Wednesday Night #2193 with Peter Berezin

As always, we are delighted to have Peter Berezin with us for the pre-Easter WN and anticipate his comments on the effect of the Baltimore Key Bridge collapse on the US and world economies; and possibly some reflections on the importance of Daniel Kahneman, the Nobel laureate who upended economics, who died today (Wednesday 27 March) “He found that people rely on shortcuts that often lead them to make wrongheaded decisions that go against their own best interest”
In addition, we look forward to Peter’s expanding his 9 March observations:
• Many investors have latched onto the 1994 tightening cycle as an example of how the Fed managed to raise rates without triggering a recession. Unfortunately, the parallel between now and then is not as close as one might wish.
• The Fed hiked rates in 1994 because it (mistakenly) thought that the economy had returned to full employment, even though the unemployment rate was still 6.5%, wage growth was weak, and both realized inflation and inflation expectations were trending lower. In that sense, the 1994 tightening cycle was somewhat gratuitous in nature.
• Today, there is no shortage of evidence that the US economy is, in fact, at full employment, which means that the Fed will need to tread cautiously in cutting rates.
• Productivity growth surged in the second half of the 1990s, which put downward pressure on unit labor costs and inflation. Although there is plenty of hope that the proliferation of AI-based technologies will power a comparable productivity boom, so far this is not evident in the data.
• Then there is the issue of valuations. In 1994, the S&P 500 was at most modestly overvalued, whereas today it trades at a 41% premium to its structural fair value, according to our MacroQuant model.
Bottom Line: The US economy is closer to 1999 than 1994. We think a recession is likely later this year or in early 2025. We moved from overweight to neutral on stocks at the start of this year and will be looking to our MacroQuant model for guidance on when to turn underweight.

The tumult and the shouting about the Right Honourable Brian Mulroney’s death and funeral are (mostly) over, and other (world) events have taken over the headlines.
Policy Magazine’s Online Series: Remembering Brian Mulroney is a treasure trove of memories from friends and sometime foes, including Jeremy Kinsman’s Brian Mulroney, a Canadian Leader of International Consequence. “Mulroney had things to say to his peers,” writes Kinsman, “and some were harsh when necessary, as on the necessity of crushing apartheid.”
‘Leader of International Consequence’ – that is what we miss today – Canada has no more leaders of consequence either nationally or internationally.
Possibly the final word on the Mulroney funeral is from Politico Ottawa Playbook He stole the show – Leave it to Brian Mulroney to steal the show at his own funeral.

Russia
Foremost is Friday’s horrific terrorist attack on Moscow’s Crocus City Concert Hall which Vladimir Putin insists on attributing to Ukraine -and  ‘western’ interests. Putin is turning Moscow’s tragedy into opportunity. There is an alternative view that suggests that Putin himself might have been the architect of the tragedy – leading from such conjecture as Moscow attack: How Putin could use the concert hall massacre to his advantage
Peter Frise has forwarded The Military Show’s video compilation Analyzing Russia’s Massive Failures in War Against Ukraine, dated 27 January – has there been significant change?

On Tuesday we woke to the news of the Baltimore Key Bridge collapse after being rammed by the Singapore-owned and flagged container ship Dali.
What we know and don’t know about Baltimore’s Key Bridge collapse
The ship was able to send a MayDay that enabled quick-acting bridge staff to save many lives when they halted traffic and cleared the bridge after the warning – about 90 seconds before the bridge collapsed.
Inevitably, conspiracy theorists surfaced immediately (Online conspiracy circles galvanize to proclaim Baltimore bridge collapse a ‘black swan event’) however President Biden assured the country that there were no indications of a terrorist attack or anything other than a devastating accident.
It’s not just Baltimore with a bridge problem The impact on global trade and maritime shipping is serious. See how the Key Bridge collapse will disrupt the supply of cars, coal and tofu

Israel, Hamas, Gaza
On Monday, the UN chief said there was growing consensus to tell Israel that a ceasefire is needed, following which the Security Council has done so, passing a resolution calling for an immediate ceasefire in Gaza. “The resolution cleverly adopts the formula long insisted upon by the United States, that a ceasefire must coincide with the release of hostages and increased humanitarian access for Gaza.” However, “Security Council resolutions do not implement themselves. No matter how strongly worded the resolution is on paper, the impact of those words is entirely dependent on the willingness of Israel and Hamas to abide by the resolution. And here, it is unclear whether or not the resolution will have a meaningful impact on the ground.” Israel/Netanyahu remains intransigent, Hamas unpredictable, and the US somewhat inscrutable.

