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Norway’s central bank became the first to raise rates since the beginning of the COVID-19 pandemic; it did so in September. The Bank of England is following the lead of the U.S. Federal Reserve, while the United Kingdom is already facing severe oil shortages. The central banks of New Zealand and Canada are likely to start tightening at an even faster pace.
Rate hikes are already happening across many emerging economies. Russia and Brazil raised interest rates amidst a surge in energy costs and food prices. Many Latin American countries, such as Mexico, Chile and Columbia, have as well due to accelerating inflation across the region.
Canada’s gross domestic product (GDP) shrunk in the second quarter as the same supply-chain distribution issues affecting other countries are hitting Canada, too. Its exports plunged at the rate of 15 percent during the second quarter.
But in 2021’s autumn months, Canada’s economy seems to be rebounding solidly, with its savings rate still elevated. Canada is America’s No. 2 trading partner, after Mexico.
While not much has been written positively about the two neighboring economies, Canadian and Mexican companies and the growing population have become a major factor to American business, with Alaska also gaining from its major proximity to Canada. Good news for all around.
The Shrinking Earnings of Big Tech
Although the five mighty tech giants (Apple, Microsoft, Amazon, Alphabet and Facebook) continue to weave their awesome power, their earnings show signs of fading. Their collective performance was astonishing, increasing 36 percent to a total of $332 billion. But investors were unimpressed. While Alphabet’s earnings inched higher at one point, the others were all down.
Amazon got the worst reception. The stock fell 7.6 percent during that week. With all five having near all-time highs, investors were rushing to take profits. Apple beat further expectations in all the segments, but this giant is slowing down, too, as component challenges continue.
The market’s biggest question with Apple’s quarter was the warning that the available chip supply continues to be a problem and will affect the availability of iPads and iPhones. In September, Apple was expected to release the iPhone 13, but the chip shortage could drag out long enough to postpone this capability indefinitely.
Apple CEO Tim Cook stated that the company’s costs are higher than expected, edging into even lower profits. On a brighter note for investors, Alphabet’s business grew 68 percent in the latest quarter, including an 84 percent jump in advertising.
Facebook’s ad business grew 56 percent, driven by a 47 percent year-over-year increase in ad pricing. These benefits also impacted Amazon’s other revenue category, mostly ads, growing by an amazing 87 percent to 7.4 billion dollars, way ahead of Wall Street’s expectations.
Even cloud adoption is accelerating as Alphabet posted 54 percent growth. These unexpected outbursts indicate that big tech earnings may be reducing based on their primary business, but making its advertising more profitable.
Why U.S. Economy/Security Needs White House
America’s consistent leaders seem to misunderstand that the United States is the only successful nation that rises or falls based on economic success. This has been proven in the modern era’s 20th and 21st centuries.
While its European equivalent consistently has beaten each other’s brains out with ever more vicious wars, none have come within a mile of America’s sophisticated and broad economic base. Even our forefathers realized that America’s superpower status is based on these factors:
1. A defense mechanism based on two oceans on each side of its borders, preventing surprise attacks from each side. The Japanese and Germans found this out when they declared war against the United States in 1942.
2. America’s ability to build war power capability superior to either evil war powers in World War II.
America’s only potential weakness generates from the White House and its particular tenant at the time. This was proven effectively during World War II when the magnanimous President Franklin D. Roosevelt was steering the ship. FDR made the difference.
It was repeated in the 1980s when President Ronald Reagan threatened and embarrassed Iran, which was ready to hold out embassy personnel and attack Israel simultaneously. In both cases, the world lucked out because of the outstanding leadership the United States had.