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Thursday, July 03, 2025

 

Gold helps Canada’s stocks benchmark outshine the S&P 500

Stock image.

Despite ongoing trade tensions and a weakening economy, Canada’s main stocks benchmark outshone its US counterpart in the first half thanks to a record-breaking gold rally.

The S&P/TSX Composite Index climbed 8.6% for the year to June 30, higher than the S&P 500’s 5.5% advance over the same period. In US-dollar terms, the Toronto index was up 15%, mirroring the gains of other gold-heavy world indexes.

“No doubt that it’s been driven by gold,” said Sadiq Adatia, chief investment officer at BMO Asset Management Inc. Investors rushed into gold and precious metals miners to hedge some of the risks caused by US President Donald Trump’s tariff threats as well as geopolitical tensions and conflicts in the Middle East. That rush benefited the Toronto stocks gauge.

“You need to have things that can bulletproof your portfolio, and gold is the one that does that the best,” Adatia said.

Gold and silver stocks drove half of the gains in the S&P/TSX Composite Index through June 18, an “exceptional” run that was “driven by heightened uncertainty surrounding US tariffs and their potential impact on economic growth,” Bank of Nova Scotia analyst Simon Fitzgerald-Carrier wrote in a note published that day.

Four of the 10 biggest gainers through the first half of the year were precious metals stocks, including Agnico Eagle Mines Ltd. and Wheaton Precious Metals Corp. Moreover, most of the top 10 performing stocks in the index are precious metals miners, led by Lundin Gold Inc.’s nearly 135% climb.

The question now is whether the gold-led rally will fade, after prices for the metal declined at the end of June as both geopolitical and trade risks waned.

“I don’t think gold is going to have the same run in the second half that it had in the first half because a lot of the ambiguity and the uncertainty that we were facing earlier on has subsided,” BMO’s Adatia said.

Revenue forecasts for S&P/TSX members have slipped “notably” since April, and the index’s large exposure to the “struggling energy sector is disproportionately weighing on overall forecasts,” Bloomberg Intelligence strategist Gillian Wolff wrote in a June 11 note.

Still, Lesley Marks, chief investment officer of equities with Mackenzie Investments, points to growth opportunities for Canadian stocks beyond the gold story. Global investors are putting money into the TSX because of its heavy weighting toward materials, energy and financials, she said.

And Canada’s new Prime Minister Mark Carney is “championing a very pro-investment, pro-growth and economically focused” mandate, Marks said.

She added that the S&P/TSX Composite is trading at a 17x price-to-earnings ratio, much lower than the S&P 500’s 24x valuation.

“I think that there is a fundamental story around Canadian stocks because of policy changes from our government, but also a valuation story,” Marks said.

(By Stephanie Hughes and Geoffrey Morgan)

Friday, June 27, 2025


The Wobbling Planet – It’s Destabilizing!



June 27, 2025

A blue and green planet AI-generated content may be incorrect.

Science is under attack throughout the world. Meanwhile, there’s substantial scientific evidence that the planetary system is turning unstable. This may not strike most people as a big problem because ‘life goes on,’ an attitude that’s more and more prevalent and one of the factors behind anti-science attitudes. But if, in fact, the planetary system is becoming unstable, if it is true, life will be hell.

Johan Rockström, joint director of the Potsdam Institute for Climate Impact Research/Germany, internationally recognized for his work on global sustainability, recently gave a 30-minute speech that specifically addresses the stability of the Earth system. This is a synopsis of his remarks, including some editorial comment.

“We are facing, undoubtedly, in all forms of risk assessment, a decisive moment for humanity’s future on planet Earth… I’m talking about for the first time in human history on planet Earth that we are forced to seriously consider the risks we are destabilizing the stability of the entire planet.” (Johan Rockström, Potsdam Institute speech Publica 25Decisive Decade: From Global Promises to Planetary Action)

“We are hitting the ceiling of the biophysical processes, the hardwired process that regulates the very functioning of the Earth’s system,” Ibid.

