On Stoicism: Seneca advised to regularly set aside days without comforts, “during which you shall be content with the scantiest and cheapest fare, with coarse and rough dress, saying to yourself the while: ‘Is this the condition that I feared?’”
Idiosyncracies In Duration (LatAm Tech)
There is no hiding my excitement about the prospects of Latin America and how bullish I am about the continent. The previous dispatch laid out the fundamental thesis on why LatAm will be the first continent out the gate into a secular growth story. Despite what may seem counterintuitive, countries in this region have extensive experience managing high inflation rates, making them experts in controlling it. Brazil and Colombia have done an admirable job of tracking and managing inflation through interest rates, something the Western democracies and Japan is finding very hard to do. In this cycle, I believe that Latin America will take the lead in initiating a rate cut, resulting in superior growth momentum surpassing that of the rest of the world.
Relating to growth and drawing back to first principles on the critical barometers to measure the advancement of a civilization, it is hard to refute that technological markers are a crucial factor. Growth and Efficiency are tied to the hip, and technology is the glue that binds them. I’m going out on a limb here as we contemplate LatAm Tech because Duration Assets is an antithesis (in an inflationary environment and higher absolute inflation levels, duration tends to underperform) to my core portfolio of Value + Commodities. This view of Tech may seem too all-encompassing, but many, including myself, find it hard to break away from it because of US Monetary Policy and, as a byproduct, US Tech has led the “world order” and set the pace for the past two decades. However, I’d like to believe that idiosyncrasies exist, and this is consistent with our view that deglobalization will lead to the rise of economic factions that will out or underperform others. In addition, Tech that is exposed to a specific people and continent will also be a beneficiary of that population’s capital and economic cycle. In the long run, civilizational and cultural shifts dominate monetary policies, and the Western standard should not too silo us. LatAm is on the precipice of massive growth and a breakaway economic faction of increasing importance (due to commodity encumbrance); we believe that the Tech scene in LatAm will perform.
US private sector manufacturing construction up 62% in March, driven by tech & electrical sectors. All of these occurring into Copper and Tin supplies being globally tight.
Reshoring is inflationary.
Peso exhibiting LatAm strength, nice breakout.
Unemployment ticking up this summer?
BOJ still doing QE via the banks, precursor for the Fed?
Asia not looking good, Taiwan already in recession.
