Investors spent the last month trying to balance two very different realities. On one side of the ledger, the global economy continues to demonstrate surprising resilience. Corporate earnings in many sectors remain healthy, labor markets are still reasonably firm, and governments around the world are leaning heavily into industrial policy, infrastructure spending, defense spending, and technology investment. On the other side sits the expanding conflict involving Iran, rising oil prices, shipping disruptions, and the growing realization that the world economy remains dangerously dependent on a handful of energy chokepoints.

The market has chosen, at least for now, to focus on growth and liquidity rather than fear. That may continue for a while longer. High yield credit spreads remain relatively contained despite the geopolitical stress, suggesting institutional investors still expect economic expansion rather than recession. Equity markets outside of a few commodity sensitive sectors have remained remarkably orderly. The calm has surprised many of the nattering nincompoops of the internet who assured everyone that every headline out of the Middle East would immediately produce financial Armageddon.

That does not mean risks are absent. The conflict with Iran matters enormously because it strikes directly at the plumbing of the global economy. Roughly one fifth of global oil and gas transit flows through the Strait of Hormuz. Supply disruptions and shipping risks have already pushed crude prices sharply higher this year. The International Energy Agency has warned that the conflict represents one of the most serious energy security disruptions in modern history.

Higher oil prices act like a tax on consumers and businesses. Transportation costs rise. Fertilizer costs rise. Plastics, chemicals, airlines, manufacturing, logistics, and food costs all move higher. Inflation expectations become harder to contain. Bond yields begin to rise as investors demand compensation for inflation risk. Central banks suddenly find themselves trapped between slowing growth and rising prices, which is never a comfortable place to be.

The remarkable aspect of the current environment is that global growth has not broken down despite these pressures. The United States continues to grow modestly. Japan remains in a genuine structural recovery. Southeast Asia continues to benefit from supply chain diversification. Europe is muddling through far better than consensus expected six months ago. Even China, despite its property sector troubles and demographic headwinds, appears determined to stabilize growth through targeted stimulus and industrial investment.

President Trump's visit to China this month adds another important layer to the global picture. Markets are interpreting the trip as an attempt to stabilize trade tensions while simultaneously seeking Chinese cooperation regarding Iran and Middle Eastern shipping routes. Whether meaningful agreements emerge remains uncertain, but the visit itself signals something important. Neither Washington nor Beijing can afford a full economic rupture while energy markets remain unstable. The world economy is simply too interconnected and too dependent on functioning trade flows.

Europe

Europe spent much of the past several years being written off as economically stagnant and structurally broken. Those concerns were not entirely misplaced, but markets may have become too pessimistic. European economies have demonstrated more resilience than expected despite war on the continent, energy disruptions, and political fragmentation.

Germany remains weak in manufacturing relative to its historic norms, but fiscal spending and defense investment are beginning to offset some of the industrial slowdown. European governments are now openly embracing military spending, infrastructure upgrades, and energy security projects after decades of underinvestment. That spending wave matters. Massive capital expenditures on power grids, LNG terminals, semiconductors, defense systems, and transportation networks create employment and industrial demand throughout the region.

Energy remains the biggest challenge. Europe is highly vulnerable to elevated oil and LNG prices stemming from Middle Eastern instability. Industrial users across Germany and Italy continue to face cost pressures. Consumers are seeing transportation and utility expenses rise again. Central bankers at the European Central Bank would very much like to continue easing monetary policy, but the resurgence in energy inflation complicates the picture considerably.

Despite those concerns, European equities remain attractively valued relative to the United States. Dividend yields remain superior in many sectors. Banks continue to benefit from wider lending spreads than they enjoyed during the negative interest rate era. Defense companies, industrial exporters, and infrastructure businesses continue to see substantial order growth tied to government spending initiatives.

The market still treats Europe as if it is trapped in permanent stagnation. That may prove too pessimistic over the next several years.

United Kingdom

The UK economy continues to grind forward despite political frustration, sticky inflation, and sluggish consumer confidence. The British economy is not booming, but neither is it collapsing.

One major issue for Britain remains energy sensitivity. Higher oil and natural gas prices quickly flow into household budgets and industrial costs. The Bank of England faces the same dilemma confronting other central banks. Growth is soft enough to justify lower rates, but inflation remains uncomfortable enough to limit aggressive easing.

Financial firms in London continue to benefit from elevated market volatility and increased global capital flows. The City remains one of the world's dominant financial centers regardless of political rhetoric surrounding Brexit. International investors continue to use London as a hub for capital markets, insurance, commodities, and banking activity.

UK equities remain deeply unloved and inexpensive by historical standards. Dividend yields are attractive. Energy companies and commodity firms remain major beneficiaries of elevated oil prices and global resource insecurity. Banks also continue to trade at discounts to intrinsic value despite improving profitability.

