Investing in Times of War – Macabre Yield: Truflation CEO Weekly Dispatch for 07 October 2024
Published 09 Oct, 2024
A Note from Founder & CEO - STEFAN RUST
Continuing conflict involving Israel, Gaza, and Lebanon has significant potential to impact global markets, drawing parallels with past Middle Eastern conflicts.
Historically, Middle Eastern conflicts have led to spikes in oil prices, of course. Current tensions could cause oil prices to rise sharply, potentially reaching $150 per barrel, reminiscent of the 1973 oil crisis. This would affect global economies, particularly those dependent on oil imports.
Lesser highlighted is how the region is a significant exporter of nitrogen fertilizers. The conflict could tighten supply, especially if it escalates, potentially driving up fertilizer and grain prices.
While initial reactions in financial markets have been muted, further escalation could lead to increased volatility. Rising geopolitical tensions typically result in risk aversion, affecting stock prices and bond yields globally.
Higher energy prices obviously lead to inflationary pressures worldwide, complicating central banks' efforts to stabilize economies post-COVID-19. A 10% increase in oil prices could reduce global growth by 0.15 percentage points, analysts insist.
Lockheed Martin, RTX, Boeing, and General Dynamic are U.S. companies profiting from increased military aid to Israel, which is required to purchase U.S.-made weapons.
BAE Systems, a UK-based company supplies artillery systems used by the Israeli military.
Corsight, an Israeli company providing AI-based facial recognition technology for surveillance in conflict zones.
Caterpillar, Ford, Toyota, although not traditionally seen as military companies, are involved due to their equipment being used in the conflict.
Keep an eye also on The Truflation Hedge Index.
A decidedly more upbeat topic is an increasingly favorite mine, Argentina.
Recently, it ended rent control, and early results show 195.23% more units and a 40% drop in rents.
Milei repealed the 2020 Rental Law in December 2023, which was initially implemented by former President Alberto Fernández.
The law imposed strict regulations on landlords, including three-year lease terms and annual rent adjustments based on inflation.
These measures were intended to protect tenants but led to a significant reduction in available rental properties.
The repeal of rent control dramatically increased the housing supply in Buenos Aires. Again, reports indicate a surge of up to 195.23% in available rental units.
This increase is attributed to landlords regaining the freedom to negotiate lease terms and accept payments in foreign currencies, offering protection against Argentina's high inflation rate.
Following the repeal, rental prices stabilized and, in some cases, decreased significantly. There has been a reported 40% drop in real rental prices when adjusted for inflation.
Stabilization is due to the increased supply and more flexible leasing agreements between landlords and tenants.
Rent reform is part of a broader set of policies enacted by Milei to tackle inflation. These include reducing import taxes, promoting dollarization, cutting government spending, deregulating labor markets, among many others. Truflation is also closely tracking this goal of fighting inflation, with the current Truflation inflation rate for Argentina year-on-year hovering around 186%, consolidating a six-month downtrend that began in April this year, and is in line with the trend reported by the government's official numbers.
It means all roads are leading to the upcoming Argentina Tech Forum on October 19th, 2024, at which I am honored to give a talk. These talks could influence the next steps for the Milei government. It's a landmark event for the country's technology sector and aims to showcase disruptive technologies like Truflation, bringing together key figures from government, industry, and the global tech community – including Milei himself. Companies from Microsoft to Input Output Global. The speaker lineup includes yours truly and a mix of high-profile government officials and international tech leaders in addition to Milei:
Demian Reidel: President of the Council of Economic Advisors
Roberto Silva: President of the Argentina National Securities Commission
Charles Hoskinson: Founder of Cardano
Emin Gün Sirer: CEO of Ava Labs
Hong Fang: President of OKX
The forum is expected to cover a range of cutting-edge topics, with a particular emphasis on:
Fintech and Blockchain. Argentina has been leading Latin America in financial technology, making this a crucial area of discussion. I am keen to hear the Artificial Intelligence segment with speakers like Martin Sciarrillo, Director of Data and AI for South America at Microsoft, AI is likely to be a major topic.
The presence of high-ranking government officials suggests a focus on how technology can drive economic growth and modernization.
This forum comes at a time when Argentina's tech industry is experiencing significant growth. Despite economic challenges, the country has emerged as a rising tech hub in Latin America, driven by factors such as high-quality education producing skilled tech talent, government support through initiatives like the Knowledge Economy law, and a thriving startup ecosystem, particularly in fintech.
Let’s have a steak and tango: https://techforum.com.ar
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