'Perspectives' by Escala

In this episode, Escala Partners CIO, Tracey McNaughton, and Escala Adviser Ed Brooke reflect back on the past 100 episodes since the Perspectives podcast began during covid in 2020. The past four years had it all - lockdowns, recessions, recoveries, bank runs, bank collapses, wars, uprisings, innovations, bubbles that burst, bubbles that inflated, elections that surprised, elections that divided.

(0:20) A lot changed due to covid, and one of those changes at Escala was this podcast. Our first episode aired on March 18th 2020 and this marks our 100th podcast. Tracey, congratulations on your century.

(1:07) Tracey, it's been a remarkable period. We seem to have jam packed multiple cycles and events in less than five years, let's start with some of your most memorable moments.

(7:39) How about you, Ed?

(10:15) Looking back, what's changed?

(13:05) What do you think Ed, what's changed the most for you?

(14:54) What about China, how has China changed?

(16:28) Tracey, over the last 4.5 years, what surprised you the most?

(17:33) What about you, Ed?

(18:37) One thing that was real however, was emotions. They were heightened over this time - how did you keep calm and carry on?

(19:13) What would be your "Stock of the Century"? Have to be Nvidia, wouldn't it?

(20:46) I've got a question for you now, Ed. What has been your greatest learning over this period?

(22:22) They're two of my key learnings, how about you Tracey?

(24:05) We'll wrap things up there, thanks for your insights once again Tracey and of course for all your insights over the past 100 episodes. Let's hope it's smooth sailing now on your way to a double century.

In this episode, Escala Partners CIO, Tracey McNaughton, talks about what she sees as the three main takeaways from the recent string of elections around the world. She and Ed talk about what Le Penn describes as the "return of nations", the rise of nationalism, and what it may mean for investors.

(0:49) Tracey, let's start with the topic of the day, inflation. We had some key data out of the US.

(1:56) The easing cycle has started for some though hasn't it.

(3:17) Why is that? We had data out last week showing the economy barely growing and yet the expectation is the Reserve Bank will be one of the last to cut interest rates?

(4:33) Elections have been another important topic. In the past couple of weeks we have had elections in Mexico, South Africa, India and Europe. What do you make of the results we have seen so far?

(9:30) What are the investment implications emerging so far from these elections?

(12:41) India is a market that you and the CIO team like a lot given its favourable demographics and it being one of the key beneficiaries of the rejigging of supply chains away from China. Does the election outcome change your view at all?

(15:14) One of the reasons you and the team are less convicted on China is the changing shape of global supply chains - moving away from China.

(17:05) So while China is still the manufacturer to the world, alternative manufacturing hubs are being established.

In this episode, Escala Partners CIO, Tracey McNaughton, talks about the connection between community, political stability, and the size of government. We are now in an age of big government. This has implications for economic growth, inflation, and central bank independence.

(0:55) Tracey, firstly, how was the ride last weekend?

(1:16) I'm a cyclist but even I know you can't ride a motorcycle without a clutch.

(4:24) We saw that with the budget a fortnight ago, didn't we? Government spending as a share of GDP has increased.

(6:04) When did this shift toward protectionism start? Was it with the election of Trump in 2016?

(8:21) What about Europe? Isn't Europe China's largest trading partner?

(10:00) I suppose with so many countries going to the polls this year, the idea of placating disgruntled voters with election sweeteners puts even more pressure on government budgets.

(11:53) We were talking in our Investment Committee meeting this week about why the US is so surprisingly resilient – even in the face of 11 interest rate hikes. Gerard put up a great chart that showed the relationship between increased government spending and higher economic growth.

(14:22) Governments might be going their own way, but markets all seem to be going one way – and that's up.

(16:14) Turning to Australia. We had the latest inflation data for the month of April yesterday. It came in a little hotter than expected.

(18:00) We have also had some activity data recently that points to a weakening outlook here.

In this episode, Escala Partners CIO, Tracey McNaughton, talks about AI and its energy demand; Biden's tariff hike on China; and why we should be a little sceptical of the this weeks' Federal Budget.

(0:54) The latest Bank of America fund manager survey shows optimism in the stock market is at its highest level since November 2021. Investors are optimistic inflation will decrease and short-term interest rates will get cut.

(3:04) Some big news overnight, apart from the Federal budget, was US President Biden's tariff announcement on goods coming in from China.

(4:50) Why is all of this important?

(7:42) We will get to the budget. You have just finished heat week with your fund managers. What were some of the themes?

(9:51)Just on AI and energy – we have known for some time that AI consumes lots of energy. Why was it such as surprise to the market?

(12:37) Speaking of inflation. Do you buy the Treasurer's view that injecting $9.5 billion into the economy is not inflationary?

(15:12) How do you think the RBA will respond?

(16:17) What about the Future Made in Australia initiatives?

(18:46) So, I'm guessing, Tracey, this budget does nothing to change your view on investing in Australia?

In this episode, Escala Partners CIO, Tracey McNaughton, talks about riding the cycle – physically and metaphorically. In a world where there are so many distractions vying for investors' attention, how can investors "tape up their mirrors"?

