What are the top global risks in trade, finance, and technology as of mid-2023?

Andy Yeh Alpha

2023-05-31 11:27:00 Wed ET

What are the top global risks in trade, finance, and technology?

In this macro report, we focus on the current global risks from inflation and growth concerns to climate change and supply chain bottlenecks. In response to recent developments in green technology, the likely reforms help minimize the economic costs of both extreme weather catastrophes and other rare disasters. These new reforms require the use of technological advances in electric vehicles, hydropower plants, and other power storage systems. The U.S. Biden Inflation Reduction Act and several other reforms help transform growth and inflation concerns into better safety valves against the adverse economic impact of both inequality and societal polarization. In time, this transformation calls for better fiscal and monetary policy coordination.

The first years of this new decade have heralded a disruptive era in human history. After the Covid-19 pandemic crisis, the global return to a new normal steady state precedes the Russia-Ukraine war. These rare events usher in a series of crises in food, energy, and regional security on a global scale. Now the world faces a set of global risks, and these risks are both wholly new and eerily familiar. We have seen the recent return of old risks such as price hikes, recession fears, trade wars, and capital outflows from new quasi-capitalist markets (China, India, and Indonesia) to America, Britain, Canada, and Europe. Moreover, the non-economic global risks include social unrest, geopolitical confrontation, and the specter of nuclear warfare. In this macro report, we delve into the top global risks and their wider implications for public policy. Specifically, the top global risks include:

  1. Near-term generic price hikes worldwide;
  2. Economic downturn worries;
  3. Geopolitical conflicts and regional security threats;
  4. State policy failures in response to climate change tech risks;
  5. Economic costs of both societal polarization and inequality;
  6. Biodiversity losses due to gradual global ecosystem decline;
  7. Post-pandemic health care concerns; and
  8. Online privacy perils.

 

During the recent Covid-19 crisis and Russia-Ukraine war, the world experiences higher inflation. This monetary phenomenon has retreated from the recent peak of 9.7% world inflation around mid-2022. This inflationary episode leads to the rapid normalization of monetary policies in the form of short-term interest rate hikes. This new episode launches a new low-growth and low-investment era in human history. Many economists refer to this episode as the new era of secular stagnation.

Central banks and governments may face stubborn inflationary pressures over the next 2 years. The recent Russia-Ukraine war adds to the costs of food and energy in Europe and elsewhere worldwide. In the post-Covid steady state, semiconductor supply-chain bottlenecks further raise the world prices of electronic gadgets such as smart phones, tablets, and computers. Additional price hikes can arise from the new normal economic warfare between China and America. This new normal trade war manifests in the common form of tariffs, quotas, and even embargoes. These sanctions can further result in a new wave of price hikes worldwide. Whether most central banks are able to institute interest rate hikes to tame inflation remains open to controversy. Any miscalibration between fiscal and monetary policies may raise the likelihood of liquidity shocks. These shocks signal a longer economic downturn with sovereign debt distress on a global scale.

Since the 1980s, the recent new normal end of the low-interest-rate era has broad and significant ramifications for central banks, governments, businesses, and most stock market investors. Today, the adverse knock-on ripple effects flow to the most vulnerable parts of society with poverty, hunger, social unrest, and political conflict. Inflationary price pressures erode wage gains made by middle-income households. These pressures can spur middle-class discontent, political polarization, and better pension protection in many countries. Governments continue to gauge a delicate balance in protecting a broader swathe of their citizens from a longer cost-of-living crisis. The resultant new economic era may be one of growing divergence between rich and poor countries. This new episode marks the first rollback in world growth and human development in decades.

Since the U.S. Trump administration, economic warfare has become a new norm. State intervention pervades trade clashes between global powers such as China and America. Defensive economic policies and sanctions build self-sufficiency and sovereignty from rival powers. These defensive trade tactics may help offensively constrain the recent rise of others. Intensive trade sanctions include tariffs, quotas, and even embargoes with financial market interference. These sanctions highlight core vulnerable parts of domestic protectionism in trade, finance, and technology. This trade stance risks escalating a cycle of distrust as the Biden administration seeks to decouple China, Russia, and other rivals (Iran and North Korea) from the global trade network. Inefficient trade and local production may inadvertently lead to further price hikes. As a consequence, the current inflationary episode persists in the worst-case scenario.

The technology sector now evolves among the central targets of stronger industrial policies and state subsidies. Recent advances include artificial intelligence, smart data analysis, quantum computation, and biotech vaccination against corona virus and even some specific kinds of cancer. These tech advances can provide partial solutions to a wide range of global crises in public health care (e.g. Covid-19), food security (e.g. food and water shortages in sub-Sahara Africa), and climate change risk mitigation (e.g. hurricanes and floods in Florida, USA, and droughts in Western Australia). In most countries and regions, the recent tech advances bring risks from misinformation and disinformation to unmanageably rapid churn in both blue-collar and white-collar jobs.

In addition to the recent rise in cybercrime, there are many new attempts for online hackers to disrupt critical high-tech resources. These hacker attacks usually target and focus on the common interoperability of online services by financial institutions, transport hubs, power systems, and communication infrastructure gatekeepers etc. Big data analysis may inadvertently contribute to the misuse of sensitive personal information through legitimate mechanisms. This misuse weakens individual digital sovereignty and personal privacy even in democratic regimes.

Climate change risks are the core focus of worldwide risk perceptions over the next decade. The lack of deep joint progress on clear climate targets (e.g. an increase of no more than 2 degrees Celsius in average world temperature by 2100) exposes the current divergence between what is politically feasible and what is scientifically necessary for most countries to achieve net-zero carbon emissions. Public-sector and private-sector demands from other crises may reduce the speed and scale of climate change efforts over the next 2 years. In the meantime, the present burdens on natural ecosystems grow and snowball in light of their still secondary role in the global economy and overall planetary health. Indeed, there are close links between nature loss and climate change. Without significant policy changes or investments, the interplay between climate change and biodiversity loss accelerates ecosystem decline, threatens food supply and water quality, and amplifies the adverse impact of both extreme weather events and other rare disasters. These key environmental risks and concerns limit further progress on climate change efforts. In combination, these climate issues may cause new price hikes in the current inflationary cycle.

Food, fuel, and cost crises exacerbate the most vulnerable parts of global society at the expense of poor ethnic groups. Supply-side price pressures risk turning the current crises into a broader humanitarian crisis in the next 2 years in many import-dependent countries. In response to hefty losses in human development and social mobility, mounting citizen frustration now poses an existential challenge to political systems around the world. In the next 2 years, worse political polarization between global powers reduces space further for joint solutions and alliances. From climate change risk management to the recent advances in trade, finance, and technology, these top global risks require better fiscal and monetary policy coordination around the world.

Concurrent shocks may give rise to the risk of polycrises. Disparate crises interact so that the overall impact far exceeds the sum of each part. In the specific context of geopolitical distrust, less cross-country cooperation can cause key ripple effects across the global risks landscape over the medium term. These ripple effects can transform into a world polycrisis of environmental degradation, geopolitical tension, social isolation, and wealth and income inequality etc. This world polycrisis arises from unforeseen changes in both the demand and supply of natural resources. For instance, the current over-exploitation of ecological resources may exacerbate the slowdown in climate adaptation with food, water, and mineral shortages worldwide. Hence, the avoidance of polycrises calls for better cross-state cooperation.

 

Near-term generic price hikes may lead to a chronic cost-of-living crisis worldwide.

We already experience a near-term global cost-of-living crisis as inflationary price pressures disproportionately hit the middle-class and low-income households and stock market retail investors. In the current post-pandemic era, the prices of basic necessities such as food, energy, and residential property are on the rise. These basic prices further increase primarily due to recent disruptions in the flows of food, oil, and natural gas from Russia, Ukraine, and many other parts of Europe. To curb domestic prices, more than 30 countries introduce export bans in food and energy to further boost world inflation. Although global supply chains for semiconductors and many other tech advances have adapted to this macro trend, price shocks to basic necessities have significantly outpaced world inflation over this time frame. Recent projections show that energy prices are likely to remain at least 45% higher than the long-run average energy prices from 2018 to 2023. The recent relaxation of China’s Covid-19 pandemic rules leads to further increases in food and energy prices. This relaxation tests the resilience of global supply chains if China’s Covid-19 policy changes remain unpredictable as new deaths and infections continue to soar in due course.

High world inflation remains a short-run global risk (at peak severity within the next 2 years). From its recent peak of 9.7% around mid-2022, world inflation is likely to ease off thereafter. In a persistent global cost-of-living crisis, the most vulnerable parts of society face higher prices of basic needs (food, oil, natural gas, and shelter etc). Global supply chain disruptions and bottlenecks lead to higher core inflation in food and energy. In response to high world inflation, central banks institute fresh interest rate hikes, raise the risk of public debt distress, elongate the next economic downturn, and better coordinate with governments to accelerate the new real cycle of fiscal stimulus.

OECD countries continue to roll out broad-brush measures to introduce new caps on electricity bills, fuel rebates, public transport subsidies, and export controls on food, tax relief, and state aid for companies. New fiscal pressures may exacerbate sovereign debt sustainability in some countries. As a result, there is far less fiscal stimulus for pension and healthcare reforms in support of the older populations in those countries. From food and energy to pension and healthcare, the affordability issues can stoke social unrest and political instability in those countries.

Extreme weather events and other rare disasters may transform the current cost-of-living crisis into a catastrophic scenario of both hunger and distress for millions in import-dependent countries. These disasters include floods, droughts, cyclones, hurricanes, famines, and water shortages across the major continents. Specifically, the catastrophic effects of both famines and livestock deaths can cause spillovers further afield as widespread violence grows and migration rises.

 

Governments and central banks need better fiscal-monetary policy coordination to avoid the next global economic downturn.

In America, Britain, Canada, and Europe, governments and central banks walk a tight robe between inflation control and output enrichment. Fiscal deficits now add to the economic costs of sovereign debt, and interest rate hikes help tame inflation. In the post-pandemic era, governments and central banks need better fiscal and monetary policy coordination to avoid a severe global economic downturn. At the same time, fiscal stimulus programs may come to a halt with gradual interest rate hikes. Central banks institute interest rate hikes to better contain inflation as their respective governments use fiscal stimulus programs to protect their citizens from a cost-of-living crisis.

Inflation has gradually declined from the peaks of 9.5% in America, 11% in Britain, 9% in Canada, and about 10.5% in Europe respectively in recent times. Now most central banks start to decelerate interest rate hikes from 75 basis points to 25-50 basis points in response to this recent disinflationary episode. As a result, capital flows to these OECD countries, and these capital flows cause the American dollar and Euro to appreciate in due course. The IMF projections anticipate a decline in world inflation from the recent peak of 9.7% in mid-2022 to 6.5% in 2023 and 4% in 2024 (with sharper disinflation in most OECD countries). In the next few quarters, world inflation may tilt toward a new equilibrium in light of a reasonable mix of both demand and supply-side factors. These factors include the recent Russia-Ukraine war and its food and energy price implications, the potential escalation of trade war sanctions (tariffs and quotas), global supply-chain bottlenecks for semiconductor shortages, and new pandemic controls in China.

Even if the economic fallout remains remote, global growth is likely to slow to 2.7% in 2023 and even 2% in 2024. In this low-growth low-investment episode of secular stagnation, about one-third of the world economy may face a technical recession. This episode represents the weakest growth profile in over 20 years. Many OECD countries face sharper growth retracement toward 1.5% in 2023 and even 1.1% in 2024. Persistent price hikes raise the likelihood of upward interest rate adjustments, low output growth rates, fiscal deficits, and higher public debt burdens on a global scale. In particular, energy importers bear the brunt of higher energy costs due to U.S. greenback appreciation. In due course, this American dollar appreciation may further import inflation in many rich and poor countries worldwide.

In recent decades, global capital flows expose several non-OECD countries to U.S. interest rate hikes. These non-OECD countries maintain a high proportion of USD Treasury bills and longer-term bonds in foreign reserves (China, Japan, Malaysia, Singapore, South Korea, and Taiwan). Some of these countries resort to foreign exchange intervention measures to limit currency fluctuations and debt-servicing loads. Since the corona virus crisis, institutional investors have already withdrawn about $70 billion capital from these countries. High currency volatility continues to boost world demand for USD stocks, bonds, and funds etc.

U.S. inflation is likely to decline to the reasonable range of 3% to 4% in the next 2 years as the fiscal shock fades away. When the U.S. government prints extra debt to finance fiscal stimulus but people have no faith in the government for future debt repayments, inflation rises until the real value of public debt equates what the U.S. government can repay in due course. Many economists expect the FOMC to focus on inflation containment in near-term monetary policy decisions. In the meantime, low growth and asset market stability concerns play a secondary role in these near-term decisions. Under the Biden administration, the recent Inflation Reduction Act reflects this relatively hawkish monetary policy stance.

Financial stability concerns should weigh more on monetary policy decisions when the Federal Reserve System is reasonably close to achieving the dual mandate of both price stability and maximum sustainable employment. However, economists should not discount financial stability risks today. Large banks and other financial institutions should retain substantially higher core equity capital in order to absorb extreme losses that might arise in rare times of severe financial stress. In a recent inflationary world, the Federal Reserve System cannot accomplish much because any Fed put interest rate adjustments may inevitably trip over the dual mandate. A relatively optimistic macro scenario over the next 2 years is that U.S. interest rates reach the reasonable range of 5% to 5.5% with 3.5%-4% core inflation and 5.5% unemployment. Through a mild recession, America, Britain, Canada, and Europe etc can traverse the steep part of the Phillips curve. At that point, it would be highly difficult for OECD central banks to further reduce inflation without job losses. The sacrifice ratio becomes too high to be consistent with the dual mandate.

Central banks should transform the dual mandate into a trilemma: monetary policy-makers launch interest rate adjustments in response to output, inflation, and asset market fluctuations over time. In addition to the dual mandate, recent interest rates adjustments should help restrain credit supply hikes and asset price increases. In time, central banks can combine monetary policy decisions and macro-prudential instruments (i.e. loan-to-value and debt-income ratios) to smooth out the financial accelerator cycle. Sometimes central banks may launch interest rate hikes to lean against to wind for asset market stabilization. Around the world, central banks may likely conclude the current cycle of interest rate hikes before asset market stability concerns arise in due course. These financial stability concerns often force central banks to recalibrate the hawkish-to-dovish monetary policy stance worldwide.

 

Geopolitical conflicts and regional security threats may shatter the new equilibrium steady state after the Cold War between America and the former Soviet Union.

Interstate confrontations are likely to remain economic in nature over the medium term. More serious geopolitical conflicts and regional security threats now include the Russia-Ukraine war, China’s potential invasion into Taiwan, and fresh nuclear threats made by Iran and North Korea. In the current trade war between China and America, interstate confrontations tend to focus on new economic sanctions such as tariffs, quotas, and even embargoes etc. Tariffs can be as high as 25% penalties on low-cost basic necessities or imports from China. These tariffs may exacerbate high inflation in OECD countries and elsewhere worldwide. Quotas and embargoes further highlight the most vulnerable nodes of the global network in trade, finance, and technology. For example, the Russian invasion of Ukraine triggers the French and German imposition of economic sanctions, as well as the government seizure of local oil and natural gas refineries in Eastern Europe. These economic sanctions complement the U.S. state aid in the form of both defensive missiles and military weapons to Ukraine.

Global superpowers seek to build self-sufficiency with state subsidies, protective industrial policies for state enterprises, exclusive state contracts, and preferential treatment practices. These superpowers achieve economic sovereignty from their rival powers through onshoring global supply chains for semiconductors and other high-tech advances. Defensive measures help boost local production with minimal foreign interference in critical tech industries through data localization policies, visa bans, and strict foreign investment requirements. The recent geopolitical tensions between China and America initially lead to extra-territorial trade and tech policies for the specific exclusion of foreign companies from local markets. In recent times, the Eurozone raises new concerns about the Biden Inflation Reduction Act as this legislation includes significant tax credits and trade subsidies for U.S. green tech advances.

Global superpowers further use economic levers to proactively constrain the recent rise of rivals. Delisting foreign companies abruptly prevents these companies from access to domestic intellectual properties and technological advances. In specific cases, global superpowers impose broad constraints on particular foreign citizens and entities to ban some transactions. These transactions would counterfactually be productive to the detriment of local businesses. More extensive deployment of economic levers risks a vicious cycle of distrust between global superpowers. Also, financial and technological ramifications may further highlight vulnerable nodes of the global trade network. These ramifications can often induce global superpowers to proactively wind back interdependencies in the name of better national security over the next 2-5 years.

America, Australia, Britain, Canada, and Europe rely on multilateral governance mechanisms to avoid a race to the bottom in world trade, finance, and technology. These multilateral governance mechanisms include the World Health Organization (WHO) and World Trade Organization (WTO). The former helps enforce Covid-19 mask and vaccine restrictions during the recent Covid-19 crisis, and the latter helps resolve cross-country trade complaints and disputes in recent years. Geopolitical tensions risk weakening the economic landscape even further with low growth and high inflation. Global superpowers now seek to dominate strategic industries such as finance, healthcare, technology, and telecommunication. As compliance costs remain on the rise, multinational companies may pragmatically pick their strategic business partners. As a result, this pragmatism can speed up divergence between various market models (e.g. democratic capitalism in America versus socialism in China and Russia). As America and Europe seek to shorten global supply chains for semiconductors and consumer electronic appliances, for instance, this strategy may unintentionally heighten exposure to geographic concentration risks such as labor shortages, pandemic infections, extreme weather events, and other climate-driven rare disasters.

 

Many governments may fail to address climate change tech risks in due course.

Despite more than 30 years of global climate change advocacy and diplomacy, the international system has struggled to make progress on climate risk management. Today, atmospheric levels of carbon dioxide, methane, and nitrous oxide have all reached record highs. Emission trajectories make it unlikely that all countries help limit the increase in average world temperature to no more than 2 degrees Celsius. The Intergovernmental Panel on Climate Change indicates that there is a 50% fair chance for all countries to reach this climate target by 2030. Current commitments made by the G7 private sector suggest an increase of 2.7-3.5 degrees Celsius by mid-century in accordance with the recent Paris agreement on climate change.

Recent extreme weather events and other climate-driven rare disasters expose a divergence between what is politically feasible and what is scientifically necessary. Despite some long-term climate change policies on the green tech transition (such as the U.S. Inflation Reduction Act and Eurozone RE-Power-EU plan), the recent overall momentum on climate risk management remains unlikely to accelerate in the next 2-5 years. Policy-makers confront the economic trade-offs among energy security, affordability, and sustainability. In many OECD countries, public companies must mandatorily disclose carbon emissions. These mandatory disclosures accord with the net-zero climate targets of the recent Paris agreement.

In the first 2 decades of this century, average world temperature has already risen by at least 1 degree Celsius. In several parts of the world, people can feel the fresh compounding effect of this sharp increase in average world temperature. This main climate change magnifies several humanitarian challenges such as food shortages, livestock deaths, extreme weather events, and other rare disasters. As floods, heat waves, droughts, and other extreme weather events etc become more severe and more frequent, a wider set of populations may bear the social and economic costs of these rare events. In parallel, the recent consolidation of both public-sector and private-sector resources may set up trade-offs between rare disaster recovery and climate change adaptation. The new diversion of resources toward climate change adaptation may further slow joint progress on global-warming targets in those core countries (e.g. China, India, and Indonesia) that remain the biggest contributors to greenhouse gas emissions worldwide.

Even if both the public and private sectors receive more fiscal stimulus for climate change adaptation, governments may risk not safeguarding against future extreme weather events and rare disasters as these governments scramble to provide relief and support in disaster-hit regions. In light of private market mechanisms for rapid disaster recovery, there is an unknown risk of retreat by insurers from some areas of natural catastrophe coverage. The likely shortfall in insurance has already grown from $117 billion in 2020 to about $165 billion in 2023. Specifically, world insurance actuarially covers only 7% of economic losses due to extreme weather events and other rare disasters over the past 20 years. This common shortfall exposes many countries and regions to extreme weather events and climate-driven disasters.

 

Many governments may fail to accommodate the economic costs of both societal polarization and inequality.

Societal polarization has been viewed as one of the biggest non-economic risks in the global network. Many short-term and longer-term potential risks trigger societal polarization and inequality. These risks include public debt distress, state instability, inflation, and climate migration. A larger gap in social equality poses an existential challenge to both autocratic and democratic systems. On many social issues such as gender, abortion, religion, immigration, ethnicity, and even secession, societal polarization characterizes recent elections, referendums, and civil protests around the world. Mounting citizen frustration manifests in divisive protests in recent years. As a result, social inequality contributes to the recent decline of new democracies in many countries. The share of world population in autocratic countries has risen from 5% in 2010 to 36% in 2023. Only 13% of world citizens now live under a liberal democracy (in stark contrast to about 45% of world citizens who now live under an electoral autocracy).

