Midas Touch: Macro | Trading
4 Keys to understand the current macro set-up
How Inflation, Energy, Geopolitics, and China shape current happenings
5 Key Take-aways
on keys shaping our current macro set-up
from Florian Grummes (Midas Touch Consulting) at our 22nd Investment Conference (2022)
To understand the current macro set up we need to consider the four factors, that include inflation, energy, geopolitics and China itself.
The only safe haven right now is the US dollar.
It’s hard to foresee exactly how the current situation will play out.
Even in the worst of the days, it’s all about people with entrepreneurial spirit.
We are moving towards a totally new decentralized world.
The current macro set-up
explained in 5 Minutes
taken from CM-Equity AGs 22nd Investment-Conference (October 2022), presented by: Florian Grummes (Midas Touch Consulting)
3 Key Statements from the presentation:
“To understand the current market set up we need to look at the macro set-up of Inflation, Energy, Geopolitics and Chinas role”
“all market crises are at root, just liquidity crises. In the end of the day, it’s all about liquidity, and the Fed with its sledgehammer is basically destroying all the liquidity right now.”
“After 40 years of falling interest rates, it looks like a big fundamental change is happening right now”
About Florian Grummes / Midas Touch Consulting
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(Germany), Dubai (UAE)
Transcript of Summary
“And as the dollar liquidity dries up, so will markets, economies and lifestyles. And remember: all market crises are at root, just liquidity crises. In the end of the day, it’s all about liquidity, and the Fed with its sledgehammer is basically destroying all the liquidity right now.
I think to understand the current situation, the macro set up, where we are in there is four keys to understand it.
And the first one obviously is inflation. It’s the big topic everybody’s talking about. It hits 95% of the population extremely hard. This creates huge tensions within societies. The second one is energy. We have a very dire situation since, especially the war in Ukraine. But this whole problem has basically been in the making for the last 10, 15, or 20 years. And then we have geopolitics. We have a lot of hotspots on the planet. obviously the main one here in, in Europe is Ukraine right now. But the big elephant in the room obviously is China against America. And the last macro key is China itself. China was responsible for pulling out the western world out of this mess after the financial crisis in 2008. This big boom in China is over.
Just talking about some of the fundamental aspects. So what has been changing now is we don’t have any more falling inflation and we don’t have any more lower interest rates. We don’t see falling labor costs anymore because outsourcing, for example, to China is not really an option anymore. Then demography in the western countries is a nightmare. We simply don’t have enough children. The societies are way too old. In regards to Africa and India they probably don’t see any more falling commodity prices due to nationalization. Chile, Peru, they’re basically nationalizing mining assets and projects. And you have a high level of bureaucracy and ideology, the states usually take almost 60% of the economic output. And finally, I also think that the increase in productivity that we have seen through tech, internet, computer over the last 30 years is now slowing down.
So the only safe haven right now is the US dollar. So what has happened, oil, currencies and bonds are currently imploding against the US dollar. It’s a severe, actually deflationary, situation that we’re suddenly in while at the same time we’re having high inflation numbers. The dollar strengths is basically squeezing in everything. It’s a doom loop. The Americans are the only ones who can print dollars. And the rest of the world has debts in dollars. So that’s the problem.
We are in such a situation right now, and so the question is, Keep tightening? If they continue to raise interest rates and that’s what they’re saying they want to do, the result will be a great depression. There is no doubt about it. But they also might start printing again. That’s usually what governments and central bankers have been doing in mankind’s history at the end of the day because the pain is just too huge for everybody. And then the result will be, Hyperinflation.
And it’s very difficult to foresee exactly how this will play out. There is so many factors and as I showed you initially, China is also a black box for us in the Western world. Most of it, we don’t really understand what’s going on inside the geopolitical events. Also, there’s so many things to it, so it’s very difficult to foresee it.
And to broaden the perspective again a little bit, even if we are in an end game, and even if in the end of the day it’s either depression or hyperinflation, it’s always people. And you can see this guy here, it’s the perfect example. It’s a natural force of doing business, improving your life standards, helping people, getting out there and building something. It’s not a political concept, and it’s not corporatism, it’s not socialism, it’s not equalism, and it’s not religion either. Okay? So these are the people you wanna look for, people that can build something that you can trust and that have that spirit, that entrepreneurial spirit. And if you go with these, your chances of picking a good investment and basically making something out of your money is very high.
And to wrap it up, the mega trends are still in place no matter what the end game is going to be .
Obviously one of the big mega trends is digitalization. Then, digital assets in general. Of course, Bitcoin is not going away. The non fungible token technology itself is very interesting and will stay and will develop into something. Quantum computing, quantum technology. Artificial intelligence obviously is a big megatrend. Data just in general is a big trend. Then sustainability, carbon credits, solar, wind. This will also continue, of course, recycling is also here to mention then electrification. You have copper battery metals, lithium, nickel, cobalt, uranium, I think we will need uranium for sure. Precious metals always a mega trend since 5,000 years, ladies and gentlemen, and this trend is not stopping.
It could be that we move into something totally new, a decentralized world, where we can do business peer-to-peer, where basically mankind is free of all these problems that basically come with a paper money system. It could be that we´re going to be living in a much more honest and transparent world.
So that would be a beautiful mega trend down the road. Decentralization. Getting away from these centralized socialistic systems because believing that a few people behind closed doors can make the best decisions for all of us is totally absurd. Simply because the amount of data that you have to process is way too big for a few people.
So, you need a free market. You need a swarm intelligence of the individuals. Each and everyone has to figure out for itself: “What is the best for me? Is this making sense? Is this a good business? Is this working out or not?”
And if it’s not working out, you have to pay with your own money, but you’re also reaping the profits if you did a good decision. That’s what we need. That’s still the best solution that we have.”