All parameters of planetary health for human well-being have similar trajectories, sharply upwards. Until the 1950s, we had a linear system (relatively stable and predictable but unsustainable exploitation). Starting in 1955, with 3.5 billion people, an exponential rise suddenly took off, characterized by overexploitation of biodiversity, acid rain, and massive deforestation. All forms of pressure on the planet took off to the point where today we are in an entirely new geological epoch, and it’s happening within only one generation, remarkably, in the context of a stable planetary system ever since humans first huddled together around fires. It’s potentially the most momentous happening in all of human history, period!

Civilization is exiting the Holocene, entering the Anthropocene. Humans are now the dominating “force of change.” This is too new, too quick for a 4.5-billion-year-old planet system accustomed to old-fashioned ways. We’re already hitting the ceiling of stable planetary processes and starting to push through. For example, last year marked the first time in history that a full year exceeded 1.5°C above pre-industrial levels, the warmest temperature on Earth over the last 100,000 years. We’re starting to feel it, see it, smell it, and taste it, record wildfires, record floods, record hurricanes, record tornados, record coral bleaching, record glacial melt, record droughts, record sea level rise, record dry riverbeds, record heat deaths, record ocean acidification, record insect loss, and record marine loss. Humans are the only gainers.

The 2023 Watershed Year

According to Rockström: “We are already outside of the Holocene range of variability… let me bring you to why we are so nervous today. Why we have over the past 12 months heard scientific language that I’ve never experienced in my whole career, mind-boggling, shocking data, observations that we never thought was possible, that we would never be able to predict in our models… it’s the observation of air temperature and sea surface temperatures”:

“We have a global climate crisis.”

“We are in a situation of dire need of change.”

In 2023, a 0.3°C jump in global temperature occurred. The planet experienced a sudden 10-times increase in only 12 months; it’s unheard of.

Under normal circumstances, with the 2023 watershed year, when global temperature suddenly spikes up, it stabilizes for a period of time, but it demonstrated an alarming change in behavior and serious cause for concern because El Niño (natural warming phase) and La Niña (natural cooling phase) cycles that always influence the climate system are not having any impact, none!. This has never happened before.

Rockström: “There is something wrong. What is happening?” Honest answer: “We do not know yet.”

The rapid escalation of planetary instability has sparked unprecedented concern as the interplay of human activity with natural systems has created a volatile environment, thunderstorms become more severe, rainstorms more powerfully destructive as atmospheric rivers suddenly bring flash floods, and droughts longer, hotter.

Increasingly, feedback mechanisms include the accelerated release of methane from thawing permafrost, which is a potent greenhouse gas, and the retreat of polar ice, which diminishes the planet’s reflection of solar radiation and further intensifies warming. The urgency of the situation has led to calls for systemic change, not only in reducing greenhouse gas emissions but also in restructuring economies and societies to prioritize sustainability over short-term gains. Yet, global emissions continue, and international agreements fall short of binding commitments or fail altogether in implementation.

The risks are glaring, for example, the latest data on the Brazilian Amazon rainforest tells the story, as Earth’s richest ecosystem, the Brazilian portion of the rainforest, which is the largest part, has already tipped. It’s no longer a carbon sink. It’s a carbon source. This has ominous warning signs written all over it. For the first time, we are seeing signs of the planet losing its resilience, losing its buffering capacity, which the science community refers to as “climate sensitivity.”

We now have the evidence of what occurs as certain limits are exceeded. For example, coincident with 1.5°C, “we’ve never before seen the frequency, amplitude, and strength of droughts, fires, floods, heat waves… There’s been a 60% increase in droughts.” The signs are everywhere. The planet is leaving the all-important “corridor of life.” The planet, for over one million years, never exceeded +2°C during warm interglacial and never below -5°C deep ice age. It’s the biogeochemical system that we depend on. It is threatened.

It’s already approaching the high end of that range. There are 16 tipping elements that regulate the Earth system. Six of those are in the Arctic, which is ground zero for Earth: 1) Greenland ice sheet, 2) boreal forest, 3) Arctic winter ice, 4) permafrost system, 5) connected by the North Atlantic and AMOC. Also impacting, the Amazon rainforest, all three big systems, Antarctica, and tropical coral reef systems. These regulate the stability of the climate system.

