In this publication we analyze cycles. I would prefer it to be mostly economic cycles, but it seems the cycle of violence is in full swing as well.
As a result, I am redirecting my effort for the next report towards the defense industry, and the consequences of drones on the battlefield.
In the meantime, I found quite a few interesting data & links I thought were worth seeing.
While writing it I realized a common thread is US officials openly looking at the coming war with China, and preparing the public for it.
Depressing, really.
Geopolitics
The US is now preparing for a global war with Eurasia as a whole.
Reuters
The endless stream of sanctions upon China and the war in Ukraine might make the 2 coordinate? You don’t f***ing say… In other news, water is wet.
This report was before the escalation of the Israeli-Palestinian conflict. So you can add Iran to China + Russia.
Maybe even Saudi Arabia, or Egypt, or Turkey for that matter, despite all being US allies in theory…
You can read more in this 160-page report.
China’s response through the Global Time is no less concerning than the initial Congress report:
My long-time readers will be interested in this bit of said report:
DOD increase shipbuilding capacity, by working with industry to establish or renovate a third shipyard dedicated to the production of nuclear-powered vessels, with particular emphasis on nuclear-powered submarines.
I said before that a military shipyard like HII would make a great investment and wrote an entire report about it.
A few months later, we are getting there.
You can see why I think covering more defense companies makes sense, in a twisted way.
I do intend to keep front-running official declarations of strategy for a few months to give a headstart to my subscribers, and I am convinced the next step is drone warfare.
US Industrial Capacities
I keep arguing that short of a revolution in restoring the US industrial capacities, any major war will be a disaster of historical proportions for the US and NATO.
A few examples supporting this idea are below, all from the Wall Street Journal, not some Russian propaganda:
Wall Street Journal
This is the same Raytheon that produces the Patriot air-defense system upon which most of NATO air defense is based. Reassuring to know Raytheon production depends on China…
This is the same Raytheon that has been rather slow at developing hypersonic missiles, after a total failure from Lockheed Martin.
Hypersonic Missiles Are Game-Changers, and America Doesn’t Have Them
Wall Street Journal
If only it was all about top-notch tech. Wielding metal in a high-quality fashion is now out of reach of the US industry:
To Build Ships That Break Ice, U.S. Must Relearn to Cut Steel
Wall Street Journal
For reference, Russia operates 40 icebreakers, out of which 6 nuclear-powered.
This raises the question of how NATO intends to “expand in the Arctic”, without the base capacities Arctic power projection will require. Hoping for global warming might not cut it…
Someone should tell Joe Biden:
The world you’re probably looking for is hubris:
hubris: noun: an extreme and unreasonable feeling of pride and confidence in yourself.
Economics
"America can certainly afford to stand with Israel and to support Israel's military needs and we also can and must support Ukraine in its struggle against Russia."
Janet Yellen- US Treasury Secretary
So … America is not seeing its debt spiral out of control (see article of last week), and can totally afford 2 wars at once.
Who knows, maybe even a third with China?
More concerning about Yellen’s honesty and/or mental capacity (she is 77 years old after all), she does not seem to know the real debt level at all, something you would expect the US Treasury Secretary to know better than anyone…
For reference, this is what the Federal Reserve's own publication shows.
98% of GDP was almost a decade ago…
Maybe back then the US could afford 2 wars at once?
Investing Links
A very massive “primer” on the oil & gas industry from Deutsche Bank: Oil & Gas for Beginners
Because I will realistically never have time to look into all and produce a report on the best ones, 12 smallcap serial acquirers that perhaps fly under the radar.
At a glance, my favorites are SDI (because I am biased toward biotech pick-and-shovel companies), Momentum AB, and Teqnion AB.
I am personally staying out of most Polish companies, due to war risk with Russia, but if you’re interested, JSW, a metallurgical coal company apparently has a “market cap of 4.4 Billion PLN, while having a net cash position of 6 Billion PLN ! The company is making around 1 Billion Net Income per quarter. So P/E of 1 !“.
To be honest I am sitting on the fence about this one. After all, war risk would require a LOT of steel, and therefore metallurgical coal as well.
An interesting analysis looking into how most of Work From Home damages to office real estate is likely already done.