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7 Foreign Stocks All U.S. Investors Should Be Watching

Undoubtedly, the U.S. stock market remains the crown jewel most investors focus on. The returns U.S. stocks have provided in recent years have outpaced…

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This article was originally published by Investor Place

Undoubtedly, the U.S. stock market remains the crown jewel most investors focus on. The returns U.S. stocks have provided in recent years have outpaced emerging markets by a wide margin. However, there are reasons why investors may want to seek out the best foreign stocks right now.

To start, this valuation gap is wider than it’s been in some time. Various high-quality foreign stocks are now trading at significant valuation discounts to U.S. peers. Additionally, some might argue that these companies are in higher-growth regions of the world, with U.S. growth slowing in recent decades.

This backdrop appears to be perfect for value investors seeking reasonably-valued opportunities. However, finding foreign stocks that are both stable (geopolitical concerns have ratcheted up of late) and consistent in terms of their long-term growth prospects isn’t as easy.

In this article, I’m going to highlight seven top foreign stocks I think are worth taking a look at. These companies can provide investors with excellent geographic diversification for those who want to expand their portfolios outside of the U.S. Indeed, “home bias” is real, and can result in investors missing out on some pretty amazing long-term growth opportunities outside our borders.

Here’s a list of seven foreign stocks that U.S. investors should be watching right now.

  • AstraZeneca (NASDAQ:AZN)
  • STMicroelectronics (NYSE:STM)
  • Petroleo Brasileiro (NYSE:PBR)
  • British American Tobacco (NYSE:BTI)
  • Baidu (NASDAQ:BIDU)
  • JD.com (NASDAQ:JD)
  • Rio Tinto (NYSE:RIO)

Top Foreign Stocks to Buy: AstraZeneca (AZN)

Source: Roland Magnusson / Shutterstock.com

The “vaccine stock” discussion is one that seems to be oddly constrained to two main players among U.S. investors. The Pfizer (NYSE:PFE) vs. Moderna (NASDAQ:MRNA) debate is one that’s intriguing to look at. It’s also one many investors have an opinion one.

However, British-Swedish pharmaceutical and biotech company AstraZeneca is a $188 billion juggernaut in this space. It’s a company that’s bene largely ignored by U.S. investors, due to the fact that the company’s Covid-19 vaccine hasn’t yet been allowed for use by U.S. regulators. Accordingly, a lack of headline news provides what may be an opportunity for investors right now.

The company’s Covid-19 vaccine has been extremely successful in other Western countries in Europe and in Canada. Like Pfizer and Moderna, this vaccine growth has provided for a nice near-term shot in the arm for this stock.

However, Astra Zeneca has a rather robust pipeline of popular drugs that make this stock enticing to me. Among the names investors focus on are cholesterol control drug Crestor, acid-reflux drug Nexium and asthma drug Symbicort.

Accordingly, this is a long-term growth play with plenty of upside for investors seeking growth outside of the U.S.

STMicroelectronics (STM)

Source: Michael Vi / Shutterstock.com

One of the international stocks I’ve had on my radar for some time is STMicroelectronics. STM is one of the leading chip manufacturers in Europe, and globally as well. This company’s clientele include among the most popular consumer brands, including Apple (NASDAQ:AAPL), Tesla (NASDAQ:TSLA), Samsung, Huawei, HP (NYSE:HPQ) and others.

Given the various chip shortages investors are reading about, only a small subset of companies make it into American portfolios. STM stock is one key beneficiary of these same tailwinds, though is less in focus for U.S. investors for the reason that it’s based in Europe. The Italian and French governments hold a combined stake of 27.5% in the Geneva-based chip manufacturer.

Rising demand for semiconductors as a result of this global shortage has led to positive second-quarter earnings. STM clocked net revenue of $2.99 billion while the net income stood at $412 million. Net revenue soared 43.4%, while net income jumped 357.2%. STM has also recently launched a share buy-back program worth $1.04 billion for a period of three years.

These sorts of results highlight the value this top foreign stock can provide to investors who are paying attention.

