"Do you consider that the corona virus and the war in Ukraine will generate an aftermath that represents one of those tectonic shifts. So not the virus or the war directly but indirectly will the Western world start to consider issues around the reliance on output from these two countries that may take us back thirty economic years effectively creating one of those "macro situations" you talk about."
Definitely and absolutely, in my opinion.
But not arising specifically from the Russia-Ukraine saga; there is going to be a broad fraying of general global inter-connected-ness, not so much when it comes to exchanges in intangibles, but certainly in the case of global trade in tactile/durable economic goods.
"Global outsourcing" - the corporate playbook for the past two decades - is going to reverse.
For the next decade, supply chains in the OECD will be brought home.
For an entire generation of political leaders, businessmen and indeed, investors, this will be the exact opposite of the economic operating paradigm which would have been their lived experience for their entire careers.
Strikes me that very few are prepared for it.
Thanks to what I call The Great Global Outsourcing of the Early Twenty-First Century, the past decade was pretty cushy for business leaders and investors.
The tailwinds (of ever-easy CoGS and ever-falling cost of capital) were sensational; just about anyone could make money (and just about anyone could pick stocks that went up).
That's changing.
Inflation is now everywhere.
I remember in the early 1990s, when I started my investing career, the seasoned fund managers spoke the whole time about the importance of price leadership. Back then, with CoGS inflating at 10%pa, if a business had no ability to re-price to its customers, it either very rapidly lost operating margin or market share.
But for the past decade and more, no one gave price leadership so much as a skerrick of thought, because businesses didn't need to refresh their price lists every quarter to fend off the impact of constantly-rising CoGS.
The not-so-good times are returning, and the gap between the winners and losers is going to become chasm-like.
