Vijay Kumar Gaba

The Bank of Canada (BoC) has added some more fuel to the debate over the efficacy of monetary tightening in maintaining inflation-growth equilibrium under the current economic conditions. BoC hiked its key policy rate by 50bps to 3.75% on Wednesday, instead of the expected 75bps. BoC explained its decision to slow the pace of policy tightening in light of growing worries about a deeper global economic downturn. In the post policy statements, BoC said, “Future rate increases will be influenced by our assessments of how tighter monetary policy is working to slow demand, how supply challenges are resolving, and how inflation and inflation expectations are responding”.

Many observers are reading the change in stance of BoC as a template that may be followed by other central bankers also, especially the US Fed. It is pertinent to recall that two members of the Monetary Policy Committee (MPC) of RBI had also expressed similar views in the last meeting of the Committee. Obviously this development adds more interest to the next week’s (1-2 November) FOMC meeting and RBI’s reaction to the latest stance of US Fed.

In my view, BoC’s latest policy stance may not particularly influence other central bankers; but we may see more and more central bankers pursuing an independent monetary policy, congruent with the local conditions rather than towing the line of the US Fed. Notably, the Bank of Japan (BoJ) and the People’s Bank of China (PBoC) have refrained from tightening in the recent past.

‘If’ we see more divergence in the monetary policies stance of major central bankers across the world, one of the collateral could be material rise in volatility in the currency markets; which have already been volatile for the past two years. This higher probability of rise in currency volatility brings gold and cryptocurrencies to the centre of investment and trading strategies.

In this context the following are noteworthy:

·         Bloomberg has recently reported that “large volumes of metal are being drawn out of vaults in financial centers like New York and heading east to meet demand in Shanghai’s gold market or Istanbul’s Grand Bazaar.”

New York and London vaults have reported an exodus of more than 527 tons of gold since the end of April, according to data from the CME Group and the London Bullion Market Association. At the same time, gold imports into China hit a four-year high in August.

The Reserve Bank of India has been a big buyer in 2022. Its total gold reserves now stand at 782.7 tons, ranking it as the ninth-largest gold-holding country in the world. The Reserve Bank of India has purchased over 200 tons of gold in the past five years.

·         Earlier this week, the House of Commons in the U.K. voted in favor of recognizing crypto assets as regulated financial instruments and products in the country. The new PM of UK, Rishi Sunak is widely seen as pro-crypto by the market participants.

Couple of weeks ago, The US based bank J. P. Morgan announced cryptocurrencies as their “preferred alternative asset class in replacement of real estate”. Many other large banks like Goldman Sachs and US Bancorp have also increased their engagement with cryptoes materially in the recent past.

 Assessing portfolio for war readiness

Yesterday, I hinted that I shall be staying mostly in defensive mode (bunkers) till the sirens of crisis and uncertainty are blowing over the global economy and markets. I may reiterate that this crisis will create once in life lifetime opportunities for investors; but these opportunities are for the adventurists with strong risk appetite to avail. I would rather identify the opportunity; and happily miss the first 100-200% of gains out of the potential 1000-2000%.

Last week I mentioned (see here) “the investment environment continues to be very uncertain and complex. The geopolitical uncertainties, fiscal policy fatigue and monetary policy dilemma makes short term forecasts very complex. These factors further support the idea of keeping the investment strategy simple and giving preference to capital preservation over higher returns.”

In order to orient my tiny investment portfolio to capital preservation mode, For example, the following are some of the points I shall consider in reassessing my portfolio:

1.    Is the company facing significant cost pressures, especially from rising interest and labor costs?

I would accord low preference to the companies with low pricing power, high debt and rising employee cost to total cost ratio for now.

2.    Is the company facing an uncertain demand environment?

Export demand for consumer discretionary goods, especially in Europe, may face demand challenges for longer than previously estimated. Also, the companies reliant on government orders (especially non critical, e.g., defence), may face challenges. I would avoid infra builders catering primarily to public infra and utilities; and businesses relying on government grants, subsidies and tax incentives.

3.    Between the companies owning material real assets and the companies following an asset light model, I would prefer asset owners for now.

4.    Prefer services over manufacturing. Within manufacturing, I prefer manufacturers of smaller value components rather than large value OEMs.

5.    Prefer drivers of sustenance like FMCG, non-luxury textile, two wheelers, small cars, utilities, pharma, MFIs, etc. rather than agents of growth like large infra developers.

