The Tri Polar World

TPW Advisory Friday Chart Pack!

Jay Pelosky — Fri, 21 Aug 2026 14:48:02 GMT

Greetings my fellow citizens of The Tri Polar World! Taking a brief beach break to shoot this out - vaca is going great - the weather is just like the markets: sun, surf & sand one minute, sideways pouring rain the next!

We are excited to share our first TPW Advisory Chartpack centered around the TPW Spending Supercycle & our Thematic 2.0 work. We also introduce a new chart: The Global Growth Long Cycle (GGLC): Inputs & Outputs. We have written reams about the GGLC; we think this is a useful schematic to help visualize what all those words mean. Here is a high-level overview of what each chart represents:

The Global Equity Opportunity in Convergence:

The Convergence graphic maps out how our long-term global thinking comes together to fuel sustained non-US equity outperformance.
The TPW Spending Supercycle and a Stable Tri Polar World drive our Global Growth Long Cycle Thesis which propels ROW earnings growth to converge with US Earnings while ROW Valuations stay depressed.
This valuation divergence creates the opportunity. We expect non-US equity to rerate upwards while the US derates (already underway), resulting in valuation convergence & sustained non-US equity outperformance.

TPW Advisory Friday Musings: It's Different This Time

Jay Pelosky — Fri, 14 Aug 2026 17:31:50 GMT

Greetings my fellow citizens of the Tri Polar World! Said to be among the most dangerous words in finance, to claim “its different this time” is to suggest strong conviction which by definition tends to be held only occasionally given the opaque nature of the future. We use it here advisedly but also feeling somewhat battle tested post the recent Momentum Crash & thematic space volatility which both challenged & supported our views that underpin the claim.

I first used this line very early in my career at Morgan Stanley Asset Mgmt. when I was marketing a Brazil Fund back in 1990. I also used the term “Leap of Faith” which given that Brazil was then in the throes of hyperinflation fit the bill. In retrospect both terms were applicable as that period marked the Bovespa’s USD low.

So we have a bit of history to go on but we are not making the claim about any lows, more that the highs are yet to come. We will defend our view that things are different this time first on a big picture framework perspective. Then we will go by asset class & note what is different. While we argue its different this time is a positive for risk assets, we will also note where things are different in such a way that may generate more risk to the global cross asset space.

We believe it is different this time in large part because of our Tri Polar World (TPW) Spending Supercycle work which we introduced some months ago. We argued then that the need for public & private spending across each of the TPW’s three main regions: Asia, Europe & the Americas in the three existential areas of AI, Defense & Climate mitigation has created a Spending Supercycle that we expect to continue through the end of the decade if not longer.

This TPW Spending Supercycle in turn underpins our Global Growth Long Cycle (GGLC) thesis, first introduced in 2023 & then based on the Covid spending surge. The GGLC does two things: one, it globalizes earnings growth as all regions spend aggressively and two it sets off an earnings boom as more and more of the global economy is boosted from raw materials to infrastructure to power to AI and on to the Agentic economy and the roll out of physical AI.

TPW Advisory Friday Musings: When Markets Talk

Jay Pelosky — Fri, 07 Aug 2026 17:33:17 GMT

Greetings my fellow citizens of the Tri Polar World! Its a steamer here in NYC…I hope all are staying cool, calm & collected!

When markets talk it’s our job as investors to listen. Recently markets have been screaming, sometimes incoherently, often with important messages. Let’s run through the various global asset classes & discuss what we think the markets have been saying & what it means for us as investors.

We have written at length, going back to April & our “Pro Tip: Stay Invested” Musings about the changes in market structure and the implications of said. Fintwit had a great chart this week showing that back in the mid 90s asset managers drove 80% of daily trading – they set the tone, they moved the markets. Today in contrast 70% of the daily trading is algo driven; models with predetermined rules and levels that drive entire asset classes on a daily basis.

We have seen this develop during Trump 2.0 when a tweet or two can move markets (before Trump effectively legalized front running). Add in some leverage courtesy of the 2x levered daily ETFs, the explosion in options day trading etc. and you have the last few months of up and down action across markets from S Korea to the US and across assets from the Mag 7 & semis in equity land to hyperscaler credit risk in IG bond land.

Where do we end up? Right back where we started or at least that is the result for our Global Multi Asset (GMA) model which had its roughest relative performance month in over 4 years in July and which in the first week of August effectively made it all back as of this morning. Same model, roughly the same positions – thank goodness we stuck to our guns in last week’s model update.

So, lesson one from the market talk is to STAY INVESTED – as hard as it is, as tough as it is to do so when it feels like the house is burning down and one is incinerating performance. Unless the core thesis has changed, unless the fundamentals underpinning one’s stance are no longer valid, then one should stay the course, embrace the bot driven agita & pop some Pepto Bismol.

