'Perspectives' by Escala

In this episode of Perspectives, Escala Chief Investment Officer, Tracey McNaughton, shares an important lesson when riding a motorcycle that can be applied to China's FOMO driven equity rally.

(00:51) We had a client lunch in Newcastle this week. One of the topics of conversation was not surprisingly, AI. But the question was more around – is AI an era or a regime shift?

(03:47) Political unrest seems to be on the rise at the moment. We are seeing protests in Sydney and Melbourne and other capital cities around the world protesting immigration among other things. Politics is always a difficult one to price. How do you and team think about this growing unrest?

(06:56) What does this mean for investors?

(09:97) One of the other points of discussion recently has been around how governments have become less global. What do you mean by that and what are the implications for investors?

(12:18) Nvidia's earnings result last week was overshadowed a little by China's latest developments in AI. What can you tell us there?

(15:08) Chinese equities are on a tear right now – they were one of the better performing markets in August. How much of this rise is based on the fundamentals around AI and how much is based on the FOMO trade – the fear of missing out.

(17:23) It is common isn't it for Chinese equities to experience sentiment driven swings like this?

In this episode of Perspectives, Escala Chief Investment Officer, Tracey McNaughton, talks about the role private markets play in quietly innovating and why patient capital is so important. Public markets in contrast are getting noisier and more volatile. What is the role for both in a portfolio?

(1:02) We have had some good feedback on the podcast you did with Lane McDonald, the CIO at SCS Financial. The whole issue of public versus private markets is something that has grabbed the attention of clients. Why is that do you think?

(4:36) This goes to the long-term thinking by private companies doesn't it and the patience private companies are given by their investors.

(6:17) You don't see this same level of volatility in private markets.

(7:56) I suppose one of the other big trends clients are seeing is the rise of ETFs. How is that impacting the market?

(9:41) And I guess the situation is made so much worse with ETFs now making up more than 50% of the entire US equity market.

(12:27) Do you think this goes some way to explaining why the market looks so expensive?

(13:01) Does this then mean by comparison the private equity market is cheaper since it doesn't suffer the same afflictions as the public market in terms of concentration and passive ETF flows?

(14:47) You mentioned earlier that public markets are becoming more private and private markets are staying private. Some would argue that private markets are becoming more liquid with the rise of evergreen private funds – funds that don't lock investors capital away for 7 plus years. What do you think of this trend?

(16:33) Where do you think we will be in 5-10 years given these trends in the structure of the market?

(19:00) So for investors, that means the question won't just be 'public or private,' but how to balance both in a portfolio that's built for the long term. Thanks Tracey that's all we have time for …

In this episode, Escala Chief Investment Officer, Tracey McNaughton, speaks with Lane MacDonald, Chief Investment Officer at SCS Financial a $40b US wealth manager and focus Financial Partner. Together, they discuss how the lines between public and private markets are blurring, prompting investors to rethink how they allocate capital, manage risk, and pursue returns between the two.

In this episode, Escala Investment Analyst Stephen Dickinson talks to Greg Hyland (Head of Capital Markets, Asia Pacific) and Hugh MacDonald (Head of Capital Advisors, Asia Pacific) from CBRE. Greg and Hugh discuss how CBRE currently view the macro landscape and the impacts on the commercial real estate sector, some of the underlying structural drivers in the sector and the outlook ahead.

In this episode of Perspectives, Escala Chief Investment Officer, Tracey McNaughton, shares what she is telling clients about the current level of uncertainty particularly in relation to tariffs, taxes and changes in technology.

(1:17) What are you saying to clients about this level of uncertainty?

(3:56) So given that, are you less worried that the trade war and Trumps tariff policies will be the thing that kills this market?

(6:40) So uncertainty is just something we need to accept?

(7:39) There's this worry you sometimes hear that governments will "go broke in an AI world" because traditional tax bases will erode. Is that real do you think?

(9:03) And we're already seeing signs of that, right?

(10:28) I would imagine Jeff Bezos didn't help the cause of his billionaire friends by have such a lavish, opulent wedding. And the US just passed its own big fiscal bill.

