What Comes Next?

Ed D'Agostino | Global Macro Update
January 5, 2024

I hope you had a peaceful holiday season. I say that fully aware that across much of the world, peace is a limited commodity.

I spent last year speaking with dozens of economists, investors, and analysts of all types. You’ve heard some of these conversations on Global Macro Update. I’ve received incredible feedback from many of you, especially after favorite guests like Felix Zulauf, Pippa Malmgren, and Louis Gave.

These interviews are part of my research process. When I’m not chatting with experts, I spend much of my time reading and preparing for these discussions or analyzing my findings with the Mauldin Economics Macro Team. We’ve been building a set of investable macroeconomic themes. I’m excited to share more about them with you over the coming weeks. In many ways, it’s the culmination of the past decade’s work here at Mauldin Economics.

For now, I’d like to share my top takeaways from 2023 and how they’ve set up what comes next.

What keeps me up at night?

In a word: geopolitics. Tensions are rising across the globe, and the US is distracted with domestic troubles and political infighting. That’s not a good combination. 

As Felix Zulauf predicted in mid-2022, the Russia/Ukraine war drags on. Hundreds of thousands of people have died. Russia has ramped up air strikes in the past week, yet it’s hinted it’s willing to begin settlement discussions. But both sides want concessions they’re unlikely to get.

The US has sent over $75 billion in military and humanitarian support to Ukraine, but our willingness to continue funding the war and supplying arms is waning.

With Iran’s help, Hamas is further destabilizing the Middle East. Houthis, also backed by Iran, are disrupting shipping in the Red Sea, effectively choking off the Suez Canal, which normally sees around 12% of global trade.

Ships are being rerouted around the Cape of Good Hope, adding 10–14 days to trips. This leaves Europe, which has reduced its dependence on Russian oil and gas, particularly vulnerable to interruptions in energy flowing out of the Middle East.

The US military and its allies are pushing back. This conflict has the potential to escalate with unpredictable ramifications.

Then there is China. It’s determined to completely dominate the South China Sea, and it may draw the US into yet another active conflict in support of the Philippines, a longstanding US ally. Tensions between the US and China over Taiwan seem poised to rise.

Diplomatically, militarily, and financially, the US is spread thin.

What concerns me most about China is the part we don’t see. China’s reach into the West is vast and deep. From TikTok’s tracking of users and its state-controlled algorithms, to a sea of Chinese chips sitting in parts of our critical infrastructure, we are vulnerable to cyberattacks that could disrupt the delivery of basic services on a national level.

This is not something to panic about, but it is something we should all be aware of. You cannot plan for a black swan (an unpredictable event), but you can safeguard your portfolio from known risks.

My second major concern is the intentional polarization of Western nations.

An alarming number of people hate those who disagree with them or live differently than they do. Algorithms determine what posts we see on social media, which shows we watch on streaming services like Netflix, and which ads we are served. Will algorithms choose our next president with the help of bad foreign actors? It’s a possibility.

I’m reading a few books at the moment. One is Max Fisher’s The Chaos Machine. Fisher explains how algorithms are designed to create addiction. This should surprise no one. But seeing the evidence in black and white just makes me angry. We’ve done ourselves, particularly the younger generations, a tremendous disservice by allowing this “technology” to take over their lives. I hope to bring Fisher on as a guest on Global Macro Update.

Another book on my nightstand is Four Battlegrounds: Power in the Age of Artificial Intelligence, by former US Army Ranger Paul Scharre. Paul will join me on Global Macro Update next week.

His book details the artificial intelligence arms race between the US and China and the role AI will play in future conflicts. I believe this element of AI, along with terrorists and criminals using it, poses a far bigger risk to society than the AI-driven job losses that many fear.

Still, there is plenty to be excited about (and invest in).

Overall, I am optimistic about AI. Paul Scharre describes it as the catalyst for the next Industrial Revolution. I agree. Absent the risks mentioned above, AI will be a net positive for humanity. It will boost productivity, eliminate lots of undesirable jobs, and free people up to concentrate on more meaningful, creative tasks.

Investors, however, should proceed with caution. Every publicly traded company will tout its use of AI on earnings calls for years to come. Most of that will be hype, but there are ways to pinpoint the real, substantive opportunities.

For all the challenges the US is facing, we are on the cusp of a surge in productivity, innovation, and resilience. A realignment of global trade is underway. This will create new jobs and investment opportunities across North America. Investors who zoom out and participate in the major macroeconomic trends taking shape should do well in the coming year.

2024 will be a year of big changes, both globally and here at Mauldin Economics.

More to come. Thank you for reading (and watching) my work this past year. Your support and comments are encouraging and appreciated. I’m lucky to be in your inbox, and I hope you find Global Macro Update helpful.

Best regards,


Ed D’Agostino
Publisher & COO

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To help you stay in front of the biggest stories, Mauldin Economics Publisher Ed D’Agostino interviews leading experts, digging deep on the most urgent stories you need to know about.

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