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Korea + Syria: Zero Impact?
25 April 2017
War Room
War Room
Idea Generation
Contextual Training
Scenario Updates
HiddenLevers runs on SCENARIOS like Facebook runs on PHOTOS
The Skinny
Global Conflicts 101
Scenarios: Korea + Syria
Upcoming Scenarios
Korea + Syria: Zero Impact?
UPDATED
HiddenLevers
THE SKINNY
Global Conflicts Update
sources: HiddenLevers, Guardian, The Independent,
Battleship Bungling
Syria gas attacks
N.Korea nuclear tests
Russia/Syria Oil Deal
Global Conflicts – Let’s take a Look
See it on HiddenLevers
Headline risks = dips + rebounds
Global Conflicts – Take Aways
Returns higher
+
Risk lower
in wartime
economy + market
move on
despite mishandling
No US impact
=
Little US market impact
HiddenLevers
GLOBAL CONFLICTS 101
101: US market reaction to Global Conflicts
Sources: HiddenLevers
S&P 500: Contraction in run-up to US troop deployment.
S&P 500: Unaffected by airstrike campaigns.
Bosnia
+2.5%
9/11
-11%
Kosovo
+4.5%
Gulf War Run-up
-4%
Iraq Run-up
-14%
101: US Defense Spending
sources: HiddenLevers
Defense sector funds more
correlated with S&P than with
DOD budget growthDOD budget now less volatile
WWII
Korea
101: Capital Markets Performance in War
Sources: HiddenLevers, CFA Institute
Equites: More Return and less Risk (standard deviation)
Bonds: Less Return, but also less Risk during wars.
101: Market Impact of WWII on Germany
Sources: HiddenLevers, Investment Office, Spiegel, RIETI
• German equity markets continued trading even in WWII loss
• Germany defaulted on bonds after WWI + WWII
• Japan imposed 100% tax on Gov. bonds, making them worthless
Currency
Devaluation
2010s: Insurgency + ISIS blowback
101: Mishandling Global Conflicts = Whatever
Sources: HiddenLevers
1980s: proxy war against Russia in Afghanistan 2000s: Iraq / Afghanistan wars
1990s: Somalia / Rwanda world policing
HiddenLevers
SCENARIO: GLOBAL CONFLICTS
BAD
North Korea: Nuclear Proliferation
sources: HiddenLevers, CNBC, CBS, NY Times, Nuclear Stats
Abandoned
by China
Armed
Conflict
Nuclear
Threat
GOOD
UGLY
1950-53
US-Korean War
S&P = +40%
BAD
Syria: US Involvement
sources: HiddenLevers, Wikipedia
US
involvement
US / Russia
entanglement
UGLY
Syria = 0.1% of world economy
Syria = virtually no oil production - #64
SCENARIO: Korea + Syria
BAD
Conflict in
Korea
BAD
US in Syria
10y Treasury
1.9%
S&P 500
-8%
10y Treasury
1.8%
S&P 500
-12%
$
OIL
+11%
OIL
-18%
Global Conflicts – Let’s take a Look
See it on HiddenLevers
Headline risks = dips + rebounds
Korea + Syria – Take Aways
Returns higher
+
Risk lower
in wartime
economy + market
move on
despite mishandling
No US impact
=
Little US market impact
HiddenLevers
UPCOMING SCENARIOS
SCENARIO: Fed Unwinding
sources: HiddenLevers
Fed unwinds balance sheet / BOJ + ECB stop printing money
SCENARIO: Climate Change
sources: HiddenLevers
Consumption impacts / Long term opportunities
SCENARIO: Tech Bubble 2.0
sources: HiddenLevers
FANGS / Failed IPOs / Unicorns bleeding / Nasdaq 6k
SCENARIO: US Housing
sources: HiddenLevers
High vs Low value property / Return of Risky Lending

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Korea + Syria Webinar Slides 04-25-2017 v2

  • 1. Korea + Syria: Zero Impact? 25 April 2017 War Room
  • 2. War Room Idea Generation Contextual Training Scenario Updates HiddenLevers runs on SCENARIOS like Facebook runs on PHOTOS
  • 3. The Skinny Global Conflicts 101 Scenarios: Korea + Syria Upcoming Scenarios Korea + Syria: Zero Impact? UPDATED
  • 5. Global Conflicts Update sources: HiddenLevers, Guardian, The Independent, Battleship Bungling Syria gas attacks N.Korea nuclear tests Russia/Syria Oil Deal
  • 6. Global Conflicts – Let’s take a Look See it on HiddenLevers
  • 7. Headline risks = dips + rebounds Global Conflicts – Take Aways Returns higher + Risk lower in wartime economy + market move on despite mishandling No US impact = Little US market impact
  • 9. 101: US market reaction to Global Conflicts Sources: HiddenLevers S&P 500: Contraction in run-up to US troop deployment. S&P 500: Unaffected by airstrike campaigns. Bosnia +2.5% 9/11 -11% Kosovo +4.5% Gulf War Run-up -4% Iraq Run-up -14%
  • 10. 101: US Defense Spending sources: HiddenLevers Defense sector funds more correlated with S&P than with DOD budget growthDOD budget now less volatile WWII Korea
  • 11. 101: Capital Markets Performance in War Sources: HiddenLevers, CFA Institute Equites: More Return and less Risk (standard deviation) Bonds: Less Return, but also less Risk during wars.
  • 12. 101: Market Impact of WWII on Germany Sources: HiddenLevers, Investment Office, Spiegel, RIETI • German equity markets continued trading even in WWII loss • Germany defaulted on bonds after WWI + WWII • Japan imposed 100% tax on Gov. bonds, making them worthless Currency Devaluation
  • 13. 2010s: Insurgency + ISIS blowback 101: Mishandling Global Conflicts = Whatever Sources: HiddenLevers 1980s: proxy war against Russia in Afghanistan 2000s: Iraq / Afghanistan wars 1990s: Somalia / Rwanda world policing
  • 15. BAD North Korea: Nuclear Proliferation sources: HiddenLevers, CNBC, CBS, NY Times, Nuclear Stats Abandoned by China Armed Conflict Nuclear Threat GOOD UGLY 1950-53 US-Korean War S&P = +40%
  • 16. BAD Syria: US Involvement sources: HiddenLevers, Wikipedia US involvement US / Russia entanglement UGLY Syria = 0.1% of world economy Syria = virtually no oil production - #64
  • 17. SCENARIO: Korea + Syria BAD Conflict in Korea BAD US in Syria 10y Treasury 1.9% S&P 500 -8% 10y Treasury 1.8% S&P 500 -12% $ OIL +11% OIL -18%
  • 18. Global Conflicts – Let’s take a Look See it on HiddenLevers
  • 19. Headline risks = dips + rebounds Korea + Syria – Take Aways Returns higher + Risk lower in wartime economy + market move on despite mishandling No US impact = Little US market impact
  • 21. SCENARIO: Fed Unwinding sources: HiddenLevers Fed unwinds balance sheet / BOJ + ECB stop printing money
  • 22. SCENARIO: Climate Change sources: HiddenLevers Consumption impacts / Long term opportunities
  • 23. SCENARIO: Tech Bubble 2.0 sources: HiddenLevers FANGS / Failed IPOs / Unicorns bleeding / Nasdaq 6k
  • 24. SCENARIO: US Housing sources: HiddenLevers High vs Low value property / Return of Risky Lending