Central Bank Gold Buying At Highest Since 1950s, As 30% Of World Economies Are Now Sanctioned By The G7
Optimists were assaulted by Friday’s data, the Eurozone manufacturing PMI down to 45.5 despite subsidies, stimulus, and lower energy, and the US only 50.4 despite being ‘back in the factory business’. Services PMIs were better but that’s where much core CPI is located, so suggested stagflation; as did Japan’s core CPI at 3.8% y-o-y; as did UK retail sales with food prices at a 45-year high - as the Financial Times noted, the BOE won’t get CPI back to 2% until that is back under control: but it can’t control it. There was also a battering from the geopolitical sphere:
The G7 may ban all exports to Russia; Russia warned the Black Sea Grain Deal will end if G7 approves ban on exports to Russia. The G7 ignores this threat requires closing third party loopholes, as with Russian imports.
Russian state TV discussed plans to rule the world after winning a nuclear war’, saying, “the territory of the former Ukraine… should be simply liquidated as a nation…. Then it can be decided what to do with the lands and the people," and that Moscow must train new European leaders favoring Russia(!) Russia also warned South Korea if it arms Ukraine, it will arm North Korea.
Head of the US Joint Chiefs of Staff stated the US will have to double its military spending if Russia wins in Ukraine, calling into question the rules-based world order.
The US said it will introduce capital controls on investments into China. So, tariffs inward capital controls > outward capital controls, as predicted in 2017. Expect these to widen from initial AI/tech over time, as tariffs and sanctions both did.
Treasury Secretary Yellen stated: “We do not seek to “decouple” our economy from China’s. A full separation of our economies would be disastrous for both countries… the world is big enough for both of us,” and not “zero sum.” However, she also said the US would always put its national security first, even at an economic cost. To her, this was olive branch; but Beijing still sees it as a stick, saying the US wants to strip it of its right to development to maintain global hegemony.
A US Congressional committee claimed a war game on China invading Taiwan shows the need for 'decisive action' to boost arms, and its head stated "The business community is not taking the threat of a Taiwan crisis seriously enough… [verging] on dereliction of fiduciary duty".
Logistics magazine gCaptain says ‘China’s Plan For Taiwan Invasion Is Not A Secret’, as projected 2030 US – China navy strength from @Tshugart3 shows the US little changed but the PLAN 50% larger in vessel count, if not total tonnage.
China’s ambassador to France stated no post-Soviet states have status under international law. That contradicts Beijing’s official position but raises questions if “legitimate security interests” now do exactly that. A joint Baltic-states protest to China will be made today; even beforehand, Italy was planning to distancing itself from China’s Belt and Road.
’Chile will nationalise its huge lithium industry. Like Indonesia and the Philippines (nickel), OPEC+ (oil), and China (rare earths), Chile is intent on controlling supply and moving up the value chain. Which way will Chile lean if there is a geopolitical choice of export destination?
The Central Bank of Argentina is, by some reports, out of dollars and might even have dipped into private-sector dollar accounts. USD/ARS was 218.51 Friday (and more than double that on the black market), +979% since 2018, with CPI over 100% y-o-y and rates at 81%. President Fernández's announced Friday that he won’t seek re-election this year, so the future is uncertain. Could new leadership see Argentina shift from USD to CNY, or to dollarize?
Egypt, home of the Suez Canal, is on the same crisis path, with no dollars and local hyperinflation, as next-door Sudan sees Western nations struggling to evacuate their embassies.
https://www.zerohedge.com/markets/central-bank-gold-buying-highest-1950s-30-world-economies-are-now-sanctioned-g7