24th January 2023
Video commentary for January 23rd 2023
A link to today's video commentary is posted in the Subscriber's Area.
Some of the topics discussed include: Risk-on gaining traction on Wall Street, bond yields and gold steady, oil pauses, bitcoin and fintech firm.
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World Economic Forum Global Risk
This report goes to some lengths to highlight the worst possible outcome for the global economy but then goes on to say that fewer than half of participants are as gloomy as the report’s conclusions. Here is a section:
The report describes four potential futures centred around food, water and metals and mineral shortages, all of which could spark a humanitarian as well as an ecological crisis – from water wars and famines to continued overexploitation of ecological resources and a slowdown in climate mitigation and adaption. Given uncertain relationships between global risks, similar foresight exercises can help anticipate potential connections, directing preparedness measures towards minimizing the scale and scope of polycrises before they arise.
In the years to come, as continued, concurrent crises embed structural changes to the economic and geopolitical landscape, they accelerate the other risks that we face. More than four in five GRPS respondents anticipate consistent volatility over the next two years at a minimum, with multiple shocks accentuating divergent trajectories. However, respondents are generally more optimistic over the longer term. Just over one-half of respondents anticipate a negative outlook, and nearly one in five respondents predict limited volatility with relative – and potentially renewed – stability in the next 10 years.
Indeed, there is still a window to shape a more secure future through more effective preparedness. Addressing the erosion of trust in multilateral processes will enhance our collective ability to prevent and respond to emerging cross-border crises and strengthen the guardrails we have in place to address well-established risks. In addition, leveraging the interconnectivity between global risks can broaden the impact of risk mitigation activities – shoring up resilience in one area can have a multiplier effect on overall preparedness for other related risks. As a deteriorating economic outlook brings tougher trade-offs for governments facing competing social, environmental and security concerns, investment in resilience must focus on solutions that address multiple risks, such as funding of adaptation measures that come with climate mitigation co-benefits, or investment in areas that strengthen human capital and development.
Some of the risks described in this year’s report are close to a tipping point. This is the moment to act collectively, decisively and with a long-term lens to shape a pathway to a more positive, inclusive and stable world.
Eoin Treacy's view
The worst case scenario seldom comes to pass. That’s an important point to remember when sentiment about the future is so bearish. Some of the biggest challenges are with relation to how populations are distributed globally. That’s true because of migration within countries to the coasts and because the highest population growth countries are all in the emerging markets. These factors are stressing water resources. So is the fact that water infrastructure is hard to build and politically fraught so also hard to get paid for building it. In the end it comes down to governance.
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Giant Fund Buys Up Tesla and Plug Power (NASDAQ:PLUG) Stock, Sells GM
This article from Barron’s may be of interest to subscribers. Here is a section:
DNB Asset Management materially increased investments in EV maker Tesla (ticker: TSLA) and Plug Power (PLUG), a hydrogen fuel-cell technology company, while slashing its stake in General Motors (GM) in the fourth quarter. The unit of Norway's largest financial-services firm, DNB, disclosed the stock trades, among others, in a form it filed with the Securities and Exchange Commission.
Eoin Treacy's view
Norway’s commitment to renewables is a very vocal and not least because it is such a large exporter of oil and gas. Nevertheless, one cannot argue with the timeliness of these purchases. Tesla lost 75% of its value in little more than a year. That’s a sufficiently large drop to encourage some value oriented interest.
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Goldilocks And The Magic Money Tree
Thanks to a subscriber for this article by Anatole Kaletsky which may be of interest. Here is a section from the conclusion:
To call the vindication of MMT a reductio ad absurdum, as I did above, is perhaps an exaggeration. MMT economists made some interesting arguments about the interaction of monetary and fiscal policy which orthodox economists and central bankers were wrong to ignore. But what about the Magic Money Tree? If inflation is cured painlessly by the end of the year and Goldilocks returns to dominate the markets for the next decade, as investors are now expecting, then governments will revive their interest in the Magic Money Tree. I too may start to believe in fairy tales—and we can all live happily ever after.
Eoin Treacy's view
The immortal word’s of former Citigroup CEO Chuck Prince come to mine when I see bond yields rising from already high levels, and a risk-on rally gaining traction on Wall Street. ““When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance. We’re still dancing,”
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Eoin's personal portfolio: trading short breakeven stop triggered January 20th 2023
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.