6.    Avoid all “expensive” stocks and loss making new age companies, regardless of their promised growth potential.

7.    Prefer short term debt for next 6 months at least, mostly gilt and overnight funds.

8.    Consider parking some money in gold for the next 6-9months. If the prices fall to my comfort zone.

9.    Hold enough liquidity to ensure that I need not sell anything in urgency for the next 12months. Also increase the liquidity quotient of my equity and debt portfolio.

10.  Watch the development in Europe, US and China carefully.

As I mentioned yesterday (see here), the current conditions are very different from the conditions in the 1980s when the US Federal Reserve under the chairmanship of Paul Volcker, managed to kill inflation with a deeper recession, but without pushing the world into an economic depression. But this does not imply that we have nothing to learn from history.

The present narrative in the global market is definitely not comforting. In the developed western economies, in particular, even the investors who took the classical moderate approach to asset allocation, e.g.,“100-age” (percent allocation to risk asset 100-investors’ age and the balance to fixed income) or “60:40” (60% risk assets and 40% fixed income for working people and vice versa for retirees) have witnessed material losses as both risk assets (equities, crypto, etc.) and fixed income (Bonds, REITS, etc.) have witnessed sharp correction. Reportedly, 60:40 Portfolio of US stocks and Bonds is down 21.6% in YTD2022, the worst performance since 1931. In India also, most balanced funds (funds that invest in a mix of equity and bonds) have yielded marginally positive or negative return YTD2022.

From whatever is happening around the world; and whatever is being prophesied about the future, at least the following five things are reasonably clear to me–

(i)    The economic growth is declining and it is not an immediate priority for the policy makers.

(ii)   The “innovative monetary policy” adopted post global financial crisis (GFC) has outlived their utility and is no longer effective. In fact the side effects of these policies are now appearing in most of the economies.

(iii)  No policy maker is in control of the economic events happening in their respective jurisdiction. Most have resorted to conventional means of policy management to tackle a situation which is largely created by unconventional policies, misplaced political aspirations; demographic transition; natural calamities; and egotistic pursuits of some political leaders.

(iv)   The cost of factors of production (wages, interest, material, and machines) is rising across the globe due to factors like demographic changes; under-investment in physical capacity building in the past 2 decades; climate change; and unwinding of unprecedented monetary stimulus.

(v)    The Indian markets are walking on a tightrope (of hope) passing through a deep valley of concerns like, worsening global macro; poor domestic macro; worsening valuation-corporate fundamental matrix; and tightening liquidity etc. The best case for markets is that it will cross the valley of concerns with no or little damage. The worst case is that it will lose balance and fall down. Generally speaking, the risk reward of investing in Indian markets is not very encouraging at this point in time.

In my view, the markets have already called the Central Bankers’ bluff, as I had expected five months ago (see Markets will call central bankers' bluff). There is no evidence of aggressive rate hikes leashing the prices; while growth has been crushed.

In the words of reputable William Hunt Gross (popularly known as Bill Gross), without interest rate “carry” (the positive difference between 2 and 10yr treasuries, for instance), our half-century-old, financed-based economy cannot thrive. In the 1980s the then Fed chairman Paul Volcker slayed 13% inflation by introducing a negative carry of 500bps or more for 3yrs. This resulted in a deep 3yr recession. Today central bankers are employing the same tactics, but our significantly higher levered economy cannot withstand the same amount of negative carry. The question is how much and for how long…..while inflation is the Fed’s seemingly solitary focus at the moment, economic growth and financial stability may soon gain equal importance……Recent events in UK, cracks in Chinese property based economy, war and a natural gas freeze in Europe, and a super strong dollar accelerating inflation in emerging market economies, point to the conclusion that today’s 2022 global economy in no way resembles Volcker’s in 1979. A negative carry of 500bps now would slay inflation but create a global depression."

Besides, Volcker tightened with the world progressing towards the end of the cold war era. Today, the world is entering an era of a fresh and perhaps more intensive cold war.

In India also, fissures have been reported in the Monetary Policy Committee. At least two members of the MPC have warned against unmindful rate hikes in the current circumstances.

My feeling is that central bankers would be forced to review their tactics and USD will revert to its rightful place. The only uncertainty is if this would happen well in time to avert a global depression.

Considering these circumstances, what should be the strategy of a small investor like me!

