include Taiwan.  Lockdowns in Shanghai impact people’s daily lives and could continue for years, delaying supply chain deliveries throughout the world. Carrie Lam will not pursue mayoral candidacy for Hong Kong. 14th BRICS summit in China calls for Nuclear Disarmament. Philippines elect Ferdinand ‘Bongbong’ Marcos jr. as President, in hopes he will not lead like his father in the 70’s.

Market Finances

Value takes over Growth

June 13th 2022 officially marked the Bear Market, as the S&P 500 closed 20% below its peak on January 3rd 2022.

The once darling FAANG Tech stocks, along with Tesla, are the biggest drivers pushing the drop. The change in market fortunes has investors reassessing their approach to Value Stocks vs. Growth Stocks for stability and short/long term investment planning.

Value Stocks - present an opportunity to buy shares below their actual value

• EY separates its audit and advisory division, with the rest of Big 4 (Deloitte, KPMG, PwC) taking notes.

• Warner Bros. Discovery follows David Zaslav $43B plan to develop the DC universe with Marvel-like model.

• Walmart being sued by Federal Trade Commission for blindly allowing fraudsters to defraud consumers over 1B.

Growth Stocks (and Crypto) exhibit above-average revenue and earnings growth potential

• Amazon’s 20:1 stock split has yet to see new investors flock in as the price drop 15% in June 2022.

  • Warehouse workers unionize in NY

• Elon Musk files with SEC to fully purchase and privatize Twitter.

• Bitcoin and Ethereum tumble to 2017 levels, in contrast to Terra’s LUNA total $50B collapse.

  • These market swings revealed the impact trading firms like Celsius, Three Arrows, Jane Street and Jump have in controlling / crashing the market for gain.

Ø  Gold – despite concerns of inflation and recession, Gold remains low and disconnected from the market as liquidity remains low

Ø  Oil – the cost per barrel is at $109 USD, with speculators predicting $200/barrel, depending on G7 relationship with OPEC+ and Russia.  

Ø  Crypto – the ‘Wild West’ has investors retreat to stability, as trading firms appear to be playing the market to bankrupt competitors.

Nickel

In March 2022, the Nickel Market shot up 250%, due to the war in Ukraine and Russian sanctions.  

The unexpected rise in the market could seem innocuous unless you were and a member of his Tsingshan Holding Group Co. who had shorted 1/8 of the entire Nickel market, a $4B short. The market shift left Tsingshan unable to pay its margin calls, and to retain stability the London Metal Exchange (LME) suspended trading for a 1 week and canceled highest priced transactions. It took JPMorgan to lead the acceptance to refrain from further margin calls, and ultimately later fully exited the Nickel Market.

The unusual events and reaction by LME have questioned the viability of the market as whole. Currently the LME is being sued for 456M by Elliott Investment Management and Jane Street.

Forecast

Cost of Living Adjustment; COLA - our newest 4 letter word.

Inflation (see Edition 21/Forecast) is traditionally targeted for a 2% rise each year. The excessive rates in 2021 were expected to be transitory due to high demand-pull from pandemic lockdowns and supply chain delays. However, 2022 reveals historic inflation as prolonged breaks in supply chains and the war in eastern Europe are placing a cost-push in Energy and Food.

Key global markets show 5-10% price rises reminiscent of the 1970’s, driving investor uncertainty and concerns a recession is on its way.

Inflation is measured best by Personal Consumer Expenditures Index (P.C.E) and Consumer Price Index (CPI)

• The PCE Index and Core PCE Index (excluding Food and Energy) is representative of costs of consumer habits and business spend.

  • In the US is reported by Bureau of Economic Analysis (BEA) and more closely followed by the Fed to gauge inflation.

• The CPI is comprised by the fluctuations 0f 80,000 household items, which fit with 200 categories and apply to 1 of 8 groups;

  • Food, Shelter, Household needs, Clothing, Transportation, Health Care, Recreational Drugs & Alcohol.

By focusing on Canada, we can view driving factors and the impact in one market. In January 2022, Stats Canada noted the CPI saw a 3.4% increase and by May rates jumped to 7.7% in Year-Over-Year changes. During the same time period hourly wages increase more slowly at 3.9% basically showing a decline in the average Canadians purchasing power.

