A few years ago, there was a musical play on Broadway called “Stop the World – I Want to Get Off,” and today, it seems that situation is repeating itself.
Beginning with the political aspect, the performance of the financial markets, the Covid rebound, and now the monkeypox and the tsunami of new populist governments around the world, there seems to be no way to find peace and tranquility anywhere.
The impact of the Supreme Court decision regarding returning to the states the ability to legalize abortion or not, the raid on Trump’s papers, the trials over the Washington riots of January 6, 2021, the conflict in Ukraine, the shutdown of many Chinese cities due to the resurgence of the pandemic, the energy crisis in Europe due to the shortage of natural gas from Russia and the possible imposition of sanctions on Mexico for violations of the USMCA are examples of the uncertainty that has the world upside down.
The United States is only two months away from the mid-term elections. The polarization of both parties is such that there is no option to elect someone from the center who will satisfy, even moderately, the voters.
President Biden continues to manifest severe cognitive impairment and the attempt to win votes by attacking Republicans by wrongly accusing them of being semi-fascists, while at the same time proposing student debt reduction at a cost that could reach a trillion dollars, defeats the 2020 promise of being a reunification president and whose purpose was to create an inclusive government for all U.S. citizens.
In my opinion, Biden will not seek re-election in 2024 for health reasons, and the Democrats have a very poor bench from which to select a candidate.
On the Republican side, I hope it is not Trump who seeks the presidency, although his policies were sound. The country was stable under his administration, but his personality bothered many people, and I think it would be a detriment to the party rather than a support.
One study that I thought was interesting to comment on is that it was calculated that the cost of growing a baby born in 2016 until they turn 18, including food, clothing, education, and health is $305,000, a figure that few parents look at when having a child.
Europe brings many problems stemming from inflation worse than North America, a severe economic slowdown due to both lack of consumption and energy shortages. We see how governments such as England and Italy have fallen and are now searching for new heads of government.
England reached a frightening 20% inflation last month, and Germany had a trade deficit for the first time in 40 years, situations that caused the dollar to be worth more than the Euro for the first time since July 15, 2002. Interesting to note that Germany reversed the closure of its nuclear plants for fear of not having natural gas to generate electricity.
China continues with zero tolerance for Covid, and almost 60 million citizens are in quarantine. It is one of the few countries (along with Turkey) that is lowering interest rates to try to achieve growth, as the contraction of its economy has been very strong. There are rumors of no growth, although the government will never accept that the increase is less than 3%. They cannot deny that unemployment among 16-24-year-olds is 20%, a dangerous powder keg.
Mexico remains very polarized, as President Lopez Obrador has continued his attacks on “neoliberals”, all those who have university degrees or have been successful in their professional lives; support known drug traffickers and other criminals, who “have the same rights as all citizens”; the policy of hugs and not bullets, which is incongruent with removing the police from the protection of citizens and giving it to the national guard under the control of the army. Infosel gave AMLO a bad grade on education, security, and the economy.
Mexico’s manufacturing statistics are up, but confidence is down. Incidents such as the burning of 25 OXXO stores in Guanajuato, the attack of the Bishop of La Paz against AMLO for insecurity and less access to health care, and the inexplicable declarations of the Mayor of Tijuana saying that the riots and closures in the city only affected those who did not pay their extortion fees, the direct attacks against the president of the PRI, Alejandro Moreno, are all examples of the instability that affects the daily lives of citizens.
One problem that concerns me is the murder of journalists in Mexico, a situation that has been commented on around the world and has raised concerns among foreign investors.
From an economic standpoint, the United States continues to have very low unemployment (3.5%) and more than twice as many jobs open as people are looking for work, which is positive. At the same time, there is unacceptable inflation of 8%, which is not only attributable to the problems in the production chain resulting from the pandemic.
The increase in the price of energy, together with the rise in food prices due to the combination of drought and low yields in the United States, in addition to the reduction in wheat exports from Ukraine, has forced the central bank to take a much more aggressive position in increasing interest rates. There is a clear shift from promoting economic growth to fighting rising prices, which is already creating a housing recession and could lead to a general slowdown in early 2023, which I believe would be shallow and relatively short.
It is interesting to note that a year ago, a queue of ships to unload in Long Beach, California, reached 109 in a row, and on August 30, that number was nine ships.
The consumer confidence index peaked at 55.1, up 3.6 points from June this year. This increase was even though the ability to buy a home dropped to a 40-year low (due to a combination of rising prices, rising mortgage rates, and wages that have not increased proportionately), as well as deterioration in retirement funds resulting from the downturn in the markets.
It was interesting to see how the large retail chains reported a bad quarter due to excess inventory as projected sales did not materialize and the need to sell more merchandise at discounts that will affect profit margins in the coming months.
An interesting fact is that 5% of car sales in the United States in the second quarter of the year were of electric vehicles, and in China, this figure was 25%, a much faster pace than was projected just a year ago.
In Mexico, Coneval stated that the basic food basket increased 12.2% in the last year and that 38.3% of the population does not have the resources to acquire these products, putting them in extreme poverty.
On the other hand, the Mexican government invested 23 billion dollars in containing inflation because if it had not done so, the price increase would have been 2.8% higher than it was.
Tortillas, the most consumed food in the country, went from $19 to $26 per kilo, aggravating the problem for low-income consumers.
Economic activity in the second quarter increased only 0.3%, and the year is expected to end with a growth of 1.6% over 2021, a meager figure considering that last year was not good because of the pandemic.
The trade deficit in July was $5.96 billion, one of the highest in history, even though oil exports grew due to higher prices, gasoline imports negatively affected the balance.
It was interesting to see how the CFE is beginning to install telephone and internet cable in direct competition with Carlos Slim’s companies, inconsistent with the businessman’s apparently very good relationship with the government.
Israel projects that its economy will grow 4.9% in 2022 and 3.5% in 2023, with an inflation of 2.4% this year. Exports will reach $165 Billion in 2022, the highest level in history, 15% above the previous year. Breaking this down, Europe is the leading trading partner with 22% of the total and Asia in second place with 13%. The United States, with 9 billion, is equivalent to 5% of the total.
Interesting to compare GDP per capita, which is $63,543 in the United States, $54,690 in Israel, and $8,917 in Mexico.
Financial markets had a bad August compared to July as the stock market lost about 50% of what was recovered in July, U.S. bonds were down 3% as the treasury note rate hit 3.20%, and only emerging market bonds had a positive return.
Bitcoin dipped below $20,000, gold closed at $1,725, and oil closed at $90.00 a barrel. The dollar hit a 5-year high, although the peso held up very well.
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