Capital Flows and Asset Markets

This is a free preview of a paid episode. To hear more, visit www.russell-clark.com I made some mid-month changes to the portfolio, which generally worked I think. I plan to quickly go over the portfolio performance, and then look at peculiar idea, that the S&P 500 is the risk free asset, rather than treasuries. It makes recent market performance easier to understand.

Theft and extortion are both ugly things. But while they may seem the same, they are very different things. Extortion you are buying a service, usually protection, and often protection from the very people you are paying, but it is still a service. Theft, you get nothing back. Some people will tell you that governments give nothing back, but if you live in a rich peaceful nation where the average...

I had been wanting to do the Kumano Kodo walk for some time. Its an old Buddhist pilgrimage network of trails in Wakayama prefecture, about 2 hours south of Osaka. With almost anything that I want to do these days, I knew that I just need to book the dates when the opportunity presented itself, and then pray that nothing came up that would force me to cancel. A number of things conspired to make t...

This is a free preview of a paid episode. To hear more, visit www.russell-clark.com I have been contemplating the nature of American capitalism for a while now. To my mind, “the rules” that market used to work with have changed. Industrial policy, capital controls, and big government are all okay, after being verboten for many years. But the thing is, that even though all these rules have now bein...

I spent the last week in Japan hiking the Kumano Kodo . It was great - but I will do a separate post on this. On almost every currency measure you can find, Japanese yen comes up cheap. This long dated BOJ measure has the Yen back at levels pre 1985 Plaza accord, which saw the Yen skyrocket in value. The temptation to be long Yen in strong, but since 2020, when the Yen also looked cheap, it has be...

Everyone should love Star Trek. It imagines a world without money, where all the different nations of the world work as one. Its continuing mission: to explore strange new worlds; to seek out new life and new civilizations; to boldly go where no one has gone before! But away from the science and the fiction, it was the first American TV show to broadcast an interracial kiss in 1968. Star Trek is p...

They say experience is good, but personally if I could trade experience for youthful dynamism, I would take that trade everyday. Sadly, its not, so we are going to have to settle for experience. And one thing experience has taught me, is that when your subconscious is not settled, then you need to take a beat and try and work out what is wrong. This also works the other way too. I think my subcons...

This is a free preview of a paid episode. To hear more, visit www.russell-clark.com Usually I like to make changes at the end of the month, as that just makes everything easier - but I fell motivated to make some mid-month changes. As a rule, if a long or short position is bothering me, then it means its either wrong, or its too big. In this case I think I might just be wrong.

This is a free preview of a paid episode. To hear more, visit www.russell-clark.com I have always thought of private equity as a cyclical asset class. There was the famous RJR Nabisco LBO that failed, and formed the basis of the 1989 book, Barbarians At The Gate. I profitably shorted Blackstone soon after its IPO, as the end of the credit cycle appeared. My negative view on private equity has also...

My interest in Japan dates from 1991 when I was fresh faced high school exchange student in Kobe. There are no prizes for finding me in the above photo. I was the only “foreigner” in the school, and would go days without seeing anyone else that looked like me or even speaking English. I managed to combine my knowledge and experience in Japan with my other love, economics. I don’t think its too muc...

Like many economists and investors working today, I learned that “the market” was an unthinking, unfeeling and unavoidable monolith that exerted its influence with powerful invisible hands. Behave appropriately, you reap benefits. Behave inappropriately, and Mr Market would punish you until you learnt your lesson. Or as James Carville supposedly quipped, he wanted to be resurrected as the bond mar...

This is a free preview of a paid episode. To hear more, visit www.russell-clark.com April saw GLD/TLT surge to new cycle highs, which was very pleasing. We also saw general weakness in equities, which was very pleasing. Peak outperformance had the portfolio up 5% with markets off 5%, but by the end of the month the portfolio had moved back to flat, with markets up around 4%. I have started to make...

Back in World War I, the Australian and New Zealand Army Corp (ANZAC) were sent off to fight the Turks in what is known at the Gallipoli campaign. My great grandfather, Lt Col Hubert Harris (above) fought and died and at Gallipoli. He bled out after a Turkish sniper shot down a sniper hole built into the ANZAC trenches from a distance of 20 metres (hard to believe that they were that accurate - bu...

