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Five Aerospace Investments to Buy Amid Russia’s Invasion, China’s Threats

Five aerospace investments to buy amid Russia’s invasion of Ukraine show the reliance on such equities and an opportunity to support companies that are…

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Five aerospace investments to buy amid Russia’s invasion of Ukraine show the reliance on such equities and an opportunity to support companies that are involved in defending civilians from attacks.

The five aerospace investments to buy as Russia’s President Vladimir Putin continues press ahead with the invasion that he ordered on Feb. 24 have niche opportunities within a sector that tends to retain demand even when inflation may flare and the economy may weaken. The five aerospace investments to buy also are among the equities that can withstand threating words from China’s leaders that characterized frail, 82-year-old House Speaker Nancy Pelosi’s visit to Taiwan, among several stops in Asia, as America playing with fire and putting it in enough peril to “perish by it.”

Despite strong differences between the Democrats and Republicans, they largely have been united in supporting the defense of freedom around the world and voting for increased funding toward aerospace programs to protect against threating actions by Russia, China and others. Aerospace companies traditionally have withstood inflationary pressures, slow economic growth, rising interest rates and the uncertainty of election years such as 2022, according to Ron Epstein, the aerospace and defense analyst at BofA Global Research. 

Five Aerospace Investments to Buy Amid Russia’s Attacks, China’s War of Words

The second-quarter 2022 reporting period showed 60% of S&P 500 companies announcing results, with 73% of them delivering a positive earnings per share (EPS) surprise and 66% offering a positive revenue surprise. In addition, the blended earnings growth rate in second-quarter 2022 reached 6.0% for the S&P 500.

“By no means is this an all-clear sign because the market has managed a strong relief rally,” wrote Bryan Perry, head of the Premium Income Pro advisory service, in his weekly update. “The bearish camp owned the narrative and now there is a more positive tone taking shape that is built on the notion that a deep recession will be avoided and good companies will grow, albeit at a slower pace.”

Paul Dykewicz interviews Bryan Perry, leader of Premium Income Pro.

Due to the levels at which this change in sentiment started to shift, confidence is rising that the market can keep climbing and consolidate while investors monitor new economic data to assess the impact of inflation, the strong dollar, the inverted yield curve and Russia’s war invasion of Ukraine on commodities, plus all things China, opined Perry, who also leads the Cash Machine investment newsletter, as well as the Quick Income Trader, Breakout Options Alert and High Tech Trader advisory services. For the first time in many months, the proverbial glass is looking more than half-full for the U.S. equity market, he added. 

Penson Fund Head Chooses ETF as One of Five Aerospace Investments to Buy

An investor who seeks a diversified way to tap into the aerospace sector should consider an exchange-traded fund (ETF), said Bob Carlson, who heads the Retirement Watch investment newsletter. The ETF with the most consistent returns is Invesco Aerospace & Defense (PPA), he added.

Bob Carlson, who leads Retirement Watch, meets with Paul Dykewicz.

The fund seeks to follow the SPADE Defense Index, which is focused on companies that are involved with aerospace and space operations considered important to the defense sector.

Top holdings are Boeing (NYSE: BA), Raytheon (NYSE: RTX), General Dynamics (NYSE: GD), Northrup Grumman (NYSE: NOC) and Lockheed Martin (NYSE: LMT). Boeing is one of the world’s largest aircraft manufacturers, but it has yet to fully recover from the fallout of two 737 MAX aircraft crashes in 2018 and 2019 that killed a combined 346 people. 

A hopeful sign is Delta Air Lines (NYSE: DAL) announcing in July that it would buy 100 Boeing 737 MAX 10 jets worth about $13.5 billion at list price, with an option to purchase an additional 30 of the aircraft. At the Farnborough Airshow in London, Qatar Airways, a state-owned flag carrier of Qatar, announced on July 21 the purchase of 25 Boeing 737 MAX 10 airliners. Even though Boeing still is awaiting regulatory approval to fly the new-generation Boeing 737 MAX aircraft, the manufacturer has amassed orders for more than 1,000 of the planes.

