In Flanders fields the poppies blow Between the crosses, row to row,

That mark our place, and in the sky The larks, still bravely singing, fly Scarce heard amid the guns below.

-“In Flanders Fields”, John McRae, 1915


Fields of Flanders – Field of Dreams

Reading reports from the frontlines in Ukraine is tough to endure. The freezing weather, constant civilian bombardment, the muddy trenches, the destruction; it all seems impossible today. Thoughts go to a visit, years ago, to Ypres, Belgium, walking the still mangled ground of vicious WWI fighting from a century past. One can still see the outlines of trenches on the topography, and, at certain times, it seems a whiff of the weaponized poisonous gasses still permeate the natural setting. It is the same mud, destruction and idiocy that currently grip Ukraine. We remember those brave souls of Ypres on the eleventh hour of the eleventh day of the eleventh month each year, with a poppy; the flower that naturally adorns Flanders fields in Belgium. As we read McRae’s famous poem about those horrific times, we realize his writing is as current today as it was when he was a medic watching his comrades fall about him. Presently, sitting in Georgia, the transition from that dystopian situation to our field of dreams is a difficult one, but one that is quite real. Ensconced in the U.S., we enjoy such affluence and opportunity; we often take it for granted. With that thought, we introduce our forward-thinking views for 2023 which we think will play out upon this field of dreams.


The military acronym, which is more and more applicable in corporate board settings, stands for Volatility, Uncertainty, Complexity, and Ambiguity. The more we consider today’s landscape, the more appropriate it seems. VUCA helps explain that unsettled feeling so many of us experience as we observe today’s markets. It will also fuel the concepts that are forming a construct for 2023.

Transformational Energy Developments

For decades oil supply chains have been in place. Occasional Persian Gulf disruption was par-for-the-course, and things went along swimmingly. Now geopolitical lines are being redrawn altering alliances and clouding the natural course of business. India and China are eagerly accepting Russian oil despite western sanctions. The European Union has colluded with the U.S. to cap Russian oil prices on shipments by sea from Russia. This is accomplished by only allowing tanker insurance on shipments that abide by the price cap. Any other shipments would be uninsured and therefore difficult to secure. No surprise that English and EU companies dominate oil tanker insurance markets. It puts Russia in a position of having the west dictate its pricing after Russia has already weaponized the commodity meant for its European customers. At the same time, Saudi Arabia has decided to cut production despite pleas from the Biden administration to the contrary. The old order is eviscerating, and a new regime will certainly be orchestrated in 2023. Will the price cap work? Where will Saudi oil production land? What will this do to world oil prices?

Huge sums of taxpayer money will be pumped into the renewable energy space compliments of the Inflation Reduction Act. In Georgia, we are seeing numerous investments of considerable size. Last week the Korean company, QCells, announced the enlargement of their north Georgia solar panel plant and the construction of an additional plant. This is an investment of $2.5 billion and will sustain 4,000 jobs. This is in addition to Korean battery manufacturer, SK ON, partnering with Hyundai to build a $4 billion plant in Bartow County, while leasing large amounts of office space in Alpharetta to house staff. Hyundai already has a large manufacturing presence near Savannah. Numerous support industries are springing up around these large manufacturers, with new electric vehicle efforts building capacity. Electric vehicle maker Rivian has also announced a new Georgia plant. The lure of subsidy in Georgia has been powerful, fueled by the past success in luring the film industry. The U.S. is aggressively discussing control of supply chains for materials critical to renewables. This will certainly heat up the space globally. At the same time Russia will do all in her power to make life cold, cold, cold for Europe in 2023. These forces will further transform the energy space into fertile investment ground.

Industrial Policy/Protectionism

These Georgia investments we mention are fueled by industrial policy. This is perhaps the most dramatic policy change we will navigate in coming years. We, as Americans, are not naturally drawn to centralized planning. We generally have not trusted government to direct industrial policy.

We have relied mainly on American ingenuity from Alexander Graham Bell to Steve Jobs, to tens of thousands of entrepreneurs in-between, to bring us new, thriving industries. Now we appear to be, in a bipartisan effort, embarking on a

new course. China’s entry into the World Trade Organization (WTO) drove the change. Free trade enthusiasts had hoped China would use WTO status to build a framework to enable market access. It never happened. Instead, China used mercantilism to exhibit state-sponsored predatory behavior the world over, allowing only certain companies entry. Consequently, tariffs have ensued, and then further semiconductor sanctions, which are crippling to China. Add to that telecommunication restrictions on Huawei and Chinese drone and security camera sanctions, and you have a toxic trade picture.

