Economics

Wars don’t just destroy nations. They expose how fragile our systems really are. Over the past few years, every global disruption, from conflicts to pandemics to supply shocks, has shown us one thing clearly: We have built a world that is highly efficient… but dangerously dependent. - Food travels thousands of kilometres before it reaches our plates. - Energy systems rely on distant, unstable sources. - Waste is exported, outsourced, and forgotten. And the moment something breaks somewhere in the world, everyone, everywhere, feels it. Maybe the question isn’t: How do we make global systems stronger? Maybe the question is: Why are we so dependent on them in the first place? And what if our cities, towns and villages could: • Grow more of their own food • Generate more of their own energy • Manage their own waste • Create and consume locally This isn’t about isolation. It’s about resilience. Because when systems are decentralised: • Communities recover faster • Livelihoods are created locally • Environmental impact reduces • And people regain a sense of ownership This is where sustainability meets survival. Decentralised production systems are not just a climate solution. They are a risk mitigation strategy for an uncertain world. The future isn’t global vs local. It’s global and local. In fact, its hyperlocal. But the balance has clearly tipped too far. If there’s one lesson from the world we’re witnessing today, it’s this: The strongest communities are the least dependent ones. Time to build local. Time to act resilient. Time to rethink how we produce, consume, and live. What do you think? #Decentralisation #Sustainability #Resilience #ClimateAction #LocalEconomies #CircularEconomy

Since Russia’s invasion of Ukraine, natural gas prices in Europe have stayed far above those in the United States — with serious implications for competitiveness, energy security, and the transition to clean energy. In September 2025, European natural gas averaged $11.1 per MMBtu, 274% higher than the U.S. price of $3.0 per MMBtu — nearly four times as high. Before the crisis, in 2019, Europe’s price was $4.8 per MMBtu, already 87% above the U.S. level. Despite progress on diversifying supply and reducing demand, this persistent price gap underscores the structural challenges Europe faces as it shifts away from fossil fuels while maintaining industrial competitiveness. The long-term answer? Investing in energy efficiency, renewables, and electrification — the only sustainable way to reduce both dependency and exposure to volatile global gas markets.

As expected, the Fed cut rates by 25 basis points and announced an end to quantitative tightening—both steps toward further easing. However, the meeting revealed some notable divisions within the Federal Open Market Committee. One member voted against the rate cut, while another favored a larger, 50 basis point cut. This dissent was a bit unexpected. Chair Powell also highlighted strong differences of opinion about a potential December rate cut and discussed the “neutral rate”—the level at which the Fed is neither stimulating nor restraining the economy. Powell suggested a range between 3 and 4%, higher than the 3% median estimate from FOMC members. These factors led markets to pause and reassess the likelihood and pace of future rate cuts. While markets still anticipate a December cut, the path ahead may be shallower than previously expected. Both stock and bond markets reacted with caution. For investors, this complexity is a sign that the Fed is weighing risks carefully—balancing the dangers of being too easy or too tough in today’s environment.  

1st Time Ever, CLO Market For the first time ever in the history of the U.S. CLO market an interesting dynamic has emerged. CLO new issue volume is at a record levels, YET the size of the CLO market has declined. This table below illustrates 10-years of history; however, one can go all the way back to 1990 (first CLO ever issued) to see that this is indeed a first. Negative net issuance despite record primary issue occurred as seasoned/older CLOs that are past their reinvestment period are amortizing or being liquidated, either into the open market (BWIC) or used to form new CLO from the same manager. Demand for CLO tranches starts with the AAA tranche since it is ~60% of the capital structure. AAA demand is rock solid, led by large U.S. & Japanese banks, global insurance companies, and the new kid on the block: Janus’ CLO ETF (JAAA) which has grown to $10B, creating an additional bid for AAAs. As a result, CLO liabilities have tightened, which is accretive for CLO equity investors. CLO managers employ teams of investment professionals that are experts in underwriting each BSL, building and managing a highly diversified portfolio with an enduring credit profile to maintain low default rates, and avoiding CCCs, a bifurcation that drives default rates. Cash flow distributions to CLO equity investors benefit from tighter CLO liabilities, the return generated during the warehouse period as the CLO ramps, +reinvestment during the investment period, +active management that adds alpha via relative value generated by CLO manager, +repricing and extensions of CLO liabilities later in the CLO life span. Today, CLO equity holders are earning their highest cash distribution in years, resulting in mid-teens IRRs, strong DPI and MOICs. I believe this dynamic will continue to be net-positive for world-class CLO managers, who have proven incredibly adept managing through the cycles. The kicker is when the CLO manager shares a portion (10-20%) of its management fees that it earns from managing the CLO (~40 bps) with the CLO equity holders. This fee sharing arrangement was first introduced post-GFC when CLO managers raised CLO equity funds required under risk-retention requirements known as The Volcker Rule. Since the Volker rule is no longer applied to U.S. CLOs, fee sharing arrangements are less prevalent today, but available from select managers. Conclusion: The technical condition that exists today, with tight liabilities and net-negative primary issuance, yet robust new issue supply and improving credit dynamics represents a unique opportunity for CLO equity.

