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<ul class="summary-list"><li>The climate crisis is throwing a wrench into already messy supply chains.</li><li>Supply chains of late have been disrupted by a pandemic, geopolitical tensions, and rising costs.</li></ul>The world's supply chains are in even bigger trouble than you think.While <a href="https://www.businessinsider.com/china-trade-war-covid-companies-moving-supply-chains-2022-12" target="_blank" rel="noopener noreferrer">the COVID-19 pandemic</a> and <a href="https://www.scmp.com/economy/china-economy/article/3146489/us-china-trade-war-timeline-key-dates-and-events-july-2018" target="_blank" rel="noopener noreferrer">China's tensions with Washington</a> have been disrupting supply in the past few years, yet another thing is playing out that might even keep you from getting your holiday presents on time months from now: the climate crisis.The situation is serious this summer because of a <a href="https://www.reuters.com/business/environment/historic-drought-hot-seas-slow-panama-canal-shipping-2023-08-21/" target="_blank" rel="noopener noreferrer">historic drought</a> affecting rainfall that feeds into the Panama Canal. This has lowered the canal's water levels and limited the number and the weight of ships that can float on it.It's causing a buildup in the number of ships waiting to cross the waterway.Droughts aren't a new phenomenon at the Panama Canal — climate change has been associated with <a href="https://www.wsj.com/articles/panama-canal-tackles-climate-change-puzzle-too-little-rainwater-or-too-much-11624872601" target="_blank" rel="noopener">unpredictable weather</a> for years. But the <a href="https://www.businessinsider.com/panama-canal-drought-travel-ships-income-falling-el-nino-2023-8">dry weather</a> is worse this summer, in part because of the onset of the <a href="https://www.reuters.com/business/environment/historic-drought-hot-seas-slow-panama-canal-shipping-2023-08-21/" target="_blank" rel="noopener">El Niño weather phenomenon,</a> which takes place every few years.This has added a new level of unpredictability that one supply-chain expert says might require the industry to "fundamentally transform."Nari Viswanathan, the senior director of the supply chain at the budget-management company Coupa, told Insider that the global supply chain had been designed to respond relatively quickly to market conditions like shifting demand.The climate crisis presents a new kind of unpredictability, one that Viswanathan said could require predictive weather analysis using algorithms and data.<h2>One shipper paid over $2 million to cross the Panama Canal — and this could hit consumer prices</h2>Project44, a supply-chain platform, told Insider earlier this month that the drought conditions had caused shipping capacity through the Panama Canal to drop by over 20% in the prior two weeks.The decline is concerning, as it is peak shipping season when retailers ramp up shipping in anticipation of increased demand ahead of holiday shopping. About <a href="https://www.globaltrademag.com/potential-shortages-loom-as-panama-canal-restrictions-impact-holiday-stocks/" target="_blank" rel="noopener">40% of US container traffic</a> passes through the waterway."If this downward trend continues, it could prompt shippers to reevaluate their choice of ports for bringing in inventory to ensure holiday season shelves remain adequately stocked," Project44 added.The situation has the shipping giant Maersk worried."The low water levels at the Panama Canal are a clear example of the effects of climate change in rainfall and weather patterns across the globe, which causes a ripple effect through the supply chain," a company representative said.The congestion of massive container ships and energy tankers in the Panama Canal has gotten so bad that <a href="https://www.businessinsider.com/panama-canal-traffic-auction-shippers-paying-millions-for-crossing-2023-9">one shipper recently paid over $2 million just to beat the queue</a> to cross the waterway.Such surcharges add to transportation costs and could feed into high prices for the end consumer."Panama Canal surcharges and vessel restrictions will likely mean higher <a href="https://www.cnbc.com/2023/06/24/us-trade-dominates-panama-canal-traffic-a-drought-is-threatening-it.html">clothing and shoe prices for US consumers</a> this holiday season," Stephen Lamar, the president and CEO of the American Apparel &amp; Footwear Association, told CNBC in June.The weather forecast isn't encouraging for ships crossing the Panama Canal in the short and long term, Jon Davis, the chief meteorologist at Everstream Analytics, told Insider.That's because the El Niño weather event is likely to strengthen, which would be associated with below-normal rainfall from late this year through early 2024, he said.<h2>Supply chains were already in chaos from COVID-19, geopolitics, and rising costs in China</h2>To be sure, the vessel congestion at the Panama Canal is troubling because it adds to the existing stress on the world's supply chains.The COVID-19 pandemic and China's strict on-off lockdowns, in particular, underscored the risks of depending so heavily on the East Asian country, which has been the world's factory floor for the past four decades.One example was the tech giant <a href="https://www.businessinsider.com/apple-accelerates-production-china-protests-2022-12">Apple, which was hit by supply-chain disruptions</a> from China's COVID-19 containment policies.The pandemic accelerated a global supply-chain diversification away from China that kicked off in about 2018 after President Donald Trump launched a <a href="https://www.scmp.com/economy/china-economy/article/3146489/us-china-trade-war-timeline-key-dates-and-events-july-2018" target="_blank" rel="nofollow noopener">trade war against China</a>.<a href="https://www.cfr.org/timeline/us-china-relations" target="_blank" rel="noopener">Washington-Beijing tensions</a> are still high under the Biden administration, particularly in the area of <a href="https://www.reuters.com/technology/us-investors-flag-retaliation-risks-after-bidens-china-tech-curbs-2023-08-11/" target="_blank" rel="noopener">high-tech chips</a>, prompting investors across the board to reconsider their business risks.Even before geopolitics started playing an outsize role in the shifting of supply chains<a href="https://www.businessinsider.com/gdp-trump-tariff-trade-war-us-china-2018-10">,</a> it was costs that were already pushing some companies out of China.<a href="https://iems.ust.hk/publications/thought-leadership-briefs/can-chinese-manufacturing-firms-cope-with-rising-labor-costs-albert-park" target="_blank" rel="noopener">Wages and operating costs</a> have been rising over four decades amid China's turbocharged growth, so alternative aspiring low-cost factory hubs — such as <a href="https://www.businessinsider.com/china-trade-war-covid-companies-moving-supply-chains-2022-12">India and Vietnam</a> — have been pumping in billions of dollars to develop their own manufacturing ecosystems.

Add the climate crisis to the long list of things messing up supply chains this summer

China's Covid-related lockdowns in 2022 crippled the flow of important pharmaceutical products around the world. The events are prompting a reconsideration of the structure of international supply networks, along with geopolitical competitiveness and macroeconomic pressures. <keyword id="3658" type="General" weightage="100" keywordseo="india" source="Orion">India</keyword> may become a destination in the US's new "friend-shoring" policy for the pharmaceutical industry, reported <keyword id="7667981" type="General" weightage="80" keywordseo="hinrich-foundation" source="Orion">Hinrich Foundation</keyword>. The term friend-shoring is used for the act of moving supply networks to nations with little chance of political unrest disrupting them. Notably, the Hinrich Foundation is an organisation that works to advance mutually beneficial and sustainable global trade through research and education programs that build understanding and leadership in global trade. National leaders no longer seem to believe in the logic of free trade as the world economy recovers from the Covid-19 pandemic, especially when it causes the concentration of essential supply chains of crucial businesses in certain geopolitically hazardous geographies. Supporting the growth of supply chains in friendly countries is known as "friend-shoring," and among US authorities it has emerged as a strategic shift away from the costs and alleged drawbacks of both uncontrolled foreign investment and the "onshoring" industries, read a paper jointly authored by <keyword id="16717305" type="General" weightage="80" keywordseo="akhil-ramesh" source="Orion">Akhil Ramesh</keyword> and <keyword id="14532427" type="General" weightage="80" keywordseo="rob-york" source="Orion">Rob York</keyword> for Hinrich Foundation. Given the recent economic liberalisation measures in India, the expanding alliance between New Delhi and Washington, and India's position as the "pharmacy of the world," the pharmaceuticals sector, whose significance was increased by the pandemic, is a good possibility. However, the indigenous industry in India confronts difficulties because of inadequate regulatory monitoring, reliance on China for component supplies, and problems emerging from environmental damage related to their manufacturing. China has provided considerable economic support to the pharmaceutical industry over the past two decades, while the US has brought a knife to a gunfight by not applying industrial policy planning to its pharmaceutical and API businesses to a comparable amount. Since then, the US has intensified its shift towards such industrial policies. America continues to have a strategic edge as the biggest buyer of medications in the world. To change the supply chain, the US might use its market for pharmaceutical consumption as a weapon. The US might increase its edge in supply chain diversification if it can convince Japan and France to join the friend-shoring movement, the paper in Hinrich Foundation further read. The <keyword id="14429529" type="General" weightage="50" keywordseo="mineral-security-partnership" source="Orion">Mineral Security Partnership</keyword> (<keyword id="133827" type="General" weightage="50" keywordseo="msp" source="Orion">MSP</keyword>) and the CHIP4Alliance for semiconductors are two comparable partnerships that the US has previously started. In order to achieve this, the US could first use the "panopticon effect"41 to collect crucial strategic information from the Indian government and pharmaceutical sector. Second, it might promote the security establishment's participation. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/india/news/for-many-years-after-independence-there-was-no-long-term-vision-in-health-sector-pm/articleshow/98444722.cms">For many years after Independence, there was no long term vision in health sector: PM</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/news/will-reliance-capital-lenders-get-their-dues-fast-or-will-there-be-legal-delays/articleshow/98445213.cms">Will Reliance Capital lenders get their dues fast or will there be legal delays</a>

