Mid-Week Updates
Some market analysis, Israel's northern fires, Tiananmen, Hong Kong and Courage
Markets
As I was preparing for a short talk later this week on the state of the markets for early stage investments, I realized that we are facing an incredible level of uncertainty right now. Just consider this:
There are three major conflicts right now: Israel-Gaza-Lebanon, Russia-Ukraine and Taiwan-China. The first two are active and could easily escalate into much larger regional even global wars, the latter is simmering but potentially quite explosive;
Unprecedented political instability and uncertainty in much of Europe and the US. The EU (tomorrow), the UK (July 4) and the US (November 5) are having elections with the potential for dramatic change in each;
Monetary contraction where over-leveraged governments have no choice but to start pulling away from spending and ever larger budget deficits. The room to spend our way out of crises is no longer there.
Yet, the major stock indices like the Dow and Nasdaq are near all-time highs indicating a positive sentiment although high gold and bitcoin prices point to an increasing refuge into safer assets. Following a period of inflation and high interest rates (Canada actually cut rates by 25bp today, the US did not) the world economy overall is actually slowing down a bit with oil prices falling and lower interest rates on the horizon, possibly. My point: there are many different dynamics at play at the same time in a fairly unprecedented way. The markets appear to have priced in the deep uncertainty we are experiencing but given the global turbulence still feel unusually confident. I have no theory or prediction for you, just laying out what is going on right now.
Israel’s on fire
Hezbollah launched major drone attacks on Israel’s north earlier this week resulting is massive bush and forest fires, destroying some 3,500 acres of land. It is not hitting the headlines globally yet in the way they should, but the tension, the attacks, the damage and above all the insane escalation on Israel’s north (where some 100,000 people have been evacuated since last October) continue unabated. And this is prompting calls within Israel to take on Hezbollah by launching a counter-attack that will neutralize the Iran sponsored terror group. Today a major call up of military reserves was announced.
This escalation would in comparison make the war in Gaza a low-level engagement as Hezbollah is armed to the teeth with far better equipment than Hamas has and it could do real damage to Israel’s heartland. It also would bring in Iran in a far more direct way. It may be also why a Hamas deal is being pushed at the moment as Israel will struggle to fight a war on two fronts. But it is ready to engage in Southern Lebanon, they’re increasingly prepared and not new to the territory.
Courage
Yesterday marked the thirty-fifth anniversary of the Tiananmen massacre and up to 2019 people in Hong Kong were free to commemorate this, usually with a large ceremony in Victoria Park in the Causeway Bay area of the city. No longer. Following the Chinese crackdown on every aspect of life in the former crown colony even the faintest, flimsiest protest is crushed in short order. Here is a roundup of what happened yesterday in terms of attempted protests in the Causeway Bay area. Also do take a look at the above video of Hong Kong performance artist Sanmu Chen who used his hands to draw 890604, the date of the crackdown in the air. A swift arrest followed.
That same fate befell a woman yesterday who decided to commemorate what would have been Alexei Navalny’s forty-eighth birthday which is also on June 4. Laying flowers at a memorial resulted in being taken away by police.
These are acts of courage, because no matter how small the offence, political dissenters are marked people in the communities they live. If they manage to get out of prison they will be followed, spied on by authorities and neighbours and they often lose their jobs or worse. Repressive regimes leave absolutely nothing to chance and while some argue that this indicates how weak and uncertain they are at their core, I would argue that they have such immense control that they can terrorize their citizens with impunity for as long as they like.
So related to that, and if you have not already, do take in Bari Weiss’ TED talk which was recorded in April in Vancouver and just released last week on YouTube. A very instructive twenty-one minutes on the art of resistance and courage:
Photo: Today is Jerusalem Day, marking 57 years since its reunification in 1967. The photo is the city viewed in western direction from the Old City, a view you don’t often get as most photos are eastward looking towards the Old City. The large building on the left is the King David Hotel.