Latest news with #Papic
Business Times
29-04-2025
- Business
- Business Times
‘Exodus' of US assets set to intensify, says strategist
GLOBAL investors are rotating out of US assets not because of uncertainty over tariffs, says strategist Marko Papic of BCA Research, but because non-US assets are more attractive, particularly as the US dollar is expected to weaken over time. Papic wrote in a recent note: 'The big picture is that the market narrative of US exceptionalism is dead. So, it doesn't really matter what happens with the trade war. President Trump has catalysed what was always going to happen, which is the rotation of capital away from extremely expensive US.' He maintains that the market story of 2025 is that 'global investors are using the catalyst and news flow of the trade war to lighten their exposure to US assets'. 'The trade war noise is providing cover for an absolute exodus out of the US.' This is evident in the year-to-date underperformance of Nasdaq and S&P 500 relative to the rest of the world. The Nasdaq is down by 10 per cent and S&P 500 by 6 per cent. In contrast, MSCI ACWI ex-US is up by more than 7 per cent; MSCI Europe by 3 per cent; China by more than 9 per cent; and Asia ex-Japan by 1 per cent. Papic is BCA Research chief strategist, whose analyses combine geopolitics and markets in a framework called GeoMacro. He was in Singapore last week for a conference by the Investment Management Association of Singapore, where he was on the podium to share his views on 'extracting geopolitical alpha'. He spoke to BT on the sidelines of the conference. US dollar, assets to weaken The US dollar is 'way too strong', he said, and could weaken by 30 to 50 per cent over the next five years. This would make US goods and services more attractive, and effectively rebalance trade for the US in a more 'gentlemanly' fashion than tariffs. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up 'Americans will be able to say – look, we're more attractive. Investment and factories will naturally move (to the US). Everything that Trump wants to do via threats and aggression will happen in a gentlemanly way, because currency depreciation is an across-the-board gentleman's tariff. The reason that rivals and partners are not going to be mad is because it's not permanent. Currencies go up and down.' He expects the value of US assets to deflate over the next five years. 'This doesn't mean the S&P 500 doesn't end the year positive; it may go up 7 or 10 per cent. But if the dollar declines by 7 per cent, in currency-adjusted returns, someone in Japan, Singapore or Europe would do better in other equity markets. 'Most investors, whether they're individuals or family offices or long-term pension funds, are up to their necks in US assets and US dollars… If you take some of the proceeds over the last five to 10 years and invest in foreign assets in a very diversified way, that will be the smartest thing to do over the next five years.' Singapore's future role Singapore, he observed, is feeling 'a lot of consternation' with the onslaught of tariffs and the trade war. But that consternation, he argued, is 'built on two false narratives'. The first narrative is the belief that globalisation is ending. This, he argued, is not so. 'Exports as a percentage of global GDP have been stable at 30 per cent for the past seven years. That's not going away. Trump's actions are causing other countries to start redoubling on globalisation. Singapore will be fine.' The second is that Singapore has traditionally played the role of helping to 'grease the wheels of US-China cooperation'. But Singapore, he said, should position itself as the 'financial capital of a multi-polar world'. 'That's where Singapore's long-term relationship with the US could be a detriment. Singapore may have to take a stand, or take no stand.' He believes the future lies in facilitating capital in a 'non-aligned Global South', and 'whoever gets there faster wins'. He sees other financial centres competing for leadership in this, including India, Abu Dhabi and Hong Kong. The Global South refers to countries mainly in Asia, Africa and Latin America. 'The next 30 years are going to be about South to South… not so much goods but capital flows and savings. I think that's where Singapore's future is.' In his GeoMacro reports, Papic has written on what he sees as an exodus out of US assets, as well as over-valuation and false narratives by Big Tech companies. One of the drivers of the funds outflow is the realisation that the 'fiscal gravy train' is slowing. Until recently the US stock market, especially tech stocks, has been buoyed by expectations of a generous fiscal package under Trump. But Trump, he wrote, will increasingly face the 'tightening noose of material constraints'. One constraint is the US bond market, which has not rallied as much given the rising odds of a recession. If bond yields remain elevated, then Trump may not be able to follow through with expected tax cuts, as fiscal spending may be opposed by conservatives in the House. 'The material constraints against Trump are coming fast and hard. Bond yields are too high, fiscal conservatives in the House are revolting and negotiating trade with the entire world at the same time seems folly.'