India emerges as US's new destination for "friend-shoring" pharmaceutical supply chains

<ul class="summary-list"><li><keyword id="11892748" type="UNKNOWN" weightage="60" keywordseo="china" source="Orion">China</keyword>'s commerce ministry told chambers of commerce that China would help ease <keyword id="11894138" type="UNKNOWN" weightage="60" keywordseo="supply-chain" source="Orion">supply chain</keyword> snarls, <a href="https://www.bloomberg.com/news/articles/2022-04-19/china-vows-to-ease-supply-chain-woes-in-foreign-chamber-meeting?sref=lAVQtUwz">Bloomberg reported.</a></li><li>Representatives of the chambers met the commerce minister on Monday to discuss the impacts of the <keyword id="91743" type="UNKNOWN" weightage="60" keywordseo="lockdown" source="Orion">lockdown</keyword>.</li></ul>China's commerce ministry told representatives of foreign business groups on Monday that Beijing will help to resolve supply chain issues stemming from the country's strict lockdowns, <a href="https://www.bloomberg.com/news/articles/2022-04-19/china-vows-to-ease-supply-chain-woes-in-foreign-chamber-meeting?sref=lAVQtUwz">Bloomberg reported. </a>Members of foreign chambers of commerce — including from the European, Japanese, South Korean, UK, and US chambers — met with commerce minister, Wang Wentao, to review the impact of China's strict lockdown measures, the outlet reported on Tuesday, citing attendees of the meeting. China has adopted a zero-Covid approach throughout the pandemic, introducing strict lockdown measures to stamp out the virus in areas when cases have emerged. Some cities have recently been battling the highest number of cases seen since the start of the pandemic.Outbreaks of the <keyword id="12616996" type="UNKNOWN" weightage="60" keywordseo="omicron" source="Orion">Omicron</keyword> variant triggered a fresh set of <a href="https://www.businessinsider.com/shanghai-covid-lockdown-bulk-buy-censorship-china-2022-4">restrictions</a> in the commercial hub of <keyword id="12087066" type="UNKNOWN" weightage="60" keywordseo="shanghai" source="Orion">Shanghai</keyword>, resulting in the closure of <a href="https://www.businessinsider.com/teslas-crucial-shanghai-gigafactory-shut-due-covid-restrictions-2022-3">some factories</a> and delayed <keyword id="11894932" type="UNKNOWN" weightage="60" keywordseo="transport" source="Orion">transport</keyword> of goods to <keyword id="11921984" type="UNKNOWN" weightage="60" keywordseo="ports" source="Orion">ports</keyword>, threatening further disruption to the global supply chain.During Monday's meeting, Chinese officials said that the government would work with foreign businesses to help iron out supply chain problems, the newswire reported, citing the European Union Chamber of Commerce's president, Joerg Wuttke, and they confirmed that China would maintain its zero-Covid approach. In a statement sent to Insider on Wednesday, Jens Hildebrandt, executive director of the German Chamber of Commerce in North China, said: "According to our assessment, it will take months to fix the disruptions in the supply chains. Companies are now looking more at (risk) diversification in China, so that they have different warehouses or production sites and can act accordingly. This would increase costs for companies and in the end for consumers.""The current policy with lockdowns leading to production stops, logistic and supply chain disruptions and restrictions on the movement of people do not only pose a short-term concern but will leave their marks on the long run," Hildebrandt added.The Ministry of Commerce in China could not be reached for comment. Insider has reached out to the European Chamber of Commerce for comment.A number of manufacturers, including Tesla, are preparing to reopen their factories in Shanghai, <a href="https://www.reuters.com/world/asia-pacific/tesla-others-prepare-shanghai-factory-restarts-city-aims-ease-lockdown-2022-04-18/">Reuters reported</a> on Monday, citing a "white list" of over 600 firms given priority to resume operations and restart the local economy. Sources told Reuters that Tesla will still operate a "closed loop" policy in Shanghai.Tesla did not respond to Insider's request for comment.

China tells foreign business groups it will help fix supply chain problems as strict lockdown measures hit factories and transport, a report says

<ul class="summary-list"><li>Dell is planning to halt the use of Chinese semiconductor chips by 2024, per Nikkei.</li><li>The move also applies to chips made in the China-based factories of non-Chinese companies.</li></ul>American tech giant Dell is planning to halt the use of Chinese semiconductor chips as soon as next year, and will slash the amount of other made-in-China parts in its products, <a href="https://asia.nikkei.com/Spotlight/Supply-Chain/Dell-looks-to-phase-out-made-in-China-chips-by-2024" target="_blank" rel="noopener">Nikkei</a> reported Thursday, citing three sources with direct knowledge of the matter.The move underscores a <a href="https://www.businessinsider.com/china-trade-war-covid-companies-moving-supply-chains-2022-12#china-has-been-the-factory-of-the-world-for-the-past-four-decades-the-pandemic-triggered-a-reckoning-of-this-status-1">shifting of supply chains out of China</a> as companies seek to end their reliance on the manufacturing giant as geopolitical relations between <a href="https://www.businessinsider.com/us-china-economy-tech-military-breaking-up-how-bad-2020-10">Washington and Beijing</a> sour, and as factory operations in China continue to be hit by the country's <a href="https://www.ft.com/content/598c81b7-bbc7-40f2-ba04-eed0dddfb989" target="_blank" rel="noopener">COVID-19 policies</a>.It's not just made-in-China chips made by Chinese companies. Dell — the world's third-largest computer maker after Lenovo and HP — has also told suppliers that it plans to cut its use of made-in-China chips that are produced by non-Chinese firms, according to Nikkei.Other than chips, Dell has also asked suppliers of other electronic parts — such as modules and circuit boards — to ramp up production capacity in countries outside China, per Nikkei."We continuously explore supply chain diversification across the globe that makes sense for our customers and our business," Dell told the Nikkei. Dell did not immediately respond to Insider's request for comment sent outside regular business hours.Dell's supply chain strategy reflects growing concerns among companies as the the <a href="https://txtify.it/https://www.reuters.com/technology/us-aims-hobble-chinas-chip-industry-with-sweeping-new-export-rules-2022-10-07/" rel=" nofollow">Biden administration</a> cracks down on China's strategic chip sector — which Beijing is counting on, to <a href="https://www.businessinsider.com/china-xi-jiinping-future-tech-global-economy-semiconductors-military-failing-2022-9">dominate the world's tech industry</a>.However, <a href="https://markets.businessinsider.com/news/stocks/stock-market-analysis-chinese-semiconductor-chip-stocks-joe-biden-exports-2022-10">in October</a> the US imposed export controls on shipping equipment to Chinese-owned factories making advanced logic chips. In December, the <a href="https://www.bis.doc.gov/index.php/documents/about-bis/newsroom/press-releases/3195-bis-press-release-clean-2022-12-14/file" target="_blank" rel="noopener">US Commerce Department</a> added Chinese memory chipmaker YMTC and 21 companies in China's artificial intelligence chip sector to a trade blacklist.To navigate Washington-China tensions, companies from Apple to Nike have been making contingency plans to shift production out of China to <a href="https://www.businessinsider.com/china-trade-war-covid-companies-moving-supply-chains-2022-12#malaysia-has-for-years-been-eyeing-opportunities-emerging-from-companies-shifting-away-from-china-6">other low-cost locations in Asia.</a> This is especially as Beijing's pandemic policies drove home the uncertainty of depending on just one country for their supply chains.For much of 2020 to 2022, China's strict pandemic containment measures disrupted factory operations and logistics. Even tech giant Apple was burned late last year when its <a href="https://www.businessinsider.com/apple-iphone-pro-china-covid-19-protests-shortfall-2022-11" rel="">iPhone output</a> was hit by the country's zero-COVID drive.And then, <a href="https://www.insider.com/china-zero-covid-changes-tweaks-policy-2022-12">Beijing abruptly</a> rolled back its zero-COVID policy, in turn triggering a wave of infections that is <a href="https://www.ft.com/content/598c81b7-bbc7-40f2-ba04-eed0dddfb989" target="_blank" rel="noopener">wrecking havoc</a> on economic activities in China right now.The extent of the outbreak in China is not clear because Beijing has stopped publishing COVID case numbers and deaths from December 25. However, <a href="https://www.france24.com/en/live-news/20221223-hospitals-overflow-in-china-s-covid-wave" target="_blank" rel="noopener">hospitals</a> and <a href="https://www.bloomberg.com/news/articles/2023-01-03/bodies-pile-up-in-china-as-covid-surge-overwhelms-crematoriums" target="_blank" rel="noopener">funeral homes</a> are reportedly overwhelmed.Beijing only acknowledged six new coronavirus deaths since December 6, when the country U-turned on its zero-COVID policies. But Airfinity, a UK health data company, estimated on December 29 that around <a href="https://www.reuters.com/world/china/china-covid-deaths-accelerate-9000-day-uk-research-firm-airfinity-2022-12-29/" target="_blank" rel="noopener">9,000 are dying</a> from COVID each day in China.