Social divisions offer incentives for people to adopt extreme short-term policies to galvanize one side of populist beliefs. As shown in some recent referendums such as Brexit and Crimean autonomous status, the contest between non-centrist social positions is often close. A larger proportion of world population can often feel anger and alienation from new leadership. More frequent political turnover now acts as a multiplier to the current social concerns and civil protests. In modern times, social media amplifies distrust, polarization, and inequality in political institutions. For this reason, misinformation and disinformation may erode social cohesion. In particular, this erosion shakes confidence in political processes and has become a prominent tool for geopolitical agents to propagate extreme beliefs through social media echo chambers. The widespread usage of machine-learning algorithms may expand the adverse impact of fake news on recent elections, referendums, and social protests. This social polarization now calls for better checks and balances in support of most centrist beliefs and positions.

Polarization undermines social trust in many political processes and institutions. In essence, polarization has reflected power struggles within each political elite more than social divisions in left-wing and right-wing ideologies. On a few socioeconomic issues such as sovereign debt distress and fiscal allocation, government gridlocks often result from social polarization. Through each electoral cycle, swings between parties may stymie the adoption of a longer-term policy outlook.

Polarization may reduce the space for collective efforts on some global risks such as healthcare and climate change adaptation. In many electoral systems, the next few elections of less centrist G20 leaders may lead to the adoption of more extreme policies in economic superpowers (e.g. China, India, and America). The resultant polarization may fracture global alliances such as the WHO pandemic corona virus crisis management taskforce and Paris climate agreement. Due to social inequality and polarization, less global collaboration arises from this more volatile dynamism. On the economic front, governments and central banks often need to view the new macro policy framework through the longer-term lens. These macro policy-makers conduct better fiscal-monetary policy coordination to smooth out economic boom-bust fluctuations over the real business cycle.

 

Biodiversity losses may arise from gradual global ecosystem decline.

Biodiversity between ecosystems now declines faster than prior decades in human history. Human intervention has caused an adverse impact on the complex global natural ecosystem. The resultant chain of reactions includes biodiversity loss, air and water pollution, natural resource consumption, and climate change. Given that over half of world output depends on nature, the next likely ecosystem decline has profound economic and societal consequences. These consequences encompass a widespread decline in crop and its nutritional value, growing air and water stress, livestock depreciation, environmental degradation of food protection systems, and so forth.

If we are unable to limit the next likely increase in average world temperature to 2 degrees Celsius, temperature and precipitation changes can become the dominant cause of biodiversity loss. Widespread heat waves and droughts now cause mass mortality events in Western Australia. Both sea-level rises and heavy storms have caused the first extinctions of entire species. Artic sea-ice, warm-water coral reefs, and terrestrial ecosystems have been found most at risk in the next 5-10 years. In fact, the adverse impact of climate-driven rare disasters on ecosystems can further constrain the near-term climate change efforts. The higher severity and frequency of extreme weather events has already degraded climate change solutions. A wide variety of ecosystems are at risk of tipping over into environmental deterioration.

Land-use climate change remains the most prolific threat to nature. Agriculture can take up more than 35% of terrestrial surface on earth. This land use serves as the biggest direct driver of wildlife decline worldwide. The current food crisis positions climate change efforts to conserve land biodiversity not in accordance with global food security. In dense agrarian countries, conservation efforts continue to struggle to be commercially feasible with complex crop-driven agricultural practices. These agricultural production techniques increase food per unit area with a smaller water and biodiversity footprint. State incentives further boost local production to reduce reliance on imports in response to current geopolitical tensions and global supply-chain shortages.

For better climate change adaptation, the fresh green tech transition helps reduce carbon emissions worldwide. Yet, the rapid expansion of green tech infrastructure may non-intentionally cause consequences on domestic and broader ecosystems. The key green tech risk revolves around whether the renewable energy technology is nature-positive. For example, wind farms can act as a safe haven for the disaster recovery of both marine species and the seabed. However, green tech may cause environmental degradation too. Good examples of this degradation include habitat loss, sound and electromagnetic pollution, introduction of non-indigenous species, and climate change to animal migratory patterns etc. Less stringent environmental regulations are likely to increase the likelihood of more widespread destruction of nature to the detriment of both local communities and indigenous groups.

Although the close relation between climate and nature heightens the likelihood of a series of potentially irreversible feedback loops, climate change agents can also leverage this relation to broaden the positive ripple effects of green tech advances. Green tech investments should focus on biodiversity preservation to drive climate change adaptation in response to trade-offs between carbon storage capacity and crop output. As a result, green tech regulations must better re-align incentives with the interdependencies among food, climate, nature, and energy.

 

Governments need to address their post-pandemic health care concerns.

Pandemic aftershocks now meet silent health care crises. As the Covid-19 corona virus crisis recedes from the headlines, complacency continues to be setting in on preparing for future pandemic crises and many other global health threats. Health systems face worker burnout and labor churn at a time when fiscal consolidation risks deflecting resources elsewhere. Amid a background of chronic diseases over the next decade, more frequent and widespread infectious disease outbreaks risk pushing health care systems to the brink of failure around the world.