#AntimicrobialResistance (AMR) threatens to send the world back into the era before antibiotics and other antimicrobials, when a routine infection could be deadly.     Already, an estimated 5 million people die every year from infections associated with AMR.    Over the next decade, AMR could reduce global life expectancy by 1.8 years and cost the global economy more than $800 billion annually, due to additional health costs and lost productivity.     It’s fueled by many factors:  1. Poorly functioning health systems 2. Weak regulation 3. Sub-standard practices in industrial farming and agriculture 4. Poor management of waste and wastewater      AMR disproportionately affects people in low and middle-income countries, and is closely linked to poverty and a lack of access to adequate water, sanitation and hygiene.     Later this month, the World Health Assembly will consider how to accelerate action in the human health sector, as part of a multi-sectoral #OneHealth approach.     The World Health Organization has outlined six recommendations for consideration: 1. Leadership and governance, based on effective and well-resourced coordination that includes all relevant stakeholders, and high-level oversight.   2. Allocation of domestic and international funding for accelerated national, regional and global action.   3. Evidence for action through strengthening AMR and antimicrobial use surveillance, strengthening bacteriology laboratory systems, research and sharing and use of data.    4. Accelerated implementation of a people-centred public health approach to address AMR, with a core package of interventions at all levels of health systems.    5. Scaling up learning, experience sharing and technical support for countries;    6. Promotion of science, research, and innovation, targeted to public health needs and to ensuring equitable access.   From communities to health workers. From youth organizations to parliamentarians.     From the private sector to people directly affected by drug-resistant infections and their consequences.    By working together, we can chart a clear path towards a safer world for all. 

Amid rising tariffs and shifting geopolitics, the foundations of the rules-based global economy are being redefined. With the US policy shifts, the uncertainty is real. In fact, I just got back from New York, where I met with a number of CEOs – and for the first time, all of them said the same three words: “I don’t know.” It’s clear we’re not going back to “business as usual”. That’s why we felt it was crucial to bring our clients together today to hear from Deputy Prime Minister and Minister for Trade and Industry Gan Kim Yong at a closed-door conversation. He’s just been appointed Chairman of the new Singapore Economic Resilience Taskforce, and his perspectives were insightful, as he also listened to the concerns and questions our clients brought to the table. Looking ahead, I believe we’re in for more short-term volatility and uncertainty. My advice to clients: lock in good rates, manage your FX exposure, and address any supply chain constraints. Longer term, we need to think about the new world order more strategically. There are four key areas businesses need to focus on: • Supply Chain – Diversify sources and build in resilience • Logistics – Plan for the possibility of longer routes and ensure continuity • Financial and Payments – Prepare for alternatives beyond USD • Technology – Be ready for dual tech ecosystems and interoperability costs The silver lining is that we are in Singapore. While Asia does bear the brunt of tariffs, it is also home to 18 of the 20 fastest-growing trade corridors. Also, even though we have had slowdowns in our neighbourhood, we are still surrounded by big economies – China, India and Indonesia. Over the years, we’ve walked alongside our clients through many turning points, and we’ll keep showing up, especially when things get tough. Whether it’s navigating treasury decisions, managing volatility, or adapting supply chains. Storms may come, but like Singapore, we’ll stay steady – anchored, open, and here for the long haul.

The Fed has taken a significant step by officially initiating its cutting cycle, which holds profound implications for the financial world. ⚠️The #FOMC has cut the FFR by 50 Basis Points to a 4.75%-5% Range. ⚠️The latest projection of the Neutral Rate, R*, came in at 2.8% versus the previous estimation of 2.9% A cutting cycle might affect other central banks' stance on monetary policy because the US Dollar could devalue considerably going into 2025, making exports from other countries like Japan more expensive. For the past two weeks, business media has made a huge story out of a 25—or 50-basis point cut, but in my opinion, today's decision on the magnitude of the cut is meaningless. Financial conditions have eased considerably since July, so it should not be a surprise that the US economy might have already started to re-accelerate. The Atlanta Fed GDPNow is flashing a Real Growth Rate of 3% for the US Economy. If that materializes, it would mean that the US #Economy is already running 1% above its potential. Why financial conditions have already started to ease? Here are some examples: ✍️Mortgage Rates decreased from 7% in July to 6.15% today ✍️The 2-Year Yield decreased from 4.75% in July to 3.63% today ✍️The 5-Year Yield decreased from 4.06% in July to 3.47% today ✍️Housing Starts have picked up momentum What market participants have priced out is a resurgence of inflation during 2025. That scenario is entirely possible if the Dollar Index drops below 100. A cheaper dollar will make commodities and import prices more expensive for the US consumer, and a reduction in real income could squeeze even more of the low to middle class into the USA. Considering the decrease in US Treasuries for the past two months, I find US Government Bonds expensive across the yield curve at these levels. I think R* is well above what the Fed estimates because of factors like de-globalization, the reshoring of strategic industries, and increased protectionism. The terminal rate post-pandemic is between 3.5% and 4%, in my opinion, and that is where I think this cutting cycle will end. If I am proven right, bond investors must reprice government bond yields higher. How do we play a potential increase in inflation in a no-landing scenario? I tilted my portfolio as I outline here below: 👉Tilt the portfolio to over-weight energy and miners. 👉Have a marginal exposure to Gold and Silver. 👉Favor TIPs over US Treasuries 👉Increase allocation to US Value Stocks and International Stocks. 👉Lock-In US Investment Grade Credit at the belly of the yield curve where we can still get 4.8% to 5% yields, especially on issues at the Single-A Rating Enjoy the ride! #Finance #InterestRates #Economy #Investing

