Winterland Updates
A raucous year ends with lots of drama and points to more instability in 2023
With an apology for the radio silence, it was a busy few weeks and I also dealt with a serious bout of flu and I am pleased that we can now scale down for a short holiday break. I really want to come back with regular updates and analysis in the new year so hope to see you all there. Let’s do a quick recap of the last few weeks which were quite eventful and they provided a dramatic end to the year while setting the stage for more conflict and instability in the new year I am afraid.
Ukraine
With President Volodymyr Zelensky’s dramatic and well scripted visit to Washington, the eyes of the world were back onto the conflict that shaped much of 2023. As expected the war is stuck in the wintery trenches with no real chance of a breakthrough on either side until at least the early spring season next year. Ukraine has made it clear it is seeking full liberation of all the occupied territories including the Crimea. Russia is beefing up its defences and potentially getting ready for a forceful counter attack with a military that is now being rebuilt. And there are no signs of any domestic Russian pushback on Putin’s agenda. Both sides are therefore ‘all in’ as of this stage and that runs counter to what many other geopolitical players would actually prefer: a peaceful settlement or at least a temporary truce.
Yet getting back to the table with a Putin-led Russia is a non-starter for Ukraine and any peace negotiations would conceivably be so complicated and protracted that little if any is to be gained from such a process. The argument is clear, only a defeated post-Putin Russia could be a partner for peace, and in order to get to that outcome a lot still needs to happen.
The dramatic trip to Washington (by train from Kyiv to Poland and then from a NATO base in Rzeszów to Maryland, partly escorted by US fighter jets) was crucial not only to shore up US support and stick it to Putin. The changing political landscape in Washington itself where Republicans will take control of the House in early January will make it much harder for Biden to open the purse and support Ukraine. And in order to achieve all of his objectives in the war Zelensky will need a lot more from the US and its allies, in particular when it comes to advanced military equipment. As mentioned it was all carefully scripted and to frame the ask for support as an investment in long term security was not just a clever wordplay, it focused in on how a continued and aggressive Putin regime destabilizes Europe and the world.
The core question is now with both sides opting to be ‘all in’ for a victory where this war will lead us. There is a ready chance that further escalation will spread regionally by for instance Belarus getting involved and Russia stirring up a renewed Serbia-Kosovo conflict, to give you just two recent examples. There is a long and likely bloody road to go to get to the end of this war.
It is never great to have one unusually wealthy man with multiple business interests control the world’s largest media platform.
That very platform by the way needed a thorough clean-up and restructuring effort.
Both of these statements are true at the same time and I have long argued that the current phase under Musk is a necessary stage for Twitter, it is a sort of overdue pivot. The Twitter files as they have been released over the past few weeks reveal how the company suppressed and manipulated news, and this cleansing act provides the sort of baseline to enable a fresh start. It is therefore so disappointing to see many people leave Twitter, declare that Musk is now himself suppressing free speech and that some right-wing takeover is afoot. There are some good explanations for why things evolved the way they did and that is by no means meant to exonerate Musk. He’s not always as stable as you would like him to be: the search for his successor has now been initiated.
There are real financial pressures on the business that was purchased for way too much money and the transaction is also weighing heavily on Tesla stock. To keep selling the latter to prop up Twitter is creating some nervousness among the investors behind the scenes who will probably have more leverage than some disgruntled journalists and commentators leaving Twitter. That’s what will drive further change, and it starts with a new CEO.
So I am not at all alarmed or nervous about Elon Musk’s ongoing efforts to bring back Twitter from where it was to where it could and should be. The new CEO - guided by owner Musk - may bring not only the platform and speech on it back to where it should be, but also bring the necessary financial acumen to position Twitter as the go-to global online portal for news and commentary.
Iran
The uprising in Iran continues which is good news, but the violent retribution of the regime continues unabated and the horror stories keep piling up. Dutch MP Ulysse Ellian who has an Iranian background reiterated last month on what it is that we can do here:
“Keep retweeting and reposting on Instagram. This revolution was started by women who took off their headscarves. Keep sharing the images, because that is exactly what the mullahs do not want the world to see”
So on that note:
Israel
Bibi Nethanyahu is close to forming a new government, the most right of centre coalition Israel has ever seen. It is not that a more centrist government could have been cobbled together, the largest parties in opposition now are still sufficiently on the right to join Nethanyahu’s Likud Party. However, it is the very presence of the man who has alienated so many of his erstwhile allies that has made it inevitable for him to team up with the outer fringes of Israel’s political spectrum. Nethanyahu’s solid record on both the economy and security, validating him as Israel’s only feasible prime minister, may not be the currency in a changed environment where support for Israel (Biden, Arab Abraham Accord partners) may become tenuous. Political uncertainty and instability will remain Israel’s wont.
Markets
Over the last twelve months I updated you from time to time with some quick comments on the markets. While Q3 saw some sort of a comeback after a brutal first half of the year, Q4 reversed all the gains to put 2022 into solidly negative territory. It was an awful year for the equity markets. However when looking at the private early-stage landscape I continue to see rays of hope and a sentiment that with the current year being a write-off, 2023 will be a year where tight monetary policies will have run their course and that much of the incredible amounts of capital sidelined will have to be (re)deployed. It will be tentative, slow and valuations will be under pressure for some time, but we can expect to see a somewhat better environment. Provided of course we can avoid some real global crises.
Break
With the World Cup over, the snow moving in and being at home with not too many interruptions it will be a great time to catch up with things I missed. The first one was The White Lotus, Season 2 which I readily recommend as a morality play about our current world where extreme wealth and access to almost anything has not made us any wiser, smarter and certainly not more morally virtuous. It is a sort of road to an abyss where there is no meaning left at all. Really highly recommended.
And while in bed sick, I decided to take things a notch lower by tuning in to the Harry & Meghan Netflix tome. I am halfway and may write something up about it as it so multi-layered that it actually is, like White Lotus, an incredible mirror of our sliding scale of values while the rest of the world is dealing with far more acute issues. Think about how people in Ukraine and Iran fighting for their lives would view our current culture of self-indulgence. More of it in the new year, that is for sure.
Merry Christmas, Happy Hanukkah and all the best for the New Year.