Top Foreign Stocks to Buy: Petroleo Brasileiro (PBR)

the Petroleo Brasileiro (PBR) logo on a building during daylightSource: A.PAES / Shutterstock.com

Brazil’s state-owned oil company Petroleo Brasileiro takes the 181st position among Fortune Global 500 companies at the time of writing. This is the largest oil and gas company in Latin America, and is an upstream as well as a downstream energy company.

As a diversified energy player, Petroleo has benefited from oil prices that are now at multi-year highs. Rising energy prices have resulted in rising revenue and earnings for most global players, and Petroleo is no exception.

The company posted solid second quarter earnings, that comfortably beat Wall Street Estimates. As economies reopened, and oil demand increased, this Brazilian oil company saw its revenue more than double year-over-year. The company’s Q2 revenue came in at a whopping $21 billion, as a matter of fact.

Additionally, the company’s free cash flows tripled on a year-over-year basis. That kind of cash flow growth is what fundamentals-oriented investors want to see. With cash flows ballooning to $9 billion, and net debt coming down by 25%, as well as a dividend that’s on the rise, this is one of the foreign stocks investors looking for energy exposure should keep an eye on.

Of course, like other companies operating in Latin America, geopolitical risks are real. Accordingly, this company’s valuation multiple may remain muted. However, it’s a cash flow machine, and one I think is worth a look from value-conscious investors.

British American Tobacco (BTI)

British American Tobacco (BTI) logo on a buildingSource: DutchMen / Shutterstock.com

In general, tobacco producers have been out of favor with investors for, pretty much, forever. Cigarette, vapes and other oral tobacco products are among the “sin” categories many investors simply won’t touch. I can’t argue with that perspective.

However, for those with an open mind, U.K.-based British American Tobacco is an intriguing pick in this space. Like its peers, British American Tobacco is looking to transition toward products that are less harmful for its consumer base. Of course, the vast majority of the company’s revenues still come from traditional cigarette sales. However, this is a company many investors are beginning to focus on from a potential long-term growth perspective, with rising prevalence of vapes and other potential verticals (including cannabis) in this company’s future.

Growth in non-combustible products jumped, as consumers more than doubled their adoption of these products last year. The company’s overall revenue growth dropped about 0.4% but cash flow growth (ex-dividend payout) of 33% year-over-year is impressive.

British American Tobacco is a company that may be hard for investors to look at right now. However, for those bullish on the potential of this company’s outlook, as well as BTI’s 8.6% dividend yield, it’s a stock to consider.

Top Foreign Stocks to Buy: Baidu (BIDU)

A Baidu (BIDU) sign outside a company office in Shenzhen, China.Source: StreetVJ / Shutterstock.com

One of the geographic areas investors looking for top foreign stocks often look to is China. In China, Baidu is among the best companies in the tech sector.

Often called the “Google of China,” Baidu’s search engine holds more than 70% of the market share in China. As the fastest-growing large economy in the world, the potential upside with BIDU stock is obvious.

However, recent regulatory curbs from the Chinese government have muddied the investment thesis for this stock. The Chinese government has begun to crack down heavily on its tech companies. Accordingly, sentiment for investors in Chinese tech is among the lowest it’s been in some time.

For value investors looking for great companies at relatively incredible valuations, now’s the time to consider BIDU stock. Baidu’s price-to-earnings ratio is less than 10, despite rather robust growth in recent years. This is also a stock that’s trading at roughly 2011 levels.

In other words, growth investors get the past ten years of growth for free with BIDU stock. This incredible valuation makes Baidu one of the top foreign stocks I’m considering right now.

JD.com (JD)

the JD.com (JD) logo on the outside of a buildingSource: testing / Shutterstock.com

Similar to Baidu, JD is another Chinese tech giant that has been hit hard by the recent Chinese government crackdown. While JD has not been explicitly called out by the government or forced to pay any fines, this is a company that most investors know could be in the cross-hairs of regulators.

Like Baidu, JD’s valuation has taken a hit. This is a company that’s currently approximately 25% below its all-time highs.

However, unlike its Chinese tech peers, JD has performed relatively well during this period of instability. That’s partly due to this company’s ability to avoid scrutiny by regulators. However, investors seem to be more bullish on JD’s long-term growth prospects.