Risk of Domino Effect

Temperatures at which a system tips from a state that helps us survive to a state of self-amplified warming include threats to the Greenland Ice Sheet, West Antarctica Ice Sheet, abrupt permafrost thawing, tropical coral systems, collapse of Labrador Sea ice and collapse of Barren Sea ice. These are all at risk. There is strong evidence that these systems interact with each other, meaning, there’s a risk of cascading impacts. Where one system triggers several others. These six systems are already outside the boundary of safe space. This is an extremely significant development for the first time in human history.

We’re at a point where we need to buckle up for a challenging journey. The probability of not exceeding 1.5°C on a sustained 10-year basis is no longer possible. No matter what course is taken going forward, “it will get worse before it gets better.” And every tenth of a degree warming has big impact going forward. Along those lines, science has identified big costs to the global economy based upon current economics with up to 20% costs over the next decades as a result of loss of planetary stability.

The amount of time remaining to take mitigation measures is running short. Based upon analyses by the Intergovernmental Panel on Climate Change (IPCC), we only have 200 Gt CO2 remaining in the global carbon budget to achieve a 50/50 chance of holding to 1.5°C, after an expected upcoming overshoot to 1.7°C. That’s five years of global emissions. Five years to accomplish “decades of work” to hopefully hold the line.

Positive Signs Within a Narrow Window of Opportunity

Efforts are being made to harness innovative technologies and traditional ecological knowledge to mitigate. From reforestation projects aimed at sequestering carbon to advancements in renewable energy, the pathways for resilience are there. However, time is running out; incremental progress will no longer suffice to prevent catastrophic outcomes. A lot needs to squeeze into the next five years, or all bets are off.

There are some favorable signs, for example, renewables are on a strong pathway in parts of the world economy, 90% of vehicle sales in Norway today are fully electric. In Denmark, the EV market share is almost 60%.

Rockström: “As of today, we are in a danger zone. But we still have an opportunity to turn this around.”

Or does the strong anti-science political movement, emanating from the United States throughout the world, throw a wet blanket on the crucial five years ahead?

Useful link: Resources for Researchers and Scholars Under Threat in the United States, National Academies, Sciences, Engineering, Medicine.

Robert Hunziker lives in Los Angeles and can be reached at rlhunziker@gmail.com.


WOBBLIES



Monday, June 02, 2025

 

India’s Foreign Trade: How Free Can it be?



Arun Kumar 




The argument that India should lower tariffs and allow import competition is a generalist one, inconsiderate of several economic and political factors.

A case is being made out for India to lower tariffs and allow import competition. It is added that this would benefit India irrespective of what President Trump wants. The PM addressing the 10th NITI Aayog Governing Council meeting suggested that the States should leverage the Free Trade Agreements (FTA) India is signing with several countries. In other words, the FTAs are going to be the new normal. Till now, India has had adverse experience with FTAs and that is why protectionism was increased during PM Modi’s first two terms.

Proponents of free trade have approved of the cuts in tariffs in the Union Budget 2025-26. They argue that India should offer greater market access for imports just as it seeks access from others. Is this just given that different countries are at different levels of development, and especially since the USA is going protectionist? 

In quick succession, twice Trump has asked the CEO of Apple, Tim Cook, to build in the US and not in India. This also undermines foreign investment in India. This is inopportune currently, when net foreign investment in India has precipitously fallen by 96 percent. India needs more investment to boost its growth. 

India’s Experience With Opening up

In the 1980s, India initiated opening its markets to increase imports in the hope that soon exports would rise – the idea of a J-curve. It was said that India imports too little. The result was a sharp rise in foreign debt in spite of a surge in foreign remittances from the Gulf. 

By 1988-89, a foreign exchange crisis ensued, triggered by the Gulf crisis and India came close to defaulting on debt repayment. It had to seek adjustment from the IMF and loans from the World Bank.

India’s tariffs have been a result of multilateral negotiations in the WTO involving give and take across nations. India gave concessions in TRIPS, TRIMS, Services, etc. President Trump is repudiating all this so as to bring back into the USA, manufacturing and jobs that have migrated to China, etc., because of the big wage differentials. But, this would require the USA to permanently levy high ‘protectionist’ tariffs. 

