Global Clean Energy Index and More

1. Economists are now thinking that yields could retest the March lows gain on the 10 year treasury. Consumer sentiment numbers look bad, this could signal reduced consumer spending and thus we may see economic plateauing.

2. Government bond trading is going lull in the second largest market, Japan. This has to do with the BOJ playing an increasing role in the local capital markets. The BOJs assets run to around 130% of GDP, nearly twice the share held by the European Central Bank and nearly four times that of America’s Federal Reserve.

3. Climate tech business is booming. It looks much more financially viable and sustainable. The S&P Global Clean Energy Index has generated annualised total returns of more than 40% over the past three years, more than double those of the benchmark S&P 500 index of big American firms.

4. Europe has made regulatory changes to make the lives of entrepreneurs easier. Going bust in Europe was a crime before, and thus the founder couldn’t manage to fund any of his future projects. They were highlighted in public media and banks maintained a list of such founders. Whereas in Silicon Valley, going bankrupt is considered part of the journey. This is now changing and banks are ready to offer founders the chance to make mistakes.

5. In both June and April, the spike in used-vehicle prices accounted for about one-third of the overall increase in the cost of living. But why is this happening? A thing as small as a computer chip is at the heart of this broader problem. Because these chips weren't available at the right time, manufacturers could produce new cars, while the demand kept on surging with the added need to travel in silos. This was the opportunistic gap used car owners sought to increase margins. So this is a classic case of supply side inflation trigger. And in cases like these reducing interest rates for the manufacturers wont bring the used car prices down.

6. The Great Resignation. US private sector workers have been quitting at record rates in 2021, with the quits rate first reaching a new high of 2.7% in April 2021 and again in June 2021, representing about 4M jobs each month. As retailers and restaurants scramble to re-hire workers, automation solutions like store shelf tracking, self-driving delivery trucks, and even kitchen robots are gaining attention.

7. US Treasury issued $3 trillion in debt back in Jan to fund its stimulus program. But that hasn’t been spent all in all. Now the TGA (treasury general account) with the Fed stands at around $390 B, which is well within the $500 B debt ceiling. This goes to show that the government has done the majority of the public spending and now they have to live off the remaining balance in the TGA account unless they plan to raise more debt, which seems unlikely given the disinterest shown by the buyers in the govt sec market in the last couple of months. And furthermore, the treasury is already sitting with 28.3 trillion of public debt, so thus now to spend more they would definitely need to inch the debt ceiling a notch higher.

8. The real yields are at an all time low, with nominal treasury yields falling and inflation rising every month. We have seen this bout of negative reals previously from 1980 to 2005. Those were some really tough years for the policy makers and the corporates. It took a while for them to pull the reals in the positive territory.

9. Interesting Charts: