The U.S. has lost an important part of its global leadership role. The G7 and IMF lack legitimacy and credibility. And the G20 is still working on its operational effectiveness. All this speaks to continued uncertainty and volatility — economic, financial, political and social. Since the world starts naturally long risk assets, we could well see more investors seeking less risky asset allocations, including cash in what they deem as “safe jurisdictions.” In the process, valuations — for bonds, commodities, currencies, and equities — could well diverge for a while from what many deem to be historically fair valuations. As Will Rogers is said to have observed decades ago, investors should be concerned with the return of their money and not just the return on their money.
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