The 'Great Convergence' Thesis

In this week's episode of WSJ’s Take On the Week, co-host Telis Demos and guest host Hannah Erin Lang discuss the volatility of the AI trade and how Nvidia's earnings report at least somewhat helped restore investors’ faith. They analyze new signals from retailers, including those who recently reported earnings, such as Target and Walmart, about the K-shaped U.S. consumer economy and the uneven spending patterns heading into the crucial Black Friday and holiday season. The hosts also note that the recent market choppiness, which saw gold and bitcoin fall, highlights the impact of the AI trade on the broader market. Upcoming earnings from companies like Dell Technologies, which has talked about AI as a driver, and consumer-staples companies and retailers, including J.M. Smucker, Kohl's and Abercrombie & Fitch, will provide further reads on both AI and the health of the consumer.

After the break, Telis talks with Luca Paolini, chief strategist at Pictet Asset Management, to discuss why U.S. investors should diversify their investment portfolios outside of their home market. They explore Pictet’s theory of the “great convergence,” where non-U.S. economies like Germany, Japan and Latin American markets are expected to close the growth gap with the U.S. Paolini makes the case for why the dollar's strength is fading, a key part of the dollar debasement trade, and why the outperformance of the MSCI World Index excluding the U.S. highlights the need for a long-term diversification strategy. He also outlines specific investment opportunities in alternative assets and foreign markets.

This is WSJ’s Take On the Week where co-hosts Gunjan Banerji, lead writer for Live Markets, and Telis Demos, Heard on the Street’s banking and money columnist, cut through the noise and dive into markets, the economy and finance—the big trades, key players and business news ahead.

As we look ahead to 2026, what major economic, markets or finance question is top of mind for you? We’d love to hear from you. Email the show at takeontheweek@wsj.com.

To watch the video version of this episode, visit our WSJ Podcasts YouTube channel or the video page of WSJ.com

Further Reading

Here’s Why Stocks Gave Up Their Gains

It’s a Scary World, but Investing Abroad Has New Attractions

Delayed Data Show Strong Hiring, but Offer Little Clarity for Fed

Nvidia’s Strong Results Show AI Fears Are Premature

The Crypto Trades That Amplified Gains Are Now Turbocharging Losses
 

For more coverage of the markets and your investments, head to WSJ.com, WSJ’s Heard on The Street Column, and WSJ’s Live Markets blog.

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Follow Gunjan Banerji here and Telis Demos here.
 

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