Clocktower Wang Kaiwen: The End of the Old Order and Global Asset Rebalancing in the Wake of the US Dollar "Bear Market" | Alpha Summit

```

On December 19, at the "Alpha Summit" jointly organized by Wallstreetcn and CEIBS, Clocktower Chief Strategist Kevin Wang delivered a keynote speech titled "Global Asset Reallocation Amid Geo-Macro Paradigm Shift".

He stated that the new U.S. "National Security Strategy" is a "landmark document" authored by a former head of hedge fund research, which officially acknowledges for the first time the simultaneous “death” of America’s unipolar hegemony, liberal internationalism, and neoconservatism. This marks America's strategic retrenchment and its acceptance of the reality of multipolarity and spheres of influence. This fundamental geopolitical shift, combined with “offshore balancing” strategies, traditional allies’ panicked fiscal expansions, and a “savings drought” caused by global demographic changes, is reshaping global macro and asset pricing logic.

He believes the U.S. dollar has entered its greatest bear market in history, with potential depreciation of almost 40% over the next 5-8 years, forcing global capital to exit the over-concentrated dollar assets. In this framework, severely underweighted Chinese assets may become the biggest short-squeeze opportunity of the next decade, the gold bull market isn't over, and silver holds even greater potential.

Looking forward to 2026, the market must beware of the risk of Fed policy shift amid persistent inflation, and U.S. stocks are now in the “final stage of a bull market” driven by earnings growth but without further valuation expansion.

Highlights from the speech:

1. The U.S. dollar enters the “largest bear market in history”: Fundamental changes in geopolitics, America’s irresponsible pro-cyclical fiscal expansion, and the eventual inevitable path of debt monetization will lead to a collapse of U.S. dollar credibility. Unlike the 1970s, this time geopolitics not only won’t save the dollar, but may even “kill the dollar.” Over the next 5-8 years, the real effective exchange rate of the dollar could depreciate by up to 40%.

2. Global capital must exit dollar assets: The entry of the dollar into the greatest bear market in history means investors “must” shift away from dollar assets—currently up to 70%-80% allocation—and diversify globally. This is “the only way” to escape the dollar’s biggest bear market.

3. China is the biggest “short squeeze” opportunity: Global institutional allocation to Chinese assets is generally under 2%, a huge gap versus China’s roughly 20% share of global GDP. This structural imbalance, combined with long-term dollar depreciation expectations, could make China the most promising short-squeeze trade of the coming decade.

4. The gold bull market isn’t over; silver holds greater potential: Western profligate fiscal paths and eventual monetization will continue to erode fiat currency credibility. The market’s pricing of a return to the gold standard (about 8%) is still too low, the gold bull market is built on solid foundations. In terms of technical breakthroughs and market cap, silver has greater potential than gold. If global bond markets become turbulent, vast amounts of wealth may ultimately “force” central banks to buy silver.

5. Core contradiction for 2026: inflation risk and policy shift: U.S. inflation (about 3%) is far above the 2% target and pressure remains, yet the Federal Reserve is cutting rates, contrary to historical patterns. Investors should prepare for fewer than two Fed rate cuts next year, as currently expected by the market. If inflation rises further to 3.5%-4%, the Fed could fully shift discussion back to rate hikes.

6. US stocks are in“the final leg of the bull market”: The market shows typical late-cycle features: new highs driven by earnings but with no further re-rating. If expectations shift back toward monetary tightening (rising rates), valuations will come under compression. The first half of 2026 might still see earnings-driven gains, but risks will rise sharply in the second half.

Full speech transcript:

The US National Security Strategy Declares the End of the Old Order

Recently, especially in the past few weeks, there has been a very significant document: the new U.S. "National Security Strategy" for Trump’s potential second term. If you haven’t read it yet, I strongly recommend you carefully read through this file. It is very short—only about a fifth or even a tenth the length of previous U.S. documents—but it explains from a vital geopolitical standpoint America's view on the pattern of the world for the next 5 to 10 years and the responses it will make. Why is this document so important? There’s a rather amusing reason: its author is Kevin Harrington, a major leader in Trump’s National Security Council; before that, he was head of research at Peter Thiel’s global macro hedge fund, Thiel Macro. So, the person writing this geopolitical report was essentially a chief strategist or researcher for a global macro hedge fund. I believe he wrote it thinking specifically about the implications for major global asset classes.

