martin 5.0 3 ideas

We were underweight US market. Korea has been the best one. We would emphasize for emerging markets which have been cheaper before now, there are price differentials between volume and growth. US equities are currently expensive and highly vulnerable to inflation shocks and delayed rate cuts. Emerging markets like South Korea offer significantly cheaper valuations and have already absorbed much of the global manufacturing pessimism, providing a better relative risk/reward for investors who need to deploy capital but want to avoid US concentration risk. LONG. Capital will rotate from overvalued US large caps into cheaper, liquid emerging market equities as a relative value play. A severe global recession that crushes export-driven economies, or a massive spike in the US dollar that triggers an emerging market currency crisis.

Private debt is something we have been warning about in December last year for us. We are very, very focused on liquid assets and being widely diversified. In an environment characterized by rising inflation, higher-for-longer interest rates, and sudden geopolitical shocks, illiquid assets like private credit are highly vulnerable. Borrowers face higher debt servicing costs leading to defaults, and investors lack the liquidity needed to exit positions during market downturns. AVOID. The yield premium offered by illiquid credit is not worth the structural risk during a major geopolitical and inflationary shock. Central banks inject massive liquidity into the financial system, effectively bailing out overleveraged private borrowers and compressing credit spreads.