Often called the “Amazon of China,” JD’s infrastructure-heavy business model is one that investors seem to like.

I think JD has immense potential to continue to grow, and I like its valuation on this dip. Accordingly, aggressive growth investors looking for deals may want to consider this top foreign stock.

Top Foreign Stocks to Buy: Rio Tinto (RIO)

the rio tinto (RIO) logo on a building during daylightSource: Rob Bayer / Shutterstock.com

London-based mining company Rio Tinto is another attractive foreign stock. As the effects of the pandemic start to subside and economies reopen, global demand for iron ore and copper has skyrocketed. Consequently, the mining sector has picked up momentum in the post-pandemic environment.

Rising inflation is broadly bullish for commodities plays. Rio Tinto is among the largest globally in this regard.

The mining company has reported one of its highest-ever earnings in the first half of the current year, along with a stunning dividend payout of $9.1 billion. Recent Q2 results show Rio Tinto posted underlying earnings of $12.2 billion post-tax and royalties payment worth $7.3 billion. Moreover, the company comes with a huge free cash flow of $10.2 billion.

Analysts believe that Rio has strong long-term growth opportunities as the global demand for iron ore will likely continue to rise in this inflationary environment. Moreover, Rio Tinto has a vast portfolio of assets that come with low operating costs. Indeed, RIO stock can be an excellent pick for U.S. investors looking for profitable foreign stocks right now.

On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective. 

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Author: Chris MacDonald

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Economics

COVID Authoritarians Are The Cause Of America’s Problems, Not The Unvaccinated

COVID Authoritarians Are The Cause Of America’s Problems, Not The Unvaccinated

Authored by Brandon Smith via Alt-Market.us,

It’s an odd…

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COVID Authoritarians Are The Cause Of America’s Problems, Not The Unvaccinated

Authored by Brandon Smith via Alt-Market.us,

It’s an odd dynamic – One would think that if the covid vaccines were a generally benevolent program that actually “followed the science” then there would be no need to pile drive the public with an endless barrage of vax propaganda.

After all, if science and morality are on the side of the covid cult then the rest would naturally take care of itself and the overwhelming majority of Americans would have already voluntarily taken the experimental mRNA cocktail without any threats required.

And, if some people still refused, then the science would dictate that it doesn’t matter, because if the vax actually works then those people present no threat whatsoever to the rest of society.

It is highly revealing that this is not the case, and the more resistance the establishment encounters on mandates the more aggressive they become and the more they lie about the facts and evidence.

Remember when Fauci and company said they only needed 70% of the population vaccinated to hit herd immunity? That concept was thrown down the memory hole and now they want 96% (really 100%) of the population vaccinated.

They claimed that the vaccination programs were a success with between 70% to almost 80% of the public taking the double jab, and that was a lie as state numbers continue to contradict federal and CDC numbers.

They claimed that the only pandemic still ongoing was a “pandemic of the unvaccinated”, and this was of course a lie as we have seen studies from multiple states and mostly vaccinated countries showing that the vaccinated now make up the bulk of infections and hospitalizations.

They said the vaccines offered more reliable protection when compared to natural immunity, yet medical studies from around the world show that this was a lie and that natural immunity offers up to 27 times more protection than the vaccines do. And, they said that the vaccines were “safe and effective”, yet there is no long term data to prove they are safe, and multiple studies show that vaccine effectiveness is questionable to say the least.

Lie after lie after lie. If the vaccines actually worked, there would be no need for so much deceit, and if their true intention was to “protect public health” then the establishment would be promoting treatment programs and natural immunity, not untested vaccines that continue to disappoint.

Numerous fully vaccinated people including political figures like Colin Powell have died from covid but the mainstream media STILL claims this doesn’t disprove the efficacy of the jab. At the same time, unvaccinated alternative media figures like Joe Rogan beat covid in 3 days using treatments like Ivermectin, and the MSM attacks him relentlessly as some kind of charlatan merely because he dared to not die. The elitists think that the public doesn’t notice massive contradictions like this, but we do. We are not dumb, we see everything.

