The Reserve Bank of Zimbabwe is set to introduce a gold-backed digital currency to serve as legal tender in the country. The move is a government initiative to stabilize the local currency from continued depreciation against the U.S. dollar.
According to a report from local media outlet The Sunday Mail, the move will allow small amounts of Zimbabwean dollars to be exchanged for the digital gold token, enabling more Zimbabweans to hedge against currency volatility. Reserve Bank of Zimbabwe Governor John Mangudya said the plan intends to “leave no one and no place behind.”
Zimbabwe’s currency trades at 1,001 ZWL against $1 but is typically exchanged for 1,750 ZWL on the streets of Harare, the country’s capital, according to Bloomberg.
The country’s annual consumer price inflation reached a one-year low in March at 87.6%, down from 92% in February.
Zimbabwe‘s inflation rate. Source: Trading Economics/Reserve Bank of Zimbabwe
According to Mangudya, the exchange rate in the parallel market is expected to stabilize after tobacco farmers receive their U.S. dollar payments in the coming weeks.
He said the current exchange rate volatility has been caused by “expectations of increased foreign currency supply” on the market due to the tobacco season.
The monetary dysfunction in Zimbabwe and lack of changes have led to businesses printing their “own money,” often on handwritten scraps of paper, so that users can pay for future purchases, according to a Wall Street Journal report from March
Zimbabwe has been fighting against currency volatility and inflation for over a decade.
In 2009, the country adopted the U.S. dollar as its currency after an episode of hyperinflation.
In 2019, the Zimbabwean dollar was reintroduced in an effort to revive the country’s struggling economy.
Last year, the government decided to use the U.S. dollar again in a bid to curb surging prices in the country.
Crypto adoption has grown in many African countries as a result of economic challenges.
According to Chainalysis, the Middle East and North Africa is the fastest-growing region for crypto adoption thanks to cross-border remittances, with over $566 billion in crypto transactions between July 2021 and June 2022, up 48% from the previous year.
Central Bank Gold Buying At Highest Since 1950s, As 30% Of World Economies Are Now Sanctioned By The G7
By Michael Every of Rabobank
ARS-sault and Barter-y
Optimists were assaulted by Friday’s data, the Eurozone manufacturing PMI down to 45.5 despite subsidies, stimulus, and lower energy, and the US only 50.4 despite being ‘back in the factory business’. Services PMIs were better but that’s where much core CPI is located, so suggested stagflation; as did Japan’s core CPI at 3.8% y-o-y; as did UK retail sales with food prices at a 45-year high – as the Financial Times noted, the BOE won’t get CPI back to 2% until that is back under control: but it can’t control it. There was also a battering from the geopolitical sphere:
The G7 may ban all exports to Russia; Russia warned the Black Sea Grain Deal will end if G7 approves ban on exports to Russia. The G7 ignores this threat requires closing third party loopholes, as with Russian imports.
Russian state TV discussed plans to rule the world after winning a nuclear war’, saying, “the territory of the former Ukraine… should be simply liquidated as a nation…. Then it can be decided what to do with the lands and the people,” and that Moscow must train new European leaders favoring Russia(!) Russia also warned South Korea if it arms Ukraine, it will arm North Korea.
Treasury Secretary Yellen stated: “We do not seek to “decouple” our economy from China’s. A full separation of our economies would be disastrous for both countries… the world is big enough for both of us,” and not “zero sum.” However, she also said the US would always put its national security first, even at an economic cost. To her, this was olive branch; but Beijing still sees it as a stick, saying the US wants to strip it of its right to development to maintain global hegemony.
Logistics magazine gCaptain says ‘China’s Plan For Taiwan Invasion Is Not A Secret’, as projected 2030 US – China navy strength from @Tshugart3 shows the US little changed but the PLAN 50% larger in vessel count, if not total tonnage.
’Chile will nationalise its huge lithium industry. Like Indonesia and the Philippines (nickel), OPEC+ (oil), and China (rare earths), Chile is intent on controlling supply and moving up the value chain. Which way will Chile lean if there is a geopolitical choice of export destination?
The Central Bank of Argentina is, by some reports, out of dollars and might even have dipped into private-sector dollar accounts. USD/ARS was 218.51 Friday (and more than double that on the black market), +979% since 2018, with CPI over 100% y-o-y and rates at 81%. President Fernández’s announced Friday that he won’t seek re-election this year, so the future is uncertain. Could new leadership see Argentina shift from USD to CNY, or to dollarize?
Egypt, home of the Suez Canal, is on the same crisis path, with no dollars and local hyperinflation, as next-door Sudan sees Western nations struggling to evacuate their embassies.