Chart courtesy of www.stockcharts.com

Money Manager Likes Leidos as One of Five Aerospace Investments to Buy

Leidos Holdings (NYSE: LDOS), a Reason, Virginia-based science and technology company that serves civil, aviation, defense health and intelligence industries, still may be known by some people by its former name of Science Applications International Corporation (SAIC). Leidos merged with Lockheed Martin’s (NYSE: LMT) information technology (IT) sector, Information Systems & Global Solutions, in August 2016, to form the defense industry’s biggest IT services provider. 

The merger became one of the largest transactions in the consolidation of the and defense sector, positioning Leidos to work extensively with the U.S. Department of Defense, the U.S. Department of Homeland Security and the U.S. intelligence community, including the National Security Agency (NSA).

BofA placed a $125 price objective on the stock and supported it by stating the value is in line with defense prime contractors, as strong U.S. National Security demand for innovative technologies and solutions and solid free cash flow generation is offset by a lumpy award environment, supply chain pressures in the near term, pressure on pricing and mounting concerns about labor inflation.

Within the defense services industry, LDOS is the largest and most diversified company, said Michelle Connell, a former portfolio manager who heads Dallas-based Portia Capital Management. The company provides scientific, engineering, and technical services to government and highly regulated industries.

Michelle Connell, of Dallas-based Portia Capital Management

The services of Leidos focus on surveillance, cybersecurity, logistics and energy. The company’s customers include the U.S. Department of Defense and the British Ministry of Defense.

With a market capitalization of more than $13 billion, Leidos Holdings is a mid-cap stock, Connell said. However, due to the company’s growth, combined with strong fundamentals and cash flow, it should be considered a Growth at a Reasonable Price Services (GARP) stock that focuses on surveillance, cybersecurity, logistics and energy.

Leidos reported strong results on Aug. 2 that beat revenue and earnings expectations. However, the stock dipped 4% after it reported earnings, possibly due to lighter than expected bookings of future services, she added.

The recent pullback in the company’s share price enhances its merit for potential new shareholders, Connell said. The stock has an upside of about 15% during the next 12 months and offers a dividend yield of 1.4%.

Chart courtesy of www.stockcharts.com

Five Aerospace Investments to Buy Include Hexcel

Hexcel Corporation (NYSE: HXL) is a Stamford, Connecticut-based manufacturer of advanced composite materials for commercial aerospace, space, defense and industrial markets. Its outlook should be aided by enhanced manufacturing orders for commercial aircraft, especially more fuel-efficient commercial jetliners that may be ordered by customers wary about high oil prices.

BofA gave the stock a price objective of $65, partly based on accelerating commercial recovery. Potential upside to the price target could occur if Airbus A350, A32neo, and Boeing 737 MAX production rates continue to ramp up as expected and 787 deliveries resume, according to BofA.

In addition, HXL may trade at a higher premium to the market compared to BofA’s estimates, the investment firm wrote. An increase in oil prices also could boost demand for and provide upside to estimates in the medium term, BofA added.

Risks to underperform include the majority of sales are original equipment manufacturer (OEM) and there is little aftermarket, which may prove problematic if the civil aircraft cycle turns dramatically. BofA cautioned. Hexcel also could be materially impacted if serious complications should arise from new platforms like the Boeing 787 and the Airbus A350. Unexpected cancellations to programs in both commercial and military could materially impact HXL. Any problems with execution, particularly as capacity expands, further could impact results.

Chart courtesy of www.stockcharts.com

TransDigm Named Among Five Aerospace Investments to Buy

TransDigm Group Inc. (NYSE: TDG), a Cleveland-based global producer, designer and supplier of highly engineered aerospace components, systems and subsystems for use on almost all commercial and military aircraft, is another buy recommendation of BofA. 

On May 25, TransDigm Group announced that it had completed its acquisition of Canada’s DART Aerospace, a Montreal, Quebec-based portfolio company of Greenbriar Equity Group, L.P., for roughly $360 million. TransDigm financed the acquisition initially with cash on hand. 