In Washington State, for example, studies show that there have been at least 51,000 “breakthrough cases” of covid in the past 10 months. Breakthrough cases are people who are fully vaccinated but were still infected with covid. Of those 51,000 people, 493 people died. When calculating the percentage of dead vs infected, we get around 0.96%. The median death rate of covid among unvaccinated people is only 0.27% according to dozens of peer reviewed medical studies. This means that the death rate of fully vaccinated people in Washington is actually HIGHER than that of unvaxxed people.

We have seen similar results in states like Massachusetts, where there were 5100 breakthrough cases in a single month and 80 deaths of fully vaccinated people, which is a 1.5% death rate for the vaxxed as opposed to 0.27% for the unvaxxed. Studies on death rates are going to have to take into account vaccinated deaths vs unvaccinated deaths from now on.

And what about studies from highly vaccinated countries like Israel, which show that the majority of infections and hospitalizations are among vaccinated people, with infections spiking well after the vaccines were introduced. Right after Israel became one of the most vaccinated nations on the planet, it also had one of the highest infection rates on the planet.

It should also be noted that the peak of US infections in 2020 ended well before the vaccine rollout even started in early 2021. Meaning, the vaccines did NOTHING to reduce infection rates. They dropped off on their own. This is a scientific fact that the mainstream avoids, just as they avoid admitting that the median death rate of covid is a mere 0.27%.

The solution that the establishment offers is not surprising – They claim we need MORE vaccines through booster requirements. As the old saying goes, insanity is doing the same thing over and over again and expecting different results. And so the demented propaganda machine continues into infinity.

The public is growing tired of the games as is evident in mass walkouts, sick-outs and other protests against Biden’s vaccine mandates for companies with more than 100 employees as well as most government institutions. We are seeing up to 50% of employees and government workers in many cases refusing to take the experimental jab despite the fact that they are being threatened with losing their jobs. This dynamic seems to have bewildered the covid cult and the globalists; they can’t wrap their heads around this level of resistance to their agenda.

It’s not a new thing, but I have noticed an increasing number of vax propaganda commercials and articles featuring Donald Trump in the past month. All of them herald Trump’s pro-vaccination stance, which is odd because leftists spent most of 2020 saying they would not take any vaccine that Trump was responsible for producing.

I was recently doing some research on YouTube and was annoyed to have to watch yet another vax ad, but this one had an odd tone. It showed clips of Trump making favorable statements on the mRNA vaccines, he and his wife taking the vaccines with dramatic music, and then a message at the end which said “There’s A Covid Vaccine Waiting For You, Too.”

The bizarre commercial was clearly aimed at conservatives, but it displays an obvious disconnect that the covid cult and the media have when it comes to conservative thinking and principles.

Leftists, collectivists and globalists function according to majority rule and herd mentality. They have gatekeepers, and the gatekeepers set the agenda and dictate decision making responsibilities for the group. Leftist herds wait patiently for top-down orders from their designated gatekeepers and most of them obey without question. This is how they operate.

Liberty minded people operate in the opposite fashion. Our “leaders” are always under scrutiny, and this includes political mascots like Donald Trump. This is why, during a recent speech in Alabama, Trump was booed by a crowd of supporters after he called for them to get the covid vaccine. Conservatives generally don’t care about the person promoting the message, they only care if the message passes the smell test.

Leftists and globalists are incapable of grasping conservative principles or the conservative mindset. This fact is hilariously evident in the style of propaganda they have consistently used to try to intimidate or pressure the conservative public into compliance with the mandates. We don’t view Trump as a philosophical leader; in fact, there were so many underlying issues with his cabinet and his policies that his leadership became suspect. At most, conservatives enjoyed Trump’s administration simply because his presence in the White House drove leftist authoritarians to greater madness.

We definitely don’t care what Trump has to say on the vaccines.

There is further evidence of the disconnect I describe in the actions of leftists and the establishment when it comes to vax mandates in the workplace. I can’t tell you how many times I have heard the argument from covid cultists that conservatives “Might say we will refuse to comply, but when our livelihoods are threatened we will submit.” They believe this because that’s how THEY would respond. They are cowardly weaklings with no heart, no principles and no morals. They think that since they would cave in to the pressure, the rest of us would cave in as well.

