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- [00:00]
A
At pgm, expertise across public and private markets today helps build resilient portfolios tomorrow. With over $1.4 trillion in AUM, PGM has navigated over 30 market cycles with active investing and disciplined risk management. But it's not just about the numbers. Our combined global expertise and local insights give us these strategic perspectives we need to help you reach your long term goals. PGM Our investments shape tomorrow today. PUSHKIN it's the most wonderful time of the year, folks, when investment banks and asset managers roll out their big predictions for markets in the year ahead. Are these predictions right? Not necessarily. But trawling through these outlooks is a fantastic way to judge the market mood right now. Let me tell you, that mood is very warm and fuzzy in 2025. Markets have swatted off a whole range of horrors. Tariffs, geopolitical splits, institutional degradation, all the scary stuff. And that means that now, even with what seems to be a big fat AI bubble inflating in plain sight, investors are feeling pretty good about what markets will deliver next year. Today on the show, we're going to run you through the key calls on Wall street where the consensus is what can go right and of course, what can go wrong. This is Unhedged, the markets and finance podcast from the Financial Times and Pushkin. A very warm welcome to new listeners today who are tuning in as part of the FT's global boardroom event. I'm Katie Martin, a markets columnist here at the FT in London and I'm joined by two of my favourite colleagues. In the studio with me, I have FT Market's workhorse, Ian Smith, one of the fine people here who does the hard work of reporting on what markets are up to every day. And my usual co pilot, Rob Armstrong, who harvests the organs of all that reporting and pontificates on it from his perch on the unhedged East Living a business card.
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B
Rob Armstrong, organ harvester.
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A
Organ harvester. So both of you, like, I think it's kind of important that we pause just for a tiny second here and reflect on how incredibly resilient markets have been this year. You know, one investor put it to me the other day that if you, if you'd said to her in April, right, the stock market was absolutely a meltdown and if you'd said right by now, by the end of the year, stocks will be at all time highs, bonds would be nice and well behaved, she would have said, come on, you're bonkers. So, I mean, let's start with Rob. What went right here?
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B
Well, I hate to toot My own horn. But I will invoke Taco here. Trump always chickens out. That moment in April was a moment when it looked like the President had lost his damn mind and was going to be. It was gonna be an absolutely crushing tariff regime. And since then, he has consistently shown willingness to back off whenever tariffs really pinch. And he's also shown that when other countries negotiate hard with him, he backs down there too. Right. Brazil, China, they've mixed it up with him and it's gone. Okay? So I think when you look at the market since April, that's the market saying we can live with the President's ill considered trade policies.
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A
For listeners who may have missed this, Little Rob Armstrong's 15 minutes of fame earlier this year.
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C
How could they have missed this?
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B
How could they, how could they have missed it?
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A
Because it went kind of nuts. Like Rob was the person who coined the taco trade. Right. Trump always chickens it. It started off as a lame joke on one of your newsletters and then it became just like canon on Wall street. And then the President was upset about it and there were TikTok videos of people singing taco songs. Rob, this is your single greatest contribution to human knowledge, is it not?
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B
It's true. And the whole thing has culminated, as regular listeners will know, with Taco the reindeer, who is the show's mascot, who is a. Was bought. One of our colleagues found it on the street. It's a reindeer with a label around her neck saying Taco. And that's kind of where it all for me. That's where the whole thing peaks.
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A
Yeah, you must be so proud. But. So Trump does pretty regularly chicken out, Ian. But it's not just that, right. That investors have been quite positive about this year. Like the main thing is you just cannot argue with the corporate earnings or the kind of chaotic politics aside, companies are doing fine.
- [05:09]
C
Yeah, Earnings, as one investor put it to me a few weeks ago, has been the rocket ship for the stock market. They've just been amazing in terms of that strong performance in the U.S. it's a good reason why the U.S. which underperformed Europe at the start of the year, caught right back up. If you look just on local currency terms would add that the US is still, you know, behind Europe when you kind of look in kind of constant currency terms. But yeah, this AI theme in the markets has just been absolutely dominant and it's helped stocks come back from that trade shock and it's helped these stocks shrug off worries over valuation. Yeah, because the earnings are coming through and the investment is There.
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A
Yeah, yeah. So you have.
