EIEIO…Soccer Moms
“The Middle East is a region where predictions go to die.” — Ehud Barak
“We aren’t addicted to oil, but our cars are.” — James Woolsey
“There’s no way I will ever just stick to sports because I understand this platform and how powerful my voice is.” — LeBron James
Throughout time, sports and politics has been a potent cocktail. Nowhere has that been more evident than at the 2022 World Cup in Qatar.
Before the tournament started, controversies included the treatment of migrant workers that were needed to build the seven new stadiums at a cost of over $200 billion. Official migrant deaths were 40, but other estimates pegged the real number at over 1000.
Allegations of bribes to select Qatar as a host country were rampant, with at least two officials convicted of under the table payments.
Qatar, being a strict Muslim country, also faced global criticism for its policy towards women and the LGBTQ community. The teams of England, Wales, Germany, Denmark, Belgium and Switzerland had originally planned to wear the “OneLove” armbands for “diversity and inclusion” but FIFA banned them shortly before the tournament was to begin.
Perhaps angering the 1.2 million people that were descending on Doha most (and certainly the Cup’s largest sponsor Anheuser Busch) was the banning of beer from the stadiums. While alcohol was available at designated venues such as hotels, the most popular place to hang after the matches was Dubai, which is just a 40 minute hop away.
Even the pronunciation of Qatar is controversial. “KUH-taar”? “GUH-ter”? “Cutter”????
This is almost as confusing as why America is the only country in the World that calls “football” “soccer” (or doesn’t use the metric system).
Football OR Soccer — FIFA World Cup 2022 | David Beckham vs Peyton Manning | PepsiCo TVC
While all important issues, they were known well in advance of the tournament itself, so recent outrage is akin to in Casablanca the Perfect of Police closing down Rick’s Café because “I’m shocked! Shocked! There’s gambling going on in your café! Shocked!” Just before the croupier hands him his nightly winnings.
Notable political statements since the tournament has begun include the Iranian National Team refusing to sing its National Anthem before the match with England as a protest to the brutal death of 22 year old Mahsa Amini in Iranian police custody.
In one of the greatest upsets in World Cup history, Saudi Arabia beat Argentina 2–1 following which MBS declared a National Holiday. Also notable was MBS watched the game next to Qatar’s ruler Tamim bin Hamad Al Thani who had previously been persona non grata in much of the region due to Qatar’s ownership of Al Jazeera and support of bad guys like Hamas and Hezbollah.
Whether Qatar is good or bad, what’s for sure is its relevant.
While teeny with just under 3 million people and geographically smaller than New York City, it’s one of the wealthiest populations in the world with over $100k GDP Per Capita by 2027. Over 60% of its economy is from oil and gas with the 13th largest oil reserve in the World.
Located on the Arabian Peninsula, it’s stunningly beautiful, combining gorgeous vistas of the Persian Gulf and incredible architecture. While I have a preference for Emirates Airlines, some have rated Qatar Airlines as the top airline in the world and Hamad International Airport as the best in the world.
Bringing the World Cup to Qatar, while far from a perfect country (what country is?), the critics seem to forget the many flaws with other World Cup and Olympic hosts such as Russia and China. Moreover, having the first World Cup in a Middle Eastern country exposes the World to that culture and vis-a-versa which can only be a positive.
Additionally, while most sane people are for shifting away from the dependence on fossil fuels, the ability to do that in a major way isn’t happening any time soon.
Currently, 81% of global energy consumption comes from oil, gas or coal — the same percentage as 30 years ago. I have been a proponent of alternative energy for over 20 years and much to my disappointment, and tremendous investment, we are still dependent on fossil fuels.
While the S & P 500 is down 16% in 2022, energy stocks are up 66%. Moreover, legendary investor Warren Buffett has invested approximately $30 billion into energy companies this year and has a total position of nearly $60 billion through his holdings in Chevron and Occidental Petroleum.
Interestingly, many of the major beneficiaries of the Oil Economy have been significant investors in alternative energy. Saudi’s 2030 plan calls for over $100 billion investment in renewable energy. The UAE is rapidly expanding the use of clean energy…it operates three nuclear power reactors that provide energy to the country’s grid and is home to three of the largest solar plants in the World. Qatar has said this year’s World Cup will be “carbon neutral.”
Ending November 20th in Egypt, the day the World Cup began, the UN climate change conference COP27, brought together leaders from around the World to create an action plan. A key result was the announcement of a “loss and damage” fund focused on the nation’s most vulnerable to the climate crisis.
My thesis is pretty simple, whether you believe in climate change or not: 1). it’s the right thing to do to leave a cleaner, more sustainable planet for our children 2). At some point, fossil fuels will be gone and 3). When we run out of solar power, we have way bigger problems!
Market Performance
In the Thanksgiving Holiday shortened week, stocks climbed higher.The Dow advanced 1.8%, and continues to be the best among bad options for performance. The S & P 500 was up 1.5% and NASDAQ was .7% higher.