DART is a provider of highly engineered, unique helicopter mission equipment solutions that mainly service civilian aircraft. The company is expected to generate approximately $100 million in pro forma revenues for the calendar year ending December 31, 2022. Approximately 95% of DART’s revenues are derived from proprietary products and about 80% of its revenues come from the aftermarket. The products are commonly used in major commercial rotary-wing platforms, as well as select applications for defense and safety services.

BofA placed a $720 price objective on the stock, partly based on TransDigm’s  strong aftermarket positioning, robust margin performance and solid cash generation. Risks to reaching that target include increased oil prices slowing air traffic growth and therefore aircraft demand to cause a downturn in commercial aviation, BofA wrote.

“However, if the commercial aerospace and business aviation jet recoveries are better than we are forecasting, earnings could fare better than our projections and the stock could perform better,” BofA wrote in a research note. “If margins fare better than we are forecasting, there could also be upside potential to our valuation.”

Chart courtesy of www.stockcharts.com

Triumph Group (TGI) Wins Spot With Five Aerospace Investments to Buy

Triumph Group (NYSE: TGI), headquartered in Berwyn, Pennsylvania, designs, engineers, manufactures, repairs and overhauls aerospace and defense systems and components. The company serves the global aviation industry, including OEMs, as well as a spectrum of military and commercial aircraft operators.

The Triumph Interiors unit provides integrated design and manufacturing of thermo-acoustic insulation systems, air distribution system ducting, thermoplastic interior components and other aircraft interior composite assemblies for major aerospace OEMs.

On July 1, Triumph Group, Inc. announced it completed the sale of its Aerostructures business in Stuart, Florida, to Daher Aerospace Inc., a subsidiary of Compagnie Daher. The Stuart business specializes in the assembly of large, complex metallic structures such as wing and fuselage assemblies, and has approximately 400 employees.

The closing of the sale marked Triumph’s 16th divestiture since beginning its transformation in 2016. Triumph has exited its build-to-print machining, fabrication, metal processing and large structure assembly to follow its new strategic plan.

The company aims to be a pure-play provider of actuation, engine controls, gearboxes and accessory drive units, mechanical and thermal systems and interiors. Triumph was relieved of outstanding customer advance obligations totaling $104 million due to the transaction. 

On June 29, Triumph Group announced that its Interiors business was awarded a contract from Mammoth Freighters for composite air distribution ducts on Boeing 777 Passenger to Freighter (P2F) conversions. Triumph Interiors will provide manufacturing and engineering support services for the Mammoth Freighters’ re-designed air distribution ducting system in the cargo compartment. With the recent increase in Passenger to Freighter conversions in the industry, Mammoth Freighters is establishing its position in 777 conversions and has commitments through 2026 and beyond.

BofA gave Triumph a price objective of $30, reflecting the commercial aerospace recovery ahead, as well as improving profitability. Better-than-expected execution could provide upside. Higher-than-expected cash generation could increase capital returned to shareholders, too, BofA wrote.

Chart courtesy of www.stockcharts.com

Risks to reaching that price target include rising oil prices slowing air traffic growth and therefore aircraft demand, causing a downturn in commercial aviation. A slump in commercial aviation, due to an exogenous factor such as a terrorist attack or natural business cyclically, also could adversely affect financial results, BofA wrote.

“Given that aircraft are priced in dollars, an unexpected rapid devaluation in the dollar could significantly affect order activity,” BofA added. “Revenues are heavily dependent on Boeing. Any material change in a relationship with Boeing could affect the company’s financials.”

U.S. COVID Deaths Near 1.028 Million

Aerospace production and sales are affected by rising COVID-19 cases and deaths that can restrain demand. As a result, investors should pay attention to the latest trends.

U.S. COVID-19 deaths climbed for the third consecutive week by more than 3,000 to 1,030,997, as of Aug. 3, according to Johns Hopkins University. Cases in the United States jumped by almost 900,000 for the third straight week to 91,589,488. America still holds the undesirable distinction as the country with the largest number of COVID-19 deaths and cases.

Worldwide COVID-19 deaths jumped by more than 16,513, up from the prior week’s 14,600, but down from 19,000 in the week before that one, totaling 6,405,538 as of Aug. 3, according to Johns Hopkins. Global COVID-19 cases rose 7.06 million, down from 7.2 million during the prior week and 7.5 million the week earlier, hitting 579,463,990 by Aug. 3.

