Follow EU Climate Rules or Else!

July 8, 2022

[China is] set on stealing your technology, whatever it is that makes your industry tick, and using it to undercut your business and dominate your market.
– FBI Director Chris Wray

THOUGHTS FROM DOUG

When employment grows but GDP stagnates or contracts, like the Atlanta Fed is predicting for this quarter, then it means productivity and/or company profits are falling.

There is a historical relationship between a stronger dollar and lower commodity prices. When US interest rates are higher than rates in other countries, global money flows to the dollar. The higher the dollar, the larger the quantity of commodities that can be purchased for fewer dollars. This drives down commodity prices, which is happening right now. Higher rates may cool off an economy as a stronger dollar brings down US inflation.

For thirty or more years, the biggest competitive advantage a country could have in goods production was cheap labor. Going forward, that competitive advantage is likely to become cheap energy.

All the recession talk today seems odd. The last few recessions seemed to come as a surprise to most everyone. Why do so many people seem so sure of this next one?

Recessions are supposed to naturally bring down inflation due to lowered demand. If a recession shows up and fuel prices don’t decrease measurably, then what’s the Fed’s next move?

Will higher inflation and a recession force disciplined consumption habits that stick around for a longer term? This would not be good for our GDP, which is 70% dependent on consumption.  

Commodity prices are starting to fall, but check out the following charts on copper, oil, natural gas, lumber, aluminum, wheat, corn and industrial metals. Make sure you look at the 10-year charts.

There seem to be two general causes of inflation. First there is the cost of energy. It trickles down into every single product and service. The second is government regulation. It always increases costs for goods producers and service providers, which forces prices up.

It’s not what you take away from life that matters. It’s what you leave behind.

THE ECONOMIC VIEW

Atlanta Fed predicts Q2 GDP of -1.9%
That would make recession official.

US home price growth by state
From 1991 to now.

US 2021 charitable giving hit a record
Now we have inflation and possible recession.

Consumer confidence is bad
Yet consumers continue to spend and spend

THE INFLATION BOGEYMAN 

Global inflation dissected
Big variations across the globe.

Citibank makes a bold prediction.
Recession could put oil at $65 by year’s end

Going green is highly inflationary
Yet inflation is top voter issue

THE LABOR VIEW

Job openings decrease in May
Yet openings are 2X of available workers
While employment grows by 372K

Mid-year raises are happening
For employee retention and inflation.

Initial jobless claims rise
Recessions always cause job losses.

MEANWHILE IN EUROPE

If you don’t follow EU climate rules
You may lose access to capital.

France to nationalize power company
Scrambling to keep the lights on.
Energy intensive industries worry
As Europe redefines green energy

Germany’s better days might be behind them
They post first trade deficit in 30 years
Could German industries collapse?
Germany plans for winter bailouts
Lack of cheap Russian gas is not good.

PLAYING WITH FIRE

Russians don’t seem to care about war
Russians are good at grain smuggling
Russia’s eastern front strategy is working
Microsoft pledges its data centers to Ukraine
Russia nationalizes Japan JV asset
Russia’s most important oil partners
Russia threatens to cut off oil to Kazakhstan
EU prepares for Russia to totally cut off gas
UK to help train Ukrainian troops
Gazprom execs keep turning up dead
Greece wants to buy US fighter jets
Russia shuts down Jewish Agency
Chinese phone companies seize on Russian market

GLOBAL

Saudi Arabia promotes two women to senior roles
Reform appears to remain on their agenda.

Hezbollah is using drones to fight Israel
Drones. Cyber war. How will we cope?

Vienna is world’s most livable city
Maybe it’s time for a visit.

“Alien things” caused Covid
Why do we even care about North Korea?

THE FINANCE WORLD

Private equity’s liquidity event challenge
They’ve paid high multiples in recent years.
As corporate profits start to break down
Investors may need to sell companies NOW
Is PE’s Goldilocks era ending?

Here comes the Wall Street slowdown

Tough to do deals in uncertain times.
And they have a brewing debt problem

THE CRYPTO MEME

Crypto trading collapses in India
After they enact a 1% trading tax.

Another crypto company hits pause
And then another lender calls time out
Crypto’s domino effect is expanding
But some folks are hanging in for…

Why this crypto crash is different
Leverage fed the bull. It cuts both ways.

TECHNOLOGY

Start-up funding collapses
How many unicorns will survive?

Europe leads the charge against tech
Anticompetitive and illegal content targeted.
Big tech companies may have to exit

The chip boom loses steam
Lower sales to PC makers and crypto miners.

THE NEXT NORMAL   

America is making more stuff
As CEOs take production out of China.

Red states leading economic recovery
More residents and more jobs.

Why are satellites plummeting from orbit?
Could solar weather influence climate change?

THE WAR ON CARBON

An avalanche of EVs are coming
Will enough buyers take them home?

There are just not enough minerals
For all the EVs supposedly on their way.

Carbon removal is climate cure
A “holy grail,” says Exxon’s CEO.

THE CHINA SYNDROME

China begins brainwashing in Africa
By opening political “schools.”

China is working the deal
To influence US state and local leaders.

Intelligence agencies are highly concerned
About China’s industrial espionage.

Stop selling chip-making gear to China
The US tells a Dutch equipment supplier.

THE WASHING-TONE

We support more labor unions
Says top Biden labor lawyer.

How should we deal with disinformation?
Don’t we first need to decide what it is?

Biden awards 17 Presidential Medals of Freedom
It’s harder to win the Heisman Trophy.

MAKING A BETTER YOU

Listening is not just being quiet
It’s being actively and sincerely engaged.

News is in the advertising business
And they know how to manipulate you.

Since everything seems a “vibe” today
Maybe it’s time to vibe out of vibes.

HOW ABOUT A BREAK

The Egyptian pyramids
Remain a wonder

It’s raining fish in San Francisco
Really, it is.

How did we function before AC?
With ingenious housing designs.

SONG OF THE WEEK

Listen to the songs of nature
The Spotify of earth sounds.
Only Mother Nature’s songs here!

VIDEOS OF THE WEEK

Don’t mess with Joey Chestnut
No distractions while eating hotdogs, please.

The record July 4th box office movie is…
Minions
What does this tell us about our culture?

Clouds over Corippo
A short film that’s more like a painting.

CASTING AROUND THE PODS

Core Human Motivations
Insights from entrepreneur and investor, Kunal Shah.

FROM THE HEADHUNTER’S KITCHEN

Bobby Flay’s grilled pork chops
Save this one!!!

Is your steak done?
How to execute the touch test.

Let’s not forget summer tomatoes.
Yummy gazpacho
Burrata and tomato salad
Tomato and creamy cucumber sandwich

IN CASE YOU MISSED IT

Fed Chair Admits Bombshell
July 1, 2022

Are Interest Rates Way Too Low?
June 24, 2022