July 14 2022
- JCal and Friedberg also in on the sweater game 🙂
- Emerging Markets
- Developed Markets - US, Japan, Europe
- Slower growth
- Developing Markets - BRICS
- Faster growth
- Frontier Markets - small, unstable, liquid - Kenya, Vietnam
- Frontier and Emerging markets are feeling a lot of pressure
- Sri Lanka in trouble
- $300T of global debt
- $100T of this debt is in emerging markets - they have variable GDP growth and challenges with their currency - recently their debt has been issued in local currency - which has been devalued compared to US dollar so investor is not making as much money anymore
- 3% US treasury yields, so emerging markets debt has declined 20% recently - so they will start defaulting on their debt - so people keep selling emerging markets debt - can lead to food crisis, financial crisis
- Sri Lanka has short term and long term issues - compare to Jamaica and Singapore
- 1960 - Jamaica was 1.4M, Singapore 1.6M, Sri Lanka 9.4M
- Jamaica GDP is now 14B, Sri Lanka is 80B, Singapore 345B
- Singapore was multi cultural yet English as lingua franca
- Lee Kuan Yew - because of him low levels of corruption - so investments helped country become amazing
- Sri Lanka had civil wars, and corruption
- Sri Lankan govt went woke, and returned fertilizers from China, offended China, Japan, Middle Easterners - and so went broke
- This is de-industrialization - going woke is going broke, not adopting modern methods of production and industrialization
- Both Holland and Sri Lanka uprisings are the same
- SL banned fertilizers - so food prices went up massively - so society has collapsed - they are adopting these policies because they are getting loans from World Bank and IMF - listening to global elite recommendations and getting high ESG rating and losing their society
- So its not true that there are no tradeoffs between growing economy and woke policies
- SL had strictest Covid-19 policies like China even though they had low infection rates
- But they alienated Muslim people and countries because they banned burying dead - and so didn’t get any subsidy help from the Gulf nations in their time of need
- Central Govt had a bill for disciplined money printing - highest inflation in post-independence history - 60%
- Same issues in Ghana, Pakistan - food riots, food insecurity, rampant inflation, chronic defaults
- In this situation they gave all power to President, who in a parliamentary system normally has no power, so now they got in trouble
- Chamath tried to introduce Google Loon and SL rejected it because of weird spectrum politics and corruption claims, a level of infighting that is very high
- Need to get rid of gerontocracy
- SL is the most literate country in the world - 92%
- SL politicians implemented western ideas - invent stupid rules and make SL pay for it
- US has rating of 51 and SL has 98 and that isn’t helping - they just didn’t have money - so had to do what their creditors want
- Singapore did well to have English, Lee Kuan Yew leadership, importance of government jobs - emphasizing multi-culturalism (you learn tamil, malay, chinese but work in English)
- China is building incredible presidential palaces through African countries - so they have great influence and power
- 19 developing countries (record) have too high debt - and 2 defaulted
- Pakistan has nukes
- Next 3 to default are Pakistan, Ghana and 1 more
- Argentina is in trouble too
- $300T of global debt
- Developed Markets - US, Japan, Europe
- CPI 9.1%
- Inflation is going to be worse
- Not sure when it will peak and go down
- How severe of a recession will we have to have for Fed to solve this problem
- Real Estate is going to be hit
- Fed focuses on PCE and not CPI - its the broadest index of prices - including food and energy
- People are not stopping their consumption
- Founders are also not cutting back
- Fed can stop inflation, not sure how much pain they will have to inflict and for how long - Paul Volcker hit 20% in early 1980s to beat 1970s inflation
- Current market sentiments
- US companies are firing white collar labor but hiring blue collar workers faster - so productivity is going down
- PE ratio over time - currently hit 20
- Retail and Hedge funds are main sources of flows into stock market
- So if you study them you will see what is happening in the market
- Right now hedge funds are staying on the sidelines
- Capital activity is going to be back this quarter because people have accepted the environment right now - high inflation, high volatility
- Sacks still investing - right now its less competitive than last year
- James Webb Telescope images
- Majority of matter in universe is undetectable
- Universe is expanding faster than ever
- Webb images are better than Hubble
- Greg Robinson turned around a $10B debacle to a roaring success
- “The most effective leader of a mission that has been seen in the history of NASA” (his boss said)
- Friedberg adopted a rescue beagle - Daisy
- Dog testing is only done in the US on beagles - because they have a high pain threshold
- FDA doesn’t provide good guidance
- Biden administration
- He has appointed useless people - 2.4 years on average of experience in private business of people who he has appointed
- Trump appointed 13 years experience
- Ukraine
- Russia turned off Nordstream 1 for “maintenance” - they are turning off gas
- Foreign policy based on virtue signalling is failing
- 3 predictions they had made
- Ukraine was going to win - but Russia has won Donbass
- Russia economy will collapse - actually US economy has collapsed
- Western alliance would be stronger - opposite will happen
Comments