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B
I would also add, if I can interrupt here, as I often do, I would also add that the economic strength has been broader than just the kind of data center boom. There was, there was this idea going around that without all these data centers the US Would not be growing at all. And this turned out to be a mistake to think this. And up until quite recently, broad based economic growth in the United States supported the earnings that you and Ian are talking about that may be slowing down. Now we can talk about that. There's sort of some rumblings in the economic picture, but growth has been okay.
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C
Yeah. The fears that people had around a recession coming and partly from like some of the economic disruption from President Trump's own policies hasn't played out as badly as people worried about. And the inflation that people feared from the tariffs has not come through to the degree that people worried about. So you had those major things that were kind of holding back that have dissipated. I think the President now looking at where things have ended up, stocks are high, but you know, the US Dollar has weakened. He's getting some of his interest rate cuts that he wanted is playing out in a way that some of some people had really pushed for at the start of the year.
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A
Yeah. Now one thing I think is really worth underlining here is that, you know, as usual, the US like blocks out all of the sun. Nothing else gets much of a look in. But the rest of the world in terms of stock markets has been performing incredibly well.
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C
Are you going to mention the plucky FTSE 100?
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A
I am.
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C
Year to day performance outstripping the blue chip s and P500.
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A
Nicely put, Ian, but by 3 percentage.
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C
Points on my number. Lucky.
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A
So if you look at the S&P 500. Right. The big US index in dollars, gotta hand it to them. Good year from the septics. You're up 16% there year to date from America. But if you flip that into Euros, if you're a euro based investor and you've been in the S&P 500 this year, guess what, you've made 3%. You've got that written down. I looked at it before we came, it's 3%. So, you know, first of all, Europe just on its own terms has done incredibly well. You look at like stock markets like Spain, which is up I think about 45% or something. If you're a dollar based investor and you've been in Europe all year, you have absolutely killed it. So I absolutely hand it to the States. It's had A fantastic year. But the rest of the world is off to the races. Like Korea is up, I'm going to say 50%, something like that. China's had a fantastic year. You know, it's not all about the States.
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B
Hong Kong, Taiwan, the list goes on.
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C
And the FX has been hugely important this year because of the trade policy.
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A
Yeah. So the currency bit, like really the.
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C
Currency bit in a way that it hasn't before. So where you're sat is crucial to how you look at this year and how you'll look at next year. And then the most interesting story of the year for me in a way is coming into it. Everyone thinking the dollar's going to strengthen because of tariffs. Then the dollar dramatically weakens. Worst start to the year since the 1970s because people worry about the domestic economic impact of those policies. And is there going to be an exodus out of dollar assets. And then we've kind of seen a kind of stabilization towards the end of the year, but still the dollar's quite weak for the year and it really has mattered where you sit.
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B
While we are on the topic of global stocks, I should mention though I was rambling on somewhere about how amazing the results from Asian markets have been. And a young man, listeners, longtime listeners to the show might remember a guy called Ethan Wu who's now at some second. Ethan Hu. Yeah, he's now at some second rate weekly financial publication we will not name, formerly of the ft. And he emailed me to point out that the Asian stock markets are very much intertwined with the AI trademark because it's chip makers and chip testing companies and chip foundries and like all the kind of back backdrop electronic equipment that the Boom.
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A
Never mind. Ethan, I've written this myself this year. Rob, you obviously don't read anything that I, that I put out there. No, it is important. Like the Korean market is absolutely jam packed with semiconductor companies like the emerging markets, big EM stocks, indices like 10% of that is in TSMC. Right. The Taiwanese semiconductor company.
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B
So Samsung Electronics, SK, Hynix, the list goes on.
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A
All those guys. Yeah.
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C
And there's also been some corporate governance reforms in Asian markets. Investors have cheered as well.
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A
That have helped made a big difference, especially in Korea. Yeah, yeah. But so look, the dollar thing really matters and the rest of the world has done really well. Nonetheless, the US is still the global benchmark effectively because it is just so gigantic as an individual market. And from what I can gather from the sort of outlooks that are coming out so far from the banks and from investors, people are feeling very positive about how that's going to perform next year. So you know, some of the. So Deutsche bank, for example, Binky Chadha, the US stock strategist is looking for the S&P 500 to be at 8,000 at the end of 20.
