Dave Gilbert here, Editor of Smart Money.
Can you believe there is controversy over Independence Day?
It’s true. Controversy may be too strong a word, but no less than John Adams himself felt that today, Jul. 2, should be Independence Day.
This is the day the Founding Fathers officially declared independence from Great Britain by adopting Richard Henry Lee’s resolution that “these United Colonies are, and of right out to be, free and independent states…”
The Continental Congress then took two more days to make final edits to the Declaration of Independence. The final version was approved on Jul. 4, 1776.
Whatever day you would pick, American independence is more than just a history lesson. It is a way of life as “the pursuit of happiness” fostered a can-do spirit, entrepreneurship, innovation, and prosperity.
It led to the “American dream” being both a vision and a reality, and to America becoming the most powerful and richest nation on Earth.
On this Independence Day 246 years later, we could be on the threshold of a new era of American independence and prosperity…
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The World’s Newest Megatrend
“Made in America” is a phrase used by companies to promote the fact that their goods are produced right here on U.S. soil, which is how it was for most of our nation’s history.
About 50 years ago, many American companies moved or outsourced their manufacturing to other nations to take advantage of cheaper labor or closer access to raw materials. It worked, but one unintended consequence was a dangerous overdependence on other nations for critical goods.
Two events in the last two years have highlighted the dark downside of this overdependence.
The COVID-19 pandemic shut down manufacturing around the world and created massive supply issues. We Americans have become painfully aware of the vulnerability of foreign supply chains, especially those that originate in places like Russia and China.
Then came Russia’s invasion of Ukraine in February. Russia became a global pariah and nations walked away from doing business there. As they did so, they realized the extent of this overdependence – especially when it comes to energy sources like natural gas and oil.
Eric Fry has highlighted the importance of this emerging new megatrend in no uncertain terms…
The mass economic exodus by Western companies from Russia is a seismic event that will redirect investment flows and reshape global supply chains for years to come.
This exodus is the final etching in the gravestone of “globalization” – and what comes next will be its alter ego: deglobalization.
This is the world’s newest megatrend, and I expect it to be an incredibly powerful one.
After COVID and with most of the Western world exiling Russia to an economic outer darkness, localizing supply chains – bringing them back to America or at least closer to home – has become “Job No. 1.”
Here’s Eric again…
Sourcing products from home, or close to home, is no longer a casual corporate pastime; it has become a political and economic imperative for every major U.S. corporation.
Or to express the same thought differently; no U.S. CEO can “play dumb” any longer about supply-chain issues or be caught flat-footed by the next supply-chain “surprise.”
Most U.S. companies will begin erring on the side of “localizing” their production and sourcing. They will accelerate plans to deemphasize relatively unreliable and/or distant supply-chain sources while emphasizing relatively reliable and/or local ones.
In some industries, these supply-chain shifts will proceed incrementally. In others, the changes will come fast and furiously.
The energy markets, in particular, are about to wrangle with a “messy divorce” from Russia. The consequences of which will produce both jarring dislocations and powerful new investment opportunities.
We now know that everything from a war to a global health crisis to the changing whims of a nation’s leaders can choke off sources of critical goods and ingredients. As such, the return to how it began – good old American self-reliance – looks to be a growing theme that will result in trillions of dollars of investment and play out over years, if not decades.
As we celebrate America’s 246th birthday, we may also be entering what could become not just a new Independence Day, but a new independence decade – at least when it comes to the production of goods.
Look for “Made in America” to take on increased significance beyond being a catchy marketing slogan to becoming a critical corporate and economic strategy. Smart investors will want to take note of this powerful new megatrend reigniting an old industry and paving the way for renewed innovation and prosperity.
Happy Fourth of July!
Sincerely,
Dave
P.S. This potential trillion-dollar device could transform Apple as company – details here.
On the date of publication, Eric Fry did not have (either directly or indirectly) any positions in the securities mentioned in this article.
