From the team at Freedom Asset Management

Guernsey cannot really compete with Hong Kong’s reciprocal clubs, but when the summer sun shines, you can sneak in a lovely beach-side sandwich lunch, as we did with the Guernsey team last Friday.  The weather was glorious.  Needless to say, the glorious weather did not quite extend into the weekend, but that is a typical British summer for you!

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Our articles this week:

Canaccord’s Justin Oliver asks whether inflation in the US is stuck at 3% - and is that due to Trump’s tariffs

Charles Harris reviews the Kensington Treaty and what it means for Anglo German relations, especially in Defence

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Please scroll down to read the articles.

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Crypto comes of age

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Probably the most important piece of news in the investment world last week was the passing of the “Genius Act” otherwise known as the Guiding and Establishing National Innovation for US Stablecoins Act.  This act has put in place a legislative framework for stable coins to operate officially in the US.  According to Morgan Lewis, the act is expected to come into force around November 2026.

Importantly, the new act brings in significant guardrails for official USD stable coins – specifically that the stable coin must have bank accounts in the US and be fully covered by investments in US Treasuries and subject to monthly disclosure and quarterly audits.

The existing dominant player in USD stable coins is Tether with a $161bn market cap, which operates offshore and has been historically very shy to share with its users, or the US government, exactly what backs its coin.   They have been given 3 years to transition onshore and disclose.  As we have said in the past, we think there are only two winners in crypto – stable coins and BitCoin – the rest are basically all fraudulent or silly and will all eventually trend to zero.

Stable coins offer benefits to two main groups: (1) anyone trying to build atomic (immediate) settlement into any transaction, whether that be institutional custody or global trade, and (2) people who are unfortunate enough to live under regimes where high inflation, corruption and general incompetence means their home currency is not to be trusted as a store of wealth.

Importantly, the biggest beneficiary of this new legislation will be the US Treasury and in consequence the US dollar, again cementing the US dollar’s role as the global payment currency of choice and store of value.

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US Technology VIP webinar later this week

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This week we shall be holding our first quarterly Zoom webinar for the US Technology VIP Fund.  We have arranged 2 sessions of the same webinar, which we will run, firstly to suit our investors in Asia and the second session to suit our investors in Europe and the Middle East.  Please sign up to the appropriate webinar using the links below.  Additionally, we shall be recording the webinar, so if you would like to receive a copy of the recording please let us know.

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Investors in Asia

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When: July 24, 2025 09:00 Hong Kong

Topic: US Technology VIP Fund quarterly investor call – July 2025

Register in advance for this webinar:

https://us06web.zoom.us/webinar/register/WN_g4mu90MoSTWZhvywPP75hQ

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Investors in Europe, Middle East and Africa

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When: July 24, 2025 15:00 London

Topic: US Technology VIP Fund quarterly investor call – July 2025

Register in advance for this webinar:

https://us06web.zoom.us/webinar/register/WN_Z4lKbvx8QEyZbUJW7dBNWA

After registering, you will receive a confirmation email containing information about joining the webinar.

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Forward planning for September meetings with the USVIP investment team in Hong Kong, Abu Dhabi and Dubai

We shall have Cody Willard and Bryce Smith in Hong Kong for the week of 8th September.  The team will then be in Abu Dhabi and Dubai the week of 15th September.  If you would like to book some time with them, please do not hesitate to be in touch with your usual contact at Freedom.

Performance

We are pleased to see the continued strong returns as the US markets and the S&P returns to favour.  USVIP continues to perform strongly and MINC is performing in line with its cautious income objective.  Sterling has started to walk back from it recent highs against the US dollar – as we have said before, you can only cheat gravity for so long.

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This week I am in London and Guernsey.

Wherever you are, please let me wish you a wonderful and peaceful week ahead.

Adrian

“Is US inflation stuck at 3% because of Trump’s tariffs?”, 21/7/25

By Canaccord’s Justin Oliver, Adviser to Opus Global Growth

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On Thursday Prime Minister Keir Starmer and German Chancellor Friedrich Merz signed an agreement to deepen bilateral ties between the UK and Germany marking the most significant defence treaty between the two nations since the second world war.  Mertz’s visit follows that of France’s President Emmanuel Macron the week before solidifying the return of the ‘E3’ (UK, France and Germany) as the pivotal force behind of Eurpean security and a key step in post-brexit cooperation.

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The ‘Treaty on Friendship and Bilateral Cooperation’, also being refered to as the ‘Kensington Treaty’, outlines 17 various initiatives ranging from defence to school trips aiming to enhance cooperation in response to deteriorating geopolitical situations and to benefit the citizens of both nations.

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The treaty is an unambiguous response to the increasingly aggressive posture of Russia and the growing uncertainty surrounding the United States' long-term commitment to European security as it looks to direct its attention to threats in the indo-pacific.  The treaty completes the triangle of bilateral treaties between the E3 group, previous treaties include the ‘Lancaster House Treaty’ (UK and France) and the ‘Elysée and Aachen Treaty’ (France and Germany).

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The Kensignton Treaty is heavily centred around defence and includes developing European Long Range Strike Approach (ELSA) 2,000km+ as a conventional deterrent, developing and procurring unmanned aerial systems, strengthening the eastern flank, countering undersea threats in the North Sea, strengthening defence exports and industry, and increased cooperation to support stability in the Balkans and Indo-Pacific.

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For the UK, the treaty also marks a significant reset in its relationship with a key European partner.  After years of strained ties with EU member states following BREXIT, which saw trade and other links decline, this agreement provides a new, solid foundation for cooperation outside the EU framework and provides a clear message from the EU’s largest economy that cooperation is vital.

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The 17 projects:

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1. Ukraine Recovery and Reconstruction
2. Trinity House Defence Agreement
3. Strengthening Defence Industrial and Export Co-operation
4. Joint Action Plan on Irregular Migration
5. Strategic Science and Technology Partnership
6. North Sea Energy Infrastructure Project
7. Joint taskforce on a new rail link between UK and Germany
8. E-gates
9. School trips and mobility of citizens
10. Business-Government Forum
11. Strategic conflict prevention and stabilisation partnership
12. Western Balkans stability and security
13. Indo-Pacific cooperation
14. Biosecurity Cooperation
15. Strategic sustainable development partnership
16. Education, Culture, Sport
17. KfW/UK Public Financial Institutions collaboration

In essence, the Kensington Treaty is far more than a simple friendship agreement.  It is a substantive strategic realignment, positioning the UK, Germany and France as the core of a more self-reliant European security architecture while simultaneously rebuilding their bilateral relationship on a new, post-Brexit footing.  Furthermore, defence sector performance has massively boosted the European economy in 2025, for the E3 in particular, with increased spending likely to benefit its economies for years to come.

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Charles Harris