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B
26,043. I'm looking at it right now.
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A
So Deutsche is kind of on the kind of top end there. But like hsbc, JP Morgan are more like seven and a half thousand. That's still a good jump from where we are now. People can see that there are some valuations in AI stocks, for example, that look super, super bubbly. But for example, dws, the German asset manager is calling this rational exuberance. You know, it makes sense, it's not irrational. BlackRock is saying like bubble framing is not helpful here. JP Morgan Asset Management saying there is more fuel in the tank. I could go on. Right.
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C
These guys are never wrong.
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A
These guys luckily never wrong.
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B
I will make the case that they are right right now. And I think I like my bull cases simple. And I think the bull case for next year is, is simple, which is we're going to have fiscal expansion that we know for sure because the one big beautiful bill act comes into effect and that is going to push money into the economy. Just to pick one example. Because the tax part of that bill goes into effect into effect retroactively to this year. Corporate and household tax refunds are going to be much bigger this spring than they were last year in the post.
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A
You don't deserve one, Rob.
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B
I know.
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C
Some tacos.
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A
True.
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B
I'm going to pay for some tacos. So that. And that. That's just one example of this. So I think that is going to happen. We know. And I think in general we have a administration that is very powerful and very activist that is rolling towards midterm elections that could make them irrelevant if they lose control of Congress in the.
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A
Midterm elections, which are when for those.
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B
Of us not in the states, which are in November. If the President loses control of Congress, he's basically sitting alone in his office for the following two years. Pete Trump watching tv. And so they're going to throw everything at this market and this economy to make sure people are feeling good.
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A
Yeah.
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B
I've said this on the show before and I think that's a very simple case. I think that's Wall street consensus and I think it's quite logical. Thank you very much.
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A
Yep, yep. Job done. Now the. Because we are miserable journalists, we have to talk about stuff that can go wrong. The first big one is that this really is a bubble that we're seeing developing in, in AI now, you know what the sort of, what cleverer investors say to me right now is, listen, we don't know if this is a bubble. Even if it is a bubble, we don't know when it's going to burst. We could have another month, we could have another year, we could have another five years before this thing goes wrong. So you don't know whether this is a thing that can go wrong. But everybody accepts on some level that there are some frothy elements here. So my expectation would be not that the entire tech sector takes a huge hit, but that some of the sort of sketchier projects, some of the more sort of, you know, overly optimistic private equity or venture capital backed things are going to fall over next year. There will be little accidents, but I don't think Nvidia, for example, is going to get zeroed. Right. This is a $4 trillion company and it will still be worth something in between. I would guess 3 and $5 trillion next year at a complete, off the top of my head guess so. I don't think tech necessarily spectacularly blows up, but everyone accepts that. I think it's time for a few little pullbacks. A few little drawbacks.
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C
Yeah. Someone put it to me like there's going to have to be proof points from AI next year.
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B
That's a good way of putting it.
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C
And the sense there is that you are going to need some return on some of the capital that's been deployed or that either people, ordinary people, are going to have to show that they're willing to pay for this technology or companies that it is really increasing their productivity in the way that the proponents of the technology have, have advocated. I just wonder whether you do need proof points in something that is driven a lot by narrative and hype around particular stocks. You know, you might have some disappointments on projects. Will that stop kind of the broader stock rally? It's not kind of clear to me that it is. I think what's more convincing to me is that something on the monetary side, and I know we're going to come on to talk about, you know, the threat from inflation, potentially the expectations on the Fed to cut. If there's going to be something that kind of kicks the legs from underneath the tech rally, you think it might be somewhere around the tightness of money, my project not playing out. But yeah, I mean there are lots of red flags. And so are we in the dot com era or are we somewhere like 1997, where people are starting to get worried about valuations, but then they go up for the next few years.
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A
Yeah. It's worth remembering that when Alan Greenspan, who was the chair of the Fed, when he talked about irrational exuberance and evidence of bubbles in markets, that was like years before this thing blew up.
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C
Right.
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A
So we, we could be years away from any sort of reckoning here.
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C
Exactly.
