Global warming? How about galactic cooling?!

Global cooling on the way? Be prepared!

The  climate is changing. We can agree on that.

The question is what is driving it, and what we can or should do about it. And possibly in which direction the wind is blowing.

In a recent short paper (by J. KAUPPINEN AND P. MALMI, June 29, 2019) the researchers demonstrate how natural changes in humidity explain, much better than, e.g., CO2 emissions, the variations in global temperatures over the last half century.

Variations in low cloud cover, and their corollary, changes in relative humidity, seem to be an order of magnitude more important for explaining both the general trend rise in global temperatures and even more so regarding the interimistic drops in temperature. The latter is of course wholly unexplained by the steadily rising levels of CO2.

The authors conclude that “During the last hundred years the temperature is increased about 0.1°C because of CO2. The human contribution was about 0.01°C,” i.e., “we have practically no anthropogenic climate change. The low clouds control mainly the global temperature

Note (Note: the paper has been criticized here). The results, however, have been corroborated by a team in Japan: “New evidence suggests that high-energy particles from space known as galactic cosmic rays affect the Earth’s climate by increasing cloud cover, causing an ‘umbrella effect’

It’s not us

So, humans aren’t doing it. Therefore there’s really no use in trying to reverse the effects by unnecessarily restricting human activity. Quite the contrary, actually. If galactic rays are causing temperatures to rise through changes in relative humidity and cloud cover, we’ll need all the human ingenuity and creativity we can muster in order to find out how to live and thrive in a much warmer world, including potentially higher water levels and frequency of extreme weather.

You can’t predict, but you can prepare

This is no joke. In fact, space weather changes could even cause a cooling before a warming, with potentially just as adverse effects. No matter which way the galactic gods lean in this respect, it’s better we come prepared, even if we can’t predict the outcome.

Winners from warming

No matter, the green revolution is still good for many things, not least combatting pollution (whether slightly warming or not), and fanning (!) innovation. So don’t give up on your recycling efforts just yet. And solar power is still our best bet long term to make sure our energy needs are met in the future, so if you like your solar companies you can keep them. The warmth of the sun is our cleanest, safest and most abundant source of energy. But we need to keep inventing better ways to capture and store it.

The corporate winners in this scenario will be solar energy capture and energy storage companies, including the entire value chain of industrial suppliers of complementary factory parts, not to mention finance companies (huge investments in storage infrastructure will be required once solar energy dominates the power supply).

However, even more interesting will be the opportunities within construction and construction materials. Imagine all the levees to be built, water-proofing solutions needed for buildings and other equipment, not to mention all the new buildings required higher up on dry land, to replace the multitude of new Atlantises being created. 

And then there is the insurance business (extreme weather, remember?).

What about losers? Well, there’s the oil industry of course. And retail: the money to pay for all the new infrastructure must come from somewhere; my guess is higher housing and insurance costs will diminish the room for non-essential shopping for the bottom 99 per cent.

Tougher times might mean higher aggregate demand (whoa, Keynes!), but the resulting higher GDP doesn’t mean ordinary people will benefit. All the extra efforts are just going toward strengthening or moving all the things we’ve already got, rather than producing new and life-enhancing stuff

ARE GOLD AND BITCOIN TELLING US SOMETHING IMPORTANT?

Gold has broken up through a 6 year resistance level around 1350-60 and is currently trading at 1393 USD/oz, after a quick visit all the way up at 1440. That makes gold look extremely interesting right now.

I’ve been buying and advocating buying gold on and off since 2013, as insurance against “Whatever It Takes” craziness by central bankers. Three years ago, I even invested privately in a gold streaming and refinery company in Colombia, and subsequently also in it’s sold supplier Gran Colombia Gold that’s listed in Canada. Even if the price in USD hasn’t moved that much yet, it’s already been a very good investment for me in SEK. The currency insurance effect of holding gold is something Venezuelians are very familiar with.

Bitcoin too is on the move, having thawed this spring from the crypto winter of 2018. Right now, the Bitcoin price is slightly above 10k$, more than 150% higher than at the turn of the year, albeit more than 25% below the peak price a few days ago on June 26.

