China Preparing to Go It Alone

September 16, 2022

Politics is more difficult than physics.
– Albert Einstein

THOUGHTS FROM DOUG

Volatility lowers valuations. Ask oil and gas companies about their 2015 to 2020 experience.

Sure seems like Europe will soon be nationalizing their electricity companies, maybe even all their energy companies.

I attended an energy technology conference this week. It was focused on renewables, energy transition, decarbonization, hydrogen, and the future of energy. A great many people were there. But unlike the tech conferences on the West Coast or conferences in Austin, where the dress is casual, this conference’s attendees were still wearing the same old “uniform.” If we’re going to get serious about new energy, maybe we should stop wearing long sleeve shirts, suits and sport coats when it’s 90 degrees or hotter in Houston.

Legendary investor Stanley Druckenmiller suggests the stock market may be flat for an entire decade. Wow. But flat from what level, Stanley?

I’m starting to wonder if government climate policies are going to kill more people and destroy more economies than actual climate change will. Hmmm…

About $8T of “wealth” has evaporated in the stock market. The housing market is now starting to turn down. So much for those excess savings. US household wealth is falling, while a recession seems around the corner.

The latest inflation report conclusion: The higher US dollar lowered global commodity prices. The lag in US real estate inflation is catching up. Food prices are skyrocketing. Watch out if oil starts rising again.

The IEA says the number of clean energy jobs exceeds that of fossil fuel jobs. But they count EV production as clean energy jobs while they don’t count ICE vehicle production or car mechanic jobs in the fossil fuel number. Is their data real or more fake facts from our “establishment” institutions?

Some of the best investment and new business opportunities in the world come during a recession. As the old saying goes, Buy when there is blood in the street. Institutional investors understand this. Today they are still quite open-minded about backing new investment managers.

The news media loves narratives that have no resolution. Let’s call it soap opera news. That’s why topics like climate change are so popular in the news. The climate is and always will be changing. Nothing sells advertising better than an end-of-the-world narrative…that has no end.

By the way, this is what “journalism” is all about today.

The larger and more complex a system gets, the more systemic risk builds. Covid and Ukraine suggest our complex, globalized economy created risks we hadn’t considered.

THE ECONOMIC VIEW

Consumer credit is exploding
Where’s all that excess savings?
While shoppers keep spending
But July sales were revised to negative

The FedEx earnings barometer
Suggests global recession may be forthcoming.

The housing market slowdown
In seven charts.
Some hot markets face big declines
Mortgage rates top 6%
Mortgage applications at 1999 levels

THE INFLATION BOGEYMAN

Inflation stays high
One more report left before the election.
Here’s who is suffering the most

Supply chain is a daily challenge
Says GE CEO.

Weather is still causing food issues
Can the Fed fix the weather?

THE LABOR VIEW

WFH to be a legal right in the Netherlands
Will this spread around the globe?
Well, people from around the world
Want to work from home.
Work is a four-letter word

US companies bringing jobs home
While robot sales reach a record high

Workers are striking more
Will a recession change this trend?