The past month has proven them oh so wrong as millions of people stage protests and walk outs across the country. There is even refusal among around 25% of the armed forced averaged across all branches, as well as up to 50% of city police forces. Most employers and government offices can barely function as is; there is zero chance they will be able to cope with a 10% loss of workforce, let alone a 25% to 50% loss. They would crumble.

This was obviously not the plan; the globalists were not prepared for this level of resistance in the US and this is evident in their pathetic propaganda scramble. That does not mean they don’t have contingencies in place. I am already seeing a fledgling narrative in the media which is implanting the idea that any breakdown of the system in the US will actually be the fault of the unvaccinated.

Biden has been a fervent culprit behind the narrative that everything from economic instability and supply chain problems to social divisions should be blamed on unvaccinated Americans. That’s right, the majority of these disasters started on Biden’s watch and because of his policies, but somehow WE are the real danger. Yes, the draconian mandates are illegal and unconstitutional and yes, mandates are not laws in any form, and yes, Biden and his handlers are acting like dictators and there is no reason to do anything they say. But, we are the bad guys. This is classic communist gaslighting.

Here’s an idea: Stop trying to enforce covid mandates and vaccine passports. Stop paying people to stay home from work with covid welfare bribes. Stop generating trillions of dollars in fiat stimulus from thin air to pay for even more useless programs we don’t need. Then watch how quickly stagflation, economic instability, the workforce shortages and most other problems in the US suddenly disappear. The unvaccinated are not the source of American distress, the globalists and errand boys like Biden and blue state governors are the cause. Remove them from the equation and America’s future looks much brighter.

*  *  *

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Tyler Durden
Fri, 10/22/2021 – 00:10

Author: Tyler Durden

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Economics

‘Thielism’: Beyond The Dogmas Of Reaganism

‘Thielism’: Beyond The Dogmas Of Reaganism

Authored by The Thielist via The Thielist Dispatch (emphasis ours),

On October 31st, 2016, Peter…

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‘Thielism’: Beyond The Dogmas Of Reaganism

Authored by The Thielist via The Thielist Dispatch (emphasis ours),

On October 31st, 2016, Peter Thiel delivered a speech at the National Press Club in the heart of Washington, just a few blocks away from the White House. In his prepared remarks, he articulated the case for Donald J. Trump, the Republican presidential nominee whose chances of winning the upcoming election against Hillary Clinton seemed all but nonexistent to the political establishment. But Thiel, always a contrarian, offered a radically different perspective. He argued that Trump voters weren’t crazy, and that the sentiments which fueled the candidate’s meteoric rise were the inevitable result of a country that had been run into the ground by decades of incompetence, misplaced priorities, and bubble thinking. The voters cast their ballots on November 8th, and the rest is history. Thiel was vindicated.

How is it that a Silicon Valley billionaire could have understood what scores of pollsters, consultants, and other industry insiders did not? Thiel’s political endeavors, after all, comprise only a fraction of his work. First and foremost, Peter Thiel is a venture capitalist and entrepreneur. And in the very same month that he gave a speech on Trump’s behalf at the RNC in Cleveland, Ohio, Thiel also bludgeoned Gawker Media out of existence and forced its founder into bankruptcy, exacting his revenge for outing him several years prior. But still, he somehow had a better read on the lives of everyday Americans than the pundit class, and in doing so made his peers look like arrogant buffoons.

In an interview with Walter Isaacson, Jeff Bezos said, “contrarians are usually wrong.” While Hillary Clinton’s infamous “basket of deplorables” slip encapsulated the Democratic nominee’s contempt for a vast portion of the American electorate, the Amazon founder’s swipe at Thiel speaks to the larger phenomenon that lead to Donald Trump’s rise.

This country’s ruling elites have known nothing but fattening wallets and expanding cultural influence for decades. But in addition to self-enrichment, they have gained unprecedented control over all of America’s treasured institutions, slowly but surely chipping away at ordinary people’s ability to have a meaningful say in how their Republic ought to be run. Having wrested power away from the general public and the government designed to serve their interests, the ruling class has internalized the mentality that they can do no wrong; anyone who challenges their infallibility should simply be ignored. So strong was this self-confidence in 2016 that, when one of their own dared to suggest that the elite consensus was completely untethered from reality, other members of the ruling class simply reassured one another that everything was still proceeding according to plan. When you replay the events of that fateful year from their point of view, it is hard to doubt that waking up on the morning of November 9th must have been uniquely terrifying.

