There’s a general feeling that we’re going back to some previous decade, but everyone seems confused about which decade exactly.
The roaring 20s certainly was for 2021, but just before that we had more 1919. Russia may be more confused than most. Is it Stalin’s 1950s Soviet Union, the Tsar’s first world war, or is it more Hitler’s 1938?
“What Saudi Arabia did to help [Russian President Vladimir] Putin continue to wage his despicable, vicious war against Ukraine will long be remembered by Americans,” said Senate Majority Leader, and Democrat, Chuck Schumer.
So back to the 70s? Inflation rampant, OPEC (now with a plus) flashbacking cartel muscles, summer strikes in Britain, and now protests in Iran to maybe reverse echo that 70s theocratic revolution.
Or is it the 80s? A new Margaret Thatcher (light) that sometime turns and seems to be met with the same resistance as Thatcher herself even though Trussonimics is now more conventional economics, it’s just it was forgotten a bit during the stagnation.
There’s some argument to be made about the 60s. An ‘underground,’ though very open but subtle cultural revolution of sorts is ongoing and globally in part due to connections now being video streams.
We can’t leave out the 90s. Pre-9/11 optimism, as some in this space – well only these pages – have claimed may be brought about by whatever is culturally happening here.
But, maybe we can leave out the 2010s, unless they’re just transported to China for their own lost decade since they’ve been missing out on that one a bit.
And maybe we can leave out the naughties, but they might be echoing too, certainly with Ben Bernanke getting a Nobel for giving us stagnation, but more with Alan Greenspan fast hiking to the banking crash.
So, a whole century in one year? Or is it more that we gotten so lazy we can’t even be bothered to be original anymore.
The slightest whiff of inflation for example has corporate media crying stagflation, when the economy has been growing and still may be growing, not stagnating. If we get the latter, no one knows whether we’d still also get inflation.
Russia’s Vladimir Putin obviously has run out of original ideas. So much so they’re increasing their defense budget to $86 billion, close to 1/3rd of their $295 billion yearly tax intake.
That worked out very well previously, so why not repeat it. Not least because the same outcome should not be expected because Russia has not over-extended itself in fermenting numerous coups in Africa, as well as the one in Myanmar under China’s nose, plus a defacto coup of sorts in Belarus, not to mention the actual occupations in Syria, Georgia, Moldova, Ukraine, Libya (failed), Mali (don’t call it occupation) and god knows what goes on in all the stanis beyond Kazakhstan.
But it is the West of course that is the evil one and treats Africa still like colonies, as Russian propaganda claims. That same Europe and America that has given Africa billions in aid over the past decades to the point Nigeria is now booming, as well as some other African countries. What has Russia actually given them?
It is the West that is evil, so much so that it has lifted more than a billion people in China from poverty to Shanghai skyscrapers. Although China would say that it was the Communist Party of course, not the tons and tons of foreign investment. Nope, these foreigners want to colonize China as well, Russia tells them and they seem to have bought it. Colonize them by making them filthy rich while giving them advanced tech. And what has Russia done for China exactly?
The Gulf has been treated so badly by the evil west that any newborn in UAE gets tens of thousands of dollars gifted by their own government. And the Kuwait glitter, Riyadh, awful awful poor exploited colonies which deserve the equal treatment of Russia which of course will treat them as superior.
Latin America seems to be alright as well, Brazil, Chile, many places growing, generally peaceful.
Europe though is so evil it has lifted half the continent to first class standards, 250 million people, from backwards poor with rusty crumbling buildings, like plenty of Russia’s regions, to not far off from Germany. Russia instead brings them war and actual subjugation, and then of course says they are brothers.
The above is not just a list of things, it’s a narrative that may have reached saturation. Because, fine, America bad, done all these bad things. We’ve gone through every little detail of it over the years, Russian propaganda has made sure of it. We know it all now. But do we globally know of the good of America?
Negativity has reached the point where the discovery of the continent, tomorrow October 12, 1492 by Christopher Columbus, is now actually the genocide day for some even though it was germs that killed the natives and those natives used to practice human sacrifice.
That discovery cemented human liberty as it is not clear how the fight against the Nazis or the Communists would have gone had the United States not been discovered.
Yet narratives matter. Europe will freeze, says Russian propaganda, so look away from the cowards hitting children’s playgrounds because soldiers are too scary.
Except both oil prices and gas are falling because it may well be that sometime narratives don’t actually matter when it comes to facts. The chief fact being that the West may have been underestimated too much, and that the Russian ruling elite may have drunk too much of its own propaganda.
Because, it may well be less a century in a year and more a century of narratives being repeated in one year.
A catharsis of sorts, where peak negativity gives way to looking at what positivity might be overlooked, ignored.
One of them might be the fact that the relationship between interest rates and assets might be overdone. There is some relationship, but this monetary supply theory by Bernanke was kind of proven wrong in the past decade.
Stocks however and assets can be as much speculation as fundamentals, and so narrative here can matter but the narrative is getting a bit tired.
Because what has been happening is obviously Putin has been trying to manipulate gas and oil prices up. Everytime gas fell, he either cut supply to some country, or closed down some pipe, and then maybe even blew one up.
The market got wise to it, and sort of ignored completely the last one. So, we get oil manipulation, with OPEC surprising.
