Capital Flows and Asset Markets

This is a free preview of a paid episode. To hear more, visit www.russell-clark.com Short selling is fun. And if you can do it well, you will seem like a magician. I like short selling - particularly the way I like to do it - which is to focus on where consensus longs are positioned, and then waiting for the right moment to pounce. Over the years, I have learnt the best shorts are the ones that pe...

My American friends have been telling me for years about how bad China and the Chinese Communist Party actually are - how they spy on everyone, how they favour their own companies over others, how they try and influence the politics of others, and most of all, how they don’t seem to trust American government and military. In fact, I suspect most of my subscribers will be reading this and thinking,...

This is a free preview of a paid episode. To hear more, visit www.russell-clark.com 2024 made a couple of things clear to me. First of all the “pro labour” trade of GLD/TLT remains broadly correct. Even with the virtual corporate takeover of the White House, GLD/TLT continued to perform well. The simple reason is that even with Trump back in the White House, the idea of US politicians enacting any...

I have been pondering the US and the re-election of President Trump. And in a previous post, I had expounded the idea of we are now in the third era of American policy making since World War II - the “Greed is Bad” era from 1945 to 1980 (high taxes and heavily regulated), to the “Greed is Good” Era from 1980 to 2016 (lower taxes and regulation, but more competition and freer trade), to now the “Gr...

2024 was an intriguing year. I feel like I was right about things macro, but that macro and markets are not longer connected in the same ways. 2024 Review So lets go over the bits that have been right. Broadly, speaking I saw inflation inflecting higher in a “pro-labour” world. When I look at measure of food inflation, they have indeed inflected back to the 1960s and 1970s era. Perhaps the most st...

I had a surprisingly competitive haiku competition, but as the Highlander said, there can be only one. The winner is Kevin - who now has been comped 6 months access to paid content. Kevin Bull slips on black ice— Frantic dance of hope and fear Fortune rolls her dice For me it captures the fascination of markets, and while a haiku format also manages to rhyme - adding a nice western feature. Good j...

Is there a digital world out there not been caught by traditional measures of GDP? It is a mind bending concept, but a very interesting one. Measuring GDP has been a family pastime- my grandfather produced the first estimates of UK and Soviet Union GDP in the early 1930s and 40s - which from memory included counting the number of tractors among other things. The question I wonder about is how do y...

This is a free preview of a paid episode. To hear more, visit www.russell-clark.com When I look at the politics in the West, it still seems wildly inflationary to me. Trump re-election implies tariffs, more defence spending, and little to no austerity. For me the risk is that long long dated treasuries sell off as they did in 2022. My favourite lead market, the 30 Year JGB market continues to rele...

I want to run a competition to find the best finance haiku. This has been inspired by my recent post, “No Country For Old Macro”, when a subscriber left the following comment: Macro = atlantic ocean with 100m height of waves Investors = the sailing ship Only the macro huge sailing ship may survive in the wavy Atlantic ocean especially during the storm. Poor retailer = sure die in the Atlantic ocea...

I turned 50 early this year - but like most men still think I am young. It only really hits home that I have aged when I catch up with a group of friends the same age. Sometimes its the grey hair, sometimes its the bald spots, or sometimes its the universal doom and gloom about markets, and I think “Wow - I am really hanging out with a bunch of old guys!” Having a doom and gloom view about markets...

I am generally of the view that risk can not be destroyed, but it can be transferred. Or in other words, you can protect one asset, but normally at the cost of another. There are lots of versions of this type of thinking in economics - beggar-thy-neighbour devaluation currency policies, helps businesses but reduce domestic wages. Central banks and governments can control either the exchange rate o...

This is a free preview of a paid episode. To hear more, visit www.russell-clark.com One of the things about finance is that markets tend to trend, and people who make money get promoted. If you get a twenty to thirty year trend in markets, then all the people in charge will be people who 100%, total believe in that trend. And when it changes, they cant believe it has really changed - “old dogs can...