More on this tomorrow…

 Strategy review

1HFY23 Market performance

For the Indian markets, the first half of the current financial year (1HFY23) has been noteworthy in many respects. While the benchmark indices have remained boringly range bound (not unexpectedly see here), the shift in sector preferences has been material. Also as expected volatility has remained low to moderate and market breadth has narrowed down.

Some key highlights of the market performance in 1HFY23 could be listed as below:

Equity Markets

·         Benchmark Nifty lost 2.1%, sharply outperforming the peers from emerging as well as developed markets. For example, S&P500 (US) lost ~20% in this period; while STOXX600 (Euro Area) was down over 15%.

·         The foreign flows were majorly negative in 5 out of 6 months. Overall foreign portfolio investors sold ~US$20bn worth of Indian equities. Most of this selling was absorbed by domestic institutions. However, on a net basis, institutions were sellers worth Rs100bn.

·         There was a clear shift in sector preference of investors, in accordance with the institutional flows. The momentum massively shifted to domestic consumer demand from global growth. The IT sector was a major loser with NIFTY IT losing over 25% in 1HFY23; whereas FMCG (+22%) and Auto (20%) were major gainers.

·         Commodities (-7%) also lost in line with the global trend; with metals losing over 10%.

·         Banks also sharply outperformed with the benchmark Bank Nifty gaining over 6%. PSBs (+10%) did better than their private sector peers (+8%).

·         The domestic growth trade did get massive support from investors with Nifty Gowth Sector 15 index gaining over 18%; however, Realty (-8.5%) and Infra (-1.2%) sectors ended lower as rate hikes accelerated.

·         Conventional investment style outperformed with Nifty100 Quality (+1.6%) gaining and Nifty Alpha 50 (-16.6%) losing. Small caps lost close to 10% while midcap gained over 3%. Overall market breadth was neutral.

Currency & Debt Markets

·         Bond yields in India rose sharply in line with the global trend. The benchmark 10yr Treasury bond yields rose 50bps from 6.9% at the end of March 2022 to over 7.4%.

·         The yield curve flattened materially, with the short term yields lifting more than 50% from below 4% to over 6%.

·         RBI has so far hiked the policy repo rates by 190bps in FY23.

·         USDINR depreciated over 8% from 75.95 at the end of FY22 to 82.35 presently.

Outlook and Strategy

As I stated in my last strategy review (see here), the investment environment continues to be very uncertain and complex. The geopolitical uncertainties, fiscal policy fatigue and monetary policy dilemma makes short term forecasts very complex. These factors further support the idea of keeping the investment strategy simple and giving preference to capital preservation over higher returns.

Market outlook

The market movement in the 1HFY23 has been mostly on the expected lines. Despite the ongoing conflict between Russia and Ukraine, and elevated energy prices, I do not see any reason to change my market outlook for the rest of FY23. I expect-

(a)   NIfty50 may move in a much larger range of 16200-18745 during 2HFY23.

(b)   I shall remain positive on IT Services, Financial Services, select capital goods, healthcare and consumer staples, and negative for commodities, chemicals, energy and discretionary consumption. For most other sectors the outlook is neutral.

(c)    Benchmark bond yields may average 7.25%+30bps for the year.

(d)   USDINR may average close to INR78.5-79/USD in 2H2023. Better growth and stable markets may attract decent flows to support INR.

(e)    Residential real estate prices may show a divergent trend in various geographies, but may generally remain stable. Commercial real estate may continue to remain strong.

Investment strategy

I shall continue to maintain my standard allocation in 2HFY23 and avoid active trading in my equity portfolio. I am keeping my target return for the overall financial asset portfolio for FY23 to 7%.

 One of the most important and fundamental principles of economics is that “in a ‘free market’ current price of anything having an economic value is a function of demand and supply of such things at that particular point in time.” Of course there could be multiple factors that may impact the demand and supply of a thing; but usually nothing impacts the “price” directly other than the factors demand and supply.

In a ‘controlled and/or manipulated market’ the prices of things are fixed by the controlling authorities (or forces); regardless of the demand and supply for such things. In such markets, usually demand and supply of things are controlled and/or manipulated; or demand and supply duly get adjusted to the fixed/manipulated prices.

If we apply this core principle of economics to the world around us, we may discover that a significantly large part of global markets is presently either controlled or manipulated. The free market may only be prevalent in textbooks, policy documents and political speeches.