We continue to believe in our Tri Polar World (TPW) Spending Supercycle which underpins our Global Growth Long Cycle thesis which supports our global earnings boom thesis which results in our GMA model being significantly Overweight equity. The evidence for this belief continues to manifest whether it be the strong Manuf PMIs numbers around the globe, Europe’s robust economic surprise numbers or the strong trade numbers in S Korea & China.

TPW Advisory Friday Musings: What A Month, What A Week!

Jay Pelosky — Fri, 31 Jul 2026 16:39:07 GMT

Greetings my fellow citizens of the Tri Polar World! We are happy to see the back of this month! It’s been quite a tricky period in financial markets. A confluence of events and uncertainties: the AI unwind, the on again, off again nature of the Iran conflict and the first test of a new Fed chair have combined to create a period where discernment is needed to suss out what is ephermal and what is solid and long lasting.

This week has been quite the culmination, featuring record breaking up & down days in markets such as South Korea’s KOSPI. Other features included crashing and then soaring US Momentum baskets, record breaking US Treasury (UST) yield moves, a massive Japanese currency intervention and finally a potential all clear signal as hedge fund bodies from the US (Situational Awareness) to China ( Jupiter Research Capital) rise to the surface, blown up by that potent combo of leverage and volatility.

Its fair to say we have struggled to put all the pieces together, especially since they seem to change positions on almost a daily basis. Since my MS days in the early 2000s I have never been a fan of daily research or market writeups. This week has led me to consider changing my mind.

As we entered the week we were considering how three AI related signals can’t all be correct. First, SK’s tech leaders off 50% from June highs on demand fears; second, Apollo noting recent boosts to hyperscaler cap ex plans, leading to FCF worries and third, US investor concerns about AI revenue & profit growth even as Anthropic & Open AI report revenue run rates that would put them both among the Fortune 100 top sales co.

On the fundamental side we noted this supportive foursome: “S&P 500 now has the lowest PEG ratio in 30+ years” based on forward E. The L/S ratio on Nasdaq-100 futures is at a 17-year low. Short interest in the S&P 500 has climbed to around 3.7% of free float, one of the highest levels since 2010. Carson reports new all-time high for the S&P 500 advance/decline line.

As we exit the week, we note South Korea has ended July down 22% and that’s after a record breaking 18% up move today – yes, a whole market rose 18% in one day led by the two tech behemoths SK Hynix and Samsung up 25-30% each! Bloomberg reports that SK retail investors sold record amounts of stock today while foreign investors stepped in to buy as both tech titans now trade at single digit forward PEs. With additional Govt measures forthcoming to stabilize the market and most levered retail players wiped out, the S Korean tech tail may be done wagging the US tech dog.

TPW Advisory July Monthly: Discernment Needed

Jay Pelosky — Fri, 24 Jul 2026 17:41:14 GMT

Greetings my fellow citizens of The Tri Polar World! Happy Friday!

Global equity market action over the past few weeks suggests we are in a new era of investing. The dramatic volatility expressed ins some of the biggest as well as the smallest ETFs, from the monster SMH in the semi space to the minnow REMX in the Rare Earths space, suggest a new world. Daily moves of 5% plus, up and down, day in and day out are unusual even for a 30 + year guy like me. The good news is that the broad equity indices: ACWI, ACWX, S&P are all within a few percent of their All-Time Highs (ATH), suggesting rotation not distribution remains the name of the game.

Morgan Stanley notes for example that its Market Sentiment Indicator (MSI) has flipped between risk on & risk off four times in the past four months – far more frequently than in past years. Aggressive leverage via stock specific daily 2x leverage ETFs in S Korea and New York have exacerbated an already tricky environment as day-to-day trading becomes the province of machines, algos, systematic traders, quants and levered retail day traders.

The good news is that even as markets price in possible US escalation vs Iran the Momentum selloff appears finished with MTUM sharply outperforming the SPY on July 23^rd. Top Down Charts notes that under 20% of SMH’s holdings entered the week above their 50dmav, a level that usually signals a bottom is at hand. GS noted their TMT Momentum basket had a 40% drawdown in 17 days, by far the fastest and deepest drawdown on record.

We have written about this at some length, titling one past April Musings: “Pro Tip - Stay Invested”, arguing that very few investors can trade with the algos and win on any replicable basis. The alternative is to harvest profits & stay invested through the volatility storms, an investing discipline that requires a strong sense of conviction in the underlying investment thesis as well as a strong stomach to manage the agita from short, sharp downdrafts.

The good news is that more short, sharp downdrafts implies fewer long, drawn out, deep bear markets as the market’s self-cleansing process occurs more frequently. Thus, the bull market froth doesn’t develop to the point where it requires a 25 -30% market wide drawdown to reset things. Given that the past month or so has presented numerous examples of ETFs taking 20% bear market type drawdowns on top of 40-100% annual gains suggests this new market structure might require a new investing lexicon as well.

