Capital Flows and Asset Markets

The original thinking behind the Pro-Labour trade was that politicians everywhere were being forced to address imbalances in the economy. The main one was sky high property prices. After the GFC, another property crash was off the political cards more or less. This left politicians with only one choice, raise wages while keeping property prices flat in nominal terms. This issue, as I saw it, was t...

In a recent note, I was looking at Softbank and Oracle, and thought they looked the weakest link in the AI financing chain. In simple terms, all the other AI players have access to the cash to compete, while Softbank was relying on margin loans on its ARM and OpenAI holdings. Looking at debt markets, CDS were also signalling weakness. The law case that Elon Musk had against OpenAI was dismissed, a...

There was a time when a prospectus was a dime a dozen. As an analyst in the 2000s, my main job was to read them and then go the management lunch, and work out if they were a buy or not. I love a good prospectus - its the only time management has to be clear and up front about risks. But with the rise of private equity and venture capital, IPOs have become much rarer. But today we get to go through...

Three years ago I wrote a note on How to Read The Economist . A lot of financial people do not take the Economist seriously - there is the famous contra indicator of the cover being the exact wrong thing to do. I do not disagree with this. But as I say above, and in my previously published note, the key to the Economist is to read it backwards. The first thing you find at the back is the Obituary....

After a blow off move in January, GLT/TLT has been going sideways since then. As mentioned numerous times, I am more bearish TLT than bullish GLD, but I needed to have GLD just in case the Fed did YCC or something similarly foolish. And in 2024 and 2025, gold has been much the better trade. As is the case with all these relative value trades, the market fell in love with the side that is working -...

This is a free preview of a paid episode. To hear more, visit www.russell-clark.com I am thinking of going to New York for 10-11 June. If you are an allocator, and would like to meet, then drop me a line. Below is really a short thesis on AI - why its has blown up so aggressively, and how it could fall apart. Generally speaking, bullish ideas have relatively low value, but short ideas are very val...

I like Goldman Sachs research. They tend to produce big bits of research with enough raw data for you to make your own decisions. If you wanted a single image to explain the market explosion higher, then these next three graphs would probably be it. In the first graph, it shows that GS thinks “agent” demand for tokens is going to grow demand 13 times more than current token demand by 2030. My gues...

There was a time, not that long ago, when the cheapest provider would be the corporate winner. Remember the days when online shopping was always the cheapest option? Or when streaming was much cheaper than buying DVDs? This was a period when government enforced competition, which has sadly disappeared. These days, particular in tech world, its how much capital you raise that is the most important...

This is a free preview of a paid episode. To hear more, visit www.russell-clark.com Showing my age, I am paraphrasing from Monty Python’s “The Meaning Of Life”. For years after seeing this movie, when ever I tried to get someone to order dessert after a big meal, I would put on a French accent, and say “It’s only wafer thin”. Speaking of wafers, paid subscribers to the Substack and Slice will know...

This is a free preview of a paid episode. To hear more, visit www.russell-clark.com I have preferred gold to bitcoin for awhile. Theoretically, they should be the same - scarce assets that should rise as investors worry about debasement. The debasement trade is easy to understand. The US is forecast to run 7% of GDP deficits for as far as the eye can see. And yet the market is only going to pay yo...

One of the markets theories I was taught when I was young was that when oil prices are up over 50% year on year, the S&P 500 does poorly. Oil is certainly up over 50% year on year. But rather than being a bearish signal, markets seem to think its a bullish signal. I had also learnt to be cautious when gold starts to outperform the S&P500 - a sign that capital no longer felt safe in growth assets....

This is a free preview of a paid episode. To hear more, visit www.russell-clark.com To be perfectly honest with you, I should have lost money this month. If I look at the big macro trades I follow, they all pretty much went against me. The most extreme was GLD/SPX, which finished the month at lows. Big up months for me have been when this spikes, like in April of last year, or January of this year...

