Investment Conclusion
The result of the Japanese election heralds a period of weak government at a critical time. That undermines the safe haven status of the Yen.
The Yen long position in the Wealth Preservation Portfolio is being sold. A short position in 10yr JGB’s is being added with a target yield of 2%. The long position in Japanese equites is being liquidated (or reduced to neutral for long only funds).
The market is far too complacent about what tariffs President Trump will declare in August and beyond. Tariffs are core to President Trump’s beliefs and those imposed for emotional reasons are even less likely to be softened down. ( See: The McKinley Factor – January 28, 2025).
Expect 15%-20% on Europe and 25% on Japan! After 50 days President Trump will hit Russia hard and is likely to force India and China to stop using Russian oil. The EU 18 th round of sanctions will have started to tighten the noose. Russian escalation is probable.
The Wealth Preservation Portfolio is at the end of this piece with changes marked in red.