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B
I think Nvidia is actually quite scary. Not because of any particular feature of its business model or the narrative around it, but instead just because of the number you just mentioned. $4.4 trillion company. Right. So let's say that goes down by 25% because somebody else's chips turn out to be good, or there's not a proof point or something happens. So now a trillion US dollars have sprouted little wings and flapped off to money heaven, never to be seen again. And by the way, every active money manager in the world is overweight that stock. Yep, they have to be, because.
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A
So if you're active, which means you're a stock picker, or if you're passive, which means you're tracking an index, doesn't matter. You are still up to your eyes in this thing.
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C
And we're all on the AI train now, you know, is the point we kind of made. But you know, credit investors more now we're seeing some credit issuance coming through, linked to the theme. They're asking the same questions about sustainability. A decent proportion of the US economic growth and like investment is tied up with this now. So the worry you would have is if you really start to get a slowing of some of that investment or some surprise on that, or you know, some external factor that questions that, then it has then that knock on impact for the economic outlook, which also hits stocks, you know, that's maybe more the scenario. I would worry about that double effect.
- [17:39]
A
Yeah, so. So with the sort of caveat that we don't know if this is a bubble and if we do, if it is, we don't know when it's going to burst. Every investor and banker that I, an analyst that I speak to at the moment accepts on some level that this is a possibility for at some point in the next few years. So, okay, that's big risk number one. Big risk number two is the macro. Right. So everyone is assuming that, you know, hooray, inflation is defeated, inflation's coming down and there's no need to worry about inflation anymore. So the U.S. federal Reserve can keep cutting interest rates. There's just something in the, in just tinkling away in the back of my head that says, yeah, but what if. Because it turns out one thing that the economists and investors have been absolutely rubbish at for, like, the past five years is inflation, which is like, the market just keeps calling it wrong over and over and over again. What if it's wrong this time? I mean, like, Rob, to you, how big of a. How big of a possibility is this?
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B
Well, first of all, people have been bad at calling inflation for a lot longer than five years, Katie.
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A
Yeah, but especially though I always say.
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B
This, but I don't think it can be said enough. Inflation is the thing everyone thinks they understand and they really don't because there's always, there's all these really simple explanations of what causes inflation, like when there's too much money chasing too few goods. And that sounds like, oh, now I understand. But it turns out to be a much more complex phenomenon and hard to predict and multifaceted. And we don't really understand why we had the inflation burst that we did a couple of years ago, why it was so big, why it ended so quickly. So it's this big thing that we don't really have our arms around. But one thing we do know, Katie, is that historically, inflationary incidents tend to bunch together. In other words, they show up in little packs and then they go away for a while. And so you have to at least be open to the possibility that the story on inflation is not over. Which kind of brings us back to the bull case that everyone believes in for next year, which is that it's gonna be kind of monetary and fiscal nirvana. A burst of inflation just ruins that whole bull case. Right, because you can't have the fiscal and monetary stimulus under inflation. It doesn't work.
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A
Yeah. And then again, like. So, Rob and I were speaking to Adam Posen from the Peterson Institute about this. Just the. On an earlier podcast, listeners do check that out, if you missed it, but that inflationary risk is like, very, very pronounced in a year when, you know, not to worry anyone or anything, but we do have a changeover at the top of the Fed. So the Federal Reserve Chair, Jay Powell, he's due to step aside in May. He may find another slot inside the Fed somewhere, but kind of not really the point. We're going to have a new chair of the fomc, which is the Rate Setting Committee at the Fed. Now, it seems likely to me that the Trump administration will seek to appoint someone into that position who's going to be of a mind with Trump about Trump's always been a low interest rate kind of guy, loves low interest rates. So there's going to be pressure on this new Fed chair most likely to keep interest rates nice and low, keep borrowing costs nice and low. Which is all well and good unless you have inflation either really digging its heels in or worse, kicking higher again, because at that point you have nowhere to hide, right? You have probably a stock market that doesn't like that much, and you probably have a bond market that doesn't like that much. If the Fed is not willing to tap the brakes on in that scenario, you have a 2022 style situation where there are no mainstream assets that are gaining in price and everyone gets completely hosed. This is not my central scenario, but this is a risk that I think people need to take pretty seriously.
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B
And it all starts with inflation, as ever.