Against this, the Financial Times notes central bank gold buying at its highest since the 1950s, as 30% of world economies are now sanctioned by the G7, and the US debt ceiling looms, arguing dollar hegemony is in trouble. However, it errs in saying the US relies on foreign capital inflows to supplement its local capital stock when, as Michael Pettis puts it, those flows supplant it, forcing up either debt or unemployment. Larry Summers also just defended the dollar on Bloomberg, asking if China is really somewhere people want to hold their reserves, and arguing capital –and people– are flooding out. Even Russia’s central bank says CNY isn’t a good option.
More broadly, what are gold buyers going to sell it for or price it in? Worse, gold either forces barter trade to balance, so the end of our global system of large imbalances, or a 19th century zero-sum imperialism to force people to let you run trade surpluses. As Dr. Pippa Malmgren says on this ‘new’ anti-US market meme: “Tactics without strategy leads to disaster. This is not about de-dollarisation. This is about replacing the medium of exchange from dollars to violence.”
Indeed, if the US is talking about a world where it doubles its defence spending, buy the buck and buckle up. As Yellen noted in her speech: “It’s important to know this: pronouncements of US decline have been around for decades. But they have always been proven wrong. The US has repeatedly demonstrated its ability to adapt and reinvent to face new challenges. This time will be no different.” Many would feel more confident if it weren’t Yellen saying it; but Foreign Policy’s ‘The Myth of Multipolarity: American Power’s Staying Power’ makes the same case.
Could the US afford to spend another $1 trillion a year? Could anyone? It’s all relative. But we are moving closer to a point of praxis on that and many fronts. The US banking sector may see a credit crunch due to rising rates, with auto loans and commercial real estate the core of concerns. That raises the likelihood that we move towards another predicted outcome: higher rates and acronyms, like QE, to reallocate capital from irrelevant to (national security) productive sectors, paid for by central banks, as the ECB’s Lagarde told us last week. In this zeitgeist, a recent Financial Times op-ed talked of ‘The contentious idea that still challenges the Fed’: that there is nothing stopping central banks allocating credit if they want to – they just haven’t wanted to.
Yet the luxury of too-high rates –so no national security spending, just austerity– or too-low rates –so no national security spending, just bubbles– surely cannot be long for this geopolitical world. It makes zero sense to have one base rate, especially if it’s zero, and expecting the economy to make a green transition, or fight a Cold War or a hot one. It’s cut rates and let bubbles rip, as markets keep expecting; or embrace Biden’s national security state capitalism, or the Heritage Foundation’s ‘common good’ capitalism with a moral mission – and higher rates.
The US still has to act in a world of ARS-sault and barter-y where EM want to drop the dollar: to offer carrots, like swap lines or dollarisation *for friends*, and sticks, like tariffs, capital controls, and higher rates to push down commodity prices. That’s realpolitik where economics is not real or political: a colleague and I just laughed at one ‘history of trade’ saying barter was “swapping spears for furs”: if you have spears and the other guy furs, then you have spears *and* furs.
Indeed, why is the US is to now crack down on shadow-bank hedge funds and private equity? Yes, to ensure financial stability. However, also to use the financial system to achieve national goals, while hitting elements that provide nothing useful nationally, China-style; the US already copied tariffs, economic coercion (i.e., sanctions), industrial policy, and capital controls. To quote Fox News: ““I bet right now (Blackstone CEO Steve) Schwarzman is calling everyone he knows in DC to get the Fed to back off. The Fed won’t, of course, because no one is going to bailout a bunch of fat cats.”” Didn’t we also just see the same thing happening in China?
By the way, China also just told its unemployed white-collar students to roll up their sleeves and try blue-collar work. What a shock to some US blue hairs that would be! Or perhaps they might enlist, given recruitment numbers are vastly short of targets, a five-alarm fire in military circles.
Key Events This Very Busy Week: Fed Blackout, GDP, PCE, BOJ, And Earnings Galore
With 178 S&P companies (including the biggest tech mega caps) representing a third of the index, and some 40% of index earnings, slated to report Q1 results this week, all eyes will be on the busiest week of earnings season, but there is plenty more to keep investors busy.
Before we focus on earnings, let’s take a look at the barrage of econ data on deck, summarized conveniently by DB’s Jim Reid. In the US Q1 GDP, the employment cost index (ECI), core PCE, and consumer confidence are the highlights with us now in the Fed blackout period ahead of next week’s FOMC. Meanwhile, we will see inflation and growth data in the Eurozone, and the BoJ’s decision in Japan on Friday where DB has a non-consensus call (more below). Big tech (14% of S&P in 4 names), pharma and oil earnings will fill out a busy earnings week. Watch out for First Republic Bank reporting as well after the closing bell today.
