Demographics and the global economy. 5 takeaways from Davos on the outlook for global finance. Speculation over the US election results is already impacting global geopolitics. How the benefits (individual and societal) of reconnecting with nature transcend all barriers. Why the Vail Mountain economic formular might prevail in ski resorts across the globe.
QUOTE OF THE WEEK
ARTICLE OF THE WEEK
John Authers, Destiny and Danger Where Demography Meets Finance
(Bloomberg, 23 January 2024)
Long-term investors beware! The current sharp decline in birth rates is strikingly broad (even though it varies by geography), and if global birth rates keep falling at 3% per annum, then the prospects for population growth must be changed radically. According to calculations by HSBC, the peak in the world’s population is imminent, and the rest of this century will see a decline. This will increasingly be felt in the global economy, with the obvious concern that it will put greater pressure on finance, leaving governments with a choice between borrowing far more (and raising interest rates), or allowing inflation to deal with the problem (gifted article, reads in 6-8 min).
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Huw Van Steenis, 5 things I learned on the future of global finance at Davos 2024
(World Economic Forum, 23 January 2024)
Oliver Wyman’s vice chair shares his 5 takeaways from Davos on the future of global finance – contains a few interesting quotes and insights. (1) Artificial intelligence remains between hopes and fears; (2) The shift to private credit is accelerating; (3) Energy security and end of free money shifting the green transition investment narrative; (4) Macro regime change is a key issue and central banks still need to adapt (note the divergence between investors and the markets – the former expect fewer than six Fed rate cuts priced in by the latter); (5) The reordering of global supply chains (friendshoring) is accelerating – benefiting India, Vietnam, Mexico and, to some extent, Canada (free access, reads in 5-6 min).
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Graham Allison, Trump Is Already Reshaping Geopolitics
(Foreign Affairs, 16 January 2024)
Worldwide, leaders are beginning to wake up to the fact that a year from now, Donald Trump could be returning to power. Some foreign governments are factoring into their relationship with the US what may come to be known as the “Trump put”—delaying choices in the expectation that they will be able to negotiate better deals with Washington a year from now when Trump will effectively establish a floor on how bad things can get for them (Putin and the oil industry are a prime example). Others, by contrast, are beginning to search for what might be called a “Trump hedge”—analyzing the ways in which his return will likely leave them with worse options and preparing accordingly (Ukraine and the EU come to mind, so do climate negotiators) (metered paywall that may require prior registration, reads in about 10 min).
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Richard Louv, Greening Democracy: The Transformative Power of Nature on Children and Society
(MIT Press Reader, 12 January 2024)
This is packed with scientific references showing why and how the topics of nature, children, and social capital relate to each other. It starts with the “biophilia hypothesis”: the idea that human attraction to nature is genetically hardwired within us. Indeed. Nature represents beauty, refuge, and healing; and immersion in it is not only good for us as individuals, but also nurtures empathy and builds social capital. This is why providing equitable access to nature builds a healthier polity. The author argues that reconnecting children and nature is a cause that transcends political, religious, racial, and professional barriers (metered paywall, reads in about 10 min).
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Mark Dent, Powder and profits: the economics of ski resorts
(The Hustle, 19 January 2024)
Being based in Chamonix Mont-Blanc, this is something we think about and discuss daily. Is Vail Mountain the future of the ski industry? Despite its single day lift ticket priced at $299, demand is soaring to record heights. The reason: there are fewer ski resorts than there were 40 years ago and almost no opportunities to build new ones, which has led to overcrowding (and boosted independent ski areas). What is true for the US is also true, but to a lesser extent, for the rest of the world – particularly Europe. The future: more investing in lodging, restaurants, high-speed chairlifts, and snow-making machines. More consolidation, more luxury, and a fight with environmentalists (metered paywall, reads in 5-7 min).
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