March 2024: Global MacroΩInsights
Politics, Culture & Economics - Edition 003
Political
Moscow Attacks
This was a surprise to many and primarily left out of the mainstream media. There was a massive attack in Moscow where officials claimed there were at least 4 gunmen attacking Russians at Moscow’s largest concert hall. Close to 150 people were killed and dozens more injured. The Terrorists were apprehended attempting to flee to Ukraine, with some of them being identified as having Ukrainian identifications, according Russian Officials. The Western narrative is that ISIS is responsible, claiming they took responsibility. But that narrative is an odd one, since there is very little history of conflict between Russia and ISIS, and no motive has been established as to why ISIS would have wanted to do this. The Russians on the other hand believe this was a consequence of US, UK and Ukrainian influence. One of the soldiers allegedly admitted to being offered a few thousand dollars, as a sort of hired hitman.
In what appears to be escalation, Russia resumes drone and missile attacks, targeting energy infrastructure in Ukraine. Clearly with such an attack at the heart of Russia, they are more motivated to increase their retaliative force.
Which narrative is most plausible? ISIS did it? Or the West did?
Continued Support for Ukraine
As the conflict between Russia and Ukraine persists, the notion of Russia's demise seems increasingly like a fairy tale that Western forces had many believing in early on. We can see it in the desire for escalation, with French President Macron being a perfect example of seeking approval to send troops to Ukraine. At the same time, Germany and France joining 12 other EU countries in calling for the European Investment Bank to enhance its financing for defense as it means to boost its bloc’s security in what they claim is due to growing Russian aggression.
On the American front of support with $, National Security Advisor Jake Sullivan made a visit to Ukraine and vowed that the US house will approve a $60 billion aid package. Far greater of a promise than Biden’s National Security Advisor announcing an emergency package of security assistance of $300 million worth of weapons and equipment to Ukraine. So the support here will keep draining the pockets of Western citizens.
Eastern Conflict
North Korea is still in full preparation mode, and their activities are validating this. North Korea’s Kim visits the Tank Unit and calls for airtight combat readiness. Kim guided military drills that included fire from an artillery unit capable of hitting Seoul. With the escalating presence of western forces in the east, I see why North Korea would be getting prepared.
Meanwhile, the US and Philippines plan military drills near the disputed sea near Taiwan. “The PRC (People’s Republic of China) portrayed the Philippines as a provocateur rather than a partner for managing disputes in the South China Sea while the Chinese Coast Guard drives heightened tensions in the South China Sea.” Taiwan is at the center of this tug of war between China and the West. “Taiwan’s Ministry of National Defense announced that it redefined its criteria for a “first strike” against PRC military assets, which now include a “first move” by PLA aircraft and vessels across Taiwan’s territorial boundaries. Meanwhile, “the PRC’s Taiwan Affairs Office (TAO) spokesperson Chen Binhua stated that “peaceful reunification” with Taiwan remains the PRC’s policy despite the omission of the term “peaceful” from the Two Sessions government work report.”
At the same time, presently, the US is spending hundreds of millions of dollars to develop maritime capabilities in Southeast Asia as nations face growing pressure from Beijing in the disputed South China Sea, a senior US official said. “We spend a great deal of time, effort and money investing in building the maritime capacity of our partners,” Assistant Secretary of State for East Asian and Pacific Affairs Daniel Kritenbrink said.
Joe Biden’s administration proposed a $850 billion pentagon budget for fiscal 2025 - with an aim to tap US stockpiles to arm Taiwan, providing major funding increases for long-range, air-launched and anti-ship missiles.
China announced defense spending will grow by 7.2% in 2024.
Governments around the world are militarizing at a pace unseen in decades.
Middle East Continuation
The PRC, Russia, and Iran held the joint Maritime Security Belt – 2024 naval exercise in the Gulf of Oman from March 11 to 15 located between Iran and Oman. Alliances are continuing to be strengthened and the division between East and West is growing clearer.
The Houthi conflict in the Red Sea is still a continuing conflict to watch. Attacks are still occuring in this area. The US is still sharing moments of conflicts in Yemen.
