The economy is about the exchange of value, i.e., goods and services. And value mixes three components, and three only:

This is why 100 barrels of oil can be exchanged for a trade secret, provided that a market process allows for the transfer of ownership, preferably facilitated through a "currency.”

The great economic advancements of mankind have always been accompanied by major innovations in one of these three forms of value. Trade exchanges (bourse) and bills of exchange in the 13th century, coal and the steam engine through the 18th and 19th centuries, and oil, gas, electricity, remote transmission, computers and the Internet in the 20th century, to name but a few examples.

What are the major innovations in the making today?

An easy way to understand the difference between gold, silver, and copper is to gift your wife a piece of jewelry made of one of these metals and wait for her reaction.

But if you're an investor, the problem gets more complicated. All three metals have had historically similar uses: hoarding, jewelry, and industry, but with varying proportions as well as differing energy cost to extract, therefore their prices are not similarly sensitive to macroeconomic factors.

Let's take a closer look.

When the press talks about a crash, they refer to 1929, 1987, 1998, 2000 or 2008. In short, stocks. Today, we are experiencing a different kind of crash, that of government bonds, one of the three worst events in this market over the last 150 years.

Bonds have become toxic in the developed world.

However not in another world: commodity exporters.

“Give me the expected yields of all your assets and I will provide you with the best asset allocation for any given risk level.”

“Fair enough, but what about gold?”

“Zero yield, high volatility, no chance to be selected.”

“Something wrong?”

René Descartes postulated a theory known as, “The Principle of Inertia.” It is best explained using an example: an individual who is traveling in a plane at constant speed with the windows closed will not feel the speed at which the plane is traveling. However, an individual does feel the plane accelerating at takeoff, and decelerating at landing.

Applying this to inflation yields the following inference: the level (speed) of inflation is not what the economy feels; it is the acceleration and deceleration of inflation the economy feels.

Today the world is inflationary for 100% of the countries we track. But when will inflation decelerate?

The Japanese yen is a mystery.

Much like Japan, in fact, the sole region in the world (in our macroeconomic partition) that is both a country and major economic center on its own.

The Japanese yen exhibits two unconventional properties:

Why? And how do we trade the mysterious yen?

Currency management is often the side-lined theme of portfolio construction. Portfolio managers tend to focus first on risk assets’ allocations, then on their currency exposures. And the last one of the climbing team is undoubtedly dragged by the first rope leaders.

The foreign exchange market, however, can provide hedges to cautious investors as well as easy leverage and high returns (uncorrelated to equities) for risk-takers.

Here is a simple quantitative solution to arbitrate the four main currencies of the world: the dollar, the euro, the yen, and the yuan.

The world of cryptocurrencies is a bit of a magical world, except of course for those already participating in the ecosystem. The king of this world, bitcoin, is the most volatile currency in history. Perhaps it is not a currency after all, but an asset, or even an illusion. But the conclusion remains the same, considering its size of about $600 billion: a value that fluctuates with 100% volatility.

The bitcoin has just collapsed, like the value of growth stocks or European and American government bonds. The market sends us a message – not a "Message in a Bottle," as The Police band famously sang in 1979 – but rather, a "Message in a Bitcoin.”

Luxury is like beauty: Rare, immediately perceivable, extremely valuable, and quite difficult to describe.

From an economic standpoint, however, luxury has a very precise meaning.

If you wish to know whether the product you bought or sold is considered luxury, grab a pen, prepare yourself for some basic mathematics, and jot this down.

What might surprise you along the way is how health may be turning into luxury.

Inflation, growth, profits, energy supply. So many uncertainties today.

One definite macroeconomic fact is the US monetary policy. The Fed will take a new trajectory on its balance sheet in a few weeks, for months and potentially years: A sustained contraction of a trillion USD per year.

This is a first in world monetary history.


What is happening on the battlefield in Ukraine left aside a second war (not military this time) in the monetary sphere. Roles are reversed. The Western world pushes hard to collapse the ruble, and thus destroy the Russian economy, and so, Russia retaliates. In both wars, resistance seems to be much stronger than expected. In three weeks’ time, we’ll see if Europe yields to President Putin’s requirement to pay Russian gas in rubles, or not.

The outcome could be a monetary game-changer.

For 150 years, investment cycles have been mostly controlled by the balance between efficiency and scarcity. Efficiency when primary energy is abundant and cheap; Scarcity when primary energy is scarce and expensive. In efficient times, the stock market thrives; In times of scarcity, it trembles.

Historically, expensive energy cycles tend to last a full decade. What if history repeated itself?