If you’ve been following the 2026 planning blogs, these have now been consolidated into a single ebook, available (free) on request
Dawn spoke about Medical Aid risk with Michael Avery on his Classic Business show last Thursday. You can listen to it here.
China has spent over $60bn building a globe-spanning port network that doubles as a strategic hedge against American retrenchment. Concerns include China’s influence over the Panama Canal, which handles 40% of US container traffic.
Markets dropped, then rocketed back up — classic sugar-rush energy. Nasdaq 100 had its best day since May, thanks to shifting expectations of a December Fed rate cut. Traders seem convinced the modern “Greenspan Put” is alive and well: if markets wobble, the Fed will swoop in. Inflation evidence is thin thanks to the US government shutdown, but that hasn’t stopped speculation. AI hype helps, but the real driver is hope that rates fall and the Fed catches falling knives.
Bracket Creep & Fiscal Drag (UK vs RSA)
Inflation without matching tax-threshold adjustments is the oldest tax trick in the book. South Africa has frozen brackets for two years running; the UK just extended its freeze another three years. Millions of Britons will slide into 40–45% tax bands by the end of the decade. The UK expects to raise £13bn this way by 2030–31. Both countries are quietly redefining who counts as “high earners.” It’s a stealth tax raid — polite, legal, and painful.
China–Japan Tensions
Relations between China and Japan are heating up again. Issues include disputed islands, Taiwan risk, seafood bans, travel advisories, and fears that China could weaponise its rare-earth dominance. Japan’s latest defence white paper labels China its biggest strategic challenge, and both sides are circling each other (literally) in contested waters. Economically, they’re deeply intertwined — but rivalry runs deeper than trade.
Google’s custom AI chips (TPUs) won’t knock Nvidia off its throne, but they *are* helping big tech keep more margin in-house. Cloud giants are all building custom silicon (Amazon, Microsoft, Meta, even OpenAI). These chips are cheaper to run for predictable large-scale workloads and could reshape profitability over time. Expect a hybrid world: Nvidia for flexible innovation, custom chips for industrial-scale AI. For portfolios, this is a long-term margin-enhancing trend, not a reason to chase the “next chip winner.”
Global Economic Roundup in the last week
United States
U.S. services continued to expand strongly (services PMI at 55.0), while manufacturing held up at 51.9, signalling modest overall growth in November.
The latest U.S. employment release was mixed: payrolls rose (notably 119,000 in September), but revisions for previous months trimmed earlier gains — creating uncertainty over whether labour-market resilience is broad-based or narrow. The gap in data is not helping the uncertainty.
Consumer confidence is low, with inflation expectations still stubborn; many households seem worried about prices, even if activity surveys look decent. Things might look different after Black Friday is over.
The mixed underlying data (jobs, PMIs, sentiment) have ratcheted up uncertainty about what the Federal Reserve will do; markets are pricing in a strong possibility of a rate cut in December, though nothing is guaranteed.
This blend of optimism (activity) and caution (jobs + sentiment) means investors are oscillating — some are chasing gains, others are hedging. Net result: volatility remains elevated and direction unclear.
South Africa (RSA)
Global
Over the past two decades, China has invested tens of billions of dollars in building or investing in a global network of commercial ports on every continent save Antarctica. Dominating trade infrastructure through shipping, highways and rail is a central pillar of President Xi Jinping’s Belt and Road Initiative, and it’s become a growing strategic advantage amid President Donald Trump’s trade war.
With the US retreating from foreign investment just as China accelerates, these projects have dwarfed similar efforts by any other country. China’s state-owned or affiliated entities reportedly have invested more than $60 billion in 129 overseas port projects. Within this expansion is something the US and other nations consider a disturbing trend.
Since World War II, the US has maintained a constellation of military bases across the globe. But as America steps back from the international stage amid a focus on domestic politics and growing internal instability, China is moving to fill the gap. At least 14 ports with Chinese majority ownership have been identified as having potential military uses, a development that has some countries rethinking earlier agreements. In Australia, for example, the government said it plans to reclaim the port of Darwin from its Chinese leaseholder. And the European Union is considering tightening controls on foreign ownership of what it calls “critical transport infrastructure.”
