Capital Flows and Asset Markets

The chart of the relative performance of the US to the rest of the world is truly extraordinary.

It has been very tempting to bet on mean reversion with this graph, and you would have been wrong. I think mean reversion use to work for very simple reasons. For me, equity investing is always about growth. There are two forms of growth as I understood it - one was a new technology taking market share - so tech investing, and then there is the catch up growth as developing markets catch up to developed markets. 1970s & 80s were about Japan catching up the US, the 1990s was about new technologies - mobile and internet - and then 2000s was about China catching up to the world. This is a huge simplification, but broadly speaking how I saw the world work. The simplest way to visualise this is energy consumption per capita. The US and Europe reached peak energy consumption per capita in late 1970s, and has been in decline since. Asia has been the growth story, and Africa always has the promise of enormous growth.

Looking at the above, energy consumption of around 150 gigajoules per capita puts you in the “developed” bucket - or at least a serious economy. You could also argue that development eventually leads to a cap in energy usage. More efficient cars, better insulation, more urbanisation all have negative effects on energy consumption per capita. But a strange thing is beginning to happen. US energy consumption is beginning to inflect higher. McKinsey has cloud computing taking up nearly 12% of US electricity consumption by 2030.

How big is that in terms of total consumption? It should be pointed out the digital revolution has been up to this point good at reducing energy consumption, hence the change in energy consumption trends is a big deal. Despite improving efficiency, growing population mean that US energy consumption peaked in 2007 at around 100 exajoules. The McKinsey numbers show a rise of 459 TWh to 2030 - which is an additional 10% consumption. This would be half of Japan’s existing generation, or 30% more than the UK’s total electricity generation.

This is already bleeding into stock markets, with the US utilities breaking their historically high correlation to long dated bonds. The market is probably correctly pricing in a new period of growth.

What I am starting to think is that the digital economy is beginning to be as a big a transformation to the world and society as the motor car. The US led the world in auto production in 1920s. I wonder if the Dow Jones index was similar outperforming the rest of the world at that time? All the large car companies and most of the oil companies would have been in the US at that time.

Even in the 1950s, US dominated auto production, but as time went on Germany, Japan and China have all come to be larger producers. That is, there was a natural tendency for nations to catch up as they mastered old technologies. Protectionism and nationalising oil industries also helped to globalise the auto industry. This is where mean reversion occurred.

Looking at the digital world, US companies have a lock on the collection of data (outside of Russia and China), and leading market share on cloud computing. Just as a lock on auto production drove the US to be the biggest consumer and producer of oil, we are beginning to see a US energy consumption rise as well. There are two separate questions here. How much demand for Gen AI will there be? Will we start having domestic robots constantly using Chat GPT to talk to their owners? Will we expect to talk to our computers constantly like Star Trek? Who knows, but the potential to surprise to the upside is there. Secondly, when do the rest of the west realise that they need to nationalise the data and cloud flows they have allowed the US to monopolise? Or does slow growth Europe happily allow itself to subside into meaningless? In the real world, Europe is a huge economic power, but in the digital world it badly lags the US and China. The digital world is eating the real world, and this is why mean reversion does not work anymore.

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I started as an emerging market analyst in 2002, and one of the biggest best stocks at the time was Petrochina. It was listed in Hong Kong in 2000, and had done nothing for years, before stating to move in 2003, and rising 1,000% by 2007, before entering a prolonged bear market.

In 2003, Warren Buffett bought 7% of Petrochina, and then slowly began exiting in 2007. The final spike happened after Berkshire Hathaway has sold out fully, and the market believed the overhang was gone. Markets were getting very bullish on emerging markets as the Federal Reserve was beginning to cut interest rates as this was seen as the catalyst for emerging markets in 2002.

The problem with this view was that in 2002, Emerging market bond spreads were very wide, and commodity prices low. By 2007, emerging market spreads were tight, and commodity prices high. Even though the Fed cut rates, emerging markets and Petrochina were not the place to be anymore. However, by early 2009, Emerging market bond spread were attractive again, but as of today, look unappealing.

I was reminded of this by seeing Warren Buffett continuing to reduce his stake in Apple. Buffett has done very well out of Apple. He started building a stake in 2016, and kept increasing. Average cost in USD 37, versus a price today of 225.

Is there any similarity between Apple and Petrochina?

