__________________________________________________________________________________ Hello international investment enthusiasts and welcome to edition #3 of R&D.
Pre-Covid, China was described by one notorious hedge fund manager as “New York on crack”. Post-Covid, however, it’s all comedowns and cold turkey. This month, we’re exploring where investors and businesses can score next as they attempt to quit the superpower.
But first, to the US. __________________________________________________________________________________
Charted Territory: US debt gives new meaning to ‘living in your overdraft’
Source: US treasury via @wallstreetsilver on Twitter.
We spotted this chart on Twitter and couldn’t believe it. We asked Dan Porto, Deaglo’s Head of Banking and Infrastructure, to break down what we’re looking at.
“To avoid defaulting on its debts, the US government recently raised the debt limit to a record $32 trillion. This has been a common practice since Ronald Reagan was in charge, with 74 adjustments made since his first term as President in 1981. The US Federal Debt to GDP ratio has varied, reaching 57% in the 2000s from 34.6% in the 80s. Currently, the total debt surpasses 123% of the country's GDP, and the official budget deficit stands at $1.5 trillion. Considering these figures, each citizen would owe approximately $94,000 if the national debt were evenly distributed among the population. If you want to see just how fast US debt is rising (and feel a little better about dipping into your overdraft prior to payday) check out this US debt clock.” __________________________________________________________________________________
Around the World in Headlines
It’s hot. It might be too hot. In fact, it is 100% too hot. Just ask almost anyone, anywhere – with a special mention to the aptly named Death Valley. Fortunately, we’ve had more than enough news this month to distract us from the scorched earth burning beneath our feet.
In the US, the dollar dropped to its lowest point in a year, actors swapped the red carpet for the picket line, and Donald Trump faced even more charges. Over in Britain, the UK government went deep into its back-catalog to get worked up about the Falklands the day before it coincidentally lost two vital parliamentary seats. The new Barbie film caused a number of geopolitical disputes across South East Asia, while the BRICS group announced its latest summit would be going ahead sans-Putin. Meanwhile, in sport, more footballers fulfilled their childhood dream of playing for the one of the four clubs owned by the Public Investment Fund of Saudi Arabia, a terrifyingly young Spaniard won the Men’s Wimbledon Final, and the Women’s World Cup kicked off Down Under.
2023 was meant to be a big year for China, yet we’re halfway into the year and in the last month alone, JP Morgan, Goldman Sachs, Citi, HSBC, Nomura, HSBC and S&P have all slashed their growth forecasts for the superpower’s economy. Where there was meant to be a post-covid boom, there’s a debt crisis, a shrinking economy and a push from many in the West to ‘de-risk’ themselves from China – although, and they cannot stress this enough, this is not a ‘decoupling’. But, in a very progressive, 2023 kind-of-way, they do want to see other people.
Because therein lies the issue: breaking up with China isn’t really an option. The best most can hope for is a sort of open relationship. But who are the contenders for these geopolitical throuples? India has been catching many an eye along with most of South East Asia, while the US has been making plans with Mexico. We explore all this and more in our latest blog ‘If not China…’.
‘Raise and Deploy: The International Investing Podcast’ Episode 4 is now live!
This week, we spoke to Jive’s Managing Partner, Marcelo Martins, on how he broke into global investment management and successfully raised and deployed close to a billion dollars across Brazil. Marcelo shares his insights on investing into distressed debt, challenges raising money from international LPs, and how Jive accounts for the currency risk affecting their investors.
BONUS: If you’d like to receive our daily round-up of the three must-know global headlines affecting international currencies, sign up for 3Things by Deaglo! __________________________________________________________________________________
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