Recent evidence points to post-Covid ripple effects on the occupational status and quality of life for many corona virus patients. These adverse ripple effects manifest in work absences, early retirements, and tight labor market conditions with subpar economic productivity. The resultant economic hit is in the reasonable range from $600 billion to $3.7 trillion in America over the past 3-year pandemic crisis. Beyond the lingering impact of Covid-19, the potential global risks of both climate change and nature decline on health are likely to grow in severity. These risks include air pollution, lower access to safe water and sanitation, and greater exposure to wet heatwaves and airborne or waterborne diseases due to droughts, cyclones, floods, and many other extreme weather events. Climate change exacerbates malnutrition as food insecurity grows. Higher atmospheric levels of carbon dioxide can further result in nutrient deficiencies in plants, and even the rapid uptake of heavy minerals. These common root causes can contribute to cancer, diabetes, hypertension, and heart impairment.

New medical tech advances have made it possible for people to live with multiple chronic co-morbidities (e.g. diabetes, hypertension, depression, and heart disease etc). Elder people now live more years in poor health, and we may soon face the great reversal in life expectancy beyond the pandemic crisis. The recent decline in health care risk perception arises from pandemic fatigue and the human tendency to focus on fresh and visible crises. As of early-2023, Covid-19 has led to about 7 million deaths on a global scale. In comparison, almost 5 million deaths result from anti-microbial resistance (AMR) each year in recent times, and air pollution causes another 9 million deaths each year. Chronic diseases and health conditions have become the new norm in the post-Covid era. Silent health care crises follow Covid-19 pandemic aftershocks.

As disease burden grows and innovation widens the scope of what medicine can treat, inexorable demand for health care tech now runs up against chronic capacity challenges. Global health care systems tend to face intense financial pressures in the form of both budget cuts and higher costs of goods and services. Governments start to reprioritize fiscal expenditures to address more salient social concerns. In fact, the World Health Organization (WHO) predicts a global shortfall of 15 million health care workers by 2035. In some countries and regions, health care workers leave their jobs due to burnout, exhaustion, and broader concerns about staff and patient safety.

Medical inflation is likely to continue to outstrip GDP growth in many countries. The financial pressures on high-skill workers tend to intensify as dependency ratios rise in due course. America already spends almost 20% of total GDP on public health care, even before the biggest cohort of baby boomers has retired in recent years. Governments, insurers, and employers may respond to this mega trend by limiting coverage and then shifting a greater proportion of health care costs to workers. In effect, this response reduces both access and affordability of health care. Today, poor people remain reliant on the increasingly threadbare public provision of health care goods and services.

A persistent mismatch between demand and supply gradually weakens the ability of health care systems to adapt to fiscal concerns and demographic trends. Rare catastrophic events such as the Covid-19 pandemic crisis can quickly overwhelm fragile health care systems worldwide. A large-scale extreme weather event, cyber attack, war, or new or re-emergent infectious disease outbreaks may trigger health system collapse within one or more regions. Geopolitical tensions may limit the co-development of new scientific breakthroughs in medical treatment. Medical export restrictions may cause a humanitarian crisis worldwide. Disparities in health care access may further worsen across countries as a result of economic inequality. If we put these health care issues into perspective, for instance, med tech advances in genomic and proteomic medicine can vastly improve health outcomes for many chronic and degenerative conditions, but these med tech advances now carry hefty price tags that may constrain widespread use. Some gene therapies can even cost more than $2 million. Geopolitical tensions would further limit the delivery of both state aid and vaccination programs in response to global health emergencies.

 

Governments need to secure safety valves against online privacy perils.

Digital tools underpin the interoperability of critical infrastructure in many big cities today. These tools range from artificial intelligence (AI) applications to Internet-of-Everything (IoE) mobile devices and autonomous tech advances. These tools play an important role in developing full or partial solutions in response to online privacy crises tomorrow. The recent proliferation of both data collection devices and data-dependent AI applications often opens pathways to new forms of state control over citizen autonomy. These AI applications increasingly expose global citizens to the misuse of personal data by both public and private sectors alike. This misuse may lead to undesirable state control and even discrimination by age, race, gender, and so forth.

Not all threats to online data autonomy and sovereignty are malicious in nature. In fact, complex big data analysis now heightens the risks of the misuse of personal information through legitimate mechanisms. These risks weaken the basic human right to online privacy. Some legal incursions on data privacy can arise from public safety considerations such as cyber-crime prevention and response, better health protection, and economic development. Online data privacy now comes under new social pressures due to national security concerns.

Online data privacy requires at least some form of adequate consent or anonymity. This requirement calls for the use of new software tech advances such as location-driven authentication, biometric identification, and keystroke surveillance etc. The metaverse further enhances online consent and anonymity by tracking even more sensitive data on facial expressions, vital signs, brainwaves, and vocal inflections. Given the new and stronger data protection policies in many markets, citizens often consent to the collection of personal data for the beneficial use of particular goods and services. However, private companies commercialize this data collection, thus online consent in one area may reveal more than the original intention, especially when these companies aggregate this online consent with many other data points. This mosaic effect often leads to 2 major online privacy perils: re-identification and attribute disclosure. Recent research shows that the government can correctly re-identify 99.98% of U.S. residents in any public-sector dataset with 15 demographic attributes. In recent years, researchers apply this mosaic theory in accordance with many policy purposes. With this re-identification over demographic profiles, these researchers infer the political preferences of online users, match DNA from public research databases to randomly chosen U.S. residents, and connect medical bills and records to specific patients.

