The AI sector looks likely to be the biggest bubble in market history – until the next one. When it pops – and it surely will – the effects will resonate round markets. Like all good Snake Oil scams, AI has promised everything and claims divinity. Too many folk have embraced the hype and hopes of easy money – but that has always been the way of markets.
Yesterday tremblors rocked global markets again after Israel bombed Qatar and Trump demanded Europe enact 100% tariffs on China and India. As America lashes out, It feels the world is tumbling towards chronic trade conflict and disruption – yet, yesterday the US stock market made yet another record high.
Gold has been an absolute portfolio star this year. It’s ridden the markets rising fears on sovereign debt, inflation and political incompetency. What will drive it back down? It seems unlikely fears will lessen, especially if predictions of rising instability and stagflation prove founded.
Last week the Axis of Autocracy gathered to watch a spectacular military parade. Here in the West governments are tripping over themselves as politics become ever more polarised and ineffective. How should these factors inform investment decisions?
The amount of nonsense being written about the imminent collapse of the UK Gilts Market defies logic and experience. The numbers show demand for Gilts remains solid – but the growing, and often invented negativity over rising Lond-End yields threatens confidence in the UK’s bond market. Yield curves are steepening around the globe!
You might think China planned it this way. As it challenges the USA as global hegemon, there is panic across the West as Western Long Bond Yields hit record levels. It smells like crisis – In Bond Yields there is Truth – but you have to know how to read the market. Long bonds are weak because of inflation. Be concerned, but not fearful. Buy the short-end – cuts are coming!
Political stresses are undermining the West. While Europe bickers and America reinvents itself, the Asian century has begun. Yet, Modi and Xi embracing in Tianjin does not herald a new China-India axis, but that India has moved firmly into the new Asia camp. How these two nations compete will be the key to 21st Century investment opportunities.
Forget the markets, forget the Fed, forget the Anti-dollar alliance – the issue of the day is what car brand best represents the aspirations of a bloke that knows nothing about cars? Should I buy something cheap, cheerful and reliable? In other words… Not a Land Rover?
Everyone knows Europe is finished. Over-regulation, bureaucracy, a demographic bust, dusty old industries and the prospect of slow lingering decline.. Nonsense. The Sun may shortly rise on new prospects and growth as geopolitics and new trade develops. Might be time for the great rotation back across The Pond.
So much to worry about. Stop. Why bother? What’s not to like about short-term markets. Nvidia is selling more and more and more chips, SpaceX half-circumnavigated the planet, and US Treasuries care not a jot about Fed Independence. Give me another puff of whatever these guys are smoking!
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