Business Times
29-04-2025
- Business
- Business Times
'Exodus' out of US assets set to intensify, says strategist
GLOBAL investors are rotating out of US assets not because of uncertainty over tariffs, says strategist Marko Papic of BCA Research, but because non-US assets are more attractive, particularly as the US dollar is expected to weaken over time. Papic wrote in a recent note: 'The big picture is that the market narrative of US exceptionalism is dead. So, it doesn't really matter what happens with the trade war. President Trump has catalysed what was always going to happen, which is the rotation of capital away from extremely expensive US.' He maintains that the market story of 2025 is that 'global investors are using the catalyst and news flow of the trade war to lighten their exposure to US assets'. 'The trade war noise is providing cover for an absolute exodus out of the US.' This is evident in the year-to-date underperformance of Nasdaq and S&P 500 relative to the rest of the world. The Nasdaq is down by 10 per cent and S&P 500 by 6 per cent. In contrast, MSCI ACWI ex-US is up by more than 7 per cent; MSCI Europe by 3 per cent; China by more than 9 per cent; and Asia ex-Japan by 1 per cent. Papic is BCA Research chief strategist, whose analyses combine geopolitics and markets in a framework called GeoMacro. He was in Singapore last week for a conference by the Investment Management Association of Singapore, where he was on the podium to share his views on 'extracting geopolitical alpha'. He spoke to BT on the sidelines of the conference. US dollar, assets to weaken The US dollar is 'way too strong', he said, and could weaken by 30 to 50 per cent over the next five years. This would make US goods and services more attractive, and effectively rebalance trade for the US in a more 'gentlemanly' fashion than tariffs. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up 'Americans will be able to say – look, we're more attractive. Investment and factories will naturally move (to the US). Everything that Trump wants to do via threats and aggression will happen in a gentlemanly way, because currency depreciation is an across-the-board gentleman's tariff. The reason that rivals and partners are not going to be mad is because it's not permanent. Currencies go up and down.' He expects the value of US assets to deflate over the next five years. 'This doesn't mean the S&P 500 doesn't end the year positive; it may go up 7 or 10 per cent. But if the dollar declines by 7 per cent, in currency-adjusted returns, someone in Japan, Singapore or Europe would do better in other equity markets. 'Most investors, whether they're individuals or family offices or long-term pension funds, are up to their necks in US assets and US dollars… If you take some of the proceeds over the last five to 10 years and invest in foreign assets in a very diversified way, that will be the smartest thing to do over the next five years.' Singapore's future role Singapore, he observed, is feeling 'a lot of consternation' with the onslaught of tariffs and the trade war. But that consternation, he argued, is 'built on two false narratives'. The first narrative is the belief that globalisation is ending. This, he argued, is not so. 'Exports as a percentage of global GDP have been stable at 30 per cent for the past seven years. That's not going away. Trump's actions are causing other countries to start redoubling on globalisation. Singapore will be fine.' The second is that Singapore has traditionally played the role of helping to 'grease the wheels of US-China cooperation'. But Singapore, he said, should position itself as the 'financial capital of a multi-polar world'. 'That's where Singapore's long-term relationship with the US could be a detriment. Singapore may have to take a stand, or take no stand.' He believes the future lies in facilitating capital in a 'non-aligned Global South', and 'whoever gets there faster wins'. He sees other financial centres competing for leadership in this, including India, Abu Dhabi and Hong Kong. The Global South refers to countries mainly in Asia, Africa and Latin America. 'The next 30 years are going to be about South to South… not so much goods but capital flows and savings. I think that's where Singapore's future is.' In his GeoMacro reports, Papic has written on what he sees as an exodus out of US assets, as well as over-valuation and false narratives by Big Tech companies. One of the drivers of the funds outflow is the realisation that the 'fiscal gravy train' is slowing. Until recently the US stock market, especially tech stocks, has been buoyed by expectations of a generous fiscal package under Trump. But Trump, he wrote, will increasingly face the 'tightening noose of material constraints'. One constraint is the US bond market, which has not rallied as much given the rising odds of a recession. If bond yields remain elevated, then Trump may not be able to follow through with expected tax cuts, as fiscal spending may be opposed by conservatives in the House. 'The material constraints against Trump are coming fast and hard. Bond yields are too high, fiscal conservatives in the House are revolting and negotiating trade with the entire world at the same time seems folly.'
