By: Yale Bock
Donald Trump did not care, in this case, about whether the world agreed with him seeking regime change in Iran. If ever there was a leadership group that needed to go, the Ayatollah and his IRGC henchmen are it. If only based on having destroyed its currency, the citizenry of Iran has a legitimate argument for needing to replace this leadership. One can only hope the result is the end of the Mullahs in this critical country. Here in our own hemisphere, Cuba would appear to be a layup when compared to the challenges in the Middle East. It is quite apparent that Donald and Marco see the Western Hemisphere as one where the US will determine what, when, and how.
Meanwhile, the United States is the largest debtor nation in the history of the world, with a national debt exceeding $38 trillion. To consider the magnitude of profligacy, a trillion is a thousand billion, and a billion is a thousand million. With this astronomical number in mind, many investors see it as too high a hurdle for the United States equity markets to overcome for continued strong gains. Naturally, capital flows to areas where it is most optimally treated, so different regions and markets would sop up that change of direction. The first obvious candidate is Japan. With a newly elected President who is committed to improved economic growth, government spending will be supportive of defense industries and domestic policies designed to foster higher activity. In combination with a change in government policies for better corporate governance, many institutions have been warming to Japan over the last few years. The Nikkei performance year to date in 2026 reflects this enthusiasm, up 12% year to date.
Brazil has always been seen as a country that is the next great world power. The infamous quote attributed to French leader Charles De Gaulle reflects the sentiment, “Brazil is the country of the future… and always will be”. The economic circumstances in Brazil look quite interesting. Its economy has long been tied to commodities, with a large mining entity, Vale, and the sizeable oil producer Petrobras, and its cycle has favorable conditions. Additionally, interest rates in the country have long been elevated, but now are seen trending lower. In the first two months of the year, the Bovespa is ahead by 24%.
For investors, dollar weakness remains an issue to pay close attention to. The common attitude of institutional investors is concern about the deficit and political dysfunction, but they have been a problem for the last forty years, and capital markets haven’t suffered at all. Why would it be any different now? The price of gold and silver has reached all-time highs, and the simple hedge is to own both. Bitcoin? Not so much.
Originally posted on March 1 on Y H & C blog and newsletter
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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 they can decide on the appropriateness and suitability of the investments consistent with their risk tolerance, risk constraints, and return objectives.