Since there wasn’t much left in regards to gas, and since the oil game was a bit new, this got a bit of attention but markets are seemingly ignoring this too.
That’s in part because a price cap on Russian oil will be imposed, a demand ‘cartel.’ That should reduce oil prices, and so a brief bump is now seemingly losing steam.
Gas and oil have been inflation, and inflation has been interest rates. So, they fall then the rest does too, which is why Putin has tried so hard for them not to fall.
Alas, there isn’t much left he can do about it now, although he has turned gas back on to Italy to presumably have something to cut off again.
But, you can play these games once, twice, maybe three times, until the market catches on and speculation becomes a bit more nuanced.
Then there’s the question of: if even the shoeshine boy is shouting doom, who exactly is left?
If the top is signaled by banana sellers trading bitcoin, then the bottom region may well be signaled by economic confidence falling to even below March 2020 levels.
Even the Fed is getting boring now to the point no one is arguing with them anymore because what does 3.25% to 4% matter. They’re both high and if gas is falling, oil is falling, inflation is falling, then they presumably won’t stay there for long.
The big surprise however, to make a mockery of all this doom, may well be if the economy is shown to have actually been growing in Q3.
Now the consensus is that good news is bad news because Fed, but if you follow consensus you’d buy the top and sell the bottom, or give a Nobel prize to stagnation.
Because if the economy has been growing, then that might be a new resilience which can point to even more positive aspects being overlooked.
One such aspect may well be that a year of bear for stocks is a fairly long time, and bitcoin doesn’t seem to care anymore.
There’s no talk of a recovery however. Everyone seems to assume down, but is that just because everyone sold already and are just waiting to buy?
Some have even recently sold just to buy lower, because [enter long list of things we’ve known for months, and also nukes which were just invented about 8 decades ago].
Yet the macro, now, doesn’t seem to be that awful. To the contrary, we may discover that our economies are actually very resilient, maybe even surprisingly so, and the current investments, in Europe especially, may pay off for decades.
Narratively as well on the propaganda front, the United States currently is directly in zero wars. Precisely zero. For many, that is the first time in their lifetime that they can say so.
It may well be therefore that we do not need to print so much anymore to deficit fund wars, and thus that the economy can handle interest rates.
Because what exactly caused 2008, was ‘you’ was the conclusion of the ‘official’ report, as in everyone, but in actuality wasn’t and isn’t too clear, except that the massive amounts spent on those wars must have had something to do with it since they are very costly.
The removal of that huge burden may well mean the new economy is more like the pre-war economy, booming.
And we do not count the Russian-Ukraine war because it is in Europe, it is our business since Russia is playing outside its borders, but it is not us or US waging the war, it is Russia and so economic problems including the huge cost, both directly and indirectly, are Russia’s problems.
Where the West is concerned we’re at peace, within NATO, and fairly secure despite some of the rhetoric, and if that changes then our vast military superiority should end that change very quickly.
That’s the overlooked positive aspect within the current doom. Europe is cool again and even US is cool again, even though some may not yet know it, because what was in the past can very quickly move to history.
The rhetoric, especially the anti-US rhetoric, that worked in the past therefore doesn’t quite work in the present again, even though some may need more time than others to update themselves, and rather than being distracted for two whole decades, well the United States may really be back as Joe Biden said.
That’s a structural change, and it may well be that structural change is feeding into the economy, and because of that we may need to get more used to normal interest rates, and normal interest rates tend to mean a normal boom.
Whether a 90s boom or a roaring 20s or a 2020s boom, or maybe no boom at all, is to be seen, but don’t get too caught up in doom as it can be a trap.
Ukraine is winning, and some children’s playground won’t change that. There’s winter now in a few weeks for Ukraine, and so they may get a much needed rest, and then we’ll see what these new Russian conscripts can do but it has all gone much better than anyone expected and that’s because there are clearly fundamental structural problems in Russia if they need to spend 1/3rd of the government’s revenue on running from Ukrainian soldiers.
Yes, yes, no mock Putin or nukes, except Ukraine has a nuke umbrella with China. Now we’ve seen the Russian signature means nothing, but if a conventional army can’t win conventionally, then it just can’t win.
Where commodities are concerned, thankfully earth produces plenty of them, so they’re not fixed in supply. The overlooked here instead may well be whether overproduction is in the cards due to expectations of high prices.
Where interest rates are concerned, bulls now may even want to cheer them higher, as stupid as that sounds, because something breaking may make Fed do a Bank of England.
And for inflation, well to solve that you just stop printing the numbers as they did for covid. Because inflation has been a bit more politics than economy, and if Fed really wanted to change course it can just interpret the inflation data however it wants.
Now we understand to some extent why they’ve done what they have, and we might not even disagree with it, but at this point when you start asking just how much room they really have to go up further, you might also start to consider that interest rates are maybe an old story.
The new story is that we’re nearly one year into the bear and so far at this point the worst has usually been over. No one can time anything however and of course the past doesn’t mean the future, but there is a bit too much FUD and we’re just waiting for everyone to get tired of it.
Because at this stage, as the lady said, the bears may turn if they want to, the holders are not for turning.
Some however may, to buy lower, but it may be precisely at that point that there is no more lower as the time to sell was almost a year ago. The time to buy will be at some point. When though, is not quite our business.