If we start in more detail now with the US, most of the key data is on Thursday and Friday. Before that tomorrow’s new home sales and consumer confidence are also important, especially the latter. The first reading of Q1 GDP is out on Thursday and economists expect a +2.0% print, versus +2.6% in the last quarter of 2022 with consumer spending (+3.7% vs. +2.5%) leading the way. However, Friday’s personal consumption and income data for March may well show that the bulk of the consumer boom in Q1 was in January and February due to warm weather. Within that report on Friday, the latest core PCE deflator will be a key report alongside the ECI. These will be the last big inflationary datapoints ahead of the FOMC.
In Europe, growth and inflation data is due for key economies on Friday. These include GDP and CPI releases for Germany and France and GDP for the Eurozone. There will also be a plenty of sentiment gauges for the bloc. These include the Ifo survey for Germany today, consumer confidence for Germany and France on Wednesday and a list of metrics for Italy and the Eurozone on Thursday.
Over in Asia, all eyes will be on Japan with both the BoJ decision and lots of key data including Tokyo CPI, labor market, retail sales and industrial production indicators all due on Friday. Our Chief Japan economist previews the central bank meeting, the first one for the new Governor Kazuo Ueda, here. Against the market consensus, he expects the BoJ to undergo a policy revision on the back of inflation risks, with potential outcomes including the termination of YCC, strengthening of forward guidance on short-term rates, and greater flexibility of JGB purchasing operations. For data releases, our economist expects unchanged unemployment and Tokyo CPI and a -0.4% MoM fall in industrial production (see full preview here).
Earnings season continues apace this week, with Big Tech reporters taking center stage (we will have more to say in a subsequent post_. Comprising almost 14% of the S&P 500 by market cap, Microsoft and Alphabet tomorrow, Meta on Wednesday, and Amazon on Thursday will be among the most anticipated reports. The only one missing from the pack is Apple, which will report on May 4th. Other notable tech earnings this week include Texas Instruments (tomorrow), SK Hynix (Wednesday), Intel (Thursday) and Sony (Friday).
In Europe the focus will be on key banks, including Credit Suisse (today) and UBS (tomorrow). The former will clearly be interesting given all that went on in Q1. Outflows will be worth watching just to see how serious the situation was at the time. In Asia, a number of Chinese banks report throughout the week. Meanwhile in the US, investors will be laser focussed on First Republic which report today. After trading in a 120-150 range in the first 2 and a bit months of the year, they have been in a 12-15 range over the last month. So they haven’t broken back out of their depressed range but haven’t deteriorated further. So these results could be important to the company and wider sentiment as this has been the perceived next weakest link.
There are also some pharma heavyweights reporting, including Novartis (tomorrow), AstraZeneca and Sanofi (Thursday) in Europe. In the US, we’ll hear from Eli Lilly, AbbVie, Merck and Bristol-Myers Squibb (Thursday), among others.
Consumer demand will be gauged from an array of earnings from companies including McDonald’s, Chipotle, PepsiCo (Tuesday), Coca-Cola (today), Domino’s, Mondelez (Thursday) and Hilton (Wednesday). In autos, the focus will be on BYD (Thursday), Mercedes-Benz (Friday) and GM (Tuesday). Investors will be particularly interested in EV rollouts and pricing. Among other economically-sensitive bellwether stocks, industrials reporting include UPS, Raytheon, General Electric (Tuesday), Honeywell, Caterpillar, Northrop Grumman (Thursday) and Boeing (Wednesday).
Courtesy of DB, here is a day-by-day calendar of events
Monday April 24
Data: US April Dallas Fed manufacturing activity, March Chicago Fed national activity index, Germany April ifo survey
Central banks: ECB’s Vujcic, Villeroy and Panetta speak
Earnings: Coca-Cola, Credit Suisse, First Republic Bank, Cadence Design Systems
Tuesday April 25
Data: US April Conference Board consumer confidence, Richmond Fed manufacturing index, Philadelphia Fed non-manufacturing activity, Dallas Fed services activity, March new home sales, February FHFA house price index, UK March public finances, Japan March department store sales, PPI services
Data: US March wholesale and retail inventories, durable goods orders, advance goods trade balance, Germany May GfK consumer confidence, France April consumer confidence, Q1 total jobseekers
Central banks: ECB’s Guindos speaks, BoC’s Summary of March Deliberations
Earnings: Meta, Thermo Fisher Scientific, Ping An, Boeing, American Tower, Iberdrola, GSK, Boston Scientific, Vale, Pioneer, SK Hynix, Hess, Universal Music Group, Hilton, Deutsche Boerse, EQT, Roku
Thursday April 27
Data: US Q1 GDP report, core PCE, April Kansas City Fed manufacturing activity, March pending home sales, initial jobless claims, China March industrial profits, Italy April manufacturing and consumer confidence, economic sentiment, Eurozone April services, industrial and economic confidence
Data: US Q1 employment cost index, March personal spending and income, PCE deflator, April MNI Chicago PMI, Kansas City Fed services activity, UK April Lloyds business barometer, Japan April Tokyo CPI, March retail sales, job-to-applicant ratio, jobless rate, industrial production, housing starts, department store, supermarket sales, Italy Q1 GDP, March hourly wages, February industrial sales, Germany Q1 GDP, April unemployment claims rate, CPI, France April CPI, Q1 GDP, March PPI, consumer spending, Eurozone Q1 GDP, Canada February GDP
Central banks: BoJ decision
Earnings: Exxon Mobil, Chevron, PetroChina, China Construction Bank, Sony, Mercedes-Benz, Colgate-Palmolive, Eni, Neste Oyj, LyondellBasell, Norsk Hydro, Covestro
* * *
Finally, taking a closer look at just the US, Goldman writes that the key economic data releases this week are the durable goods report on Wednesday, the Q1 GDP advance release on Thursday, and the employment cost index and core PCE reports on Friday. Fed officials are not expected to comment on monetary policy this week, reflecting the FOMC blackout period.