Recent equity market action suggests things have sped up again, with aggressive moves across much of the AI and AI adjacent space. Our July 10^th Musings titled: “Dog, Meet Tail”, argued that the South Korean equity market, the tail, had begun to wag the US equity market (the dog) with its violent moves in SK Hynix and Samsung, due mainly to new retail focused, single stock levered vehicles. The South Korean authorities have subsequently re regulated these vehicles; leverage in the S Korean equity market is now back to April levels.

Last Friday’s open ( July 17^th) may have been the low for the semi, AI, thematic sell off as several vehicles have now bounced 5-10% (albeit two days’ worth of moves) off those lows. Even if this storm is over one needs to be prepared for the next one as such drawdowns seem more like a feature than a bug of the current trading environment.

What does all this price volatility mean for the fundamental case that we have laid out since last October when we published our 2026 Outlook titled: “Continuation”. This question gets to the heart of our title & the noun “discernment” which according to Websters dictionary the means: : the quality of being able to grasp and comprehend what is obscure.

Investors need to learn the art of discernment in order to understand the difference between a technical, trading driven drawdown & a fundamental case no longer being valid bear market selloff. One is to ride through; the other requires a portfolio redo. Obviously one doesn’t want to redo the portfolio if the fundamental case is intact because then one is just chasing one’s tail, confusion reigns, the plot is lost & the game over.

Its quite possible to confuse the two as the aggressive nature of these drawdowns obscures the difference between drawdowns & selloffs. The drawdowns, especially in some of the frontier areas of the market like parts of AI, autonomy, robotics, etc. are not very deep or liquid leading to the elephant in the keyhole issue where money coming in pushes prices up and money going out drops prices down, even if the underlying theme is intact and perhaps even improving as one can argue is the case in several of these thematic spaces. The 20% drawdown in the US semiconductor space suggests its not just the thematic space that has aggressive drawdowns – the momentum crash has been legendary.

Given that 20% declines are the informal definition of a bear market one really needs to be on guard to ensure one doesn’t mistake a technical, volatility driven sell off for a more fundamentally based reassessment of theme or market narrative. We have also written at some length about the omnivorous nature of this market as it eats up narratives, digesting & discounting them in rapid order and moving on, what some have now termed “rolling bubbles”.

Iran is a very good example of this. Even with 11 straight days of attacks by both sides the global cross asset markets remain relatively sanguine about the outlook, including the oil market. Shutting the Red Sea outlet together with the Strait of Hormuz and the Black Sea being off limits has pushed Brent oil prices back towards $100 & US rates back towards their Spring highs. US boots on the ground in Iran would change that calm perspective but that remains very unlikely and would be a huge mistake if it were to occur, at least in this writer’s opinion.

We continue to feel strongly that investors should focus not on worries about AI demand but much more about the supply of items that make up the Nvidia 5 layer AI cake, from power, to chips, to models and on to the agentic and physical AI worlds to come. We wrote about this in last week’s Musings: “Worry About Supply Not Demand” and we continue to feel strongly that demand is not and will not be a problem.

For example, Bloomberg recently reported that TSMC has told customers to prepare for 10% price hikes next year. Does that sound like demand is a problem? No, it does not. Jensen Huang argues that Chinese open source models are good for the industry because they will stimulate demand as prices decline allowing more customers to explore and develop model use cases. Frontier models are for the biggest most expensive questions; open source can do the rest at much more cost effective levels.

Company after company in the semi space has talked about how demand is robust as far out as they can see with CEOs and CFOs talking about solid outlooks through the end of the decade. Bloomberg reports that order backlogs for AI & Data Center related companies have surged to three years or more, suggesting the build out will run thru the end of the decade.

Multi year contracts are becoming a norm in the memory space which is almost unheard of as both producers and clients seek some clarity on the future. If buyers thought demand was rolling over why would they be seeking to lock in multi year contracts? They wouldn’t.

Any yet the equity market and the investor community seem determined to make the case that this is a bubble, that there is an AI bubble, an AI cap ex bubble, that there is a bubble in AI valuations, that there is even a bubble in earnings which seems pretty ridiculous. Fintwit notes that EPS has never fallen more than 15% outside of a recession suggesting that those calling an earnings bubble are really calling for a deep recession of which there is no sign. The only bubble we see is the one in bubble talk.

All this market noise is obscuring the shift underway from cyclical to secular demand drivers. In industries like the semiconductor space, the cyclical nature of the business is gospel and yet one can argue we believe convincingly that the cycle is shifting to a secular demand build out. We believe this is the case across industries from the AI space to the power & electrification space to the Defense and autonomy spaces and on to the clean energy revolution. The focus should be on the combination of deep financialization necessary to fund disruptive technologies.

The supply – demand question extends to the capital markets as well. Again not a demand question but a supply at what price question. Wall St seems willing to underwrite the hyperscaler DC build out on the thesis that today’s cap ex needs will translate into higher revenues, rising margins and larger cash flows tomorrow. FactSet currently has FCF inflecting higher next year.

Chokepoints are the new buzz word - driven by geopolitics as in the Strait of Hormuz & Red Sea as well as the AI splinternet between the US & China. There are also the chokepoints generated by the pig in a python challenge as global just in time supply chains reconfigure to regionally based set ups as the Tri Polar World (TPW) manifests in real time.

