Lhe anger was too strong. Despite bans, cameras and the police, they took to the streets of Beijing, Shanghai, Guangzhou and Wuhan this weekend of November 26 and 27. Chinese youth can’t take it anymore, and for the first time since coming to power, President Xi Jinping is weakened. Will he be the next victim of a tiny virus which in three years has transformed the world economy more than many revolutions? On November 17, 2019, a first case of covid 19 was reported in the city of Wuhan, on January 23, 2020, the city is completely sealed off.
Three years, three stories. 2020 was the year of lockdowns and massive state budget support policies to avoid collapse. 2021 was that of a recovery that was all the more vigorous as it was stimulated by government aid. Logistics, disorganized by the pandemic, no longer follows, shortages are setting in, prices are rising. 2022 will be the year when inflation… and central banks wake up. The conflict in Ukraine adds some fuel to this flammable cocktail. Prices are skyrocketing, especially in energy, and interest rates are rising at a speed not seen in forty years.
To summarize this shift, the weekly The Economist has compiled the stock market valuations of the top 500 US companies, aggregated into the S&P 500 Index. In its own patchy and choppy way, this development tells the story from a corporate perspective. First observation, the return of the fundamentals. Starting with energy, fuel for all economic growth.
expensive money
Since the 2010s, the energy values were largely exceeded by the stars of technology. At the beginning of 2020, Facebook (renamed Meta) was worth twice as much as the first American oil company Exxon. Since then, energy stocks have largely caught up. This sector is the one that has progressed the most in three years, well ahead of the glories of the Internet. Today, Exxon is worth twice as much as Facebook/Meta. Individually, the two stars of stock market growth also reflect this new situation: a pharmaceutical laboratory, Moderna, with an increase of 800% and a car manufacturer, Tesla, up 550%.
Big winners of the last decade, Google, Amazon, Facebook, Netflix or Apple have taken advantage of periods of cheap or even free money to invest massively in data centers, cable networks, content production, stores . It is now over, money becomes expensive, and a new cycle begins, less favorable.