(11:03) So neither the US or UK are tackling the long-term revenue challenge head-on.

(12:23) But in the meantime, government debt levels continue to grow. I am reminded of the old adage, how do you go bankrupt, first slowly then quickly.

(14:13) Global equities have done well. Bonds have been relatively well behaved. What's behind this resiliency?

(15:19) Earlier this year, everything felt like it was about Big Tech and AI megacaps. Has that changed at all?

(16:15) So that means investors might start looking outside the US for tech exposure

In this episode of Perspectives, Escala Chief Investment Officer, Tracey McNaughton, talks about the importance of trust – between governments, institutions, clients and their advisers and of course the rider and her bike.

(1:18) So, Tracey, how do you define trust?

(1:59) Can you think of a single system—financial, political, or social—that functions without trust?

(2:35) Let's go back to 2008. Where were you when Lehman collapsed? Did it hit you right away that this was a trust crisis?

(3:46) And the stats reflect that. Only 27% of Americans said at the time they trusted the financial system. Ben Bernanke was the Chair of the Federal Reserve. His first move wasn't to inject capital - it was to calm people down.

(4:22) That's the thing with trust - it's invisible when it works, but when it fails?

(5:07) Let's zoom out for a minute. We've talked about trust in institutions, but what about trust between countries? You saw that on display at the G7 recently in Canada. President Trump walked out mid-session. Again. Cameras rolled as he boarded Air Force One early, leaving key negotiations unfinished. The summit, momentarily, became the G6.

(6:00) What does that look like in practice?

(6:58) And trade?

(7:18) So is this a retreat from U.S. leadership?

(9:35) And while allies hedge, rivals act.

(10:25) And underneath all of that—is the erosion of trust.

(10:44) So Tracey, I'll put the big question to you: What if trust—not military power, not GDP—was the real engine of American leadership... and that engine's stalling?

(11:41) Let's come down from the G7 and walk into an adviser's office. We have spoken about trust between institutions and their clients, between the US and its allies. What about trust in our world – between the adviser and their client?

(12:38) It's not just about investments, it goes further than that, its nice to get to know clients on a personal level and vice versa.

(15:03) Let me shift gears—literally and talk about trust as it relates to something close to your heart. Like every other relationship we have talked about here, trust on two wheels isn't abstract. It's visceral.

In this episode of Perspectives, Escala Chief Investment Officer, Tracey McNaughton, considers the question are we past peak US exceptionalism? If so, where are the alternative safe havens for investors.

(0:50) So, Tracey, you presented at a conference last week. Let's start with topic of your session: Have we seen peak U.S. exceptionalism?

(4:12) Just on the topic of ballooning government debt, the current fiscal proposal, the so called "Big beautiful budget bill" combines tax cuts with higher defence spending and no meaningful plan to reduce debt. It just ties in with investor concerns about fiscal recklessness.

(6:17) Let's look at what the market's telling us. U.S. equities? Basically, flat for the year. Meanwhile, German equities are up 20%. And what about the tech titans? The so-called Magnificent Seven – are they still magnificent?

(7:50) So, if the U.S. is losing its lustre, the next question is: who is looking more attractive? Is China a beneficiary of Americas decline?

(10:35) So, what does that mean for investors? Should we be increasing our allocation to China?

(11:44) If we are in world that is potentially going through structural change where can investors find shelter?

(14:45) What if you still wanted to be invested. You mentioned China is looking interesting again. Where else?

In this episode of Perspectives, Escala Chief Investment Officer, Tracey McNaughton, presents from New York where she discusses her observations from being on the ground. Following meetings with portfolio managers, economists, political strategists and financial advisers across four US states she discusses how President Trump's trade war is being perceived.

(0:52) Tracey, let's start with some observations of what you have seen and heard on the ground. What stood out the most?

(1:51) How about the cities? You spent time in Chicago and New York, right?

(2:48) What are people saying about China over there?