The somewhat taming of inflation has been a positive influence on stocks with a corresponding decrease in bond yields. While in my view, we’ve already been in a recession for the past six months, and growth stocks rolled over more than a year ago, it’s likely economic activity remains sluggish for the foreseeable future.
That said, with the Treasury Market ignoring the hawkish noise from the Fed, it feels to me we might be getting closer to the end of the Bear Market than I thought previously. Stocks aren’t cheap, but growth stocks are at a level that if we get some comfort that inflation is more or less in check, and interest rates aren’t going to soar much higher, we could start to see some powerful moves in the highest quality names. Stay tuned for our Christmas List.
GSV’s Four I’s of Investor Sentiment
GSV tracks four primary indicators of investor sentiment: inflows and outflows of mutual funds and ETFs, IPO activity, interest rates, and inflation. Here’s how these four signals performed this past week:
#1: Inflows and Outflows for Mutual Funds & ETFs
Total Equity Funds increased from (-9.4) to (15.1) from 11/9 to 11/16.
#2: IPO Market
While the US IPO market is essentially “on pause,” the international IPO market continues to show bright spots. Two weeks ago, Dubai school operator Taaleem Holdings raised Dh750 million ($204m) from its IPO, which was 18 times oversubscribed. The company will be the largest and only dedicated education provider on the Dubai Financial Market when it starts trading later this month.
#3: Interest Rates
After the Fed’s fourth consecutive 75 basis point rate hike, market expectations are that the Fed will opt for a 50 basis rate hike in December. Fed Governor Waller said earlier this month that “the data of the past few weeks have made me more comfortable considering stepping down to a 50-basis-point hike.”
#4: Inflation
Many investors saw the October CPI print as a sign that investors could be peaking. The data is more mixed: Walmart’s CFO said that he “can’t call” a peak on inflation yet, UK inflation hit a 41-year high earlier this month, and the US Treasury curve is now more than 70% inverted.
Chuckles of the Week
Photo of the Week
Video of the Week
“Hope for the best, prepare for the worst.” — Jeff Bezos on the current economic climate
The GSV Big 10
This fall, we launched The GSV Big 10, synthesizing the news to bring you the top 10 stories and insights in learning and skilling. In case you missed it, here are some of last week’s top stories:
#1 Speak lands investment from OpenAI to expand its language learning platform
Speak is giving anyone with a phone access to AI tutors that are more affordable, available, and patient than human tutors. OpenAI spent years developing their AI models; now, they are going to play kingmaker across every vertical… including education. As Duolingo is to vocab, Speak is to actually speaking.
#2 The incredible shrinking future of college
Strike 1: shrinking demographics. Strike 2: price ceiling. Strike 3: alternative credentials for opportunities….you’re out!
#3 How China Got Our Kids Hooked on ‘Digital Fentanyl’
The stable of writers on Bari Weiss’ Common Sense are must-read for all. In this case, the title is better than any comment we can make. There are 1.8 billion TikTokers around the world, and its influence is being felt in politics, education, and culture.
… for more insights on the news, subscribe to N2K and The Big 10.
EIEIO: FAST FACTS
Entrepreneurship…
- 32% — amount of companies that plan to expand remote and hybrid work in the next year (Source)
- 7% — amount of companies that plan to pull back on remote and hybrid work in the next year (Source)
- 65% — percentage of portfolio company failures attributed by investors to people and organizational issues (Source)
- 32% — amount of US employees feeling engaged at work (Source)
- 20% — amount of Crypto.com’s assets held in Shiba Inu (Source)
Innovation…
- 800 million — amount of individuals using WeChat Pay in China (Source)
- 50% — annual growth of global data flows since 2010 (Source)
- 29 million — amount of people who write code for a living (Source)
- 69% — percentage of Gen Zers that view TikTok favorably (Source)
- 39% — percentage of U.S. Adults that view TikTok favorably (Source)
Education…
- 40x — increase in VC edtech funding in 2020 vs. 2021 (Source)
- 12% — amount of American schools that had the equivalent of at least half of their 11th- and 12th-graders taking at least one AP or IB exam (Source)
- 405 million — number of schoolchildren whose schools have not yet fully reopened, as of March 2022 (Source)
- 30% — amount of Grade 3 students that can read and understand simple texts (Source)
- 18% — amount of Grade 3 students that show mastery over simple numeracy tasks (Source)
Impact…
- 5% — amount of C-suite members that are women of color (Source)
- 40,000 — amount of Black families making >$150K in the US in 1967 (Source)
- 1.2 million — amount of Black families making >$150K in the US in 2020 (Source)
- 10% — share of global population over 65 in 2022 (Source)
- 16% — share of global population over 65 in 2050 (Source)
Opportunity…
- $3.73 trillion — collective net worth of the bottom 50% of US households, up 10x since 2011 (Source)
- 72.8 — global life expectancy at birth in 2019, up 7 years since 1990 (Source)
- 6 — number of top 10 2022 NYC marathon female finishers that are mothers (Source)
- 2.5% — annual population growth rate in sub-Saharan Africa, more than 3x the global average (Source)
- 0.1% — population growth rate in the United States in 2021, the lowest since the country was founded (Source)
