When the Foundations Shift, Opportunity Emerges

The global economy is standing on a precarious sandpile, one built from years of excess leverage, underpriced risk, and political complacency. With each new grain, be it a policy misstep, a rate shock, or a geopolitical surprise, we move closer to triggering a cascade.

Recent headlines, such as the US-China tariff pause, offer a reprieve from escalating tensions. However, this is not a signal that volatility is subsiding. Quite the opposite: the system is becoming more brittle, and the dislocations more frequent. As articulated in a recent macroeconomic outlook, the global economy is facing multiple simultaneous stressors, any of which could tip the pile.

At Tamim, we believe this era of continuous volatility is fertile ground for decisive investors. Over the next 3 and a half years (of the Trump Presidency), we expect repeated waves of fear and relief, repricing and recovery. This is not the time to be meak. It is a time for boldness, tempered by clarity, strategy, and deep research.

The Global Sandpile: Layer Upon Layer of Instability

John Mauldin recently described the world economy as a complex system where seemingly small changes can spark outsize consequences. The analogy of the sandpile is powerful: we have built global systems: financial, trade and monetary that appear stable until, suddenly, they aren’t.

Multiple stress points are developing:

• Offshore US Dollar Liquidity: Eurodollar markets are increasingly strained as US fiscal dominance and Fed tightening crowd out foreign borrowers.
• Trade Fractures: Despite this week’s tariff pause, the broader trend of deglobalisation and supply chain realignment continues.
• Commercial Real Estate (CRE): Particularly in the US, CRE debt is rolling over into a higher-rate world.
• Municipal and Sovereign Debt: Global public finances are deteriorating, with the US now running $2 trillion deficits in peacetime, a fiscal position that may become unsustainable under even mild stress.

This is not fear mongering. It is simply the reality of a system in which each fault line interacts with others in unpredictable ways.

Repricing and the Mirage of Stability

Markets are conditioned to expect reversion to the mean. But in systems under stress, the mean itself is shifting. What was once considered “normal” may no longer be relevant.

For example:

• Yields are rising not from strength, but from disorder. A steepening US yield curve typically precedes recovery, but here it reflects a flight from duration amid inflation, fiscal fear, and geopolitical uncertainty.
• Monetary policy has limited power to backstop growth. The Fed and other central banks are constrained by inflation risks, even as consumer and business confidence wavers.
• Liquidity can vanish quickly. The velocity of money, once a quiet footnote, is now a flashing red light, warning of systemic slowing that can cascade quickly.

What this means for investors is simple: stability is not the baseline. Volatility is.

Volatility as a Feature, Not a Bug

Periods of economic tension often birth innovation and reallocation. This was true in the 1970s, the early 2000s, and again post-GFC. What we’re entering now is not dissimilar, a world where:

• Mispriced assets are common.
• Policy overreach and correction alternate.
• Narratives change monthly.

Mauldin’s core message: the coming cycle will be jagged, non-linear, and filled with opportunities for those who can stay nimble and long-term focused.

At Tamim, we view volatility as the mechanism by which capital is transferred from the reactive to the prepared. Our role is to be in the latter camp.

Thematic Conviction Amid Disorder

We are applying this lens across our thematic portfolios. Where others see noise, we see:

1. Technology Repricing: AI, automation, and cloud computing continue to accelerate. Ýet valuations have reset, especially outside the mega-cap bracket. We are positioning into profitable, under-the-radar names where the market is yet to catch on.
2. Energy Transition: Australia’s shift towards a decarbonised economy is not optional. It’s inevitable. We continue to focus on the enablers, grid software, smart metering, storage infrastructure. Companies like Gentrack and Southern Cross Electrical remain well-placed.
3. Commercial Property Repricing: As Mauldin notes, CRE globally is repricing, particularly in office and retail. Yet repricing creates opportunity. We’re focusing on suburban, ESG-aligned office spaces with value-add potential.
4. Capital Rotation from Passive to Active: Benchmark-hugging may have worked in the liquidity-flooded 2010s. It won’t work now. We are already seeing capital flow to active managers who can navigate dislocation, not merely absorb it.

Macro Watch: US-China, Inflation, and the Political Cycle

The temporary truce in US-China tariffs is not the end of trade tension, it is a tactical delay. It reflects political strategy, not economic cooperation. As the US election cycle ramps up, expect more such blinks.

However, these pauses offer windows of clarity and pricing dislocations. Investors who can interpret these episodes not as direction, but as opportunity, will thrive.

The Fed, the RBA, and others are walking a tightrope. But history suggests the balance will tip. When it does, capital will flood into underloved sectors, likely triggering explosive rebounds.

Be positioned before that happens, not after.

TAMIM Takeaway: Opportunity Favours the Prepared and the Brave

In the next three years, we will likely see:

• More market corrections
• More major geopolitical or financial shocks
• Shifting policy settings as governments grapple with fiscal pressures
• Major moves in interest rates, both up and down

None of this should frighten disciplined investors. If anything, it should excite them. Such dislocations are where long-term returns are built.

Actionable insights for investors:

• Don’t wait for the all-clear, invest on fundamentals, not headlines.
• Keep powder dry, but don’t stay on the sidelines for too long.
• Focus on companies with strong cash flows, scalable business models, and structural tailwinds.
• Stay light on leverage, high on agility.
• Use volatility as an entry point, not an exit excuse.

The next decade will be shaped by those who step into complexity with clear strategy and strong hands. This is the time to think boldly, act patiently, and embrace the dislocation as the birthplace of value.