Donald Trump has rallied against nations that run trade surpluses with the US, accusing them of stealing American jobs. Prior to the 1980s, the US ran a flat current account (of which the trade balance is the largest component). Moving from the gold standard was a key driver in the ability for trade deficits to open up. But why does only the US run such large trade deficits?

Korea offers a good explanation of how America created the trade deficit. The Korean example pretty much generalises across east Asia, and unlike Japan in 1980s, or China now is not seen as a threat, so it allows for more rational analysis. During the boom years of Korea in the early 1990s, it was running a close to flat trade balance. It was importing as much as it was exporting.

Korea’s problem was that it had come to rely on global (read American) financing. We can most clearly see this using BIS data. This looks at claims of foreign banks by Koreans versus claims by Koreans on foreign banks. When the number rises, it means foreign banks are more heavily participating in the Korean financial system.

Surges in lending in 1997 and 2007, preceded the Asian Financial Crisis and Global Financial Crisis. When the flow of capital turned, the Korean Won suffered, and economic activity in Korea weakened dramatically.

Koreans (and in fact Asian, Latin American, Russians and most emerging markets) learnt that foreign (mainly American) financing could not be relied on, so nations needed to have strong exports, and to built up foreign reserves. In this respect they were following in the steps of Japan. Prior to Japan, almost all foreign reserves were held as gold, but Japan started to build US treasury reserves, in part to try and slow the strengthening of the Yen.

The rest of the world followed suit, and by 2013, we can 12 trillion in foreign reserves.

Talk of foreign reserves, and currency movements tend to obscure the simplicity of what is really happening. Governments learnt that financial markets can be volatile, and so made a choice to reduce their consumption, and build up savings. Someone had to lend to them, and that was the US. Unlike a bank, this lending happened via trade balance, where the US consumed more that it made. The problem, as we see above with Korea, is when lending nations, like Korea also start to become borrowers. When there are only borrowers, someone is going to not get a loan, and the cycle breaks down. So far, China has been happy to be a lender, in so far it has a record trade surplus.

Trump’s trade policies seem to be focused on getting the trade surplus in balance. I can also safely assume, that he does not plan to achieve this through austerity and recession. For Asian nations they are faced with a tricky choice. Relying on exports, and building foreign reserves leaves them exposed politically, and at risk of tariffs and trade wars. The better option is to stimulate. Japan is probably ahead of the curve in this respect. They have embarked on very stimulatory policy, although I feel relied too heavily on Yen weakness.

But despite Yen weakness Japanese foreign reserves are declining. When I was there in May, it was booming.

We have already seen an inflection in the long term trend of Treasuries versus gold. What happens when China realises it has no option but to stimulate?

In a strange way, perhaps China’s refusal to stimulate it perhaps the most bullish thing in the market? Collapsing Chinese yields have coincided with great strength in US assets.

In contrast to China, US 30 year treasury yields are looking to test 5% again in my view.

If China chooses to stimulate to reduce its trade surplus, then even higher yields look likely to me. I think Asians have been slow to realise that the game has changed, although Shinzo Abe and Japan seemed to understand it early on. Stimulus is the only game in town now. When China stimulates, who will be left to lend to the US?

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The Trump election has radically changed the fortunes of crypto, and bitcoin in particular. The US government is now fully supportive of the crypto project, and the prospect of it being fully integrated into the US financial system is now very high. Memories of the jailing of Sam Bankman-Fried and the collapse of FTX are now very much in the rear view mirror.

One of the more interesting things about bitcoin is that the volume traded of bitcoin (in bitcoin terms) has declined from a peak level in 2017. In the Covid trading boom, bitcoin was trading almost its entire future supply of 21 million coins. On average since then, daily trading volume is closer to 500,000.

Microstrategy holds 279,420 bitcoin, which at about 0.5 days of trading and slightly more than 1% of total theoretical supply still had a long way to go - but he has signalled his intent to continue to issue debt and equity to keep buying bitcoin. Shares outstanding in bitcoin ETF is surging (IBIT US)

With a market cap of USD 42 in- it holds the same number of bitcoin at Michael Saylor's Microstrategy. As we have seen with gold - ETF ownership does rise and fall, but let's assume Microstrategy and IBIT gives us a read on 2% ownership of outstanding. Satoshi Nakamoto is estimated to hold a bit less than 5% of total supply at 1 million bitcoin (this is subject to debate - like all things crypto). So how much supply would Michael Saylor need to control to cause a squeeze? Well we have have a good precedent. Back in 1979, the Hunt Brothers managed to gain control of 10% of the silver supply (and back them you could consider silver money - like bitcoin). Believe it or not silver is still below the peak price the Hunt squeeze achieved.