2024 will be remembered as The Super Election Year
2024 is seeing national elections in more than 60 countries worldwide. Around 2 billion voters – approximately a quarter of the world’s population – are expected to be heading to the polls this year. 2024 has been dubbed a super election year or even the biggest election year in history – aided by closely watched elections in populous countries like United States, Mexico, India and Indonesia, among others, that will be going ahead this year.
In Africa, This is a Key Year for Democracy – 19 elections are scheduled. Not all will be free or fair.
Most recently, Sénégal voted in a presidential race after months of unrest; The Opposition candidate Bassirou Diomaye Faye has won in a landslide.

The campaign in India promises to be less sanguine. Modi’s dedication to Hindu nationalism is causing friction as
India’s Muslims are an Increasingly Marginalized Population. They have faced decades of discrimination, which experts say has worsened under the Hindu nationalist BJP’s government.
Already some Bollywood films are promoting Modi politics by embracing Hindu nationalism

We have been appalled by the invasion of the privacy of Catherine, Princess of Wales, both prior to her video message and even worse, since, and applaud The Guardian view on the Princess of Wales: she has the right to heal privately
Sadly, for some, there is no decency.

Trump Criminal Trial Is Set for April 15 as His Attempt at Delay Fails
Donald Trump is poised to become the first ex-president to go on trial on criminal charges, in a case related to hush money paid to a porn star.

Canada
The natives (provincial premiers) are growing restless.
What’s behind the carbon tax, and does it work?
Policy has faced plenty of criticism ahead of April 1 increase
With the federal government under pressure to freeze its planned increase to the carbon tax, policy experts are calling for a clear-eyed debate over the legislation and its role in the country’s climate goals.
The current carbon price isn’t high enough to have much of an effect on consumer behaviour, but as the levy rises the incentives to use less fossil fuels will grow, says Christopher Ragan, the director of the Max Bell School of Public Policy at McGill University.
“We shouldn’t be thinking about this over a few months or even a few years — we should be thinking about this policy over the longer term,” said Ragan, who is also the former chair of the Ecofiscal Commission, a group of experts that advocated for a carbon tax.
The April 1 increase will only amount to about three cents more per litre of gasoline. By 2030, though, the price on carbon would add nearly 40 cents per litre. Ragan says the scheduled increases should be maintained, to allow businesses to plan their costs and make decisions accordingly.
Conservative Leader Pierre Poilievre, along with seven premiers, have called for the scheduled hike to be scrapped, saying it will only make inflation worse. The Tories threatened a non-confidence vote against the government over the issue, which failed [last] Thursday. And the Tories are offering what plan?

Budget Day April 16
Freeland promises to ‘unlock pathways’ to middle-class life in April 16 federal budget
“Our economic plan is about building more homes, faster, making life more affordable, and creating more good jobs… because Canada is stronger when everyone has an equal chance to succeed,” Freeland said in a statement announcing the date of the next budget.
Federal government promising a ‘renters’ bill of rights’ in upcoming budget
Trudeau expected to make more pre-budget announcements in coming weeks
Ottawa will work with provinces and territories to develop a “renters’ bill of rights” that would introduce a national standard lease agreement and implement requirements for landlords to disclose an apartment’s pricing history to allow tenants to negotiate their rent.
The new measures will also include a $15-million fund for provincial legal aid organizations that help tenants fight against “renovictions” and landlord abuse.
But, none of the provisions are likely to help the Liberals: Big Conservative Lead Stablizes as Evaluations of Trudeau Government Performance Drop

On Wednesday, Justice Marie-Josée Hogue resumed foreign interference inquiry, warning some details will be kept secret for national security
Commissioner Marie-Josée Hogue opened public hearings Wednesday as part of the inquiry on foreign interference, saying she wants to release as much information as possible about meddling in the 2019 and 2021 elections but warning that some details must be kept secret to protect national security.