President Biden seeks a ceasefire between Israel and Palestine. This conflict is really splitting as a military issue, going as far as dividing political groups even within themselves, especially within the Democrats and the Liberals.
US approves possible javelin missiles and related equipment sale to Morocco for an estimated cost of $260 million.
US sanctions on Iranian natural gas exports are failing, with surging exports of liquid petroleum gas. In 2023, Iran became the middle Middle Eastern supplier for the fuel. The USA attempted to dent energy sales. As they did with Russia, with no real success.
Don’t let any politician or daydreamer tell you the whole world is all fine and dandy. Use that truth to hedge and understand how to be malleable to what is happening around the world, so you do not get blind sided. To maintain one's sovereignty, macro awareness is crucial.
New Regulations to be Wary off
In Canada, Bill C-63, the Online Harm Act “seeks to introduce harsher penalties for existing offenses. It would allow sentences of up to five years behind bars for hate propaganda, up from the current two years. It would also allow a judge to impose lifetime imprisonment for advocating genocide.” The Canadian Civil Liberties Associated warned against this. The mixing of government and social media for digital control will continue growing as a problem. Speech is at risk.
In the US, Senator Bob Casey, Pennsylvania Democrat introduced a bill called Shrinkflation Prevention Act of 2024. These politicians act as though inflation itself is an act of the free market. They forget to look inwards rather at the marketplace. Businesses do have the option to reduce the quantity of their products rather than push prices up, hence the concept of shrinkflation. But this is the choice of a business. Who is the government to dictate any of these market dynamics? Oh right the Welfare State can’t stay away from pretending to be some hero who will solve economic problems with more control and regulations. Precisely the behaviors that drive us into these market problems.
California moves to expand zero-down interest free home loan programs to illegal migrants. Assemblymember Joaquin Arambula, D-Fresno, introduced legislation, Assembly Bill 1840, in February to expand eligibility for the California Dream for All program, which uses a “shared appreciation” lending model. No wonder people in California are paying the highest costs in America, the state has become a heavy socialist welfare state and the citizens are footing the entire bill.
In the same realm of socialism insanity, Bernie Sanders introduced legislation that could make a 32 hour work week a new U.S. standard. Let’s not forget, these are the same people who cause the inflationary problems that regress the standard of living, while taxing people for what they work hard for. Now the solution, one that is from a POV of privilege since most of mankind now and in the past have no concept of ‘days offs’. All while productivity is becoming a growing problem, and in Canada alarms are being sounded on the collapse of productivity. Yet here we have politicians day dreaming of a fantasy world all so they can appeal to the ignorant for votes.
The Biden administration has proposed a 30% tax on bitcoin mining in a new budget proposal. In a U.S. Department of the Treasury document titled “General Explanations of the Administration’s Fiscal Year 2025 Revenue Proposals,” the administration stated that current laws do not address digital assets apart from broker and cash transaction reporting. Because of this, the administration wants to impose an excise tax, taxes levied on goods like fuel, on digital asset mining. The Treasury wrote: “Any firm using computing resources, whether owned by the firm or leased from others, to mine digital assets would be subject to an excise tax equal to 30 percent of the costs of electricity used in digital asset mining.” The administration suggests it could generate nearly $10 billion in 2025, and north of $42 billion over the next decade.
On the Social media front, the US House passed a by-partisan bill - bill HR7521 that could force TikTok to cut ties with Chinese parent company Bytedance or face nationwide ban.
The UN stalls bid to examine sun-blocking ‘climate change’ tech. Switzerland’s attempt to explore the possibility of dimming the sun has been dismissed by a United Nations summit in March. Solar geoengineering will go no further for now. A debate at the UN Environment Assembly (UNEA) in Kenya failed to reach a consensus on the issue. Switzerland had suggested creating a UN expert group to study the “risks and opportunities” of solar radiation modification (SRM), a controversial set of technologies aimed at cooling the Earth but the EU canceled its draft resolution in the face of strong opposition from other nations. Thankfully for now this is not a problem, but it seems to be a ‘solution’ some academics in a lab believe. Honestly, it seems dangerous to be playing God with nature like this. So stay aware of the developing insanities for ‘climate change’.
