How to Win the Ukraine War (without firing a shot)
I had a chance conversation with a Ukrainian scientist today, with whom I shared my reasoning as to why the Ukrainian war is being fought and how it can be resolved. My views are unconventional and quite contrary to the prevailing winds, but as she liked them so much, and as they may be helpful to unwind a dangerous and contentious problem, I made a video to walk you through my ideas.
Ideas - Sell All US Equities Now, Decline Will be Worse than 2020
1. COVID Risk Increasing
News of Covid success in the United States and UK is masking much bigger problems. News reports estimate that 30,000 people are dying a day in India. Covid is still spreading out across the developing world and Asia (Tokyo and Melbourne on lockdown).
2. Variant Risk Increasing
The risk of a super variant that current vaccines are ineffective against emerging from these hotspots is a realistic possibility and will drive down risk taking in markets. As 200 countries come together for the Olympics in Japan, a super variant could emerge from the Games, as a chief doctor has warned, begging the government to postpone the games.
3. Republicans
As the Democrats have such a narrow margin of control in the Congress, the Republicans are highly incentivized to harm the economy and be generally disruptive so as to weaken support for President Biden’s policies and push voters to support the Republicans in the mid-term elections and take control of the House and the Senate.
For example, just two days ago former National Security Advisor General Flynn talked up a coup, the Governor of Texas just signed a law that will limit abortions after six weeks, and Republican states across the US are limiting voting access.
Sustainability Arbitrage LLC and 2021 Surprise Forecast
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I am pleased to announce that Macro ESG is now the research product of Sustainability Arbitrage LLC, a company that I founded. Macroesg.com will be the research portal for Sustainability Arbitrage.
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I believe that a significant surprise event likely to happen in 2021 will be the massacre by the Taliban of mid-level and low-level collaborators in Kabul, Afghanistan. I have not seen this idea stated anywhere and as it is so obvious – it leads me to believe that this could be a surprise with power in the markets.
A Greater China Currency Trading Bloc is Emerging in Asia
Actionable Ideas:
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Keep a sharp eye on the RMB, the Korean won, the Taiwanese dollar, the Philippine peso, and the Malaysian ringgit.
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Similarly, monitor the large non-bloc nations of India, Japan, Indonesia, and Australia.
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Pay close attention to statements from China seeking to tighten the bloc and harm non-bloc states like China’s threat today that it would not buy coal from Australia.
China Will Retaliate
China will strike back. There is no doubt about it. President Xi’s power rests on his aggressive call to action to the Party’s cadres to be bold. He can’t back down from any challenge to his authority - foreign or domestic. He can - however - bide his time so long as his supporters are confident that he will act, then he is safe. But the gloves are officially off. This morning, in Hong Kong, media mogul Jimmy Lai and his two sons were arrested on suspicion of foreign collusion and uttering seditious words.
And we may have a war on our hands before we know it. Today’s South China Morning Post ran a story about the US looking to “outgun PLA in Indo-Pacific” - and given the current environment - I think that story was directed from Beijing. The story concluded with the observation, “Beijing’s countermeasure is to disrupt the alliance. At the moment, only Australia is listening to the US. Its other allies, like Japan, Singapore, the Philippines, and the other members of ASEAN are undecided about what to do as they don’t want to take sides between Beijing and Washington.”