Sustainable Future Outlook:

• But there is a risk to thinking that China will seriously act at all in any time in the near future on climate change.

• As China is likely to build itself up strategically through creating a “hard” currency by recycling its energy spending with its energy suppliers into rising RMB against the dollar and a rising equity market, it will be unlikely that China will make any meaningful progress on the climate change front.

• Therefore – Macro ESG’s assessment from China’s likely set of incentives based on 2nd and 3rd order changes through integrating markets, politics, and technology for a sustainable future – China will not want to upset its client energy suppliers with a big push to decarbonize.

• In a sense, Chinese elites will have been captured by the hydrocarbon elites much like the Republican party has in the United States.

The similarities between what happened in Beirut and what is happening with climate change and biodiversity collapse are striking.

Like Beirut, the world has a bomb of climate change and biodiversity collapse risk metaphorically sitting in a warehouse by the port too and, literally, nobody wants to deal with it. Many complaints have been filed with governments by scientists, activists, and the public about this huge risk and yet it is still there, many years on.

The world, like Beirut, is run by competing interests but the way the game is set up, nobody is going to do anything about climate change and biodiversity loss until it is too late and the proverbial climate bomb has gone off.

This is a negative feedback loop – the virus continues to soar, so the economy is dead and the government stimulus lifeline that was keeping consumer spending stable is about to take a hit. So, the economy will decline, and the virus will continue to grow as people are continuing to interact outside of their homes looking for work. It will just continue to get worse and worse until after the elections when the new President calls for a lockdown.

OIL  US production is coming back online in a big way via the FT. I can’t see any reason for the Russians and the Saudis not to push the price down again. However, with all of the talk of Russian and Chinese interference in US elections, it’s possible that the two biggest players in OPEC+ might just want to sit on their heels and let the election slide by before beginning open market operations again. I’m revising my opinion on Oil – the market will likely drift until the election and then the price will start to sell off gradually. Any rallies are traps and to be avoided. 

We Are At an Inflection Point

The markets today are on a knife edge. The whole lattice of politics, elections, technology conflicts, China, and virus can be seen clearly in the trading of the USD, the SP500, the Nasdaq, crude oil, and the 30-year yield.

Disaster could be averted, but the flow of bad news a-la the virus is so negative and not likely to diminish that it looks like the whole system is about to roll over.