Here is a great chart from Gavekal showing correlation between the money growth (liquidity) and PMI (one of the growth indicators). The projected money supply in the Europe is likely to decline based on the ECB’s forward guidance.
If the correlation shown in the chart holds true, than this is not likely to bode well for growth in Europe
Here is a great chart from Bloomberg showing how the real rates have turned more negative with the recent fall in US treasury yields and the rise in the US inflation. The 30-year T-bonds are almost -3%. Note that subsequent CPI numbers make this chart slightly worse.
The black line in the chart shows real” inflation-adjusted Treasury yield curve as of December 2019 before the Fed’s assorted pandemic programs, and the green line is showing the same as of June 2021).
The Fed is incentivizing everyone to leverage up and everyone (especially corporations) is responding. The problem is some of these borrowers may be in good condition now but won’t be when something goes wrong. What happens when borrowers can’t repay it’s bad for the lenders, too. Hmmmm SUBPRIME crises comes to mind.
History tells us that in the short term and may be even medium term this is likely to encourage corporate buy backs and therefore good for equities. It also makes gold and other real asset attractive fuelling further asset price inflation. Hmmm so are we going to see more inequality in the distribution of wealth. Surely this cannot continue as the demographic changes gives younger generation more political voice.
Europe last year, took 17 gigawatts off the global stage in terms of carbon and China just put that on the same if not more. 1000 coal plants are in operation now in China and another 25 to 30 are in planning stages.
India is a colossal diesel fuel and oi user: 6% of the global consumption up from 3% just eight or nine years ago. India population is growing three times faster than the European continent; 1.4 billion group of people that are still vastly addicted to diesel fuel and oil.
This is also what the markets are telling us. India and Europe were just in a horrific, like lockdown. Oil should have been off 20% on that news and yet the oil price was up.
Over the next 12 months, we are likely to witness the most spectacular ESG backfire because we’re going to have a vast reopening, demand is going to come back really strong, especially in countries like India, as they come back online.
The ESG agenda all for good reasons no doubt has seriously impaired the ability of coal companies and shale companies to finance especially in the US.
The ESG dynamic around fossil fuels, is leading to higher natural gas prices, higher coal prices, that makes nuclear power much more competitive. No wonder in the United States, John Kerry that’s has recently flipped over to nuclear power. Jennifer Grantham at the Department of Energy, she’s flipped dramatically. The Biden team has flipped dramatically in terms of energy support for the US nuclear power industry.
But wait the uranium industry is just around $ 21 billion in size. Let us put this in some context to say Bitcoin which is close to half a trillion dollars in size. Dogecoin is around 50 billion in size.
Source – Bear Trap Report
Economies that embrace data sharing for finance could see GDP gains of between 1 and 5 percent by 2030, with benefits flowing to consumers and financial institutions
Advantages include more accurate credit risk evaluation and risk-based pricing, improved workforce allocation, better product delivery and customer service, and stronger fraud protection.
A McKinsey analysis suggests broad adoption of open-data ecosystems could range from an increase of about 1 to 1.5 percent of GDP in 2030 in the European Union, the United Kingdom, and the United States, to as much as 4 to 5 percent in India. All market participants benefit, be they institutions or consumers—either individuals or micro-, small-, and medium-sized enterprises (MSMEs)—albeit to varying degrees.
In less than a decade, companies have been able to reduce the production costs of cultivated meat by 99 percent. If costs follow the same trajectory as that of human genome sequencing (for which costs, on average, dropped by 45 percent annually between 2001 and 2021), cultivated meat can achieve cost parity with conventional meat by 2030
According to McKinsey analysis, about 75 percent of costs can be eliminated through increased scale and best-in-class manufacturing processes, while roughly 25 percent of additional costs can be eliminated by fine-tuning R&D, bringing the total cost down 99.5 percent, from the low thousands of dollars to under $5 per pound. Further cost reduction can be achieved by blending cultivated meats with plant protein.
A recent Life Cycle Assessment by CE Delft found that cultivated meat is significantly (over 75 percent) more sustainable by measures such as CO2 production and land and water usage than beef and has a sustainability profile similar to that of poultry and pork. 2 Cultivated meat’s sustainability profile can be better than that of chicken or pork if sustainable energy is used or if process improvements are implemented, such as if cooling is not needed for the bioreactor
The industry, which at present comprises fewer than 100 start-ups, attracted roughly $350 million in investments in 2020 and about $250 million thus far in 2021 from some of the largest animal-protein players, including Tyson and Nutreco, and well-known investors, including Temasek and SoftBank.
Here are the world’s top 20 tax havens, as ranked by the 2020 Financial Secrecy Index (FSI) by the English NGO Tax Justice Network. The FSI ranks countries and territories from all over the world on two criteria: secrecy and scale.
One surprising thing many of them have in common is a link to England. In addition to the UK, four of the top 20 tax havens—Cayman Islands, British Virgin Islands, Guernsey, and Jersey—are British Overseas Territories or Crown Dependencies.
The tax haven landscape might soon shift. The G7 struck a deal in June 2021 to start taxing multinational corporations based on the revenue generated in each country (instead of where the company is based), as well as setting a global minimum tax of 15%. In total, a group of 130 countries have agreed to the deal, including India, China, the UK, and the Cayman Islands.
It will be interesting to see the reactions of the ultra-wealthy individuals and corporations.
FT is reporting how China’s household wealth has grown.
HSBC, estimates that Chinese households will have Rmb300tn ($46.3tn) of investable assets by 2025 — an amount equivalent to the entire US bond market.
At present capital outflow from China is restricted. Imagine the likely impact on global assets value when such restriction are eased.
Collection of Thoughts 