19 January 2025 It is only three weeks into the year, and it has already been an eventful one for the world and markets. Investor sentiment on equities has reached a near record bullish extreme according to Bank of America’s Bull & Bear Indicator (9.3 out of 10). Cash allocations in mutual funds have also fallen to a record low of 3.3% (a sell-signal). By contrast, investor sentiment has turned bearish on US Treasuries (higher yields, lower bond prices) driven by shifting vie

14 January 2025 We have had several questions in the last 48 hours on Department of Justice probe into Fed Chair Powell and the implication that might have for Fed Independence. From our humble perch, the Fed’s influence was already under threat indirectly due to fiscal dominance  – once debt is large enough and deficits stop being cyclical and become permanent, monetary policy becomes constrained. In that environment rates cease being a clean policy lever. Instead, they beco

06 January 2025 In our big picture outlook for 2026 we argued that there were three upside risks to growth. First, we are only halfway through the AI capex super cycle and associated productivity boom. Second, financial conditions were very accommodative. Third, the US fiscal impulse remained supportive, and the US administration was motivated to “run the economy hot” into the mid-terms. In Asia, we argued that the supply-chain leveraged to the AI boom remained inexpensive or

11 December 2025 As widely anticipated, the US Federal Reserve cut the funds rate by 25bp to 3.75% (upper band) at the December FOMC. That takes the policy rate closer to the upper end of neutral according to Chair Powell. A signal that “risk management” cuts are done. The Fed Chairman did not rule out more cuts if that was warranted by the data. However, he explicitly ruled out symmetrical (two-sided) risks to the policy path for now.   From our perch, the outlook for the la

10 December 2025 The prevailing bias is that the US Federal Reserve will cut the funds rate at the December FOMC on Wednesday. However, many investors anticipate “hawkish language.” From our vantage point, the description of a “hawkish cut” is self-contradictory. If the Fed cuts rates that will ease the cost of borrowing at the front end of the yield curve.  To be fair, the US is a “long rate” economy – most borrowing is done at the long end of the yield curve. Hence some inv

21 November 2025 There has been a correction in risk assets over the past few weeks. While it has been orderly at the index level there has been a deeper correction in some of the popular exposures (data centre names) and in some of the listed private asset companies providing the finance. Investors were, quite rightly, focussed on NVDIA which reported after the market close on Wednesday in the United States. The bullish case, as we noted last week, is that we are only halfwa

17 November 2025 We put a low weight on our ability to forecast. That is always challenging because human beings cannot see the future. Nonetheless, it is important to frame plausible realities to get a sense of the risk-reward. From our perch, the 2026 outlook is particularly inscrutable because there is a highly conflicting outlook on growth and inflation. Stated differently, we can make a convincing case for material upside and downside risks to the cyclical outlook. Each

03 November 2025 A key feature of our macro framework is that business cycles tend to be non-linear. This is antithetical to the efficient market hypothesis. The non-linearity exists because of a pro-cyclical or reflexive feedback loop. When a positive feedback loop develops between an underlying trend and a misconception relating to that trend, it sets a boom-bust process in motion. The boom-bust process is then amplified by credit and leverage. From our perch, most precondi

25 September 2025 One of my mentors used to say always think symmetrically about risk . Put another way, it is important to consider...

29 August 2025 Earlier this month following the Microsoft and Meta results we discussed AI and the spiraling cost model. The key...

20 August 2025 The upcoming Jackson Hole meeting will be the last one for Jay Powell as Fed Chair. The big picture question is whether...

07 August 2025 In late June we argued that “although the unemployment rate remains low, partial indicators of the labour market (job...

31 July 2025 The much-anticipated quarterly results from Microsoft and Meta were considerably stronger than expected (+9% and +7% on the...

17 June 2025 Ironically, we had been doing work on oil and gas prior to the Isreal-Iran episode last Friday. Recent underperformance of...

24 April 2025 From a behavioural perspective, a key feature of major market episodes is that investors tend to focus on a single story....

09 April 2025 A mentor of mine used to say in these moments, “what do you think you know that the market doesn’t already know?”   We know...

17 March 2025 Since World War II there have been 48 corrections of -10% on the S&P500 (the global risk proxy), 12/48 (25%) have turned...

07 March 2025 George Soros, influenced by his tutor, Karl Popper (1957) developed the concept of reflexivity. In contrast to general...

25 February 2025 Controversial opinion: the Fast and the Furious movie franchise improved considerably by the tenth sequel. Perhaps the...

17 February 2025 We find the renewed enthusiasm for Chinese equities rather ironic given the extreme pessimism in consensus beliefs this...

11 February 2025 One of the phrases that has always wound me up as an investor is when market participants argue that the outlook is...

February 2, 2025 The current speculative episode in Artificial Intelligence (AI) has many parallels with the first Dot.Com  bubble in...

January 23, 2025 January 29th will usher in the year of the snake. According to Chinese geomancy snakes hold complex and varied...

January 21, 2025 The prevailing bias among market participants ahead of and in the immediate aftermath of the November election was that...

January 12, 2025 A key fear we have had for the performance of risk assets has been that the correlated rise in US Treasury yields and...

07 January 2025 Since 2023, our sense is that there have been a few major swings in macro trends (and narratives) that have caught...

As regular readers and clients know, our sense leading into the US elections was that the internals of the stock market, US Treasury...

A key question our mentor used to ask is what is your quarrel with price?  The S&P500 (the global risk proxy) is trading near the...

The way price responded to China’s NDRC Press Conference today raised two key observations about recent developments. First, the rally...