(3:30) And how are the ports doing? I've been hearing some concerning things.

(4:25) Did you get any fresh data on trade?

(5:48) Let's switch gears a bit. You mentioned some cultural shifts too?

(6:36) And tech?

(7:40) Let's pivot to markets. Tracey, you've said it feels like a period of stasis. Can you unpack that?

(8:22) So what's the disconnect?

(9:19) Let's talk specifically about earnings. What's the mood?

(10:28) And currency?

(10:58) You mentioned the CFA Conference that you went to in Chicago. What was the big takeaway?

(11:28) So private equity is in vogue. Why?

(12:50) That's huge. What does this mean for junior analyst roles?

(13:14) One of the issues we hear a lot about with private equity is the drop off in public listings. Is this an issue for the asset class do you think?

(14:14) Let's turn to geopolitics before we wrap. The new UK-US trade deal got quite a bit of airtime in the press. What's your take?

(15:33) Do you think we will see the US become more isolated?

(16:45) And what about Europe? We've heard a lot about the EU being slow to act in the past—has that changed?

(17:23) So you're saying US protectionism is acting like a catalyst to make Europe great again?

In this episode of Perspectives, Escala Chief Investment Officer, Tracey McNaughton, discusses how this market correction differs to anything in the past; what the Escala fund managers are saying about it; and why the investment environment will be different when the fog finally lifts.

(1:05) Tracey lets start with how you are viewing current events in markets?

(3:19) You mentioned the similarities with covid in terms of uncertainty of what comes next. How do you compare the market reaction this time to previous sell offs?

(5:47) You have just come off heat week where you talk to all of our managers, what are they saying?

(8:32) How have fund managers adjusted their portfolio's?

(10:46) How have you and the team adjusted portfolio's?

(14:42) But you think the best way to approach this is through tactical asset allocation?

(16:02) What about the currency? The Aussie dollar has fallen a long way. Should clients be hedged against the USD?

In this episode of Perspectives, Escala Chief Investment Officer, Tracey McNaughton, discusses the seismic shift in German defence spending, why Greek banks are looking attractive and why the team are no longer happy to be overweight US equities.

(1:10) Tracey for decades, Germany has been the poster child of fiscal conservatism in Europe. The country's approach was shaped by its post-WWII economic memory, where inflation and debt were deeply stigmatized. The past few weeks has seen a seismic shift in that view.

(1:55) It was a historic shift in Germany's fiscal policy.

(2:49) Still, it means some significant government spending in Germany. What does it say about NATO?

(3:51) So is this another cold War?

(4:27) The Australian Government brought down its budget last week. Did defence spending get a boost?

(5:21) Let's turn to trade policy—specifically tariffs. Today is Liberation Day – the day the Trump administration is expected to announce the most aggressive pivot in U.S. trade policy in decades. There's been a lot of headline noise, but break it down for us: how are U.S. companies actually being affected on the ground?

(6:15) That's massive. What are companies doing in response?

(7:49) So even "Made in America" isn't immune? The idea of a 100% "Made in America" car does not exist.

(9:19) What about everyday consumer brands?

(10:07) So inflation is coming back through the trade channel?

(10:30) What about smaller companies? How is all of this affecting them?

(11:47) So what are the smart companies doing right now?

(13:32) That's a pretty tough landscape. Are there sectors that are less affected by these tariffs -maybe even thriving?

(14:48) What are some other examples of more resilient sectors?

(15:36) So it is the defensive sectors plus financials and real assets that will likely be the most insulated – at least in a relative sense. The countries whose equity indexes are highest in these sectors are the UK, Europe and Australia.

(15:56) That brings us to an important decision that came out of our investment committee last week. You've announced the closure of your overweight position in US equities relative to Australian equities. Walk us through this decision?

(16:48) That sounds logical. So what changed?

(17:38) Tariff induced inflation pressures may prevent the US Federal Reserve cutting interest rates as much as expected. Further undermining the case for US equities.

(17:58) Tracey it's clear we're navigating a period of substantial global change. What advice would give to investors right now?