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In this episode, we discuss:

• How 2022 killed MMT
• Why buy gold
• The earnings recession risk
• Oil companies and the outlook for oil prices
• Banks and rising non-performing loans

If we look at the staggering decline of the cryptocurrency index in 2022, we may understand an uncomfortable truth. Cryptocurrencies were created as an alternative to the monetary insanity in the fiat currency world yet became a massive bet on the money expansion they were supposed to combat. Cryptocurrencies did not become uncorrelated assets, independent to the monetary policy cycle. Their market value was entirely dependent on monetary expansion.

The correlation between cryptocurrencies and non-profit tech stocks is enormous, but it is even clearer when we look at the impact of rate hikes and central bank balance sheet increase or contraction.

Cryptocurrencies should have benefitted from the rise in inflation and the destruction of purchasing power of currencies. However, their market value ended being a monster trade on central bank balance sheets rising.

The latest estimates from consensus for the main Latin American economies show a continent facing a lost decade. The region GDP growth has been downgraded yet again to a modest 1.1% for 2023, with rising inflation and weakening gross fixed investment. Considering that the region was already recovering at a slower pace than other emerging markets, the outlook is exceedingly worrying.

The poor growth and high inflation expectations are even worse when we consider that consensus estimates still consider a tailwind coming from rising commodity prices and more exports due to the China re-opening.

There are many mistakes in the G7 agreement to put a cap on Russian oil. The first one is that it does not hurt Russia at all. The agreed cap, at $60 a barrel, is higher than the current Urals price, above the five-year average of the quoted price and higher than Rosneft’s average netback price.

According to Reuters, “the G7 price cap will allow non-EU countries to continue importing seaborne Russian crude oil, but it will prohibit shipping, insurance, and re-insurance companies from handling cargoes of Russian crude around the globe, unless it is sold for less than the price cap”. This means that China will be able to purchase more Russian oil at a large discount while the Russian state-owned oil giant will continue to make a very healthy 16% return on average capital employed (ROACE) and more than 8.8 billion roubles in revenues, which means an EBITDA (earnings before interest, taxes, depreciation and amortization) that more than doubles its capex requirements.