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Linear thinking is easy.

Non-linear (or lateral) thinking is hard.

The title of this article is a good example of linear thinking.

You do this, therefore... insert assumption here

Linear thinking is all part of the faulty wiring in our brains.


Now, linear thinking isn't all bad. It's great for making points and winning arguments.

It's also good for maths, and factory assembly lines, and step by step instruction manuals.

But it's not the best way to think about the economy, markets or any complex systems.

There's simply too much going on.

Take the current supply chain as an example ๐Ÿ‘‡

I have no idea if that image is accurate or photoshopped.

However, it is definitely the case for a lot of products in the globalised world, especially complex machines. ย 

Even clothes.

Last year, the US banned the import of products using Xinjiang cotton. Now, China is importing cotton from the US, making clothes and sending them back.

Let's look at another example.

China banned Australian lobster last November.

Linear thinking = "OMG, that's the Australian lobster industry screwed then, China buys 93% of their lobster from the Aussies"

What happened instead?

Hong Kong suddenly had a suspiciously large appetite for lobster...

Since direct shipments to China virtually ground to a halt last November, Hong Kong has become the worldโ€™s largest importer of Australian lobsters, with monthly trade growing more than 2000 per cent from October to April
โ€œItโ€™s highly unlikely that locked-down Hong Kong citizens are suddenly buying, cooking and eating 20 times more lobster in their homes over the last six months,โ€ said Deborah Elms, the Singapore-based executive director of the Asian Trade Centre. โ€œLobster is a high-value product. As with any high-value product, the incentives to skirt the rules are also high.โ€

These types of second order effects are everywhere in modern life, and we are peppered with 'news' every hour of the day.

It's far too easy to consume 'news' and build a false understanding of the world.

Acknowledging that 'it's usually not that simple' is a great place to start.

Linear vs lateral thinking is something we touched on in this morning's call ๐Ÿ‘‡

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Why I won't take the vaccine...

Kidding, I got double-jabbed and didn't even cry.

We're moving on from Covid now, although mRNA is here to stay.

Would people refuse to take a cancer vaccine?

That's a whole other question, right?

Totally different risk/reward.

Well, that's exactly what everyone's working on now... ๐Ÿ‘‡

Proponents of mRNA argue that combating Covid-19 is just the start and that its wider adoption heralds a revolution in modern medicine. Cures for some forms of cancer are among several areas being explored. Pharmaceutical companies are now turning their attention to the power of mRNA to tackle a range of illnesses from flu to heart disease and HIV. Very early vaccine trials are also under way for the Zika virus, yellow fever and rare diseases such as methylmalonic acidemia, where the body is unable to break down proteins.
โ€œFive years ago there was hesitation from the larger companies about investing in this space,โ€ says Michael Choy, head of life sciences at Boston Consulting Group. โ€œHaving so many people receive the mRNA product [for Covid] has made a big difference.โ€
David Braun, an oncologist focusing on kidney cancer at the Dana-Farber Cancer Institute in Boston, says it is a long road from Covid vaccine to personalised cancer jab. โ€œMedicine has made this mistake many times in the past, going from enthusiasm and great ideas to overpromising,โ€ he says. โ€œThereโ€™s a lot of promise for mRNA to be used beyond infectious disease but itโ€™s a big leap.โ€

I genuinely think we'll look back in a decade or two and recognise this as a breakthrough era for modern medicine.

mRNA technology already existed of course but Covid was the catalyst that catapulted it into the mainstream.

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Evergrande reading ahead of the weekend...

An excellent thread and found it interesting that Travis uses HNA Group as rough guide for what to expect.

In January, HNA Group declared bankruptcy.

At the start of October they finally declared how much was owed. Back in June 2019, this figure was believed to be $109.8 billion. Now it's $170bn ๐Ÿ‘‡

HNA bankruptcy reaches turning point, putting $170bn size on debt
Chinese conglomerateโ€™s restructuring expected to conclude in November

The Evergrande situation is going to get uglier. There will be more mini-defaults, and it will likely be many months before everything is uncovered, the scale of the problem is clear and restructuring/settlements can be reached.

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