PC giant Dell will reportedly stop using Chinese chips as soon as next year, and it shows how Washington-Beijing tensions are forcing companies to diversify their supply chains

<ul class="summary-list"><li>The <keyword id="1754604" type="PERSON" weightage="60" keywordseo="coronavirus">coronavirus</keyword> pandemic has been an important "learning experience" for manufacturers who are struggling with unprecedented demand and supply chain disruptions, an expert told Business Insider.</li><li>Many companies are now learning the hard way about "supply chain diversification," the concept of using a variety of different suppliers to reduce the risk of having an entire supply chain cut off all at once.</li><li>It's a predicament many <a href="https://www.businessinsider.com/maine-factory-pivots-to-ppe-but-marketplace-is-a-mess-2020-4">American factories have faced firsthand</a> as they attempted to pivot to producing medical supplies but immediately ran into challenges sourcing raw materials.</li><li>"We're only going to come out better on the other side of this, once this is all said and done," said Seckin Ozkul, a supply chain management expert at the University of South Florida.</li><li><a href="https://www.businessinsider.com/?hprecirc-bullet">Visit Business Insider's homepage for more stories</a>.</li></ul>Americans adjusting to the coronavirus pandemic and the pivot to stay-home life have struggled for months with major shortages of key products, including everything from vital <a href="https://www.businessinsider.com/why-factories-cant-keep-up-demand-for-face-masks-coronavirus-2020-4">medical equipment</a> and <a href="https://www.businessinsider.com/grocery-stores-kroger-giant-eagle-limit-meat-purchases-some-locations-2020-5">grocery items</a>, to <a href="https://www.businessinsider.com/when-lysol-clorox-wipes-back-in-stock-available-by-summer-2020-4">cleaning supplies</a> and <a href="https://www.businessinsider.com/nintendo-switch-production-increasing-animal-crossing-2020-4">Nintendo Switches</a>.Most of those shortages stem from an unprecedented surge in demand, which caught companies off guard. In many cases, manufacturers also had trouble sourcing raw materials from countries like China, which closed factories for months to stem the coronavirus outbreak.One expert said the disruption has been "a learning experience," and that many US manufacturers are learning the hard way about the value of supply chain diversification — the concept of broadening a company's range of suppliers to reduce the impact of a disruption.Because nearly every industry in the country has been touched in some way by the coronavirus, the crisis doubles as a perfect opportunity for manufacturers to think creatively about how and where to create their products and source their materials, Seckin Ozkul, a supply chain management expert at the University of South Florida, told Business Insider.That will only strengthen the <keyword id="113056" type="PERSON" weightage="60" keywordseo="US-manufacturing">US manufacturing</keyword> sector in the long run, he said, as companies might open up new factories in the US or in neighboring countries, or push themselves to rely less on China and work with different countries.<div type="image" title="N95 masks are prepared to be shipped at the Afya Warehouse, a non-profit medical supply recovery organization, during the outbreak of coronavirus disease (COVID-19) in Yonkers, New York, U.S. March 25, 2020. REUTERS/Lila Engelbrecht" height="526" width="800" msid="75585996" hostid="261"></div>"What I can tell you is I am sure every company right now is looking at their supply chain and thinking, 'How can I diversify it further?'" Ozkul said. "If you were only doing business with China, and China closed for three months, you were in deep, deep, deep problems."That's the predicament many medical supply manufacturers have found themselves in, amid sky-high demand for items like <keyword id="50982" type="PERSON" weightage="60" keywordseo="N95-masks">N95 masks</keyword> and other personal protective equipment that hospitals have had to ration for months.Though a number of American companies have sought to help by <a href="https://www.businessinsider.com/how-us-factories-can-pivot-to-make-ppe-2020-4">pivoting to producing PPE</a> like face shields, <a href="https://www.businessinsider.com/maine-factory-pivots-to-ppe-but-marketplace-is-a-mess-2020-4">some factory owners</a> told Business Insider they were shocked that the US had no coherent, centralized plan for producing its own face masks, medical devices, and pharmaceuticals after decades of relying on China to create those products.That will likely change going forward, Ozkul said, as companies that have traditionally relied on Chinese factories will likely want to prevent a similar crisis."Folks are now going to start thinking, 'Can I open up a smaller facility? Or a facility in the United States? Can I open up a facility closer to the United States? Maybe Mexico? Canada?" he said.<h2>Companies were prepared for local or national disruptions — not global ones</h2><div type="image" title="Target toilet paper" height="2250" width="3000" msid="75585999" hostid="261"></div>Ozkul said experts frequently model potential supply chain disruptions in an effort to better understand how to prevent and solve them, but the problem is that those models typically account for local or national disasters like hurricanes — not pandemics that cripple the entire globe."Now, we want to look at this — it happened, and the next time it happens, we can be better prepared and we can actually take the necessary precautions so we don't see the impacts as much as we saw it this time," he said. "We're only going to come out better on the other side of this, once this is all said and done."That lesson goes for consumers as well as manufacturers and suppliers, Ozkul said, adding that it's important Americans recognize how their buying habits can affect others.For instance, in early March, Americans flocked to stores to buy up massive quantities of <keyword id="15727" type="PERSON" weightage="60" keywordseo="Toilet-paper">toilet paper</keyword> and other household items, leaving store shelves empty for months while companies struggled to ramp up production. That sort of behavior needs to change, and people need get used to buying no more than the amount they normally would buy, Ozkul said."There was no toilet paper, there was no Lysol, there was no Clorox. But then we also learn, 'Oh yeah, maybe I shouldn't buy 10 gallons of this thing, because it looks like there are supplies still coming in,'" he said. "Use as you were before, and therefore buy as you were before — otherwise you are buying the supply of your neighbor."Read the original article on <a href="https://www.businessinsider.com/coronavirus-supply-chain-diversification-disruption-could-be-good-2020-5">Business Insider</a>