There is very little excitement surrounding British assets at the moment, which is often when long term opportunities quietly emerge.

Japan

Japan remains one of the most compelling long term opportunities in the global market.

The Japanese economy is undergoing a transformation that many investors still do not fully appreciate. After decades of deflationary psychology, stagnant wages, and weak capital allocation, corporate Japan is finally changing. Wage growth has improved materially. Inflation, while modest by Western standards, has returned. Corporate governance reforms continue to push companies toward higher returns on equity, better shareholder treatment, and more efficient balance sheet management.

The Bank of Japan continues moving cautiously away from the ultra easy policies that defined the past generation, but monetary conditions remain broadly supportive for economic growth. Fiscal policy also remains stimulative as the government leans into semiconductor investment, defense spending, industrial reshoring, and energy security initiatives.

Japanese companies remain extraordinarily well positioned for the next decade. Industrial automation, robotics, factory equipment, semiconductors, electronic components, shipping, trading houses, and financial firms all stand to benefit from the restructuring of global supply chains.

The geopolitical environment also favors Japan more than many realize. As Western nations attempt to reduce dependence on China for strategic manufacturing capacity, Japan becomes increasingly important as a trusted industrial and technological partner. Capital that once flowed automatically into China is increasingly finding its way into Japan instead.

Higher oil prices create challenges for Japan because of its import dependence, but Japanese firms have historically adapted extremely well to energy shocks through efficiency improvements and technological innovation.

Japanese banks may ultimately become some of the biggest winners in the global financial system if the country continues normalizing interest rates. After decades of suppressed margins, even modestly higher rates can dramatically improve profitability.

This remains one of the most bullish long term stories in the world economy.

Other Asian Markets

Asia continues to represent one of the most important engines of global growth despite the obvious risks created by the Iran conflict and rising energy prices.

The biggest issue confronting the region is energy dependency. Much of Asia imports enormous quantities of oil and LNG through shipping routes vulnerable to Middle Eastern instability. Rising fuel costs place direct pressure on trade balances, inflation rates, and household spending.

At the same time, the region continues benefiting from supply chain diversification away from China. Manufacturers increasingly want secondary production hubs throughout Southeast Asia to reduce geopolitical risk.

India continues seeing strong infrastructure investment and manufacturing growth. Indonesia benefits from commodity demand and nickel production tied to electric vehicle supply chains. South Korea and Taiwan remain critical semiconductor hubs despite ongoing geopolitical tensions.

China remains the most complicated story in the region. Property market weakness and demographic decline remain serious long term concerns. However, the Chinese government continues deploying targeted stimulus aimed at stabilizing growth. Infrastructure investment, industrial policy, semiconductor development, electric vehicles, artificial intelligence, and export manufacturing remain enormous priorities for Beijing.

Trump's visit to China reinforces the reality that both nations remain economically intertwined despite escalating strategic rivalry. Neither side can afford complete decoupling without severe economic consequences.

Philippines

The Philippines continues to benefit from favorable demographics, strong remittance inflows, infrastructure spending, and growing domestic consumption. The economy remains one of the faster growing stories in Southeast Asia.

Government investment in transportation infrastructure, ports, airports, and energy systems continues supporting economic expansion. Outsourcing and service industries remain important growth drivers as global firms continue using the Philippines for back office and technology support functions.

Higher oil prices represent a challenge because the country remains a major energy importer. Inflation pressures could limit monetary easing in the near term. However, long term demographic trends remain highly favorable.

The Philippines continues developing into a stronger middle income consumer economy with substantial room for long term growth.

Vietnam

Vietnam remains one of the clearest beneficiaries of global supply chain realignment.

Manufacturing investment continues flowing into the country as corporations diversify production away from China. Electronics, textiles, industrial manufacturing, and export industries continue expanding rapidly. Vietnam has become an increasingly important node in the Asian manufacturing ecosystem.

Government policy remains strongly focused on export growth, infrastructure development, and foreign direct investment. Industrial parks, ports, transportation systems, and energy infrastructure continue receiving substantial investment.

Vietnam faces some pressure from higher energy costs and slower global trade growth, but the long term trend remains exceptionally positive. The country combines relatively low labor costs, improving infrastructure, favorable demographics, and increasingly sophisticated manufacturing capabilities.

This remains one of the strongest structural growth stories in emerging markets.

North America

The North American economy continues to outperform expectations despite high interest rates, political uncertainty, and geopolitical tensions.

The United States economy remains driven by several powerful structural forces. Artificial intelligence infrastructure spending continues accelerating. Data center construction remains explosive. Power generation and grid investment are expanding rapidly. Industrial reshoring and defense manufacturing continue supporting employment and capital spending.