📊 Exciting new research from the European Central Bank (ECB) sheds light on how banks are pricing climate risk in their lending practices! 🌿 In their working paper, Carlo Altavilla, Miguel Boucinha, Marco Pagano, and Andrea Polo combine euro-area credit register data with carbon emission information to uncover fascinating insights into the intersection of finance and climate change. 🏦 The study finds that banks are indeed factoring climate risk into their lending decisions. Firms with higher carbon emissions face higher interest rates, while those committed to reducing emissions enjoy lower rates. Interestingly, banks that have publicly committed to decarbonization goals (through initiatives like Science Based Targets initiative) are even more aggressive in this pricing strategy. 💶 But here's where it gets really intriguing: the researchers uncovered a "climate risk-taking channel" of monetary policy. When the ECB tightens monetary policy, banks not only increase their overall credit risk premiums but also amplify their climate risk premiums. This means that during periods of monetary tightening, high-emission firms face a double whammy of increased borrowing costs and reduced access to credit compared to their greener counterparts. The authors argue that while restrictive monetary policy may slow down overall decarbonization efforts, it inadvertently creates a more favourable environment for low-emission firms and those committed to going green. 🌍 These findings are crucial for understanding how the financial sector is adapting to climate change and how monetary policy interacts with climate-related financial risks. It's also clear that the greening of finance is not just a trend, but a fundamental shift in how risk is assessed and priced in our economy. #ClimateFinance #SustainableBanking #MonetaryPolicy #ECB #GreenEconomy #ClimateRisk

The Centers for Medicare & Medicaid Services has proposed that Medicare Advantage plan revenues will remain flat going into 2027 at a moment when underlying medical costs, labor expenses, and pharmaceuticals continue to rise materially. What does this mean in practice? For beneficiaries: Over time, beneficiaries should expect less generous benefits, tighter utilization management, and narrower provider networks. Access may become more constrained—not necessarily through explicit benefit cuts, but through fewer participating provider groups and more selective contracting. The tradeoff between affordability and choice will become more acute. For brokers and distribution partners: Distribution costs in Medicare Advantage are largely fixed, particularly commissions and marketing infrastructure. As margins compress, plans will continue to reassess how (and how much) they pay for growth. This may include lower upfront commissions, greater reliance on retention-based compensation, or shifts toward more direct-to-consumer enrollment strategies. For provider groups: Provider organizations seeking rate increases will face a much tougher negotiating environment. With plan revenues constrained, upward pressure on provider rates becomes difficult to absorb. As a result, some provider groups may choose to exit Medicare Advantage entirely, while others will narrow participation to fewer plans. The result may be increased network fragmentation and heightened tension between plans and providers over risk, quality expectations, and total cost of care. For managed care company employees: Cost discipline will extend inward. Plans will be slower to hire, more selective about new investments, and may pursue workforce reductions. Expectations will shift toward higher productivity, flatter organizational structures, and doing more with fewer resources. For Investor-backed Medicare Advantage plans: The economics of growth will change. Longer payback periods, lower internal rates of return, and greater regulatory uncertainty will make Medicare Advantage investments less immediately attractive. Capital will still flow to the sector, but it will be more discriminating, favoring scale, operational excellence, and differentiated capabilities rather than growth at any cost. For small and regional health plans: Scale matters more than ever. Smaller plans will struggle to compete. Many may exit the market or seek partnerships, mergers, or acquisitions. Consolidation pressures are likely to intensify as fixed administrative and compliance costs consume a greater share of revenue. Time will tell whether the rate decisions outlined in the Advance Notice hold through the Final Rule. Regardless of the ultimate number, one thing is clear: Medicare Advantage is entering a period of transition. The era of easy growth is ending, and the next phase will be defined by tradeoffs—between generosity and sustainability, growth and discipline, innovation and affordability.