Markets Happy Hour Podcast with Aoifinn Devitt

Markets Happy Hour Podcast May 15, 2025 - Live from NYC - A Fever Dream?

In this week's podcast we reflect on what some commentators have described as a "fever dream" - the essential round trip of US markets since the beginning of the year, whereby they have recently made up lost ground - despite tremendous month to month and intra-week volatility. So should we proceed as if the past few months - including the post Liberation day crisis - never happened?We first look at the hard data - inflation is subdued although this may be a temporary state pending the effect of tariffs. When parsing the data further, it becomes clear that some of the fall in inflation is due to the fall in service inflation, which is not directly subject to tariffs, so may be more sticky as a contributor. This lower inflationary environment now mirrors that of Europe and the UK, and could, in theory allow some space for the Fed to ease. There is, so far, no sign of that however, and we discuss what may become a different "framework" in which the Fed may operate in its decision making going forward. Interest rate cuts seem to be further out on the horizon for now though as expectations have come down and the bond market takes things into its own hands - sending the yield on the 10 year treasury to over 4.5%. Upon analysis, the Big Beautiful tax bill looks set to spook bond investors further as it is likely to add to the fiscal deficit, thanks to a generous swathe of cuts, and this lack of fiscal discipline could well stoke fear in an already wavering market for US dollars. Moving to market conditions we reflect on the fragile nature of the news flow that is sending markets into overdrive (e.g. soundbites without detail on trade) and the still busy set of geo-political headlines, in a week where President Trump's visit to the Middle East dominated the discussion.We were delighted to be joined by Jon Cheshire, who works with Clearbrook Consulting, on this podcast and thank him for his many contributions to the discussion.

Markets Happy Hour Podcast - May 8, 2025 - Another Kind of US Exceptionalism?

In today's slightly shorter podcast - due to a pending Bloomberg appearance - we discuss the transition from the tariff setting stage to the deal-making stage and markets have responded with enthusiasm.The deals to date - when probed - may have over-promised and under-delivered though, and there may be little "there" there, upon examination. For example in the US/UK deal it seems to have been restricted to cars and metal on the parts of the UK exports and agricultural products and Boeing orders on the part of UK imports. It is worth remembering that the 10% tariff is still in place, and that the UK was one of the few markets that previously had a trading surplus with the US. The trend of US exceptionalism continues in three distinct domains:1. Interest rates, where the US Fed remains firm on pausing, while other central banks around the world are cutting rates - the latest being the Bank of England, which just cut its rates and suggested that it will cut further. 2. Equity markets - where the equity markets in the US continue to lag non-US markets slightly on the upside, particularly due to technical factors such as flows out of US assets.3. The new Pope, Pope Leo XIV, is the first American Pope, much to the delight of Catholics throughout the US, particularly his home town of Chicago. Finally, we discuss rising geo-political risks, particularly from the newest front of tensions being India/Pakistan.

Markets Happy Hour Podcast - Is the Economy Anti-Fragile?

Markets Happy Hour Podcast - Live from Barcelona - April 24, 2025

In today's markets happy hour podcast we ask whether the swing from American Exceptionalism to Sell USA is another swing of the pendulum which has gone too far too fast. The podcast was recorded with a mixed audience of European investors and US investors in Europe at a conference, so we had a unique opportunity to discuss macro conditions on the ground in Europe and the reason for the relatively resilient bounce back in economies such as Spain. We talk about why some of the so-called headwinds in Europe - such as the regulatory landscape, the lack of innovation and the demographic crisis, can in fact be tailwinds when it comes to servicing the booming tourism industry.We look to earnings season, and the effect of uncertainty, as well as the difficulty of planning around tariffs, look at the price of gold - continuing to soar, and the decline in he relative outperformance of US markets relative to markets outside the US.

Markets Happy Hour Podcast - Are We There Yet?

It has been a slightly less eventful week this week than last week, but it has still been characterized by a flooding of the zone from court disputes, immigration disputes, defunding of Ivy League institutions, unresolved trade negotiations, to interest rate cuts and pauses. The atmosphere has been charged as the rhetoric has increased, particularly between the president and the Chairman of the Federal Reserve. Recession chatter has continued unabated, and we analyze the nature of this potential recession - event driven, v. structural or cyclical and ask what that means for median duration and loss. Consumer sentiment has continued to be soft as tariff worries mount.

