Capital Flows and Asset Markets

When I was 17 and learning Japanese, I read the entire series of Dragonball in Japanese. As a manga aimed at young boys, all the difficult Chinese characters would have the pronunciation written out in small characters next to it, so you would now how to read it (furigana). The recurring theme of Dragonball was that the hero, Goku, would face an enemy, lose, and then find a way to evolve into a st...

This is a free preview of a paid episode. To hear more, visit www.russell-clark.com I am big believer in developing a theory on assets have traded - particularly when they trade in a way that surprises you. A good theory should produce forecasts than you can then apply. My first theory was “Japan as Saudi Arabia of savings theory” which basically showed that Japan had all this capital, and whereve...

I am a member of club in London that is somehow the best night out in London mid-week, while simultaneously the home of conservative thinking in the UK. I joined for the partying, but recently I have been frequenting this club to access their library of books on conservative thinking. Neo-conservative thinking has never really made sense to me. And as I thought it was not that important, and to be...

In my recent post, “Modern Marxist Theory” I argued that if Marx was resurrected today, he would predict an economic crisis from corporate and capitalists seeking to minimise and avoid tax, and hence hollowing out the financial capacity of the state. For me the obvious political response to this would be a enacting antitrust and tax reform, and restoring power to labour and unions. This was a left...

This is a free preview of a paid episode. To hear more, visit www.russell-clark.com I was first interested in Restaurant Brands International (QSR US) when a huge disconnect opened up between its listed subsidiaries and the parent company. The listed Brazilian operator of Burger King restaurants (Zampa) is down 90% over the last 5 years, while QSR is flat. With Bill Ackman being a big owner of QSR...

This is a free preview of a paid episode. To hear more, visit www.russell-clark.com I have been thinking about the portfolio a lot recently. One reason is that I have been calling for higher inflation for a long time, and put a range of “inflationary"“ trades on - various long commodity trades, as well as long banks, while putting a range of short short interest rates sensitive trades on. The idea...

Much of my analysis on bonds highlights that the traditional centre of politics has lost its appeal, and voters are craving change, which has led to rising vote shares for extreme left and right with parties, or the takeover by traditional parties by extremist elements. I have expressed a wish for a modern day FDR who could forge a new political consensus and centre. This may seem like wishful thi...

This is a free preview of a paid episode. To hear more, visit www.russell-clark.com My gut instinct for the last few years is that you want nothing to do with bonds. This has been correct. And just as the lead market for the bond bull market was Japan, it has been the lead market for the bond bear market. And Japanese 30 year yields continue to say bear market to me. I see plenty of analysis of wh...

I only read the Communist Manifesto last year. I was trying to understand, how the Chinese planners think about economics, and I found it extremely illuminating. I had often heard people talking about Marx, without ever being interested enough to read it myself. All I knew was he was keen on collective ownership, which as everyone knows, doesn’t work. However, my favourite historian, Eric Hobsbawm...

Back in January I wondered if semiconductors were the new oil . The price action this year probably says yes. Just as the Soviet Union tried to cripple the US in the 1970s through helping organise an oil embargo, the US is trying to cripple China through creating a semiconductor embargo. The US “war” with China was always about keeping China as a smaller economy than the US. From that perspective,...

Since pushing the big red button , I have started talking to allocators, and financial professionals again. I have found it invigorating. I feel like I should apologise to the financial world. It is very easy to be prejudiced against finance people - “banker w****r” is almost the universal term. But after spending the last four years talking to parents worried about the 11 plus (high school entran...

I was state school educated in Australia, so I missed out on an education in “classics”. But whenever I hear a good turn of phrase, I bring it into my vocabulary. “Hubris before nemesis” is one such phrase - basically meaning arrogance precedes a fall. I have seen many investors suffer from it, and I have also suffered from it myself. As it happens I was in the Midlands this weekend - Peaky Blinde...

I will admit, I have only started taking a close interest in politics in recent years. Like many of the “elite” I was shocked by the Brexit vote, and the election of Trump. But having spent a few years reading and thinking about politics, every election this year has conformed to exactly the same message - “show me the money”. The market and the Economist where surprised by recent election results...

This is a free preview of a paid episode. To hear more, visit www.russell-clark.com Back when I first started writing this substack, I was greatly influenced by the idea of systemic food inflation leading to rising wages and rising interest rates. The key driver was that China was no longer self sufficient in grain due to structural shortage of land and labour. It suddenly became the world’s bigge...

The other day I saw my wife had this photo on her lock screen. I asked her why she had this photo - the double chin makes me look terrible in this photo in my view. She replied, “Oh no - this is a wonderful photo - it sums up all the things I love about you.” This was not the only photo that we had disagreed about for the same reason recently. I wondered why our views differed so much. I gave it s...

I often describe myself as lazy - although this is not quite the right word. The more correct word would be efficient. I tend to calibrate effort to potential reward. Back in 2011, the entire financial community was convinced that inflation was going to surge, and if anything, there was a preference for commodities over financial assets. At the time, China was obviously heading for trouble, and po...

I used to get asked by young fund managers for advice in making it in the hedge fund industry. I always gave the same advice. There are two key jobs, making money, and raising money. Of the two, the second is the most important. Most young managers think of themselves as proto-Warren Buffett’s, and just want to focus on investing. I then point out, as great as an investor that Warren Buffett is, h...

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.