Superior investment results require that you deviate from the norm. In our monthly Absolute Return Letter we discuss key macro topics. Subscribers get it straight to their inbox about 1o times a year.
The Art of Defaulting
A debt crisis is looming, but how will it manifest itself? Through inflation, defaults or …? There are many possible outcomes. Even more interestingly, it could also mark the end of the current debt super-cycle, which has been in full swing since 1945. When debt super-cycles end, something dramatic always happens. What will mark the end of this super-cycle? Hopefully not the same as what marked the end of the last debt super-cycle. Enjoy the read.
Will Lithium Sink OPEC?
Electrification of all transportation and heating is already a trend in motion, and it is going to change everything. The arrival of fusion energy will only make those changes even more dramatic. Commercial banks may cease to exist, fossil fuel prices will fall dramatically – some may even go to zero – and OPEC may be replaced by OLEC – the Organisation of Lithium Exporting Countries.
The Productivity Conundrum
One of the great conundrums in today’s world is why computers in general and the digital revolution in particular have had exactly the opposite effect on productivity than everybody expected. Why on earth is productivity growth slowing when we all expected it to rise and what can we do about it? That’s what this month’s Absolute Return Letter is about. Enjoy the read.
Private Credit Demystified
60% allocated to equities and 40% to bonds has been an extraordinarily successful investment strategy for most of the past 40 years, but I believe the show is now largely over. In this month’s Absolute Return Letter, I focus on the 40%, and I argue that, although I don’t expect 10-year government bonds to deliver more than 0-2% annual inflation-adjusted returns in the years to come, there are indeed things you can do to earn higher returns.
The Italian Job
Italy suffers from a series of major structural problems that, even with the best of intentions, cannot be corrected anytime soon, and the new Italian government is about to find out that it has landed in the deep end of the pool. The mix of high debts, low productivity, a large shadow economy, bad demographics and the proximity to North Africa makes it almost impossible to govern the country without an open confrontation with the EU and, quite possibly, even a default.
Investor Attention Deficit Disorder – aka the Goldfish Syndrome
There are three key drivers of financial markets – behavioural patterns, cyclical trends and structural trends. Because human attention spans are getting shorter and shorter, behavioural patterns affect financial markets more and more. That is a problem but also an opportunity set for the astute investor who is prepared to think outside-the-box.
The Death of Fossil Fuels? Really?
Oil prices have been remarkably strong more recently, defying our (very) long-term prediction that fossil fuel prices will go to $0. In this month’s Absolute Return Letter, we take a look at the reasons behind the recent strength and where oil prices are likely to go next.
The Inflationary Impact of Ageing
BIS surprised many, when they back in 2015 concluded that ageing is actually inflationary. New research from Oxford Economics have come to precisely the opposite conclusion, which is why I have decided to do a deeper dive on the topic this month. Conclusion? BIS may have been correct in the past but, more recently, my vote would definitely go to the dis-inflationary camp.