For Trump, the more immediate concern is how China could leverage the ports it controls as part of trade tensions. The Republican president has expressed particular concern about Beijing’s influence over the Panama Canal, which the US President Jimmy Carter long ago returned to Panama. Two ports on either side of the canal are owned by Hong Kong-based conglomerate CK Hutchison. Trump aides have claimed that control of these ports by Chinese companies could allow Beijing to impede canal traffic in a time of conflict, trade or otherwise. This could be a major threat to the US economy, since 40% of the country’s container traffic passes through the canal.
Just in time for the Thanksgiving break in the US, the market correction has been corrected, but in the big scheme of things, it was hardly monumental:
The Nasdaq 100 opened last week with its best daily performance since May, rallying by 2.6% as risk assets enjoyed a general rebound. But this appeared to owe more to changing interest rate expectations than any news from the big tech groups.
Hopes for a December Fed funds rate cut were dwindling by the end of the previous week as stocks sold off. Then a couple of more dovish pronouncements from senior Federal Reserve officials changed things. The futures market raised its odds on a December cut above 70%, and the stock market rallied with it. Correlation doesn’t prove causation, but it certainly looks like the change in Fed expectations drove the market.
They almost appear to believe that a modern version of the Greenspan Put, in which the former Fed chairman cut rates if ever it seemed the stock market needed a bailout, is in effect.
From the cut to tide through the implosion of Long-Term Capital Management in 1998 until the credit crisis a decade later, it certainly seemed that the fed funds rate was following the stock market.
Thanks to the government shutdown, it’s difficult to see what evidence traders are working on, as the most recent US inflation report was for September. Further, and again with little obvious evidence, the closing gap between one- and two-year expectations suggests that tariffs are no longer expected even to have a transitory effect in rising price levels. But if the market is right that inflation worries are disappearing, and the Fed is really more concerned about the labour market, then that means an imminent rate cut. And that means an excuse to buy back into the stock market.
There’s great excitement about AI, as there should be. But this market continues to roll forward on the belief that inflation is slain and that the Fed will have its back if stocks begin to fall. These beliefs aren’t unreasonable, but an awful lot of money is now being stacked on them.
Bracket–creep/Fiscal-drag UK-style
Fiscal drag and bracket creep are cousins who show up to the same tax party but cause trouble in slightly different ways.
Bracket creep
This is the sneaky one. When inflation pushes your income into a higher tax bracket, even though your real (inflation-adjusted) income hasn’t actually improved. You feel richer on paper, but SARS feels richer in reality. Your tax rate goes up without your living standard going up. Classic creep behaviour.
Fiscal drag
This is the big-picture effect. It happens when the tax system as a whole doesn’t adjust fully for inflation or wage growth. Even if you don’t move into a higher bracket, you still end up paying a larger share of your income in tax because the thresholds, rebates or deductions haven’t kept pace with rising incomes or prices. It’s like the government slowly tightening the belt around your wallet while smiling politely.
Here in RSA we have become accustomed to the Treasury playing a game of stealth with our tax brackets. Basically, they shout from the rooftops that taxes aren’t being increased but do not move the tax brackets in line with inflation, which means that everyone’s tax home pay is eroded by inflation. Added to this, annual allowances also don’t move – in some cases, for decades. The RSA Treasury has now done this ‘bracket freeze’ two years on the trot.
In the UK, some 5.4 million workers will have been pushed into higher tax brackets of between 40% and 45% by the start of the next decade after Chancellor of the Exchequer Rachel Reeves extended a policy of freezing income thresholds. Remember that this relatively high inflation is a fairly new phenomenon in the UK and US, and policymakers are taking advantage of that.
The Labour chancellor announced that the long-running freeze on personal tax thresholds will last for an extra three years, meaning they won’t be increased to keep pace with the rate of inflation. The so-called fiscal drag, rightly dubbed by critics a “stealth tax raid”, continues a tactic used by Reeves’ Conservative predecessors to avoid the political backlash of actually raising tax rates.
All over the world, policymakers are battling with unsustainable levels of government debt, and just like when you’re trying to balance your personal finances, they can make more (tax in the case of governments), or spend less. Unfortunately, they don’t have a bank manager constraining their overdraft; if they want more money, they just print it – the default choice in most cases.
The measure in the UK will raise an estimated £13 billion ($17 billion) by 2030-31, as millions of Britons find their salaries suddenly qualifying for higher bands. Almost 1-in-4 taxpayers will be in either of the top two income tax bands at the end of the period, compared with 15% in 2021-22, when then-Chancellor Rishi Sunak, a Conservative, first froze the thresholds.