We remain focused on our TPW Spending Supercycle as Europe, Asia and the Americas spend aggressively to meet their needs across the AI, Defense and Climate mitigation build outs. This spending is coming from both public and private sources, from corporate cash flow (the hyperscale FCF worry) to IPOs ( SpaceX) to the global debt markets both sovereign & credit. Developed Market (DM) fiscal situations remain challenging which is why long duration sovereign DM debt remains one of the least attractive places to invest.

TPW Advisory July Monthly Exec Summary: Discernment Needed

Jay Pelosky — Fri, 24 Jul 2026 17:27:43 GMT

Greetings my fellow citizens of The Tri Polar World! Recent global equity market action suggests we are in a new investing era. Daily 5% moves, up & down, across the AI ecosystem from minerals to power, chips to hyperscalers are unusual even for a 30+ year guy like me.

Aggressive leverage via 2x daily stock ETFs in S Korea & New York have exacerbated an already challenging investing environment as day to day trading becomes the province of algos, systematic traders, quants and levered retail day traders.

The good news is that with ACWI, ACWX, SPY etc. within a few percent of All Time Highs (ATHs), its rotation not distribution. ATHs in bank stocks on both sides of the Atlantic are likewise not a recession or bear market signals.

This new environment incorporates more short, sharp drawdowns which require a strong sense of conviction coupled with a strong stomach to ride through & stay invested. Trying to trade these moves is a mug’s game. See Charts 1-3

The good news is that more short, sharp drawdowns obviates the need for long, drawn out, deep bear markets as the “omnivorous” market digests & discounts the market narrative & cleans the froth.

To succeed in this new era investors will need new skills including learning the art of discernment. Discernment (Websters: the quality of being able to grasp and comprehend what is obscure) is necessary to understand the difference between a technical, trading driven drawdown & a fundamental case no longer valid, bear market selloff. One is to ride through, the other requires a portfolio do over.

With technical pullbacks now including 20% down moves (the old bear market definition) a new investing lexicon might be needed.

Discernment reinforces that focus should be on supply not demand as we wrote in last week’s Musings. Company after company, CEO after CFO notes that the demand for compute remains off the charts as far as the eye can see. Multiyear contracts are becoming the norm in the traditionally cyclical memory chip world. That’s not a sign of weak demand.

Bubble talk continues to reverberate across the equity space: an AI bubble, a chip bubble, even an earnings bubble. We note that US EPS has never fallen more than 15% without a recession. So the earnings bubble folks are in essence calling for a major recession – of which there is zero sign.

The only bubble is in bubble talk. See Charts 6-8

Our Tri Polar World (TPW) Spending Supercycle got some support from Japan recently as well as S Korea. Both countries are investing heavily in their future; the semiconductor space in S Korea and a broader reinvestment focus in Japan.

Japanese PM Takaichi’s investment program is expected to cost $2.5 T, or roughly 60% of GDP and play out thru 2040 across multiple levels of the economy & national security. See Chart 10

We believe this signals a major new theme: countries are deciding to actively de risk from the US. The message from Europe, from Japan, S Korea, Latin America is clear for those practicing discernment. It is to de risk from US defense (sorry we used those Patriots you paid for) de risk from US energy policy (Strait of Hormuz closure) de risk from US AI control (sorry no Mythos for you).

De risking implies that US companies global TAMs, the basis of their valuation, may no longer be valid. Those relatively cheap, non US companies may see growing market share & valuation in the years ahead.

De risking from the US is likely to coincide with a reversal of capital flows out of the US. The very clear call by Japan’s PM for Japanese institutions to buy more domestic Japanese financial assets should be a wake up call. Japan is the biggest holder of US Treasuries (UST) and has over $3T in offshore investments. What happens when not if that money starts to come home? See chart 11.

Our newest chart demonstrates that the opportunity in ROW equity becomes even greater when one considers the potential for today’s valuation divergence to converge. As earnings globalize due to each region investing heavily in AI, Defense & Climate the rationale for such wide disparity in valuation falls away. The US trades at 20x forward, EM trades at 11-12, China at 10x. Unsustainable. See Chart 14

TPW Advisory Friday Musings: Worry About Supply Not Demand

Jay Pelosky — Fri, 17 Jul 2026 16:44:11 GMT

Amidst the smoke and heat of New York City we continue to assess the global equity market tail (S Korean leverage) wag the dog (US & global tech). It hasn’t been pretty with Barchart noting Nasdaq 100 is on pace for its worst July in 22 years while Goldman’s High Beta Momentum basket is having its worst month in 17 years.

At the same time the S&P equal weighted ETF (RSP) just hit a new all-time high (ATH) as cyclicals continue to outperform defensives. Carson notes that: “The number of stocks in the S&P 500 above their 200-day MA continues to trend higher and is close to 70%, the highest level since February.” As earnings seasons gets fully underway the beats just keep rolling in yet the reality of tech stocks beating and their stocks dumping is raising hairs on the backs of experienced inventors’ necks.

