A Strong $USD

Because of the significance of the USD, the US economy is unlike all others. A strengthening USD, despite the negative effects it causes in combination with its rise, produces greater spending power in the largest economy in the world; and if there is one thing Americans can be counted on to do, it is spending. Greater spending power from the USD is historically known to be spent, and when non-American things are cheaper, that money will get spent where its utilization is highest.

There are always swings and volatility in currency valuations, and the dynamics of capitalism-as-usual ensure that capital will continue to flow and relative valuations will respond and adjust over time, so a strong USD now
also suggests a weaker one in the future; agile firms have analysts on payroll to specifically attend to these complex monetary realities of multinational money-making. Investors who are wary of currency swings can study the attached charts, take guidance from the activities of trustworthy leading firms with extensive R&D departments, and stop listening to the doomsayers who, themselves, don’t understand how monetary cycles actually interact with prices and business cycles.

The Commodity “Sweet Spot”… Digitized

A commonly held idea suggests that once a national economy’s spending power rises above a threshold of about USD$4,000 GDP/capita, that country has entered into what’s known as the commodity “sweet spot”, where a more-rapid industrialization process will take hold and the amount of raw commodity inputs used and imported into the country will rapidly increase as it “builds out” a more advanced infrastructure capable of supporting a more modern society. This dynamic has played out numerous times around the Pacific Rim in countries such as South Korea and Japan, which now boast some of the most advanced infrastructural capacities anywhere. According to the IMF, Vietnam, Peru, the Philippines, and Indonesia are all currently in the commodity sweet spot, with Thailand, China and Mexico each just rising over the upper limit of the threshold and ascending into ever greater levels of advancement and quality of life.

All of the seven aforementioned economies will likely continue to see increases in their basic commodity usages as their incomes and wealth rise and they increase infrastructural buildouts. However, it’s also necessary that an additional and separate set of digital goods and services will increase along with the level of GDP/capita, as the modern world now runs as a physical-digital hybrid. Even in areas absent central electrification, smaller and cheaper batteries and generators are starting to bridge the gap between innovative capitalists and eager rural consumers, and recognition of demand will always motivate the capitalists to experiment in supply. Mobile computing technology is allowing consumers in much-less-developed economies to gain access to goods and services previously unavailable to citizens of nations at that level of development.

These factors combine to constitute an “update” to the leveling-up process for national economies gaining a greater foothold in the world economy. In conjunction with the critical basic materials required to build modern cities and infrastructures (ie: aluminum, wood, cement, steel, sand/gravel, and limestone), rapidly developing economies now also need access to other critical minerals like Rare Earth Oxides (REO) and lithium, which are vital for producing the technologies which actually make societies modern and technologically “advanced” (see: “Natural Elements” for more.) Due to this expansion and reorganization of the basic list of city-building materials, commodity supply chains are evolving and newly-built urban centers in rapidly progressing nations are finding ways to skip steps in the traditional infrastructural development scheme, resulting in even quicker access to regional and global markets with earlier participation in world commerce than other historical examples were capable of achieving. Economies entering into the commodity sweet spot and currently speeding their way through the industrialization process will have myriad opportunities to set new standards for how urban areas can be organized and managed, such as broadly installing EV charging stations powered by alternative energy sources rather than fossil fuel-based ones with pipeline systems. Each one of these modern city choices will gently, or rudely, stir up the mix of basic components “required” for modern urban development. No matter what, the future will be different than today.

Moreover still, in comparing the two SEA nations of Vietnam and Indonesia, we find that their GDP/capita is very similar at ~$13kUSD and ~14kUSD, respectively, but the fact that Indonesia’s composition as an archipelago of thousands of islands makes the logistical transportation of goods more challenging and will hinder the pace of development, so Vietnam’s sweet spot occupancy is a little bit “sweeter” than Indonesia’s. Economies such as Vietnam that are accelerating through the commodity sweet spot will also experience commensurate growth in digital services necessary to populate the newly-built digital infrastructure. (See: “Emergent Dynamic Elements” for more.)

Wealth Inequality

Through the fundamental activities of capitalism-as-usual, increases in wealth and income inequality continue to spread throughout the Trans-Pacific economies. In the wealthier Asian economies with GDP/capita higher than USD$30,000 (Japan, South Korea, Hong Kong, Taiwan, Singapore), and also including the PRC, since the sheer population volume dictates there will be tens of thousands of people in brackets multiple standard deviations from the mean, capitalism-as-usual has minted many new billionaires and annually adds tens of thousands of new millionaires, with an even larger aspirational class right on the heels and growing. The volume of spending power newly directed towards aspirational and luxury markets coming out of Asia is unprecedented. Certain companies, such as Chow Tai Fook Jewelry Group Limited, are extremely well positioned to capitalize on this economic swell throughout Asia, and have been doing so for some time already, with two Asian luxury retailers in the top 10 globally and expanding (UKD). Chow Tai Fook, being headquartered in Hong Kong, unlike its other top 10 competitor (China National Gold), gives it a little more free market flexibility that, along with its much longer history of public ownership (11+ years, versus China National Gold’s very recent entrance into public ownership at the start of 2021), makes for a confidently emerging player in the international luxury retail arena. The ability to tap into the broad and rapidly growing pool of new Chinese (and other) millionaires around Asia makes growth opportunities in the Trans-Pacific unparalleled.