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C
Yes. And as you say, there's two ways that inflation is bad. One is that the Fed can't cut by the three or four times in terms of quarter percentage point cuts that the market is currently expecting. And then that has that ripple effect free markets that you guys are talking about. And another is that the new Fed chair leads a pack there that doesn't respond to it in a way that makes people really worried about its ability to control longer run inflation. Long term inflation expectations have been well behaved this year, even with the worries about Fed independence. But that will come back up again if there's any signal that the new chair will not bear down on inflation or will be willing to run it higher or run interest rates lower than than they need to be.
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A
And then the dollar impact that we've seen on global portfolios this year will be a walk in the park. If we see a proper downdraft in the dollar, which I think you would see if you had a Fed that was not willing to tamp down on inflation, then we're in trouble. I mean, Rob, from your perch over there on the other side of the Atlantic, how is this situation looking to you?
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B
There is a lot of noise about Kevin Hassett, who is now the heir presumptive to the throne of Jay Powell, being very much in the thrall of the President, not being the kind of person who will stand up to the President's demands for low rates. And I would like to make the following bold prediction, which is that it's going to be fine at the Fed. I don't think it matters loads if it's Hassett or one of the other top candidates.
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A
I'm just writing this down so that I can timestamp it.
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B
I'm just saying it. I think. I think that once you're in that chair. Once you're in that chair, your eyes turn from the President and turn towards history. And you don't want to be Arthur Burns, the Fed chair, who famously, from the decades ago, who famously let inflation run out of control. You're secure in your position. The markets exert a lot of pressure on you, not just the president. And I think it'll be fine. You know, and I'm also, in general, a bit of a skeptic about the power of the Fed. I think the Fed is.
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C
Sometimes that's okay because they're gonna take some of it away, Rob.
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B
But look, I think it's important. Don't get me wrong. What I'm saying is that in a lot of cases, the market leads and the Fed follows, rather than the other way around. And we attribute a lot of powers to the Fed because it sort of makes the universe look like a simpler place when there is a group of women and men in a room pulling a lever that is controlling the economy. But it ain't really like that. So I don't think Hassett will make a massive mistake with inflation, and I don't think the Fed is as powerful as people generally say. Anyway, what I am saying, Katie, is I've given you tons of opportunities to make fun of me when I turn out to be wrong about this next year.
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C
I mean, it's such an interesting question. Yeah, it's a rationalization that I hear a lot from international money managers. Yeah, it comes down to. Yeah. When they are in the seat, do they make decisions based on their view of economic growth and inflation, or do they succumb to political pressure? And you have the question live now already with Stephen Moran, you know, one.
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A
Of the Trump appointees to, to, to the Fed.
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C
You know, is he currently making decisions based on his, you know, deeply held economic beliefs, as he said, or is he calling for lower interest rates because he knows that's the job he's supposed to do? And it's definitely something that divides international investors, you know, and the worry is that there is an economic veneer that is very convincing, but really, we know what decision they're going to be taking.
- [25:48]
B
And though you have to keep in mind there's a big difference between being a member of the committee and being the chair. If you are the chair and you cut rates in the face of rising inflation, you will spend the rest of your days on Earth as the butt of people's jokes you will hear about nothing for the rest of your life.
- [26:13]
C
Rob will turn up at your house.
- [26:16]
B
Yeah, exactly. They'll come to your house with a bullhorn. And. So it's going to be the first line is obituary and he'll tough it out.
- [26:29]
C
I agree with you on that. And also the 10 year, looking at the 10 year U.S. treasury, it's down from the start of the year. It's hard to look at the market now and say there are huge worries around this. But yeah, we have seen a steepening in the yield curve. So long term rates rising faster than short term rates. And we have had outside of the US wobbles in big bond markets such as our own and France. And to a degree, Japan's coming on the radar now where people are saying, well, you know, that's maybe signs of things to come at the long end of government yield curves, that there could be some like, sources of volatility there. But yeah, Rob, I take your point.
