Supply Issues and Markets

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Supply Issues and Markets
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Supply Side Inflation and Slower Growth

Speaking on Bloomberg TV, David Malpass, the president of the World Bank said that the primary force behind worldwide inflation is supply-related. US car makers are not able to keep production lines running at full tilt despite demand for cars because of shortage of computer chips. Malpass focused on oil, natural gas, food, and fertilizers. The World Bank website says that the risk of stagflation is considerable. They have reduced their forecast for global growth from 4.1% which was their January prediction to 2.9%. They believe that growth will be slowed for several years rather than a year or two as previously believed. In the immediate term they believe that dealing with the war in Ukraine and its fallout is paramount. These side effects are largely what are driving up prices and threatening unrest throughout Africa, the Middle East, and South Asia.

Relationship of Efficient Markets, Security and Prosperity

In an ideal world markets are totally efficient. Goods are produced where it is most cost-effective and efficient and where the best products can be made. Then one adds in expansionist aims of countries like China and Russia. Although cheap labor has made manufacturing in China desirable for many companies like Apple, the result is money pouring into China for development and expansion of their military and less investment in the USA and Europe. Over decades the US and EU have lost the sort of skill sets that made them industrial powers. These skills are at the level of the factory floor and allow for cost-efficient production of the best products. Now to a large degree the US and EU are relying on skills first taught by US and EU companies to Chinese workers and then honed by Japanese management and enhanced by equipment from Germany. In the name of national security and prosperity we can expect to see a decline in global markets and increased protectionism. The global GDP will likely fall and markets will follow.

Newsletter: Our Less-Than-10-Minute Video Overview of Today’s Market Activity

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CEO TOPGUN Options, chairman & founder No Fallen Heroes Foundation, ONN.tv founder and CEO, Former F/A-18 USN fighter pilot, TOPGUN (adv) graduate. Father of 3.

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Matthew "Whiz" Buckley

Matthew "Whiz" Buckley

CEO TOPGUN Options, chairman & founder No Fallen Heroes Foundation, ONN.tv founder and CEO, Former F/A-18 USN fighter pilot, TOPGUN (adv) graduate. Father of 3.