I might agree that a near term high is in but I'd really push back on the long term view. The US system is far more flexible than any other. You'd have to convince me that other areas are going to adapt better long term. While you deny it at times, I do think you have an anti-US bias and in particular an anti-US tech bias. Of course I have a pro US tech bias so guilty as charged.
Generally speaking, I am a "actions have consequences" type of guy. When China launched its property bubble in 2009, I became very bearish on China, but it took a few years to come through. And I had made a lot of money being bullish on China, but policy making became silly. And US policy making is now quite silly. And as I point out in the notes, the gap in borrowing cost between the US and Switzerland is already widening. I also remember at the top in Japan there were so many reasons it would continue to flourish - and likewise with China. Things change.
Agreed and from a 5-10 year perspective I think you're right. From a 20-30 year perspective, I'd weight the chances of the US responding more dynamically than Japan did or than China will highly. Our chaotic political system is the advantage there. Immigration is already popular again according to many polls - just like it rebounded in Trump's first term. I also think there'll be a strong backlash against state ownership of AI and chip companies. China on the other hand can't adjust the level of chaos they'd experience from reallocating jobs from SOEs to private companies. Nor can they reconstitute their banking system to lend for profits rather than preference. Of course none of us know.
A bit of that - but Nomura provided great data on retail currency and equity flow. I would also track popular investment vehicles - like the Shinko REIT fund back in the day.
Hi, Russel, you know just how wonderful that Citadel global macro strategy paper conclude its recent paper with one line: never bet against America! within broader AI context it thinks will help small buesiness in the america to innovate better and achieved that economies of scale soon at lower cost, i am just not sure this is the case.
It’s also very cultural. Japan is in general extremely good at getting the details very well done but many times missing the bigger picture. Quite the contrary to the US and some other western countries.
I agree the Japanese senior leadership tend to give in to US pressure.
However, if US would commit political and economic fumbles while burning bridges with other nations, wouldn’t they somehow drag Japan down with them on a relative basis? (long US assets and small gold reserves)
Not sure about Japan missing the bigger picture - they just tend to be more patient. A good example is Japan maintaining self sufficiency in semi production, while the US is now building from scratch.
My argument is that US guarantees of mutual defence benefitted the US as other nations outsourced cutting edge military R&D to the US. Now in the future, this R&D will remain at home - which can only be negative long term for the US.
I often think how Liberation Day while muted on its effect on stocks in the short term will be a marker in economic history of de-globalization and a long term underperformance of US to ROW, good stuff
I might agree that a near term high is in but I'd really push back on the long term view. The US system is far more flexible than any other. You'd have to convince me that other areas are going to adapt better long term. While you deny it at times, I do think you have an anti-US bias and in particular an anti-US tech bias. Of course I have a pro US tech bias so guilty as charged.
Generally speaking, I am a "actions have consequences" type of guy. When China launched its property bubble in 2009, I became very bearish on China, but it took a few years to come through. And I had made a lot of money being bullish on China, but policy making became silly. And US policy making is now quite silly. And as I point out in the notes, the gap in borrowing cost between the US and Switzerland is already widening. I also remember at the top in Japan there were so many reasons it would continue to flourish - and likewise with China. Things change.
Agreed and from a 5-10 year perspective I think you're right. From a 20-30 year perspective, I'd weight the chances of the US responding more dynamically than Japan did or than China will highly. Our chaotic political system is the advantage there. Immigration is already popular again according to many polls - just like it rebounded in Trump's first term. I also think there'll be a strong backlash against state ownership of AI and chip companies. China on the other hand can't adjust the level of chaos they'd experience from reallocating jobs from SOEs to private companies. Nor can they reconstitute their banking system to lend for profits rather than preference. Of course none of us know.
How did you used to track the capital flows in and out of Japan ? BOJ flow of funds data ?
A bit of that - but Nomura provided great data on retail currency and equity flow. I would also track popular investment vehicles - like the Shinko REIT fund back in the day.
Hi, Russel, you know just how wonderful that Citadel global macro strategy paper conclude its recent paper with one line: never bet against America! within broader AI context it thinks will help small buesiness in the america to innovate better and achieved that economies of scale soon at lower cost, i am just not sure this is the case.
Long term - America will do fine - but you do get decade or two when US stocks do nothing...
It’s also very cultural. Japan is in general extremely good at getting the details very well done but many times missing the bigger picture. Quite the contrary to the US and some other western countries.
I agree the Japanese senior leadership tend to give in to US pressure.
However, if US would commit political and economic fumbles while burning bridges with other nations, wouldn’t they somehow drag Japan down with them on a relative basis? (long US assets and small gold reserves)
Not sure about Japan missing the bigger picture - they just tend to be more patient. A good example is Japan maintaining self sufficiency in semi production, while the US is now building from scratch.
My argument is that US guarantees of mutual defence benefitted the US as other nations outsourced cutting edge military R&D to the US. Now in the future, this R&D will remain at home - which can only be negative long term for the US.
I often think how Liberation Day while muted on its effect on stocks in the short term will be a marker in economic history of de-globalization and a long term underperformance of US to ROW, good stuff
Indeed. Markets over react in short term, but once the panic is over, assume no change... but over time the effects build