Defining Thielism

Nearly five years after his bet on Donald Trump, Peter Thiel is making his biggest foray into the political arena yet. He has given twin contributions of ten million dollars to the United States Senate campaigns of J.D. Vance in Ohio and Blake Masters in Arizona, and he’s also thrown his support behind the likes of congressional candidates such as Joe Kent and Patrick Witt. No one can say for certain what these efforts will yield, but it is undeniable that Thiel seems determined to disrupt the American political landscape. If his endgame is merely to raise the profile of a strong crop of candidates and get them elected to federal office, the strategy seems to be working. The closely-vetted bunch is charismatic, competent, and strong on messaging, which poses a frustrating challenge to Republican and Democratic challengers alike. But Peter Thiel’s true ambitions are grander.

At the conclusion of his aforementioned National Press Club speech, Thiel spoke of then-candidate Trump ushering in “a new Republican Party, beyond the dogmas of Reaganism” and the birth of “a new American politics that overcomes denial.” The sentiment suggests that the project at hand is far more consequential than boosting a handful of impressive political outsiders. As the patron of an emerging movement within the Republican sphere, Peter Thiel is staging an effort to save the country. This is the dawn of Thielism as a political philosophy, which can be defined as follows:

A contrarian conservatism is one whose priorities and strategies diverge from the platform of the Republican establishment. While reigning in Big Tech, fixing the American university system, and addressing the decline of domestic manufacturing have all become points of conversation on the Right, Thielism emphasizes the need to address each of those problems substantively. Furthermore, it rejects the premise that we always have to subscribe to established methods when devising solutions to those problems. Protecting the American worker, for example, requires us to reassess the near-sacred status of free trade within Republican orthodoxy.

On a fundamental level, Thielism also rejects the doctrine of American exceptionalism. Why? Because it recognizes that America’s greatness cannot exist in rhetoric alone; it must be backed up with action, achievement, and honesty. What made us great in the past is worth celebrating, but simply assuming that some special national character will continue to buoy us into the future is ludicrous. We are still masters of our own destiny, but we can only reassert our national sovereignty if we become far more self-aware than we are today. This awareness requires us to take stock of our problems and begin solving them.

Charting the Course Forward

Every great movement has a founder, but the movement’s impact is inseparably linked to how much its adherents actually accomplish. If one espouses genius ideas but remains largely ignored, it’s not a movement at all. Fortunately, Thielism is reaching a critical mass on the legislative front, as candidates from Washington to Georgia position themselves to win seats in both houses of Congress next fall. But, as important as gaining an electoral foothold may be, it’s only one small part of the Thielist mission. The political dimension of the conservative movement must interface with the cultural dimension. And, most importantly, both politics and culture need to be responsive to the ever-present force of technology, which the Republican establishment has long ignored save for the purpose of generating funds for its campaigns. If leveraged correctly, technology of all varieties, not just digital, can become the space in which we finally reverse America’s decline.

But first, it’s critical to note that we can’t afford to get bogged down in the culture wars. Despite an avalanche of opposition to them, the facts of biology which have underpinned all of human existence and been fundamental to Western civilization remain true as ever. In engaging with debates over such obvious matters, we conservatives lock ourselves into a hopelessly defensive posture. It’s time to drop our shovels and refuse to dig ourselves in any deeper. The only way out of the hole we’re in now is to go up, and the only way up is to build.

This is not to say that we should outright ignore the state of our culture. To do so would be a grave mistake, as the work of preserving whatever fundamental truth and history we have left, reduced and diminished as they may be, remains an always important task. But, as many of us have come to understand already, the brand of conservatism to which we had subscribed up until this point has failed to conserve almost anything meaningful. The Thielist perspective on the matter is to filter out the distractions and devote energy to constructive, new endeavors that will serve our interests in tangible ways.