In the modern world, money is arguably the largest factor of production in the world. The price of money (interest rate) should ideally be a function of demand and supply of money. In case of excess supply the interest rates should be lower and vice versa.

In the past three years (2020-2022), nominal world GDP is estimated to have grown by less than 19%; whereas the money supply has increased by more than 50%. In spite of recent marginal contraction in money supply, the supply must be exceeding demand. Thus, there is no economic case for rise in interest rates; but it is happening. Obviously the money market is a controlled/manipulated market where central bankers and other major lenders may be controlling/manipulating the price of money to meet their other economic, political and/or geopolitical goals. (I refuse to accept the argument that money supply manipulation is happening to control inflation. There is no evidence of money supply impacting inflation in the past 15years at least. Else we should have 10% CPI inflation in 2010-12.) 

This distortion in the price of money has material repercussions in the market for goods and services across the world. It is impacting demand and supply (and therefore prices) of almost everything.

A significant part of the global trade is priced in terms of US dollar (USD). In a free market the price of USD (exchange rate) should also be a function of its demand and supply. In the past 33 months the supply of USD (M2) has increased by more than 50%, from $15.5trn at the end of 2020 to 21.7trn at the end of September 2022. In this period, we have seen global demand for USD diminishing, as reflected by the fall in global forex reserves. As per IMF the demand for USD by global central bankers is down to 25yr low. (see here) 

Under these circumstances the price (exchange rate) of USD must fall materially. To the contrary it has strengthened against most currencies. Obviously, the price of USD and some other dominant currencies is also manipulated.

Same argument could be extended to the prices of energy, gold, travel, wages in many jurisdictions, communication, education etc.

Under these circumstances I do not find it hard to believe that in the extant global order, ‘free market’ is a myth; and if we earnestly accept this premise, few things will remain the same insofar as the investment strategy and valuation methods are concerned.

I believe that we might soon need to adjust valuation models and investment strategy to factor in probabilities of frequent and strong state interventions; diminishing competition; radical policy shifts and sudden collapses.

Last week I travelled through three divisions of Western Uttar Pradesh and Garhwal division of Uttaranchal. The idea was to assess the current socio-economic conditions, especially in light of a deficient monsoon, inflation and accelerated public investment in infrastructure building. I may share some of the key take away as follows:

Crop plentiful

The crop, mainly sugarcane, appeared plentiful. The landscape was mostly lush green. However, many farmers suggested that they lost the investment in early sowing; and have again sown cash crops (vegetable etc.) after the late rains. These crops are also yielding much less as excess late rains have flooded the fields, particularly the smaller fields. Most of them are cautious about the rabi crop as the sowing for advance crop of potato is already delayed by 2-3weeks. However, if the current spell of rains ends in another week as forecasted, the rabi crop could be plentiful. Winter setting in early would also help rabi crops.

Vehicle and jewelry purchases deferred to next year

The impact of tighter availability of credit and prospects of a lower than usual Kharif earning has perhaps prompted deferment of decision to purchase personal vehicles, tractors and jewelry. Eight of the ten people I spoke to were positive that they will be making new purchases next year.

Expressways may not be making life easy

The highway infrastructure is being created at an accelerated pace in UP. It is common to see some old projects getting completed and some new projects being initiated in almost all parts of the states. However, two things remain constant. The quality of new expressways remains questionable. While the instances of damages to the newly constructed expressways in Eastern UP have hogged the media limelight in recent weeks; what has escaped the media scrutiny is the general quality of highways across the state. For example, on the newly built Saharanpur-Dehradun stretch of expressway, the permitted speed is in excess of 100kmph. However, the joints of most spans are so shabbily stitched that even the heavy vehicles get unbalanced at a speed of 80kmph. There was virtually no emergency rescue infrastructure on any of the expressways I travelled.

The NHAI and concessionaires have made absolutely no attempt to create awareness amongst the dwellers living on both sides of the expressways. Few people seem to be conscious of the fact that the speed of life around them has suddenly increased manifold. Most of them could be seen riding two wheelers on expressways without helmets. Wrong side driving to avoid long U turns and exits is blatantly common.

The knowledge to operate a vehicle is often accepted as driving skill. The road awareness and consciousness about the right of way and dangerous driving is almost absent in most village drivers of tractors and motorcycles.

