We recently had the opportunity to present our Global Macro Outlook 2026 at CFA Society Bombay and CFA Society Kolkata. We are now releasing the complete slide deck along with notes for each slide for the benefit of our readers.
All our presentations are titled “Brave New World after Covid”, reflecting our belief that the underlying global paradigm has fundamentally shifted. The world is now grappling with new realities, and this presentation is our attempt to clearly articulate and frame those evolving dynamics shaping today’s environment.
Even before the election, Trump’s economic stance was clearly anti-globalization and “America First,” favoring tariffs and trade barriers. This inward turn was structurally inevitable for the US; the difference under another president would have been a quieter, less confrontational execution but the outcome would have not changed one bit.
The US accumulated massive debt from ~$6 trillion to ~$36 trillion without building productive assets, largely due to wars and an expanding welfare state.
Simultaneously, decades of offshoring hollowed out manufacturing, enriching financial markets but damaging the real economy and benefiting China.
The US is no longer willing to police the world or fully underwrite the reserve-currency system. Its military umbrella is receding, forcing other nations to prioritize self-reliance and security. As the global hegemon steps back, countries rush to fill the vacuum. This inevitably leads to higher defense spending worldwide, despite economic and physical constraints.
The US faces a toxic combination of unsustainable debt, a weakened industrial base, and an unwillingness to maintain global leadership. There are only two options ahead Austerity or Inflating away the Debt.
Austerity via spending cuts and higher taxes is politically unviable in democracies and consistently rejected by voters. Re-industrialization is the more likely path, even though it entails higher inflation and financial repression that erodes savings.
Post-WWII, the US effectively inflated away its debt while simultaneously expanding industrial output. The most powerful tools at its disposal were sustained negative real interest rates and policy-driven economic growth.
Financial repression combined with re-industrialization naturally weakens the dollar. Early signs of a structural trend break are already visible.
Most G7 economies share the same issues of high debt and weakened industry. Government bonds now guarantee real losses, effectively acting as “certificates of confiscation.”
Re-industrialization demands heavy capital investment in the real economy, where margins are structurally lower. In contrast, the American elite has grown accustomed to a highly financialised system delivering elevated returns and as this shift becomes evident, they are reallocating their financial capital accordingly.
The old system relied on global surpluses flowing into US Treasuries under US hegemony. Sanctioning Russian FX reserves in 2022 shattered trust, prompting central banks to cut Treasury exposure and turn to gold. Gold has overtaken US Treasuries as a share of global FX reserves. This marks a structural and lasting shift in the global monetary system.
China wants to lead the Gold based Monetary order.
A China-led system is reintroducing gold into trade settlement, while the US is attempting to sustain Treasury demand through stablecoins. The world is fragmenting into parallel monetary blocs.
The rivalry spans money, trade, production, and technology. It is an existential contest between the world’s top two powers. China leads on key production metrics, while the US remains consumption-driven and propped up by AI spending. Without AI, the US economy would likely slip into recession and rising power and infrastructure constraint is emerging as key bottleneck in AI and Data Center growth.
US is already heading to energy stressed category and will invest massively in Electricity and Industrials.
Chinese Equities and Chinese bonds are quietly winning, Chines bonds aided by sub-2% yields that support cheap capital. In contrast, US yields near 4% constrain re-industrialization.
The Investment playbook for a Brave New World
Real Assets are now outperforming Financial Assets
Central banks are accumulating gold and silver, while electrification drives demand for copper and aluminum. Rare earths have become a critical geopolitical battleground.
In a volatile currency landscape, relative safe havens like the Singapore Dollar and Swiss Franc are likely to outperform or at least lose the least.
India faced stretched valuations, weak nominal GDP, and an overvalued currency over the past year. Valuations and currency have corrected, but nominal GDP growth remains a concern.
Excessive IPO supply contrasts with buybacks in the US, China, and Japan. This oversupply discourages foreign investors seeking better capital discipline elsewhere.
India’s blue-collar workforce is a major long-term advantage amid global aging and labor shortages. Its scale, skill, and mobility position India well in the new global order.
The tide is turning for the Blue-Collar workers.
For the first time the wages of Blue-Collar have surpassed that of White Collar.
The supply of investment professionals led by rapid growth in CFA charter holders, is rising far faster than the universe of listed companies, intensifying competition.
Past forecasts versus outcomes are presented as a scorecard. The final judgment is left to the audience.
Central banks now function as extensions of governments, and AI shows signs of a bubble favor picks-and-shovels exposure. The US is retreating globally, debt will be inflated away, real assets should outperform, parallel monetary systems may emerge, and weak nominal GDP remains a risk for Indian equities.
Many thanks for sharing this deck, read it along with video shared by CFA Society. This talk in mindblowing, clearly explains the basis for investment today and in near future. Thanks for sharing your knowledge.
Interesting read. I feel US will do something in future to crash gold prices after a rally to make sure china losses game.