Updated: Jul 24, 2020
Over the last few months, a few of you have suggested that I put out some kind of newsletter to share some of the research and thinking that I do as a political and economic analyst/advisor. So, I thought I’d start this up on a semi-regular basis. I’ve not settled on a format yet, and what I have below is only a quick round up since I returned to New York this week. I’d love to hear your feedback and suggestions. I consider this to be fun and a good way for me to formulate and sharpen my thoughts. I hope you find it interesting and useful.
Tensions between Iran and the West deepened this week with the downing of a Ukraine International Airlines Boeing 737-800 departing Tehran (Iran’s capital) for Kyiv (Ukraine’s capital) on Wednesday. Western intelligence subsequently labelled the likely cause as an Iranian anti-aircraft missile. None of the 176 passengers survived, 63 of who were Canadian citizens.
Statements from Canadian, British, and US leaders Justin Trudeau, Boris Johnson, and Donald Trump were all carefully calibrated, noting that the plane could have been an “unintentional” target of the Iranian missile. This language seems to be an effort to avoid further escalating tensions between Iran and Western powers. In language reminiscent of the Cold War, a senior Iranian official dubbed these statements as “psychological warfare”, while Iran’s Civil Aviation Authority countered that the crash could have resulted from a technical fault with the Boeing aircraft. You’ll remember that Boeing endured rocky 2019 after two Boeing 737 Max aircraft crashed in 2019 due to technical faults with the plane model's software.
The crash in Tehran occurred a few hours after Iran launched ballistic missiles at US military installations in Iraq. The logical conclusion is that Iran had readied their own anti-missile defence system for a possible US response, and mistook the Ukrainian commercial aircraft as a malicious threat. Anti-air defence systems are typically overseen by a small team of personnel, who may have panicked and mistook the aircraft for a malicious threat.
The FT has provided an interesting look at the impact of African Swine Fever on China’s pork supplies, and how it is impacting global meat supply chains. China’s pig herd has been reduced by 1/3 from 12 months ago. That’s around 100 million pigs. The price of pork in China has surged to record highs, with wholesale costs increasing by 159% for butchers and restaurants, with retail prices increasing by 73%. The discrepancy has placed meat-related business owners under substantial financial pressure, as they absorb much of the price increase for fear of losing customers.
In response, China has accelerated foreign imports of pork and pork substitutes such as chicken and beef. Total meat imports increased by 63% in the first 11 months of 2019 compared to the previous year. Australian beef exports to China increased by 81% over the same period, placing it on a trajectory to overtake Japan as Australia’s largest beef export market. This doesn’t suggest a ramp up in total Australian beef exports yet however, with overall beef exports only increasing by 7% in this period. Chinese demand for Aussie beef has offset the downward pressure on Australian beef prices that would otherwise prevail, as livestock are sold off and culled in response to the ongoing droughts. It’s not certain however whether this demand will be sustained once African Swine Fever is under control in China, and domestic pork supply returns to historical levels. Beijing will always preference their own producers, for reasons of economic and political security and stability.
I’ve recommended this podcast to a few of you as the most informative podcast I listened to in 2019 - Jim Collins: Keeping the Flywheel in Motion [The Knowledge Project Ep. #67]. Jim Collins gives an incredibly rich description of some of his top ideas on what makes successful, enduring companies. As I listened to this, I found that many of these principles can be applied to ourselves individually, which he discusses in the latter part of the podcast. Thanks to Alejandro Arango for putting me onto the Knowledge Project Podcast!