The repeated use of the policy has done a lot to push Britain’s tax take toward a projected all-time high of 38% of economic output. Starmer and Reeves criticised the Tories for fiscal drag while in opposition and the chancellor even touted her decision to end the freeze in her first budget last year, saying to do otherwise would “hurt working people.”
Pressed by reporters on the reversal later on Wednesday, Reeves said she was making the necessary choice to balance the country’s finances and cited other measures to reduce the cost of living.
“I’m being open and honest,” Reeves said. “That is, from 2028, freezing thresholds for a bit longer, and that does have a cost. But we are putting money now in the pockets of working people.”
The policy has redefined who the government sees as high-earning workers while sweeping in an estimated £67 billion by 2030-31. The measure was the biggest single revenue raiser in Reeves’ budget, as she used a patchwork of tax increases to avoid breaking Labour’s campaign promise not to hike the rates of key taxes.
The freeze means that an extra 5.2 million individuals will be paying the basic income tax rate of 20% by the end of the forecast period. A further 4.8 million will move into the higher 40% rate for those earning between £50,271 and £125,140 annually.
Another 600,000 will move into the top 45% rate of tax for the highest earners. Such tax bills will become an increasing drag on household finances over the next decade.
A separate move by Reeves as part of her budget announcement will also make it harder for taxpayers to avoid busting into higher brackets by diverting more of their salaries into retirement funds. This is also a tactic used by the RSA government, which capped retirement contributions at R350k per annum in 2016.
China and Japan are two of Asia’s most powerful nations and the region’s biggest trading partners. Yet centuries of intense rivalry mean their economic embrace can never be taken for granted.
A number of issues continue to simmer between the two countries, including China’s increasing military activity around a disputed cluster of islands, trade restrictions and concerns over peace and stability in the Taiwan Strait. Fresh tensions developed in November after Japan’s Prime Minister Sanae Takaichi said that if China fought to take control of Taiwan, it could amount to a “survival-threatening situation” for Japan — a classification that would provide a legal justification for Tokyo to potentially deploy its military, in concert with the US.
The Chinese government accused Takaichi of meddling in its internal affairs and demanded a retraction, but the Japanese leader defended her comments. As the diplomatic spat escalates, China has taken retaliatory action. It has warned its citizens against travelling to Japan, banned the import of Japanese seafood and suspended the screening of some Japanese films.
Neither country has stepped up military exercises, but Chinese ships circle the disputed islands each day, and Japanese vessels shadow them closely.
China’s President Xi Jinping reinforced his country’s position in a phone call with US President Donald Trump on Nov. 24, who immediately followed up with a call to Takaichi, during which both leaders confirmed their close cooperation.
What’s the history of China and Japan’s relationship?
China and Japan have for centuries been the dominant political and cultural powers of Northeast Asia. They’ve influenced each other’s language, economic development, and culinary traditions. Trade picked up from the late 19th century, but so did political friction, leading to a series of armed conflicts.
Japan invaded and annexed parts of China during this period, and from the 1930s through World War II, Japan’s Imperial Army launched brutal campaigns in China, including infamous mass killings in Nanjing. These events — as well as ongoing territorial disputes — continue to overshadow relations between the two countries.
What’s behind China-Japan tensions today?
Territorial disputes remain one of the biggest flashpoints. Both countries lay claim to a group of uninhabited islands in the East China Sea.
China has been sending coast guard and government vessels into the area almost daily since 2012, when then-Japanese Prime Minister Yoshihiko Noda decided to move some of the islands from private to state ownership. The number of Chinese vessels entering the zone hit a record in 2024. China and Japan also have competing claims to a nearby gas field.
Japan’s 2025 annual military white paper made more than 1,000 mentions of China, saying its neighbour had achieved a rapid improvement in military power and was Japan’s “greatest strategic challenge.” Xi has overseen a doubling of defence spending since taking office in 2013. This has been one of the drivers of Japan’s expansion of its own military.
China has accused Japan of not learning the lessons of history and returning to militarism.
China considers Taiwan part of its territory and has vowed to reclaim the self-ruled island of 23 million people someday, by force, if necessary. Japan doesn’t have formal diplomatic ties with Taiwan but has spoken out against any unilateral attempts to change the status quo and insists that cross-strait issues must be resolved peacefully. Japan’s concern stems partly from geography. Taiwan lies less than 100 kilometres from Yonaguni, the closest Japanese island — a reminder of how quickly any conflict could spill across the East China Sea.
