Summary

After outlining the Global Forecaster’s product, methods and services, David began by outlining the market, the geopolitical situation, and the collective mass denial within Western systems as “alarming”. This period is a “great shift” in the world, with the rise of China and the marked decline of the West. Highlighting his Five Stages of Empire model David spoke about the regression of American hegemony and the conditions of international decline that Joe Biden inherits in entering office. His presidency is doomed to slump to the mediocrity of a James Callahan-like tenure in the White House: completely ineffectual and without the tools to deal with the core structural maladies the US faces. When a war or pandemic hits a system in regression – with declining national energy - it is a high entropy event that facilities disorder and that system begins to erode and collapse. Paradoxically China has a vast excess of national energy as it is in its second phase of expansion. Therefore, the entropic effect of the Pandemic has thus had profoundly contrasting effects on the two systems. In effect the pandemic has accelerated China’s global hegemonic challenge. Part of this process of decline is a myopic mindset that fundamentally restricts a society from being forward looking, focused on internal disorder there can be no visions for the future. The consequences of being unable to look beyond the narrow focus of one’s own system were evidenced in early 2020 with the Pandemic imminent: Western governments displayed an utter inability to act - exacerbating the wave of entropy when it did come. Covid-19 is far from reaching its conclusion. Its multi-wave and multi-strained nature combined with the fact that it has affected only 4-5% of the population means there are countless iterations that will doubtless surface by a convergent evolution of the virus, in all likelihood making redundant current vaccination programmes. More profoundly, it has badly damaged, if not fractured, the notion of globalism as a central paradigm in global relations. This presents a huge opportunity for China. Their ascension accelerated under a weak Obama administration that empowered Beijing to provide a serious hegemonic challenge to Washington. China’s precautionary stockpiling of commodities shows active cognition of the growing chance of global conflict or a potential development into global pariah status. Historical parallels with both 1914 and 1939 are developing rapidly, with India’s growing to challenge to China echoing that of the Soviet Union to Nazi Germany in the 1930s, with greater strategic competition fostering greater tension and aggression. Britain, on the other hand, is one of the few leading Western nations that has been in ascension since the reversals of the 1980s. Brexit was a civil war between regionalisation and expansion and an impact of the Leave decision is that the nation will now require far greater adaptability to successfully engage internationally, for example in Asian Markets. The recent vaccine dynamic in the UK showcases what is going on – with potentially far more to come. Britain is the one system in the Western world that can work through this better than both Europe and America; it will progress - even if it will make mistakes. On the other hand, the pandemic has compounded the already growing, Russian socio-economic issues and, with another 8 months of turgid economic conditions likely to come in Russia the prospects for regime change grow ever more likely. Such a regime change would likely embody a Russian movement to the West: a global de-stabilising factor, with the potential to insight Chinese action accordingly against a shifting balance of power which Beijing might find untenable. In terms of financial markets, we are on the cusp of a 2-Quarter bear market despite relentless financial intervention. The multi-faceted nature of the pandemic and the looming de facto Western-China confrontation means that there is simply no way in which the market can sustain current expectations moving forward. We have just had the first surge in commodities – of what will be a 5-year commodity bull market – but not without a strong reversal first. This means that we will not have Inflation in the immediate term, but rather, we will have a highly deflationary period for the next 6 months in asset classes before inflation grabs hold later in 2021. Compounding a dismal outlook for equities in 2021, there is a Western debt crisis looming on the bleak horizon.

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