Macro

Powell leaves on 15 May. Warsh may not be confirmed in time. The Iran war has ensured this transition will be anything but orderly.

The 1970s parallel for a gold crash requires a Volcker. There is no Volcker in 2026.

For over a decade, the default recommendation for retail investors worldwide has been simple: buy a global index fund and forget about it. The MSCI All Country World Index — or its close cousin, the S&P 500 — became the intellectual path of least resistance. And for a long time, it worked beautifully. But the conditions that powered that trade are shifting. I believe we are entering a period where Japanese equities will meaningfully outperform global indices. This is not a short-term tactical call. It is a structural argument built on five mutually reinforcing pillars. ...

Between 1995 and 2021, Japan’s average annual inflation rate was approximately 0.2%. For an entire generation, prices were essentially flat or falling. This was not a neutral condition. Deflation corroded the economy from the inside, suppressing wages, discouraging investment, rewarding cash hoarding, and keeping equity valuations perpetually depressed. That era is over. As of December 2025, Japan’s core consumer price index — excluding fresh food but including energy — had remained above the Bank of Japan’s 2% target for 45 consecutive months. The headline CPI averaged 3.2% for calendar year 2025, according to Japan’s Statistics Bureau. Even the “core-core” measure excluding both food and energy — the closest proxy for domestically generated inflation — has been running above 2% for over three years. ...