Understanding Mega Trends and Positioning for Opportunity | January Client Meeting

As we enter 2025, the economic landscape continues to evolve, shaped by three powerful and interlocking megatrends: Deglobalization, Decentralization, and Debt Growth/Fiscal Dominance. These forces not only reshape how we view global economics but also present unique opportunities for investors to align with the structural changes in our world. In our recent client meeting, we explored how these trends influence your investments and financial strategy.

Here’s what you need to know:

1. Deglobalization: Building Resilience in a Fragmented World

For decades, globalization created a tightly interconnected global economy. Today, that pendulum is swinging back as nations prioritize self-sufficiency and regional alliances over international interdependence. Trade tensions, supply chain disruptions, and geopolitical competition have accelerated this shift.

The U.S. Advantage: The United States is uniquely positioned to thrive in a deglobalized world:

• Energy independence ensures stable energy access.
• We believe the U.S. agricultural sector remains a global powerhouse.
• The U.S. dollar, as the world’s reserve currency, strengthens financial influence.

These factors create opportunities in industries tied to infrastructure, energy, and reshoring efforts. As nations onshore critical manufacturing, demand for industrial real estate, logistics centers, and energy production capabilities will rise​​.

2. Decentralization: Empowering Individuals and Reshaping Industries

Decentralization is about dispersing control from governments and corporations to individuals and smaller entities. The rise of Artificial Intelligence (AI), blockchain technology, and decentralized energy systems reflects this trend.

Key Developments:

• AI will likely drive productivity and innovation but requires robust digital infrastructure, such as data centers and advanced energy grids​​.
• Blockchain and Cryptocurrencies are transforming finance by enabling decentralized transactions. While volatile, these technologies hint at a future with less reliance on centralized intermediaries​​.
• Energy Decentralization will likely be a cornerstone of the new economy, with microgrids, renewable energy, and small-scale energy storage systems playing critical roles.

This shift creates opportunities for investments in digital infrastructure, clean energy technologies, and commodities supporting this transformation.

3. Debt Growth and Fiscal Dominance: Navigating a High-Leverage Economy

Governments worldwide are turning to fiscal policy to drive growth amid slowing population and productivity gains. Persistent deficits and elevated debt levels underscore the concept of fiscal dominance, where fiscal policies outpace monetary tools in shaping economies.

Implications:

• Elevated debt-to-GDP ratios will drive inflation, increasing the value of tangible and finite resources.
• Real assets such as industrial real estate, commodities, and digital assets like Bitcoin become attractive stores of value, particularly as currency debasement erodes purchasing power​.

Understanding these dynamics allows investors to strategically align portfolios with long-term trends rather than reacting to short-term fluctuations.

How These Trends Shape Your Portfolio

We believe these megatrends signal a pivotal moment for real assets. As infrastructure investments and digital transformation accelerate, opportunities abound in:

• Industrial Infrastructure: Factories, logistics hubs, and data centers.
• Energy Assets: Renewable energy projects, traditional energy sources, and decentralized energy systems.
• Digital Scarcity Assets: Bitcoin and other cryptocurrencies, which combine the characteristics of real assets with the flexibility of digital tools.

Investing alongside these trends positions portfolios to benefit from the structural shifts reshaping our world.

Looking AheaD

In the short term, market volatility may arise as policymakers balance inflation control with economic growth. However, we believe that over the medium and long term, these megatrends will create a wave of opportunity. The alignment of energy independence, reshoring, and digital transformation is positioning the U.S. economy for robust growth.

As always, Sound Financial Strategies Group is here to help you navigate these changes with confidence. We are committed to aligning your investments with the trends shaping the global economy, so that your portfolios have the greatest chance of remaining resilient and forward-looking.

Thank you for trusting us with your financial future. If you have any questions or wish to discuss these insights further, please don’t hesitate to reach out.