In both instances (gold and Bitcoin) I expect much, much higher prices (multiples higher, not measly percentages) in the coming five years (and likely much sooner than that, but you never know with politicians like Draghi, Powell, Trump and Xi at the helm)

As happy as I am about my investments/insurance positions, I am simultaneously afraid we are entering into a period of extreme financial stress, almost to the point that I hope we somehow will miraculously escape it altogether without having to deal with the issue in earnest.

Equities are extremely expensive compared to both cyclically adjusted profits and gold

It’s just that with equity valuations 3x their norm (MAPE at 45 rather than 15), and gold only at about 1/4 vs S&P 500 of where it was even quite recently, and twice the amount of “almost junk” rated corp debt in the US vs. before the last crisis, and countless trillions of derivatives, extreme debt levels and recent changes in debt levels for govs, corps and individuals in most places, and 25 Tn printed money since 2008, I just don’t see how to resolve it all without tremendous volatility and chaotic relative movements between asset classes as everybody tries to salvage what can be salvaged.

REAL assets are the way to go of course, but it’s not that easy to say what IS a real REAL asset. Gold at least will stay gold, but you can’t eat it, and it’s difficult to transport. Meanwhile, bitcoins can be transported across borders by just memorizing 12 words in the right order, but they’re “just” an accounting mechanism with no tangible value (apart from the distributed and secure accounting function, which definitely has intrinsic value).

Central banks are at the end of the rope

In any case, I think both are starting to say that central bankers are losing their grip and the confidence of the people/markets. Sure, stocks are REAL claims too. In theory they grow with the nominal economy, and should grow with printed money (which there will be much more of soon). However, when relative prices between REAL gold and REAL companies are already 3-5x out of whack, you shouldn’t hope for repeating the same kind of Indian rope trick again on top of the previous one without a calamitous re-set first.

If the economy rolls over now, the Fed will probably lower rates and increase the QE “slope” (money printing) more than most expect.

Such “surprise” cuts are what kicked off the bursting of the bubble in 2001. This time is likely to get much worse – although the absolute first reaction might be a blow off top for equities first, to lure in the last fools at an extreme all time high. Gold and Bitcoin should still protect you in that environment. More importantly, they’ll protect you after the top.

ARE YOU PREPARED FOR A RE-SET? ARE YOU REALLY?

Please note, that I’m NOT making any recommendations for trading financial instruments. Do your research elsewhere.

 
http://www.hussman.com/weeklyMarketComment.html

What are your primary drivers?

Summary: Just say NO to unnecessary maintenance, conspicuous consumption and other secondhander behavior, and…double up on your primary drivers.

—–

Why is your why your why?

Simon Sinek advocates finding your “why,” your purpose. Other philosophers confidently assert that if you have a strong enough reason for achieving a goal, figuring out how to do it is easy.

Cal Newport can tell you how to be the most productive through deep work, while James Clear can teach you all about the power of habits.

I’ve myself repeated endlessly that aiming low, to make sure you get started at all, is key to getting things done.

 

The question remains, however, exactly what it is you should get done.

—–

I like to think about primarily three categories of activities:

  • Pure maintenance
  • Primary enablers
  • Primary drivers

Pure maintenance refers to securing life and limb, basically putting a roof over your head and food in your belly. It includes cleaning, washing, doing the dishes, buying clothes and groceries, visiting the bank or the post office and so on. Some people spend a lot of time here. Quite a few do it in order to show off a shiny facade to their friends and neighbors.

Avoid getting caught up in a Red Queen chase of constantly upgrading your maintenance activities

Good enough, practical and comfortable,” is my way of taking care of the basics. This is emphatically not a prioritized area for me There’s no reason to buy a bigger house, renovate a kitchen you never use, or buy a new car every five years, unless you spend more time cursing over stuff that doesnt work than you would over the cost of buying new items.

Primary enablers are activities that pull your life forward, creating more opportunities for sustained happiness and meaning (by the way, check out this wonderful talk about happiness vs. meaning).

