The Global State of Play

Stropro Team
5 min readAug 11, 2022


There’s a lot going on across the globe, so I thought I would share a quick state of the world’s macroeconomic landscape. Unfortunately, it’s a bit bleak, but please excuse my pessimism.

As for my groupings of ‘good, bad and the ugly.’ There’s obviously a lot more nuance that can’t be easily captured in a catchy structure.


The U.S. is probably breathing a few sighs of relief this week, with good news coming from all directions.

The S&P500 has recovered 15% from its June 16 lows, fuelled by tempered fed rate hike inflations.

  • We’ve already seen 4 ‘bear rallys’ this year, my gut feel is that we’re in another. But the U.S. economy is continuing to show resilience, so maybe I’ll be proven wrong.

The U.S. senate passed a historic climate reduction bill which aims to cut greenhouse gas emissions by 40% by 2030, representing the single biggest climate investment in U.S. history by far. (1)

Lastly, the country has seen a brief respite from inflation, with the latest headline CPI print last night showing an 8.5% YOY growth, which was ‘flat’ on the month prior.

  • This was significantly driven by a fall in oil prices during July.
  • This print suggests that ‘peak’ inflation may have been reached, though only time will tell.

Australia records a second consecutive record trade surplus in June off then back of soaring global demand for mining and energy commodities:

  • Exports grew 5.1 per cent to $61.5 billion
  • Together, iron ore, coal and LNG accounted for a record 70 per cent of the total value of goods exported in the quarter
  • This result has the potential to boost Australia’s economic growth and national income and counter the effects of a broader economic slowdown.

Australia’s unemployment rate fell to 3.5% in June, the lowest level since 1974.(2) While good news, this may continue to pressure Australia’s inflationary situation, as there is ultimately limited spare capacity in the labour force.


Europe’s economic outlook:

The Euro hit parity with the US dollar for the first time in 20 years.(3)

  • Despite rising inflation, the USD continues to remain resilient. The U.S.’ relatively hot post-pandemic economy (read high consumption) means interest rate hikes remain a powerful tool in reducing consumption and thereby reducing inflation.
  • Europe doesn’t have the benefits of a hot economy, their consumption still remains below pre-pandemic levels. This means that the European Central bank has to remain tactful, and increase rates more slowly.
  • The growing spread between European and U.S. interest rates is continuing to make the USD more attractive. As more money flows into USD, the U.S. economy will continue to strengthen.
  • Meanwhile, Europe will face higher costs thanks to a weaker Euro, especially with natural gas, oil and other major imports being denominated in USD.
  • This all combined with other war-related issues creates a lethal concoction of inflationary pressures.


Global food prices probably won’t be falling any time soon:

Fertiliser is slowly being limited and facing price pressure:

  • China has put restrictions on the export of phosphate.(4)
  • Potash supplies are tight even with Russia increasing their output. (5)
  • Natural gas prices have led to a reduction in the creation of nitrogen-based fertilizers.(6)

Russia, the world’s biggest wheat exporter, is at war with Ukraine, the 4th biggest wheat exporter. Infrastructure is being destroyed and sanctions are holding back exports.

  • Despite a deal between the two countries to safely allow Ukrainian wheat exports, the logistical nightmare of enabling these exports will constrain any major relief.(7)

China is facing pressures from all directions.

Their banking and property crisis isn’t slowing down:

  • Protests have been occurring outside of rural and regional banks as citizens have had their life savings frozen.
  • Other homeowners are threatening a mortgage strike as homes they have purchased haven’t been built.

Meanwhile, their GDP growth has slowed to 2%:

  • China’s zero-covid policy has slowed growth immensely.
  • Chinese companies listed in the US are facing potential delisting, threatening their ability to access capital.(8)

The demographic crisis is continuing to rear its head:

  • Slowing population growth will threaten the country’s GDP growth and ability to serve its population.(9) Although, this is a long-term threat.

China’s belt-and-road initiative, which finances major infrastructure projects in emerging markets, is facing pressure from a global debt crisis:(10)

  • Sri-Lanka is one of the first emerging countries to default on their debt, and many other developing economies may face similar challenges.
  • The strengthening USD also hurts emerging markets, which have to pay their debt and oil in USD.

Risks of a conflict over Taiwan are increasing:

  • Ray Dalio recently outlined the increasing possibility and risks of a ‘tit-for-tat’ military escalation that would significantly hurt both China, and the global economy.11 Christopher Joye’s recent quantitative conflict analysis similarly predicts a high likelihood of escalation.(12)
  • Of course, others would disagree about the likelihood of escalation, renowned Geo-poiticist and ex-intelligence analyst Peter Zeihan discussed that China faces some huge potential consequences if they make a move.(13)

Anyway, that’s a quick overview of the macro-economic environment. Condensing the entire world into a 3 page series of bullet points is tremendously difficult — so I’m sure I’ve missed some things. Feel free to flick me a message if you want to discuss some of these points, I’m learning too.

Stropro is constantly offering strategies that aim to help investors manage volatility, so if you’re looking to reduce your correlations or hedge your exposure, check out the platform.

  1. The Guardian, Read Here
  2. ABS, Read Here
  3. NYT, Read Here
  4. Reuters, Read Here
  5. Bloomberg, Read Here
  6. Bloomberg, Read Here
  7. Swissinfo, Read Here
  8. Bloomberg, Read Here
  9. The Spectator, Read Here
  10. RFERL, Read Here
  11. Ray Dalio, Read Here
  12. Christopher Joye, Read Here
  13. Peter Zeihan, Read Here

This article was written by Rory Turner, Investment Analyst at Stropro. This article is for educational purposes and is not a substitute for professional and tailored financial advice. This article expresses the views of the author(s) at a point in time, which may change in the future with no obligation on Stropro or the author to publicly update these views. This article uses information from sources the author considers to be reliable but does not represent that such information is accurate or complete, or that it should be relied upon. Past performance is not a reliable indicator of future performance. Investments may rise and fall in value and returns cannot be guaranteed. Stropro makes no representations or warranties, express or implied, as to the accuracy or completeness of the information it provides. Stropro Operations Pty Ltd (ABN 28 633 603 399) is a Corporate Authorised Representative (CAR №1293257) of Stropro Compliance Pty Ltd (ABN 74 640 214 740, AFSL №533443).



Stropro Team

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