How Is Geopoltical Fragmentation Reshaping US FDI: US foreign direct investment (FDI) is shifting away from China and Hong Kong towards countries like Mexico, India, and major European nations due to geopolitical concerns. US multinationals are also showing early signs of reshoring and localizing supply chains in high-tech and advanced manufacturing sectors. Overall, these changes indicate a response to geopolitical tensions, although the process may take time to fully develop.
The Techno-Industrial Policy Playbook: The Techno-Industrial Policy Playbook discusses the need for effective policies to support U.S. industries in adapting to changing technologies. It emphasizes the importance of collaboration between Congress and agencies to ensure that investments in technology and infrastructure are made wisely. The document also highlights the potential risks and challenges faced by sectors like healthcare amid global conflicts and technological advancements.
Artificial Intelligence and Its Implication For Electricity Systems: A plethora of articles on how artificial intelligence (AI) is affecting electricity systems and power demand. It highlights the challenges posed by AI's energy needs, while also noting its potential to improve grid efficiency and sustainability. Our primary focus during reading was on how the growth of AI infrastructure may strain power resources, making reliable electricity access increasingly important.
How Do Investors Form Long-Run Return Expectations (Part 1) and Exception Expectations - US vs Non US Equities (Part 2)
Part 1: Investors often have two types of expectations: objective, which are based on market valuations and yields, and subjective, which rely on past returns. Many investors mistakenly extrapolate past performance, leading to overly optimistic or cautious expectations about future returns. This can create risks, especially when current market valuations are high and expected returns are low.
Part 2: U.S. equities have significantly outperformed non-U.S. equities in recent years, largely due to high relative valuations rather than sustainable growth. While some investors maintain their U.S. equity allocations, historical trends suggest that U.S. underperformance could occur, especially given current extreme valuations. The analysis indicates that many investors may be overly optimistic about future U.S. returns while neglecting the potential for mean reversion in valuations
Huge fan of Antti Illmanens other work, well worth reading if you have not.
Joined two of my favorite Aussies for a conversation covering topics including tin and the DRC, copper and Zambia, the USA’s growing understanding of mineral importance, gold miners in the Americas, and some thoughts on the investment management business.
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