Unlike the Hunt Brother's Saylor seems pretty open and transparent about getting financing to achieve this aim. As can be seen above Hunt Brothers squeeze failed and eventually saddled them with losses. But what was more extraordinary was they were able to raise financing at all. Ten year treasury rates were 15% back then, against 5% today.

One of the questions I always wondered with Bitcoin was whether at some point Satoshi Nakamoto with his 5% supply could come out and dump his Bitcoins. With a value now of USD 90bn - and now what looks like US government endorsement- selling this bitcoin seems unlikely. Like equity owners - Satoshi should be able to borrow against this asset value, if not now soon. There is also a risk that the key to this bitcoin wallet has been lost. Either way with 5% at Satoshi, 1% and rising at Microstrategy and 1% and rising at IBIT - the threshold for a squeeze is rapidly coming into view. This view is enforced by the surge in Tether market cap - implying money is coming to the crypto space.

All very squeezy, squeezy Japanesesy. If participating in a short squeeze is too much for you, unlike others who see bitcoin as an inflation hedge - I see it as source of inflation. Bitcoin squeeze implies higher interest rates to me. My target remains at least 10% bond yields in the US. Don't like crypto? Short bonds.

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Since the election, GLD/TLT is down, although still in a strong uptrend.

And the S&P 500 is at new all time highs - breaking through the 6000 barrier

I would have potentially thought a Trump win would power gold higher than S&P 500, but with gold weakness and S&P 500 strength we are back close to cycle lows.

Why is this?

I have always wondered why the seven wonders of the ancient world were concentrated in nations that now seem underdeveloped - Egypt, Turkey, Iraq and um.. Greece (!!). Why were the once the richest nations in the world, but are now second tier powers as best? Did these nations all lose their way? I think the answer lies in the old silk road which terminated at these nations, and was the key source of trade for centuries. As trade routes changed, the fortunes of these nations declined as well. The Mongol Empire stretched from Asia to Europe, and pretty much captured all the nations worth conquering at the time. Empire and trade were intertwined.

But the centre of the world, the Eurasian continent was stitched together by trade - by cart and horse. And the trade generated the wealth to create the finest cities of ancient times. The seven wonders of the ancient world, are all at the Western End of the Silk Road trade route. There were plenty of wonders at the Eastern End as well, but where trade went, wealth and technology followed.

What happened to these nations? Nothing really, just technology destroyed their lucrative trade routes. Rather than moving caravans along the megacontinent, improvements in ships and navigation made long distance sailing made the peripheral states, with easy access to ports the new powers in the world. This was the era of the British, Spanish, Portuguese and French Empires. Travel by sea allowed traders to direct cargoes to locations where the profits were largest. The undoubted superpower of the time was the British Empire. British Empire was centred on the area not touched by the old silk road, but a new empire. Britain ran the world by dominating the new world, not the old world.

While the British Empire was extensive, it had an extremely strong focus on controlling ports. Hong Kong, Singapore, Penang, Gibraltar were all ports under British control, with a view to controlling and maintain power. Losing control of the Suez Canal marked the true end of the British Empire, as it could no longer control the main access points to trade.

Trade is power. China provides a good demonstration of how trade provides the profits to invest into technology. Chinese exports surged form 2002 onwards, but patent applications only took off much later.

As I have said in my last two posts, rather than the digital and real world merging, I am thinking more along the lines of the digital world eating the real world. Or to put in another way, you first need digital success before you can have real world success. I think Donald Trump is one example, Elon Musk could be one potentially, crypto is another example. So what I am saying is that just as the rise of naval power destroyed the ancient world, the rise of digital world is destroying old power bases as well. For me, US economic history shows they have form is rapidly adopting technology and allowing political decisions to reinforce a lead in technology. When Henry Ford introduced the Model-T, mass car culture came to the US before anywhere else.

This led the US to physically different from the old world, as anyone who has visited Los Angeles will know, its a car city. Trying to walk around L.A. is pointless, as is Miami and many other American cities. A US economy centred around auto production was a marvel during the 1950s and 1960s, until US oil dependence became an issue, and US car makers were getting out competed by German and Japanese car makers. That is the US does what it always does, push a new industry to its limit.