The disrupted supply chains that left store shelves devoid of toilet paper and cleaning supplies could end up being a good lesson for American companies

<div type="image" title="empty pub" height="1414" width="1885" msid="78301396" hostid="261"></div><ul class="summary-list"><li>Entertainment, travel, and hospitality industries, among others, took a hit as businesses and cities shut down across the nation.</li><li>Finance experts and business owners shared tips with Business Insider on diversifying sources of <keyword id="45663" type="ORGANIZATION" weightage="60" keywordseo="Revenue">revenue</keyword> to make it through a tough economic downturn.</li><li>Start by evaluating how your customers are reacting to the crisis, they said. From there, determine which costs are worth keeping or cutting as needs change. </li><li>Stay close to what you're familiar with. If you try to add too many new revenue streams, you'll end up "not doing any one thing particularly well."</li><li>Leverage technology and a diverse workforce to stay agile, adaptable, and scalable even when needs and preferences evolve. </li></ul>In early March, <a href="https://www.cadmusicmgmt.com/">CAD Management</a>, a music and entertainment consulting agency based in New York, had more than 75 concerts booked across the country. Then suddenly cities and states began shutting down and issuing stay-at-home orders because of COVID-19. Concert ticket sales fell, and venue owners and promoters started rescheduling shows for later in the year."My team and I felt in our guts that this wasn't going to be a month-long issue, that this could be a long-term problem that could completely shut down the global touring business for a significant amount of time," CAD Management CEO Clayton Durant told Business Insider.So the company came up with two new ways to generate revenue: It launched an executive representation practice to represent entertainment company CEOs and manage their media relations and social media and it created a digital touring service as an extension of their physical touring business."We became much more hyper-focused on being digital experts as it pertains to live streaming and digital marketing," Durant said. The new ventures, he said, have helped CAD recover 75% of the revenue lost from canceled shows, and Durant expects the new products will help the company break even this year.Businesses in the entertainment, travel, and hospitality sectors have been <a href="https://www.businessinsider.com/jobs-industries-careers-hit-hardest-by-coronavirus-unemployment-data-2020-5">hardest hit by the pandemic</a> and economic crisis. But, as Durant's story illustrates, there's more than one way for a company to generate revenue, and now's the time for businesses to explore new revenue streams if they hope to endure.<h2>Start by evaluating the market and cutting costs</h2>Stepping back and evaluating the market and how customer needs are shifting is always a good idea for businesses, but it's especially useful during times of economic distress, Michael Sury, a finance lecturer at the <a href="https://www.utexas.edu">University of Texas at Austin</a> McCombs School of Business, said."This year's pandemic has been a catalyst for a number of changes in consumer behavior, including in how we shop, how we work, how we entertain ourselves, and even how we communicate," he said. "It has led to a massive acceleration and adoption of digitization and online activity. As trends shift, <keyword id="390673" type="PERSON" weightage="60" keywordseo="small-businesses">small businesses</keyword> must re-evaluate what they're doing and confirm that they are still offering value for their customers that they cannot get elsewhere."A <a href="https://www.mckinsey.com/featured-insights/americas/which-small-businesses-are-most-vulnerable-to-covid-19-and-when">McKinsey and Company report</a> from June estimates that disruption during the first four months of COVID-19 could force 25% to 36% of small businesses to close permanently. Finding new relevant revenue streams is essential for survival, but doesn't guarantee it, Sury said.Cutting costs is equally important, said Pratim Datta, professor of information systems at the <a href="https://www.kent.edu">Kent State University</a> College of Business. "Whatever revenue stream they choose to monetize during these changing times has to be where their idea is to provide the best service, yet be able to stringently curtail internal operating costs," he said.One of the first expenses CAD Management cut was its office space, Durant said. The savings went toward overhauling the company's website and building a flexible, remote workforce.<h2>Stay true to your core business as much as possible to remain competitive </h2>Businesses shouldn't stray too far from their core competencies, Sury said. The focus should always be on what they do well, how they add value to customers' lives, and how they differ from their competitors."History is littered with companies that over-diversified and ended up not doing any one thing particularly well," Sury said. "The best way to develop new business is to look for areas that are within your core competencies or adjacent to them." A couple of approaches for adding revenue streams that align with a current business include vertical integration or expanding into areas already in the company's supply chain, such as insourcing product delivery or administrative tasks, Sury said. Horizontal integration expands the scope of the business, like selling related products. He used the example of a toothpaste maker starting to sell toothbrushes. This is the route travel brand <a href="https://iflyluggage.com">iFLY</a> took when the pandemic led to travel bans and canceled trips. Luggage and travel accessories made up about 90% of the company's business, but that core business dropped by more than 80% from March to May, said David Rapps, CEO of iFLY and president of its parent company Calego.iFLY decided to build on an idea they first developed in 2017: "smart kits" for travelers, a take on a travel kit that included antiseptic wipes, a disposable face mask, headrest cover, antibacterial hand gel, and other items. Rapps said the kits launched in one retailer in 2019 but "initial sales were a letdown."Realizing that COVID-19 would put health at the top of consumers' minds, iFLY relaunched <a href="https://www.prnewswire.com/news-releases/ifly-smart-announces-expansion-of-safety-kits-lineup-301080552.html#:~:text=About%20Calego%20International%20Inc.&amp;text=Amidst%20record%20sales%20of%20iFLY,to%20the%20world's%20largest%20retailers.ers.">their health and wellness kits</a>, which are FDA and EPA compliant, and face mask packs under the iFLYSmart brand. The company also developed B2B products like face masks, gloves, and a <a href="https://www.prnewswire.com/news-releases/ifly-smart-helps-organizations-businesses-and-health-care-facilities-get-back-to-work-safely-301111719.html">face mask dispenser</a>, which is patent pending."All of this was a big departure from our core business," Rapps said. By April, he said, iFLY had commitments from major retailers like Walmart, Walgreens, 7-Eleven, and others to sell smart kits, and added organizations, including the New York Mets, Dollar General, and major healthcare and food and beverage companies, as B2B customers. Rapps said iFLY finished its financial year, which ended May 31, with higher sales year over year.<h2>Invest in digital transformation and a diverse team</h2>Technology can help companies shift from a traditional business model to one that's quickly adaptable, scalable, and able to meet customers' evolving needs and generate revenue, Datta said. "The monetization pivot is being driven by digital transformation," he added.Digital touring was something CAD Management had its eye on for a while, but Durant said traditional shows were more lucrative. With<a href="https://www.businessinsider.com/major-events-cancelled-or-postponed-due-to-the-coronavirus-2020"> in-person shows likely canceled for the next year</a> or more, he said the company quickly learned about live-streaming production qualities and how to monetize digital tours."Our work in digital touring is allowing us to be more of a digital <keyword id="6363690" type="UNKNOWN" weightage="100" keywordseo="Strategy">strategy</keyword> agency than I had ever anticipated," Durant said.Along with taking digital steps, investing in a diverse workforce is the most valuable move companies can make, he said. Those who put people first will thrive post-pandemic and have the advantage of tapping into different perspectives, which could lead to the next winning idea."If you keep your business flexible, allow your employees to be heard, and keep an ear to the market, you will have the best chance at finding new revenue streams, even amidst a pandemic," Durant said.

