Road Trip

Scarcity Commands a Premium

Assets most correlated to liquidity have historically included Nasdaq and Bitcoin (where Clarity Act passage will help, expected later in March or April). Hard assets - those that can't be replicated or confiscated - also stand to benefit, especially amid structural demand drivers: AI, energy transition, national security, resource wars, commodity-intensive growth in India and signs of reflation in China (see Chinese 10-year yields and Commodity Research Bureau Index for clues). This is after years of chronic underinvestment. As one Australian client quipped: "Mate, you can't have your AI capex cycle without a commodity one too." Quite. Yet you can still buy all the world's listed miners for less than Nvidia - and at a fraction of their market multiple. As commodities are the gating constraint to compute, and as scarcity attracts a premium, that gap may continue to close over time.

The Geopolitics of Guyana - and Gold

In Melbourne, talk turned to Venezuela and possible U.S. military action. With U.S. shale likely peaking at 13.5 million barrels/day, securing supply via alliance or annexation isn't far-fetched. Low oil prices are a MAAA imperative after-all. It just happened on the flight, I listened to my former lecturer Helen Thompson's brilliant discussion of the U.S., Britain and Venezuela's territorial dispute over Guyana's Essequibo region - home to vast oil reserves discovered in 2015 - making Guyana the fastest growing country on the planet. Back in 1840, the British, in abject defiance of the Monroe Doctrine, adjusted Guyana's borders claiming parts of then-Venezuela. Post a December 2023 referendum, Venezuela signaled intent to reclaim it. Whether this shapes U.S. strategy is unclear, but one thing is: confiscation of operating assets - like financial ones - only strengthens gold's role as a 'safe haven.'

Supply Shock

Syzygy Investment Advisory's Bill Callanan framed the Venezuela incursion to me in market terms as a "takeover of a distressed subsidiary (Venezuela) by a well-capitalized parent (U.S.)," bringing trillions in proven low-cost reserves (and gold, silver, rare earths and perhaps even bitcoin) back into orbit. He suggested this could transform a stranded asset into a disinflationary lever for the U.S., providing heavy crude feedstock for Gulf Coast refiners, just as shale production peaks. In time, it could become a non-OPEC supply shock rivaling the shale revolution itself, with implications to oil prices, inflation, interest rates (ref MAAA) and, potentially, the ability of marginal producers to control price. But that's a geopolitical hot potato we will cover another day.

China's Response - and Soft Power Signals

Any deterioration in U.S.-China détente - or Xi-Trump relations - could move markets. However, Venezuela may not be the trigger some expect; China has been hedging its risks for years given the mismanagement of Venezuela's Maduro regime. In the U.S., attitudes towards China have become less hostile (see Facts, Not Feelings), the majority of Americans prefer engagement and the U.S. even downgraded China from strategic to economic competitor in its recent National Security Strategy. President Trump has even adopted language that sounds like President Xi himself. Consider, "people live in homes, not corporations," echoing Xi's "houses are for living, not for speculation." The more important signal for deteriorating relations would be if the Xi-Trump summit in April was cancelled. Although that's not yet the case.

Changing Sentiment

As an aside, throughout my meetings it was abundantly clear sentiment toward China is shifting. Indeed investors are returning after years away, finding excitement in robotics, autonomous transport and AI (viewed as a public good, like electricity). Many I encountered noted China's future isn't its past. It's moving from debt-fuelled property and exports to consumption, equity and tech. Soft-power signals? Consider food. I learnt on my travels that China now seems to dominate luxury food production: caviar, truffles, porcini mushrooms - and, to Australia's dismay, macadamias. That's nuts.

Diversification Risks

Nearly every client I spoke to worried about tech concentration risks. For many, diversification (both within and outside the U.S.) seemed a price worth paying to stay fully invested in equities. Within this context, we discussed reversion potential from beta to alpha, index to factors (especially quality, low volume and dividend), AI builders to beneficiaries (refer to Bessent's comment that 2026 will see the hand-off from capex to productivity), compute to commodities, growth to value and big to small. Ironically, these strategies - to diversify away from large U.S. tech - exposed another risk: that concentration is a feature, not a bug, of the current AI revolution. Nevertheless, there were a few notable mean reversion trades exciting folks, with this chart below getting considerable attention.

Emerging Markets vs. Developing Markets

This was the most discussed chart. It shows emerging markets vs. developing markets at 2000 lows while emerging markets indices make new multi-year highs. This is within a context of a weaker U.S. dollar, improving commodity prices (many are extraction-based economies) and changing perceptions towards China.

EXHIBIT 2: COMPARISON OF EM/DM RATIO AND MSCI EMERGING MARKETS INDEX, 1988-2025