I have been engaged in a number of side projects for the last few months. One of them is writing a book about myself. I have written about eight chapters, but I am struggling to finish it off - there is just so much happening in the world today. So I have decided to serialise the book - that way, I am setting a deadline for myself to get my act together. Below is a taste…. OUTSIDER TRADER They wer...

One of the questions I am often asked is surely the US government or the Fed will step in to stop yields rising too much. And usually I answer this question - with yes that true but that is why you need to own gold, as a hedge against exactly that. And that is a nice, simple answer, but could also be wrong. I could see another reason why long dated US yields rise, one that would closely echo the 1...

Yesterday, I gave a presentation to ANU Alumni of UK. It was just a quick presentation on AI, which I am now posting here. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.russell-clark.com/subscribe

I have used the red pill/blue pill analogy before. I like using it because it does capture the idea of do we choose to continue to stay in an artificial world, or do we choose to face reality? I also like it as the original Matrix was filmed in Sydney, and in fact in the lobby of UBS. The lobby that they destroy, was indeed the lobby I walked past everyday. I felt cool by association. It goes with...

This is a free preview of a paid episode. To hear more, visit www.russell-clark.com I have an investor day this week, and one of the questions was whether we actually need hedge funds? Its a good question. When I look at markets now, I think probably yes which is why, early last year, I launched Brumby. That being said I can (easily) see the case for why you don’t need hedge funds. If we are just...

I try not to take absolute positions, but relative positions. In the inflationary world that we live in, I think inflationary assets will do well, UNLESS central banks run tight monetary policy. What that means in practice for me, is that I like Gold (GLD) relative to Treasuries (TLT). GLD/TLT has been good. I have always worked in relative terms - as I always fear political reaction to one side o...

This is a free preview of a paid episode. To hear more, visit www.russell-clark.com As predicted, markets would generally speaking look through the current crisis and spike in oil prices. Equities are long lived, and its hard to believe this crisis will be long lived. Already oil majors are rushing to add capacity elsewhere, and countries are turning to coal and other energy sources. For me, this...

I find that AI defies almost every investment technique I have ever developed. When DeepSeek was released last year, I thought we would see some correction in pricing in Western AI relative to Chinese AI. That is pricing for Nvidia/TSMC chips would fall back towards SMIC levels (SMIC makes chips for DeepSeek). Contrary to my expectations, the pricing differential has continued to widen. I then tho...

If you have not heard of the “Gays of the Hormuz”, there is a viral tiktok where an interviewer ask people if they think its unfair that we only talk about the Straits of Hormuz. What about the Gays of Hormuz he asks people. Its quite funny. I feel like I SHOULD be worried about the Strait of Hormuz, but part of me just cannot. When I usually see trouble in the market, I am happy to dive in and tr...

I have friends who know nothing of my work life. When they find out I have a social media following of a sort, they ask why do people follow you? It is an interesting question. My best guess is that I really have a holistic approach to the world, and I do think everything is connected, even if those connections are not always easy to see. And then I do my best to explain these connections as simpl...

This is a free preview of a paid episode. To hear more, visit www.russell-clark.com Sorry guys - you need to be a paying sub to watch this one. It’s about what I am trying to do, how its going, and whether market moves in March invalidated or validate the thesis.

There are many reasons I like gold - but I am not a gold bug. To me its just an asset choice among many. One thing that definitely disturbs me about gold is that it has become very popular among retail investors and second rate macro analysts. I also find the recent popularity of silver also a big warning sign. Below is a graph of silver. The tops in silver in 1980, 2008 and 2011 were also tops in...

This is a free preview of a paid episode. To hear more, visit www.russell-clark.com March was as tough as January and February was easy. It was a volatile month, and I put a number of trades on intra month. My best guess of performance is we gave up half of what we had made this year. This is disappointing - although still well up for the year. Months like this tend to really tempt you to move awa...