How to identify new revenue streams and successful ventures for your business

<ul class="summary-list"><li>The war in <keyword id="11985141" type="UNKNOWN" weightage="60" keywordseo="ukraine" source="Orion">Ukraine</keyword> has had a wide-ranging impact on food and <keyword id="11917806" type="UNKNOWN" weightage="100" keywordseo="energy" source="Orion">energy</keyword> supplies.</li><li>Western countries are being forced to reckon with their reliance on Russian imports.</li></ul>In the months since <keyword id="11894337" type="UNKNOWN" weightage="60" keywordseo="russia" source="Orion">Russia</keyword> ordered troops into Ukraine, a flurry of <keyword id="12754126" type="UNKNOWN" weightage="60" keywordseo="sanctions" source="Orion">sanctions</keyword> issued by Western countries has failed to curb <a href="https://www.businessinsider.com/us-spy-chief-warns-putin-is-preparing-prolonged-war-ukraine-2022-5?r=US&amp;IR=T">the military assault</a>. With a drawn-out conflict appearing more likely, the political determination to punish President Vladimir Putin's nation suggests a prolonged period of sanctions lies ahead. Some experts say that the prospect of continued disruption to food and energy supplies as a result of the war will trigger a search for long-term alternatives to Russian imports.While the price shock of the conflict is felt globally, the disruption to energy supplies is most keenly felt in the <keyword id="11907394" type="UNKNOWN" weightage="60" keywordseo="european-union" source="Orion">European Union</keyword> (EU), which sources <a href="https://ec.europa.eu/eurostat/statistics-explained/index.php?title=EU_imports_of_energy_products_-_recent_developments#Overview">a quarter of its oil imports</a> and 40% of its <a href="https://ec.europa.eu/eurostat/cache/infographs/energy/bloc-2c.html">natural gas</a> from Russia (the US, by comparison, got about 3% of its crude oil from Russia in 2021). In its sixth round of sanctions against Moscow, the <a href="https://www.businessinsider.com/ukraine-serhiy-marchenko-calls-for-immediate-energy-embargo-russia-2022-5?r=US&amp;IR=T">EU announced plans</a> for a total ban on Russian oil and refined product imports by the end of the year."Let us be clear: it will not be easy," European Union President Ursula von der Leyen said in a speech outlining the proposals. "Some member states are strongly dependent on Russian oil. But we simply have to work on it." While shifting away from Russian oil may prove difficult, Europe's reliance on Russian natural gas provides policymakers and central bankers with a much bigger headache. In a recent round of sanctions, the <a href="https://www.businessinsider.com/european-union-coal-ban-russia-oil-natural-gas-ukraine-war-2022-4?r=US&amp;IR=T">EU continued to exclude</a> any embargo on natural gas, although it has aired proposals to cut demand for Russian imports by two-thirds by the end of 2022. The EU's plan to wean itself off Russian imports is going to have profoundly negative implications on energy prices, according to David Claridge, CEO of security intelligence firm <a href="https://www.dragonflyintelligence.com/">Dragonfly</a>.The EU has invested billions of euros in pipeline projects to service its demand, and seeking alternatives will be time-consuming and costly. If European countries follow through with diversification away from Russian fossil fuels – be it through finding an alternative supply or adopting new means of energy such as renewables – they won't return, he said.Claridge added: "If and when European nations can move away from Russian fossil fuels, they will look toward a more sustainable energy mix in order to meet simultaneous climate change objectives. So in that respect, they won't return to buy Russian oil and gas – that is long term."<a href="https://www.businessinsider.com/russian-natural-gas-energy-eu-africa-european-union-commission-import-2022-5?r=US&amp;IR=T">Europe is mulling</a> Africa as a potential future source of gas but lacks the infrastructure to pipe it between the continents. Meanwhile, liquefied natural gas imports from other nations are limited in their potential to help make up the current shortfall.Benjamin Maltby, a partner at Keystone Law and an expert in yacht and luxury asset law, said: "In practical terms, switching to a new source of gas supply is neither overly difficult nor complex, given that gas can be carried by liquefied natural gas ships. But the supply of such vessels is limited, as are alternative sources of gas."That leaves the bloc without a quick fix and, while it might sponsor a more rapid shift to cleaner, more sustainable energy sources, it suggests that countries will have to absorb a higher price environment for some time to come.According to <a href="https://www.economicsobservatory.com/how-is-the-war-in-ukraine-affecting-global-food-security">Economics Observatory</a>, Ukraine is the world's largest producer of sunflower oil, and combined with Russia, it is responsible for more than half of global exports of sunflower oil. Russia, however, is the world's largest exporter of wheat, accounting for 36% of exports. <a href="https://www.businessinsider.com/millions-tons-grain-blocked-ukraines-ports-2022-5?r=US&amp;IR=T">A UN official warned</a> in early May that millions of tons of grain are stuck in Ukraine as the ongoing conflict with Russia prevents safe transit from the country's ports.Martin Frick, the Germany director of the UN World Food Programme, told German news agency DPA: "Ukraine's food is urgently needed in the world," adding that Ukrainian shipments were critical to help tackle a "global food crisis."While the heavy investment required to source new supplies suggests that any development of new supply channels could ensure a long-term shift away from Russian natural gas, trade in oil, refined products, and agricultural goods could be more fluid. But any reversion to previous trade routes would almost certainly depend on peace in Ukraine and personnel in the Kremlin."The second and more short- to medium-term consideration is tied to the conclusion of the war and the fate of Putin," Claridge said."I cannot see it being politically acceptable, or strategically sensible, to move in the direction of resumption of the same imbalanced energy relationship," he added, but also noted that trade choices may not be determined solely by Western governments. "In any case, as we can see from current developments with Bulgaria and others, Russia may also refuse to supply, either because of currency issues arising from its financial isolation or to weaponize European dependence on its energy," he said.<div type="image" title="Red paint appears on the wall of the Russian embassy in London, UK." height="1397" width="1863" msid="91580553" hostid="261"></div>Maltby said one unintended consequence could be a curtailment of globalization and a possible consolidation of the Russo-Chinese axis of autocracy. Russia and China are now closer than before: they reject the postwar economic and political order that the US and allies created, they want to regain territories they believe were separated unjustly from their homelands, and they see democracy as a threat.He added: "All other things being equal, this will limit the scope for economies within and without such axis from specializing in what their constituent businesses excel in."According to Maltby, now more than ever, businesses must plan for the possibility and consequences of the imposition of sanctions, and the impact on supply chains.This means that both businesses and governments would need to plan ahead, adapting plans and policies according to sanctions. Maltby added: "It is imperative that manufacturers not only look for alternative sources of raw materials and components but manage their customer's expectations and ensure that their sales contracts allow for non or late delivery of goods."

The impact on food and energy supplies amid Russia's invasion of Ukraine will be long-lasting, experts say

