Your latest thoughts then ahead of
Jackson Hallmark earlier this week you
were very preoccupied by the political
pressure being applied to the Fed and
what that will either in the short term
or longer term due to the long end of
the curve.
Absolutely. I think the really important
thing to remember that that going into
Jackson Hole this weekend it's clearly
going to be market moving today. There
seems to be a complete divide in the
market whether it'll be hawkish or
dobbish for what it's worth and not very
much. I think he's going to be hawkish
relative to expectations because of
course there is no economic
justification for a rate cut just yet
and he's probably going to have to point
that out particularly the topic on the
labor markets but that's not worth very
much the much bigger point is is that
he's Jacksonhole pal speech is going to
really matter in the short term today
probably into next week it's not going
to change where we're going to be in a
few months time and that is US assets
are going to continue to suffer monetary
policy in the US has been completely
undermined doesn't matter what happens
this weekend it's been undermined we
know the fiscal situation is problematic
and got worse. We know with
institutional credibility has been
undermined. We know that the cost of
doing business with the US is both more
expensive and more uncertain and more
problematic. It is going to continue to
be a world of US underperformance. We've
seen US stocks lose their a share uh
decrease in their share of global market
cap this year. That will be an ongoing
theme. It'll likely accelerate into the
end of the year. It's it's been
accelerated a little bit in August, only
slightly, but it's likely to continue.
And linked to that, we're likely to see
the dollar to continue decline. So, it's
just a matter of when do you play the
next big dollar down leg, not if
Mark, US assets have outperformed over
the last 3 months while all of this has
been going on.
Why?
Sorry. US assets have not out
US they they've outperformed European
equities. Okay, I'm being simplistic
about this. You US equity markets have
come roaring back. Are you judging them
both in local currency terms?
to certain you're forgetting about the
currency budget. You
No, I'm not. It It's If I put put it all
in euros, I've got the S&P up by 6% and
I've got the Euro stocks 50 up by less
than 1% in euros over the last three
months.
Okay. I tell you've picked two arbitrary
benchmarks there and they're important
benchmarks. So, a better way to look at
is the glo is the overall picture of the
region versus each other. Now, I don't
have the the the the chart in front of
me, but I'm pretty sure that the US
share of global market cap has declined
from three months ago. Now, specifically
versus European stocks, I don't have the
chart in front of me. The point is it's
underperforming global stocks. It is
below 48%. It was above 50% six months
ago, eight months ago. All those months,
I'm not picking between both six months
and eight months ago. US share of global
market stocks is declining. Now if you
want to tell me then the last three
months that the outperformance has been
more about in Asia absolutely I think
the much better story is in Asia. I
fully believe that. I don't think it's
just a choice between US and Europe. I
think that Europe is the obvious liquid
one for people who are you know want to
diversify from the US and don't really
care about global affairs. But Asia is
the much much better story. Absolutely.
The point is US shares are
underperforming globally. When do you
pick Europe? When do you pick Asia? For
me it's Asia.