Since end of WW2 the world has been continuously moving to open global trading. The supply chain issues during COVID highlighted this. History books will mark the start of COVID as the end of peak global trading. The truth is global trading was strained and retracting from China started before then.
The result is we are headed to a multi-polar world, with different countries aligning as trading partners.
Russia
With the invasion into Ukraine, the free world (minus India) has moved away from trading with Russia. International companies withdrew from Russia practically overnight. Russia removing itself from global open trade, combined with destruction of it's military arsenal, global banking freeze on US assets, and economic turmoil will continue to take a toll.
The ruble is falling as Russia spends its reserves to maintain Ruble value. This isn't sustainable as Russia is no longer net importer of US dollars.
China
China raised its rhetoric of invading Taiwan before COVID, and started to take steps by removing westerners from its country. The hostility of the environment rose, and post COVID accelerated. Western countries have exited China en-mass for being the manufacturing hub of the world.
Even Chinese companies are exiting China to setup manufacturing outside of China simply to remain relevant. If these companies didn't take this step, they would have collapsed.
China Yuan is in a freefall, with levels not seen since the start of COVID. Real estate has declined 25-50%+, and unemployment skyrocketing to over 20%
The result is exodus out of China to leave en mass, with an estimate of 90 million people.
Inflation - here to stay.
The world has under-invested in resources, and resources like Oil will continue to see costs to produce rise. Since WWII energy has continuously become cheaper. For the first time in over 80 years we will see perpetual energy costs rise until alternate energy sources become more viable as a major source of energy.
The issue is the Federal Reserve is trying to fight inflation, when the real threat is increasing energy production. The result will likely be a Fed that punishes companies from investing, including into energy due to higher borrowing costs. This could become an economic death loop.
Affect on US and world
Money must reside in a place. People living in these countries, and countries negatively affected by these failing states have the option to move money. Moving money will also be affected by inflation concerns. Some will choose to purchase Bitcoin or other Crypto, European assets, US assets including stocks. The net is a stronger dollar and a more robust US stock market.
The Risk
Assuming Russia or China does NOT start WWIII or other global dislocating event, as these countries destabilize, the result will be a less robust global economy. How this plays out is difficult to predict. The question out there is moving your assets to protect.
What to do?
INDA is a good bet, as it is a free country that also trades with Russia. It has benefited from the exodus from China to other countries. India has 1.2 billion people and has low global debt. It does have weakness of depending on imports, and could get caught in a political issue between US and Russia.
Bitcoin historically falls and rises with the US Stock market. Therefore as a hedge against US market it isn't that good. Same for Gold, in times of downturn it takes a massive hit. In times of massive printing or lowering rates it benefits.
The best investment is in yourself, including solar panels by reducing future living costs. Divesting to countries like India is a good longer term hedge including a rising Rupee or India economy booms.
The US market could go higher from here due to the global instability, or take a nose dive with the world. The nose dive I do believe is inevitable just not guarantied the next destination.
Good luck!