<ul class="summary-list"><li>OpenAI is reportedly teaming up with Broadcom and TSMC to build custom AI chips, per Reuters.</li><li>It would see OpenAI joining tech giants like Meta, Amazon, and Google in designing their own chips.</li></ul>Building custom AI chips has long been the preserve of a select few tech companies — but <a target="_blank" class="" href="https://www.businessinsider.com/openai-investors-latest-funding-round-2024-10">OpenAI</a> might be about to join the party.The AI startup is in talks with semiconductor firms Broadcom and TSMC to design and produce its own AI chips, <a target="_blank" class="" href="https://www.reuters.com/technology/artificial-intelligence/openai-builds-first-chip-with-broadcom-tsmc-scales-back-foundry-ambition-2024-10-29/">sources told Reuters on Wednesday</a>.OpenAI has reportedly assembled a team headed by former Google engineers to lead the project and has secured manufacturing capacity with TSMC, the world's largest contract chipmaker, to build the first chips in 2026.However, Reuters reported that OpenAI has backed away from <a target="_blank" class="" href="https://www.businessinsider.com/openai-boss-sam-altman-wants-his-own-chip-supply-2024-1">ambitious plans to build its own network of chip factories, known as fabs.</a>OpenAI declined to comment when approached by BI.The move to design chips in-house would give OpenAI greater control of its supply chain and the chance to create chips better suited to its needs."By working in tandem with Broadcom, OpenAI can design chips that are specifically tailored to power its models, offering more speed and greater energy efficiency," Kate Leaman, chief market analyst at AvaTrade, told Business Insider."Nevertheless, this collaboration doesn't just concern efficiency — it's also about control. Custom chips could result in less dependency on external suppliers and potentially lower costs," she added.It's a play that echoes those made in the past by the likes of Amazon, Google, Microsoft, Meta, and Apple — underscoring how much of a force OpenAI has become since it launched in late 2015. <h2 id="7cd19eb6-f4e7-4f43-8e14-5ea98c77ebb2">Tech giants go their own way</h2>Chip design is a venture with high upfront costs, typically making it an option reserved for the biggest tech companies.Amazon has used its own home-grown central-processing unit chips in its data centers since 2018. <a target="_blank" class="" href="https://www.businessinsider.com/aws-graviton-chips-used-by-90-percent-top-1000-customers-2024-10?utm_source=Iterable&amp;utm_medium=email&amp;utm_campaign=campaign_jerb%20test%20oct%2030">Amazon Web Services executive Rahul Kulkarni</a> told Business Insider this month that over 90% of AWS' biggest customers are now using the company's Graviton chip.Earlier this year, Google <a target="_blank" class="" href="https://cloud.google.com/blog/products/compute/introducing-googles-new-arm-based-cpu">unveiled its new Axion proprietary chip</a>, which the company said is optimized for training and running AI models as efficiently as possible.Google has been building TPUs — chips designed especially for artificial intelligence — <a target="_blank" class="" href="https://cloud.google.com/blog/products/compute/introducing-googles-new-arm-based-cpu">since 2015</a> and renting them out via its cloud service. <a target="_blank" class="" href="https://www.businessinsider.com/apple-ai-google-data-centers-2024-6">Apple even used Google's chips</a> to train the models that power the iPhone's AI features.Microsoft <a target="_blank" class="" href="https://news.microsoft.com/source/features/ai/in-house-chips-silicon-to-service-to-meet-ai-demand/">unveiled its own custom Maia AI chip</a> in November 2023, and Meta also joined the party by releasing the latest version of its <a target="_blank" class="" href="https://about.fb.com/news/2024/04/introducing-our-next-generation-infrastructure-for-ai/">Meta Training and Inference Accelerator chip in April</a>.CEO Mark Zuckerberg has vowed to spend heavily on building out Meta's chip capacity, with the company saying it would <a target="_blank" class="" href="https://www.businessinsider.com/meta-amazon-alphabet-spend-big-ai-investors-concerned-roi-2024-8">spend at least $35 billion on AI infrastructure in 2024</a>.<h2 id="df2597f2-94e0-47c5-a69a-94d40d30b79b">Chip diversification </h2>In-house chip design comes with advantages that extend beyond customization. OpenAI's move, which will also reportedly see it incorporate AMD chips into its supply mix, means it would reduce its dependency on Nvidia, the market leader for AI chips. Gil Luria, a senior software analyst at investment firm D.A. Davidson, said that the "over-reliance on Nvidia chips has caused bottlenecks for Microsoft, OpenAI, and others and has been extraordinarily expensive."Luria added that the AI chip market is too important for companies to rely on one supplier. "That is why Google and Amazon are investing so much in growing their own chip supply, Microsoft has developed new AI chips and evidently OpenAI is considering the same," he said."We've seen with Meta and Alphabet that designing your own chip is one way of improving the power of your model," Edward Wilford, a senior principal analyst at tech consultancy Omdia, told BI."The fact that it makes them perhaps less reliant on Nvidia is certainly a bonus," he added.<h2 id="b39b0e08-7b79-4f85-a782-e798af9e3381">Soaring demand for AI chips </h2>OpenAI's CEO, Sam Altman, along with other Big Tech CEOs, has been <a target="_blank" class="" href="https://www.ft.com/content/dd9ba2f6-f509-42f0-8e97-4271c7b84ded">outspoken about the need to increase chip supply.</a>The Wall Street Journal previously reported that Altman was <a target="_blank" class="" href="https://www.businessinsider.com/how-much-sam-altman-wants-seven-trillion-openai-compare-costs-2024-2">seeking as much as $7 trillion</a> to boost the world's chip-building capacity and accelerate progress toward developing advanced artificial intelligence. However, the reported move was met with skepticism from industry leaders.While it's unclear how much OpenAI's reported chip-building push will cost, creating custom AI chips doesn't come cheap. Pierre Ferragu, an analyst at New Street Research, told The New York Times in January that Google spent an estimated $2 billion to $3 billion in 2023 building a million of its own AI chips.Designing its own chips will likely put more pressure on OpenAI's finances. A report from The Information earlier this month found that OpenAI expects to lose $44 billion between 2023 and 2028, <a target="_blank" class="" href="https://www.businessinsider.com/openai-profit-funding-ai-microsoft-chatgpt-revenue-2024-10">and doesn't expect to turn a profit before 2029</a>.However, the fast-growing company has deep pockets to meet its goals, <a target="_blank" class="" href="https://www.businessinsider.com/openai-investors-latest-funding-round-2024-10">raising a historic $6.6 billion</a> from investors in early October.

OpenAI is taking a page out of Big Tech's playbook by reportedly building its own chips

<ul class="summary-list"><li>Expect a re-acceleration of inflation for the rest of 2024 into 2025, says Michael Landsberg.</li><li>High shipping rates and daily living expenses indicate that inflation could be worse than expected.</li></ul>A few months ago, it seemed like the war on <a target="_blank" href="https://www.businessinsider.com/higher-long-term-inflation-outlook-investing-strategy-attractive-bonds-stocks-2024-10">inflation</a> had been won.Wall Street strategists were expecting inflation to continue cooling down into 2025, clearing the way for a series of consistent rate cuts as the Federal Reserve insisted price increases were no longer a threat. In September, the Consumer Price Index (CPI) showed that prices rose 2.4% from last year — closing in on the Federal Reserve's target of 2%.Michael Landsberg, chief investment officer at Landsberg Bennett Private Wealth Management, wasn't so sure. He saw signs in the market pointing to a re-acceleration of inflation in the last few months of 2024 and into 2025.Now, it seems like Landsberg may be right. After a Trump victory, concerns about inflation are creeping up again as proposed policies such as <a target="_blank" href="https://www.businessinsider.com/trump-tariffs-hit-company-stock-profits-hardest-china-investing-manufacturing-2024-11">tariffs</a> could push prices up. And as the October CPI report showed, inflation is back on the rise, with prices increasing 2.6% year-over-year. In an interview with Business Insider, Landsberg shared the economic indicators he's watching to monitor inflation and the best way to prepare your portfolio in case of another flare up.<h2 id="7dc40d47-f3ee-4de6-bd68-d838e6c9299f">'Higher for longer'</h2>Inflation could rise to 3% as early as January and hit a mid-3% level in 2025, making it difficult for the Federal Reserve to continue its rate-cutting cycle, in Landsburg's view. He's expecting the Fed to pause rate cuts in December.Landsberg believes the Bureau of Labor Statistics' metrics aren't providing the full inflation picture. He's keeping his eye out on other economic indicators that provide a more on-the-ground look at inflation levels.First, rising Chinese shipping rates are a telling sign of inflation. China is one of the US' biggest trading partners, so an increase in transportation costs between the two countries will likely trickle down and reflect in consumer prices.Geopolitical conflicts in the Red Sea are contributing to the price increases, as shipping companies are forced to detour and choose longer and more expensive routes, according to Landsberg.With <a target="_blank" href="https://www.businessinsider.com/inflation-fed-rate-cuts-red-sea-attacks-panama-canal-shipping-2024-1">12% of global trade</a> passing through the Suez Canal, the Red Sea region is a critical trade route for consumer basics such as oil, cars, raw materials, and electronic components. As a result, these blockades are putting pressure on global supply chains and shipping costs.<div type="image" title="Shanghai Containerized Freight Index" height="663" width="1185" msid="115308890" hostid="261" sizebytes="33696"></div>The Shanghai Containerized Freight Index, which tracks the current spot freight rates for containerized cargo departing from Shanghai, China, has remained elevated in 2024 after spiking earlier this year due to the continued blockade of the Red Sea by Houthi rebels."Shipping costs don't affect margins of companies as much as they're going to affect people's wallets, and that's not getting looked at," Landsberg said.Landsberg also points to the high prices of commodities and everyday necessities. Food prices and rents are still rising. In some East Coast metro areas, rents have risen over double digits since last year, according to <a target="_blank" class="" href="https://www.redfin.com/news/rental-tracker-october-2024/">Redfin</a>.Insurance prices are another strong indicator of inflation, whether it be for cars or <a target="_blank" href="https://www.businessinsider.com/states-most-at-risk-climate-change-rising-home-insurance-premiums-2024-10">homes</a>."Inflation in insurance, which everyone has to have all the time, is up double digits year-over-year," Landsberg said. "That affects people's wallets certainly more than just a printed CPI number."That's not to mention the potential of wage inflation. According to October's employment report, hourly wage growth was up 4% from this time last year. If Trump clamps down on immigration, then that number could go even higher as the supply of workers falls, pushing up the cost of labor.<h2 id="102f3015-2817-4d7e-8b5c-6ea2e030d247">Rebalance your portfolio</h2>Diversification is key in an inflationary environment by spreading out risk between sectors and asset classes, but you might be less diversified that you think, according to Landsberg.One mistake that Landsberg sees investors making is doubling down too much on a specific investment theme. Investors bullish on AI may have devised creative ways to play the AI trade outside of the technology sector, such as buying data center real estate investment trusts and utility stocks. This can give them a false sense of security in their portfolio, as it seems like they're exposed to multiple different sectors.However, if all of your investments across sectors are based on the AI theme, you won't experience much derisking.Landsberg points to the market selloff in August this year, where utilities and real estate indices fared better than technology, but individual real estate and utilities stocks with significant exposure to data centers didn't perform so well."I tell people now that we need to be diversified on themes, not just on sectors," Landsberg said. Some other secular growth themes that Landsberg believes will drive stocks include an aging population, cybersecurity, and alternative energy.In addition to making sure you're sufficiently diversified, there are some other steps that you can take to protect your portfolio from inflation. Landsberg identified a few inflation-benefitting trades such as energy, financials, and <a target="_blank" href="https://www.businessinsider.com/how-to-invest-in-gold-price-record-highs-safe-haven-2024-10">gold</a>.Some funds that provide exposure to these sectors include the Energy Select Sector SPDR Fund (<a target="_blank" href="https://markets.businessinsider.com/etfs/the-energy-select-sector-spdr-fund-us81369y5069?miRedirects=1">XLE</a>), the iShares US Financials ETF (<a target="_blank" href="https://markets.businessinsider.com/etfs/ishares-us-financials-etf-us4642877884?miRedirects=1">IYF</a>), and the Goldman Sachs Physical Gold ETF (<a target="_blank" href="https://markets.businessinsider.com/etfs/goldman-sachs-physical-gold-etf-us38150k1034?miRedirects=1">AAAU</a>)As the end of the year draws near, Landsberg recommends taking a look at your portfolio and rebalancing some positions. If you're overexposed to technology and AI, now is a good time to put money in more inflation-resistant areas.Ultimately, make sure you're investing in high-quality companies with a robust financial profile, he said."You need to have a portion of your portfolio that will do well if inflation starts to move back higher," Landsberg said. "You want companies with pricing power, companies with earnings growth."

