Two Big Different macro factors

Investment Analysis Clubs Macro Economic Trends and Risks
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Our prognses for investments now need to take in a very different sort of calculus than we have seen in decades: the nearly mandatory expenditures for war and conflicts, with both its armaments and suction of labor, and also cf GCC and its similar insistance on big infrastructural investments and its downside of massive movements of starving or flooded peoples. All coming to a “theater” near you.

Shortage of grains was already becoming problematic in Africa even before the Ukraine invasion, and now with Ukraine gains inaccessible the situation is likely to become catastrophic leading to a huge flood of refugees heading north to Europe. Europe will need to greatly enhance its military and police patrols of the Med to block that flow and to divert resources to cope with the refugees getting through, or suffer major internal conniptions and disruptions. Expensive either way.

We need to look back to WWII mobilization of societies for some semblance of what seems to be coming. Or we get luck and Putin collapses quickly, and that is also possible.

david fb

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George Soros, who I admire enormously, sounding off at Davos on these exact same macroeconomic themes:

https://www.theguardian.com/business/2022/may/24/ukraine-inv…

In a ferocious attack on Vladimir Putin and China’s Xi Jinping at the World Economic Forum in Davos, Soros warned that autocratic regimes were in the ascendant and the global economy was heading for a depression....also heavily criticised the former German chancellor Angela Merkel for cosying up to Moscow and Beijing.... “The invasion may have been the beginning of the third world war and our civilisation may not survive it,” he said.

It would make a lot of sense to increase taxation to pay for vital long overdue expenditures on infrastructure etc., especially with regard to power generation and transmission, but also on transportation etc to help make rehomed manufacturing more efficient. Essentially that means decreasing non-vital consumption, which is to say that we should go on the equivalent of a “war footing” in dealing with both rampant autocratic imperialism and with GCC. And if that is the case then the sooner the better.

Since the USA is deadlocked on almost everything (except lots of blah blah) I would expect, especially with the new governing coalition in Germany, that we might see Europe, Japan, and Korea taking the lead before we even look for, let alone find, our bait can, let alone start cutting bait, let alone fishing…

Electrical equimpment (including batteries) and large scale construction project companies, etc., for the long haul, and armaments industries for the time it takes to take down Putin and maybe Xi?

Meanwhile I am keeping my bets in place on finding land and resources that the rich and powerful seem to covet. And I am watching the Mungofitch rule and sniffing the breeze as to when to go into key beaten down stocks.

War has often (but NOT always) been very very good for securities markets.

david fb

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War has often (but NOT always) been very very good for securities markets.<\i>

American securities markets at least. Not so much for Russian, Ukrainian, Iraqi etc…

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War has often (but NOT always) been very very good for securities markets.<\i>
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American securities markets at least. Not so much for Russian, Ukrainian, Iraqi etc…

Yup. It depends upon who’s winning. The Dow went down from 1939 to a mid-1942 bottom.

DB2