Carry is compelling: 6.8% USD yield at 320bps spread, with EM inflation falling and rates cutting.Differentiation is key: Investment-grade EM vs frontier markets; commodity exporters vs manufacturing hubs.Distressed names offer asymmetry: Post-restructuring bonds (Sri Lanka, Ghana, Zambia) have 25-40% return potential.The macro backdrop for
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Historic concentration risk: 33% of S&P 500 in 7 stocks exceeds Nifty Fifty and dot-com peaks.Fundamentals justify premium—for now: Earnings growth (18% vs 8%), margins (28% FCF), and AI optionality support valuations.Broadening is starting: Equal-weighted S&P outperforming in Q4 2025; small caps rebounding.The concentration
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Terminal rate at 3.25-3.50%: Market pricing implies 2-3 more 25bp cuts in 2026.Soft landing base case intact: GDP 2.3%, unemployment 3.9%, inflation trending down.Watch core PCE and Sahm Rule: 0.2% m/m PCE and sub-0.5 Sahm reading keep easing on track.The easing cycle in contextThe
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Base case: $75-90 Brent: 60% probability of managed OPEC+ unwind with 1.2M bpd returned over 2026.India > China in demand: India overtakes China as top demand growth source; Chinese EV adoption at 45%.Energy equities undervalued: E&Ps trading at 40% discount to 5-year average EV/EBITDA
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Institutional adoption is structural: Pension funds and endowments entering means the capital is sticky and long-horizon.Supply squeeze amplifies demand: Post-halving supply of ~450 BTC/day vs $200-400M daily ETF inflows.Size at 1-5% via risk parity: Risk-parity frameworks suggest 0.5-1.5% allocation at current volatility.From fringe to
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Central banks are the new marginal buyer: 1,136 tonnes purchased in 2025, replacing Western institutions as price-setters.Supply deficit structural: 3,600t mine output vs 5,000t+ total demand; deficit met by ETF drawdowns.From hedge to core: Gold’s 3-year Sharpe ratio (1.42) now exceeds both equities and
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