We feel all that as our thematic positions have been taken to the woodshed; looking at recent performance we see the bottom five laggards in our Global Multi Asset (GMA) model all down 10% +. All reside in the thematic space including clean tech, blockchain, rare earths and autonomy. The technical damage has been real with most now trading below their 200d mav, not a good sign. Leaders over the period include financials & energy as Iran’s on again, off again cycle puts a bid under fossil fuels.

So, what do we make of it all? Our title sets the tone – while the equity market seems obsessed over the question of AI demand, we believe the demand is there and will continue to be there for the foreseeable future. Its not just our POV; leading tech companies like Samsung, TSMC, SK Hynix, all of which gave glowing results and sold off hard, also clearly stated that demand is booming and is set for as far as they can see. Many CEOs & CFOs noted such conditions are expected to persist through 2030.

The companies also talked about rising customer demand for multiyear contracts to ensure supply which provides the runway for the companies to meet high investor expectations while also allowing them the conviction to build out the supply necessary to meet demand.

TPW Advisory Friday Musings: Dog, Meet Tail

Jay Pelosky — Fri, 10 Jul 2026 17:01:34 GMT

Greetings my fellow citizens of The Tri Polar World! We pick up right where we left off two weeks ago as our argument that the US debasement trade is just beginning got some powerful backing from two of the largest sources of global capital underpinning the US financial asset edifice.

This morning’s Bloomberg: “One priority is to encourage households, as well as pension funds including the GPIF, to increase their investment in Japanese financial assets. We intend to pursue policies that support that objective,” Finance Minister Satsuki Katayama said Friday, referring to the Government Pension Investment Fund. It’s one of the world’s largest pensions with ¥293.6 trillion ($1.81 trillion) in assets.

The nation is the largest foreign holder of US Treasuries with a $1.2 trillion stockpile, and almost $5 trillion of the country’s capital is deployed overseas. The call signals the government’s intention to channel more household and institutional savings into domestic assets as the nation enters a new phase of economic growth.”

Should Japan’s institutions start to reallocate back home several things would happen. The yen, the world’s cheapest currency, now at a 40 year low, would strengthen, Japanese Govt Bonds (JGBs), deep in a bear market, would rally as would Japanese stocks, already doing well thanks to domestic retail allocating out of bonds into stocks and foreign investors buying the Japanese corporate restructuring story.

That’s not all. Europe is now considering doing the same. Another huge investor in US financial assets is perhaps finally getting serious about investing in itself. Spain, the poster child for our new growth model (abundant, cheap, clean energy & an expanding labor force) is now leading on the policy front as well (being Europe’s fastest growing large economy for the past several years gives it that clout).

More Bloomberg: “Spanish Economy Minister Carlos Cuerpo said he sees a chance to revisit the idea of joint borrowing within the European Union, Cuerpo outlined how the European Commission could issue a portion of member states’ national borrowing as part of a setup that would save billions of euros in interest costs and bolster the common currency’s role on the global stage. “Fragmentation is costing us dearly,” he said. “We need a safe asset to back our capital markets union within the EU.”

ATOMIQ LEVEL Live Replay featuring TPW's Jay Pelosky & ATOMIQ's Chris Snook

Jay Pelosky — Wed, 01 Jul 2026 14:41:26 GMT

Greetings my fellow citizens of The Tri Polar World! Happy to share the replay from last week’s ATOM!Q Level podcast with Chris. We covered lots of ground focusing on our TPW Spending Supercycle and how it supports our Global Growth Long Cycle thesis with its Econ & earnings growth convergence. We highlighted the implications: non US equity leadership & a significant MT-LT investment opportunity brought about by the closing of the valuation divergence btwn US equity & ROW, especially EM. If EPS growth is converging, and it is, then why should the US trade at 21x forward vs EM at 11-12x? Add in China announcing its intent to internationalize the RMB and you have a twin engine tailwind for EM and Chinese assets. We brought the convo down to the Thematic 2.0 level as well, noting the opportunity we see in autonomy, robotics, clean tech & more.

Let’s open this up to all - if you like what you hear consider becoming a paid up member of the Tri Polar World!

Subscribe now

Available for iOS and Android

TPW Advisory Friday Musings: The US Debasement Trade Has Barely Begun

Jay Pelosky — Fri, 26 Jun 2026 16:08:09 GMT

Greetings my fellow citizens of the Tri Polar World! Today’s Musings marks the end of our busy period which consists of posting our Monthly last Friday, holding our monthly model portfolio meeting mid week, updating and sending our new models to clients yesterday before culminating with today’s Musings. There is so much being written about the demise of the (mainly USD) debasement trade that we just have to push back against it.