- [27:05]
A
So that's a nice segue there, Ian. Thank you. So two main risks so far are AI goes pop, inflation goes bang. These are the two things you really need to worry about. But there are other things that could upset the apple cart and people are feeling incredibly optimistic about next year. One of them is like, weirdly, as you mentioned, the Japanese government bond market. So it's certainly starting to look like the bank of Japan is raising rates a little bit too slowly for the market's liking. And inflation, like there's been no inflation in Japan for like ever and now suddenly they've got quite sticky inflation. It looks like the bank of Japan is raising rates a little bit too slowly to deal with that. And so what you're seeing is some long term Japanese government bond or short term, even Japanese government bond yields are kicking higher. That matters globally because at a certain point Japanese investors are not going to see the rationale for putting money to work overseas. They're just going to stay at home. Right. And Japan is a massive buyer of us, uk, European, loads of different types of different government bonds. This has been flagged as a risk to global macro for years and years and years and years. But now when people talk to me about it, they're a bit more like, I think this could actually be on. Maybe it is time for Japan to really forcefully step back from global debt markets. Ian, you speak to a lot of debt investors. How seriously are they taking this?
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C
Yeah, very seriously. We saw times earlier in the year, April, May, where there was kind of weak auctions of long dated Japanese government debt that added to people's anxiety that there's maybe this glut of long term debt, that there aren't the buyers, that there once were pension funds and life insurers might not need as long term debt as they once did. And at the same time, governments are issuing record amounts and there might be a bit of a supply demand problem for very long term debt. And Japan, as you say, if yields rise to points where people don't want to invest or pull money home from, you know, Eurozone government debt, for example, and invest it at home, then it's like taking another kind of guaranteed buyer out of other international debt markets that are experiencing some of the same dynamics. And the thing that's compounding in Japan is the new Prime Minister who came in presented, as you know, the Margaret Thatcher of Japan. And one fund manager put it to me the other day is kind of put in a Keynesian policy, right? So in some ways the market, the spending announcements that have come through way more than what some in the market were expecting. So you've kind of got this free spending governments theme at a time where long term bond yields are already quite high. I mean, the UK, the 30 year is higher since 1998 this year, so you're seeing some dramatic kind of moves higher or at least a kind of gradual shift higher. And it's just something to be looked at next year. It could be a source of volatility in markets outside of Japan where government bond yields just hit a level where it drags, you know, it remunerates people more and drags people out of risky assets like stocks or Japan, as you say, you might see that repatriation of.
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A
Capital, the other like potential curveball that I think we do need to keep a little bit of an eye on this coming year. And I, and I hate to say it is crypto because it, we've seen a big pullback in bitcoin prices over the past few weeks and that has tended to coincide, you know, here and there with pullbacks in riskier bits of, of the stock market. What you've got here is a market that is dominated by retail investors, right in crypto. And they're the same people who are dominating large parts of the US Stock market, for example. So I don't think it's impossible that you see wobbles stemming from the crypto market leak through into more established markets like stocks in a way that I just think is worth keeping an eye on over the course of this year. Like Rob, what's Your take on that.
- [31:05]
B
I think Adam Posen, to invoke his name again, was very good on this. Making the point that the crypto markets are very much entangled with the US debt markets at this point, that the state stablecoins link, link short term treasuries to basically the whole crypto ecosystem so that we know there is some connective tissue between what I think of as the real world and the fake world of crypto. And so I don't know how that's gonna play out, but I'm just, I'm agreeing with your point that crypto world is connected to the other parts of the market now in ways we're gonna discover, possibly the hard way.
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C
Yeah, I think those are the two links. Yeah. Through stablecoins. But also as you say, the kind of retail link between crypto and stocks, you know, and it does feel like from some of the market moves and speaking to investors, you know, recent sessions where you've seen stocks sell off with crypto, they've talked about that kind of liquidity link between the two. Whereas you know, if they need, if they're getting margin called because they've made kind of bought crypto on margin and what do they sell? They sell some of the stocks they've bought.
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A
Right.
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C
It's a plausible kind of causality that does seem to be happening.
- [32:21]
A
Yeah. So we do need to watch it. One final thought to leave you with because I think we've covered a lot of ground about what's likely to happen next year. Is one thing that is worrying me slightly at the moment is that I can't find anyone who's taking the other side of this. Everyone agrees with everybody else. That is generally not a good sign in markets. So even Albert Edwards at sg, the French bank, he's a perma bear, he's always bearish. And I was just reading his latest note and he was saying, look, I do think this is going to be horrible and I do think it's all going to fall over. And I think stocks are overvalued. But and I quote, I struggle to see an imminent macro trigger for a major bear market.
