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Climate, China, Economic Depression and War: Simon Hunt’s Somber Outlook

Climate, China, Economic Depression and War: Simon Hunt’s Somber Outlook

  • Climate change impacts virtually everyone on the planet. But certain changes in global climate are the results of natural, cyclical phenomena like volcanic activity, gravitational forces on the Earth’s axis and solar brightening and dimming.
  • Economist and geopolitical consultant Simon Hunt argues that the imminent threat isn’t global warming — it’s the cooling cycle produced by sunspot activity, which he says will have a profound impact on agriculture and food prices.
  • Simon also predicts that the Russia-Ukraine conflict will spread outside Ukrainian borders and that we’ll see hot wars in other global hotspots like Taiwan. He says that these forces, coupled with climate, rising interest rates and soaring debt, will add up to an economic crisis on par with the Great Depression of the 1930s.

Climate change is the existential threat of our lifetime — whether you’re 18 or 80. According to the U.S. National Oceanic and Atmospheric Administration (NOAA), Earth’s temperature rose by 0.14 F (0.08 C) per decade since 1880, but since 1981 the rate of warming has been more than twice that: 0.32 F (0.18 C) per decade. The nine years from 2013 through 2021 rank among the 10 warmest years on record. 

But what if the world is about to get colder in the years to come?

“Climate operates in long-term cycles of 40 to 70 years, driven by sunspot activity, volcanic activity and changes in ocean temperatures,” says economist and geopolitical consultant Simon Hunt

“We are in the process of moving out of the 40-year cycle of warming weather that we’ve been experiencing. And we will be moving into 40 to 70 years of cooling, [in which] the cooling weather allows the oceans to absorb excess CO2 emissions.”

Simon’s predictions about the future of our planet will surprise and even shock many Top Traders Unplugged listeners. I first came across his work a couple of years ago and was fascinated by his outlooks on climate, the economy and global conflict, many of which contradict the mainstream narratives we hear so often. 

He is particularly interested in cycles and their effects on our interconnected world, including natural climate cycles and economic ones like “Kondratiev Waves,” aka “supercycles.” 

Unfortunately, many of these cycles “are now converging, which is going to lead to some big shocks,” says Simon, who joined me on an episode of Top Traders Unplugged for some contrarian — yet fascinating — opinions on geopolitics and candidly distressing forecasts for the months (and years) to come. 

From copper consultant to climate controversialist

Simon began his career in the Central African copper industry before moving to London, where  he helped launch an international copper development association; conducted the first end-use studies of copper consumption in Europe; and established the world’s first analysis of global copper costs. He spent a large part of the last two decades in China, where he became an expert on its manufacturing sector, politics and economy. 

Along the way, Simon developed a global network and a contrarian reputation. His consulting firm, Simon Hunt Strategic Services, aims “to provide independent and unfettered advice without institutional bias on all economic and copper matters, no matter how long it takes to arrive at the truth.”

Arguably, the changing global climate is the most consequential (and most controversial) of Simon’s predictions. He says NOAA’s own data suggests the next sunspot-triggered cooling cycle will begin as soon as 2027.

“So what are we doing with all these EVs and renewables?” he asks. “By the time we get into the cooling cycle, households are going to rebel. Why spend the additional [money] to purchase an EV and move to renewables, when the weather is cooling under natural circumstances? But that’s a different story.”

Vicious (solar and volcanic) cycles

Many parts of the world experienced droughts over the last summer, which Simon says were not caused by “what people call ‘climate change’ or ‘global warming,’ but by an underwater volcano in Tonga exploding, which spit up a lot of vapor into the atmosphere that circled around the globe. That is what actually did cause extreme temperatures.”

Within a few years, he posits that we will feel the effects of the Centennial Gleissberg Cycle, an amplitude modulation of solar cycles that happens roughly every 70 to 100 years. In the 1930s, the effects of the last Gleissberg cycle caused the decade-long Dust Bowl in the American Midwest.

