Paragraphs below were written on Jan 7, 2022:
The first “Macro Alfa” section got really nice feedback, and I have been encouraged to continue my geopolitical ramblings, so here it is.
Timelines are a funny thing. Last time, I expected the market cap top to happen in August, and that was not a bad take as a very local high happened on Sep 7, 2021. However, the August top was a consensus among the crypto community, so many of the folks acted preemptively and we had the all time high happening May 12.
Last time, I expected we have 4 years till the storm. But it wont start overnight, and many events will unfold along the way. Even so, I hoped these would start happening later on. But like with crypto prediction, once enough observers agree on something, their observations affects their actions, and this in turn affects the timeline, and the initial observation is no longer accurate, because many people are preparing for it… triggering the events earlier than anticipated.
Last time, I mentioned the three hot spots where a major conflict can start: South-East China Sea, the Strait of Hormuz and the Suwalki Gap. Well, two of these are already in a state of hybrid war, or something one might call a sustainable war – a local conflict with little violence that benefits both sides in some way.
And I am beginning to think there will be no great world war again. There will be many small local conflicts, pushbacks, ethnic clashes and social disruptions. I begin to think these conflicts will be fought mostly by civilians, private armies & the little green men, because “democracy”. And I begin to be certain that we wont see the start of World War III… because we are already in it. But it is subtle.
So, to recap recent events. In the South-East China Sea, China is testing Taiwan, and vice versa. China regularly sends squadrons after squadrons into Taiwanese air defence space. Taiwan performs exercises, buys more weapons, and is doing some silicon chip market manipulations to emphasise its importance in the global supply chains.
In the Suwalki Gap, Belarus with help from Russia, is using Turkey playbook by waging immigration war on its neighbours: Lithuania and Poland. By organising direct transport of migrants from the Middle East, Belarus has created a very visual humanitarian crisis among the borders of Lithuania and Poland.
Paragraphs below were written on Feb 22, 2022:
And on this palindrome day, Putin decided to roll over the separatists republics of eastern Ukraine. The sad part is, this hopefully local conflict benefits everyone except the Ukrainians. Russia wants to get its playground, strategic depth and propaganda shots for the state TV.
USA wants to get Russia into a clusterf*ck to weaken it if it ever colludes with China, also disrupting an important Silk Road route to Europe. The Pentagon equipped Ukraine with lots of Javelins and Stingers, so any Russian ground or air engagement is likely to end in shameful flames, repeating the Taliban playbook when the Soviet Union invaded Afghanistan in the 80s.
China wants to have the USA battling on two fronts. And have the western eyes looking at something else apart from Taiwan.
I have no clue what the EU wants, but neither do they it seems.
So what about the markets? Well, with an escalating war, rising inflation and contracting QE, we are pretty much guaranteed to get rekt. But at least in a volatile manner, so maybe there is a chance for gains in a leveraged casino. But as always: NFA, DYOR.