I’m back at the helm of Capital & Conflict and our daily market broadcasts. It’s been good to take a couple days off and get burned to hell by the impressively strong London sun, and indeed to give you a sneak peak at some of our premium research, but now it’s back to the usual.
In today’s short note, we’ll take a look to the US, where all the social pressure for self-isolation and social distancing has evaporated in favour of its total opposite: mass protest.
You’ve probably seen glimpses of where protests have given way to outright violence on the news by now: the rioting, looting, and burning which have polarised the US political spectrum even further. The stories about stacks of bricks being placed near protests to facilitate destructive behaviour (if true) are a sad reflection of how the death of George Floyd is being seized as a political opportunity.
But there are two aspects of the chaos I’d like to dwell on today (neither are political positions, as this is an investing newsletter). The first is the social unrest itself, and the second is the response by the state to clamp down on it – I believe both reveal information that investors should arm themselves with.
- The Hong Kong prophesy rings true?
I’ve said a few times in this letter that I view Hong Kong as a “forward indicator” for the developed world – that the events transpiring there now we shall see occur in the developed world in the future. A bit like a vague crystal ball for the developed economies. See crazy things going on there? There’s a decent chance we’ll see it here (though I hope I can exclude the possibility of an invasion by the People’s Liberation Army on our shores).
I made this argument as Hong Kong is so much further along the curve of wealth inequality, that the social tension there is already much higher. I believe we’re on the same trajectory, just further behind.
Last year we noted that while violence was erupting across Hong Kong, gold toilets studded with diamonds debuted on the market there. The most expensive parking space in the world was sold in Hong Kong not long beforehand (for nearly a million bucks).
I feel there is now a similar situation taking place in the US, where there are protests occurring in some 350 cities, while the Nasdaq is only a whisker from making a new all-time high.
The protests in Hong Kong and the protests in the US over the death of George Floyd are of course not the same, but I think both are symptoms of deep social disquiet – an anger at authorities that are not seen to be serving the common man.
- Predators come out of their coffins
Predator and Reaper drones have become closely attributed with the War on Terror. However, they’re not very well suited to a Cold War scenario, as these lumbering metal birds of the sky are slow and defenceless, and can only function over areas without air defences or an air force.
It’s for that reason that many of them are being retired, placed in “coffins” to be transported into storage or sold to other nations that fancy a go on them. It’s a pretty curious image:
However, something that gains a lot less public awareness is the other “work opportunities” these drones are being engaged in now that they’re middle-aged. If they can only fly in areas without hostile air defences or enemy aircraft… they should be fine for spying on the public at home.
The Pentagon has been ramping up its use of Predator, Reaper, and other drones over the US over the last few years. They’re unarmed, and can be used for things like monitoring the spread of wildfires and border security. But they can also be used simply for surveilling the public, with Reaper missions being flown over New York State as part of an “incident and awareness exercise”.
Low and behold, Predator drones have been used to monitor the riots. From DroneDJ:
On Friday, alarms went off in the media after an investigative journalist spotted a US Predator drone flying a loop over riot-ravaged Minneapolis. Predators are associated with deadly combat missions in places like Afghanistan, not in the airspace above American cities.
But the drones are more common in the US than people may realize. US Customs and Border Patrol routinely uses unarmed versions of predators to surveil both the northern and southern borders of the US. And it was one of these drones, CBP104, that was diverted from North Dakota to provide an aerial view over Minneapolis.
“Earlier today a US Customs and Border Protection, Air and Marine Operations unmanned aircraft system was preparing to provide live video to aid in situational awareness at the request of our federal law enforcement partners in Minneapolis,” a spokesperson for CBP told news site Recode in an email. “The unmanned aircraft system provides live video feed to ground law enforcement, giving them situational awareness, maximizing public safety, while minimizing the threat to personnel and assets.”
The use of drones for monitoring the public will be a great boon to the drone industry. In fact, in Estonia they’ve been using drones to catch people breaking the social distancing rules.
Social unrest as we’ve seen in the US will only accelerate the trend. Like it or not, the use of military Predator drones to spy on the public is coming to the UK too. But don’t worry – they’ve been given a rebrand. They’re not called Predators… they’re called Protectors.
More to come…
Boaz Shoshan
Editor, Capital & Conflict
Category: Market updates