In today's Markets Happy Hour Podcast we feature the legendary Pete Drewienkiewicz of Thoughts from The Loft (TFTL) fame (of Gallagher Benefit Company, formerly Redington in the UK) and a robust discussion ensues. Starting with "Food Glorious Food" and its driver of inflation, we examine whether inflation will rest at the higher 3.6% level in the UK and what trajectory is likely in the US.

We move then to the different apparent interest rate plateaus across the US, the UK and Europe, and ask whether the UK should be "resting" at a higher level than the US, given the clear strains on its economic growth. We turn then to discussing what this means for holding cash today.

Equity markets again take centre stage, and we reflect on the recent Nvidia earnings release and then turn to a fascinating piece of analysis that Pete has drawn upon in TFTL the strong earnings growth across all markets, not just the US. While US margins still trump those in other countries, other valuation metrics don't necessarily point to stark US exceptionalism. This underscores the challenge of true diversification today.

Finally we touch on the recent excellent analysis of Total Portfolio Approach by Toby Nangle in the Financial Times, and ask whether it is all it is cracked up to be. We do note, however, that some asset class "walls" have started to become porous as new asset classes evolve and investors allocate between them.

You can write to Pete directly to get on his weekly distribution list for his excellent newsletter.

Full Episode: Too Big to Fail - 2.0 and Beyond

https://www.youtube.com/watch?v=BQeihjN5UO0

In today's live podcast from Dublin we do a comparative vibe check on the Irish economy compared to the US economy. We speak about the pressure of inflation on investor portfolios and ask what investors should do to guard against that.

In looking like a now-familiar chart plotting the size of the US stock market v. the rest of the world the question is asked as to whether investors are in fact happy running that level of risk, particularly as it pertains to US stocks and tech stocks in particular. One guest suggested that the best approach was to communicate early and often to investors about the realistic expectations as to risk and return and how to modify their portfolios accordingly.

We cycled back to AI, the bubble question and the use case and collected some "anecdata" from the guests in the room as to how they were using AI in their personal and professional lives, citing some of the shortcomings of the dataset so far. In general there was a skepticism around its broader, aspirational use case, and definitely a sensitivity to cost. When discussing AI as a kitchen table issue it was clear that when translated into monthly consumer expenditure the revenue projections seem untenable. This begs the question as to who will pay - inevitably enterprises - and where they will take money from in order to achieve this.

In today's Markets Happy Hour Podcast we are delighted to host Rich Nuzum, Head of OCIO at Franklin Templeton, for our usual canter through the macro drivers of investor portfolios - inflation, interest rates, equity markets, geopolitics and other asset classes.

We look at inflation firstly - and ask about expectations, which, remarkably, are diverging along political lines in the US. It seems that inflation is very much in the eye of the beholder - an aspect noted by Rich who suggests that averages "often lie" and are not an accurate depiction of client by client inflation.

We move then to central banks and their challenging task of navigating in the fog without even less data than usual, and we move then to geopolitics where Rich discusses the oil price and demand and supply issues as well as the importance that investors think through the ramifications that current geopolitical forces have on their portfolios.

We move to US equity markets and the AI underpinning, the effect of the shutdown and why non-US markets seem to be signalling something else today.

We end with a detailed discussion of credit markets and Rich gives an alternative take on some of the weakness that seems to have recently been noticed in credit markets.

In this week's Markets Happy Hour Podcast (our second recorded this week - there will be a special episode featuring Paula Campbell Roberts from KKR released shortly), we focus on recent rumbles in markets around the integrity of the AI story, the increased concern about power costs and how our "discovery phase" around Bitcoin is continuing, with more and more clues added weekly.

We start with the usual inflation analysis and the strain that power costs are likely to have for the lower income consumer. Fixed income volatility continues to be subdued, even among government bonds which suggests an interesting sense of calm among a cohort (bond investors) which continues even in the government bond arena.

Equity markets continue to be rattled by the scope of spending on AI infrastructure as well as some high profile shorting in the space, and it is worth recalling three hallmarks of bubbles - as suggested by a Financial Times journalist - Leverage, Liquidity and Lunacy. We trace each of these with reference to the current market context.

Finally we examine recent behavior in Bitcoin and see how it has decoupled from gold and ask what this tells us about its characteristics as an asset class.

In today's live recording of the Markets Happy Hour Podcast we gathered a group of allocators, hedge fund, private credit and real asset specialists to debate the changing shape of inflation and whether certain assets continued to represent paths to inflation resilience.

We also dug deeper into the private credit landscape and asked whether the recent poor performance in diversified financials firms was merited, and what might be behind it? Stay tuned for some exceptional detailed insight into the trajectory of direct lending and its fee structure.

We finish with an analysis of the AI segment, examine how hedge funds are exploiting or taking advantage of bubble talk and stretched valuations. This moves then to a discussion on market concentration and whether all of these changing factors will affect fundamental tenets of asset allocation.

In this week's Markets Happy Hour Podcast we sit down with Michael Blayney, who is General Manager, Dynamic Asset Allocation at Hesta, an Australian Superannuation fund with $100 bn AUD in assets under management. The sting in the tail is a reference to AI and the "sting" being the job losses that have moved from murmurs to full-blown company announcements, with more to come.

As always we kick off with our inflation discussion, where it does indeed appear that 3% is now the new normal in the US, where expectations and core measures are all higher, and Australia too is experiencing a negative surprise - it's number jumped to 3.2% for the year in the latest print, up from 2.1% in the last quarter, in that case due to electricity rebates expiring in some states.