Writing a book might not be your idea of great fun, but it could put you in a position in the future where you get to hold lectures – and that might be one of your primary drivers. Sometimes you need to feel you’ve made an effort, overcome a challenge etc. to be able to relax and enjoy your primary drivers fully.

Some enablers entail climbing the socioeconomic ladder. They are tools for ensuring sustainable happiness. A certain education or career, or a house in the right place, might give you access to networks that otherwise would be closed off. Interesting, creative and intelligent people use a variety of cues to identify each other. Get the tools for their utility: means not ends.

Everything, however, is about the primary drivers themselves. This is what you live for, this is the source of your true happiness (or meaning, if you prefer that word). What do you like or love doing, feeling, experiencing that you don’t need to show off to others in order to enjoy it?

An influencer takes photos of their food as a tool to get more followers and make more money. Taking photos of their food is their way of putting food on the table, so to speak. You, however, get exactly nowhere by trying to impress people with how good your food looks or how interesting you can make your life seem, by in effect making your eating experience worse.

Posting pictures of food or cultural landmarks like the Eiffel tower, however, isn’t really sharing or caring. It’s bragging, possibly making people feel bad about their own lives, thus making both your and theirs experience worse than if you hadn’t wasted time taking and posting the perfect picture

That ordinary people seek approval for their choice of food, at the cost of letting it go cold or stale, is bordeline tragic. If you like quality restaurant food, buy it and eat it for its intrinsic utility, not to get meaningless likes from strangers.

If you’re only doing it for the likes, and claim likes are one of your primary drivers, you have some soul searching to do. Impressing others is a tool or an enabler if it’s your job; and otherwise a worrisome symptom of emptiness and being hacked by society and clever programmers.

There’s nothing wrong with sharing a good book because you want others to feel what you felt when reading it, and to be able to discuss the contents. Sharing is caring, and egotistical in the most profound sense of the word. Posting pictures of food or cultural landmarks like the Eiffel tower, however, isn’t really sharing or caring. It’s bragging, possibly making people feel bad about their own lives, thus making both your and theirs experience worse than if you hadn’t wasted time taking and posting the perfect picture.

Summary

Identify what you do and why. Identify tiers of activities, e.g., the three I’ve detailed above, and think hard about how you in practice prioritize between them.

My guess is you’re spending way too much time on maintenance, or empty hedonistic activities (doing what you feel like in the short term, with no regard to what you actually want to do, and want to be able to do).

Scrolling through your newsflow on social media might feel good and make time fly, but actually creating something will feel so much better afterward, and put you in a better position for even more qualitative activities going forward.

Most important of all is finding your primary sources of happiness, the things that make you enjoy yourself, without feeling you encumber your potential for further happiness.

Don’t be that person who claims to dream about painting, creating, building, fishing, relaxing, reading, exercising, climbing mountains, writing, just hanging with friends, travelling etc.; but in practice mostly waste your time at the office, then dutifully go drinking after work beer while checking twitter and texting other friends or arguing with strangers on the Internet.

Stop wasting your time without even knowing you do it. Divide and conquer; categorize and consciously prioritize your activities. Just say NO to unnecessary maintenance, conspicuous consumption and other secondhander behavior, and…

…double up on your primary drivers.

Feelings are ultimately all you have. Your feelings guide you toward your values, and away from losing them. However, you can choose between short term hedonistic lust fulfillment, and achieving a deeper long term sustainable happiness and desire.

The latter is what meaning is, the sum of your feelings. You can only feel what you feel, you value what you value.

You can, of course, (erreneously) choose to go against your feelings, and live a miserable life, but why on Earth would you?

Why substitute your own happiness and values, just to put on a show for others? Unless it’s just whoring out in the short term (can be a positive, despite how it sounds) for a grander purpose, your own long term happiness.

That I can understand. That is tantamount to not have that last drink, in order to feel better tomorrow, or not be gluttonous today, in order to enjoy your healthy body tomorrow: doing what you want, not what you feel like or think others will “like”