The scorecard for the first half puts Equities, commodities and Gold in the top half of the table, with cash and fixed income in the lower half. This is consistent with the steady but uninspiring macro backdrop and positioning ahead of a tricky H2 from a political perspective. The anomaly of the Market Cap weighted SPX out-performing the equal weighted SPW by over 10% points tells us both that the SPX is no longer telling us anything about the US economy and that this excess return is for taking (considerable) concentration risk. Meanwhile, with Bond analysts 'pivoting from the Pivot' the fixed income markets have calmed down a little and leaving The Donald' rather thna 'The Fed' as likely the biggest policy influence on Markets over the next 12 months. In particular, we would look out for a 'Trump Plaza Acord" early next year, 40 years after the last one- something the FX markets aren't talking about, but the asset allocators seem to be (at least subconsciously) pricing in.

While western policy makers try and 'simulate growth' by fixing prices - of money, energy or the exchange rate - emerging economies like China are pursuing policies of creative destruction, allowing industries to boom and then deliberately collapsing part of them when their purpose has been served. The Property developers were the latest example. Focusing on the 'destruction' rather than the 'creative' side of the policy means the west is constantly seeing China in crisis. When it isn't.

Passive and Semi Passive managers are only controlling for benchmark and volatility risk. To the extent that active managers are also controlling for the risk of loss of capital they will generally take less risk and thus generate lower returns - by design. Thus the argument that active can’t beat passive is mis-specified. The closer we move to the underlying investor the more important it is to control for risk of loss of capital rather than risk of loss of job and thus the more value can be added by active managers.

Markets are range trading, with traders reducing exposure ahead of a likely volatile summer. Currency markets in particular are looking for catalysts for directional moves to come from politics, with Europe, the UK and the US all having Elections in the coming months. The biggest tail risk we see is from a New White House revisiting the Plaza accord or 1985 and actively talking down the Dollar. Interestingly, while the currency traders are not about talking this at the moment, some of the obvious tail risk hedges - diversification away from $ assets, EM, Gold, Commodities - are already starting to perform.

The timing of US tariffs on Chinese EVs and Solar panels is political, but they also signal a significant shift in the Global Economy as Globalisation rapidly unravels. The reality is that China's competitive advantage is actually in automation, network effects, an integrated supply chain and a huge home market, which means that pretending it is about cheap labour and subsidies achieves nothing other than punishing consumers. Europe in particular can't compete with China because its energy costs are too high thanks to US led tariffs on Russia and the madness of net zero policies and US pressure to match these new tariffs threatens to seriously unbalance the unity of the EU - already troubled by populist push back against the key Globalist policies of open borders and net zero. Perhaps most important though is that a US economy that has successfully cut its import dependency is one that has every incentive to talk down the $