Roughly 78.8% of the U.S. population, or 261,654,61, have received at least one dose of a COVID-19 vaccine, as of July 27, the CDC reported. Fully vaccinated people total 223,245,563, or 67.2%, of America’s population, according to the CDC. The United States also has given at least one COVID-19 booster vaccine to 107.9 million people, up 400,000 in the last week.

The five aerospace investments to buy offer a defensive way to invest due the rising demand for goods and services in the industry. Despite the highest inflation in 42 years, a second consecutive 0.75% Fed rate hike and other rate increases that may follow to follow, the trajectory of the five aerospace investments to buy appears to be ascending amid Russia’s attacks on Ukraine and China’s sharply worded complaints about an octogenarian member of Congress stopping in Taiwan during her travels through Asia.

Paul Dykewicz, www.pauldykewicz.com, is an accomplished, award-winning journalist who has written for Dow Jones, the Wall Street JournalInvestor’s Business DailyUSA Today, the Journal of Commerce, Seeking Alpha, GuruFocus and other publications and websites. Paul, who can be followed on Twitter @PaulDykewicz, is the editor of StockInvestor.com and DividendInvestor.com, a writer for both websites and a columnist. He further is editorial director of Eagle Financial Publications in Washington, D.C., where he edits monthly investment newsletters, time-sensitive trading alerts, free e-letters and other investment reports. Paul previously served as business editor of Baltimore’s Daily Record newspaper. Paul also is the author of an inspirational book, “Holy Smokes! Golden Guidance from Notre Dame’s Championship Chaplain,” with a foreword by former national championship-winning football coach Lou Holtz. The book is great as a gift and is endorsed by Joe Montana, Joe Theismann, Ara Parseghian, “Rocket” Ismail, Reggie Brooks, Dick Vitale and many othersCall 202-677-4457 for multiple-book pricing.

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Steps to building a more patient-centric industry

Lack of access, strict regulations, and demanding schedules have made it extremely difficult for patients to participate in
The post Steps to building…

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Lack of access, strict regulations, and demanding schedules have made it extremely difficult for patients to participate in clinical trials. A 2018 NIH survey found that patients felt clinical trial participation to be inconvenient and burdensome, and nearly half (49.0%) said it disrupted their daily routine. In 2021, a CISCRIP Perceptions and Insights Study reported more disruption to daily routines compared to previous years, citing length of visits, travel, and diagnostic tests as top burdens.

To ease this burden, the life sciences industry has been searching for ways to make clinical trials more accessible for patients and to drive participation numbers, increase participant diversity, and improve overall patient experience. For many patients, this change starts with choice.

A recent survey of clinical trial professionals found that more than two-thirds of respondents (61%) believe giving patients choice will have a positive impact on clinical research, and well over half (58%) said that their organisations plan to give patients the option to choose how they participate in clinical trials moving forward. Some examples of these choices can include video visits, phone visits, and remote monitoring.

As the industry focuses on creating a more holistic, inclusive patient experience, here are key steps to consider in order to help bridge the gap between clinical research and the patient experience.

Build a base in the community

According to the FDA’s 2020 Drug Trials Snapshot Report, only 8% of clinical trial participants are Black or African American, as compared to nearly 14% of the US population. The fact is, many minorities never learn about vital clinical trials in play, or that they’re eligible to participate. Subsequently, they are excluded, creating an evident gap in participants, and subsequently needed data on how treatments respond across different demographics of people.

Creating a broader, more inclusive patient experience starts with building a network of advocates who can help organisers meet patients where they are located and educate them about the availability and value of the trials. Initially, there needs to be a more proactive and sustained nationwide outreach effort to raise clinical trial awareness within minority communities.

It’s also important to partner with trusted people within minority communities, such as religious and government leaders that have the credibility needed to share clinical trial information to counter scepticism. If sponsors can partner with patient-advocacy groups to inform design, recruitment, follow-up, and even data collection (particularly for patient-reported outcomes), it will help to keep patients engaged longer and potentially derive higher quality data sets that can lead to better patient outcomes over the long run.