Here's how to rebalance your portfolio as these economic indicators flash 'higher for longer' inflation and rates

No one's going to sound an alarm, blast out a text message, or shoot you an email about it, but the US economy is undergoing a historic shift. We are leaving one long period of expansion — what economists refer to as a "supercycle" — and entering a very different one.Over the past 15 years, the economy has been characterized by weak demand and low interest rates — a decade-and-a-half hangover from the Great Recession. Now, experts tell me, that is coming to an end. The world has changed, and we are entering an era of higher growth, creeping inflation, and geopolitical instability that will reroute the flow of money around the world. A new era has arrived, but it's going to be bumpy.The good news is that this new era looks as if it will be unencumbered by some of the problems that put a ceiling on growth during the previous era. The most salient feature of the old period, economists say, was the risk of deflation — the possibility that a lack of demand would cause wages and prices to spiral downward, a trap that is <a target="_blank" href="https://www.businessinsider.com/inflation-economy-deflation-unemployment-job-market-recession-outlook-paul-krugman-2024-7">extremely difficult to escape</a>. In an effort to avoid that fate, policymakers in Washington pushed interest rates down to zero and encouraged <a target="_blank" href="https://www.businessinsider.com/softbank-crashing-investments-uber-wework-monopoly-failure-2019-11">all kinds</a> of <a target="_blank" href="https://www.businessinsider.com/charlatans-show-up-when-wall-street-stock-market-gets-weird-2021-3">risky</a> <a target="_blank" href="https://www.businessinsider.com/twilight-of-tech-gods-recession-stock-market-crash-silicon-valley-2022-5">behavior</a> <a target="_blank" href="https://www.businessinsider.com/bill-ackmans-big-pharma-trade-is-making-wall-street-a-super-awkward-place-2014-10">among</a> investors, businesses, and everyday consumers. Investors trying to reach their benchmarks "had to creep out on the risk spectrum," Josh Hirt, a senior economist at Vanguard, tells me. "Supercheap debt," he says, made it easy for businesses to "overexpand and overhire."The pro-risk environment had some earth-shifting consequences. Silicon Valley put the internet on our phones, China blew a massive bubble in its property market, and the world started investing in renewable energy. But low interest rates did little to boost demand, and the economy consistently grew slower than it did before the crash, never notching above 3% GDP growth. It was only after the massive government stimulus, spurred by the pandemic, that the economy reached escape velocity, pushing up wages and starting to grow at a healthy clip.Now, economists say, we're entering a supercycle that will be characterized by three sweeping forces. First, higher interest rates will reward savers, making it more expensive to take risks. Second, geopolitical and economic volatility will generate inflationary effects, reintroducing the specter of soaring prices. And third, industrial planning will be increasingly influenced by national-security concerns, altering supply chains across industries. How low interest rates wind up settling will establish a new gravitational pull in global markets, recalibrating the forces that determine where the economy is most likely to grow — and where investment is most likely to flow.The new supercycle "puts the economy in a completely new era," says Silas Myers, the CEO of Mar Vista Investments, which oversees $4 billion in assets. He warns that an entire generation of investors, lenders, and entrepreneurs have failed to embrace the "profound impact" that the new economic era will have on their businesses."We were in a time that was less demanding and more forgiving," Myers says. "But that time is ending."One of the clearest signs that a new economic supercycle has arrived is when the financial rules go topsy-turvy. The previous supercycle was ushered in when the Federal Reserve, in response to the destruction caused by the financial crisis, cut its benchmark interest rate to 0% — the first time the central bank went all the way to the bottom.The structural shift sent shockwaves throughout the world. Yields on Treasury bonds tanked, meaning investors had to start taking some serious risks if they wanted to make money. This new adventurism pushed stocks higher and higher. Capital went flying into China and other emerging markets in record amounts — some $1 trillion in 2010 alone. Venture capitalists sank billions into companies like Juicero and <a target="_blank" href="https://www.businessinsider.com/wework-adam-neumann-apartment-startup-investment-silicon-valley-vc-apocalypse-2022-8">WeWork</a> that had no viable plan to turn a profit. And with interest rates so low, companies could suddenly load up on debt: From 2007 to 2017, global nonfinancial corporate debt doubled, to $66 trillion. Until the pandemic hit, inflation and wage growth both remained below 3.9%. The world had changed. Now, with the arrival of a new supercycle, money managers are once again being forced to adapt to a changing set of economic realities. Normally, when the Fed hikes interest rates rapidly, the stock market tanks. But that's no longer true. From 2022 to 2024, as the benchmark federal funds rate shot up to 5.5% from 0.5%, the Nasdaq 100 and the S&amp;P 500 soared by 23% and 22%. Higher interest rates also failed to spur widespread layoffs or crater the economy. <a target="_blank" href="https://www.businessinsider.com/jobs-report-labor-market-hiring-layoffs-quits-recession-sahm-rule-2024-8">Unemployment has stayed below 4.3%</a>, and GDP growth has remained solid, <a target="_blank" href="https://www.businessinsider.com/gdp-gross-domestic-product-second-quarter-2024-us-economy-2024-7">defying fears of a recession</a>. In short, something has scrambled the natural interactions of the marketplace. It's as if you put your hand over a hot stove and your fingers turned ice cold.One explanation for the economy's topsy-turvy behavior is a change in what economists call the neutral interest rate — the optimal point for encouraging growth without triggering inflation. After the financial crisis in 2008, the economy was so weak that the neutral rate went to zero to encourage money to flow more freely. But now the market's weird nature may be signaling that the neutral rate has risen above the Fed's ideal target of 2%. That would explain why the Fed's higher rates are no longer putting the brakes on growth. Fueled by the post-pandemic government stimulus, the economy's baseline has shifted. Over at Vanguard, Hirt and his colleagues predict that the neutral rate will stay higher for the foreseeable future, eventually settling at about 3.5%."Even if we do dip below 3.5%, the Fed will be anchored at that higher rate," Hirt says. "If the economy were to experience weakness and we have to cut rates, we still don't think that means taking rates back to zero."Unless you're a boomer, you've probably never experienced a world with this high a neutral rate. It changes the nature of risk, which changes what people decide to do with money on micro and macro levels. If you can get a decent return parking your money in ultrasafe government debt, why risk investing it in a startup or stomach the stock market's volatility? This isn't to say no one will be out here taking risks with their cash — it will just flow in different directions. That's because consumers are in a better place now than they were in the era that emerged after the Great Recession.The economy is "an extraordinarily diverse and dynamic animal," Joe Quinlan, the chief market strategist at Bank of America, assured clients in a recent note. It's "a $28 trillion hydra-headed behemoth that beats to the tune of many different sectors." As the Fed's higher rates were putting a strain on rate-sensitive sectors