And just as Britain understood that controlling the nodes of naval trade (ie ports) was the key to economic success, the US has understood controlling the nodes of the digital trade is essential to success. With the cost of new data centres rising with the cost of Nvidia chips, it is very hard to see how any nation can catch the US (unless a new technology comes along).

There was a time when most of the world was under British control, one way or another. In a digital world, we are all under American control one way or another. The market confirms, and the Trump reelection suggests, that America first policies are now embedded in Washington. My guess is the dominance of the digital world and America over the rest of the world increases from here.

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In 2016, the first Trump victory and the Brexit referendum created a deep sense of angst in me. I often thought of both Trump and Brexit as the wrong answers to the right question - that income inequality had become so stretched, that politicians and voters needed to become pro-labour. This suggested to me that policies to promote wage growth would be enacted, and inflation would be greater than expected, and I suggested the GLD/TLT trade, which has been good, although there are signs that the Trump election win was at least a temporary blow off top.

The big problem - for me at least - was the continuing dominance of US tech, and the US in general over other asset markets. Part of the pro-labour argument would be that you see stagnating nominal asset prices, as wages rise, reducing income inequality. You have seen this in the rest of the world to a degree, but not in the US. Even more confusing has been the vastly different price action of US tech and Chinese tech. I had assumed a pro-labour world would also see western politicians take on tech monopolies.

But as I mulled over the Trump win, the dichotomy of a surging US, and the “pro-labour” trade resolved itself in my mind like a thunderbolt. Unlike the first Trump victory, this one has brought great clarity to my thinking and a calmness. As the subtitle above suggests, the world makes more sense if you understand it as the digital world is eating the physical world. The best way forward is to ignore how something looks or feels in the real world, and to focus exclusively on how it looks or feels in the digital world.

Donald Trump is a good example, but one that readily generalises. In the “real world”, Trump was a property developer with a mixed record, a serial womaniser, was definitely involved in the storming of Capitol Hill, and has very unusual economic policies. 15 years ago this made the idea of Trump as President nonsensical, but the digital world and social media changes the calculation. Success in the modern world seems to centre on the ability to master modern social media. And modern social media tends to bypass the traditional gatekeepers of journalists, editors, and other keepers of “mainstream” views. But what you need to succeed is the ability to be viral - to motivate people to follow you on social media. I am not a big Donald Trump fan, but I have no inclination to follow Hillary Clinton, Joe Biden or Kamala Harris on social media - and that was the key to victory. For the Democrats to recover, they need to move to a much heavier focus on social media, even cult like personalities. My hope is that the Republican Party has adopted the social media to win elections, but kept the organisational heft to implement good policies.

Looking back at US politics, Obama was probably the first viral candidate, and the Democrats won back to back presidencies by organising and accepting this viral nature. Trump has now won his second term by leaning into this viral trends, and with the support of the most viral business man on the planet- Elon Musk.

You can see in this election how clearly the digital world is eating the physical world. Some people believe that Murdoch’s Fox News Network is the power behind Trump. But in this election, we saw a very good showing by Trump among Hispanic men. As far as I know, young Hispanic men is not a key demographic for Fox News. Trump’s mastery of social media, not Fox News is the key to his success. When Trump speaks of lamestreet media, he is not joking, and he is also including Fox News. Back when I was managing money, I was well aware of this viral nature. I would get write ups in the FT or Bloomberg, and there would be no response from investors. But if I had a write up in Zerohedge - and the servers would crash. At the time, I thought traditional media and viral media would merge, but that has not been the case. Traditional media has tried to maintain its political power, when in fact everyone is more interested in direct to direct communication, not gatekeeping. Mocking traditional media is easy - they are like the old feudal barons as the French Revolution swept them away. Not accepting the viral nature of the digital world is refusing to accept the new world.

The clarity that his has brought to me is that slowly but surely the digital world is eating the physical world. When the internet first took off, it just seemed like another, more efficient channel for existing world to utilise. But what we are seeing is that opinion making has become decentralised. Getting the blessing of the editor of the New York Times is less important than going viral. In the old world, cafes located in the best locations with the most footfall did best. In the new digital world, the cafes with the best social media game are the ones that are busiest. Physical location matters less than digital location. If you have no social media game - you have no game at all.

Crypto, and bitcoin, which have little no support in the physical world (ie no government or guns) have a fantastic digital position.. Bitcoin is an extremely viral product, and its supporters believe in it. And this belief makes it real.