Government Spending
The US House approved a $460 Billion spending bill, moving to the Senate where they hope it'll pass in time to avert a partial government shutdown. This is becoming a never ending recurring problem, waiting to get near shutdown of government to then justify more spending. Cutting their spending seems to be a non existent solution to those who love spending other people’s money.
Congress released a +1000 page spending bill with a nearly $1.2 trillion price tag, featuring money for the departments of State, Homeland Security, Defense, Labor and Health and Human Services, as well as funds for foreign operations, financial services and the legislative branch.
Democrats of course put in spending commitments such as:
$850K for a gay senior Citizens home
$15 million to pay for Egyptians college tuitions
$500K for a DEI Zoo
$400k for a gay activist group to teach elementary kids about being trans
400k for a group to gives clothes to teens to help them hide their gender
Money truly has no meaning but to fuel the fantasies of these political ideologues.
The Battle Versus Dems and Republicans
The U.S Supreme Court has restored Donald Trump to this year's presidential primary ballots. Former President Donald Trump will not be disqualified from Colorado’s presidential ballot under the 14th Amendment, the Supreme Court ruled. “Colorado was the first state to kick Trump off the ballot as lawsuits have proliferated across the country challenging his candidacy, with Maine and Illinois following, but the court’s ruling Monday kills those cases, as justices unilaterally found that states cannot remove federal candidates from the ballot.”
2 days later, Nikki Haley officially drops out of the Race for Presidency, leaving Trump as the clear primary candidate for the Conservatives. Nikki although seemed to appeal far more to Democrats than republicans.
Special Counsel Robert Hur led the investigation into President Joe Biden's handling of classified documents. He faced heavy fire from both Republicans and Democrats in congressional testimony. After Trump had his Mar-O-Lago home raided for “abuse” of classified documents, it now became Biden’s turn to be on the spot. The Republicans wanted to know why Mr Hur had decided not to prosecute President Biden for having classified documents that were from before his presidency and found in many different locations belonging to Biden.
Democrats attacked Mr Hur's remarks in his explosive report on Mr Biden's mental acuity. Democrats are fixated on keeping the illusion of Biden being sharp, aware and capable going for as long as possible. They take citizens for complete imbeciles.
Government ‘investments’
Let’s begin with the incredible yet insane Trudeau speaking on “climate change”, seeking to “invest” $8.4 million on research across the global south to better understand how climate change interacts with democratic decline. According to proponents of the climate fears, there is an attempt to establish a link of causality between the ramifications of a fractured culture and oppressive governance with the phenomenon of climate change..In their fractured logic, the consequences of a regressing culture, with abusive and manipulative government that produces social decay is actually the by product of climate………. Scapegoating and misleading citizens has become too much of an easy thing to do. We need to end it before they spend us into oblivion while pretending to solve climate change.
The EU pledges to bolster ties with Egypt with a $8 billion funding. The so-called purpose is to curb migration. Spending around migration across Europe and North America is rising. And again, more burden on citizens while governments spend more and more.
Cultural
Haiti’s Societal Collapse
Haiti's political system collapsed, with a state of emergency declared because the Haitian Gang led by Jimmy Cherizier, “aka barbecue” , has led an escalation of violence against the Haiti government, saying it was a bloody revolution and not a peaceful one. President Ariel Henry fled Haiti as Haiti fell to the gangs. The 2 largest prisons in Haiti were stormed, giving the chance to 1000’s of violent prison inmates to escape. The US, Canada, Germany and the EU have had their embassies begin to evacuate. About a week before this developed in Haiti, the Trudeau government of Canada promised a funding of $123 million of taxpayer resources to “improve security” in Haiti. Great to know the Western government has had so much successful influence in Haiti while spending citizen’s money.