The worst part is that the internal roads of villages and small towns were in absolute pathetic conditions in all the divisions I travelled. Even in the rich town/villages like Sardhana, Budhana, Shamli etc. the internal roads were not travel worthy. Obviously, the expressways are not providing any improvement to the ease of living to the people living alongside these expressways.

Cities expanding to swallow bypass

Numerous bypass roads have been constructed to ease the traffic congestion in major cities. The bypass roads allow the intercity traffic to cross major cities without entering the city, thus saving on precious time and fuel. However, there are instances (for example, Merrut bypass road) where the cities are expanding so fast that the bypass road is becoming part of the expanded city itself, thus defeating the very purpose of constructing the bypass itself.

Mussoorie – an impoverished queen

The visit to the Hill Queen Mussoorie after five years was a shocking experience. The town appeared a pale shadow of its glorious past. The infrastructure appeared to be collapsing. The roads were totally broken. The local vehicle population seems to have increased to an unsustainable level. The cacophony of motorbike horns was unbearable. The locals were always known for their simplicity and honesty. But many young people no longer adhere to the old value system. They do not mind fleecing the tourist for some quick gains; disregarding the reputation of the state as Dev Bhoomi (abode of gods).

There is little effort visible to showcase the local culture. Mussoorie has three Turkish Ice Cream Parlors, many Chinese, Tibetan, Punjabi and South Indian restaurants. But it is hard to find an exclusive local Garhwali cuisine restaurant, which is incidentally extremely tasty, healthy, and organic.

A strange thing was that almost all shops are accepting payment through UPI and wallets, but none was willing to accept credit card payment. The matter needs further exploration.

The composition of tourists has also changed completely. It was mostly budget tourists and some weekend visitors from Dehradun. The hill queen is certainly missing the Delhi and Merrut elites.

I feel the town needs to be completely shut down for outsiders for at last five years to let it rejuvenate and open in a new avatar.

Ppt slides about accomplished PIOs

It is very common to receive the lists (or graphics) depicting very successful persons of Indian origin (PIOs) on our social media timelines; email inboxes and even front pages of newspapers. Some of these lists contain names of people who are not necessarily of Indian origin, but whose names resemble Indian names like Tulsi. In some cases we do not even mind turning matriarchal, if the successful person has only a mother of Indian origin, e.g., Kamala Harris.

Recently, two such persons are prominently in the news – Rishi Sunak, who lost the race to the 10 Downing Street last month, and Suella Braveman, the newly appointed Home Secretary in Liz Truss cabinet. Both British politicians happen to be born to parents of Indian origin who migrated from India many decades ago. Both were born and brought up in the UK; own a passport issued in the name of the British Monarch; have never publicly shown any allegiance to India. Suella Braveman recently lamented that Indians form the largest group of VISA violators in the UK.

Many of the top global corporations, like Google, Microsoft, Adobe, Twitter, IBM, Cognizant, Nokia, Bata, Chanel, Starbucks, Micron etc. now have CEOs who were born and graduated from India. Many of them pursued higher studies abroad and worked there for many years before reaching the top. They all are global citizens, do not necessarily carry an Indian passport and have shown no specific commitment to development and growth of India.

I fear that most of these names may be under pressure to prove their allegiance to the country, whose name appears on the front page of their passports; or the companies which write their paychecks; even if it means taking decisions that are prejudicial to the Indian economy. They may hold tremendous respect for their motherland, alma mater, religion and culture. But the economy of India and welfare of a common Indian may not appear high in their list of priorities. In fact, people who are not of Indian origin may do much more for India than PIOs.

In fact, the more PIOs reach the pole positions in global corporations and politics, more worried we should be. Because, it not only strengthens the global lobby of influential people who may not like to be openly seen as biased towards India; it also reflects poorly on the weaknesses of our entrepreneurial ecosystem that is unable to retain top talent.

Having understood this, I shall now avoid investing in mutual funds and companies whose periodic presentations show the list of accomplished PIOs as a strength of the Indian economy and markets.

Running foreign policy from press conferences

Recently, one of the most celebrated video clips on social media in India has been the one where the external affair minister (EAM) of India is answering the questions of western media about India’s policy with regard to the Russia-Ukraine war, especially India’s decision to buy crude oil from Russia despite NATO sanctions. The stern and articulate response of the EAM won him millions of accolades. Many did not hesitate in terming him the most competent minister of PM Modi’s cabinet; a symbol of rising global power of India; and a worthy successor to PM Modi (whenever he decides to retire). Even some foreign experts have termed him one of the best diplomats in the world.