Thus our title. It seems emblematic of the confusion being expressed in global cross asset markets due in no small part to the speed of the market discounting process. The “omnivorous” market that eats, digests/discounts old narratives as it relentlessly moves on to the next. It also reflects the ever expanding AI trade, the incredible earnings acceleration/multiple compression that is part of it coupled with just how wrong oil experts have been about oil price behavior post ceasefire. Confusion is rife.

Here’s Bloomberg reporting on Micron’s results: “In the space of only two quarters, 12-month trailing earnings have quadrupled. Before the announcement, Micron’s stock had closed trading at 9.5 times expected earnings — barely even half the multiple for the average S&P 500 company.”

We know the cyclical argument – buy semis when they appear expensive and sell when they appear cheap. That’s an old style argument; today’s environment suggest a vast elongation if not outright negation of semi cyclicality.

Don’t take our word for it. Axios: “Demand for AI compute is still outpacing available supply by at least five or even 10 times, says Mandeep Singh, global head of technology research at Bloomberg Intelligence.”

For our part, we have been stacking the building blocs of our Tri Polar World (TPW) investment outlook these past few months. Recall we titled our 2026 Outlook piece, written back in October: “Continuation” and at midyear it seems fair to say continuation is what we got with global equities hitting new highs led by EM just this week. Bonds have continued to struggle while commodities have done well with GSG up over 20% YTD even after the very sharp oil price pullback.

TPW Advisory Going ATOM!Q

Jay Pelosky — Mon, 22 Jun 2026 19:10:35 GMT

Subscribe now

TPW Advisory June Monthly: The Global Convergence – Divergence Duet

Jay Pelosky — Fri, 19 Jun 2026 16:46:38 GMT

Greetings my fellow citizens of the Tri Polar World! Happy Juneteenth! Normally we would be doing a 2H Outlook piece this month as the summer beckons. The calendar approach feels outdated today though given our view of the TPW Spending Supercycle underpinning our Global Growth Long Cycle thesis that we see extending out to 2030 & beyond. Big pieces are moving and simply going by the clock or the calendar just isn’t good enough.

Maybe its also the desire to expand our thinking after time spent honing our thematic outlook, culminating in last week’s launch of our TPW Thematic 2.0 Investment Roadmap ( See Chart 12). Feedback has been VG to date; we encourage our readers to spend some time with the roadmap, thinking about the thematic opportunity and where & how they should allocate to it. Our Model Portfolio Delivery Service (MPDS) clients are all set in that regard; invested as they are in either the TPW 20 thematic model itself or in our Global Multi Asset (GMA) model with its substantial thematic allocation.

While we continue to work on the thematic space (See Chart 33), we have been struck by the idea of convergence, most notably in McKinsey’s recent work highlighting a “great convergence in global incomes” which are closer today than at any point in the past 100 years. This is true even as groups within each economy have diverged as the wealthy gain from capital appreciation while labor’s share of wealth has declined significantly.

This convergence – divergence duet or dance led us to today’s title and the thrust of this front section. We believe there are multiple levels of convergence and divergence across economies, policies, markets etc. We want to dig into them especially as they pertain to our own big picture thinking: our Tri Polar World (TPW) construct, our TPW Spending Supercycle, Global Growth Long Cycle & Thematic 2.0 Investment Roadmap.

As we see it the great convergence identified by McKinsey set the stage for the Tri Polar World (TPW) of regional integration in Europe, Asia and the Americas to take shape. In turn, the TPW sets the stage for divergence between regions as competition between the three regions in the critical areas of AI, Defense & Climate heats up, leading to our TPW Spending Supercycle. The Spending Supercycle reinforces the global growth convergence and sets the stage for continued global earnings growth and hence equity market appreciation.

The convergence of incomes across many countries is a unique definer of our current investment landscape – one that we don’t think investors have spent enough time contemplating. This is especially true insofar as what it means for the globalization of earnings growth and thus the implications for our secular global equity leadership shift from the US to the Rest of World (ROW) led by Emerging Markets (EM).

TPW Advisory June Monthly Exec Summary: The Global Convergence - Divergence Duet

Jay Pelosky — Fri, 19 Jun 2026 16:37:38 GMT

Greetings my fellow citizens of the Tri Polar World and happy Juneteenth! This would normally be a 2H outlook piece. Not today – big investment pieces are moving & simply going by the calendar doesn’t cut it – not at TPW Advisory.

Out title comes from two recent pieces of work we were impressed by: McKinsey’s global income convergence work (closest in over 100 years) and EMBER’s Asian Electrotech Convergence work which we present in depth in the Climate section. See Charts 1 & 7

Big picture wise: the great income convergence identified by McKinsey set the stage for the development of the Tri Polar World (TPW) & regional integration in Europe, Asia and the Americas. In turn, the TPW sets the stage for divergences between regions as competition in the critical areas of AI, Defense & Climate heats up, leading to our TPW Spending Supercycle. The Spending Supercycle reinforces the global growth convergence and sets the stage for continued global earnings growth and new global equity market leadership.

While G7 long rates have converged the same has yet to occur in either equity appreciation or valuation or in the FX space between an overvalued USD and other DM & EM Fx.

