I just finished a workshop with Youngsook Park, a futurist in Korea, and Jose  Cordeiro, one of the founding faculty of Singularity University.  Jose is most passionate about the business of life extension. He is convinced that he might be able to live for ever. Plan A is immortality according to him. Plan B is cryo-preservation.  What was interesting from his talks was that there are already examples of ageless cells in the human body – bacteria and cancer cells. And he believes that the technology will be around soon to make ageless cells. already significant life extension has been made in mice (3X), mosquitoes (4X) and worms (6x). It is interesting that with all the technology we have, we haven’t really extended the natural human life span until now. All we have done is reduce the chances of early death with our medicine. So the opportunities are immense. And huge resources are being putting in to this.

Also for his plan b, there has already been examples of scientists reviving living organisms after preservation. First, we have been doing it with organs, sperm, eggs, embryos and tissues. Second, recently some works were revived and they showed signs of memory.

New Silk Road

Chinese President Xi Jinping just hailed China’s Belt and Road initiative as “the project of the century” as delegates from 100 countries, including 28 heads of state, met at a $1bn complex in Beijing this week.

“Pride of place went to Russian president Vladimir Putin, while the largest economies in Asia and the west sent lower-level representatives. China used the forum to announce lavish new financing plans at a time when the US and Europe are scaling back their international commitments. Attendees pushed for greater clarity on the ambitious but hazily defined strategy. For Mr Xi, the forum is a chance to project political influence to two audiences: an outside world looking for global leadership amid unpredictability in Washington and the fallout of Brexit; and within China, where the president is positioning himself for his second term as head of the ruling Communist party.  “Spanning thousands of miles and years, the ancient silk routes embody the spirit of peace and co-operation, openness and inclusiveness, mutual learning and mutual benefit,” Mr Xi said in his opening speech. “We should foster a new type of international relations featuring win-win co-operation; and we should forge partnerships of dialogue with no confrontation and of friendship rather than alliance.”

The Western press is making a big deal out of this. The Economist suggests that the “ultimate aim is to make Eurasia (dominated by China) an economic and trading area to rival the transatlantic one (dominated by America).”

Just this week, I put out a seminal essay by Robert Kaplan about the disintegration of Europe back into Eurasia. In fact, Europe isn’t a continent. Its a civilisation thats on the Western edge of a vast continent, Eurasia. And Kaplan writes a mesmerising article on the future of this landmass. You can read it here:

Return of Marco Polo

I do think its important to think about Eurasia. And one must absolutely follow all of this as it will have profound ramifications I am sure. However, as readers know I am still a little skeptical doubt China becoming the new leader of globalisation. Its certainly talking all the talk. But even in the realm of open trade, it doesn’t seem to be ‘walking the walk’. A lack of reciprocity has been of the big themes at the American Chamber of Commerce in recent years. Also, there are some legitimate fears that China is merely exporting its business model and all its flaws. If the focus is infrastructure, isn’t this what China has too much of anyway. Do we need another credit binge across Eurasia? Clearly the Chinese will prefer to lend money here than keep it at low interest rates in US treasuries. But will there be good returns longer term?

 Eric Peters, the CIO of One River Asset Management, made some pretty bleak comments recently.

“No one has a model for this,” said the CIO.

 “Everyone buying assets today is building somewhat plausible arguments, but they’re really all just geared to decisions made in Beijing.” 

 The most crowded trade in the world is cognitive dissonance on China. “We need persistent increases in debt relative to GDP for the world economy to function. And since 2011, 100% of global non-financial private-sector net credit creation has occurred in China. Across the western world, it’s been zero.” Since 2008, non-financial private-sector credit has risen 20% per year in China. In the west, net credit creation occurred through rising government debt – but for that fact, our economies would’ve suffered profoundly. Instead, global asset and liability levels have grown inexorably, led by Chinese credit creation.

 “At 20% annual credit growth, China’s asset (and liability) base doubles every 3.5 years.” Seven years ago China’s asset base was roughly $15trln. Then it doubled. And doubled again.

 “China’s asset base today is roughly $60trln, on its way to $120trln sometime in 2020,” he laughed, his spreadsheet sprouting trees, racing to the sky. “The US asset base is $90trln. They’ll pass us in 2yrs. When we were $60trln, China was $10trln.”