Inarguably, incumbent EAM is very articulate, confident and clear in his views. He also seems to have a clear mandate from the prime minister in the matters of foreign policy. But in recent times, there have been more failures than successes in foreign policy.

NATO countries have tacitly imposed travel sanctions (inordinate delays in VISA issuance) against India for supporting Russia. Businesses and students are suffering from long delays in VISA issuance. China is cementing its position in Ladakh. The US is giving arms and money to Pakistan. We have not been able to get Pakistan black listed by FATF. There is little progress on key issues like membership of UNSC and NSG. There is little improvement in relationships with other neighbors. The UK home secretary has spoken openly against India and the trade deal has been delayed. The Canadian government is seen openly supporting anti India (Khalistan) elements. Despite claims of 30-35% cheaper oil from Russia, the price of our basket of oil is not much different from the benchmark Brent Crude. Belt Road and CPEC are progressing steadily.

I would rather prefer that no one knows about our EAM or see him on TV. Let him be an anonymous person and work behind curtains and show results. The job of making fun of western media and giving blunt responses to western diplomats is best left to the innocuous full timers like Tharoors and Swamis.

This summer Americans drove less than the summer of 2020 when many office goers were working from home and the economy was partially shut down. The situation is no better in Europe. Higher fuel and food cost is driving the cost of living higher in most of the world, significantly disturbing the household budgets.

Many emerging and underdeveloped markets were struggling with higher inflation even before the pandemic. But pandemic and adverse weather conditions in the past two and half years have made the situation worse.

Whereas many emerging markets, especially in Africa and Latin America, have been struggling with higher inflation and rise in the cost of living for a couple of decades, it is a relatively new phenomenon for the post 1980s developed western economies. The present generation in these economies had gotten used to cheap and easily available money and marginal food and fuel inflation in the past two decades. For them this sudden and sharp rise in basic cost of living is nothing less than a major shock. Most of them may not be financially sufficient, economically trained, socially skilled and/or mentally prepared to deal with this problem.

On the other hand, the modern asset pricing models may also not be suitable to the situation where interest rates are rising at record pace. Many valuation models used for making investments in "startups" - having very long payback period in terms of conventional asset pricing techniques; not differentiating between revenue and capital cashflows for operating purposes; usually funded by professional private equity investors with little own skin in the game; and having high leverage debt as the ultimate source of funding – may not work at all in a scenario where USD is depreciating and cost of USD borrowing is running in excess of 6%.

The current spike and persistence of inflation has been attributed to the logistic constraints due to the pandemic; adverse weather conditions; Russia-Ukraine war and fiscal support extended by various governments to mitigate the hardships faced by the citizens. Initially most central bankers believed that the inflation is transitory and will wane as these conditions change. However, in the past six months a realization seems to be dawning upon them that the trillions of dollars in new money, printed over the course of the past 2yrs, may also have a key role to play in this episode of high inflation. Apparently, it took 215yrs for the US government debt to reach US$7trn. It has added the same amount in just the past 27months.

Inarguably, the problem of inflation has many more dimensions. Hiking rates and withdrawing quantitative tightening will take more than 25yrs to reach a sustainable level of debt. Manufacturing a recession by sharp hikes will only destroy demand for various commodities and weaken the inflation. However, the inflationary forces will keep coming back, much stronger than now, as and when the growth begins to revive.

A sharp USD and EUR devaluation could perhaps be one of the more viable solutions left to (i) reduce the public debt materially in a short period of time; (ii) complete restructuring of the global terms of trade; (iii) rationalization of the global commodity prices especially energy; (iv) catalyze a new investment cycle led by US and European exports.

The investors in USD denominated assets would obviously suffer tremendous losses. No wonder large investors like the Chinese government have materially reduced their holdings of US treasury and USD. India is also trying hard to diversify its trade to include other currencies like Ruble, Riyal and Yuan, to contain its exposure to USD.

The questions that beg answer are:

(a)   What shall be the safe haven in case of a sudden USD decline. Whether it would be the traditional asset like Gold; a new age asset like digital currencies or traditional safe havens like CHF, CNY, SGD etc.?

(b)   Is there any actionable for a small investor, if this speculation does come true?