Towards this end, there are a practically infinite number of pathways which can be taken. Particularly promising are the areas of decentralized finance, human inhabitance of space, and developing new modes of transportation. The common denominator among these three examples is the usage of technology for our own purposes rather than letting it be wielded mercilessly against us. While the current ruling class controls all major institutions, a truly disruptive advancement within a domain beyond their influence will loosen their grip. Of course, artificial intelligence and robots do pose a challenge to the new conservative movement, as both have thus far hurt the American worker immeasurably in service to the globalist agenda. But those scores are not entirely settled, and there is still a chance to stave off the worst possible outcomes if we address both items with urgency.

Ultimately, Thielism seeks to return America to the state of definite optimism, which it has not experienced for some five decades now. Indefinite optimism—the “everything will be fine” mentality—has been the prevailing disposition of the ruling class since the dawn of the 1970s, and it was also the attitude of ordinary people until very recently. Today, most ordinary people aren’t optimistic. We are now in an era of indefinite pessimism, where things are just expected to get worse. And as much as we want to believe that the present storms will pass, a prolonged period of indefinite pessimism will eventually lead to collapse unless things change. A course correction is needed if we are to have any hope of keeping the Republic.

Getting the compass reoriented back towards the ideal, definite optimism, means we need to provide concrete proof that the future will be better than the past. It means overcoming the blackpill, once and for all. It means harnessing the power of technology, which is supposed to improve our quality of life, and actually reaping its benefits. It means reclaiming the American Dream and using the government which exists to protect it in an effective, efficient manner.

In beginning this project, I hope to play a small role in commentating on emerging developments within the conservative movement. It is abundantly clear that we need to take this country back, and doing so requires a worldview that looks beyond the tired solutions of the past to face the future, unafraid to acknowledge the many challenges before our nation today. With the same firm reliance on the protection of divine Providence as our forebears, let us go forward to create and build a better tomorrow for ourselves and for America.

Tyler Durden
Thu, 10/21/2021 – 22:10

Author: Tyler Durden

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Economics

The bond market is waking up

It looks like the bond market is beginning to wake up to the reality of higher inflation. Yields have moved significantly higher in recent days, and inflation…

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It looks like the bond market is beginning to wake up to the reality of higher inflation. Yields have moved significantly higher in recent days, and inflation expectations are rising. That the stock market is taking this in stride—so far—suggests that higher interest rates are not necessarily bad for the economy. I think we are still in the early innings of the adjustment to higher interest rates. There’s a lot more to this story that will play out soon.

Chart #1
Chart #1 compares the nominal yield on 5-yr Treasuries (which is roughly equivalent to what the market expects that the Federal funds rate will average over the next 5 years) to the ex-energy rate of consumer price inflation (I remove energy because it is by far the most volatile component of the CPI). Despite recent jumps in yields, the chart strongly suggests that the level of yields is still way below what it “should be” given the current level of inflation. But yields are moving in the right direction.
I’ve been making the point of late that negative yields (i.e., nominal yields below the rate of inflation are unsustainable long-term because the existence of negative yields gives consumers and investors a strong incentive to “borrow and buy.” When real yields are negative it pays to short the dollar (i.e., borrow dollars) and go long anything that has roots in the nominal economy (e.g., houses, commodities, cars, equities). This incentive weakens the demand for money, which then leaves the economy with a lot of unwanted money—which provides the fuel for higher inflation. Eventually, rising yields and rising inflation expectations will prod the Fed to ignore the supposed weakness of the economy and begin the long process of normalizing interest rates. 
Chart #2

Chart #2 shows the level of real and nominal yields on 5-yr Treasuries and the difference between the two (green line), which is the market’s expectation for what the CPI will average over the next 5 years. Inflation expectations by this measure (now 3.0%) are the highest they have been since 1997, when TIPS were first introduced. Inflation expectations have now surged by 250 bps since March 2020. As the chart also shows, nominal yields are the ones that have risen the most. 

The economy won’t be at real risk of higher interest rates until real short-term interest rates are much higher than they are today (probably 3% or more) and the yield curve is much flatter than it is today (currently it is still steepening). 
Fasten your seat belts, because we just begun what could be a long and wild ride to higher interest rates.





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