Today, many international organizations may share anonymous data with partner governments to support effective and efficient crisis responses. Data on age, race, gender, ethnicity, and immigration status etc can flow through legitimate filters and mechanisms in many markets. In data-driven anocracies, online privacy is not an absolute basic human right. Governments often trade off this right against baseline state surveillance and crime prevention in the name of national security. However, the state surveillance of personal data has meant that any third parties may acquire access to material and sensitive information with no due process or transparency. In some cases, data protection laws that require user consent effectively waive the legal protection against online state surveillance of data on private communication and location.

In America, law enforcement agencies can often purchase GPS location data with neither warranty nor public disclosure. Specifically, for example, the police can use license plate data to prosecute out-of-state abortions. This prosecution leads most search engines such as Google and Bing to announce that they would auto-delete location data for users who visit particular centers. The police can further weaken some encryption mechanisms if these mechanisms relate to terrorist investigations, despite broader implications for the online security of private user data. On balance, these legal incursions on online privacy can often act as the necessary evil in the name of national security.

The potential implications of data misuse may become especially problematic for private users who reside in countries with high online privacy risks, poor regulatory protection frameworks, or authoritarian tendencies. Many governments recognize the security concerns around the potential abuse and misuse of sensitive personal data. Most governments have already adopted more widespread data localization policies. In effect, these policies help further limit the collection and possession of sensitive data by non-allies. Yet, private users and interest groups pay much less attention to the broader implications of both the misuse and overreach of sensitive data in the name of national security. This slow legal erosion of online data privacy may cause profound consequences for social control in most democratic regimes and even authoritarian regimes.

In many markets, cross-industry and public-private AI data aggregation often helps consolidate some types of sensitive data to lend a major competitive advantage to governments. This advantage manifests in the common form of both better health care and economic growth outcomes. To address the recent concentration of data in the hands of a small number of organizations, governments should increasingly push for open-data protocols from both public and private sources. At the national level, a patchwork of data policy regimes at both local and state levels raises the risks of data breaches in a manner that cannot result from the original user consent. For this reason, many governments should harmonize data protection protocols to ensure the more effective and less complex cross-border protection of online data privacy.

Online data sensitivity often arises from data-driven inferences about specific parts and categories of large data sets. In modern times, social media blurs the fine line between both personal and industrial data segments in the recent rollout of the IoE implementation of smarter cities. For instance, the European Commission imposes punitive fines on any companies under General Data Protection Regulation (GDPR) for targeting online ads that infer a medical condition (or a special category of data) on the basis of recent purchase history. Historically, severe fines for data damages further help change the cost-benefit assessment around new investments in cyber-security measures. It is now incumbent on both public and private organizations to consider ethical data collection and usage to limit reputational costs beyond basic regulatory compliance.

 

As of mid-2022, we provide our proprietary dynamic conditional alphas for the U.S. top tech titans Meta, Apple, Microsoft, Google, and Amazon (MAMGA). Our unique proprietary alpha stock signals enable both institutional investors and retail traders to better balance their key stock portfolios. This delicate balance helps gauge each alpha, or the supernormal excess stock return to the smart beta stock investment portfolio strategy. This proprietary strategy minimizes beta exposure to size, value, momentum, asset growth, cash operating profitability, and the market risk premium. Our unique proprietary algorithmic system for asset return prediction relies on U.S. trademark and patent protection and enforcement.

  1. 13.54% 6-factor dynamic conditional alpha for Meta;
  2. 13.73% 6-factor dynamic conditional alpha for Apple;
  3. 15.10% 6-factor dynamic conditional alpha for Microsoft;
  4. 14.98% 6-factor dynamic conditional alpha for Google; and
  5. 13.53% 6-factor dynamic conditional alpha for Amazon.

 

Our unique algorithmic system for asset return prediction includes 6 fundamental factors such as size, value, momentum, asset growth, profitability, and market risk exposure.

 

Our proprietary alpha stock investment model outperforms the major stock market benchmarks such as S&P 500, MSCI, Dow Jones, and Nasdaq. We implement our proprietary alpha investment model for U.S. stock signals. A comprehensive model description is available on our AYA fintech network platform. Our U.S. Patent and Trademark Office (USPTO) patent publication is available on the World Intellectual Property Office (WIPO) official website.

 

Our core proprietary algorithmic alpha stock investment model estimates long-term abnormal returns for U.S. individual stocks and then ranks these individual stocks in accordance with their dynamic conditional alphas. Most virtual members follow these dynamic conditional alphas or proprietary stock signals to trade U.S. stocks on our AYA fintech network platform. For the recent period from February 2017 to February 2022, our algorithmic alpha stock investment model outperforms the vast majority of global stock market benchmarks such as S&P 500, MSCI USA, MSCI Europe, MSCI World, Dow Jones, and Nasdaq etc.

 

This analytic essay cannot constitute any form of financial advice, analyst opinion, recommendation, or endorsement. We refrain from engaging in financial advisory services, and we seek to offer our analytic insights into the latest economic trends, stock market topics, investment memes, personal finance tools, and other self-help inspirations. Our proprietary alpha investment algorithmic system helps enrich our AYA fintech network platform as a new social community for stock market investors: https://ayafintech.network.

