On December 19, at the "Alpha Summit" co-hosted by Wall Street News and CEIBS, Clocktower's Chief Strategist Kevin Wang delivered a keynote speech titled "Global Asset Reallocation Under a Shifting Geopolitical Macro Paradigm."
He argued that the U.S. National Security Strategy (NSS) is a "landmark document" authored by a former hedge fund research director, marking the first official acknowledgment that U.S. unipolar hegemony, liberal internationalism, and neoconservatism have simultaneously "died." This signals America’s strategic retreat and acceptance of a multipolar world with spheres of influence. This fundamental geopolitical shift, combined with an "offshore balancing" strategy, panic-driven fiscal expansion among traditional allies, and a global "savings drought" due to demographic shifts, is reshaping global macroeconomics and asset pricing logic.
Wang believes the U.S. dollar has entered its largest bear market in history, with a potential 40% depreciation over the next 5-8 years, forcing global capital to exit overconcentrated dollar assets. Under this framework, severely underweighted Chinese assets could become the decade’s biggest "short squeeze" opportunity, while gold’s bull run remains intact, and silver holds even greater potential.
Looking ahead to 2026, markets must brace for Fed policy reversals amid recurring inflation risks, while U.S. stocks are in the "final leg" of a profit-driven but valuation-stagnant bull market.
Key Insights:
1. **Dollar’s "Largest Bear Market in History"**: Geopolitical upheaval, irresponsible U.S. pro-cyclical fiscal expansion, and inevitable debt monetization will trigger a dollar credibility collapse. Unlike the 1970s, geopolitics may now "kill the dollar" rather than save it, with real effective exchange rates potentially dropping ~40% in 5-8 years.
2. **Global Capital Must Exit Dollar Assets**: With dollar assets comprising 70-80% of portfolios, diversification is the "only escape" from this historic bear market.
3. **China: The Ultimate Short Squeeze**: Global institutions allocate <2% to Chinese assets despite China’s ~20% GDP share, creating a structural gap. Dollar depreciation could turbocharge this rebalancing.
4. **Gold’s Run Continues; Silver Outshines**: Reckless Western fiscal policies and debt monetization will erode fiat credibility. Gold’s bull case is solid (market prices only an 8% chance of a gold standard return), while silver’s technical breakout and smaller market cap offer greater upside. Central banks may eventually be "forced" to buy silver amid bond market turmoil.
5. **2026’s Inflation Wildcard**: U.S. inflation (~3%) remains above target, yet the Fed is cutting rates—a historical anomaly. Prepare for fewer rate cuts (currently priced at two) or even hikes if inflation spikes to 3.5-4%.
6. **U.S. Stocks: "Final Bull Market Leg"**: Earnings drive new highs, but forward P/Es have stalled as liquidity peaks. H2 2026 risks loom if rate-hike expectations emerge.
**Full Speech Highlights**:
**The NSS and the End of the Old Order** The latest U.S. NSS, drafted by ex-Thiel Macro researcher Kevin Harrington, bluntly declares three deaths: unipolarity, liberal internationalism, and neoconservatism. America now accepts multipolarity and regional spheres of influence—a stark reversal from Hillary Clinton’s 2010 stance. This is a *strategic contraction*.
**Why Unipolarity Died** U.S. capability—not willingness—to sustain hegemony has crumbled since its early-2000s peak. Public support for global policing fell from ~80% to ~65%, while NATO troop deployments dwindled. The "offshore balancing" strategy (akin to historic Britain) will heighten global conflict risks, as seen in 2023’s post-WWII-high war probability.
**Allies’ Fiscal Panic** Japan (3-3.5% GDP stimulus), Germany (austerity U-turn), and the U.S. (pro-cyclical "reindustrialization") are racing to offset American retreat. But this collides with a global "savings drought" as demographics reverse (China’s aging is pivotal). Bond investors are revolting via yield spikes.
**Debt Monetization Inevitable** With foreign buyers (China, Japan, Germany) retreating and private capital demanding higher rates, the Fed will resort to yield curve control (YCC)—echoing 1970s dollar collapses (~35% drop vs. majors, ~75% vs. gold).
**Dollar’s Super Bear Market** Unlike the 1970s, today’s surplus leader (China) is a U.S. rival, and allies won’t backstop the dollar. A 40% depreciation looms.
**Portfolio Shifts: China, Gold, Silver** - **China**: A 2% vs. 20% GDP allocation gap spells a historic short squeeze. - **Gold**: Fiat erosion underpins the bull case; gold standard odds are underpriced. - **Silver**: Technicals and capacity make it a sleeper hit. Central banks may be compelled to buy.
**2026 Outlook: Inflation and U.S. Stock Risks** The Fed is cutting at 3% inflation—unprecedented. Bet on fewer cuts or hikes if inflation hits 3.5-4%. U.S. stocks’ "final leg" hinges on earnings; H2 2026 may see valuation compression as rate fears mount.
*Bottom line*: The dollar’s decline, China’s rise, and metals’ resilience define the next decade. Prepare for turbulence.
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