Friday, March 31, 2017

Friday Feature Book Review: The Absent Superpower (Shale Revolution) by Peter Zeihan「存在しない超大国」シェール市場 ピーター・ゼイハン著

This book is excellent, and really stretches your economic, political, and trading imagination in profitable new ways. I have never been this interested in any new style view on economics in a very long time. Peter Zeihan uses a fascinating mix of Demographics, Geography, and Energy Data to create a very plausible Economic world full of long and short trading ideas. 

I get a Matrix movie like feeling when reading this book, similar to the Red Pill or Blue Pill choice. If you really want to know what the full impact of Oil, the Shale Revolution and what it will do for various markets and global politics, then perfect. Take the Red pill right away, this book is for you. 

If however, you want to just keep reacting to what OPEC says in the media, to influence publicly any prices, then take the Blue Pill. I cannot look at Energy News the same way again. The US shale industry has evolved way beyond its first stage wave, and many market investors do not realize how much it has adapted to lower prices via new technology. Time has been a big help due to new uses of technology. My eyes have been opened, and I cannot go back. I am now feeling enlightened. It is a very confident way to looking at the world anew. It is a world of geopolitics and energy markets that suddenly makes much more sense. I recommend this helicopter like view, so read the book, and get that same feeling.

I love facts, and so does the author, Peter Zeihan loves maps, and everything about them. The geographic cases he makes for why nations or markets will go in a certain direction all make very logical sense. There is no clear time table, but the many eye opening scenarios that I would not have made such a good case for. Time is connected to demographics and Russia's large army today is a prime example. It is a very large standing army today, but will retire soon with a few short years. 

The more you realize how important this "use it now or lose it forever after" mentality is, the more it actions make sense. Sochi was an Olympic success, so why the invasion of Crimea, why the aggression in Syria, why not then another possible move into Poland soon? If this was just a recent concept, fine, but this observation goes back several years. Many of the specifics are not actually happening on the world stage. Economically, Peter Zeihan, the author, may have a way of looking at the world of energy and politics, on par with "back to the future" how can you NOT want to read more?

There were many times when I kept saying to myself, I must write this down and figure out obvious trades on the long or short side that seem so worthwhile. If you know what trade could happen, you just need to know the timing.

The Top 3 Takeaways from this book that really impact any reader are:

1) There is a lot to learn about energy investment globally, its geopolitical impact in the middle east, and how lower US military policy by it navy in particular, will end the current globalization wave. Many places import food, without it the recent Arab spring will seem like a nice tea party by comparison.

2) The impact of Russian military aggression in Europe has a "use or lose by date" after which the soldiers in uniform today, will retire en masse within a few short years. We could see a Russian army half its current strength within 5 years or less. Putin will not be waiting.

3) The amount of disconnect of the US market made possible by plenty of shale oil with the rest of the world will be wide. Many markets will be suffering from high oil prices from Iran, Saudi Arabian or other conflicts within a few short years. 

This is not a book to read once but many times after more events unfold. You feel as if it is to be absorbed to better understand why oil keeps the industrial world turning. It needs frequent reviews to make sure that you do incorporate all of the key points into any financial, political or energy investment impact view. The maps, charts and solid numbers are well written, smoothly edited, and a wonderful read for anyone in finance or not. Good solid big picture advice on how the world may look in future, and how to anticipate it with winning trades. Highly recommended!

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