Protests & Revolt Continue
In Cuba, thousands took to the streets to protest wanting an end to the 64 year communist Castro regime. This comes after power cuts and food shortages plague cubans. Centralized economies over a long enough time period will experience decay. This tyrannical government has been in control of the market for decades, and the compounding effect of that horrible combination is beginning to show signs of reaching boiling points. Government, a negative economic force, cannot remain the foundation of economic continuity for a society. Only the marketplace can accomplish this. Decay is observable around the world. Plan and hedge accordingly.
Spanish farmers and police clash as roads are blocked in northwestern Spain by farmers pushing forth waves of protests over Government actions in the agricultural sector. They are angered by excessive environmental demands in the EU's Common Agricultural Policy (CAP) and its forthcoming "Green Deal". Farmer conflict still in full effect, seeing growing conflict in Brussels (EU headquarters), Poland, Czech and Germany. We are seeing farmers rise in Rimouski Quebec also, following the footsteps of their European neighbors against government overreach, wanting to remind people that farmers are important to have food on their plates.
Activists claim responsibility for an attack on the Tesla GigaFactory in Berlin where a power outage was induced. The activist group is called “Volcano Group” and their actions weren't isolated only to Tesla’s factory, impacting thousands of homes around. These climate activists are acting like terror groups and they are becoming a threat. Disruptive forces from within were as destructive to Rome as the external problems.
Social Decay Acceleration in Canada & USA
With a combination of social decay from a weakening and politicized culture, and uncontrolled migration is showing to be destructive, giving opportunity for the Government to exert more power and control.
What has been occurring in New York City is a perfect example of the rising police State. Governor Kathy Hochul, deploys close to 1000 National Guard and State Police to the NYC transit system, checking bags and patrolling. She even admitted that a refusal to have your bags checked if requested would mean a refusal to enter the transit. Safety has been used for this expansion of power. The rise of the police state as conflict rises. Philly transit boss takes a lesson from New York and calls for National Guard help as Philly experiences rising violent crimes. NYC mayor Adams meanwhile came out a few weeks before saying New York is the safest big city in America and not to fear. Talk about trying to create a distorted reality, an illusion. What they fail to understand is that this will resolve nothing when the problem is social decay.
LAPD established a new Unit to combat the rise in residential burglaries orchestrated by foreign gangs. Chaos from within is plaguing America, undoubtedly.
There is a trend in American cities where mayors and their politicians who supported open borders and advocated being sanctuary cities are now asking their citizens to open their homes to illegal migrants who are flooding their communities as we have witnessed in Denver Colorado.
The Biden Administration supposedly flew as many as 320,000 illegal immigrants on secret flights into the U.S., in an effort to decrease the number of illegal immigrant encounters at the Southern Border. Use of a cell phone app has allowed for the near undetected arrival by air of 320,000 aliens with no legal rights to enter the United States.
The migration problem mixed with defected laws in some states such as squatter rights is becoming a problem, so much so Governor Desantis signed a law squashing squatter rights. There was an illegal migrant with a TikTok who was spreading this flaw in the US encouraging others to come to America where the border is indeed open and take over a home in some places that have squatter rights to be taken advantage of.
On the other extreme of the social decay, armed citizens in Hartford Conn have begun patrolling the streets day and night in their neighborhood, while cleaning up the community. Time to take back the community and protect it themselves is their conclusion. Safe communities are becoming a distant reality. Families and businesses cannot function and plan when violence becomes a predominant issue in an ecosystem.
Look at Toronto where police advised people to leave car keys at the front door to prevent escalation with possible thieves since the violent crimes and thefts are escalating at a rapid pace. An estimated 12,000 cars were stolen in 2023 with a rough value of $800 million.
Economic
Energy Sector Development
Britain’s National Grid proposes a $74 billion energy system upgrade. Infrastructure spending is how Governments will prioritize economic “stimulation” and create employment. This is becoming noticeable as a means to push GDP and employment up by governments around the world.
Another Government initiative is the Biden Administration announces plans to lend more than $2.26 billion to Lithium Americas Corp, who is developing the largest lithium deposit in the country in Nevada. Talk about governments fueling monopolies and playing special interest games.
