"Be quick to hear, slow to speak", Action Speaks Louder Than Words

Week ended September 15, 2023, interesting news items to look at this week were:

1. “Be quick to hear, slow to speak”, Action Speaks Louder Than Words: The first two weeks in September were rather busy in terms of international missions and diplomacy. The ASEAN Summit kicked off from 4 to 7 September 2023, in Jakarta. Then the G20 Summit in New Delhi on September 9-10 followed by the Eastern Economic Forum on 10–13 September 2023 in Vladivostok. When Presidents Xi and Putin did not turn up at the G20 meeting, Western MSM had a field day portraying Xi being too busy in defending political criticisms at home and fighting fires in the Chinese economy There were also multiple articles on the same talking point that Xi’s absence was to snub Biden and Modi at G20. I have a different perspective because such wild speculation by MSM on such petty squabbles would mask a genuine understanding of important changes in geopolitics.

(i) G20 no longer relevant - The first G20 Summit was called in Washington in 2008 following the Global Financial Crisis (“GFC”). The West was to enlist powerful Eastern economies to help Wall Street’s and London’s disastrous financial market fiasco. The selection of who gets into G20 was not the then ranking top 20 countries in terms of GDP, but rather it was G7 plus a carefully few of Asia and Middle East countries plus others friendly to Washington such that Washington could comfortably maintain a majority voice over G20. (Fig. 1) is the current ranking of countries by GDP and you can see the G20 inclusions and omissions was rather arbitrary.

G20 had served its purpose as Washington and London received their bailouts but turned to bite the hands of the philanthropists. The G20 Bali 2022 Summit already turned into a puppet theatre with Zelensky on parade, so why would Xi and Putin lend their time for mere western optics. On the other hand, BRICS and especially the expanded BRICS+ is a non-allied grouping of emerging economies to champion the plight of the Global South. BRICS+ aims to stand tall against old Colonial masters, against the unipolar “rulers based international order”. To many astute observers, BRICS+ is set to become the tip of the spear for reforms of a more equitable world including reforming the UN and other supranational institutions.  

(ii) Eastern Economic Forum (“EEF”): Few in the West appreciate the significance of this year’s EEF.  I posted two charts last year dividing the World’s Oil & Gas Marginal Supply and Demand between the Western Hegemons and the Global South. Fig. 2 is a chart for Gas

and Fig. 3 for Petroleum.

One can see the closest and most efficient supplier for Europe’s energy needs is Russia but sadly Europe fell into a trap set by the Anglos Americans to turn hostile against Russia. At the 2023 EEF, when Russia made a strategic realignment to divert its energy resources to the East through new pipelines and new Arctic Ocean Shipping routes, it spells disasters for Europe.(Fig 4).

A September 11 2023 article in the Economist headlined “Germany faces a looming threat of deindustrialisation” spells out exactly this point. (Fig. 5).

On September 9, Reuters revealed Russia is selling gas at prices some 50% below those offered to Europe and Turkey. Uninterrupted abundant and very competitively priced energy to China is the unintended consequence for the Dollar Hegemons’ hostility against Russia and China. When one have such moronic enemies like the Anglo Americans, one surely can comfortably concentrate one’s energy into innovation, diplomacy and extend a hand to those in need.(Fig. 6)

(iii) The Enemy of My Enemy is my Friend: This ancient wisdom is as true this week when Kim Jong Il visited Russia and Maduro visited China. ( Fig. 7).

But more about its significance in the next paragraph.

(iv) Smoke Screens and Mirrors or Globalization 2.0: For those who belittle the Global South is just a conglomeration of poor countries, I would caution an everything financialized economy is but a virtual economy. China’s initiative in BRICS, OBOR and Community of Common Destiny has received near world-wide support in just 10 years was a recognition of what China says is not ideological slogans but workable solutions. China recognizes no country is totally self-sufficient in terms of Food, Materials, Energy or Innovations. In G7’s Globalization 1.0, it was just exploitation of third world countries’ resources and labour. With China’s dependency in food, energy and materials but rich in innovations, China set an example of sharing technologies at “cabbage prices (白菜價)” such that each country’s unique gifting in a particular area of resource can reap its due reward. (Fig. 8).

It is a long road ahead but the rise of China into world’s number one industrial power without aggression and exploitation is her credential. In terms of Energy(Russia, Saudi Arabia, Iran, UAE), Food(Russia, Brazil, Argentina), Materials(Russia, South Africa), Innovations(China, Russia, India), Strategic Demo Sites (Ethiopia, Egypt). (Fig. 9).

Currencies are but a medium of exchange, so when one control the source of materials and goods to trade, the perceived power of a currency becomes irrelevant. Sadly this lesson is still not taken to heart by the Western Hegemons when sanctions against Russia backfired.

