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The 2022 Business Downturn & The End of Inflation

 JPMorgan's Jamie Dimon said today at a conference that there's an economic "hurricane" coming, although he's choosing dramatic words, what he is referring to is the coming natural business downturn.


Business owners are risk takers and owning a business is not a static process, economies have good years and bad years first and foremost and are always adapting to new technologies or trends, this affects the economy as a whole because of jobs and growth.


The current economic circumstances due to Ukraine, Covid or China tensions are causing a surging inflation in energy and oil prices and has shown how fragile the linkages between the world's economies truly are. The G7 literally threatened sanctions on OPEC if they didn't increase oil production and OPEC just announced they are now looking to increase and countries like Germany and The Netherlands have lowered taxes on gasoline, this is political desparation at it's finest.

Economies and markets fundamentally run on inefficiency of information, this means a lot of economic decisions are not rational or that predictable, for example, currently online food ordering is exploding but also the amount of delivery restaurants, but do people order more food? or are we severly diluting the restaurant business. I think a large part of low awareness restaurants are doomed to fail due to lack of actual market share, delivery apps are overvalued and the power of brand equity severly underrated.


With every cycle risk takers learn from experience and information assymetry decreases, information has never flowed so fast across the world and the science on business profit growth is showing more and more that we have emotional connections to brands (Binet, Field, 2014. Sharp, 2013.).


The most fascinating thing was probably seeing Kissinger and Soros go head to head with their opinion on Ukraine and Putin. Kissinger says that a war that is not about freedom but territory should aim for a truce while Soros pleaded for an idealistic defeat of Putin and forgets to mention the thousands of lives this will cost. This shows the clear difference between a political and diplomatic thinker and an idealist with too much influence and Soros in a way is exposing himself.


It is clear that fundamentally we are as a complex system society in a state of chaos trying to find integration through information and we are reaching a point where podcasts are becoming the mainstream as shown by Joe Rogan who went from a conspiracy basement podcast to a 100 million dollar global media force.

The economy is in for a ride simply due to the normal exuberance of speculative bubbles, businesses are always in a state of flux and in a more competitive environment one needs to have an effective strategy. The lesson is never be complacent and always factor in economic risks whether it's about savings or business decisions, one phrase from Soros I do use a lot is: "discount the obvious, bet on the unexpected."

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