We believe the divergence in equity valuation and ownership levels between the US & ROW represent one of today’s most compelling investment opportunities as it suggests significant price convergence in the years ahead. See Charts 3 & 4

TPW Advisory Friday Musings: Introducing Our TPW Thematic 2.0 Investment Roadmap

Jay Pelosky — Fri, 12 Jun 2026 19:23:56 GMT

Greetings my fellow citizens of the Tri Polar World! We couldn’t think of a better day to launch our new Thematic 2.0 Roadmap than today given SpaceX’s launch, tying in the biggest IPO ever with our first effort to map the global thematic space. While Space might be the final frontier, we believe the Tri Polar World (TPW) thematic map is vast as well.

We think the timing also works given the global equity market volatility of the past few months, especially in the thematic space, as various themes soared in May and then fell back sharply back to earth in early June. Point being even if one isn’t invested in thematics one’s investments are being affected by them.

What we would like to do today is lay out how we got to Thematics 2.0, how we think about thematics within our global macro investing process, how one should consider allocating to thematics before concluding with the process by which we came to the finished product – our Thematics 2.0 Investment Roadmap. This latter process has been very ably led by our intern, Cole Denson, who developed the graphic and has written the latter section of this Musings.

To start we call this work Thematics 2.0 to separate it from Thematics 1.0 which we consider to be the Covid related 2020-2022 timeframe and the whole liquidity driven GameStop, retail led meme culture that existed at that time, flowing in part from the Crypto crowd. Today’s thematic space is very different with more robust fundamental underpinnings & growing institutional level allocations to the main themes.

What’s most distinct about Thematics 2.0 is the runway we see stretching out for thematic adoption thru 2030 and beyond. This runway is built on two key underpinnings: our TPW Spending Supercycle thesis coupled with the geopolitical stability we see emanating from the US – China “Constructive Strategic Stability” agreement developed during the recent Beijing Summit coupled with the cease fires we expect in both Iran and the Ukraine.

This combination suggests to us that the thematics we discuss today will have the global financing & geopolitical stability together with the global breadth of production & distribution to flesh out and become some of the dominant businesses of the future.

TPW Spending Supercycle Thesis Makes The FT, TPW Advisory Enters Substack Bestseller Ranks!

Jay Pelosky — Mon, 08 Jun 2026 18:23:57 GMT

Greetings my fellow citizens of the Tri Polar World! Happy to share this excerpt from today’s FT & global business columnist Rana Foroohar highlighting our Supercycle work - note the FT graphics include our AI, Defense & Climate focus as well!

Happy to add that through all YOUR support we have just broken into Substack’s Bestseller ranks - BIG THANKS to all you TPW veterans & newbies alike!

Don’t forget this Friday’s Musings will include the launch of our Thematic 2.0 chart work! We continue to push our thinking & our investing forward and welcome all to join the ride.

Subscribe now

Lets make this one free for all but just to be clear this Friday’s Thematic work will be for paying subscribers only!

Go, NY, GO!

https://www.ft.com/content/d91cf0b4-2ed6-47b6-a9b1-46f87c52efc1?shareType=nongift

TPW Advisory Friday Musings: Taking The Other Side

Jay Pelosky — Fri, 05 Jun 2026 16:45:58 GMT

Greetings my fellow citizens of The Tri Polar World! Markets are moving faster than ever as what we have taken to calling the “omnivorous” market eats, digests and moves on to the next narrative at speed. Hard as it is to believe the pace may accelerate further as the hedge fund community appears to be moving on from multi strat to same strat, looking to pay others for their idea flow.

Marshall Wace began this process some years ago, paying buyside folks for their idea flow. Now suddenly its become a thing with Citadel announcing plans to do the same and Point 72 today suggesting they might join the party. One implication: the short, sharp selloffs noted in our last Monthly are likely to replace the long drawn out bear markets of the past, given that the bulk of the daily trading action is going to be running the same strategies with the same levels.

This has big implications for professional investors & money managers. See “Pro Tip: Stay Invested” for our perspective. Who can trade double digit declines in a matter of weeks, selling at the top and buying back at the bottom on a replicable basis – not us at TPW Advisory. Conviction and strong stomach linings are going to be at a premium.

Thus, today’s Musings and our title. As we write ACWI is down close to 1.5% for the day and several of our Global Multi Asset (GMA) model thematic positions are down sharply. Thankfully, as noted last week, we reduced several of our leading thematics given how extended they were, rotating the proceeds into laggard areas both within thematics and other areas such as European equity. We remain constructive and look to rotate into laggards rather than raise lots of cash. We want to take the other side.

TPW Advisory Friday Musings: Yesteryear & Today

Jay Pelosky — Fri, 29 May 2026 16:28:27 GMT

Greetings my fellow citizens of the Tri Polar World! Happy early summer Friday! The S&P is gunning for a rare 9 week win streak (last seen 40+ years ago), new All Time Highs (ATHs) are piling up in ACWI, ACWX, EM and soon enough in EAFE. We continue to think the easy part of global macro investing today is the asset allocation part: long global equities with a non US OW, deep Underweight Fixed Income, especially DM long duration sovereign debt and long Commodities across the complex with a focus on industrial metals.

