April 2022 will go down in history as a milestone that has only been seen on three previous occasions since 1973. A month in which the S&P500 Index and US Treasuries have fallen at the same time, 5% and 2% respectively. Additionally, the US dollar has appreciated against the main currencies with which it trades and reaches a new year high.

Years of monetary laughing gas have not diminished the strength of the US dollar as world reserve currency, rather the opposite. Now we witness the vacuum effect. Inflows into the US dollar in a period of risk aversion.

The latest International Monetary Fund (IMF) global economic outlook has just been published and, like all of them, it has many interesting aspects. It acknowledges the economic slowdown in many economies and has dramatically increased the Fund’s inflation estimates.

Global growth is now projected to slow from an estimated 6.1 percent in 2021 to 3.6 percent in 2022 and 2023. This is 0.8 and 0.2 percentage points lower for 2022 and 2023 than projected in January. Estimates for 2022 of inflation projections have risen to 5.7 percent in advanced economies and 8.7 percent in emerging market and developing economies—1.8 and 2.8 percentage points higher than projected last January.

The most recent macroeconomic figures show that the Chinese slowdown is much more severe than expected and not only attributable to the covid-19 lockdowns.

The lockdowns have an enormous impact. 26 of 31 China mainland provinces have rising covid cases and the fear of a Shanghai-style lockdown is enormous. The information coming from Shanghai proves that these drastic lockdowns create an enormous damage to the population. Millions of citizens without food or medicine and rising suicides have shown that the infamous “zero covid” policy often disguises mass population control and repression.

The proposals of the European Union and the United States to implement a complete energy embargo on Russia must consider the reality. Asia is importing all that Russia can offer. China, India, and the main Asian economies will send Russian exports to a decade-high, according to the Financial Times. In fact, Russia’s trade account surplus could reach $28 billion in March, an all-time high, according to Reuters.

That does not mean that sanctions do not work. Estimates of Russia’s GDP fall range between 11 and 15% in 2022 and inflation is close to 200%, according to JP Morgan, Quartz, and Business Insider.