The report examines whether the concerns that exploding money supply is causing inflation are misplaced and explains why the policy response to the COVID-19 crisis has created a “sweet spot” for risk assets.

The report also lays out the framework to understand how money, interest rates and asset prices interact over the longer run and points out the growing potential for asset bubbles in the post-COVID-19 world due to rampant money and credit creation.

China’s long-delayed National People’s Congress delivered underwhelming growth objectives and policy support, a sign that the Chinese government is entering “survival mode”. It intends to save its “policy bullets” in preparation for a prolonged hostile global environment amid the conflict with the U.S. Issues with Hong Kong and Taiwan will be the new points of contention in the U.S. – China relationship, on which Beijing has little room for negotiation.

An all-out cold war between the U.S. and China is still a tail risk at the moment, but the odds are quickly rising and warrant close attention. In addition, this week’s report also recommends long positions in Mexican and Brazilian local currency government bonds.