Monday, April 24
10:30 AM Dallas Fed manufacturing activity, April (consensus -11.0, last -15.7)
Tuesday, April 25
09:00 AM FHFA house price index, February (consensus -0.2%, last +0.2%)
09:00 AM S&P/Case-Shiller 20-city home price index, February (GS -0.3%, consensus -0.4%, last -0.4%)
10:00 AM New home sales, March (GS -2.0%, consensus -1.6%, last +1.1%)
10:00 AM Conference Board consumer confidence, April (GS 105.0, consensus 104.0, last 104.2)
10:00 AM Richmond Fed manufacturing index, April (consensus -8, last -5)
Wednesday, April 26
08:30 AM Wholesale inventories, March preliminary (consensus +0.1%, last +0.1%)
08:30 AM Advance goods trade balance, March (GS -$90.0bn, consensus -$90.0bn, last -$91.6bn)
08:30 AM Durable goods orders, March preliminary (GS +0.8%, consensus +0.8%, last -1.0%); Durable goods orders ex-transportation, March preliminary (GS -0.2%, consensus -0.2%, last -0.1%); Core capital goods orders, March preliminary (GS -0.2%, consensus +0.1%, last -0.1%); Core capital goods shipments, March preliminary (GS -0.1%, consensus +0.1%, last -0.1%): We estimate that durable goods orders rose 0.8% in the preliminary March report, reflecting firmer commercial aircraft orders. We forecast small declines in core capital goods orders (-0.2%) and shipments (-0.1%), reflecting a drag from tighter credit and the lackluster rebound in East Asian industrial activity as of March.
Thursday, April 27
08:30 AM Initial jobless claims, week ended April 22 (GS 245k, consensus 250k, last 245k); Continuing jobless claims, week ended April 15 (consensus 1,884k, last 1,865k): We estimate that initial jobless claims were unchanged at 245k in the week ended April 22. We note that the Easter holiday and school spring breaks—which frequently but do not always coincide with Easter—often contribute to additional volatility in claims around April.
08:30 AM GDP, Q1 advance (GS +2.2%, consensus +2.0%, last +2.6%); Personal consumption, Q1 advance (GS +5.0%, consensus +4.0%, last +1.0%): We estimate that GDP rose +2.2% annualized in the advance reading for Q1, following +2.6% annualized in Q4. Our forecast reflects strength in consumption growth (+5.0%) and a more modest rise in business fixed investment (+1.5%). We expect a negative contribution to GDP growth from inventories (-1.7pp) and net exports (-0.3pp).
10:00 AM Pending home sales, March (GS -2.0%, consensus +1.0%, last +0.8%)
11:00 AM Kansas City Fed manufacturing index, April (consensus -2, last 0)
Friday, April 28
08:30 AM Employment cost index, Q1 (GS +1.2%, consensus +1.1%, prior +1.0%): We estimate that the employment cost index (ECI) rose 1.2% in Q1 (qoq sa), which would lower the year-on-year rate by three tenths to 4.8%. Our forecast reflects start-of-year wage hikes, strength in the Atlanta Fed wage tracker, and a boost from the benefits category as firms expand health insurance and supplemental pay programs in order to attract and retain talent.
08:30 AM Personal income, March (GS +0.3%, consensus +0.2%, last +0.3%); Personal spending, March (GS flat, consensus -0.1%, last +0.2%); PCE price index, March (GS +0.08%, consensus +0.1%, last +0.3%); Core PCE price index, March (GS +0.28%, consensus +0.3%, last +0.3%): Based on details in the PPI, CPI, and import price reports, we forecast that the core PCE price index rose by 0.28% month-over-month in March, corresponding to a 4.51% increase from a year earlier. Additionally, we expect that the headline PCE price index increased by 0.08% in March, corresponding to a 4.10% increase from a year earlier. We expect that personal income increased by 0.3% and personal spending was flat in March.