Embrace technology to expand reach

Technology – especially related to automation and the cloud – can help create a more flexible clinical trial model, thereby making it easier for patients to participate. Digital tools used in decentralised trials, remote enrolment tools, consent forms, wearables, and remote devices, as well as data capture, can help to expand overall access to clinical trials. For example, with remote monitoring, doctors and trial administrators can analyse all the data coming in and, if there’s a problem, they can act more quickly and respond back to the patient through a mobile device such as a smartphone.

Cloud platforms can open two-way communication channels for patients, doctors, and trial administrators to talk and share data, essentially in real-time. Some early examples of these capabilities were part of the US Centers for Disease Control and Prevention’s (CDC) v-safe program, developed by Oracle, which is used to track the effects of the COVID-19 vaccines through voluntary, scheduled survey prompts, and to remind people about boosters. Today, capabilities like this are being extended so that trial data from wearable devices and home-monitoring systems can be communicated directly to trial sites.

A new solution

One significant roadblock to clinical trial inclusion of minority groups has been location and transportation. Many potential participants lack transportation to and from clinical sites, and some trials are only held in large city hospitals, instead of smaller community hospitals that participants can sometimes access more easily. Thanks to decentralised trials and technology that collects data remotely, people from anywhere can participate.

One approach the industry has been exploring is to utilise community retail pharmacies as a central location for people to learn about and participate in clinical trials. By collaborating with pharmacy retailers, sponsors will have more opportunities for patient recruitment because they can offer patients the convenience and comfort of visiting familiar community sites.

For example, CVS and Walgreens have instituted flexible clinical trial models that combine patient insights, technology capabilities, and in-person and virtual-care options to engage broader and more diverse communities. The result is a much more expansive pool of participants and potentially much better information about populations where the drug is effective, and other populations where it might not be effective.

Keep it simple

There’s a notion that because the healthcare and life sciences industries are very complex, the systems that support them have to be equally complex. In fact, the opposite is true. Easier-to-use systems will increase participation rates, and we will have better outcomes as a result. With so many technology advancements at its disposal, the industry must find a way to bridge the divide between patient experience and clinical research. The patient journey must be a positive one, so that they will encourage others to participate.

Imagine, clinical research as an accessible care option to anyone. Technology has given us the opportunity to make this goal a reality. But as an industry, we must innovate to bring new experiences to market and improve the clinical research ecosystem for patients, healthcare professionals, sponsors, and regulators.

About the author

Katherine (Kathy) Vandebelt is global head of clinical innovation at Oracle Health Sciences. With over thirty years of experience in clinical research working in different geographies and across various TA, Kathy has worked with various organisations to advance their clinical operations and business processes to a better operating model. She believes patients are the most important constituent in clinical development and provide the necessary information to assess the safety and efficacy of new medicines. She strives to introduce new experiences and make the clinical research ecosystem better for patients, healthcare professionals, sponsors, and regulators using the power of technology.

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42 Biden Admin Officials Put On Notice By House Republicans

42 Biden Admin Officials Put On Notice By House Republicans

Authored by Jack Phillips via The Epoch Times (emphasis ours),

At least 42 Biden…

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42 Biden Admin Officials Put On Notice By House Republicans

Authored by Jack Phillips via The Epoch Times (emphasis ours),

At least 42 Biden administration officials were sent letters by Republicans on the House Judiciary Committee this month requesting testimony from a variety of White House officials.

Flanked by House Republicans, U.S. Rep. James Comer (R-Ky.) speaks during a news conference at the U.S. Capitol in Washington on Nov. 17, 2022. (Alex Wong/Getty Images)

Those letters primarily dealt with the suspected politicization of the FBI and Department of Justice (DOJ), investigations into U.S. border security, and President Joe Biden’s son Hunter.

A recent letter (pdf) led by Rep. Jim Jordan (R-Ohio) to White House chief of staff Ron Klain requested testimony from Biden administration staffers relating to alleged “misuse of federal criminal and counterterrorism resources to target concerned parents at school board meetings.” Interviews from four White House officials were requested.

