Let
them eat cake
Recent political pronouncements
and policy initiatives, combined with grim winter weather have put significant
pressure upon raw materials prices. The
market's fear is that burdensome cyclical pricing pressure might become
systemic trends that would accelerate inflation in everyday products, including
energy and food, thus undermining wage gains, consumer spending patterns, and
global trade. There is no question,
however, that the pricing curve is shifting upwards.
The political and
economic consequences of these changing tides are leading to the creation of
global "ideological" movements that reflect population displacements
and financial disequilibrium. Examples
of "jingoism", "protectionism" and fear-mongering litter
the election landscape throughout Europe, and are dangerously migrating into
the 2018 plebiscite here in the US.
These threats and false
promises are more than just rhetoric.
They extract a human toll felt by our socio-economic dynamic that forcefully
will govern stock and financial analysis for the next decade and beyond.
These changes can be
evidenced in the raw data as well as in the stories we tell around the kitchen
table. They represent generational
shifts that might elongate the timeline of how we analyze, extract, and
interpret our financial condition.
We know, for example,
that interest rates will rise.
While it is impossible to forecast the target date for each increase,
one must accept that rising rates are a by-product of coincidental expansion in
other areas of the economy. The
trajectory of bond yields will accelerate, making fixed income the alternative
investment to stocks it historically always had been.
Price pressure in
agricultural commodities is also expanding at a faster rate than at any time in
the past 5 years. Industrial and
population evolution requires sophistication in farming techniques to keep pace
with the demand for food and potable water.
If one subscribes to the notion that emerging
markets are the next great places to invest, then a corollary to that thesis might be the
expansion of agricultural technology to feed those growing population
centers. We believe that the next
capital gains beneficiaries of top-down macro global trends are the agricultural
foodstuffs, including corn, coffee, wheat, soy, poultry, beef, grains, sugar,
and dairy, amongst others.
A
sophisticated population ecosystem cannot rely solely upon the capriciousness
of weather patterns but must, instead, develop well thought-out structures for
managing food processing and delivery to support its population's needs.
Those who seek to find capital
gains from real estate investment in ETF's and private placement offerings might
also look as an alternative at public/private partnerships that are developing
arable farmland across the globe.
I proudly note that my
proprietary research analytics, ArlingtonEconometrics, has allowed me to
construct portfolio solutions for clients that reflect these, and other,
specific investment silos. While I generally adhere to a broadly diversified
portfolio strategy to mitigate risk, I also believe that customization of
portfolio solutions can localize performance in areas that we and our clients
believe hold opportunity for the very long-term, such as our previous efforts
in Health and Life Sciences, Alternative Energy, Water, Global Agriculture, and
a host of other socially responsible topics.
Population explosion
and dislocation, natural and man-made disasters, and natural resource shortages
are making our planet seem as if we are reverting back in time, when bread
basket migrations caused sociological, political, and economic
revolutions. Those indigent souls that
you see on television rioting in the streets because of drought, political
oppression, or natural disaster are not hungry for a piece of the profit....they are literally starving
for their fair share of the food, water, and opportunity that many simply take
for granted.
No comments:
Post a Comment