Interest Rates are recognized by central banks as a method to combat inflation. With high demand driving a hot economy, business will hike prices on goods and services if their consumers continue to buy. If lending rates rise, then consumers will face higher loan expenses and demand will decreases to right size costs. Following the playbook, the West employs quantitative tightening (QT) by rising the basis points at a pace not seen in 30-40 years.

The biggest impact will be felt by homeowners and small businesses with large borrowing costs. A spike in interest rates will hit the bottom line, to simply retain one’s current loans and expenses. Basically a 1% increase will roughly translate to 15% increase in borrowing costs, if a $2,000 mortgage (Dec 2021) is renewed it could be a $2,300 mortgage (Dec 2022).

Investors are keenly watching on the impact of these hikes and speculating on the next rise later this year. Questions loom if central banks have been too late to act, with energy and supply chains return to normal levels and will a long or short recession lie ahead?

Politics & Religion

the myths of recycling

Canada’s Environmental Protection Act labelled ‘plastic’ as toxic, leading to a ban of single-use plastics. By December 2023, business will have to adapt with bio-degradable alternatives. The modest step forward is an attempt to reframe plastics and prevent them from entering the environment, breaking down to smaller microplastics and destroying key eco-systems and lifeforms depending on these habitats.

           
  In 1907, Leo Baekeland coined the term ‘plastic’ from the Greek λαστός (plastos) meaning "molded", after he created Bakelite, from a condensation reaction of phenol with formaldehyde. The development revolutionized the chemical industry and set for a path for petro-chemical companies to develop a collection of various synthetic or semi-synthetic materials through polymerization. Important groups like acrylics, polyesters, silicones, polyurethanes and halogenated plastics all found a place in our modern way of life, due to their malleability, thermal resistance, lightweight, density and varying conductive properties.

Since the end of WWII, Chemical companies began focusing on the mass application of plastic packaging and industrial utilization. The output has resulted in over 9.2B tonnes of plastic has been made between 1950 to 2017, with over half having been produced since 2004.

As Environmental concerns hit social consciousness in the 1970’s, attention and grass roots movements began to highlight our individual responsibilities to protect the planet from wasteful actions. Enter a mass campaign to learn the need to Reduce, Reuse and Recycle and a program that present plastics as safe and could be included in plans to save the planet. The plastics industry heralded this movement, and worked to ease concerns by promoting the consumers options to recycle and reuse the product – all the while continue to manufacture virgin plastics. “Of all the plastic discarded so far, some 12% has been incinerated and less than 9% has been recycled”.

We familiarized ourselves over the years to separate wet compost into green, seal true garbage into the black, and then all other papers, plastics and recyclables end up in blue. Despite that simplicity, there is quite a complex structure for what one can and cannot recycle. We may notice on many container there is a recycling symbol with numbers and acronyms to better help us dispose of our waste.

It is due to these complexities that big waste disposal collectors and companies need to ensure a proper separation of our materials as they officially get disposed of and sent to the dump. The programs are at the core of our recycling success, but due to costs and the cheaper alternative to transfer waste to landfills elsewhere. In 2015, the inefficiency of the North American and European Recycling Programs took a hit when China began to reject the West garbage and initiated Operation Global Sword. The result saw key programs struggling to manage and a true difficulty in proper management of our recycling – which was just being shipped across the planet.  

The Ultimate Test is Stamina and Pain

The 109 edition of Tour De France 2022 kicks off July 1st in Denmark, Copenhagen, ending 24 days later on Champs-Élysées, Paris. The event is one of the most widely attended events in the world, where patrons gather to watch male riders will cover 3,328 Km (2,068 Mi) over the course of 21 stationed stops, and 3 rest days.

Henri Desgrange came up with an idea in 1903, a publicity stunt to help push the circulation for the Sports newspaper L’Auto (now “L’Equipe, where names changed post WWII due to links with occupying Germans). Thus began the first Tour De France and set a stage for the next century and then same. In 1919, the trophy of the winning ‘Yellow Jacket’ was brought in due to it connection with the yellow paper that publication was printed on. Today, the event is current managed by the French Media Group Amaury Sports Organisation (ASO) with ties to Phillipe Amaury the original publisher of L’Auto.

The road cycling event in France is a part of the Grand Tours, complimented by the Italian Giro D’Italia (May), and Spanish Vuelta a España (August).