Around the same time, another letter (pdf) from Jordan was sent to the Department of Education requesting testimony from three officials, and another letter to the Department of Homeland Security requests interviews from around a dozen administration officials. That includes embattled Homeland Security Secretary Alejandro Mayorkas and U.S. Immigrations and Customs Enforcement chief Tae Johnson.

Even more DOJ and FBI officials were asked to testify during the next Congress, according to two separate letters (pdf, pdf) sent by Jordan and others last week. They’re seeking testimony from Attorney General Merrick Garland, FBI Director Christopher Wray, Deputy Attorney General Lisa Monaco, and dozens of other DOJ and FBI officials, according to a Washington Examiner analysis of the GOP-backed letters.

It’s likely that Republicans will seek to investigate how the FBI and DOJ handled investigations into former President Donald Trump and the raid that targeted Mar-a-Lago in August. Republicans and Trump have long said the two agencies have exhibited a politically motivated animus toward the former president, coming after Garland announced he had appointed a special counsel, Jack Smith, to investigate him.

FBI Director Christopher Wray (R) and Attorney General Merrick Garland speak at a press conference at the Department of Justice in Washington on Oct. 24, 2022. (Kevin Dietsch/Getty Images)

More than a week ago, Garland appointed Smith as special counsel to “oversee two ongoing criminal investigations” into Trump, namely events surrounding the Jan. 6, 2021, Capitol breach and the Mar-a-Lago raid, according to a DOJ statement. Just days before, Trump announced he would be embarking on a third presidential bid in 2024.

Other Investigations

House Majority Leader-elect Steve Scalise (R-La.) revealed that some of the GOP’s priorities for the incoming Congress are probing the origins of COVID-19, the widely criticized U.S. withdrawal from Afghanistan, and allegations surrounding Hunter Biden.

The House Oversight Committee, under its top Republican and likely next chairman, Rep. James Comer (R-Ky.), is “ready to go start looking into a lot of the questions that people have had,” Scalise told Breitbart this weekend.

Whether it’s Hunter Biden’s dealings with all kinds of foreign countries [or] the laptop scandal, which the liberal media tried to dismiss when it came out in 2020,” he added. “It’s been verified.

It turns out there’s a lot of information on that laptop that raises serious questions, and James Comer’s committee’s going to be asking those.

Read more here...

Tyler Durden Wed, 11/30/2022 - 22:25

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How Inflation Changes Culture

How Inflation Changes Culture

Authored by Jeffrey Tucker via DailyReckoning.com,

The midterm elections are over (no Red Wave), but nothing…

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How Inflation Changes Culture

Authored by Jeffrey Tucker via DailyReckoning.com,

The midterm elections are over (no Red Wave), but nothing has changed. In fact, the Biden regime will probably become even more emboldened to pursue destructive economic policies because it will interpret the lack of a Red Wave as some kind of mandate.

Every day seems to be a day of spin, with every regime apologist assuring the public that inflation is getting better. Just look at the wonderful trend line! They point to the latest inflation numbers, which were down a bit from the month prior.

The regime insists that yes, inflation will vex us for a bit more time but will settle down in a few months. Plus, the president is working to fix this! And we know the American people are on board with him since no Red Wave materialized.

But in the footnotes, you’ll find the truth: it was a tiny drop and mostly for technical reasons and the main reason for the drop has already disappeared from the price trends.

Has any political propaganda on this topic ever been this ineffective? It’s truly a joke.

Where’s the Relief Coming From?

The producer price index that came out recently paints a clearer picture. It’s grim. It reveals no softening at all. In fact, it shows that there are plenty of coming price increases. Here is the index by commodities from 2013 to the present.

Remember how last year many people finally came to the conclusion that we had to learn to live with COVID? That was a smart choice because there was no way that the China-style suppression method could work.

Well, here we are now with a preventable inflation pandemic and the realization that we have to learn to live with inflation. Soon we’ll realize that we have to live with recession at the same time.

But what does this mean?

The impact will be felt not just in terms of economics but in culture. Inflation causes a society-wide shortening of time horizons.

