Wednesday Night #2054 with Peter Berezin

Written by  //  July 28, 2021  //  Wednesday Nights  //  No comments

Welcome back Peter!
In his latest weekly report, Peter notes that Investors Are Asking The Wrong Question About Inflation
• Investors keep asking whether the recent increase in US inflation is transitory. However, this is the wrong question to ask. Annualized core CPI inflation reached 10.6% in the second quarter. There is little doubt that inflation will fall from such elevated levels.
• The key question that investors should be asking is whether inflation will decline more or less than what the market is discounting.
• The widely watched 5-year/5-year forward TIPS inflation breakeven rate has sunk to 2.11%, below the Fed’s “comfort zone” of 2.3%-to-2.5%. Thus, the market already expects a substantial decline in inflation.
• Our sense is that US inflation will come down fast enough to allow the Fed to maintain a highly dovish policy stance, but not as fast as market expectations currently imply.
• As inflation surprises on the upside, long-term bond yields will rise. This should revive bank shares and other reflationary plays.
• The combination of a weaker US dollar, faster sequential Chinese growth, increased vaccine supplies, and favorable valuations should all help EM stocks later this year. Go long the Vanguard FTSE Emerging Markets ETF (VWO) versus the Vanguard S&P 500 ETF (VOO).

On Tuesday, the IMF published a July 2021 update to the World Economic Outlook
Fault Lines Widen in the Global Economy

Should we exhaust those topics, we might move on to a global economy concern touched on last week: the current scarcity of goods, including microchips, due to interruption of supply chains.
See The COVID-19 pandemic has revealed that global supply chains are a huge house of cards and
From ports to rail yards, global supply lines struggle amid virus outbreaks in the developing world and
Global supply chains buckle as virus variant and disasters strike

Mary Simon officially becomes Canada’s first Inuk Governor General
“I was born Mary Jeannie May in Arctic Quebec, now known as Nunavik. My Inuk name is Ningiukudluk. And prime minister, it means ‘bossy little old lady,'” she said.
Globe & Mail Photos of Mary Simon installed as Canada’s 30th governor-general
Where would we be without Conrad to critique and add to our vocabulary?
Conrad Black: “To borrow a clangorous platitude from popular psychology, Canada has to address its problem of low self-esteem.”

Last week, we mentioned the lack of media interest in the world beyond Canada-U.S. including a number of international developments, and consequent inaction of the government.  Jeremy Kinsman and Larry Haas spoke of  Canada’s  failure to act swiftly to resettle Afghans who worked for the Canadian government in Afghanistan. Thanks to  Canadian Veterans for stepping up to the plate
Now, we would add to the list of neglected issues Tunisia and Lebanon.
But events in those countries pale in comparison to the revelations of the congressional hearing into the January 6 siege of the U.S. Capitol which began on Tuesday with testimony from two Capitol Police officers and two Metropolitan Police officers. Lawmakers questioning the officers had them walk the members through horrific video footage taken from the officers’ body cameras.
If you have not seen the compilation of video coverage of the siege assembled by the New York Times Day of Rage: An In-Depth Look at How a Mob Stormed the Capitol, it is a must.
Jeremy Kinsman and Larry Haas concur that the congressional hearing cannot be deemed a success if it does not result in reconciliation of the opposing sides – sadly, highly unlikely [As Jan. 6 hearings begin, Republicans side with the terrorists]. They then turn to what Jeremy terms  The curious case of Canada opening its border to vaccinated Americans, while the US does not reciprocate, each claiming to be “following the science.” Jeremy forcefully makes the case that science plays no part in the decision in either country – in both cases the reasons are purely political with Trudeau hoping to boost his standing in southern Ontario ahead of an election call on either 10 or 17 August. (More on that topic from Politico Canada: Trudeau shops for votes in Atlantic Canada)
In anticipation of the forthcoming election, Andrew Caddell warns “The one message politicians are ignoring is the prospect the election result could be influenced in some way by foreign agents. Which, given the concerns expressed about Russian and Chinese influence in the 2020 U.S. election, should be top of mind for Canadian political party leaders and their brain trusts…. Every Canadian must do their own due diligence: if they suspect attempts to influence our elections, they should report them to CSIS. The Trudeau government should be running an extensive ad campaign to get this message out. Instead, it is silent. It is another example of its unmitigated failure to accept the mantle of defending our democracy.”