In short, the document tells everyone one key thing: for the first time, the US government itself admits the old world order is gone. Then it tells you three things: First, American unipolar hegemony is dead—America no longer has the will, let alone the ability, to maintain the global unipolar world as seen in the past 30 years. Second, liberal internationalism is dead. Previously, the U.S. wanted to impose its liberal democracy on other countries—this ideology was called liberal internationalism in geopolitical practice. Now, America explicitly states: It does not seek to export its ideology to places without that history and tradition. Third, neoconservatism is dead. Neoconservatism argued the U.S. must always maintain absolute strength, dominating a world without challengers. Now it admits: the power of major, rich, strong nations in international relations is eternal truth. In other words, it admits other major powers can have spheres of influence. In 2010, Hillary Clinton said, “the U.S. does not recognize any other sphere of influence in the world.” A decade later, the U.S. government itself acknowledges this universal truth. Thus, the old world order—the so-called liberal international order since WWII—is over. This may have been China’s reality for a decade, but this is the first time the US government itself recognizes the profound change. Overall, this NSS is a document of strategic retrenchment.

Why is American unipolarity dead? Not because the government doesn’t want it, but because it’s unable to maintain a unipolar world. Since the early 21st century peak, America’s relative power vs. other great powers has dropped sharply. Meanwhile, public support in the US for playing global policeman has fallen from almost 80% to about 65%. US troop numbers in NATO have declined since 2010. U.S. mainstream center voters have gradually shifted from “the US must be world leader” to “we need to focus more on our own affairs and people’s lives.” This means the US must “de-lever” geopolitically, continuously reducing global military deployment and resource input.

The US now clearly wants to turn to“offshore balancing”strategy. The most successful historical practitioner was Britain from the 16th–19th centuries. As an offshore power, Britain intervened at key moments in continental Europe to prevent dominance by any single power. This was good for the balancer; now America is that balancer, able to sit back and watch. But what it will watch is a “fight between tigers”—that is, the very regions it wants to “balance” will be highly dangerous. When Britain practiced offshore balancing, 16th-19th-century Europe was wracked by recurrent conflict. So, a multipolar world is very dangerous and scary. Since 2010’s shift from unipolarity to multipolarity, global conflicts have clearly increased, with many long-dormant historical issues flaring up again, and global war risk now at post-WWII highs.

In this multipolar and increasingly chaotic world, the most alarmed are America’s traditional allies, specifically Japan, South Korea, and Western Europe, whose military spending and competitiveness vs. rivals have dropped in recent decades, relying heavily on American protection. Now with U.S. retrenchment, they realize “this is truly a moment of life and death.” Governments’ first reaction is always fiscal stimulus. So, we see: Germany has historically shifted from fiscal conservatism; Japan has launched large-scale stimulus of 3%-3.5% of GDP; the US under “reindustrialization” puts cyclical fiscal policy top priority. This means U.S. government investment as a share of GDP will keep rising in coming years.

Western Fiscal Expansion Collides With Global Savings Drought

The problem is, as Western nations use fiscal policy to rebuild strength, they just meet a global macro environment shifting from“savings surplus” to “savings drought.”The global savings-to-GDP ratio peaked in 2021-2022 and began falling. The main, irreversible driver is global demographics: the world dependency ratio (working/non-working population) bottomed around 2020, marking the end of the demographic dividend—driven centrally by Chinese aging. When fiscal dominance meets a savings drought, the result is global bond investors’ “rebellion.” They say “no” to irresponsible fiscal expansions by dumping long bonds and pushing up yields. That’s why this year, you keep hearing about new historic highs in long bond yields in various developed Western nations.