One of my favourite books is Eric Hobsbawm’s “The Age of Extremes 1914-1991”. I always recommend it to anyone trying to understand why the world looks like it does. The book tracks the rise and fall of socialism, and makes the compelling argument that without understanding socialism, you cannot understand the modern world. The rise of socialism, and the fear that it generated in the West, particul...

In a previous post, I said I looked at energy use per capita to determine the development of an economy. I highlighted this as it looked like computing digital data was going to cause an inflection in energy use in North America - the “digital world eating the real world”. I tried to analysis the digital world in the same way. I started by asking Chat GPT how much digital data does the average per...

The chart of the relative performance of the US to the rest of the world is truly extraordinary. It has been very tempting to bet on mean reversion with this graph, and you would have been wrong. I think mean reversion use to work for very simple reasons. For me, equity investing is always about growth. There are two forms of growth as I understood it - one was a new technology taking market share...

This is a free preview of a paid episode. To hear more, visit www.russell-clark.com I started as an emerging market analyst in 2002, and one of the biggest best stocks at the time was Petrochina. It was listed in Hong Kong in 2000, and had done nothing for years, before stating to move in 2003, and rising 1,000% by 2007, before entering a prolonged bear market. In 2003, Warren Buffett bought 7% of...

Donald Trump has rallied against nations that run trade surpluses with the US, accusing them of stealing American jobs. Prior to the 1980s, the US ran a flat current account (of which the trade balance is the largest component). Moving from the gold standard was a key driver in the ability for trade deficits to open up. But why does only the US run such large trade deficits? Korea offers a good ex...

The Trump election has radically changed the fortunes of crypto, and bitcoin in particular. The US government is now fully supportive of the crypto project, and the prospect of it being fully integrated into the US financial system is now very high. Memories of the jailing of Sam Bankman-Fried and the collapse of FTX are now very much in the rear view mirror. One of the more interesting things abo...

This is a free preview of a paid episode. To hear more, visit www.russell-clark.com Since the election, GLD/TLT is down, although still in a strong uptrend. And the S&P 500 is at new all time highs - breaking through the 6000 barrier I would have potentially thought a Trump win would power gold higher than S&P 500, but with gold weakness and S&P 500 strength we are back close to cycle lows. Why is...

I have always wondered why the seven wonders of the ancient world were concentrated in nations that now seem underdeveloped - Egypt, Turkey, Iraq and um.. Greece (!!). Why were the once the richest nations in the world, but are now second tier powers as best? Did these nations all lose their way? I think the answer lies in the old silk road which terminated at these nations, and was the key source...

In 2016, the first Trump victory and the Brexit referendum created a deep sense of angst in me. I often thought of both Trump and Brexit as the wrong answers to the right question - that income inequality had become so stretched, that politicians and voters needed to become pro-labour. This suggested to me that policies to promote wage growth would be enacted, and inflation would be greater than e...

A lot to take in, and think about, but here are are collection of thoughts. It always seemed clear to me that whoever won, the US deficit was not going to shrink. With the US 30 year treasury yield spiking back to 4.6% the market knows this as well. Why investors have continued to be bullish on TLT remains a mystery to me. Shares outstanding in TLT US should really be falling, not rising, but old...

Unlike a lot of fund managers and business people, President Trump really destroyed my business model. In its most simplest form, I see pure capitalism, or what I call pro-capital policy as being inherent deflationary. If you look at the performance of S&P 500 versus US treasuries, the performance has tended to align, and periods of outperformance in equities, like the dot com boom, then sees the...

This is a free preview of a paid episode. To hear more, visit www.russell-clark.com In a recent post, I lamented that rather than chasing macro trades, I should have just indexed. The problem with indexing, as far as I am concerned, was that inflation trade seem to imply indexing is a disaster trade waiting to happen. One very long dated chart that I liked looking at was the performance of the S&P...

I recently rewatched “Silence of the Lambs” - fantastic movie. It was with a bit of a shock that I realised I had a lot in common with Hannibal Lecter - I mean other that the killing and eating people part. He has his own moral code, he enjoys analysing people to try and work out what pushes their buttons, has little tolerance for arrogant hacks, and can be very patient in working for his goals. I...