We share and circulate these informative posts and essays with hyperlinks through our blogs, podcasts, emails, social media channels, and patent specifications. Our goal is to help promote better financial literacy, inclusion, and freedom of the global general public. While we make a conscious effort to optimize our global reach, this optimization retains our current focus on the American stock market.

This free ebook, AYA Analytica, shares new economic insights, investment memes, and stock portfolio strategies through both blog posts and patent specifications on our AYA fintech network platform. AYA fintech network platform is every investor's social toolkit for profitable investment management. We can help empower stock market investors through technology, education, and social integration.

We hope you enjoy the substantive content of this essay! AYA!

 

Andy Yeh

Chief Financial Architect (CFA) and Financial Risk Manager (FRM)

Brass Ring International Density Enterprise (BRIDE) © 

 

Do you find it difficult to beat the long-term average 11% stock market return?

It took us 20+ years to design a new profitable algorithmic asset investment model and its attendant proprietary software technology with fintech patent protection in 2+ years. AYA fintech network platform serves as everyone's first aid for his or her personal stock investment portfolio. Our proprietary software technology allows each investor to leverage fintech intelligence and information without exorbitant time commitment. Our dynamic conditional alpha analysis boosts the typical win rate from 70% to 90%+.

Our new alpha model empowers members to be a wiser stock market investor with profitable alpha signals! The proprietary quantitative analysis applies the collective wisdom of Warren Buffett, George Soros, Carl Icahn, Mark Cuban, Tony Robbins, and Nobel Laureates in finance such as Robert Engle, Eugene Fama, Lars Hansen, Robert Lucas, Robert Merton, Edward Prescott, Thomas Sargent, William Sharpe, Robert Shiller, and Christopher Sims.

 

Follow our Brass Ring Facebook to learn more about the latest financial news and fantastic stock investment ideas: http://www.facebook.com/brassring2013.

 

Follow AYA Analytica financial health memo (FHM) podcast channel on YouTube: https://www.youtube.com/channel/UCvntmnacYyCmVyQ-c_qjyyQ

 

Free signup for stock signals: https://ayafintech.network  

Mission on profitable signals: https://ayafintech.network/mission.php 

Model technical descriptions: https://ayafintech.network/model.php

Blog on stock alpha signals: https://ayafintech.network/blog.php

Freemium base pricing plans: https://ayafintech.network/freemium.php 

Signup for periodic updates: https://ayafintech.network/signup.php

Login for freemium benefits: https://ayafintech.network/login.php

 


If any of our AYA Analytica financial health memos (FHM), blog posts, ebooks, newsletters, and notifications etc, or any other form of online content curation, involves potential copyright concerns, please feel free to contact us at service@ayafintech.network so that we can remove relevant content in response to any such request within a reasonable time frame.

Blog+More

Agile lean enterprises break down organizational silos to promote smart collaboration for better profitability and customer loyalty.

Laura Hermes

2020-11-03 08:30:00 Tuesday ET

Agile lean enterprises break down organizational silos to promote smart collaboration for better profitability and customer loyalty.

Agile lean enterprises break down organizational silos to promote smart collaboration for better profitability and customer loyalty. Heidi Gardner (2017

+See More

A Harvard MBA graduate Camilo Maldonado shares several life lessons and wise insights into personal finance.

James Campbell

2019-05-17 15:24:00 Friday ET

A Harvard MBA graduate Camilo Maldonado shares several life lessons and wise insights into personal finance.

A Harvard MBA graduate Camilo Maldonado shares several life lessons and wise insights into personal finance. People can leverage stock market investments an

+See More

President Trump withdraws America from the Iran nuclear agreement and revives economic sanctions on Iran for better negotiations.

Chanel Holden

2018-05-06 07:30:00 Sunday ET

President Trump withdraws America from the Iran nuclear agreement and revives economic sanctions on Iran for better negotiations.

President Trump withdraws America from the Iran nuclear agreement and revives economic sanctions on Iran for better negotiations as western allies Britain,

+See More

The Trump fiscal trifecta of lower income taxation, new infrastructure, and deregulation has yet to run its natural course.

Becky Berkman

2017-04-25 06:35:00 Tuesday ET

The Trump fiscal trifecta of lower income taxation, new infrastructure, and deregulation has yet to run its natural course.

This nice and clear infographic visualization helps us better decipher the main memes and themes of President Donald Trump's first 100 days in office.

+See More

American unemployment declines to the 50-year historical low level of 3.5% with moderate job growth.

Chanel Holden

2019-11-19 09:33:00 Tuesday ET

American unemployment declines to the 50-year historical low level of 3.5% with moderate job growth.

American unemployment declines to the 50-year historical low level of 3.5% with moderate job growth. Despite a sharp slowdown in U.S. services and utilities

+See More

The Federal Reserve proposes softening the Volcker rule that prevents banks from placing risky bets on securities with deposit finance.

James Campbell

2018-05-27 08:33:00 Sunday ET

The Federal Reserve proposes softening the Volcker rule that prevents banks from placing risky bets on securities with deposit finance.

The Federal Reserve proposes softening the Volcker rule that prevents banks from placing risky bets on securities with deposit finance. As part of the po

+See More