What this line of thinking is allowing me to square the circle of the obvious pro-labour trends that are apparent in politics everywhere, and apparent in the performance of gold vs treasuries, GLT/TLT, but not apparent in the S&P 500. The virality of pro-labour message is totally reliant on the virality of the leading stocks in the S&P 500. Companies that connect huge masses - Meta, Google, Apple, Microsoft, and run the cloud computing that allows such node to node communication to work are the winners - but it is exactly the success of this viral business that drives the pro-labour trade.

What has made the US great has been its ability to allow business to adopt and shape the country according to new technologies. The US was the first nation to truly adopt the car, and organising principles of the car - straight roads, suburban life, the interstate highways and largely ignoring rail as a transport method, and government looked to support these champions. The US, and its politics is seems, have fully embraced the realities of social media, and the need to be viral. It makes it obvious why Chinese tech has lagged US tech. The Chinese Communist Party needed to take control of this part of the industry to avoid the rise of alternative power, particular Jack Ma.

The US has fully adopted the social media economy - and is surging because of it. The rest of the world will have to follow, both politically and economically. For me, it means I need to fully embrace the digital world, rather than seeing as just another communication channel of the old world. You should see me more fully engage with the digital world going forward, in both investing and social media.

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A lot to take in, and think about, but here are are collection of thoughts. It always seemed clear to me that whoever won, the US deficit was not going to shrink. With the US 30 year treasury yield spiking back to 4.6% the market knows this as well.

Why investors have continued to be bullish on TLT remains a mystery to me. Shares outstanding in TLT US should really be falling, not rising, but old habits die hard I guess.

The thing about the President Trump getting reelected and likely sweep by the Republicans is that America First is here to stay. In some ways, this moves US political practice is closer to US business practice. What I mean by that, is that rules are not so important - leverage and power is. If you want to have an independent policy from the US, then you need to have an independent military, and supply chain. Only two or three nations have this, Russia and China and possibly India, and are the only nations that can negotiate with US, mainly as they have an independent military base. The three countries that I have lived in, Australia, Japan and the UK, and now closer to vassal states, than truly independent nations. The UN is also largely redundant. We are back to Great Power political era.

The likely outcome of a Trump win, is the rise of strongmen politicians everywhere, and the remilitarisation of every corner of the globe. The EU needs a European army to remain relevant, but I suspect distrust runs to deep for that to be realistic. Ultimately, the reelection of Trump, signals the end of trade and trust led growth. It ends the era of all getting prosperous together. The market was already foreshadowing this with the dominance of US equities, and this seems likely to continue. The dominant trade of long S&P500 and short Treasuries, also looks likely to continue.

The depressing thing about all of this, is that the countries that bet most heavily of the US remaining a leader of free trade and democracy, are likely to lose the most. Europe that had largely demilitarised after the horrors of two world wars, will be forced to remilitarise, and ponder whether this can be done without conflict. Japan, who has built its economic model around trade with the US, and was the original supporter of buying treasuries instead of gold, is seeing real wages decline, and its economy stagnate. I always found gold in yen terms, are fascinating chart - and its continued sell off points to collapsing relative wealth of the Japanese.

Japan embraced the treasury over gold trade with gusto, accumulation all of its foreign reserves as US treasuries. While forward thinking at the time, it seems to be backward looking now.

It is striking how the relative performance of gold versus treasuries has matched up with the % of gold in central bank reserves. For gold bugs out there - if we assume we go back to 40% holdings of foreign reserves, and the US tried to maintain nominal value in treasuries, then you get a price of US 10,000 for gold. The alternative is gold stays where it is, and you get 20% interest rates in the US.

Where does it end? Well the US pursued a growth through trade policy, in the hopes that it would export democracy to the rest of the world, while also securing the leading position of the US. It is no coincidence that Trump and the Republican party have changed position when growth through trade looked to be strengthening rivals. The American public has chosen a different path. And US economic dominance in the early 20th century was built upon the destructive wars in Europe and Asia that hobbled rivals, while leaving the US unscathed. America first policies also includes others must fail politics.