The Biden administration efforts to ensure vaccination of as many as possible have reached an apparent stalemate, although some Republican leaders, like Alabama governor Kay Ivey have reversed course and Mitch McConnell aims to boost U.S. Republican vaccination rate by countering ‘bad advice’. (See Stephen Colbert Agrees With Mitch McConnell)
The Delta Variant Is the Symptom of a Bigger Threat: Vaccine Refusal There are almost as many reasons for vaccine hesitancy and refusal as there are unvaccinated Americans. But this problem, not the variant, lies at the root of rising infection rates.

The major news from the Olympics (aside from Canada’s women athletes who have won all of the 9 medals claimed so far by Canada) is American gymnast Simone Biles’ withdrawal from Thursday’s all-around competition to focus on her mental well-being. Coverage has been sympathetic, supportive, and full of praise for what was a courageous -and certainly agonizing- decision, with many deploring the treatment of athletes by coaches and national associations as commodities to be pushed to the limits of their endurance.

We would guess that brother Andrew Molson had a hand in crafting that letter. Habs owner apologizes after days of criticism. Will this satisfy fans -and sponsors?

For those who were unable to watch the QCGN Webinar, French, English & “les autres,” Perceptions and Realities with President and CEO of the Association for Canadian Studies, Jack Jedwab, to watch or share it within your networks, please click here.

While the media gushes over the Flights of the Billionaires, we have been reminded that the first privately funded human spaceflight took place on 21 June 2004. SpaceShipOne was designed by celebrated aeronautical engineer Burt Rutan. In July 2005, it was announced that “Sir Richard Branson, has teamed up with aerospace designer, Burt Rutan of Scaled Composites to form a new aerospace production company. The new firm will build a fleet of commercial suborbital spaceships and launch aircraft.”
BBC recounts the saga of Richard Branson’s long, winding path to space.
Some worthwhile arguments on the current debate: Why the billionaire Space Race is something to cheer
(CAPX) The reactions to Branson and Bezos’ trips have been predictably negative. Criticisms fall into three broad camps:
Space exploration is a waste of money. With so many pressing needs here on earth it’s wrong to pour billions into what is essentially a vanity exercise.
If they’ve got so much spare cash, why don’t they pay their taxes and treat their workers better.
The commercialisation of space travel is wrong and will just lead to yet another industry offering expensive perks to the super-wealthy.
There is actually a fourth category of criticism which boils down to ‘I really, really, don’t like these people’, which is perfectly reasonable but not particularly relevant or useful to debate … More

Long Reads & Listens
Cleo Paskal: What China Doesn’t Want You to Know About the Indo-Pacific
How the U.S. and its allies respond to China in the Indo-Pacific could have major repercussions for decades to come. That’s because China is trying to get a foothold in the area, and if the U.S. and its allies don’t increase their presence there, China will —with very real consequences for geopolitics, national security and trade.

In Lebanon’s capital, a physical and political emptiness prevails, while the people manage to make do

The COVID-19 pandemic has revealed that global supply chains are a huge house of cards

Despite an annoying self-satisfied tone, Andrew Tanner presents convincing arguments. We are hoping that Heather Cox Richardson will comment.
Fourth America is Almost Over — Americans Want a Divorce.
Andrew Tanner
…  the results of recent polls by Bright Line Watch have provided the first hard and frighteningly conclusive evidence that Americans are moving fast down the road I predicted—towards a national divorce.

Varia
Canada is deporting its ‘guardian angels’
Many asylum seekers in Canada, who served as essential workers at the peak of the COVID-19 pandemic, are now facing the threat of deportation.

The U.S. withdrawal from Afghanistan has evoked many comparisons to the retreat from Vietnam. Thanks to Anne Lagacé Dawson for sharing this post:
“Remember the photo of a 7 year old girl running naked down the road during a South Vietnamese attack? This Pulitzer Prize-winning photograph titled, “The Terror of War” has an update. The girl, Phan Thị Kim Phuc, suffered severe burns from the attack. The very same photographer Nick Ut saved Phúc’s life by rushing her to the nearest hospital and demanding treatment holding his American press credentials. Phan Thị Kim Phuc is now 51 years old and now a doctor and mother of two. She has finally overcome the events of the photo. …  as a teenager, Kim Phuc was accepted into medical school but was forced to quit because of the new communist regime. Ultimately, in 1982, Vietnam’s prime minister sent her to Cuba to study medicine.”
I did not realize that Kim Phuc now lives in Ontario. More from Wikipedia about her extraordinary life.

Walmart now offering free college tuition and books to its 1.5 million U.S. employees
It turns out this is not a spectacularly generous offer.

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