like housing — which makes up 16% of the economy — Big Tech and travel-starved households were spending money fast and loose. The experience showed that overall consumption can continue to rise even when significant swaths of the economy are struggling.So what can we expect from the new economic supercycle? Like every cycle, it will have its upsides and downsides. Rising interest rates will make loans more expensive, forcing businesses to make more-thoughtful decisions about debt. But they'll also boost savings accounts and interest income. In addition, a faster-growing economy will tighten the labor market, empowering workers to continue to fight for a larger slice of the pie. Since 2019, the bottom 10% of earners have seen a wage increase of 13%.Shifting away from the "grow at all costs" mindset of the previous supercycle has also incentivized governments — especially in the developed world — to do more to police markets and protect consumers. Whether it's capping the price of drugs or enforcing antitrust rules more aggressively, polls suggest Americans want to see <a target="_blank" href="https://prospect.org/economy/2024-08-27-polling-voters-action-corporate-power/">more limits</a> on <a target="_blank" href="https://today.yougov.com/economy/articles/47798-most-americans-oppose-monopolies-and-support-antitrust-laws">corporate power</a> and <a target="_blank" href="https://www.pewresearch.org/short-reads/2021/07/20/56-of-americans-support-more-regulation-of-major-technology-companies/">more regulation</a> to safeguard citizens. For the first time in years, the Federal Trade Commission has begun going after pharmaceutical middlemen, opposing mergers between grocery giants, and taking big swings at Big Tech.The new supercycle will also have profound consequences worldwide, upending how and where money is most likely to flow. In China, the debt bubble that formed in the property sector during the previous cycle is sucking cash away from <a target="_blank" href="https://www.businessinsider.com/china-xi-jinping-stimulus-plan-wall-street-stock-market-economy-2024-9">businesses and households</a>, undermining China's bid to become the world's leading economic superpower. And with Europe growing more slowly than the US, foreign investors are steering more of their money to America. In the second quarter of this year, foreign investors owned $8.2 trillion worth of US Treasury bonds, up by 7.3% from a year earlier. Foreign investment is also soaring in US corporate bonds (up by 9.8%) and US equities (up by 23%). Quinlan says he expects the US economy to continue outperforming the rest of the world, given the fiscal and demographic challenges facing the European Union, Japan, and China. In an era of increasing instability, when former sources of growth are flailing, the United States is widely viewed as the safest place to find returns."Not lost on investors is the fact that the US economy remains among the most competitive, innovative, and resilient in the world," Quinlan wrote in a recent note to investors. "Aerospace or agriculture, energy or entertainment, transportation or technology, goods or services — pick any sector or activity, and there's a good chance the US leads the rest of the world. All of this has helped fuel demand among foreign investors for US securities of all stripes." America's economic diversification is also expected to give it a leg up in one of the most volatile features of the new era: trade conflict. The US and China are already battling for control over critical industries like <a target="_blank" href="https://www.businessinsider.com/china-xi-jiinping-future-tech-global-economy-semiconductors-military-failing-2022-9">semiconductors</a>, <a target="_blank" href="https://www.businessinsider.com/china-crushing-us-america-battle-energy-evs-batteries-tech-war-2023-5">batteries</a>, and <a target="_blank" href="https://www.businessinsider.com/china-xi-jinping-crush-tesla-elon-musk-american-ev-industry-2024-2">electric cars</a> — and the tit for tat will be especially costly for less diversified economies. Germany's dependence on manufacturing, for example, places its most essential industries on a collision course with China's ambitions. And while the United States is well positioned to weather the storm, that doesn't mean it won't be rough. The world has never faced a challenge like the skyrocketing flow of exports from China up and down the value chain. It's a dynamic that threatens to imbalance international trade by flooding the market with cheap goods of all kinds. <a target="_blank" href="https://www.businessinsider.com/china-shock-explainer-us-economy-trade-dumping-supply-glut-yellen-2024-4">China Shock 2.0</a> "will not go down easily," Quinlan tells me.For over a decade we have become accustomed to the economy working a certain way — if this, then that. As a new supercycle emerges, investors, businesses, and governments that structured themselves around the old model may experience acute shocks. To succeed in this unfamiliar new world, they'll have to adjust their expectations and find ways to harness the supercycle's opportunities. It's the economic equivalent of natural selection: As the economy evolves, those who adapt will be most likely to survive. The days of economic growth are back. The future belongs to those who can grow with it.<a target="_blank" rel="" href="https://www.businessinsider.com/author/linette-lopez">Linette Lopez</a> is a senior correspondent at Business Insider.

America is entering a new 'economic supercycle'

The <keyword id="47276" type="General" weightage="20" keywordseo="economic-growth" source="Orion">economic growth</keyword> in <keyword id="119132" type="General" weightage="20" keywordseo="asia-pacific" source="Orion">Asia Pacific</keyword> will remain strong in 2024 and GDP is expected to grow by about 5 per cent in India and a host of emerging market countries, <keyword id="82981" type="General" weightage="20" keywordseo="fitch" source="Orion">Fitch</keyword> Ratings said on Wednesday. In its report titled '<keyword id="156416" type="General" weightage="20" keywordseo="apac" source="Orion">APAC</keyword> Cross-Sector Outlook 2024', Fitch said the outlooks for the banking sectors in India and Indonesia, as well as APAC emerging markets as a whole, move to improving in 2024, partly reflecting the robust economic backdrop. "Economic growth in APAC will generally remain strong in 2024, especially in emerging markets (EMs), supporting sector outlooks across the region. We expect real GDP to expand by, or above, 5 per cent in India, Indonesia, the Philippines and Vietnam, and China's performance will still be strong by most other countries' standards," Fitch said. The <keyword id="6356076" type="General" weightage="20" keywordseo="indian-economy" source="Orion">Indian economy</keyword> grew 7.2 per cent in 2022-23 fiscal year. India's GDP expanded 7.8 per cent and 7.6 per cent in the June and September quarters, respectively. Fitch had last month said it expects India to be among the world's fastest-growing large sovereigns, with resilient GDP growth of 6.9 per cent this fiscal, followed by 6.5 per cent in 2024-25. "Robust regional economic growth - particularly in Asia's large emerging markets - should offset headwinds from slowing growth in China, weak global demand and high interest rates, helping to support performance across sectors in APAC in 2024," Fitch Ratings Senior Director Duncan Innes-Ker said. Fitch said headwinds from slower Chinese growth, weak global demand and higher interest burdens following the rise in interest rates over 2022-23 will weigh on performance for many sectors. But the bulk of Fitch's APAC sector outlooks for 2024 remain neutral. "Sino-US tensions have eased recently, but we expect relations to remain challenging, which will lead companies to pursue further supply-chain diversification to limit exposure to geopolitical risks," Fitch said.

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