Weekly Digest: IMF warning, Trouble in/with China

Investment news

Hate to say we told you so: the IMF has issued a warning that inflation could prove to be persistent, asking central banks to act.

The recent and ongoing increase in prices makes it more and more likely that central banks will start revising their ultra-accommodative monetary policies and slowly start talking about tapering.

The IMF is also sounding the alarm that more financial support from governments could further increase inflationary pressures.

While keeping its 2021 growth forecast at 6%, the IMF has now revised its expectations for 2022.

Wednesday is game day: Gold Vs. the Fed. With a Fed’s interest rate announcement scheduled for today, whether or not the Federal Reserve hint at tapering is what matters most to gold price this week, according to analysts.

"If the Fed's statement contains no indication that tapering will commence in the near future, and if Fed Chair Powell likewise makes no remarks to this effect at the press conference, this is likely in our opinion to weaken the U.S. dollar – which should benefit gold," said Commerzbank analyst Daniel Briesemann.

Trouble in China: the Chinese stock market is experiencing a meltdown which is putting U.S. investors at risk.

“Are they [China] concerned about an asset bubble and they’re letting the air out before it pops hard and does more damage? Or are they the canary that says the recovery has already peaked? Or both? One wonders. If either of these are true, then U.S. equities are at risk of spillover,” says Sven Henrich, founder of NorthmanTrader.com

You can talk trash about Tesla all you want but: Tesla reports more than $1 billion in net income for the last quarter, a tenfold increase from a year ago.

The electric car company created by Elon Musk has beat expectations on every level.

However, Musk said a “big struggle this quarter” was from supply chain issues for key safety modules for Tesla vehicles which ended up limiting the company’s production both in Fremont, California, and Shanghai.

And talking of supply chain…

Supply chain can’t catch a break: After the massive supply chain disruptions caused by COVID-19 and the Ever Given getting stuck in the Suez Canal, the global shipping industry is seeing concerning and possibly long-lasting disruptions by floods in Europe and China.

Broken railways links, including those going to and from international ports, are set to cause important delays and disruptions on the global supply chain: Thyssenkrupp, the German steel-making giant, was already unable to get raw materials due to the flooding.

“That ultimately will have a knock-on effect on industries such as the motor industry, domestic appliances, and things like that,” said Tim Huxley, CEO of Mandarin Shipping.

Opinion

In the mood for a good old SWOT analysis? With gold and precious metals demand running hot, Frank Holmes, CEO of U.S. Global Investors, Inc. has taken it upon himself to do a SWOT analysis. And the results are in.

What else is happening

Solidify like a hard concrete: U.S.-China relations seem to be moving forward to a dead end, after high-level meetings ended on "unreachable" demands from each country.

”I think it’s going to be really hard, so we may see this relationship solidifying like a hard concrete into a rivalry which may be with us for some time,” said Scott Kennedy of the Center for Strategic and International Studies.

A planned Biden-Xi meeting at the G20 Summit this fall could be hope for easing relations between the two countries: “Even if the relationship is not improved one iota, I think that these two leaders own this relationship and they want to talk to each other and explain themselves and see if there could potentially be a pathway forward,” he adds.

To the Moooon! After going to space on his Blue Origin’s New Shepard rocket only a few days ago, Jeff Bezos is trying to conquer the moon by outbidding SpaceX’s preexisting contract with Nasa.

“Nasa veered from its original dual-source acquisition strategy due to perceived near-term budgetary issues, and this offer removes that obstacle,” Bezos wrote talking about his company’s offer versus Musk’s.

In a letter to Nasa, Bezos went further on this rather aggressive stance against SpaceX, stating that Blue Origin would go as far as paying for an orbital mission to vet its technology if, in exchange, they settled on a firm, fixed-price contract.

And finally…

Are YOU a 12-year-old Olympian? The youngest athletes competing in the Tokyo Games are only 12 years old, with others as young as 13, 14, or 15. While not all of them will end up winning a gold medal at the Olympics, who of us can say they’ve participated in the Olympics before we even finished high school?

Tokyo’s youngest competitor was 12-year-old Syrian table tennis prodigy Hend Zaza, who ended up losing her match against Austria’s Liu Jia. The second-youngest Tokyo Olympian is 12-year-old Kokona Hiraki, a Japanese skateboarder, who will compete against Great Britain’s Sky Brown, who just turned 13 this month.

See you next week!