Spy read the dreadful news of Republican political activist, Charlie Kirk’s, assassination on Thursday morning. For the world’s leading democracy, the sad truth is that violent politics is, historically, all too common. Four presidents, Abraham Lincoln, James Garfield, William Mckinley and John Kenndey were assassinated. Even more alarmingly, no less than 20 more presidents have suffered attempts on their life in office. There have only been 46 American presidents, including Donald Trump, and that means more than half have been assassinated or had narrows escapes. The Americans, with the deeply polarised politics, are beginning to resemble the decadent ancient Romans in too many tragic ways.
Spy was brought up on James Bond and other dashing fictional secret agents, but these days, “agents” seem to be entirely digital, live in the cloud and are supposed to be smarter than Einstein. SoFi Technologies thinks everyone will want to use them and so we should be investing in them, too. The asset manager has just released an ETF that will invest in the companies that will build the myriad AI agents that are going to power our future and, one supposes, make our lives an automated dream. The Tidal Trust SoFi Agentic AI ETF has launched in New York and is now trading under the ticker, AGIQ, for those who believe the hype. The strategy will track the BITA US Agentic AI Index, naturally. The fund will only hold a maximum 50 stocks, but each firm will provide autonomous agents in a range of fields including cyber and infrastructure, scientific and discovery, mobility and transportation and, industrial and robotics among others. Let the agentic games begin.
How does one forecast the future of an economy? Some like to measure transports, other look at housing sales, others at consumer confidence and some ask the chaps at the gold course. M&G’s Bond Vigilantes team are looking at an old favourite, Dr Copper.
“Doctor Copper is simply the ratio of the price of copper divided by the price of gold. Copper, an industrial metal, reflects economic activity, while gold is traditionally viewed as a store of wealth. The theory goes: when the economy is strong, the ratio is high; when it’s weak, the ratio is low.” What is the Doctor saying? In relatively clear terms, the outlook is looking shaky. As the vigilantes put it, “While investors remain optimistic, the copper-to-gold ratio is signalling a more cautious view. Whenever the ratio has reached levels this low, it was consistent with a slowdown or even a recession.” None of us can say we have not been warned.
No matter how much the asset management industry moans about compressed margins, what is true is that the global asset base keeps growing and growing at a very healthy pace. Broadridge reckons that “global assets will rise to $132trn by 2027”, which would be up $18trn from the current $114trn.” The rather exciting thing is that a significant portion of that growth is expected to come from Asia. Interestingly, for Spy anyway, is that the consultant expects retail assets to represent 50 per cent of the global asset pool by 2027. Modern platforms and the ease with which ETFs can be bought and sold, are allowing retail adoption at an unrivalled pace.
Something for a Friday afternoon that could be a trick question: Which have performed better this year: emerging markets or developed markets? According to Eastspring, EMs are the clear winner: “17.0% net gains to end July, [while] developed markets lagged at 13.1%.” But the real kicker is that “EMs remain deeply undervalued: at 14x forward price-to-earnings, they are 30% cheaper than DMs and a striking 42% cheaper than the US”. In other words, even after a decent run, they still remain a bargain. As their strategists put it, “Add in the low price-to-book ratios and higher dividend yields versus the US, and the case for EMs becomes more compelling.” Hard to argue with that, reckons Spy.
The stock market has often been described as “a casino” in the last few decades. Gamified trading platforms, talking head TV shows with exuberant pundits, the listing of crazy ideas and SPACs – all add up to a lively picture, for sure. And, in some ways, the vision is quite right. What is the best performing stock in the last five years and how did it do? If your answer is Nvidia, with its 1400% return, you are not even in the ballpark. According to Stock Analysis, a specialist investor service, the best performing company is Applied Digital Corporation. This firm “designs, develops, and operates digital infrastructure solutions to high-performance computing and artificial intelligence industries in North America.” Its stock is up a blistering 28,400% in just 60 months, making early Bitcoin investors jealous. Choosing the right number on a roulette table only gives a 3,500% return, by comparison…casino, indeed. You just have to choose the right stock. Ah, there’s the rub.
The news broke this week that Hong Kong tycoon Albert Yeung, chairman of Emperor Group, has sold his wine collection for a decent HK$17.7m ($2.27m) in an auction. The sale of 161 lots included bottles from renowned wine makers, Domaine de la Romanee-Conti, Petrus and Chateau Palmer. While it is a big number, Spy’s loyal and thirsty readers may be interested to know that the most expensive single bottle of wine ever sold at auction was a 1945 Domaine de la Romanée-Conti bottle, which fetched $558,000 (including buyer’s premium) at Sotheby’s in New York on 13 October 2018.
Spy’s quote of the week comes from an anonymous writer, “The path to inner peace begins with four little words: “not my bloody problem’”. If only.
Until next week…