Those forces, he argues, will add up to a food cost crisis. Simon points to statistics compiled by the Food and Agriculture Organizations of the United Nations (FAO): the FAO Food Price Index (FFPI), a measure of the monthly change in international prices of a basket of food commodities. The (rounded) average was about 95 points in 2019. In 2021, the FFPI was approximately 126. This year to date: 147. 

That number is projected to rise to 185 in 2024 and 220 in 2025, which will have a profound impact on countless households. In parts of the world, Simon says poverty will soar. 

Russian, NATO and nightmare scenarios

2022 has been an eventful year, to say the least. Are we in for more disruptions? 

We’re living in a “troubled world,” says Simon. “Because a combination of the war scenario in Europe and a very highly leveraged financial system is going to give us a few nightmares over the next five years.”

When he and I spoke (in the early part of the fourth quarter), he forecast a “dangerous intensification” of what he characterizes as a war between Russia and NATO, using Ukraine as the proxy.

“I think that by the end of the year, the risk is … an out-and-out war between NATO and Russia. I think there’s a real risk the war will spread beyond the Ukrainian borders,” Simon argues. “So we’re going to have serious consequences of this military intensification at a time when the global financial system — which is highly leveraged, with central banks tightening credit and raising interest rates.” 

Will the U.S. ‘force’ China to invade Taiwan?

Simon believes that World War III has already begun and that armed conflicts will soon spread from Europe to Asia. 

“Obviously, Taiwan is a ‘hotspot’ at the moment,” he says. “I believe strongly that China has no wish to invade or blockade Taiwan. But there is a risk that America will take China over the red line by making some sort of announcement — such as ‘we support any referendum Taiwan has for independence,’ which would force China to make a move.” 

China has “no wish to do it,” Simon adds, “because they feel that given time an accommodation will be made between the island and the mainland. It comes back to what Deng Xiaoping always said: ‘The two parties come together in 2028.’”

If China invades Taiwan, ripple effects are bound to reach distant shores. 

“The big semiconductor company TSMC (Taiwan Semiconductor Manufacturing Company Limited) has something like 500 suppliers in Taiwan,” Simon explains. “At least one of them would be bound to be knocked out. So we would have zero production coming from TSMC, which would probably impact America more than it would impact China.”

‘Bombshells’ in combat and the global economy  

Simon worries that any escalation of conflict — the war in Eastern Europe and/or elsewhere in the world — will cause “severe pain” in what he calls the “undergrowth of the global credit system.”

What will that look like? Simon says we could see “pockets of implosions” in the global economy quite soon, as central banks are “forced to change direction” within the next three months.

He predicts that this volatility will knock the dollar “off its perch,” and that central banks will be forced to add liquidity into the system “to stop these bombshells from exploding.” 

Unfortunately, this “loosening” will lead to a resurgence of inflation. 

Simon thinks we will see a significant increase in energy and food prices over the next few years. But prices risk “absolutely exploding upwards” instead, due to the lull in exports like fertilizers and grains from Russia and Ukraine, as well as climate change. 

Davos elites versus the rest of us

Simon’s less-than-rosy outlook for the next few years includes an assertion that 10-year U.S. Treasury bonds will yield over 11% by 2025. 

“That, of course, is going to implode large parts of the global — highly leveraged — financial system. Add this all together with the war [in Ukraine] still ongoing, and we’re going to have a depression very much akin to what we experienced from 1929 to 1932.”

That being said, the problems that keep Simon up at night are not just “how dangerous the world is financially … and warmongering” — though those two issues are worrying for sure. 

He is “very concerned about [World Economic Forum Executive Chairman] Klaus Schwab and the Davos crowd,” he says. “He, with his elite members that we better not name, are trying to reshape the world. And I think they’re going to fail. … They may have bought the governments — which they probably have — but they’ve not bought the people. And the people have begun to rebel.”

This is based on an episode of Top Traders Unplugged, a bi-weekly podcast with the most interesting and experienced investors, economists, traders and thought leaders in the world. Subscribe on your preferred podcast platform so that you don’t miss out on future episodes.