Other nations too would levy high reciprocal tariffs on US imports. This would lead to decline in trade with the US, inflation and fall in demand. Each nation would then look for other markets to sell what they were selling to the USA. It would be a godsend for them if India cuts tariffs in general and unilaterally.  

India’s experience with FTAs with Korea, Australia and ASEAN has not been promising. The trade deficit has increased due to a surge of imports. So, bilateral agreements have not helped in boosting India’s manufacturing and trade. Though controversial, it is suggested that India’s share of manufacturing (at current prices) has declined in recent times. 

India’s difficulties have also come in the way of early completion of negotiations on FTAs with the UK, EU and others. An agreement has now been reached with the UK but it remains to be seen how beneficial it would be to India. So, a general argument in favour of lower tariffs and allowing more imports is not justified by India’s recent experience.

Free Trade Limitations

Allowing import competition is an argument for ‘free trade’. It may hold in the hypothetical ‘first best’ situation. But the reality is ‘second best’ since there are distortions. If India opens up while other nations use tariff and non-tariff barriers to protect their economy, the Indian economy would be swamped. This is also President Trump’s argument for protecting the US economy by imposing high tariffs. So, under the circumstances, multilateral agreement, like under WTO, is required on not only tariffs but the wider trade. Unfortunately, President Trump is undoing WTO gains.

If the US feels the need to protect itself then India stands little chance under free trade. The argument for free trade is based on ‘comparative advantage’. It assumes that capital and labour can smoothly switch across sectors. That is far from the reality. India has disguised unemployment (surplus labour) in agriculture and trade because neither is there any alternative work nor is it possible to generate self-employment, given the lack of access to capital. 

Free trade leads to differentiation across sectors and sections of society. There are gainers and losers from it. For instance, India cannot afford to open agriculture as demanded by President Trump. Most Indian farmers are small and marginal, cultivating less than 5 acres of land. They have little capital, weak access to credit and incomes close to the poverty line. This is unlike an average American farmer who is big by Indian scale and reportedly gets an average subsidy of Rs.26 lakh per annum. So, opening up Indian agriculture under free trade would impact adversely 60% of Indians who directly or indirectly depend on agriculture. Even Indian industry has hardly benefited from free trade agreements already signed. 

Technology: Crux of Competitiveness 

India’s technological weakness needs to be factored into any argument for free trade. It is hard to compete on equal terms with those who have developed technology. There is the ‘infant industry’ argument. Namely, industry needs protection to develop otherwise it would die a premature death. But, how long can the excuse of the infant industry argument be used? 

As long as the nation lacks the capability to develop technology and that depends on its R&D expenditures. India has been a laggard, spending 0.65 percent of its GDP, since the private sector invests little on R&D. Other dynamic nations spend 2 to 4 percent of their GDP on R&D.

Technology is a moving frontier. Advanced technology of yesterday becomes intermediate and low technology later on. So, India has moved up the technology ladder but has largely been at the intermediate and low technology levels. So, it has to compete with the other developing countries and that leads to adverse income terms of trade.  

Kaldor argued that there is an ‘advantage of a late start’. That is, those who are late developers have the technology path laid out and they can advance rapidly. But that requires R&D capability and in its absence, there is a ‘disadvantage of a late start’. India is suffering from this given its poor R&D effort. Further, modern technologies are hugely expensive and most developing countries are unable to invest that kind of funds. India could spend a lot more but this has not received the priority it deserves.

In brief, making a general argument that India should lower tariffs and allow import competition does not factor in a variety of real life economic and political factors.

Arun Kumar is a Retired Professor of Economics at the Jawaharlal Nehru University, Delhi. The views are personal.

Courtesy: The Leaflet

Friday, May 23, 2025

OLIGOPOLY

Hungary's richest see €5bn surge in wealth, with Orban allies among biggest gainers

Hungary's richest see €5bn surge in wealth, with Orban allies among biggest gainers
Prime Minister Viktor Orban (right) and Lorinc Meszaros (left) have been friends since they were at school together. / bne IntelliNews
By bne IntelliNews May 23, 2025

 

Tuesday, April 22, 2025

Wall Street and the dollar tumble as investors retreat further from the United States


By The Associated Press
 April 21, 2025 

Traders at the New York Stock Exchange. Photographer: Michael Nagle/Bloomberg (Michael Nagle/Bloomberg)

NEW YORK — Wall Street weakened Monday as investors worldwide get more skeptical about U.S. investments because of U.S. President Donald Trump’s trade war and his criticism of the Federal Reserve, which are shaking the traditional order.

