Including this year to date, Chinese Equities are down for the third year in a row, while Japanese Equities are up for the fourth year in five. Covid, Geopolitics, and Index weightings for diversification are all part of the story, but we also think that just as western models that assumed low interest rates would cause inflation singularly failed to recognise their role in a savings based culture as return on savings on the downside, so they are also missing the point that higher rates will generate higher demand and inflation in Japan

A note recently published on livewire about how AI rather than the Fed will bring down the cost of education and healthcare - and thus inflation.

The biggest challenges for markets are from cash - having been too cheap to borrow and too expensive to save, we now have the opposite, with some balance sheets under pressure while liquidity is syphoned out of equities and credit by high deposit rates. Market breadth is extremely narrow, with 493 stocks flat ytd and 7 up more than 50%. Much of this is tied into hype around AI.

Markets are largely range bound, albeit the previous strong correlations have broken so that some are at the top of recent ranges while others are at the bottom. This is contributing to an overall feeling of uncertainty, compounded by lack of direction from central banks, Geo Politics and muddied economic data.

Completing a trio of recent external press articles/videos. A discussion (again) on de-Dollarisation and the split between the Financial Capitalism of 'the west' and the industrial capitalism of 'the rest'