- [32:59]
C
It's the capitulation worries, you know, when you start to see those signals, Right. It's like when people start to say, well maybe the press to earnings ratio should just be higher than it has in history, you know? You know, and you saw in the dot com, is it like per click like, you know, new valuation metrics come through?
- [33:16]
A
Yeah. So when, when the bears, you know, when the pessimists are slightly throwing in the towel. There's a part of me that thinks I don't know, man. I feel like I've seen this movie before and it did not end very well. So yes, if you can't find any pessimists, that can be alarming. If you are a listener and you are a pessimist, feel free to drop us a lineunhedged.com but we are going to have to be back in just one sec with Long Short. At pgum, expertise across public and private markets today helps build resilient portfolios tomorrow. With over $1.4 trillion in AUM, PGUM has navigated over 30 market cycles with active investing and disciplined risk management. But it's not just about the numbers. Our combined global expertise and local insights give us these strategic perspectives we need to help you reach your long term goals. Pgum our investments shape tomorrow today. Okeydoke. It's time for Long short. That part of the show where we go long a thing we love or short a thing we hate. Ian, last time I asked you this, you came out with a long list of animals. What have you got this time?
- [34:38]
C
I'm going to. I'm gonna go short a thing I love, which is. And it hurts me to say this, but I think K Pop Demon Hunters might have reached its peak in terms of its grip on the world's children and young adults.
- [34:54]
A
I still don't really understand what it.
- [34:56]
C
Is and I think you're not allowed to.
- [34:58]
B
You're too old. You're not allowed too old.
- [35:01]
C
You know what the taco trade is, but you don't know what K Pop Demon Hunters is.
- [35:04]
A
Sorry. Well, I'm very old and very smart.
- [35:07]
C
This is an excellent film based on a South Korean pop group who are Demon Hunters, an animated movie. And it's got incredible songs. And like my children are addicted to it and now all parents are addicted to it who have young children. And yeah, it's just been incredible hype. Kind of thinks Frozen on steroids.
- [35:27]
A
Okay.
- [35:27]
C
But I feel like we've reached the peak.
- [35:29]
A
Okay. It's a good one from Ian and he's younger than us, Rob, so he's more down with the kids. What have you got, Rob?
- [35:38]
B
I am going to do a real old man long, which is, I think 2026 is going to be a good year for the kind of fuddy duddy old man stocks that I like. Quality businesses value businesses that are businesses that are steady, have high returns, aren't growing really fast. That's been a neglected class of stocks much of this year. And if any of the bad stuff that we talked about on this show happens, these kind of solid producers are gonna do well. So quality, value, the stuff I grew up with, I'm long at all.
- [36:19]
A
One funny thing that people often say to me is that like, you know, yes, we like the AI trade, but within that we want to buy quality. And I'm like, do you normally just buy like any old rubbish like this is just like slightly silly. But I do take your point nonetheless. Yeah, I am going to be long of buying the dip. Like, say what you like about this as a dumb strategy, but I tell you what, it works like, it worked really well for people this year in 2025. It's been a consistent strategy for retail investors who are wiping the floor with the professionals, as usual. So, yeah, you know, if you find a dip, this is not investment advice. And if it was investment advice, as I always say, it would be terrible if buying a dip works for people.
- [37:08]
C
So you're saying Rob was right all along?
- [37:10]
A
No, I'm not saying that. No, I wouldn't go. Definitely would not go that far. Okay, that is all we have time for for today. Ian and Rob, thank you so much, listeners, especially those who've come through the FT boardroom event. Thanks for sticking with us. Hope you've enjoyed the show. We will be back in your ears on Thursday. So listen up then. Unhedged is produced by Jake Harper and edited by Bryant Urstadt. Our executive producer is Jacob Goldstein. Topher forges is the FT's acting co. Head of Audio. Special thanks to Laura Clarke, Alistair Mackey, Greta Cohn and Natalie Sadler. FT Premium subscribers can get the Unhedged newsletter for free. A 30 day free trial is available to everyone else. Just go to ft. I'm Katie Martin. Thanks for listening.