The S&P 500 sank 2.4% in another wipeout. That yanked the index that’s at the center of many 401(k) accounts 16% below its record set two months ago.Trade War coverage on BNNBloomberg.ca

The Dow Jones Industrial Average dropped 971 points, or 2.5%, while losses for Tesla and Nvidia helped drag the Nasdaq composite down 2.6%.

Perhaps more worryingly, U.S. government bonds and the value of the U.S. dollar also sank as prices retreated across U.S. markets. It’s an unusual move because Treasurys and the dollar have historically strengthened during episodes of nervousness. This time around, though, it’s policies directly from Washington that are causing the fear and potentially weakening their reputations as some of the world’s safest investments.

Trump continued his tough talk on global trade as economists and investors continue to say his stiff proposed tariffs could cause a recession if they’re not rolled back. U.S. talks last week with Japan failed to reach a quick deal that could lower tariffs and protect the economy, and they’re seen as a “test case,” according to Thierry Wizman, a strategist at Macquarie.

“The golden rule of negotiating and success: He who has the gold makes the rules,” Trump said in all capitalized letters on his Truth Social Network. He also said that “the businessmen who criticize tariffs are bad at business, but really bad at politics,” likewise in all caps.

Trump has recently focused more on China, the world’s second-largest economy, which has also been keeping up its rhetoric. China on Monday warned other countries against making trade deals with the United States “at the expense of China’s interest” as Japan, South Korea and others try to negotiate agreements.

“If this happens, China will never accept it and will resolutely take countermeasures in a reciprocal manner,” China’s Commerce Ministry said in a statement.

Also hanging over the market are worries about Trump’s anger at Federal Reserve Chair Jerome Powell. Trump last week criticized Powell again for not cutting interest rates sooner to give the economy more juice.

The Fed has been resistant to lowering rates too quickly because it does not want to allow inflation to reaccelerate after slowing nearly all the way down to its 2% goal from more than 9% three years ago.

Trump talked Monday about a slowdown for the U.S. economy that could be coming unless “Mr. Too Late, a major loser, lowers interest rates, NOW.”

A move by Trump to fire Powell would likely send a bolt of fear through financial markets. While Wall Street loves lower rates, largely because they boost stock prices, the bigger worry would be that a less independent Fed would be less effective at keeping inflation under control. Such a move could further weaken, if not kill, the United States’ reputation as the world’s safest place to keep cash.

All the uncertainty striking pillars at the center of financial markets means some investors say they’re having to rethink the fundamentals of how to invest.

“We can no longer extrapolate from past trends or rely on long-term assumptions to anchor portfolios,” strategists at BlackRock Investment Institute said in a report. “The distinction between tactical and strategic asset allocation is blurred. Instead, we need to constantly reassess the long-term trajectory and be dynamic with asset allocation as we learn more about the future state of the global system.”

That in turn could push investors outside the United States to keep more of their money in their home markets, according to the strategists led by Jean Boivin.


On Wall Street, Big Tech stocks helped lead indexes lower ahead of their latest earnings reports due later this week.

Tesla sank 5.7%. The electric vehicle maker’s stock has more than halved from its record set in December on criticism that the stock price had gone too high and that CEO Elon Musk’s role in leading the U.S. government’s efforts to cut spending is damaging the brand.

Nvidia fell 4.5% for a third straight drop after disclosing that U.S. export limits on chips to China could hurt its first-quarter results by $5.5 billion.

They led another wipeout on Wall Street, and 92% of the stocks within the S&P 500 fell.

Among the few gainers were Discover Financial Services and Capital One Financial, which climbed after the U.S. government approved their proposed merger. Discover rose 3.6%, while Capital One added 1.5%.

All told, the S&P 500 fell 124.50 points to 5,158.20. The Dow Jones Industrial Average dropped 971.82 to 38,170.41, and the Nasdaq composite tumbled 415.55 to 15,870.90.