(0:57) Tracey, before we start, our clients have been asking for an update on your riding. You have been doing some training, I hear, on a racetrack.

(3:35) So let's go there. The obvious distraction for investors at the moment is geopolitical risk. How are you guarding against that?

(8:28) What is the data telling you at the moment?

(9:48) Okay, so the risk that the US is going into recession has declined significantly, but what about earnings? We are about halfway through US earnings season. Are we at risk of an earnings recession?

(12:36) We need to talk about AI Tracey. Let's talk about Apple. Apple continues to move extremely quietly in the AI world – we are really not hearing too much from them. An interesting feature of Apple's last earnings call was the absence of any mention of artificial intelligence.

(16:43) Turning to Australia, we had a troubling inflation report last week. It told a similar story that we are hearing in other parts of the world, that service sector inflation remains sticky. Does this change your view on Australian equities?

In this episode, Investment Analyst Darragh Kennelly, talks to Nick Edgerton of Stewart Investors to discuss a key engagement initiative Stewart Investors have worked on since 2020 when they identified serious human rights risk that is often overlooked. Conflict minerals are vital materials for the semiconductor industry and are powering the green transition. The pair finally discuss recent examples of sustainable companies incorporating A.I. into their business practices.

Live on stage at our Agenda 2024 client event, Escala Partners CIO, Tracey McNaughton, is in discussion with Gerard Minack from Minack Advisers. Tracey and Gerard discuss interest rates, company earnings and the outlook for economic growth both domestically and overseas.

In this episode, Escala Partners CIO, Tracey McNaughton, talks about why our investment conviction level is the highest it has been since 2021 and how this has transformed into an overweight position in global over Australian equities. And why is OpenAI CEO Sam Altman investing in fusion?

(0:55) Tracey, we heard on your last podcast that you are a weekend road warrior on your motorcycle. Do you navigate markets in the same way you navigate roads?

(3:27) It seems like the Investment Committee at Escala has become more convicted in recent weeks. The Committee are feeling more confident now than they have since 2021. What's driving that view?

(5:39) One of our highest conviction views is a preference for US equities over Australia. What is that view based on?

(8:00) The usual question remains on the lips of investors – is this a bubble?

(11:26) Boston Consulting Group believes that AI and regular data centre demand will grow to 7% of total electricity demand by 2030.

(13:33) It seems as though the energy transition needs artificial intelligence and artificial intelligence needs the energy transition. The so-called Next Generation Energy could help address this.

(15:35) The other side of your new versus old economy trade is to underweight Australian equities. We have the Reserve Bank meeting today. What are your thoughts on Australia?

(18:03) The other conviction view the team has is a preference for Japanese equities. We have the Bank of Japan meeting today to discuss interest rates. The expectation from the market is that the BOJ will end its experiment with negative interest rates today.

In this episode, Escala Partners CIO, Tracey McNaughton, celebrates IWD with a conversation with Lorna Kapusta, Fidelity's Head of Women & Engagement. How can wealth managers help women achieve their financial goals and become more confident investors? How can the skills learned by a motorcycle rider help ease financial anxiety?

(1:20) Maybe we could start with you telling us a little bit about yourself, your journey, and how did you find yourself in the role of head of women and engagement at Fidelity Investments?

(3:23) So what is Fidelity doing then to help women in improving their financial situation? You've been in this role for several years, haven't you?

(5:51) What other things have you found that tends to hold women back from feeling more confident about stepping out there and managing their financial situation?

(7:42) In your research, have you identified any issues that seem to be unique to women?

(9:36) Have you noticed if that caregiving role has increased post Covid?

(10:53) Having that plan almost acts like an anchor. It just calms you down when you're feeling anxious about your financial future. So just how important is that?

(13:54) I think getting the message out there, that sitting down and having a plan, actually does the opposite. It calms you down and it just makes you see clearer, doesn't it?

(16:29) You mentioned earlier about women, they think differently about investing and they can ride the ups and downs of investing better than men. Can you talk a bit about that? Why is that?

(18:28) Are women more likely to seek out advice?

(20:42) So a final question then, Lorna, from your sort of past, your previous experience, what's the best piece of financial advice that you've ever been given?

In this episode, Escala Partners CIO, Tracey McNaughton, makes the comparison to the 1990s tech boom and notes by comparison, the market is not that extended right now. AI is going deeper into the economy and broadening across more sectors of the equity market. The ingredients are there for the sustainability of this market rally.

(0:44) We are just about through with the US earnings season. What is the final take on the results?

(2:55) The share price moves have been staggering for Nvidia. It begs the question, is the stock overvalued?

(6:34) Comparisons are being made between this AI boom and past bubbles.

(10:58) Tracey, we often get asked by clients how can we position portfolios for geopolitical risk? How do you respond to that?

(14:43) Tracey, we had our Investment Committee meeting yesterday and one of the most interesting discussions was around the divergence opening up between the US and Australia. The economic data seems to be getting better in the US but remains very weak here.