Years of Rising Waters

From Bret Stephens (New York Times):

"The usual date given for the start of World War II is Sept. 1, 1939, when Hitler invaded Poland after the signing of the Molotov-Ribbentrop Pact. But that was just one in a series of events that at the time could have seemed disconnected.

Among them: Japan’s invasion of Manchuria in 1931. Italy’s invasion of Abyssinia in 1935. The remilitarization of the Rhineland in 1936 and the Spanish Civil War, which started the same year. Anschluss with Austria and the Sudeten crisis of 1938. The Soviet invasion of Poland weeks after the German one and Germany’s western invasions the following year. Operation Barbarossa and Pearl Harbor in 1941.

The point is, World War II didn’t so much begin as it gathered, like water rising until it breaches a dam. We, too, have been living through years of rising waters, though it took Russia’s invasion of Ukraine for much of the world to notice."

I thought this was a great observation not just in the geopolitical sphere, but something that should be applied more towards market commentary. The 2008 market collapse didn't just happen - many things happened leading up to it which caused that dam to breach. Inflation is not all of the sudden something that showed up when Russia decided to invade Ukraine on February 24, or because of policies of any sitting president, or any other one thing. These things are layers of complexity deep. For starters, we've had massive supply chain disruptions for years on end (tariffs, COVID supply/demand shocks, then a war.) Tariffs and COVID supply shocks probably had roots to policies going back 30 + years that outsourced mostly everything and prioritized cheaper labor over domestic manufacturing. It just took a global pandemic for much of the world to notice. There's many more inputs that I'm not even aware of, and most certainly isn't being reported on. I don't know. 

Economic and market events than pan out usually have years of rising waters tied to them, both good and bad. While it doesn't necessarily help to predict the future, this perspective does make the day-to-day news cycle a little less jarring and will contribute to making more informed, less reactive investment decisions.

So, how does the next recession begin? It won't 'begin', but gather like water rising until it breaches the dam. The same way every other one has.