Hawk or Dove?: Supersonic technologies go through hydrogen.

The doubts of whether Falcon or Dove politics have been clarified with Powell's statements on Wednesday, this has caused a cascade of effects. Falls in indices, in raw materials and practically in all markets. Biden's green policy, which started warming up last year, is taking shape in the aviation industry and will take off this summer.

According to the information of June 16, the "dove" or expansionist policies seem to be coming to an end. The FED's strategy, according to James J. Bullard, will involve taking a hawkish attitude by applying a reduction in extraordinary measures of expansionary policy, or tapering, to face the crisis. It has happened earlier than expected, and it has not been necessary to go fishing to hear from Jerome Powel that the Dot-Plot used by the Fed is not a great forecasting element, and we must try to regenerate the economy. Janet Yellen had already indicated that expansion plans should reach 4 Trillion USD despite the fact that this implies an increase in inflation and interest rates. The Fed and Biden are concerned about the unemployment rate so - in their opinion - they should keep promoting growth this way.

The new measures will lead to a rise in the value of the 10-year Bonds, an effect that -obviously- has been noticed in the markets since last Wednesday, with a continued fall until today, Friday, with the Dow Jones, with a decrease of 500 points one of the most affected indexes. Obviously, an expansionary policy cannot be sustained for so long. In fact, 7 -of the 18 members that make up the FED- ratified that it was intended to increase rates as of 2022, but with the objective of being effective as of 2023.

After the news on Wednesday and the effect on the markets, Mario Draghi, former president of the ECB, is in tune with the expansionist policy model and asks Lagarde and the ECB to continue with the expansionary policy, to limit and control the effect on unemployment in Europe for a little longer. Thus, trying to reverse the effects of the pandemic that has hit the region so hard.

Blurry has bet against the danger of Repos - among others -, can happen again if current inflation is not controlled. free money has been feeding companies artificially and consequently citizens will pay dearly for the Fed's stimulus. It is not difficult to discern that a Subprime crisis could happen again. The Fed sold a record $ 756 Billion in Securities or Treasury Bonds in exchange for reverse repos. This is an impressive 45% increase, from operations of $ 521 Billion, with 68 counterparties involved. This morning according to Wolfstreet, reverse repos have matured and developed to be replaced by today's tsunami.

Following the aforementioned news from the FED, Gold futures entered a bearish spike on the same day; and until Friday, they have been trying to slow down. The week has ended - clearly - with a strong sell of gold (XAUUSD) and silver (XAGUSD). The latter spot metal rebounded, but as predicted continued in free fall, dragged by the former.

Unlike these, Brent (UKOIL) and West Texas (USDOIL) oils suffered less the FED’s news, and tried to recover quickly by setting their price at 73 and 71 USD respectively. Clearly oils will continue their uptrend.

It is blatantly obvious, in this inflationary and expansive climate of beastly rises in the market, that the Food Commodities, sooner or later, would also be punctuated by a correction with the news that goes against the dovish policy. The dubious results in corn, soybean and wheat crops in the Midwest and in markets as large as Brazil, have caused speculators to stampede out of the market after the federal reserve projection of an increase in interest rates by 2023 Other raw materials such as Coffee, which received news of a production shortage the previous week, have suffered an appreciation effect despite the general downturn due to the fact that their shortage will possibly extend throughout the campaigns of the current and following year.

The whole week has been sprinkled by the appreciation of the dollar against all currencies. Pairs such as the euro against the dollar (EURUSD) have suffered the tremors of raw materials reaching China. The highlighted news by the Bolivian government drums on the imposition of import tariffs on agricultural products that are domestically produced in an interventionalist-nationalist attempt initiative such as chicken meat, powdered milk, cocoa and other locally produced fruits and vegetables.

Next week Ethereum (USDETH) will be the protagonist on June 25th, since the options for the second quarter expire. On May 9th  the "All time High-ATH" was reached, which was little to the mass and the euphoria was short-lived, and last week reached $1.880 USD, it is believed that the options that expire that day are equivalent to 1,500 million dollars according to Skew, a maturity of more than $1,500 USD which is 30% more than the previous one on March 26 according to AMBcrypto. Therefore, this bull cycle, together with possible news of Ethereum 2.0, expected to come out by the end of 2022, will make the bull run more than justified between now and the end of the year.

Unlike Bitcoin (USDBTC), which has been criticized for being too polluting by entrepreneurs like Elon Musk, or having been adopted as a currency by El Salvador, as a reform initiative, Ethereum has a green and efficiency-seeking mindset. This is in my opinion the key to the rise. Bitcoin is still in strong hands and most crypto funds and ETFs have done nothing but take advantage of the downturn to $ 30,000 USD to re-feed and wait for the next rise. The development of second layer solutions tends to grow, but the management of payments today with virtual currencies is much more efficient in some stablecoins.

As we had already been warning the previous week, the world will be green, the tourism recovery process is going to skyrocket in the summer and this will affect the travel agencies, retail and hospitality sectors, but obviously also the aeronautical industry. From the 1903 Wright brothers to the days of supersonic aircraft, the history of aviation has been driven by technology and ambition.

Last year, ZeroAvia (PreIPO) in the UK, organized the maiden flight of a hydrogen powered airliner. The same month, AIRBUS (AIR: Paris), issued the announcement of three new hydrogen-powered models, which would enter service by 2035. The airline United Airlines (UAL: Nasdaq), recently signed an agreement to acquire fifteen Boom Supersonic aircrafts (BOOM: Nasdaq), a Startup, becoming in my opinion the new “Concorde” of reference that it is about to develop its growth like a Unicorn in a brutal way, because it is using 100% sustainable fuel.

All these strategies involve the avoidance of leaving an environmental footprint, within the green strategies of the 2050 agenda. According to the Energy Agency, CO2 emissions from aviation grew during the last two decades, reaching a gigaton in 2019, close to 2.8% of global fossil fuel emissions. It was named by the World Wildlife Fund as one of the most polluting.

Propulsion is not limited to airplanes alone. Companies such as Volocopter and Lilium (two PreIPOs) develop the VTOL, or Electric Vertical Take-off and Landing aircraft. An electric helicopter. Hydrogen batteries are not as suitable for smaller devices, which travel less than 1,000 km according to Gray. Ranges from 1,000 to 3,000 km are the ones that take the most attention. Eurocontrol published that 6% of flights between European airports were long-haul in 2020 exceeding 4,000 km.

It is evident that the norms and regulations aimed at reducing carbon dioxide and the regulatory framework that will direct air flights in the future, can provide these technologies to the market and turn the sector towards a more sustainable model.

 Happy Trading and Happy Friday!

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* This article only expresses my opinion and under no circumstances represents an investment recommendation, but a merely educational document.