As China gradually opened its markets from the late 1970s, Japanese companies, including Panasonic Holdings Corp. and Toyota Motor Corp., set up production sites in the country to sell to a growing class of prosperous consumers. Japanese businesses also latched on to China’s potential as a source of cheap labour for manufacturing. Firms such as clothing retailer Uniqlo set up factories there or sourced goods from Chinese companies before selling them in Japan and elsewhere.
China is now Japan’s top trading partner, while China counts only the US as more important in bilateral trade. But the relationship is evolving fast. Chinese businesses are starting to compete directly with Japanese companies in producing expensive items such as cars and electronics. And Japan is increasingly becoming a supplier of components to China rather than finished products.
Chinese consumer brands, including low-cost e-commerce giant Shein, are expanding in Japan, while electric car manufacturers such as BYD Co. have emerged as a competitive threat to Japanese automakers, not only in China but around the world, too. Some Japanese companies, including Mitsubishi Motors Corp. and Nippon Steel Corp., have even pulled out of China or pared back operations there.
Takaichi and Xi met in October and agreed to bolster economic and trade ties and to promote tourist visas. The progress made during that meeting is now at risk of unravelling. Chinese state media said in mid-November that the government had “made full preparations for substantive retaliation,” hinting that the possible measures could include sanctions, a suspension of economic, diplomatic and military ties, and restrictions on trade.
China subsequently indicated it would halt imports of Japanese seafood. It previously imposed a ban in 2023 and mostly lifted the restrictions earlier this year. However, shipments remained subdued, totalling just $500,000 in the first nine months of 2025, according to Chinese customs data.
Much more significant concerns focus on the potential for China to weaponise its dominance of the rare-earth supply chain, a tactic it has used before. When the two countries clashed over a territorial dispute more than a decade ago, China temporarily blocked exports of these critical materials, which are used in smartphones, cars and many other technologies.
The stakes are also high for Japan’s tourism industry after China’s foreign ministry warned that citizens should avoid travelling to Japan in the near term. Some state-owned firms, including major banks, echoed this guidance, and Hong Kong updated its travel advisory for Japan as well.
While China appears to have more leverage to deal an economic blow than Japan, it will also have to weigh its options. Resorting to strong-arm tactics too quickly, especially if it imposes restrictions on critical minerals, could draw Japan’s ally, the US, into the fray. Rare-earth supplies have been a key source of friction between Washington and Beijing, and their relationship remains fragile even after reaching a tentative trade truce in October.
Author: Dawn Ridler
TPUs: Google’s Quiet Weapon in the AI Hardware Wars
How custom AI chips could shift power – and profits – across the tech giants without ending Nvidia’s reign overnight
Tensor processing units (TPUs) are custom AI chips designed by Google that could quietly reshape who makes money from artificial intelligence, especially inside the big cloud platforms. They are unlikely to end the dominance of graphics chips overnight. For long‑term investors, TPUs look less like a “Nvidia killer” and more like a powerful tool for big tech to improve margins and negotiate better on price in a still‑early AI spending cycle.
Big tech, big chips, big money
The AI boom rests on giant cloud platforms and the specialised chips inside them. Companies like Alphabet, Microsoft, Amazon and Meta Platforms are spending hundreds of billions of dollars building data centres packed with AI hardware, with Nvidia GPUs currently the workhorse of the industry. This spending is justified by hopes of future AI‑driven revenue from search, advertising, cloud services and new software products, but investors are increasingly asking when that spending will translate into sustainable cash flows.
In this context, any technology that reduces the cost of AI calculations, while keeping performance high, matters a great deal. Lower costs per unit of AI work mean better margins for the platforms and potentially more competitive pricing for their customers.
TPUs and the custom chip movement
Google’s TPU is just one example of a broader shift toward custom AI chips among tech giants. Amazon developed Trainium and Inferentia chips, Microsoft created Maia, and Meta is building its own accelerators, while even OpenAI plans custom silicon by 2026. These application‑specific integrated circuits (ASICs) are designed exclusively for AI workloads, unlike GPUs, which were originally built for graphics.
By stripping away unnecessary features and optimising for specific AI tasks, custom chips like TPUs can deliver more work per dollar and per watt for large, predictable workloads such as running search, translation or chatbots at scale. Recent TPU generations used in Google Cloud are reported to offer significantly better performance per dollar than some comparable GPU setups, with case studies pointing to cost savings of 50% or more.