Gold also climbed to burnish its reputation as a safe-haven investment, unlike some others.

In the bond market, shorter-term Treasury yields fell as investors expect the Fed to cut its main overnight interest rate later this year to support the economy.

But longer-term yields rose with doubts about the United States’ standing in the global economy. The yield on the 10-year Treasury climbed to 4.40%, up from 4.34% at the end of last week and from just about 4% earlier this month. That’s a substantial move for the bond market.

The U.S. dollar’s value, meanwhile, fell against the euro, Japanese yen, the Swiss franc and other currencies.

___

AP Business writer Elaine Kurtenbach contributed.

Stan Choe, The Associated Press

Saturday, January 25, 2025

Fossil Fuel Billionaires are Cashing In on Trump


 January 24, 2025
Facebook

Photograph by Nathaniel St. Clair

As he left office, President Biden warned of an emerging oligarchy in this country — rule by and for a small number of wealthy people and corporations.

After donating heavily to President Trump’s campaign, the fossil fuel industry in particular has already begun to reap return on their investments. Welcome to the age of “Oil-Garchy.”

Trump has nominated some of the most vociferous climate deniers and advocates for the oil, gas, and coal industries for key positions overseeing the environment, energy, and public lands. He picked former Rep. Lee Zeldin, a climate denialist, to run the Environmental Protection Agency and Chris Wright, CEO of fracking company Liberty Energy, to oversee the Energy Department.

Meanwhile the top 15 fossil fuel industry billionaires have already seen their personal combined wealth rise from $267.6 billion to $307.9 billion — a gain of over $40 billion, or 15.2 percent — since April 2024.

The Climate Accountability Research Project (CARP) released its first monthly tracking report, Pipeline to Power: Trump and the “Oil-garch” Wealth Surge, that will monitor wealth gains and losses by top billionaires in the sector over the coming year. According to the report, the first wave of big wealth gainers include fossil fuel CEOs and scions of billionaire families like the Kochs.

For these billionaires, it’s time to cash in.

On April 11, 2024, the CEOs and leaders of the oil and gas industries gathered at Mar-A-Lago for a meeting with then-candidate Trump about energy policy.

Trump used the occasion, according to witnesses, to make a brazen transactional pitch: raise $1 billion for his campaign and he would do their bidding. Trump told the assembled that the billions they would save in taxes and legal expenses after he repealed regulations would more than cover their billion-dollar contribution.

Already, Trump is moving to expand offshore drilling, weaken environmental rules, scrap electric vehicles, and stop new wind projects, among other policies opposed by the industry groups. Trump also vowed to reverse President Biden’s pause on new LNG exports.

Present at the Mar-a-Lago Club on that April day were industry leaders such as Harold Hamm, the wildcat fracker and chairman of Continental Resources, who played an influential role in Trump’s first administration. Also present was Doug Burgum, governor of North Dakota and Trump’s nominee to Interior Secretary, a position overseeing gas leases on public lands.

Other attendees included leaders from the American Petroleum Institute and executives from Chevron, ExxonMobil, and ConocoPhillips, along with fracking producers Cheniere Energy and EQT.

Hamm and Vicki Hollub, CEO of Occidental Petroleum, organized donors within the fossil fuel sector to support Trump and funnel money to his campaign. They didn’t raise a billion dollars, but they helped move hundreds of millions to PACs supporting Trump and directly to the candidate.

According to Climate Connections at Yale University, the fossil fuel industry spent $219 million to influence the new U.S. government, including $26 million in direct oil and gas industry contributions to (mostly) Republican lawmakers and nearly $23 million in oil and gas industry funds went directly to Trump and his PACs.

No wonder Hamm just hosted an exclusive inauguration watch party for fossil fuel executives to celebrate Trump’s re-election.

If the last few years taught us anything, it’s that record levels of oil production and fossil fuel profits don’t lead to better prices for consumers — and they come with the additional price of climate chaos for our communities.

This is what “Oil-garchy” looks like. And we all need to stand up to it.

You can see the whole report at www.climatecriminals.org.

Chuck Collins directs the Program on Inequality and the Common Good at the Institute for Policy Studies, where he also co-edits Inequality.org.