This is a free preview of a paid episode. To hear more, visit www.russell-clark.com It is so common in life that dealing with the truth is far harder than just pretending it does not exist. Politically, so many people wonder why people cannot except the truth of climate change, or Brexit or Trump. It is far easier, to accept alternative answers that don’t require you to do anything. Climate change...

In my recent post, I made fun of the macro community, as the old correlation of gold/copper and US ten year treasury yields had broken down. However, I would be remiss to not point out that the copper/gold ratio still works quite well when we replace US 10 year with China 10 year bond yield. And Chinese yields are so low as the domestic property market has been going through a huge slowdown. If yo...

Even though I have been pushing GLD/TLT as a good idea, and I am actually long gold, I am not a “gold bug”. Until I was asked by a friend, I had completely ignored the other precious metals. As you should be aware, gold has surged to new all time highs. Platinum, on the other hand, is sitting at around half of its highs set all the way back in 2007. If you look at the gold/platinum ratio until 201...

In macro world, there seems to some existential angst as to why gold is performing so well in a rising real rate environment. Generally speaking, positive real rates, and in particular moving from negative to positive real rates has been negative for gold. This mystery is compounded by the strength of the dollar. Rising real rates in the US should drive a strong dollar, but also a weak gold price...

I have just turned 50, so decided to hand myself into the Louvre as a museum piece. They told me to “Get Stuffed”, so a taxidermist has been booked. With the end close than the beginning I thought I would reflect on a few learnings from my life so far, and how that reflects on my decision to start a new fund. * Financial markets and politics love extremes - the ACTUAL truth is always somewhere in...

The new Dune movie is beautiful - but some how I love the batshit craziness of 1984 Dune movie - starring Kyle MacLachlan as Paul Atreides. This was the first time I heard the term “The Sleeper Has Awakened” and somehow it hit home for me. For much of my life I have been alternatively criticised and/or praised for operating at very low levels of effort. Criticism was along the lines of “wake up”,...

This is a free preview of a paid episode. To hear more, visit www.russell-clark.com The key trade of GLD/TLT returned to its highs seen in September last year, when I decided to launch a model portfolio. However, unlike in September when TLT weakness was the driver, this month it has been GLD taking out new highs.

This is a free preview of a paid episode. To hear more, visit www.russell-clark.com Yen is cheap. In every possible way I look at currencies - Yen comes up as cheap. Using BIS data on real effective terms it is back at 1970s levels. I also know two very successful fund managers who are openly long Yen. And they get very little push back on this view. The problem with this view is that it reminds m...

Why are large cap US stocks doing so well? I have been thinking about this a lot, as THE question for fund managers is whether this will continue to forever, or change in coming. I had thought that a trend change in bond yields would lead to a change in market leadership, but this view has been wrong. Leading stocks, and particularly tech, continue to dominate. The more I think about how the US wo...

1992 film “A Few Good Men” is a classic. Jack Nicholson, Tom Cruise, Demi Moore, Kevin Bacon and Kevin Pollak are all fantastic. And the scene we all remember - Tom Cruise demanding the truth, and Jack Nicholson telling him “You can’t handle the truth”. The irony of this statement, where Colonel Jessup tells him the truth - that you don’t want “nice” guys to be soldiers on the front line, makes hi...

1997 movie Gattaca has always been one of my favourite films, and I have rewatched it many times. Unlike my other favourite films, I seem to be the only one I know that loves this film. Films like Casablanca, Groundhog Day, Aliens, Little Miss Sunshine, Dark Knight, Sound of Music, I find other people love too, but my love of Gattaca seems to be a lonely affair. (SPOILERS BELOW) For those who have...

When I started to add political analysis into my market analysis, I was given some very good advice by someone who shall remain nameless. Politicians are simple - they will do whatever they need to do to be elected. The corollary of this is that in true democratic nations, like the UK, US or Australia, there are never really “populists or extremists” - they are just politicians that are just respo...