2. Huawei and Apple: This week’s media is buzzed with excitement on comparing Apple i15 with Huawei’s Mate 60. The West still has not catch on the fact by blocking Huawei 5G development in their home country, they have missed the next generation of “Everything connects to everything else (萬物互聯)”. In terms of Moore’s Law, we are coming to a finite physical limit and so the additional functionality of even the most powerful 1 um chip in a compact cellular phone is loosing its luster. So sad people beat a single tree to death but missed an entire forest. (Fig. 10).

This week, the top trader in JP Morgan also had a sombre call against too much hype in AI. (Fig. 11)  

3. Definite Turn in the Ukraine War: (i) Blinken contradicts Ukraine on peace negotiations (Fig. 12);

(ii) EU states tell Zelensky they won’t hand over draft dodgers (Fig. 13);

(iii) Russia Overcomes Sanctions to Expand Missiles Production. (Fig. 14). At the peak of the Summer Ukraine counter offensive, Russia still outgun Ukraine in daily sorties by a factor of between 5 to 10. Independent military analysts reported all of AFU trained brigades have been decimated.

This week’s financial markets:     

A. Stock Market: (Fig. 15): Dow closed at 34,618 for the week, a gain of 42 points or +0.12%. S&P 500 -0.25% and NASDAQ -0.73%.

Mid week, Wall Street in response to further China monetary stimulus bid up stocks but quickly receded as bond prices continued to drop. Apple stocks fell another 2.85% as i15 showed no excitement. AI darling stock Nvidia was marked down 4.84% for the week. Cloud darling stock Microsoft down 2.08%, 

B. Debt Market: (Fig. 16): USGG10YR ended the week at 4.264%, a rise of 9 basis points.

Bond prices was bid up mid week in response to further China monetary stimulus but higher bond prices was greeted with renewed selling and ended the week with a yield increase of 9 basis points. The economy has not slowed to a recession level as the Federal Reserve monetary tightening was countered by huge fiscal deficits running at 8% of GDP. Jeff Gundlach, the New Bond King, said running a war time fiscal deficit when the country is at peace will have disastrous consequence and expect a very severe recession in 2024 when a substantial portion of US Govt borrowings will have to be rolled over from 1.5% to 4.5%, and interest expense for US Inc. will shoot to stratosphere (my paraphrase). My observation is the western financial market still think high interest rate is a Federal Reserve Policy Option to fight inflation and the Fed can switch to QE as circumstances permit. USGG2YR is therefore tracking very closely the effective Fed Funds Rate. (Fig. 17).

The truth of the matter is, US & UK has to offer an interest rate in the same tier as Indonesia and Saudi Arabia, (higher than China, Japan, South Korea, Singapore, Canada, Australia and the Euro Area) (Fig. 18) to ensure capital is not going anywhere too fast in the midst of a global dedollarization movement.

The time bomb for a USD implosion has very short fuse. See more elaboration on this topic in the next paragraph.

C. FX, Commodities and Precious Metals: Trading results for the week: (Fig. 19)

Uranium (+17.54%), Oil (+4.08%), Bitcoin (+2.32%), Rubble (+1.22%), Rmb (+0.95%), Silver (+0.50%), Gold (+0.18%), JPY( 0.06%), S&P 500 (-0.25%), Euro (-0.45%), GBP (-0.70%), NASDAQ (-0.73%), Energy (Uranium and Oil) are galloping ahead despite the western economy begin to slow. I purchase my first Uranium stock as a long term holding in October 2021, the stock sat quietly until the Niger coup and has not looked back. With EV gathering momentum, there is no real alternative to increase electricity supply except nuclear. I expect Uranium to do very well in the coming seasons. The next to watch is gold, basically the Shanghai Gold Exchange is to centre for physical gold trading with London and New York faking it through paper derivative trades, particularly through price suppression to give USD an appearance of strength. This week the price of physical gold in Shanghai begins to break out against the London/NY centric paper price. (premium of over US$100/oz). Expect fireworks next week asmLondon/NY has lost control of the international gold price and will need to cover their very short paper position or be in default. (Fig. 20).

Welcome to a East/West financial war in full swing.

^{James 1:19}  So then, my beloved brethren, let every man be swift to hear, slow to speak, slow to wrath; ²⁰  for the wrath of man does not produce the righteousness of God. ²¹  Therefore lay aside all filthiness and overflow of wickedness, and receive with meekness the implanted word, which is able to save your souls. ²²  But be doers of the word, and not hearers only, deceiving yourselves. ²³  For if anyone is a hearer of the word and not a doer, he is like a man observing his natural face in a mirror; ²⁴  for he observes himself, goes away, and immediately forgets what kind of man he was. ²⁵  But he who looks into the perfect law of liberty and continues in it, and is not a forgetful hearer but a doer of the work, this one will be blessed in what he does. ²⁶  If anyone among you thinks he is religious, and does not bridle his tongue but deceives his own heart, this one's religion is useless. ²⁷  Pure and undefiled religion before God and the Father is this: to visit orphans and widows in their trouble, and to keep oneself unspotted from the world.