Comment of the Day
Video commentary for December 12th 2022
A link to today's video commentary is posted in the Subscriber's Area.
Some of the topics discussed include: China COVID cases rising but likely to peak by the end of the Q1 2023. Copper pauses near the MA, stocks steady, gold eases, oil unwinding oversold condition, bitcoin stable. bond yields unwinding short-term overextension.
Felix Zulauf: 'A Decade of Roller Coaster Markets'
This interview may be of interest to subscribers. Here is a section:
Saudi Arabia will be part of it. Russia will be part of it. Iran may be part of it. India may be part of it. And that currency will be—unlike all other currencies—not be a fiat currency, but a currency backed by commodities these member nations produce. And what I hear is, I think, it will come to the market in the mid-’20s or something like that. So, in a few years’ time. It’s another two to three years away.
Once that comes and becomes reality, then I think this is an important source and currency unit to settle trade and to store certain reserves for countries that are not very close friends with the US. And once that currency unit gets established, that could be a big problem for the US dollar.
I don’t think it will happen overnight. I think it will happen step by step, but it’s a first step. So, I’m concerned that the US dollar is in a topping process. They could stretch into next year and then begin a decline. I do not believe that the decline will be dramatic in the first next few years, but I think from the second half of the ‘20s onwards, I think we could see the dollar in an accelerating decline, yes.
Eoin Treacy's view - I agree the world is in a state of flux. There are significant competing themes evolving and not every cherished theory is going to be successful. The biggest consensus in the market today is there is going to be a soft landing. I have my doubts.
EU Nears Deal on Landmark Carbon Levy as Trade Tensions Rise
This article from Bloomberg may be of interest to subscribers. Here is a section:
A deal on the carbon measure would be a major victory for one of the EU’s more controversial proposals, when it was announced last year as part of the bloc’s package to cut emissions by 55% by the end of the decade. The proposal tabled by the European Commission in 2021 envisaged that the importer would be entitled to account for the pollutions costs paid in country of origin if it has carbon pricing.
The EU plans have already caused diplomatic unease in China and India and there’s concern that Russia may not comply with it. The EU mechanism also comes amid growing tensions over the US government’s Inflation Reduction Act, the country’s $369 billion green package, which provides subsidies only to American manufacturers to develop some clean technologies, including electric vehicles. The EU sees that as a possible contravention of WTO rules.
For its part, the EU argues that the CBAM is in line with international trade rules as an environmental measure, designed to stop industry from moving carbon emissions outside of the bloc as it imposes stricter climate measures on industry. A potential preliminary deal among negotiators on Monday would need the endorsement of ministers from national governments and the full EU Parliament to enter into force. That may be done only after policy makers iron out the details of a link with a broader carbon market reform.
Eoin Treacy's view - For European bureaucrats climate change is a religion and adherence to its tenets borders on zealotry. From their perspective, there is an acute need to reduce all forms of carbon emissions as quickly as possible to avoid the worst effects of climate change.
Fusion energy breakthrough by US scientists boosts clean power hopes
This article from the Financial Times may be of interest to subscribers. Here is a section:
The federal Lawrence Livermore National Laboratory in California, which uses a process called inertial confinement fusion that involves bombarding a tiny pellet of hydrogen plasma with the world’s biggest laser, had achieved net energy gain in a fusion experiment in the past two weeks, the people said.
Although many scientists believe fusion power stations are still decades away, the technology’s potential is hard to ignore. Fusion reactions emit no carbon, produce no long-lived radioactive waste and a small cup of the hydrogen fuel could theoretically power a house for hundreds of years.
The US breakthrough comes as the world wrestles with high energy prices and the need to rapidly move away from burning fossil fuels to stop average global temperatures reaching dangerous levels. Through the Inflation Reduction Act, the Biden administration is ploughing almost $370bn into new subsidies for low-carbon energy in an effort to slash emissions and win a global race for next-generation clean tech.
The fusion reaction at the US government facility produced about 2.5 megajoules of energy, which was about 120 per cent of the 2.1 megajoules of energy in the lasers, the people with knowledge of the results said, adding that the data was still being analysed.
Eoin Treacy's view - To the extent people are familiar with fusion experiments, most think of the tokamak experiments that look like big globes. They basically use magnetic confinement to control and heat plasma with the aim of achieving fusion.
Eoin's personal portfolio: stock market index positions closed at profit and shorts opened December 6th 2022
One of the questions subscribers ask most often is how to find details of my open trades. To make it easier I will simply repost the latest summary on a daily basis until there is a change.