The Big Picture in 5

Your 5-Minute Weekly Update on the World’s Biggest Trends and Opportunities

 

1. Russia’s First Default Since 1918 (Kind Of)

Headlines this weekend were dominated by news of Russia’s sovereign debt default. They’re saying it’s the first time Russia has failed to pay back foreign investors in over 100 years — since its government was overthrown by Communist revolutionaries. It’s a wild story, and it’s almost true.

In reality, Russia holds just $40 billion in sovereign debt, with roughly half-owned by foreigners. Meanwhile, the country built up a war chest of $640 billion in capital reserves prior to their invasion of Ukraine. They’ve also been stockpiling the oil and gas that no one is buying. Russia is fully capable of paying off these debts — but due to the nature of ongoing sanctions, they’re not really being allowed to do so.

That’s why this is a default in name only, and even then, credit rating agencies refuse to acknowledge it. This bit of political theater isn’t likely to have a direct impact on your portfolio. But it’s symbolic of the deepening antagonism that indicates this war will get worse before it gets any better.

2. Bank on Russian Bravado for 161% Gains

If you want to turn Russia’s ongoing loss into your portfolio gain, look no further than the ProShares Ultra Bloomberg Natural Gas (NYSE: BOIL). First recommended by Ted on March 22, BOIL benefits from rising natural gas prices and rising demand for foreign alternatives to Russian fuel.

In the three months since Ted first recommended this leveraged exchange-traded fund, it’s up over 161%.

And this particular energy story isn’t likely to change, either. With cooler weather just a few months away, Europe still doesn’t have a solution for its massive dependence on Russian gas. Their domestic energy situation is growing uncomfortably hostile, and their governments will spend a fortune looking for a way out.

3. Is That Inflation in Your Pocket?

Pennies these days are practically worthless — especially as inflation has its way with them.

But in reality, the coins in your pocket may be worth much more than their face value. That’s because pennies produced before 1982 have a much higher copper content, and as a result, are worth up to $0.03 each (instead of the $0.01 you get for them):

This changed in 1982, when the government shifted to making pennies out of cheaper zinc and then simply coating them with copper. Throughout most of history this would’ve been derided as “clipping coins” or outright forgery, but we’ve all played along with it pretty well. Looking back, however, it’s a startling example of inflation that hits pretty close to home.

It’s one thing to think about how much a loaf of bread cost in 1982, but it’s something else altogether to hold a $0.03 penny from the era in your own hand.

Worth noting, of course, it’s illegal to melt down U.S. tender. So there’s no way to lock in this 200% gain.

4. Your Flight Has Been Delayed/Canceled/Redirected

Just this Sunday, over 7,000 flights across the U.S. were either delayed or canceled.

That wreaked havoc on travelers all across America, with some left sleeping in an airport for up to 24 hours as they waited for a flight. And with a long Fourth of July weekend just a few days away, the situation could quickly evolve into a traveler’s nightmare.

These delays and cancellations are being caused by an unprecedented shortage of both Federal Aviation Administration staffers and airline pilots. By some estimates, the industry is short of a whopping 12,000 pilots with “no quick fix” on the horizon according to United CEO Scott Kirby.

So, if you’re headed out for the holiday weekend, be prepared for a few possible delays.

5. How to Know It’s “Not a Bubble”

Investing manias are fascinating.

Because in hindsight, it always seems so obvious. Of course, housing or dot-com stocks were going to crash. Of course, a tulip bulb shouldn’t be worth as much as a house. But in the moment, no one seems to see anything wrong with it. Even as Shiba Inu coin soared 45 million percent (yes, million percent) in 2021 alone, folks didn’t really see any cause for alarm.

Our chart of the week from Clint Lee shows just how crypto stacks up against previous massive bubbles:

What’s especially interesting about this chart is the duration of the asset bubbles. They all seem to last just a few years. Crypto enjoyed a much more rapid runup than gold or biotech stocks, but the mania didn’t last any longer on average.

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