Capital Flows and Asset Markets

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...

Being the reserve currency has enormous benefits. And in the entirety of financial history, the US is the first and only fiat reserve currency. Sterling, and any other reserve currencies derived their value from the ability to maintain their value to gold. With the two World Wars, the US came to be seen as the government most able to honour its commitments, and saw huge inflows of gold, but in the...

One thing I struggle with is the market’s view of Chinese policy. The almost universal view of the world is that the Chinese communist party is exerting more and more influence over the economy, and that this makes China almost uninvestible. If you believe that China is turning communist, then it’s only a matter of time before the landlords are rounded up and shot, and the Chinese army starts inva...

One of the factors that was identified as a cause of the Japanese bubble economy was the intercompany dealings of Japanese conglomerates - keiretsu (系列). Broadly speaking, they were groups of companies, often centred around banks, that helped each other out, and often had cross shareholdings in each other. Korean chaebol (재벌) are very similar. Keiretsu banks often lent to other keiretsu member...

This is a free preview of a paid episode. To hear more, visit www.russell-clark.com The key trade of GLD/TLT continues to recover from the sell off seen in later 2023. And key lead indicator on treasuries, 30 year JGBs, still points to higher treasury yields. But elsewhere in markets, liquidity still reigns supreme.

Many days I still feel like a young man, with much to learn. But then other times, when I muse on the changes that I have seen and lived through, I realise I am more likely the adult in the room. One thing I love about the UK is that its politics is so open and competitive, but also winner takes all. If you capture the House of Commons, you can pretty much do whatever you want (see Boris Johnson)....

This is a free preview of a paid episode. To hear more, visit www.russell-clark.com For a number of reasons, I was reminded of 1999. One of my tells for a bear market is when advertising on the Tube in London starts going out of date. It means marketing budgets are being cut. And in late February, I can still plenty of Christmas ads at tube stations. But even more than that has been the stark cont...

Back in the early 2000s, Berkshire Hathaway had a large stake in Chinese oil major, Petrochina. Selling out of the position in 2007, they made 7 times there money in a relatively short period of time. As so often, he was selling when he could at pretty close to the top. The oil price has been rangebound ever since. My impression of the time that Buffett was a excellent commodity investor. When I h...

Free market capitalism is a relatively new phenomenon. Many call the period before World War I as a period of free market capitalism, but that was the era of British Empire, where intra-empire trade could hardly be called free. The post World War II period was the era of Cold War and saw large swathes of the world run on Communist lines, and even in the West policy had a positively socialist bent....