10:00 AM University of Michigan consumer sentiment, April final (GS 64.5, consensus 63.5, last 63.5): University of Michigan 5–10-year inflation expectations, April final (GS +2.9%, consensus +2.9%, last +2.9%)
NBCUniversal Chief Ousted Over ‘Inappropriate Conduct’ With CNBC Anchor
In what must have felt to senior executives like a jarring Succession plot twist, NBCUniversal CEO Jeff Shell has been ousted after an investigation of an inappropriate relationship with an employee.
“Today is my last day as CEO of NBCUniversal,” said the married, 57-year-old Shell in a Sunday statement. “I had an inappropriate relationship with a woman in the company, which I deeply regret. I’m truly sorry I let my Comcast and NBCUniversal colleagues down.” Comcast is NBCUniversal’s parent company.
While the firm didn’t identify the employee, Deadline reports multiple sources have identified her as 41-year-old CNBC anchor and senior international correspondent Hadley Gamble. ZeroHedge couldn’t find any indication that she’s married.
The investigation was reportedly prompted a complaint from Gamble who’d been in a sporadic 9-year relationship with Shell. It ended a couple years ago — but the complaint wasn’t filed until the past month, says Deadline.
An outside law firm was retained to investigate Gamble’s allegations. Executives were shocked by the announcement, as only a few senior leaders had been informed about the probe, The Wall Street Journal reports.
In a Sunday memo to employees, Comcast Chairman and CEO Brian Roberts and President Mike Cavanaugh said, “You should count on your leaders to create a safe and respectful workplace. When our principles and policies are violated, we will always move quickly to take the appropriate action, as we have done here.”
A successor for Shell, a 2010 media-category inductee into the Southern California Jewish Sports Hall of Fame, has not been named. Until then, Shell’s former team will report to Cavanaugh. NBCUniversal’s sprawling array of properties includes NBC, MSNBC, Universal Pictures, Universal Television, Bravo, E!, USA and Universal’s amusement parks.
The Journal notes that Shell’s sudden ouster comes during challenging times for the company, as its streaming Peacock service lost almost $1 billion in the fourth quarter alone.
Gamble covers energy, geopolitics and markets, and anchors “Capital Connection” from Abu Dhabi. Gamble’s CNBC bio describes her as a “passionate advocate for women in the workplace and their advancement around the world.”
She was the last Western journalist to interview Russian President Vladimir Putin before Russia’s invasion of Ukraine. The Putin interview sparked an amusing controversy when a Russian TV host accused Gamble of having “openly positioned herself as a sex object.”
Body language expert Darren Stanton validated the Russian anchor’s characterization, telling Daily Mail that Gamble displayed 7 or 8 of 10 classic female flirtation techniques, including “hair twizzling,” playing with her shoe, ‘floating gestures’ with feet circling midair, and dilated pupils — the last of which Stanton said would typically imply genuine attraction on a woman’s part.
During a speech in Florida Friday, Donald Trump highlighted how he will likely be running for President against a man who doesn’t know where he is most of the time.
“He’s all ga-ga,” Trump told the crowd, adding “he doesn’t know what the hell he’s talking about.”
“Sometimes you have to talk tough, and sometimes you have to talk soft, and he’s got a mixed up. He talks tough when you’re supposed to talk soft, and he talks soft when you’re supposed to talk tough,” Trump continued, referring to times when Biden suddenly starts yelling for no reason during speeches.
Trump further noted, “then he walks off the stage, but he’s supposed to walk that way! Where am I? Where am I?!” referring to Biden getting lost practically every time he’s on a stage.
Meanwhile, a new NBC poll has revealed that 53 percent of 2020 Biden voters say that he shouldn’t run again.
The poll also found that more than three quarters of voters under the age of 35 don’t want a second Biden term, believing him to be too old.
Good Sunday afternoon —
Americans are dissatisfied with what is likely coming: A 2024 re-match between Joe Biden and Donald Trump.
According to a new @NBCNews poll, just 1 in 4 Americans believe Biden should run for re-election and only 35% believe Trump should run again. pic.twitter.com/HB97g2mOm0
The findings come on the heels of a Rasmussen poll that revealed almost two thirds of Democratic voters would like to see challengers run against Biden, with less than 40 percent believing Biden should seek a second term.
In the age of mass Silicon Valley censorship It is crucial that we stay in touch. We need you to sign up for our free newsletter here. Support our sponsor – Turbo Force – a supercharged boost of clean energy without the comedown. Also, we urgently need your financial support here.
Chinese Ambassador Suggests Ex-Soviet States Aren’t Real Countries, Sparking Fury In Europe
China is quickly trying to backtrack, calling statements of one of its ambassadors merely personal views after a firestorm was set off in Europe, resulting in outrage and tit-for-tat response, including the summoning of ambassadors.