True Prosperity

Let’s review some basics. All societies are born desperately poor, fated to live off foraging and just getting by. Prosperity is built through the construction of capital, which is the institution that embodies forward thinking.

To make capital requires the deferral of consumption: you have to give up some today in order to make tools that enable more consumption tomorrow. This means discipline and a future orientation. And it means, above all, savings that can be invested in productive projects. Only through that path can societies grow rich.

A key component of this concerns the stability of the medium of exchange. And not just stability: a currency that rises in value over time incentivizes saving and thus investing for the long term.

The late 19th century provided a good example of this. Under the gold standard, money grew more valuable over time, thus rewarding long-term thinking and instilling that outlook in the culture at large.

Live for Today

Inflation has the opposite effect. It punishes saving. It forces a penalty on economic behavior that is future-oriented. That means also discouraging investment in long-term projects, which is the whole key to building a complex division of labor and causing wealth to emerge from the muck of the state of nature. Every bit of inflation trims back that future orientation.

Hyperinflation utterly wrecks it.

Living for the day becomes the theme. Taking what you can get now is the method and the theme. Grasping and spending. You might as well because the money is only going down in value and goods are in ever shorter supply.

Better to live hard and short and forget the future. Go into debt if possible. Let the devaluation itself pay the price.

The Seeds of Destruction

Once this attitude becomes instilled in a prosperous society, what we call civilization gradually devolves. If inflation persists, this kind of short-term thinking can wreck everything.

This is why inflation is not just about rising prices. It’s about declining prosperity, the punishing of thrift, the discouragement of financial responsibility, and a culture that gradually falls apart.

Another factor in reducing time horizons is legal instability. This was my first concern when the lockdowns began. Why would anyone start a business if governments can just shut it down on a whim? Why plan for the future when that future can be wrecked by the stroke of a pen?

Many people had assumed that this new path would be short-lived. Surely the politicians would wise up and stop the madness. Surely! Tragically, it got worse and worse. The spending and printing began and ramped up over time. It was a perfect storm of sheer madness, and now we are paying the highest possible price.

The Hinge of History

We need to speak frankly about what’s happening to the global economy. It’s not just about supply chain breakages. Those can be repaired. It’s not just about inflation affecting every country. We are living amidst a fundamental upheaval in the whole world.

The most significant single danger to global prosperity now comes in the form of a devastating and deeply tragic wreckage of the country that was set to lead the world in finance and technology: China.

The WSJ summarizes the current pain:

China in 2021 accounted for 18.1% of global gross domestic product, according to International Monetary Fund data, behind the U.S. at 23.9% but ahead of the 27 members of the European Union at 17.8%. It accounts for almost a third of global manufacturing output, according to United Nations data from 2020. China’s economy expanded modestly at the beginning of the year but data for March and April point to a sharp slowdown.

The trouble there traces to the top. When Xi Jinping locked down Wuhan, the world celebrated him for achieving what no other leader in history had achieved: the eradication of a virus in one country. Even now, he gets accolades for this.

The rest of the world followed, and elites in all countries said that this path was the future.

Going Backwards

Now the virus is on the loose all over the country, and the eradication methods are intensifying. This is crushing economic growth and now threatening genuine economic depression in the country that only a few years ago was seen as the greatest economic engine of the world.

It’s truly the case that Xi Jinping has put his personal pride above the well-being of all people in China. The scientists in the country know that he is wrong about this but no one is in a position to tell him.

We cannot really trust the data coming out of China but officially the rate of infection in that country is one of the lowest in the world. Billions more people need to get the bug and recover in order to have anything close to herd immunity. This means that lockdowns are the way for years to come so long as the present regime remains in power.

American prosperity for decades has relied on: relatively low inflation, fairly stable rules of the game, and widening trade with the world and China in particular. All three are at an end. Yes, it is heartbreaking to watch it all unfold.

I’m not defending China’s human rights abuses. Far from it. But the best way to end these abuses is through engagement, not estrangement.

We all need hope right now but it’s very difficult to find, since we are on a course that is not likely to be fixed for a very long time.

Tyler Durden Wed, 11/30/2022 - 19:05

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