A (brief) summary of @theallinpod Ep. 87 ๐Ÿงต

Topics include:

- emerging markets (EMs), Sri Lanka situation
- the latest 9.1% CPI print
- current markets sentiment
- @NASAWebb
- animal testing, @friedberg certified good guy
- @POTUS' business unsavvy-cabinet

2/ First things first:

1โƒฃ As a result of being too real wid it, @DavidSacks is now in witness protection.

2โƒฃ @Jason is, reportedly, wearing polyester, with @friedberg following suit, effectively setting the scene for an outfit-matching 2v2 battle.

Who will emerge victorious?
3/ Emerging markets

There are generally 4 types of countries if you are to sort them by the level of market development:

- developed (US, Europe, Japan)
- developing (BRICS)
- frontier (Sri Lanka falls here)
- '3rd world'

2, 3, 4 are considered emerging (EMs)
4/ Developed countries are characterized by slower, more predictable growth (e.g. 2-3% YoY GDP).

The rest are characterized by (ideally) faster, more variable growth with increased volatility and risk (e.g. 6-10% YoY GDP).

Said volatility increases as you go down the list.
5/ Currently, there is a total of ~$300 trillion of global debt and ~$100 trillion of that is in EMs.

Right now, the US bond yield is high at 3%

(US) Bonds are considered very safe investments, which has been resulting in significant capital outflow from EMs (higher risk).
6/ You can see a chart from @Jason at 3:35

Next to high bond yields, we have high inflation and slowing growth.

The combination of the above makes it harder for EMs to attract investments. But the problem is even bigger as $$$ is actually getting OUT.
7/ Currently, 20% of EM debt is at risk of defaulting. As the global economy is connected, this creates an even higher risk of trickle down effects that can affect the whole $300 trillion pie.

Detailed and better explained overview by @friedberg here:
8/ 19 developing countries' sovereign debt is now trading at distress levels, with 3 of those already defaulted.

A situation like this is ripe for opportunistic countries to seize global power.

Is China best positioned to capitalize?
9/ Sri Lanka situation TL:DR

The government of Sri Lanka is very corrupt, the country has a sovereign debt crisis and is a net importer of food and energy due to questionable ESG agricultural policies.

Top that with skyrocketing inflation, the country cannot even feed its own.
10/ The ESG policies, TL:DR

As a result of ESG policy requirements, Sri Lanka has banned the use of pesticides, leading to a one third decrease in local produce.

Decreased local produce + foreign investment outflows + more expensive food imports = hunger
11/ The ESG policies problem

They are soft law and effectively a tool to put poorer states at a disadvantage.

The name of the game is the following: richer countries can resist these policies by paying up, while poorer countries rely on @WorldBank loans to survive.
12/ So, as a poorer country you need to comply with these policies in order to receive funding, at the expense of reducing the amount local farmers produce.

As a richer one, you just continue what you were doing, which is produce and export more.

ESG ratings: US 54% / SL 98%
13/ Sri Lanka and Singapore: a lesson in public governance

In the 1960s, SL and SG were in a similar position, aka early innings of statehood.

Population: SL 9.8 million / SG 1.6 million
GDP: SL $1.4 billion / SG $700 million
GDP per capita: SL $142.78 / SG $428.06
14/ Today's numbers

Population: SL 22 million / SG 5.7 million
GDP: SL $85 billion / SG $400 billion
GDP per capita: $3.815 / SG $66176.39

Despite a relatively similar starting point (politically and geographically), Singapore has done way better.

Why is that?
15/ In the 1960s Singapore embraced multiculturalism by introducing English as an official language.

It invested tons in healthcare and education, while also making public service a reputable sector to be working in and having a small, but very effective government.
16/ Regardless of what outsiders had to say about the regime, the government of Singapore, arguably 'authoritarian', provided steady and predictable leadership in a low corruption environment.

This proved to plant the seeds for what is today a burgeoning economy.
17/ Sri Lanka, on the other hand, took a vastly different trajectory marked by:

- political instability and civil war
- corruption and inefficient spending
- alienation from (the whole) world, induced by inadequate foreign policy and subjection to 'wokeism'
18/ Great and detailed explanation of how that all came to be by @chamath and @DavidSacks starts here:

The segment also dives deeper into the above-mentioned ESG policies, the incentive mechanisms and how those (don't) work in practice. Must watch/listen.
19/ 9.1% CPI print and markets

- home sales listings are way up, sales (esp. luxury) are way down (chart @ 43:50 by @Jason)
- Canada just raised rates by 100 bps (1%)
- US market is expecting and pricing in an 80 bps hike for July, some even expect 100 bps
20/ @chamath:

"I'm worried we are in a sustained high inflation environment, but market reaction is interesting."


"We will 100% solve this. The question is how much pain does the FED want to inflict and we still don't know that yet."

21/ More on markets:

- psychological desire is for this to be over
- March people were in dismay, panicking
- today reality has been accepted and the market is ready to start looking at new things
- retail is now buying, general market participants likely to start moving this Q
22/ Some problems remain and this may not be the bottom:

- the possibility of the above-mentioned EM debt issue
- Taiwan
- Ukraine
- Russian gas

Market is waiting for resolutions and portfolio managers are not in a rush to deploy capital now - @friedberg
23/ @chamath's latest deal:

Uses your own body to help heal your kidneys if you are on the verge of chronic kidney disease.

$500m check
24/ @NASAWebb

It is a space telescope, positioned IN space, which enables it to get rid of the murkyness from our own atmosphere.

That way we can really capture the light coming from far far away, which makes for more detailed imagery.

Hubble vs James Webb below
25/ @friedberg: @NASAWebb enables us to see 4.6 billion years in the past and there is an unknown force 'pushing' the constituents of our universe away from each other, thereby expanding it.

@chamath s/o Greg Robinson, the project's engineering leader
26/ @friedberg adopted a Beagle:

Why? Beagles are the only dogs subject to animal testing because of their high pain tolerance.

Food for thought: How should animal testing be done, if at all? Is there an 'ethical' way to do it?
27/ @POTUS

The average business experience of Biden's top executive-branch appointees (sample size 68 people) is 2.4 years.

62% have 'virtually no' business experience.

Similar Trump appointees had 13 years of such experience.

~67% of Democrats want Biden out.
28/ Ukraine

Russians are slowing the flow of gas and shutting down the Nord Stream gas pipeline for 'annual maintenance'.

Supply is officially supposed to be back up on July 21.

Question: what would happen if there is a 2-3 day delay?
29/ The above was just my own reconstruction of this week's @theallinpod.

Thank you for reading and I really hope this has been useful! โค๏ธ

If you think I've made any mistakes, please do comment here so I can at the very least correct my own views/assumptions.
30/ I will aim to write one of these every week (and hopefully get better at it) with the hope of amplifying the @theallinpod, which has been instrumental for my learning of macroeconomics, politics, advancements in science, HIGH FASHION and everything in between.
31/ Follow me @stefanikus69 if this summary has been useful and if you want to see more of these going forward, plus a great deal of adjacent degeneracy and hot takes.

Goes without saying, check out the full @theallinpod Ep.87:

See you next week ๐Ÿซก

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