All-In E72: Impact of sanctions, deglobalization, food shortage risks, macroeconomic outlook and more

Ukraine War Status & Peace Prospects

• Sacks noted that while Putin clearly miscalculated and Russia has taken serious casualties, there may be excessive Western triumphalism about Ukraine's position
• Chamath argued the situation is closer to peace than many realize, noting both sides have indicated the "surface area of a deal" is in sight
• The broad contours of a potential peace deal include:
  • Ukrainian neutrality (no NATO membership)
  • Limits on Ukraine's military but with security guarantees
  • Recognition of Russian control of Crimea
  • Some independence for disputed Donbass territories

Food Security Crisis

• Friedberg warned of an impending global food crisis due to:
  • Russia/Ukraine providing ~30% of global wheat exports
  • Russian export bans on fertilizer components through 2022
  • Skyrocketing fertilizer prices (5x increase) causing farmers to reduce planting
  • Predicts hundreds of millions could face famine within a year

Economic & Market Outlook

• Chamath sees a market "melt up" in the near term due to reduced uncertainty from:
  • Potential peace deal framework emerging
  • Federal Reserve providing clear rate hike guidance
• Sacks more pessimistic, warning of:
  • Private market valuations returning to pre-COVID levels
  • Possible recession if war continues
  • High market volatility continuing

Foreign Policy Implications

• Discussion of how sanctions plus corporate action proved surprisingly effective against Russia
• Biden praised for clearly stating no direct military intervention while effectively coordinating sanctions
• Sacks criticized the "permanent foreign policy establishment" for consistently pushing toward military intervention
• Group agreed on need for "race to resiliency" in energy, food, and supply chains to reduce dependence on hostile states

Key Takeaways

• Unprecedented combination of government sanctions and corporate actions showing new model for international pressure
• Major restructuring of global order underway with significant food security and economic risks
• Need for more pragmatic approach to environmental and agricultural policy given strategic implications
• US dollar primacy reinforced but role as global mediator diminished