China’s ambassador to France Lu Shaye sparked anger in Europe during a French television interview by questioning the sovereignty of former Soviet republics. He was asked during the segment on broadcaster TFI whether Crimea is part of Ukraine under international law.
His controversial response was that Crimea belongs to Russia historically and that it had been handed over to Ukraine, but that “Even these countries of the former Soviet Union do not have an effective status in international law, since there is no international agreement that would specify their status as sovereign countries.”
Given this in effect posed doubts over the very sovereignty of the former Soviet satellite states (including Ukraine itself), European countries are now demanding answers, with Baltic countries Lithuania, Latvia, Estonia reportedly summoning their Chinese ambassadors for an explanation. Statements of denunciation are expected from other European officials as well.
The comments also sparked confusion over China’s policy, also awkwardly at a moment Beijing is holding itself out as a powerful third party which can mediate peace in Ukraine, as the NY Times reviews:
Fu Cong, China’s ambassador to the European Union, by contrast, told The New York Times in an interview this month that China did not recognize Russia’s annexation of Crimea or of parts of Ukraine’s eastern Donbas region, instead recognizing Ukraine within its internationally accepted borders, in line with Ms. Mao’s remarks on Monday.
But Mr. Fu also said that Beijing had not condemned the Russian invasion of Ukraine because it understood Russia’s claims about its being a defensive war against NATO encroachment, and because his government believes “the root causes are more complicated” than Western leaders say.
Certainly at the very least this latter statement has been consistently presented by Chinese leaders (refusing a wholesale condemnation of Russia, instead criticizing NATO expansion).
But Ambassador Lu in the interview went further than any other Chinese official since the invasion began in offering a deeply pro-Moscow historical and political viewpoint on the crisis. According to his precise words in full:
“Even these ex-Soviet countries don’t have an effective status in international law because there was no international agreement to materialize their status as sovereign countries,” Lu said, after firstnoting that the question of Crimea “depends on how the problem is perceived” as the region was “at the beginning Russian” and then “offered to Ukraine during the Soviet era.”
European officials have taken this as a disavowal of those sovereign nations which became independent with the fall of the Soviet Union in 1991, and which entered the United Nations as members. China’s Ministry of Foreign Affairs then issued the following clarification Monday:
“China respects the sovereign status of the former soviet countries after the dissolution of the Soviet Union,” said foreign ministry spokesperson Mao Ning. Mao said Beijing’s position is “consistent and clear” but gave no indication whether Lu’s comment was considered incorrect.
EU foreign affairs chief Josep Borrell issued swift condemnation of the Chinese ambassador’s words…
Unacceptable remarks of the Chinese Ambassador to France questioning the sovereignty of the countries which became independent with the end of the Soviet Union in 1991.
The EU can only suppose these declarations do not represent China’s official policy.
— Josep Borrell Fontelles (@JosepBorrellF) April 23, 2023
He also expressed deep concern over the futures of Georgia and Moldova, both tiny ex-Soviet republics which have felt under threat in the wake of the Ukraine invasion. Borrell said those countries “see the war (in Ukraine) very close, they feel the threat” and the matter will be taken up by European ministers in the coming days. “For us Georgia is a very important country and remember that it has specific security issues because its territory is partially occupied by Russia,” Borrell said Monday.
In the wake of the weekend interview with the Chinese ambassador, France was also quick to express “full solidarity” with all the allied countries affected and urged China to explain its position unequivocally. Germany too said it has “taken note of the Chinese ambassador’s statement on French television with great astonishment, especially since the statements are not in line with the Chinese position known to us so far.“
Again, so far Beijing has merely painted the statements as the personal views of a lone ambassador, and not the official position of the government of China, while affirming the sovereignty of the affected countries.
Biden Holds Fewest Press Conferences Of Any US President In 40 Years
Despite a pledge to “bring transparency and truth back to the government,” President Joe Biden has held the fewest press conferences since Ronald Reagan.
It’s so bad that last Thursday he bailed on a decades-old tradition of holding a press conference with Colombian President Gustavo Petro following a White House meeting. Instead, Petro held a news conference all by himself in front of the West Wing, the NY Times (!) reports.
In more than two years as president, Biden has held just 54 interviews. For comparison, Trump held 202 during the first two years of his presidency, while Obama gave 275.
More than any president in recent memory, Mr. Biden, 80, has taken steps to reduce opportunities for journalists to question him in forums where he can offer unscripted answers and they can follow up. The result, critics say, is a president who has fewer moments of public accountability for his comments, decisions and actions.