Yellen visits US lithium producer Albemarle in northern Chile for green transition as the US sees a big jump in imports from Chile. While there, she stated that rising demand for clean energy could generate some $3 trillion in global investment opportunities through 2050. Governments will be spending trillions clearly to make this happen.
This clearly creates a commodities opportunity since the demand is greatly above the capable supply as we speak.
How much debt and burden will citizens incur to make this fantasy a reality?
How secure will their access to energy be as this forced transition occurs?
Biden Admin awards Intel $8.5 billion chipmaking grant in direct funding under the CHIPS Act. This would help Intel advance American semiconductor manufacturing and technology leadership in the AI era. More special interest and fueling of big companies, and then they complain they are too big. The irony and hypocrisy of bureaucrats.
Growing Problems In Renewables Sector
Swiss Solar panel maker Meyer Burger wants to start operations in the US in 2024 after a flood of products from China forced it to close one of Europe's largest solar factories.
Saudi Aramco CEO says energy transition is failing, world should abandon fantasy of phasing out oil. This one seems to be an obvious statement but to the climate hysteric people and the government alongside their so called ‘experts’, don't seem to understand how you can't just phase out an energy source that is fundamentally intertwined with the global economy and infrastructures. Oil, and alot more of it will be needed to get all the commodities out of the ground to make this transition. Plus, nations outside the Western bubble do not have the same incentive to put their economies at a disadvantage, putting their infrastructure and energy grids at risk.
We have a perfect example of the lack of understanding from the government and their experts that the Biden Administration slashed its target for US electric Vehicle adoption by 2030-2032 from 67% to as little as 35%. The Fraser Institute came out saying that Ottawa’s EV mandate is so unrealistic, it would require an equivalent of 10 new mega hydro dams or 13 large natural gas plants nationwide within 11 years. The marketplace will suffer the consequences of misplaced and ignorant intentions.
The other issue arising is the true sustainability of some renewable projects like solar panel farms. Why? A perfect example is a weather occurrence in Texas that experienced a strong hail storm that damaged thousands of solar panels at a 350 MW farm. Apparently, the solar industry is losing $2.5 billion annually from equipment underperformance, likely caused by equipment malfunctions and weather conditions, according to an article in kWh Analytics’ 2023 Solar Risk Assessment.
How sustainable is this source of energy when it is at risk from nature to this extent?
The issue of licensing/permitting processes in the mining industry is crucial to solve if we want to tap into USA’s and Canada’s vast resources. This issue ensures American companies are at a disadvantage in terms of competitiveness against international mining companies and jurisdictions. Freeport CEO, Richard Adkerson voiced his concerns that the US must improve the copper mine permitting process if it hopes to boost domestic supplies. He said "the question is, given our political system that we have today and the dysfunctionality of it, how do you go from getting a project verbally accepted to getting actions done?"
Meanwhile, U.S. Energy Secretary Jennifer Granholm told the conference that she supported efforts in the U.S. Congress to reform the country's mining laws, some of which were first approved in the 19th Century. We shall see how quick and effective these politicians can be with this issue in the coming years.
Debt, Inflation & Interest Rates
Global Government Debt has reached $82 trillion. Global debt levels hit a new record high of $313 trillion by year end of 2023, with developing economies scaling a fresh peak for the ratio of debt to their gross domestic product, a study showed. The Institute of International Finance (IIF), a financial services trade group, said that global debt surged by over $15 trillion in the last quarter of 2023 year-on-year. The figure stood at around $210 trillion almost a decade ago, according to the data.
US Federal debt has surpassed $34.5 trillion, with a pace of nearly $1 trillion every 3 months. The U.S. unemployment rate rose to 3.9%, higher than the estimate of 3.7% and highest since Jan 2022. US producer price index (PPI) comes in hotter than what they expected for February, rising 0.6% from January.