These signature 14+ days tours are overseen by the Union Cycliste Internationale (UCI) who enforces disciplinary rules and licenses riders. The governing body also oversees mountain, track and BMX biking and has been prominent in Tour De France’s successes and controversies. The UCI has enforced helmets in the 90’s while at the same time faced criticism from journalists and bicyclist in its complicity in doping scandals in the 90’s and 00’s.

Doping scandals date back to the origin in 1903, when Tour De France riders were challenged for using alcohol and ether to numb the pain of the grueling race conditions. In 1967, the death of Tom Simpson from brandy induced dehydration raised attention and overall monitoring drug use. The 70’s amphetamines took over, to be replaced in the 90’s with erythropoietin (EPO) transfusion.

It was the scandal surrounding Lance Armstrong, the 7-time winner (1999-2005) that drew attention of the globe as his fall from grace also drew scrutiny from the public to better monitor the riders.

Despite the scandals, Tour De France is the largest annual sporting event in the world and has a steady following from its die-hard fans. The intensity the riders face in time trial stages, the overall distance covered in 14 days, the changing conditions from flat roads to 2000m daily alpine inclines, and the possible chaos of a crash at every crowded hairpin turn.  

As the Tour start, 22 teams of 9 riders; 1 leader and 8 domestiques who will work to protect, shield and even fetch water for the leader and their team’s chance to take the title. By working as a unit throughout each of the stages, they aim to win each stage with the fastest times and earning a chance to wear one of the jerseys throughout each stage of the race – with the ultimate goal to take the race by the end.

The reigning champ, Tadej Pogačar, is also the youngest winner in its history at age 22. Will he and his UAE Team Emirates win the € 500,000 prize or will Primož Rogliča and his Team Jumbo-Vista pose a challenge to unseat the throne. Or could a dark horse and team pull up and winner the stages and overall covet Yellow Jersey this summer in France?      

                 
The Yellow Jersey, the maillot jaune, for the rider with the fastest overall time for all the stages.

The Green Jersey for the 1st over the line at each stage, rewarding the sprinters in the race.

The White Polka-Dot Jersey, known as the ‘King of the Mountains’, for 1st to complete the alpine inclines.

The White Jersey, for the younger challengers (under 25) with the fastest overall time for the stages.      

Mixtape XXV

Court Television saw a resurgence reminiscent of the 90’s, all due to a civil trial straight of out Hollywood.

One of the most watched new story headlines, is also one of the best performances that both Amber Heard and Johnny Depp have had in their recent careers. In a time in need for distraction, the public descended on the highlights of a messy Post-Divorce Libel Slander civil suit from the depths of Los Angeles royalty.

The Suit

The couple, Johnny Depp and Amber Heard, have both filed a multi-million defamation lawsuits against one another.  Mr. Depp has filed on the grounds that Ms. Heard’s Opinion Editorial in the Washington Post in 2018 set his career back and lost him work. The resulting impacting was that Mr. Depp not only filed the libel suit to clear his name, but highlights that Ms. Heard herself was abusive within the relationship. Ms. Heard has countered that he was the true abuser, and for defamation for comments made by Depp’s lawyer Andy Waldman in an article in Daily Mail.

The Trial

….was a circus, which reveals an intense drug-fueled relationship, with martial arguments exploding in outbursts and heights of passion. The couple each referenced different high-water marks throughout their marriage and divorce; Johnny smashing up rooms and trailers, Amber punching and severing of Johnny’s finger with a vodka bottle, smuggling in Amber’s dogs into Australia and her passing blame on those same dogs for defecating on their marital bed.

Insert high level actors and actresses’ testimony, highly unconventional deposition interviews, psychologist interviews about the couples’ behaviours and aggressive cross examinations, and you have a perfect distraction from everything else going on in the real world.  

The Outcome

The jury sided with Mr. Depp that the Op-ed had negative impact on his career trajectory and awarded 10.35M USD, as well with Ms. Heard for a compensatory 2.0M in the counter suit. However, with the negative PR imaging from the trial, Ms. Heard has been dropped from the Aquaman series and many even question if she is in a position to pay the 8.35M due.

                               Tunes

1. – Father Time - Kendrick Lamar ft. Sampha (TDE)

2. – LET’S DO IT AGAIN – Jamie XX (Young Turks)

3. – Skrting on the Surface – The Smile (Self Help Tapes)

4. – Brainwash – Nils Frahm (LEITER Verlag)

5. – Booty Call – Bulow (Universal)