World-renowned economist, adviser, and speaker, Dr. Pippa Malmgren, provided one of the most fascinating and insightful interviews I’ve heard in a long time. On MacroVoices, Dr Malmgren explained that if we enter World War 3, it will look very different than the previous two.
She described two recent developments that suggest this new kind of war is already underway.
Development 1: Bankrupt your enemy
Dr. Malmgren recapped a Norwegian intelligence report stating that as Russia loses more people in Ukraine, it may lower its threshold for nuclear escalation. This would occur because if Russia loses, they have nowhere to go but the nuclear threat.
Norwegian officials also said that tactical nuclear weapons are a particular threat to Norway, and there is a significant risk of sabotage to their oil and gas installations. That threat has broad implications because Norway has essentially become Russia’s substitute as the oil supplier to Western Europe.
These new developments are in addition to Russia pulling out of the New START nuclear arms reduction treaty, which I wrote about in the Feb. 25 edition of Over the Weekend.
Russian President Vladimir Putin now says that his country will boost its nuclear triad to a level that will force the West to spend enormous amounts of money on surveillance.
Notice that this is different than launching a nuclear weapon. This is about creating an environment where the West must keep all their spy planes constantly in the air to search for nuclear submarines and weapons. To remain on watch at all times is incredibly expensive, however.
A Reversal of Reagan’s Star Wars
Dr. Malmgren likened the situation to President Ronald Reagan announcing Star Wars. That move forced the Soviet Union to spend a ton of money that it didn’t have, eventually bankrupting the country. Dr. Malmgren suggested that we’re seeing the reverse of that now.
By becoming more aggressive and abandoning mutual inspections via suspending the SMART treaty, Russia is effectively forcing the West to be on continuous high alert—and spend exorbitant money to do so. Dr. Malmgren described the situation this way in her recent Substack article:
Russia has now abandoned the Strategic Arms Limitation Talks and the START Pact, which means the West will have to ramp up spending on detecting nuclear weapons since there are no more mutual inspection protocols in place. This is necessary now that Russian ships and subs in Northern Europe and the Arctic region are equipped with armed nukes for the first time in thirty years.
Dr. Malmgren in “Rumblings: Abkhazia, Artsakh, S. Ossetia, Serbia, Nagorno-Karabakh, Transnistria, Moldova, Norway, Denmark, Poland and Romania, Part 1“
Therefore, Russia’s strategy is less about launching a weapon as it is about creating a very expensive environment for the West to maintain and to instill a high level of fear.
Russia’s goal, according to Dr. Malmgren, is to force the West to give up because of monetary reasons. That would then allow Russia to keep pieces of Ukraine that it wouldn’t otherwise be able to militarily maintain.
Development 2: Weaponize everything
Many people have questioned what would happen if Russia and China teamed up against the United States, resulting in World War 3. Dr. Malmgren said that the U.S. is not set up to fight a war on two different fronts. She also argued that a third World War would look very different than a conventional war like what we’re seeing in Ukraine.
Dr. Malmgren explained that war now occurs in space with satellites being blown up and creating debris fields, with the cutting of internet cables, and via spy games. She said that this type of war is already underway. It’s just happening in areas that most people have never heard of, places where saboteurs are creating public problems.
We don’t hear about this, however, because our news streams and algorithms are not set up to track conflict in these places. Dr. Malmgren used the country of Moldova as an example. The government just collapsed there, and as that happened, the leader of that government claimed it was a Russian coup.
She also explained that in this new kind of war, anything goes. It’s a type of war where countries can weaponize anything—food prices, social events, or as I wrote in my special report on energy, oil supply.
Dr. Malmgren cited the Chinese balloon incidents as an example. In one way, they were a TikTok event. But they also created an atmosphere where the public began to question its own government. They were therefore a form of warfare.
She concluded by emphasizing that this new type of “invisible war” is especially dangerous because it goes unnoticed until it is much further advanced.
What does a possible World War 3 have to do with The Antagonist?
The threat of World War 3 involves far more serious and important implications than the stock market.
The Antagonist is a financial research publication, however, and one of my jobs is to analyze how macro events—including geopolitical conflict—impact markets and therefore your portfolio.
I’m not a politician, military strategist, or diplomat, so I won’t comment on any of those areas. I’ll just stick to finance.
The first step of my stock picking process is to look at the macro level. At the risk of repeating myself ad nauseam, I’ve already written about the weaponization of oil and the impact of Russia’s actions on oil prices and the stock market.
Dr. Malmgren’s insights have now led me to start researching companies that will help the U.S. and other countries fight this “invisible war.”
You’re probably familiar with large defense contractors such as Northrop Grumman (NOC), Lockheed Martin (LMT), and General Dynamics (GD). There are plenty of other companies, however, that are vital to the Department of Defense even though they don’t manufacture anything that goes “Boom!”. Over the next few weeks, I’ll analyze companies that fit this category.
Once I identify a few intriguing prospects, I’ll further screen for ones that fit our Blend Portfolio’s growth-at-a-reasonable price (GARP) strategy. I’ll then tell you about those stocks so that you can determine if they are a good fit for your portfolio.
Subscribe to The Antagonist now so you don’t miss those updates!
Until next time,
Jason Milton
For Dr. Malmgren’s full interview, visit this episode of MacroVoices. I also highly recommend subscribing to her Substack, Dr. Pippa’s Pen & Podcast. She provides insights on the current and future state of the world that you won’t find anywhere else.