In November, Canada ordered three Chinese companies to sell their equity shares in Canadian miners extracting critical industrial minerals. We would expect more of this type of governmental involvement. Due to her Ukrainian incursion, Russia has been totally excluded from western commercial activity and denied access to US Dollar financing or fund transfers in the international SWIFT system. Such draconian measures have never been implemented before. American businesses have rapidly deserted Russia. Our companies in China are less numerous but far more engaged. The likes of Apple and Tesla have entrenched supply chains in place which look riskier in 2023. Chinese retaliation is a probability we factor into investment decisions.

Semiconductor Chips

In previous letters we have recommended investment in the semiconductor area. We were early to the game and caught by surprise with the global weaponization of these chips. Semiconductor stocks have fallen mightily as draconian restrictions were put in place by the White House on exports to China of any advanced semiconductors or fabricating equipment. The Chips and Science Act, an example of industrial policy, has supercharged investment in new production in the United States. Some $200 billion has been invested since its enactment in August. Such development, however, will take years to bear fruit. As one of our advisors pointed out in the office, “Heck, even my daughter’s toothbrush has a chip in it!” It does put things in perspective!

Artificial intelligence (AI) will be another driver in the development of advanced semiconductors. Generative AI uses the internet to search for data to incorporate in AI responses to queries. It is a powerful technology that will be a force in future drug research, computer programming, legal contracts, and computer

programming. Chips produced by NVIDIA and AMD will likely be an integral part of the generative AI story. Certainly, more chip manufacturers will enter this space. Google (Alphabet) and Microsoft are racing ahead with investments in DeepMind Technologies and OpenAI (owner of ChatGPT) respectively. Expect new search engine designs to disrupt the present environment.

This momentum behind advanced semiconductor applications is significant considering 90 percent of the world’s advanced semiconductors are produced in Taiwan. It is worth noting that Taiwan used extensive public industrial policy over the past several decades to transform a backwater island into a semiconductor giant. Now, with our focus on this industry we will see major changes in the semiconductor landscape with far more advanced chips being fabricated domestically, securing important industrial and military supplies. Taiwan’s proximity to mainland China holds too many uncertainties for U.S policymakers.

Interest Rates

The interest rate scenario will be a major component to investing in 2023. The rate rise we have seen as the Federal Reserve has aggressively hiked has somewhat dampened animal spirits in markets and seen bond investing reemerge. This will be good news for retirees who have endured far too much risk in portfolios during the zero-interest rate policy period. Interestingly, with never- before-seen debt loads, bonds are now refinancing tools for some $300 trillion in global debt. Mike Howell at CrossBorder Capital estimates that for every $1 raised in new finance, $7 of existing debt needs to be renewed each year. As he points out, liquidity becomes vital.

Our government will need to sell voluminous amounts of bonds to refinance these massive debt loads we have seen spring into existence since the 2008 economic meltdown and COVID. The bond debacle in the United Kingdom in September illustrates the skittishness of markets. It cost a Prime Minister her job just days into her first term. This is not lost on other central banks and seats of power around the world.


We will go out on a limb here to introduce Mexico as a viable investment. As the supply chain landscape evolves, Mexico stands to become the first stop for U.S. manufacturers looking for cheaper production costs and consolidated supply chains. The USMCA (the updated NAFTA treaty) allows a current framework to support this cross-border trade. Mexico struggles with massive drug cartel problems and political and governmental obstacles, but none of these should significantly slow business from finding a footing. It is too important to both Mexico and the U.S. to allow this economic cooperation to falter. The drug and immigration issues will rankle U.S. politics, but quietly business will toil away, unencumbered by the bluster of politicians.

Looking at the economies of Latin America, our attention was grabbed by the global success of Bad Bunny. Most of our readers probably do not listen to Bad Bunny. In fact, we had to dig deep to find out what this naughty creature might be.

Emerging from this research was a trap music sensation out of Puerto Rico with massive global appeal. Most astounding was Bad Bunny’s 4 billion 2022 U.S. streams of his Un Verano Sin Ti (A Summer Without You) album. The Spanish title was not lost on us, and yes, he sings in Spanish and still manages billions of streams in our country. The influence and impact of Latin America seeps into our locales and many of us are oblivious to it and its opportunities. For this reason alone, we will watch Mexico closely. Bad Bunny might just be a leading economic indicator!

So, as we venture forward together, VUCA remains the catchphrase we are focused on. There is no substitute for our country’s ingenuity, or the stable and gargantuan economic foundation we enjoy. None of this will change in 2023, and prudent investments will pay off moving forward. Join us in volatility, uncertainty, complexity, and ambiguity in our field of dreams. We are truly fortunate.

-E.B. “Chip” Beard February 13, 2023