From our Quarterly Report:

We are going through The Great Rebalancing. I’m not talking about rebalancing your portfolio (which you should do), but rather an adjustment of an economic kind. The first quarter was a volatile period and brought into focus the dramatic changes that are going on in the world economy.

Irresistible moves in exchange rates and energy prices have recast the shape of trade and capital flows. Countries previously deemed uncompetitive are back in the game and swashbuckling oil nations are getting a severe dose of reality (and in some cases, being brought to their knees).

The U.S. dollar has been a powerhouse, reflecting the relative strength of the American economy. Currencies closely linked to the greenback, such as the Chinese Yuan, have also been strong. As a result, Japan, Europe and Canada are in a much better position to compete for new business.

Read Tom's full brief and the rest of our report here.