Karien van Gennip

Gold is on the move. And this is only the very first inning of what could become a massive wave. Please read the full story in this column in the Financial Times. A big thanks to Rana Foroohar for the opportunity. #gold #commodities #waves #technicalanalysis

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US - SAUDI PETRODOLLAR ACCORD: PURE SOCIAL MEDIA SENSATION There has been a lot of brouhaha about the expiry of the petrodollar accord between the US and Saudi Arabia and how it would lead to the collapse of US dollar. However, this is a non-event and inconsequential if we get the context right. Here is the context: 1. To begin with, there was never an accord like this (source in comments) 2. ⁠The agreement (s) in 1974 closest to what is being stated in social media posts was about US trying to stabilize relations with Saudi Arabia after the 1973 Oil Embargo, to ensure that it never happens again. 2. US was the largest imported of oil and Saudi Arabia the largest exporter. 3. US offered complete military security to Saudi Arabia in exchange for stable oil supply and in exchange for Saudi Arabia investing the sale proceeds in US Treasuries. 4. This helped Saudi Arabia to safely deploy its wealth with high liquidity and US a source of investments just after the abandonment of Bretton Woods system. Things have changed dramatically since then: 1. Today, US is the largest producer of oil (13 million barrels a day), is self sufficient in energy and does not depend upon Saudi Arabia (9 million barrels a day) oil. Total oil market is 100 million barrels a day. 2. Saudi Arabia has become militarily strong and is the biggest buyer of US defense equipment sending hundreds of billions of dollars to the US. (Source in comments) 3. US and Saudi Arabia are about to sign a new agreement referred to as the Strategic Alliance Agreement to further cement their relationships. (Source in comments) 4. US Treasuries outstanding have risen from $775 million in 1974 to $34 trillion in 2023. Saudi Arabia’s holding of $125 billion represents just a small fraction. Foreign demand for US Treasuries is still large at 30% of outstanding. (source in comments) 5. US dollar is the established reserve currency of the world — its share may be reducing because central banks are diversifying but there is no credible alternative. 6. USD is supremely dominant at 56% of foreign reserves with Euro at a distant second at 20%. Chinese yuan’s share is at an insignificant 2.5% and declining every quarter since 2020. USD makes up one side of 89% of global trade payments. (Sources in comments). The idea that the petrodollar agreement has expired and somehow that would lead to the collapse of the dollar is pure fantasy and another social media sensation. It has no effect on the US dollar, Saudi Arabia, or the United States.

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The fallout from President Macron’s decision to call a general election has been unprecedented. For further analysis on the long-term political cycle in #Europe, please refer to our weekly commentary. Headlines are now leading with "La Crise!"—this is truly a political crisis for France. It appears that the government was not in favour of President Macron's decision to call an election, yet he proceeded regardless. Reports suggest that the President is ready to resign. Right-wing parties are eager at the prospect of winning the elections and gaining power. Before we become too negative about European events and hence #Europeanassets, it's worth reflecting on current polls in the US. These polls suggest that the US could see political leadership with similar views on nationalism and immigration early next year. #gcio #theglobalciooffice #garydugan Chart: France's 5 year CDS spike

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A few personal thoughts on the European tremors unleashed by the decision to call snap elections in France. The weakness of the current leaderships in France and Germany have created a void in the center of Europe that could have a profound and lasting impact on the continent. One could provocatively even ask the question if this is the inevitable result of years of mutual misunderstandings and a stubborn unwillingness to share a comprehensive common agenda for Europe:

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The rising star in Dutch politics is Pieter Omtzigt. Many years ago I sat next to him on a flight from Vienna to Amsterdam. Two years ago he left the Christian Democratic Party to start his own political party #NSC, that achieved a landslide victory by becoming 3x bigger than the party he had left. He is renowned for his meticulousness. Some call him a terrier, as sometimes details matter. Particularly when institutions erode trust. Sometimes governments themselves are found guilty of doing that, which requires the kind of determination he clearly has. Last week he gave the H.J. Schoo lecture, which is deemed to be the opening of the Dutch Parliamentary Year. In it he said something that triggered my interest. Having been involved in scenario work, where I learned that the most determining factor driving future development is #DEMOGRAPHICS I remember this map from those days, that shows the world through a different lens. The size of each country represents its #population rather than its #surface. It is not difficult to see that this matters and approximates impact in many respect. The most thought provoking part of his speech was this: "In 2023 in Ethiopia alone, more children were born than in all 27 Member-states of Europe. The same was true for the Democratic Republic of Congo. In Nigeria more than twice as many children were born as in all EU Member-states together!" Fast forward to 2050 we will live in an entirely different world, exacerbated by the non-linear developments in Climate Change. It made me reflect on 3 dimensions of Demographics and its implications. 1) #SIZE of Population drives energy, food & mobility demand. But also determined the environmental footprint of a nation. Albeit that #GDP/capita makes a big difference in the latter. We had to correct an #ETS error where 'emission relocations' were accounted as 'emission reductions': https://lnkd.in/eKEsJV58 2) #AGE of Population is another important dimension. It determines the proportion of active and non-active members. Importantly the number of elderly determines the need for care and hence the proportion of active people that have to be involved with care, rather than producing products & services that can be exported. Unless we follow Japan's example, whose extreme shrinking population makes them resort to the use of robots in care for the elderly. 3) #TALENT of Population is perhaps the most important indicator of a nation's resilience and ability to face challenges. Transposing that notion to the biggest challenge 'Humanity as a whole' faces, combined with the evident inability of even the highest form of #Governance - the United Nations - incapable of changing behaviours of Businesses, Citizens and Countries, perhaps a new CURRICULUM is needed to make evolve "a CIVIUM of globally conscious SCIENTIENTS" That was the topic of my keynote as Ambassador of the EU STEM Coalition at the NEWTON International Education Summit: https://lnkd.in/eiaHuJ3

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💡 Interesting article in the Dutch newspaper Het Financieele Dagblad on the European Commission's ‘protectionist’ measures against China following the trilateral meeting on 6 May 2024, with the European Commissions' President von der Leyen, French President Macron and President of the People's Republic of China Xi Jinping. ⚖️ The European Commission has several instruments at its disposal to protect the European market and its businesses. Earlier I wrote about the Foreign Subsidies Regulation together with my colleague Karst Vriesendorp and the International Procurement Instrument and I mentioned the Anti-Coercion Instrument. ⏳It seems a matter of time before new investigations follow. ❔Want to stay up to date or do you have questions about these instruments? Let me know!

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