The victory of Trump and Republican also potentially is the next step on moving to a true digital world, that is distinct from the nation state world we live in today. American corporations control almost all the important aspects of the digital world - from optic fibre cables, to social media, to operating systems to payment systems. Large US corporates operate on purely global scale, that is at odds with the domestic focus of nation state. We have already seen that the nation state struggles to enforce its will against large US corporates, and with the reelection of Trump, tax rates will likely fall further. Elon Musk has already made the jump from businessman to politician (with control over SpaceX and Starlink making him the most powerful single person in military matters). The support of Bitcoin, which is outside of the control of the US government, also adds to the idea that we are moving to a new stage in Western civilisation, or returning to an age of Empire, with US tech company the digital world overlords. This would be similar to the arrangement between the UK government and the East India Company back in the day.

In the short term, the obvious trades will work. Long S&P 500, gold, bitcoin and short treasuries. In the longer term, I would bet on politics in the rest of the world turning more violent. Rule of law and free trade politicians are useless against a Trump administration. I see the return of the general-politician globally, and the end of the lawyer-politician. I think that is a shame - but if the most powerful nation wants it that way, then that’s the way its going to be.

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Unlike a lot of fund managers and business people, President Trump really destroyed my business model. In its most simplest form, I see pure capitalism, or what I call pro-capital policy as being inherent deflationary. If you look at the performance of S&P 500 versus US treasuries, the performance has tended to align, and periods of outperformance in equities, like the dot com boom, then sees the reverse with the GFC. However Trump changed the rules, and Biden has followed. The rules of the game is that Treasuries are piggy bank for government to distribute largesse to its constituents. Equities rip, and bonds dip.

Looking back at 2016, and thinking about the swing voters that matter these day - rust belt blue collar workers - when faced with the choice of Clinton or Trump, Trump was by far the most appealing to pro-labour voters. Clinton represented establishment, and ever worse, lawyers.

In 2020, with a Biden v Trump match up, for a pro-labour voter you were faced with a President that had indeed at least tried to boost labour income, even if it was too disorganised to actually work, against Biden, who was very definitely a pro-union and pro-labour politician. And in power, Biden did work very hard to be pro-labour. If he was 10 years younger, who knows that this election would hold.

But away from the US, the pro-labour trend in politics has been very strong. In the UK, we saw ex-hedge funder, banker, consultant Rishi Sunak vs public servant lawyer, and saw the conservative party suffer huge losses, not only to labour but too Nigel Farage’s new party.

In India, Modi also saw a reversal, as many of his pro-business policies alienated lower caste Indian, as well as other voters. In France, Macron lost heavily to pro-labour forces on both the left and the right. In Japan, the LDP has just suffered a large loss of seats, and was very much the part pro-capital politics. So the question for me, who is the pro-labour candidate in Harris vs Trump?

This is a surprisingly tough question. Trump is tariff man - which is popular with unions. But he is also “tax cut” man for big business. He also chose JD Vance to go up against Tim Walz - who is clearly the most pro-labour politician on the ticket. I feel that tax cuts for business and JD Vance are two huge mistakes for Trump - and without these two “policy choices” would likely romp it in. Kamala is tough - she is labelled as a radical Marxist because of her father - but I am not sure that is damaging as Republican believe. Would she fight for pro-labour policies as hard as Biden? Maybe, but hard to tell. Election betting odds favour Trump at the moment.

My guess for what it is worth is that Harris does much better than expected. I suspect that she will win the popular vote by quite a large margin, and that is enough to squeak a victory. In all the election results this year, the vote for pro-labour has been underestimated, and I think Trump has kicked a few own goals in pushing tax cuts and JD Vance.

Funnily enough, a Harris win will have no long term effect on markets. Even if Trump gets too old to campaign for 2028, his effect on politics will remain until the bond market blows up, and pro-capital policies become popular again. We are years from that - even if the trend is already moving that way..

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In a recent post, I lamented that rather than chasing macro trades, I should have just indexed. The problem with indexing, as far as I am concerned, was that inflation trade seem to imply indexing is a disaster trade waiting to happen. One very long dated chart that I liked looking at was the performance of the S&P 500 compared to returns from treasuries. Equities seem to have greatly outperformed treasuries, and I am bearish treasuries would imply a very bearish view on equities. The excess of the dot com bubble, saw the reverse excess of the GFC. Hubris before nemesis - as they say. If the dot com bubble was hubris - I am not sure what we would call today.

The problem for me, is that I think a “pro-labour” turn in politics is making the world inflationary - and I have been pushing, GLD/TLT, which has taken out new cycle highs.

Other inflation indicators I look at have inflected from deflation, back to inflation.