The Evidence is Clear: Pax Americana has Won the “Trade War” for AI & Space Tech Leadership
By Ryan Scott, Executive Director
& Steven Arevalo, Chief Technologist
On 13 July 2024 at Butler, Pennsylvania, one of the top three most iconic American snapshots was taken in a blink of an eye: the 45th President Trump survived a 1 out of 1 Trillion near fatal 6 shot tragedy— what tho the odds, as is sang at the hallowed halls of University of Notre Dame in Indiana, 373 Miles to the West.
Similar to the Oil Painting of General Washington’s the Crossing of the Delaware, or the Kodak of President Bush on the ash heap of WTC with the NYC’s Bravest Fire Captain— the “Butler Bulldog” Photo of a raised fist of President Trump, will forever serve as a signpost to America’s posterity. It will be a flashpoint that affirmed the country’s unique role as the Good Steward of International Peace, Liberty, Property rights, Innovation, and Pursuit of Prosperity
At the very onset of the near disaster for the 45th President and American optimism: over the last 5 days, fixed asset heavy industrial oriented ETFs with mainly American based revenues have outperformed more Internationally reliant asset-light tech companies. That is a positive signpost that top-line “value” risk factor has received a bit of a bid since the tragedy:
There is no GenAI Brave New American World, without also the physical “Hard Hat” type of industries, such as:
Regional banks.
Energy intensity
Bi-partisan demands for on-shoring and near-shoring multi-sources of Energy to offset the ever growing electricity demands of the AI based computing & Chip production,
Sustainable agriculture as their demands for Water and GHG less intensive Energy will all be part of the future balance of power that the market hopes whoever will be the next President, will be able to steer the rudder towards the American way.
The Chart to Compliment the “America Invcitus” Trump Fist Pump seen Around the World:
The Trade War Accelerated America’s Tech Dominance for the AI & Chips Era due to its Focus on greater Self-Reliance, Enforcement of WTO Rulings, and building ties between other nations that have historically respected IP/R&D rights such as the UK and Taiwan (ROC)— and increasingly the Republic of India, UAE, and Israel.
Over the last 10 years, the Market has rewarded American anchored tech world despite the prospects of covid19 and trade tariffs on hard goods and even their own access to PRC subscription revenue by over 20% on an annualized basis.
Stakeholder Collectivism tends to encourage “buck passing” and corporate lethargy— this acts as a “diabetic effect” to a company’s operating profits and investment towards the future— the GenAI Ecosystem and Build out of the CO2 less-intensive, yet still Fossil Fuel anchored Near-Shore Energy Portfolio is most optimal in political-economic models that reward hard work, innovation, and assign credit where credit is due.
This is significant as Institutional Liability Driven Investors, such as the Pennsylvania Firefighter Union Pension Fund, don’t have any extra “Sharpe Ratios” to squander on the vega risk expansion and politically charged “Stakeholder Collectivism for Common Good” based interventions by the state on the market.
History shows, as Dr. Hayek and Dr. Friedman long predicted, that state-based “Collectivism”, act as modern day edicts or fiat that simply tend to “add more cooks in the kitchen”: whether someone has honed in on the skill of Magherita Pizza making, or dim sum and dumpling creation, a chef always knows that such a model only slows down the producer’s innate capacity for high-power, efficiency, and innovation. Industrial and Tech capital allocation for future growth and support of sovereignty is very similar.
The Market has been very positive for institutional investor’s expectations of term premium and future WAAC estimations for expensive yet vital build outs in the GenAI & Chips Ecosystem, Sovereign Energy Infrastructure that are now being re-weighted as a net positive for the future ROIC of America’s balance sheet. President Trump launched the opening salvo to restore America Tech & Energy dominance 7 years ago, the Biden Administration carefully carried on many of its Long-Term accretive policies such as proposals to limit Private Equity investment in PRC military Chip technology. However, the DJIA has rallied over 1000 points since the 13 July 2024 tragedy yet improbable silver lining, as Fortune Favours the Brave— and the Markets prefer less regulatory over-reach, naturally and actually.
Given AI Chips and AI hyperscalers from a realpolitik & real capital standpoint, the Markets are now dusting off plans for a bullish American 22nd Century in care of Western Civilization’s balance with the emerging world of the technologically revamped Silk Road Ecosystem of the Orient & Middle East. The Hard won Abraham Accords, Generative AI Ethical Frameworks, and attempts to secure a detente with other nuclear powers were won through hard work, sacrifice, and duty by Citizens and Professionals alike since the end of the Cold War, out of a reverence to the American constitution, which is eternally designed to be in care of its most vulnerable.
Hence, the Chief did not perish in vein— he like many of the American & British troops who paid the ultimate sacrifice to establish greater sense of peace and order in the Middle East over 20 year period since 9/11 tragedy, will always be remembered as the Silent Victors that helped to “tame the savages of man.”
Bottom line: all of the more fixed asset heavy, lower EV/ EBITDA, and greater capacity for Operational Gains via AI Enabled Robotics and pro-growth tax cuts to offset the cost of retraining workers for the new era, will all be in need of much more than mere marginal upticks in cap-ex expansion: it will be akin to the capital allocation of the America Gilded Age that then spawned the country to catapult from the Railroad Era, to the RCA Radio Era within just one generation.
Ryan Scott
Executive Director and Founder
DuLac Capital Advisory
(+1) 516-939-6833
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