Theoretically there are three ways to stabilize the bond market: First, rely on foreign investors—but China is selling Treasuries, and surplus nations like Japan and Germany now need their own funds. Second, rely on domestic private sector—but it is also protesting via market volatility, and current rates offer insufficient compensation. Third, monetize the debt (i.e., print money)—the central bank directly buying bonds via yield curve control (YCC). In today’s era of Western populism, policymakers have no political capital to impose pain (tight fiscal policy), so the only choice is to have central banks absorb the debt. This happened after WWII and in the 1960s/1970s, with the result always a loss of currency credibility and sharp devaluation (e.g., from 1971–76, the USD lost ~35% vs. major currencies and 70%-80% vs. gold). This time, the US will again resort to printing, and the dollar will collapse.

The U.S. Dollar Will Enter The Greatest Bear Market In History

In the 1970s dollar crisis, foreign holdings of Treasuries actually rose because the main surplus countries (Japan, Germany, Saudi Arabia) were close US allies and dependent on American protection in the Cold War. So, geopolitics then actually saved the dollar. Today it is totally different: the world’s top surplus nation is China, America’s #1 strategic competitor, which is selling Treasuries. At the same time, with U.S. retrenchment, allies like Japan and Germany are less willing or able to support U.S. debt as unconditionally as in the 1970s. Therefore, this time, geopolitics not only won’t save the dollar but may “kill the dollar.”

Our core conclusion: the dollar has already entered its greatest bear market ever. Not one of the greatest—the greatest. Caused by fundamental geopolitical shift, irresponsible fiscal policy, and the inevitable debt monetization. Even after nearly 10% decline this year, the real effective exchange rate remains historically high. Comparing to the 30%-35% depreciation in the 1971 and 1985 bear cycles, we expect overall USD depreciation of up to 40% in the next 5-8 years. This is the greatest bear market for the USD in history.

Asset Allocation Must Shift: China, Gold, and Silver

With the USD entering a bear market, you must exit dollar assets for global allocation. The biggest global capital imbalance is now with China. Current global institutional allocation to U.S./USD assets is 70%-80%, but to China is barely 2%. Yet China’s GDP share is near 20% globally (higher by PPP). Like a football match with 92:8 odds instead of a fair 64:36 or 55:45. If the dollar enters a historic bear market, the biggest short-squeeze trade of the next decade is actually China.

Is the gold bull market over? Absolutely not. Western fiscal profligacy and eventual debt monetization will keep eroding fiat credibility. Market pricing for a return to the gold standard is only 8%, even less than 2011-2012. Given today’s geopolitics, this probability should be much higher. Silver may be even better than gold: spot silver just broke above a long-term downtrend, the gold/silver ratio broke up out of a rising trend. If Western bond markets become volatile and hundreds of trillions seek assets, by market cap, silver offers even greater upside than gold. Central banks will surely buy silver—not by choice, but by necessity.

Outlook for 2026: Inflation Contradictions And U.S. Equity Tail Risk

Looking toward2026, the key macro fact is: Historically, whenever U.S. inflation rebounded above the 2% target, the Fed responded with hikes—only two pauses. This time, inflation is already at 3% and still rising, yet the Fed is cutting; this is unprecedented. The market is pricing in further cuts. But many leading indicators signal U.S. inflation pressure remains, the labor market is stronger than expected, real GDP growth is still 4%. If I had to bet, I’d bet U.S. rates are more likely to rise than fall. From where we sit now, be ready: the market’s expectation for two Fed cuts by 2026 may be reduced, perhaps even flipping to discuss hikes (especially after mid-terms). This is a major market risk. If inflation rises above 3.5% next year, the Fed could well turn hawkish again.

U.S. stocks now show classic late-cycle signs: strong earnings drive new highs, but forward P/E is no longer expanding. That’s because the market realizes peak liquidity is past. Once expectations shift to monetary tightening (higher rates), valuation compression risk becomes real. In the first half of next year, U.S. stocks may still rise on earnings, but risk will rise sharply after that—possibly pulling out of U.S. equities by Q2. This is the last stretch of the bull market.

Risk Disclaimer and TermsThe market has risks; investments should be made cautiously. This article does not constitute individual investment advice nor does it account for special investment targets, financial situation or needs of specific users. Users should consider whether any views or conclusions fit their situation. Investments made accordingly are at their own risk. ```