FED holds rates in March. But Jerome indicates a potential for 3 rate cuts in 2024. This does not appear to be an outlook he alone holds. “Strong job growth is not a reason for us to be concerned about inflation” - Jerome Powel. He also said inflation data released is pretty much in line with their expectations, but restates that it won't be appropriate to lower rates until inflation is on track toward the 2% goal. This reinforces the stagflation thesis, assuming inflation does hold persistent and reignites another wave. But raising rates is not what they want to do either. The Central bank is reaching a climax where it will become clear that they are stuck between a rock and a hard place. They don’t want deflation as debt is hitting record levels on a weekly basis.
Treasury Secretary Yellen insists that American households are better off under Biden and that 2024 will be a very good economic year for Americans. This is the same Keynesian economic expert who just recently in an interview, Janet Yellen says she regrets saying in 2021-2022 that inflation was transitory. So take her words and economic outlook with a grain of salt.
Other Central Bank moves:
Canada holds rates
The Bank of Japan raised its interest rates for the first time in 17 years, ending its negative rate policy.
Argentina’s central bank cuts interest rates to 80% from 100% as the Peso has been strengthening.
The Chinese Central bank has room to cut bank reserves ratio further, the Deputy Governor says.
The ECB decided to keep rates unchanged also. But their outlook for rates is similar to that of the FED. ECB Governing Council members Pierre Wunsch & Pablo Hernandez De Cos said policymakers will have to lower the rates, with June being an expected starting point. We even have Italy’s Bank Governor Fabio Panetta saying a rate cut is expected.
Bankruptcies & Employment Trends
The Body Shop Canada files for bankruptcy closing 33 stores
Dollar Tree to close nearly 1000 stores after a Q4 loss
The S7P global ratings released a report showing that the number of corporations defaulting on their debt has hit its fastest pace since the great recession of 2008-2009.
As this trend continues, it will absolutely put downward pressure on employment.
It seems that as the private market place regresses, the public sector will grow to offset this, be it directly with public jobs or indirectly with government subsidies to private companies.
Bell Canada lays off 400 employees.
Ericsson to lay off 1200 employees as 5G demand slows down.
Touching on the subject of employment, the graph above provides a window into how the Government has distorted the reality of the market “strength” by subsidizing the labor market and fueling the increase in GDP through spending programs and debt. Sustainable economic strength cannot come from what the government does, as it depends on taking/controlling the market place.
Can we truly call these distortions strength? I believe not. In time, the truth shall be revealed.
Canadian Real Estate is Boiling
One must begin to watch real estate in Canada with some important developments:
Canada’s Superintendent of Financial Institutions has directed banks to begin assessing risky mortgages and estimating potential losses immediately as mortgage defaults begin to skyrocket. They have also told lenders they will have to limit loans to borrowers with mortgages greater than 4.5x times their annual income.
Equifax has informed that in Q4 2023, there is a noticeable increase in missed payments by mortgage holders in BC and Ontario. See this lagging data, watch how it will continue to creep up on us.
RBC economics estimates that half of all the wealth generated in Canada in the last 3 decades has come from homeownership. This only validates that the Government and Central bank want to absolutely avoid a deflation in the real estate market as much as possible as the market’s wealth effect which encourages spending is tied to this asset.
Commodities development
Jiangxi Copper buys $212 million worth of Canadian First Quantum Mineral located in Panama.
JP Morgan names gold as their #1 commodities pick with a price target of $2500 in 2024.
Gold hit an all time high 4x in March closing the month close to $2240 USD. Bitcoin, SP and Nasdaq also hit an all time high in the month of March. Is gold foreshadowing something the market is ignoring?
Silver poked its head above a 15 year resistance on the quarterly chart.
Cocoa prices spike to record high
Copper prices spike breaking a 52 week high.
Financial Markets
US bank profits dropped 44% in Q4 2023
Delinquency rate among large banks hits an 11 year high at 3%
Delinquency rate among small banks hits 7.8%, a record.
New all time high for S&P’s tech sector’s price/sales ratio
Millions of Google, Whatsapp, Facebook 2FA security codes leak online as social media platforms in America experienced a cyber attack.
Costco starts selling silver coins.
Mexico overtook China as the #1 source of Imports into the US
