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Most technologies create value before they create problems, but quantum computing may break that pattern. Imagine two clocks ticking side by side: one measures the time until quantum computers become economically useful, the other the time until they can break the cryptography that underpins the financial system.
The 60/40 portfolio has quietly stopped working. The risk-adjusted return investors could reasonably expect from the standard balanced portfolio has fallen to roughly a third of its long-run level, from a Sharpe ratio of 0.47 to just 0.14.
Political fragility is now a key driver of European sovereign bond risk, particularly ahead of the 2027 elections in France and Italy. Since QE ended, it has significantly increased borrowing costs and could keep bond spreads elevated.