By: Yale Bock
The world is focused on the possibility of bringing the Russia-Ukraine war to an end. Ongoing negotiations about the specific terms remain in flux as the US government tries to broker a deal. In Asia, the Bank of Japan appears ready to raise interest rates in 2026. The ten-year Japanese Government bond (JGB) currently sits at a yield of 1.69% with the benchmark rate at .50%. You will notice these are lower than US yields of comparable length. The Yen has long been the borrowing currency where investors borrow in Yen because of the low rates and then invest elsewhere with higher rates. The potential weakness in the investment is the exchange rate fluctuation between what one borrows in and what one invests in. With yields increasing in Japan, the trade becomes more expensive, and the hurdle rate for investment rises. With billions or more funded this way, it is important for investors to pay attention to the specifics, as it can affect liquidity all over the world.
In the UK, the Starmer government has proposals to raise taxes in any number of ways, including higher rates on dividends, potentially taxing electric vehicles, and looking at taxing retirement plan contributions. All of this is related to trying to ‘balance’ a spending program, which is the real issue. What is the famous refrain about socialism?
Turning to South America, the three C countries in the region, Colombia, Chile, and Cuba are all interesting in their own respect, but in combination, the trio reveals what could be an especially important development for the world and investors. Chile may elect a conservative as its next president in the runoff elections scheduled for December 14. Columbia will hold their next presidential election in May of 2026, and like Chile, there is a good possibility of a similar result.
The big development in the region is the escalation of rhetoric between Venezuela and the United States. Venezuela has weakened dramatically in every area under the lack of leadership of its President, Nicolas Maduro, but especially economically. Some political analysts believe Venezuela could eventually change its president with the help of the United States, either economically or through force. Cuba receives much of its funding from Venezuela, so any change in the latter will have large implications for the former. Great, you say, but what about an investment that might benefit from all this?
I have long known about the largest litigation finance company in the United States. It currently trades as cheaply as it has in many years. It has a large judgment pending regarding a settlement with the Argentine government, which has been tied up on appeal for a long time. Litigation finance is the domain of class action attorneys who fund cases and earn the rewards when the cases either settle, or they receive favorable verdicts. The cash flow dynamics of the business are difficult because the working capital cycle can be, uh, ahem, lengthy. I would not expect any returns for a while as the Argentina case has more appeals left and could still take many years for an outcome. Still, the risk-reward is interesting. I’ll send you the bill later.
Originally posted on December 1, 2025 on Y H & C newsletter and blog
DISCLOSURES:
Y H & C Investments may have positions in companies mentioned in this newsletter. Nothing in the newsletter should be taken as an offer to buy or sell individual securities. It is the responsibility of each investor to research the investments mentioned so it meets the return objectives, risk profile, liquidity needs, tax circumstances, and specific issues pertinent to the individual.