For Alphabet, the strategic benefit is that more of each AI dollar stays “in‑house”. When customers use TPUs on Google Cloud, Alphabet captures value not only from cloud software and services but also from the underlying chip and infrastructure layer, instead of paying that margin to an external supplier like Nvidia. Interest from other platforms, such as reported talks with Meta about using TPUs, reinforces the idea that these chips are a genuine alternative for certain high‑volume workloads.
Hype versus reality for investors
TPUs and other custom chips are not a death blow for Nvidia, nor are they a guarantee of effortless profit for the platforms building them. GPUs still dominate for flexible, experimental work and for many organisations outside the largest cloud providers. The more realistic medium‑term picture is an AI ecosystem where custom chips from Alphabet, Amazon and others sit alongside Nvidia GPUs, spreading the economic power across more players.
The key message is that TPUs and similar custom chips are part of a broader shift in which major platforms try to control more of the AI “stack” to lower their costs and protect margins. This can support long‑term profitability for diversified big‑tech holdings, but it does not remove the underlying risks around AI regulation, competition and adoption.
Portfolios should treat custom chips as an incremental positive within a multi‑year AI infrastructure theme, not as a reason to make short‑term, concentrated bets on a single chip story.
Author: Jonathan Brummer
EXCHANGE RATES:
The Rand/Dollar closed at R17.13 (R17.36, R17.13, R17.27, R17.31, R17.25, R17.38, R17.50, R17.22 , R17.35, R17.33, R17.37, R17.58, R17.65, R17.44, R17.61, R17.74, R18.15,R17.76, R17.72, R17.90, R17.58, R17.89, R17.99, R17.92, R17.77, R17.95, R17.88)
The Rand/Pound closed at R22.68 (R22.74, R22.56, R22.69, R22.76, R22.96, R23.34, R23.37, R23.19, R23.22, R23.35, R23.55, R23.73, R23.84, R23.53, R23.84, R23.84, R24.09, R23.88, R23.76, R24.22, R24.08, R24.49, R24.22, R24.35, R24.05, R24.18)
The Rand/Euro closed the week at R19.86 (R19.99, R19.96, R19.98, R20.02, R20.06, R20.26, R20.33, R 20.22, R20.30, R20.35, R20.38, R20.61, R20.62, R20.44, R20.56, R20.64, R21.04, R20.86, R20.61, R20.93, R 20.70, R20.91, R20.74, R20.68, R20.24, R20,37)
Brent Crude: Closed the week $63.19 ($62.42, $63.94, $63.61 $64.66, $65.04, $61.27, $62.14, $64.28, $69.67, $66.57, $66.80, $65.52, $67.38, $67.73, $66.08, $66.07, $69.46, $68.29, $69.21, $70.58, $68.27, $67.39, $77.27, $74.38, $66.56, $62.61, $65.41)
Bitcoin closed at $90,809 ($86,334, $94,990, $101,562, $109.936, $112,492, $106,849, $111,888, $124,858, $109,446, $115,838, $115,770, $110,752, $108,923, $114,916, $117,371, $118,043, $113,608, $118,139, $118,214, $117,871, $108,056, $107,461, $103,455)
Medical Risk Mitigation NEW
Next Year is going to be different – Consolidation NEW
Abdication or diversification?
Carbo-loading your retirement
Spoiled for choice
Who needs a plan anyway
8 questions you need to ask about retirement
What to do when interest rates drop
How to survive volatility in your investments
What to do when interest rates drop
Difficult Financial Conversations
Financial Implications of Longevity
Kick Start Your Own Retirement Plan
You matter more than your kids in retirement
To catch a falling knife
Income at retirement
2025 Budget
Apportioning blame for your financial state
Tempering fear and greed
New Year’s resolutions over? Try a Wealth Bingo Card instead.
Wills and Estate Planning (comprehensive 3 in one post)
Pre-retirement – The make-or-break moments
Some unconventional thoughts on wealth and risk management
Wealth creation is a balancing act over time
Wealth traps waiting for unsuspecting entrepreneurs
Two Pot pension system demystified
Cobie Legrange and Dawn Ridler,
Rexsolom Invest, Licensed FSP 45521.
Email: cobie@rexsolom.co.za, dawn@rexsolom.co.za
Website: rexsolom.co.za, wealthecology.co.za