Independent Strategy

The broken plate

The world will continue to split along Cold War lines – economically, culturally, technologically and scientifically. Inflation and recession risks will remain the economic policy issues. But markets will not reflect these variables in the same way as in the last year because they already reflect a large part of the risks.

Equity markets probably have at most a 10% downside from here. Bonds are still overpriced. Commodities, such as agricultural products and energy, remain longs. That means Brazil as a long and places like Turkey and Egypt as shorts. We remain long the USD (but nervously), the AUD, SGD and the BRL. We are now turning neutral the EUR. And we remain short the JPY.

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