Mr. Biden has not accused the news media of being “the enemy of the people,” as his predecessor did during four years in which news organizations documented thousands of lies by Mr. Trump. -NY Times
Meanwhile, with Biden’s 2024 reelection announcement waiting in the wings, “he is accelerating the demise of traditions that have underpinned the relationship with the news media for decades,” by keeping the press at arm’s length in an attempt to sidestep those traditions.
According to the White House, the lack of transparency is a deliberate attempt to connect with audiences without the traditional news media (what?) that can cast a filter on his words (i.e. accurately report that he’s a highly-medicated vegetable).
“Our ultimate goal is to reach the American people wherever and however they consume media, and that’s not just through the briefing room or Washington-based news outlets,” said White House comms director, Ben LaBolt. “The fracturing of the media and the changing nature of information consumption requires a communications strategy that adapts to reach Americans where they get the news.“
Instead, the new strategy “often means low-risk conversations with celebrities or supportive internet influencers as a regular means of generating publicity,” according to the report.
Sure guys.
Instead of facing tough questions from actual journalists, Biden has sat for interviews with actors Jason Bateman and Drew Barrymore, as well as weatherman Al Roker and YouTube beauty blogger Manny MUA (who?).
Biden last week: “There are more important things than going to the border”
“All presidents chafe at people questioning what they think is the great policies that we’re enacting and the good things that we’re doing,” said former Bill Clinton press secretary, Mike McCurry. “But at some level, you’ve got to have a process in the White House that respects that.”
According to McCurry, presidents feel less pressure to engage journalists in today’s news environment because ‘traditional news organizations have lost the influence they used to have…’
“That’s a real issue too, because we can sort of say, ‘Well, we don’t have to be as responsive to this group of journalists who are yapping at our knees every day,’” said McCurry. “And that’s too bad. Preparing for and giving press conferences forces the White House and other agencies to come up with better answers and sometimes better policies.”
Our leaders were able to successfully kick the can down the road for a long time, but now many of our long-term problems are becoming short-term problems, and the economic outlook for the remainder of 2023 is extremely bleak. But none of the economic hardships that we are experiencing at this moment should shock any of us. The truth is that we were warned about all of these things well ahead of time.
Many independent voices have been warning us that there would be severe consequences for the exceedingly foolish economic decisions that our leaders were making, and now those severe consequences are starting to play out right in front of our eyes.
The following are 5 economic disasters we were warned about in advance that are happening right now…
#1 We were warned that a great commercial real estate crisis would be coming, and now it is here. In fact, we just witnessed another massive default…
With recent stress in the regional banking sector, sentiment in US commercial real estate (CRE) – and especially the office sector – has turned negative as investors prepare for potential spillover effects (with JPM, Morgan Stanley, and Goldman Sachs all joining the gloom parade), especially as high-profile defaults continue to make headlines as borrowers face higher debt service costs and refinancing becomes much harder ahead of a $400 billion CRE debt maturities this year alone.
The latest headline fueling concerns about a potential CRE crisis involves a fund belonging to CRE giant Brookfield defaulting on a $161.4 million mortgage for twelve office buildings in Washington, DC.
According to Bloomberg, the loan was transferred to a special servicer working with “the borrower to execute a pre-negotiation agreement and to determine the path forward.”
#2 We were warned that there would be widespread layoffs as economic conditions in the United States deteriorated. Sadly, that is now happening all around us. For example, on Monday accounting firm Ernst & Young announced that they will be laying off thousands of highly paid workers…
Ernst & Young said Monday that it would eliminate roughly 3,000 jobs from its US workforce as it pivots to address shifts in demand and “overcapacity” in sections of its business.
The cuts represent less than 5% of the US firm’s total workforce. EY described the workforce reduction as “part of the ongoing management of our business” and said it didn’t stem from the firm’s recent failure to implement a global breakup.
#3 We were warned that the largest corporate debt bubble in the history of the world would eventually burst, and now corporations are beginning to default on their debts at a rate that should deeply alarm all of us…
More companies around the world defaulted on their debts in the first three months of this year than in any quarter since late 2020, when businesses were still hamstrung by restrictions to stop the spread of Covid.
In a report Tuesday, credit rating agency Moody’s said 33 of the corporations it rates defaulted on their debts in the first quarter, the highest level since the last quarter of 2020 when 47 companies defaulted. Almost half, or 15 companies, defaulted last month — the highest monthly count since December 2020.
Defaulting firms included Silicon Valley Bank, which collapsed in March, its holding company SVB Financial Group and Signature Bank.
#4 We were warned that we would witness a dramatic surge in bankruptcies in 2023, and that is precisely what is happening…
Bankruptcy filings across the United States rose for the third straight month in March in all major industries. A total of 42,368 new bankruptcies were filed last month, according to data from Epiq Bankruptcy, a provider of U.S. bankruptcy court data, technology, and services.
This is 17 percent up from the 36,068 filings in March 2022 and is the highest number of monthly bankruptcy filings since April 2021.
