Markets Are Entering A Wartime Economy | Cem Karsan

Summary

Cem Karsan of Kai Volatility Advisors joins Felix Jauvin to argue the world is entering a wartime economy defined by deglobalization, geopolitical conflict, populism, and fiscal dominance. He expects structurally higher inflation, a steeper yield curve, continued demand for hard and strategic assets, and pressure on long-end bonds. He also warns that the 1962-1982 populist analog points to midterm-year equity drawdown risk and that authoritarianism could amplify volatility and structural unrest.

• Cem describes a bifurcating world economy split between China/Russia and Western allies.
• He views Greenland pressure as a tactic to push Europe toward higher military spending.
• Populism and protectionism are framed as inseparable drivers of fiscal spending and inflation.
• He argues the Fed is boxed in by political and fiscal priorities.
• He favors precious metals and broader hard/strategic assets as secular wartime exposures.
• He sees long-end bonds as vulnerable to inflation, supply, and refinancing pressures.
• He highlights midterm-year drawdown risk using the 1962-1982 analog and 2022.
• He says capital rotation and flight to safety are accelerating and could be just beginning.