Yahoo
14-02-2025
- Science
- Yahoo
Quantum Machine Could Predict The Ultimate Fate of The Universe
Our entire reality could – in theory – be built on a bed of sand, teetering on the brink of collapse. If so, a new device developed by a collaboration of physicists in Europe might give us some idea of how it all ends. Using a process known as quantum annealing, the researchers have provided a proof-of-concept method to study the dynamics of a terrifying kind of reality-decay that would pull at the threads of physics, causing them to unravel. Were such an event to occur somewhere in the cosmos, the quantum laws that lend structure to matter would be rewritten at the speed of light, spelling an end to all reality as we know it. How likely is this existential exit? Somewhere on the spectrum from impossible to putting a question mark around next Tuesday's dental appointment. "We are trying to develop systems where we can carry out simple experiments to study these sorts of things," says Zlatko Papic, a theoretical physicist at the University of Leeds in the UK and lead author of a study aiming to provide a new way to study quantum fluctuation. "The time scales for these processes happening in the Universe are huge, but using the annealer allows us to observe them in real time, so we can actually see what's happening." Late last century, American theoretical physicists Sidney Coleman and Frank De Luccia grimly pointed out that there is no reason to think the lowest energy state of absolute nothingness really is the lowest. In other words, we're all standing on a false floor above an abyss of pure chaos. Wink out every star, lock away every atom, and wipe the cosmos clean, you're still left with a nothingness that seethes with particles buying and selling their way towards existence. All of physics emerges from this economy of exchange, in fact, facilitating nuclear and chemical reactions in a relatively stable stock market of energy bartering. Coleman and De Luccia invited us to imagine that what we think of as the lowest level of the Universe's economy hides a deeper kind of broke. What might happen if somewhere, somewhen, one bubble of space was to lose its fortune at the roulette table, and then some? The consequences could, in fact, be catastrophic. A ripple-effect could roll out at light-speed as the new value of nothingness brought the whole cosmic financial system crashing down. "We're talking about a process by which the Universe would completely change its structure," says Papic. "The fundamental constants could instantaneously change and the world as we know it would collapse like a house of cards. What we really need are controlled experiments to observe this process and determine its time scales." Controlled experiments to test a hypothetical black market for the Universe's energy economy aren't exactly the easiest things to design, but Papic and his team may have found a way to at least mimic the pockets of economic collapse using quantum annealing. The concept relies on using the fluctuating fuzziness in quantum mechanics to find an optimal solution among a range of likely states. Their system used thousands of superconducting units operating as units in a quantum computer, representing a simplified single-dimensional map of empty space churning with possibility. In the study, the team's simulation of false vacuum decay supported models that predict the size of a collapsing bubble is in fact the result of a competition between the energy gained by the sudden drop inside it and the loss of energy from the bubble's surface. In the event multiple bubbles form, a complex dance of interactions emerges where smaller ones can affect the expansion of larger ones. None of this actually tells us whether a false vacuum exists, or – if it does – whether we can expect our favorite reality show to be cancelled within the next few quadrillion years. But every experiment takes us a step forward to understanding these complex ideas, and the quantum annealing method could one day be used to test predictions on the birth of universes like our own. "This exciting work, which merges cutting-edge quantum simulation with deep theoretical physics, shows how close we are to solving some of the Universe's biggest mysteries," says Papic. This research was published in Nature Physics. Earth's Flipping Magnetic Field Heard as Sound Is an Unnerving Horror We Finally Know Why Ancient Roman Concrete Was So Durable Teleportation Achieved Between Quantum Computers in a World First