Whereas in Australia that might herald a pause in interest rates, in the US a 25 bps cut came as expected, but it was, as Michael suggests, a "hawkish cut" given the abundance of caution in Chairman Powell's statement about "slowing down", "driving in the fog" etc. Spreads are still tight across the board in fixed income, suggesting that risk is either being underpriced or that risks are low, and this euphoria has indeed carried over from the fixed income area to the equity market, with a few exceptions, one of which is discussed below.

Equity markets continue to grind higher, with the S&P in reaching distance of a 7000 target and Nvidia just crossing the $5 trillion market cap barrier, which is greater than the market cap of the UK public market and Singapore combined. One exception to the ebullient treatment is the diversified financials segment - which includes many alternative asset managers. The shares of these companies have struggled year to date and we ask whether investors are signaling their concern about some of the fundamentals in private credit as well as structural headwinds in private equity given a low level of distributions and some issues with fund raising.

We look outside the US to China and its strong pace of growth as well as the dependency that both China and the US have on the outcome trade negotiations. Finally we examine the areas for R&D for an allocator at present - which may include bitcoin as a new "element" and gold as an traditional element that is continuing to act differently. While these are portals of discovery for allocators, they often do not represent mainstay or even token investments, and we discuss the kind of insights that these emerging asset classes can provide about investor sentiment and market risk.

In this week's Markets Happy Hour Podcast we are joined by Luba Nikulina, Head of Global Strategy for IFM Investors. She is responsible for leading the development of IFM’s global strategy with a focus on private markets solutions that meet the needs of Australian and global pension funds and their members. Luba has always thought in an orthogonal way, finding links between different factors in the economy and trying to apply a fresh perspective to common problems.

This podcast does not disappoint in this respect - we first focus on the complexity of the inflation problem - the role of food and oil prices, as well as expectations more broadly. We speak then about how investors are approaching this dilemma and preparing their portfolios for inflation resilience.

Moving to interest rates Luba refers to the high level of government debts and the destabilizing backdrop that this presents, and then we discuss the oft stated cockroach analogy this week - with Luba noting that the ethos and high standing of the commentators noting this issue (Jamie Dimon and the Governor of the Bank of England) only adds to its integrity as a potential real issue. The "data desert" in the title referred to the dearth of data in the private area, which makes knowing whether a problem is in fact endemic very difficult.

We don't forget the tariff turmoil either - noting that it has again dragged on markets this week, and in another spot of orthogonal thinking talk about the way that the arteries of global trade are clogged and what this might mean for risk factors. The challenge of estimating risk, particularly when it comes to geopolitics should not be overlooked either, we note, and overall relying on diversified portfolios with careful monitoring remains sound counsel for institutional investors.

In this week's Markets Happy Hour Podcast we dig through some "anecdata" to see what is driving global markets through white knuckle moments and back again.

We are forced to rely on "anecdata" due to the ongoing shortage of data due to the US government shutdown, so are missing official inflation figures and jobs data. Anecdotally, however, CEOs (Walmart in particular) are reporting that consumers remain resilient (notable given that the Walmart consumers will not be the highest earners) and we can also see firm data that oil prices are hovering close to 5 year lows, which will drive lower prices at the pump. While an easing in Middle East hostilities was in the news this week this may more be a sign of growing US inventories that are keeping a lid on prices.

There remains actual data around the world outside the US and UK inflation data showed a stickiness at a challenging 3.8% level, although there some positive soundings out of the UK as the Chancellor committed to cut spending and raise taxes, and market seemed to indicate their approval by buying long dated UK gilts, which saw their largest drop in yields since April.

US stock markets have experienced a rocky week, from the "white knuckle moment" of the surprise tariff news regarding China last weekend, to the emergence of worries around regional banks - in particular Zions Bank and Western Alliance which spooked investors with a sense of "deja vu" from early 2023, when other regional banks created worries. The entire financial sector suffered in this case, as the news came close to the news of the credit issues around First Brands and Tricolor, which Jamie Dimon described as the "cockroach" that could well signify other sources of trouble around.

We conclude the podcast with some interesting - lateral thinking around the actual effect of AI on GDP and jobs, some positive suggestion re. the lowest quintile of wage earners and analyze what the Nobel Prize in Economics for 2025 can teach us about growth and innovation. Finally we look at the unstoppable march of gold (up 65% ytd) as well as the correlation that Bitcoin is showing to China/US trade relations, which is an interesting relationship to unpack with time.

In this week’s Markets Happy Hour Podcast we discuss alarm bells - where we see them, whether we are finding them where none exist and what we can do about it, if anything. We are joined by former CIO of Royal Mail, Ian McKnight.

A few weeks ago, in a podcast with John Normand of Australian Super, we asked if the US economy was actually stronger than we thought, in that US GDP growth figures looked to be revised upwards and the consumer as well as the stock market proved to be stubbornly resilient. Of course, the stock market does not equal the economy - we are reminded of that over and over again, but when the stock markets rises to fresh highs (over 29 in the S&P alone in 2025 year to date) and Main Street increasingly participates, the two do start to march in step (at least at times).

This week we discuss how optimism around the US economy is presenting strangely - on the one hand inflation expectations are subdued - as expressed by US breakevens and swap rates, which are hovering below 3%, so well out of the danger zone and on the other hand the strong equity markets are being supported by strong corporate cash flow and corporate margins - which presuppose pricing power and ongoing inflation.

Given Ian's location in the UK we do a bit of deep dive into the current malaise in the UK around low growth, high debt to GDP and high inflation and look at some of the dependencies that lead to that.

We look at potential cracks in the bond market, ask whether the rise in demand of gold is actually an alarm signal, or just a sign of all of the return seeking capital out there.

Finally, given the breaking news today on the Israel/Hamas peace deal we ask what this may mean for geopolitics and the market impact beside the massive human relief.