A rise of this magnitude and pace is as unprecedented as its impact is ubiquitous; more CO2, fewer rhinos, higher global asset prices, lower global defaults.

 “People believe they’re leveraged to all of these wonderful things happening in the world. But they’re simply leveraged to what happens in China.” 

 Oil prices, iron ore, copper, real estate, and today’s global cyclical recovery are all directly tied back to China. And this can all continue for a time. Or end abruptly.

 “What makes this so difficult to model is that this’ll be the first cycle that ends based on decisions made in Beijing, not Washington or Frankfurt.”

I do nt necessarily agree with his conclusion. I think that the Fed can have plenty of impact on how this all ends. However, he is right to point out the immensity of this bubble.

The Chinese macro appears to be rolling over again. But one never knows whether this is the last time, or whether they will just push things back again with credit.

Lameduck President? Russia et al

I think David Stockman nicely summarises my overall stance on the threat of Russia – and elsewhere.

“You know that’s a joke. If the Russians were going to land on the shores of New Jersey, they would need vast power-projection capability – aircraft carriers and the capacity to land troops.

None of that is even remotely possible. The Russians have got one 50-year-old, smoke-belching aircraft carrier on duty in the Eastern Mediterranean. It probably couldn’t get out of the Strait of Gibraltar if it had to. So how could Russia threaten the security or the safety of anybody in the U.S.?

It couldn’t, unless you believe that Vladimir Putin – the ultimate chess player, the Cool Hand Luke of the global scene today – is foolish enough to risk nuclear retaliation by attacking us and have Russia turned into a parking lot.

We have enough nuclear deterrent on our Trident submarines alone. And we’ve had it ever since 1980. Not to mention that the entire Russian economy is not even as big as that of New York City – $1.6 trillion for the New York metro area and just $1.3 trillion for Russia. Russia is mainly a huge hydrocarbon field with a few nickel mines, 100 million acres of wheat, and an aging workforce that has a great fondness for vodka and other distractions.

Then there’s China… Do you really stay up at night worrying that China is going to send some missiles, or a fleet of aircraft, over the Pacific to bomb the 4,000 Walmart stores in the U.S.?

Its economy would collapse within six months without the bloated global system of exports. That’s what the whole “Red Ponzi” is based on. If the Chinese want to build sand castles in the South China Sea, more power to them. But they aren’t a threat to us.”

However, Trump’s firing of Comey has given his enemies a great opportunity. We are moving in to a particularly difficult political phase I think. Liberals/progressives who think the Trump has been outrageous since day one might not be able to discern whats really going on. But I think there might be a shift now. His enemies can see blood. But Trump might be a fierce opponent and he is still Commander-in-Chief so there might be an erratic response. It could involve a major shake up in his team, but it might also involve foreign policy.

Perhaps this is why Nouriel Roubini, the now-insider economist, made this stark warning on geo-political risks recently and even warned of something specific kicking off with North Korea.

http://www.marketwatch.com/story/why-are-markets-ignoring-geopolitical-risks-2017-05-08

And probably, the legislative agenda might now get further postponed. And this could have fall out on the stock market.

This is happening at a time when the data is still softening. In fact, the so-called ‘soft’ data which includes sentiment and psychological data is now starting to roll over and follow the weaker ‘hard’ data.

Investments

I have mentioned that incredibly interest picking up in financial technology and crypto-currencies before.  This seems to continue. All I would say is ‘be careful.’ This is indeed the future, but don’t just chase things because they have gone up.  I have been asking myself whether the run up in these currencies is actually a ‘stealth’ crash in fiat currencies. To some extent, the buying from China does indeed reflect stresses in their system.  As we know many affluent Chinese have been desperate to get their money out of the country for some time.

But I also wonder what happens if there is a crash in traditional financial assets? I suspect that given the run up, these crypt-currencies might well fall initially on any crash.

The ICO market continues to take off as we have suggested it would. This is one update here about the ICO vs VC funding space.

https://www.cbinsights.com/blog/blockchain-ico-vc-funding-pace/

Its important to monitor this. And perhaps you will find business models you like coming up. Of course, its not regulated properly yet. So there are  big risks.

 Movements

I am going in to a Zen retreat soon but will make some comments for mainly subscribers whilst that is going on. I am then excited to be going on a bit of a roadshow in Europe and the US. Lots of things are happening and I really want to make my difference.

 

 

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