The Social Fabric Is Fraying, Fortunately There's A Trade For That (AXA; CS:Paris)

There's always a trade, if interested see after the jump.

From Barron's November 29: 

The Social Fabric Is Fraying. This Global CEO Sees Opportunity.

Few people in the world think more about risk than Thomas Buberl. [ahem...]

Since becoming CEO of AXA (ticker: CS.France) in 2016, the 50-year-old German executive has led the Paris-based insurer through a difficult transformation. He drew the company away from its roots in life insurance and built a diversified global business. AXA is the one of the world’s largest insurance companies, the largest insurer of companies’ physical assets, and the manager of roughly $920 billion in financial assets.

Buberl has run the business through moments of significant global turmoil. Russia’s invasion of Ukraine cost AXA 300 million euros ($325 million), and yet it remained profitable. Buberl has staked out aggressive positions on climate issues, including divesting the company from coal.

His view of the world is shaped in part by the company’s annual Future Risks report, a formerly internal document that AXA began publishing externally in 2018. The report’s tenth edition describes a “world in ‘polycrisis,’ where risks are now interconnected.” Experts surveyed for the report ranked climate change as the world’s No. 1 risk, followed by cybersecurity, geopolitical instability, artificial intelligence and big data, and energy issues.

Buberl spoke to Barron’s about those risks in New York in mid-November. An edited version of the conversation follows.

Barron’s: What have you learned about the world from your Future Risks report?

Thomas Buberl: The fact that we are confronted with many risks is nothing new. We have had this report now for 10 years. The risks are, I’d say, the same, but maybe in a different order. What is new is the sequence of the risks’ realization. So, traditionally, you had a crisis, six months of heated issues, then stop, and then quiet again. Then, after 12 months, the next issue came in. It was a very different amplitude of risks. Now, you have many of them happening together or straight after.

I think the impact of risk is higher, and second, the interdependencies of these risks is much higher.

You say the world is in a “polycrisis.” Some people use that term to mean climate is amplifying all of the other crises. Do you agree?

Certainly, yes. If you peel it back to where are the drivers, the originator risks versus the derived risks, I think one is clearly climate. That’s because climate has an issue of destruction, an issue of health, an issue around social fragmentation. But when you look, for example, at technological risk, this is similar to climate. It’s more of an originating risk.

I think what nobody has done yet is to look at what are the hierarchies or the decision trees of these risks. Which risks are influencing what? How do they drive one another?

Where it all comes together is the question of what it does to the social fabric.

What is happening to the social fabric?

You certainly have much more social fragmentation. And I don’t mean only in the democratic states in the U.S. and Europe. It is that, but if you go into Africa and look at the question of climate risk, it will lead to a lot of migration. This whole question now around how the energy crisis, the food crisis, will lead to a lot more poverty. I would guess that what these markets have lost in the past 10 to 20 months is probably everything they have gained in terms of prosperity in the past 10 to 20 years.

When you look at the Middle East, you’ve got some states that are much better positioned than others. If you look at Saudi Arabia, Qatar, the United Arab Emirates, versus Egypt, Libya, and so on—very, very different. If you go into China and look at the social fabric in Beijing or Shanghai versus the social fabric in a Tier 3 city, where you have 20% unemployment, where basic child medicine is missing—this fabric issue is everywhere.

Are markets adequately pricing this level of interconnected risks?....

....MUCH MORE

There will be some bright spots, there are always bright spots.

See for example:

Profit From The Global Riot Control Industry
This is a repost from May 2016 but it's probably evergreen.

2021: Today's Hot Tip From Investment Hulk

RIOT-CONTROL KILLER ROBOT TECHNOLOGY IS A WINNING INVESTMENT THEME FOR THE NEXT 10-15 YEARS (AND BEYOND). https://t.co/O0kkDqAxh9

— INVESTMENT HULK (@INVESTMENTSHULK) November 19, 2021

November 2022: Elliot Management: "World ‘plunging towards societal collapse’ as era of cheap money ends"

In other news: "Meghan Markle Wears a Chic Trench Coat in a Rare Look at Her Off-Duty Style"

*****

I'm not sure why Mr. Singer is talking about hyperinflation, that term has a specific meaning, 50%, or higher, per month price increases, that is the result of monetizing government deficit spending as it happens, i.e. printing money, and the major economies are at least 10 years from that.

On the other hand there is the probability that Central Banks will accept 4% CPI, declare victory and move on to other stuff. Thirdly, a decade of 10% annual inflation is a real possibility if the Central Banks decide their over-leveraged compadres in the private sector are worthy of being bailed out.

For the latter two scenarios the top-of-mind public riot-control equity names are Taser International (TASR) and Lamperd Less Lethal Inc. (LLLI).

Should the hyperinflation scenario actually occur you would probably want the old-line armaments purveyors, Northrup-Grumman (NOC), Ratheon [now RTX Corp.] (RTN RTX) or BAE Systems (BA:lon) come to mind.

And trench coats? Burberry from $2490.00.