Data from S&P Global Market Intelligence showed 71 corporate bankruptcy petitions in March, a jump from 58 in the previous month. This is the highest monthly total since July 2020 and the fourth straight month of increases.
#5 We were warned that the rest of the world would eventually start rejecting the U.S. dollar, and now “de-dollarization” is happening at a “stunning” pace…
The dollar is losing its reserve status at a faster pace than generally accepted as many analysts have failed to account for last year’s wild exchange rate moves, according to Stephen Jen.
The greenback’s share in global reserves slid last year at 10 times the average speed of the past two decades as a number of countries looked for alternatives after Russia’s invasion of Ukraine triggered sanctions, Jen and his Eurizon SLJ Capital Ltd. colleague Joana Freire wrote in a note. Adjusting for exchange rate movements, the dollar has lost about 11% of its market share since 2016 and double that amount since 2008, they said.
“The dollar suffered a stunning collapse in 2022 in its market share as a reserve currency, presumably due to its muscular use of sanctions,” Jen and Freire wrote. “Exceptional actions taken by the US and its allies against Russia have startled large reserve-holding countries,” most of which are emerging economies from the so-called Global South, they said.
Unfortunately, we are still only in the very early stages of this economic meltdown.
The general population is starting to understand that things have gone horribly wrong, and a CNBC survey that was just released discovered that Americans “have never been more negative about the economy” than they are at this moment…
Amid persistent inflation, higher interest rates and recession worries, Americans have never been more negative about the economy, according to the latest CNBC All-America Economic Survey.
A record 69% of the public holds negative views about the economy both now and in the future, the highest percentage in the survey’s 17-year history.
Even during the darkest days of 2008 and 2009 Americans were more optimistic about the future of the economy than they are right now.
Just think about that.
We are in really deep trouble.
Of course this new economic crisis will take some time to fully play out.
But it has officially arrived.
The months ahead are going to be filled with economic pain, and that is going to cause a tremendous amount of turmoil throughout our entire society.
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Michael’s new book entitled “End Times” is now available in paperback and for the Kindle on Amazon.com, and you can check out his new Substack newsletter right here.
While the latest IMF forecasts were mostly lost in the din surrounding the start of earnings season, besides the now standard cuts to global growth forecasts, there was one standout item.
As National Bank of Canada points out, the IMF’s projections forecast US net debt to rise from 95% of GDP in 2023 to 110% by 2028, which actually is a conservative estimate when comparing a similar, if even more concerning longer-term forecast from the Congressional Budget Office, which effectively projects hyperinflation.
US to add $19TN in debt over next decade according to the CBO’s conservative estimate and debt as % of GDP will double by 2053 to 195%.
But while the fate of US debt/GDP in 2050 may feel like someone else’s problem to most Americans, NBC warns that a far more pressing issue may emerge as soon as a decade from today. That’s because unless Washington raises taxes more or slashes benefits (an unlikely outcome), the Social Security fund will hit net zero – i.e., will be exhausted – in just 10 years.
And as US social security becomes a pay as you go system, sovereign debt issuance will increase at an accelerated rate to offset the statutory decline in the social security fund balance. That, combined with the global “Net Zero” cost forecast of $150 trillion over the next 30 years – or some $5 trillion per year – most if not all of it courtesy of the Federal Reserve…
… means that in the very near future, the Fed will be drawn back in to monetize debt (read restart QE) at a pace that has never been seen before. The only question is which crisis will get us there first.
Last week, the Treasury Department revealed that the federal deficit hit $1.1 trillion in the first half of the fiscal year ending in March, $432 billion larger than the same period a year earlier.
Moreover, most of this expansion came in the month of March, as spending rose 36% year-over-year (not in small part due to rapidly rising interest costs). Longer-term, there is a clear widening trend that began back in 2015 that appears to now have resumed after some pandemic-inspired gyrations. And, if history is any guide, this deteriorating fiscal trend should represent a structurally bearish influence for the dollar in the months and years to come.
The last time the deficit reversed from a narrowing trend and began a major widening trend, back in the early-2000’s, it coincided with a major top in the dollar index which evolved into a major bear market for the greenback (inverted in the chart below) that lasted roughly a decade.
This was one of the primary catalysts for a major bull market in the price of gold which rose from a low of $250 in 2001 to a high of nearly $2,000 a decade later.
Currently, investors have little to no interest in owning gold (which is a bullish contrarian sign in my book).
As my friend Callum Thomas recently pointed out, assets in gold ETFs like GLD are a tiny fraction of those invested in equity ETFs like SPY.
However, there’s a good chance that the deteriorating fiscal situation will over time light a fire under investor appetites for precious metals relative to financial assets, just as it did two decades ago.
And that’s exactly the sort of thing that could power another major bull market for the precious metal.