Good news we hope Judge confirms plan to restructure Atlantic Canada newspaper chain
Saltwire sought creditor protection earlier this month
A Nova Scotia judge has approved the plan for restructuring Saltwire, the company which owns a string of newspapers in Atlantic Canada, including the Halifax Chronicle Herald, the Charlottetown Guardian and the St. John’s Telegram.

Overlooked as interest in details of the Mulroney funeral became public was the announcement of the death of one of Quebec’s more colourful public figures, Yves Michaud, known as « Robin des banques » for his defense of the interests of small shareholders in a 15-year battle with the big banks. Ardent separatist and defender of French culture and language, he was also an infrequent, but gracious, articulate guest of Wednesday Night. National Assembly honours Yves Michaud, 24 years after censuring him –But the motion does not apologize for censuring him in 2000

Events
French in decline? New perspectives on the issues and challenges of French as a common public language of Quebec society
Apr 04, 2024
From 5 PM to 7 PM
Onsite at the Centre St Jax and virtual
Bilingual conference focused on the future of the French language in Quebec. Inspired by the recently published book Le français en déclin ? Repenser la francophonie Québécoise, this event aims to facilitate dialogue on the challenges facing French as a common public language in Quebec society.
Co-sponsored by The Montreal Gazette and the Fondation Notre Home Foundation, our conference features a conversation with Jean-Pierre Corbeil, Mario Polèse, and Jean-Benoît Nadeau, key contributors to the book. Gazette columnist Allison Hanes will moderate the panel discussion, which will be followed by a Q&A session.
Free attendance. Registration required.

Marc Nicholson and 1880 are “excited to be hosting Deepak Chopra next week for a transformative talk, meditation session, and intimate dining experiences.
He is a world-renowned pioneer in mind-body medicine. Described by TIME magazine as “one of the top 100 heroes and icons of the century,” he has authored over 90 books on meditation, self-discovery, and healing.

Fastest hiring turn-around ever?
NBC News cuts ties with former RNC Chair Ronna McDaniel
The decision comes less than a week after NBC News announced her hiring, prompting an extraordinary public protest from the former host of its flagship Sunday morning political show, as well as from many of the most popular MSNBC hosts.
What was NBC thinking?
Chuck Todd Questions His Network, NBC News, Over Hiring of Former R.N.C. Chair
The veteran NBC anchor Chuck Todd publicly attacked the leadership of his own network on Sunday, questioning why NBC News hired Ronna McDaniel, the former chairwoman of the Republican National Committee.

Lighter moments
Man changes name to Literally Anybody Else and announces US presidential run
Texas man says he is unsatisfied with Donald Trump and Joe Biden and says new name ‘isn’t a person, it’s a rally cry’
Speaker of South African parliament accused of taking $135,000 and a wig in bribes
On one occasion in February 2019, Nosiviwe Mapisa-Nqakula received more than $15,000 and a wig(!) at a meeting at the country’s main international airport, the papers say.

Long reads
Moscow massacre sparks battle of blame
Islamic State’s claim of responsibility for Friday’s terror attack hasn’t halted the clash of accusations between Moscow and Kyiv over the killings.
Global Sanctions Dashboard: How Hamas raises, uses, and moves money
In addition to extorting money from the civilian population of Gaza and receiving varying amounts of annual financial support from Iran, estimated to be as much as $100 million, Hamas has created a global investment portfolio valued between $500 million and $1 billion.
Canada’s foreign correspondents are almost extinct
The news media in Canada is in crisis. Policy responses to date are failing to solve for the information that citizens need to make informed decisions about important issues and debates. … Foreign bureaus keeping Canadians informed about the world beyond our borders have all but disappeared. According to new data collected by The Hub, there could be less than 60 full-time journalists from the major outlets reporting on world events, with 45 of those working for the CBC.

HAPPY EASTER/PASSOVER  one and all!
Be wary of the tempting chocolate bunnies et al.
Cocoa Prices Reach All-Time High: What This Means For Easter Baskets