Summer's over

I have been writing these notes on substack for five years this month, after deciding to restart writing regular public notes in the depths of the pandemic. It was good timing. The past five years have been particularly turbulent and consequential: Covid; the second Russian invasion of Ukraine; strategic rivalry between the US and China; the rewiring of global flows; and now the second Trump Administration. A process of economic and geopolitical regime change is underway. And it’s likely that the next five years will be at least as disruptive.

This note discusses seven recent global economic and geopolitical developments that provide insight into how this new world is shaping up. Do get in touch if you would like to discuss. I’m at david.skilling@landfallstrategy.com or on LinkedIn.

And all the best to my Northern Hemisphere readers as we transition from summer into a busy back half of the year.

1. US exceptionalism redux?

The current US tariff rate is estimated at 18%, not far below Liberation Day levels. Immediately after the shock of the Liberation Day announcements in April, US markets sold off heavily and foreign investors withdrew capital from US equity and bond markets. But almost five months on, US equity markets are at record levels and foreign investors have returned. Treasury data for May and June show that foreign investors have since allocated substantial amounts into US equities, although flows into US Treasuries are not as strong. This foreign investor capital allocation has been supported by the recovery in US equity markets, particularly in the tech sector. So was this simply a very brief interruption to US economic/market exceptionalism? I am not so sure: my sense is that the relative risk/return profile of the US compared to other markets has structurally shifted.

The full note is available at: https://davidskilling.substack.com/p/summers-over