Geopolitical Alpha

Chapter 12Conclusion

In March 2020, popular opinion – spearheaded by the media – might deem it beside the point to write a book about geopolitics and investing. A book on epidemiology and investing may be more appropriate.

But geopolitics is central to the COVID-19 pandemic and its ultimate effect on the economy and markets. In Chapter 8, I argued the curve-flattening narrative will ultimately succumb to economic constraints: the pressure to restart the economy. Figure 12.1 summarizes that chapter's conclusions, and only half-jokingly.

As a reminder of my main thesis in Chapter 8, most voters are not savers. Or, if they are, their savings is not enough to nurse them through a depression-level economic dislocation. Therefore, investors should expect a revolt against the indefinite curve-flattening narrative to occur sooner rather than later – at the “desensitization point for debtors” in Figure 12.1. While your sample may be skewed if your friends, family, and colleagues are “savers” – certainly if you are an investor they are – most people are “debtors” on the diagram. Twitter and Instagram are not representative of the median voter in this respect.

Figure 12.1 Constraints to flatten-the-curve narrative will grow.

This book has little to teach about pandemics, but it does provide a framework to forecast policy reactions to anything. A recession, terrorism, trade war, pandemic, ...