Consumers have slowed somewhat, particularly at lower income levels, but overall economic activity remains surprisingly firm. Labor markets have weakened modestly but remain far healthier than recession forecasts predicted earlier in the year.

The Federal Reserve faces an increasingly difficult balancing act. Higher oil prices threaten renewed inflation pressure just as portions of the economy begin slowing. Bond markets are already reacting nervously to the combination of large federal deficits, elevated energy prices, and persistent inflation risks.

Canada remains highly leveraged to commodity prices and housing activity. Higher energy prices benefit parts of the Canadian economy substantially, particularly Western energy producers. However, housing affordability and consumer debt remain major long term concerns.

Mexico continues benefiting from nearshoring trends as manufacturers relocate production closer to the United States. Industrial investment and export manufacturing remain strong.

The broader North American picture still favors ownership of productive assets over cash. Governments continue running enormous fiscal deficits. Infrastructure spending remains elevated. Defense spending is accelerating globally. Industrial policy has returned in force.

That environment tends to favor real assets, energy infrastructure, industrial businesses, financials, and companies tied to long duration capital investment cycles.

Final Thoughts

The market environment remains messy, emotional, and headline driven. Every day brings another prediction of catastrophe or euphoria from the instant experts populating financial television and social media.

Ignore the noise.

The underlying reality is that the world is entering a period defined by reindustrialization, infrastructure investment, energy competition, defense spending, supply chain restructuring, and technological transformation. Those trends create volatility, but they also create enormous opportunity.

The conflict with Iran and higher oil prices absolutely matter. Energy remains the master variable in the global economy. Sustained spikes in crude prices would eventually pressure consumers, margins, and economic growth worldwide.

At the same time, governments around the world are responding with investment, fiscal spending, industrial policy, and strategic realignment on a scale not seen in decades.

Japan remains one of the most attractive long term opportunities globally. Southeast Asia continues to emerge as a manufacturing powerhouse. Europe is less broken than consensus believes. North America remains driven by industrial and technological investment booms.

The world is changing rapidly. That creates uncertainty.

It also creates opportunity for disciplined investors willing to look past the panic of the moment and focus on long term fundamentals.

I am adding two new stocks this month.

Japanese media companies have quietly become one of the more compelling deep value opportunities in the global market, especially those with strong intellectual property assets, fortress balance sheets, and the financial flexibility to adapt to the streaming era. That is exactly the setup today with TV Ashai Holding (THDDY)

TV Asahi Holdings is one of Japan's premier media and entertainment companies. The firm owns one of the country's leading television broadcasting networks, but the real story today is the evolution of the business beyond traditional television advertising. Management is aggressively repositioning the company into a broader intellectual property, streaming, anime, and entertainment platform. In a world where global demand for Japanese content continues to surge, that transition could create substantial long term shareholder value.

The company owns or participates in some of Japan's most recognizable entertainment franchises, including Doraemon and Crayon Shin-chan, and maintains important strategic relationships throughout the Japanese anime ecosystem. Management has made it clear that the future growth engine will come from expanding anime production, increasing ownership stakes in production committees, and monetizing content globally through streaming, merchandising, licensing, and live entertainment events.

That matters because the economics of Japanese media are changing rapidly. Traditional broadcasters historically earned modest returns from domestic advertising and syndication. The new model is recurring intellectual property monetization. Netflix, Amazon, Disney, and regional streaming players are spending heavily to secure premium Japanese content as anime becomes a global entertainment category rather than a niche genre. TV Asahi is positioning itself to own more of the economics rather than simply acting as a distributor.

The company's latest medium term business plan reflects this transformation. Management is investing heavily in digital distribution, streaming partnerships, live entertainment venues, and content production capacity. Unlike many western legacy broadcasters struggling with debt and declining audiences, TV Asahi enters this transition from a position of financial strength.

That is where the valuation becomes particularly attractive for value investors.

The ADR currently trades at roughly 70% of tangible book value despite the company possessing a very strong balance sheet, substantial liquidity, and valuable media and intellectual property assets. In many respects, investors are still valuing the company like a slow growth terrestrial broadcaster while management is actively building a modern entertainment and intellectual property platform.

Balance sheet quality provides a meaningful margin of safety here. The company maintains significant cash and investment holdings, conservative leverage, and strong liquidity. That financial flexibility allows management to continue investing in content, streaming initiatives, and shareholder returns without placing the balance sheet at risk. In uncertain markets, companies with clean balance sheets and hard asset support tend to survive volatility far better than heavily leveraged competitors.

