We believe many of our current investment themes characterization. One example is our current theme on artificial intelligence, AI, which we originally published in April and wrote extensively about in our Q1 newsletter. We believe that over the next 10 years, some labor that is currently being executed by humans, will be replaced by machines. This will be pervasive across industries. This issue is already surfacing in the labor market and is one of the major sticking points in the Hollywood writers’ strike. This mega trend will disproportionately impact the developed world and be highly deflationary.
Another example is our view of deglobalization. This is essentially the re-ordering of priorities of governments away from simply optimizing for cost efficiency, and instead laying in other factors, such as national security into the construction of supply lines. The results are a re-onshoring of certain, high value manufacturing, and industries such as semiconductor chip production and supercomputing. Lower value industries will see supply lines diversified as well, but to other locations. We see the beneficiaries of these lower value add industries including southeast Asia, primarily India, and closer to home Mexico and parts of South America.
