Liwa Digest — September 2026: What We Learned in September
1 — The Dollar’s Diversification Role
Foreign capital funding the AI boom has supported the dollar, but may also weaken its role as a portfolio diversifier.
In an AI-driven downturn, slowing inflows and weaker growth could offset the usual support from tighter dollar funding, leaving the dollar rising less, or even falling, alongside equities.
2 — The Fed’s Commodity Dilemma
Higher rates cannot resolve an energy shortage. With underlying inflation otherwise close to target, Bridgewater expects gradual tightening to preserve Fed credibility.
3 — Leverage and Liquidity
What leverage finances matters as much as how much is used. Adding complementary return streams can improve portfolio balance; levering existing exposures magnifies risk.
4 — The Falling Price of Intelligence
The price of a fixed level of AI capability has fallen by more than 90% within six to nine months of first being reached.
Cheaper intelligence broadens adoption and makes more tasks economical to automate.
5 — Energy Buffers Running Thin
Oil markets have weathered the Iran conflict better than feared, but stockpile releases and reduced Chinese imports have provided support that is nearing exhaustion.
Without a normalisation of Hormuz flows, Bridgewater expects higher prices to ration demand, weighing most heavily on growth in Asia and Europe.
6 — Poll Highlights
Over the past three years, which alternative asset class has delivered the highest returns to investors?
What’s different about this inflation spike and tightening cycle compared to the post-COVID episode in 2021–23?
Disclaimer
Liwa Capital Advisors Ltd (“Liwa”) is regulated by the ADGM Financial Services Regulatory Authority. Liwa’s address is AlReem Island, Sky Towers, Suite 3502, PO Box: 32111, Abu Dhabi - United Arab Emirates. This material is intended for Professional Clients only and should not be directed to Retail Clients (as defined by the ADGM Financial Services Regulatory Authority)