There is also a macro tailwind developing for Japanese entertainment exports. A relatively weak yen improves the competitiveness of Japanese content globally and increases the value of overseas licensing revenue when translated back into yen. Japan increasingly views anime and entertainment exports as strategic growth industries, much like Korea successfully developed K-pop and drama exports into major global businesses.

The risks are not insignificant. Traditional television advertising remains cyclical and faces long term structural pressure. Content production costs continue to rise across Japan. Competition for talent and premium content has intensified as global streaming giants pour capital into the sector. Success in intellectual property is also inherently uneven because a handful of major franchises often generate the bulk of industry profits.

Even so, the risk reward profile here appears highly attractive. Investors are getting a conservatively financed Japanese media franchise with valuable intellectual property assets, growing exposure to global streaming demand, and substantial asset backing at a meaningful discount to tangible book value.

This is precisely the type of overlooked international deep value opportunity we like to find for the Perfect Stocks portfolio. The market still sees a traditional broadcaster. Management is trying to build a global entertainment and intellectual property compounder. If they execute even moderately well, the gap between price and intrinsic value could eventually close in dramatic fashion.

The stock is thinly traded in the OTC market so be sure to use a limit order.

K+S AG (KPLUY)is exactly the sort of overlooked global deep value situation we want to own in the Perfect Stock Portfolio. The shares trade at roughly 60% of tangible book value despite a strong balance sheet, substantial liquidity, and ownership of strategically important fertilizer and industrial mineral assets that would be almost impossible to replicate today. Markets are once again treating the company like a purely cyclical commodity producer even as the long term fundamentals for global agriculture and fertilizer security continue to improve.

K+S is one of the world's major potash fertilizer producers, serving agricultural markets across Europe, North America, and South America. Potash remains one of the critical inputs for global food production because it improves crop yields and soil quality. That matters a great deal in a world where governments are increasingly focused on food security, agricultural self sufficiency, and supply chain resilience. The disruptions caused by sanctions on Belarus and Russia permanently altered global fertilizer trade flows, and Western producers like K+S suddenly became much more strategically important.

The company also benefits from geography. European policymakers have learned the hard way that dependence on hostile or unstable suppliers for critical resources creates enormous economic vulnerabilities. K+S operates significant production capacity inside the Western economic sphere, giving it a competitive advantage as Europe and North America continue prioritizing secure supply chains. Investors tend to overlook this aspect of the story because fertilizer stocks are usually analyzed strictly through the lens of quarterly commodity prices. That misses the broader strategic picture entirely.

The near term outlook has also improved substantially. Potash pricing has stabilized and begun recovering in key export markets, particularly Brazil, while agricultural demand remains healthy. Farmers globally continue to replenish soil nutrients after years of aggressive crop production. Grain inventories remain tight in several regions, and governments are highly motivated to maintain strong agricultural output. That creates a constructive backdrop for fertilizer demand over the next several years.

Higher energy prices tied to the Middle East conflict could actually become a relative advantage for K+S. Nitrogen fertilizer producers are heavily exposed to natural gas costs, while potash production is less vulnerable to energy price spikes. If oil and natural gas prices remain elevated because of geopolitical instability, farmers may increasingly favor potash applications over more expensive nitrogen inputs. That dynamic could support stronger margins across the industry.

The company also owns a large salt business that provides an important layer of diversification and stability. Investors often forget that K+S is not solely dependent on agricultural markets. Road salt and industrial salt operations generate dependable cash flow and help cushion the business during weaker fertilizer cycles. The strong winter season earlier this year demonstrated the value of that diversification.

Perhaps most importantly for deep value investors, the balance sheet is in excellent shape relative to prior cycles. Management has spent the last several years reducing leverage and improving liquidity. The company now has ample financial flexibility and appears well positioned to weather commodity volatility while continuing to invest in its operations. That matters because highly leveraged commodity companies rarely create long term shareholder wealth. K+S today looks much healthier financially than it did during previous fertilizer downturns.

The valuation disconnect here is difficult to ignore. Investors are essentially being offered world class fertilizer and mineral assets at a steep discount to tangible book value during a period when agricultural security, resource nationalism, and global supply chain resilience are becoming increasingly important investment themes. Markets remain obsessed with short term commodity fluctuations while ignoring the long term strategic value of these assets.

This is not a glamour stock, nor is it the sort of company that attracts momentum traders chasing artificial intelligence stories or speculative technology themes. It is a hard asset business with real mines, critical products, and durable global demand drivers. Those are often the best kinds of opportunities for patient value investors.

In a world increasingly shaped by inflation, geopolitical conflict, resource scarcity, and food security concerns, K+S looks less like a struggling cyclical commodity company and more like an undervalued strategic asset hiding in plain sight.