The real investment game today is playing out in the thematic space - what we call Thematics 2.0. We see it in our Global Multi Asset (GMA) model and our TPW 20 thematic focused model where leadership is increasingly made up of thematic plays. Thus today’s title; in many cases, it’s not your thematic leaders of yesteryear but a new crop of themes and ETFs, leaving some old favorites by the wayside. One constant, clean energy. Parsing this new thematics space is where we are now devoting our energies.

We have been focused on the economic and market ramifications of our TPW Spending Supercycle and how it underpins our Global Growth Long Cycle thesis as well as supporting our belief in an earnings driven secular change of global equity leadership away from the US to the Rest of World (ROW) led by Emerging Markets (EM).

More recently we have integrated this Spending Supercycle with the “Constructive Strategic Stability” agreement that came out of the recent China – US Summit. We believe this agreement paves the way for a continuation of Thematic development & deployment centered around China’s buildout of the industries of the future.

The combination of these two is now igniting a new wave of thematic investment, Thematics 2.0; we use the 2020-2022 Covid period as the origin of today’s thematic investing, or Thematics 1.0. The differences between the two periods are significant.

TPW Advisory Talks Global Macro

Jay Pelosky — Wed, 27 May 2026 13:40:59 GMT

Greetings my fellow citizens of the Tri Polar World! This was an excellent interview; David asked numerous on point, probing questions about today’s markets and how we are navigating them.

I think you will really enjoy it. We walk through our TPW Spending Supercycle thesis and how it is driving record earnings growth around the globe. We flesh out the importance of the “Constructive Strategic Stability” agreement between China and the US and push our thinking forward as we lay out how this powerful combo will drive Thematics 2.0, noting our top thematic plays & how they are driving performance.

MPDS clients pls note, new models will be out tomorrow - keep an eye on your inbox!

TPW Advisory May Monthly: A Market Palimpsest

Jay Pelosky — Fri, 22 May 2026 17:31:50 GMT

Greetings my fellow citizens of The Tri Polar World! Happy Memorial Day Weekend!

It seems like a good time to take stock of where the global economy & investment landscape sits and to lay out some early markers for what we might expect in the 2H. Events, story lines, market narratives are piling on top of one another, inspiring our title: A Market Palimpsest. Palimpsest is not a word one sees every day so here is a refresher. Websters Dictionary defines it as: “writing material (such as a parchment or tablet) used one or more times after earlier writing has been erased or something having usually diverse layers or aspects apparent beneath the surface”.

Both definitions seem to suit the moment; we are clearly layering on top of prior market narratives & writings while a diversity of risk on – off factors have become a feature not a bug of the current global macro landscape.

Our focus remains on the forest not the trees; the forest being our recently introduced Tri Polar World (TPW) Spending Supercycle as both public and private spending across AI, Defense and Climate surges ahead in each of the TPW’s three main regions Asia, Europe & the Americas.

This tsunami of spending which we have calculated as roughly $10T this year with forecasts from Gartner, Bloomberg and others to reach $16T by 2030 is roughly 50% cap ex. Others have defined the AI spend in the US for example or the EU defense spend but as far as we know we are the only Firm to have put it all together. The totality of it, the unprecedented breadth of spending across the globe, is the point.

TPW Advisory May Monthly Exec Summary: A Market Palimpsest

Jay Pelosky — Fri, 22 May 2026 17:04:56 GMT

Greetings my fellow citizens of The Tri Polar World! Happy Memorial Day Weekend! Lets define that non financial term: Palimpsest. From Websters Dictionary: “writing material (such as parchment or tablet) used one or more times after earlier writings has been erased or something having usually diverse layers or aspects apparent beneath the surface”. We think both definitions fit the current global economic & cross asset market environment as narratives & storylines pile one on top of another.

We remain focused on the forest as represented by our Tri Polar World (TPW) Spending Supercycle as all three main regions: Asia, Europe & the Americas compete & spend unprecedented public & private money across the three existential areas of AI, Climate & Defense. See Chart 1.

This Spending Supercycle underpins our Global Growth Long Cycle thesis extending out to 2030 and supporting the ongoing global equity bull market, distinguished by its new leadership as Emerging Market (EM) equity supplants US equity leadership. Over the past year EM has far outperformed the US, up roughly 40% in USD vs SPY up 25%. See Chart 2

We identify a new thru line from the TPW Spending Supercycle to the thematic investing space. Unlike Thematics 1.0, the Covid run up and collapse, Thematics 2.0 is supported by the tsunami of spending described above. We expect continued acceleration in development and scale as noted with Nvidia’s recent results, those of Anthropic, US Govt investments in quantum computing & rare earths etc. See Charts 3&4