Markets Happy Hour Podcast - LIVE from Baltimore - Towson University - April 10, 2025

In this LIVE Markets Happy Hour Podcast, which we hosted at Towson University in Baltimore, we hosted a group of industry professionals and finance students from Towson University and Loyola University. It has been a tumultuous week, and we reflected on the fact that this was the third podcast of the week, each one responding to a new twist in news flow. As of the markets close on Thursday April 10, we discussed the reprieve in the US CPI number - which was a respectable 2.4%, although noted the dulling effect of energy prices as oil prices reflected muted demand and recession fears. Interest rates had paid an outsized role in the recent roll back of tariff measures - or at least their stay of execution. However, as we noted, a cloud of uncertainty remained.I was particularly interested in hearing from the students about to graduate about their views on the market backdrop, their expectations for the job market and their use of AI in the jobs of the future. It was a heartening discussion. With thanks to Yannis Chulos-Saarinen and Chris Chulos for securing the wonderful location for this week's podcast, and to our industry guests for their generous contributions to the discussion.

Special Markets Happy Hour Podcast - April 9, 2025 - Upping the Ante

We are back with another Markets Happy Hour Podcast today to discuss the recent movements in the prevailing trade war as both sides up the ante. And now the US Treasury as well as other long term government bonds around the world have entered the chat . . they are selling off, undermining the previous good news that lower rates suggested and leading to conspiracy theories as to why.We examine the status of the US dollar and US treasuries as a safe haven, look at where there may be others and ask where the Fed will come down as it faces its latest dilemma.Continuing our discussion of the K shaped recovery, we explain that now some hardship is likely to affect all parts of the K - top, middle and bottom and what this is likely to do to sentiment going forward.Finally we implore investors to wait out this uncertainty and remember the lessons of previous crises and stay the course.

Special Markets Happy Hour Podcast: April 7 Signal, Noise and Strong Medicine

Tune in for today's Markets Happy Hour Podcast in which we discuss the dramatic developments since the tariff announcement on April 2, as we parse market reaction - separate the pre-existing conditions from the new ailment facing markets, and the medicine which the markets just received.We argue that the medicine is more akin to an amputation - a limb - or that of international trade as we knew it, sourcing goods from countries that could produce them more cheaply - with a comparative advantage - has essentially been cut off. We have to learn how to walk again. And while we may find a prosthetic limb in time, it may never be the same, but it will function.We also liken the developments to the tragic events of September 11, 2001. When the unimaginable happened, flying and airline security were never the same again - we have to check our large liquids, take off our shoes, lock the cockpit door - the same will happen in international trade - we will have to develop work arounds, diversify supply chains, prepare for risk events like this one. Even though this "medicine" may be reversible, unlike an actual amputation or September 11 as set out above, the effects of almost seeing it in force will be long lasting. We parse what we knew already - the Trump Trade indicators that have been in place since July 2024 - as well as what had been happening since the inauguration of President Trump. And then we analyze the medicine that has just been administered.

Markets Happy Hour Podcast April 3 - LIVE from Dallas - The Morning After

What a day we chose to hold our once rescheduled Markets Happy Hour Podcast in Dallas. We were hosted in the glorious surroundings of Old Parkland in the Executive Board Room and enjoyed a dialogue with a broad audience of family office investors, real estate, oil and gas and private credit experts. We naturally talked about tariffs - a lot, and showed slides that show that the recent tariffs will lead to the highest effective rate of US tariffs in decades. Throughout today it is clear that this is being met with severe market strain and some incredulity at their breadth and depth.Some commentary has focused on the means of calculation of what is in fact reciprocal - and it has been argued that the actual tariffs in effect abroad do not reflect those contained in the now infamous tariff chart used in the Rose Garden. Some of the rates include VAT which is imposed on all goods in Europe, while all reflect a calculation based on a goods deficit only, while in some cases there is a services surplus with these global trading partners.Markets have reacted violently and will continue to do so. It is interesting that the Russell 2000 has sold off more than the mainstream large cap indices - these indices should in theory be a little more protected than the larger multi-nationals, but what we are witnessing is a broader risk sell-off. Most affected are tech companies, shoe companies, manufacturers of furniture (highly reliant on imports) as well as other "risk on" assets such as cryptoassets.All global markets have been affected too - there is clearly a contagion effect, but a falling dollar has cushioned the blow somewhat.US 10 year rates have fallen and expectations of more rate cuts in 2025 may well play into Scott Bessent's preferred focus, but it is all an indication of souring growth expectations. And meanwhile other dynamics - such as a slowing in pace of AI expenditures and data centers - continue to swirl. It will be a dynamic and fluid situation for many weeks;

Markets Happy Hour Podcast March 28, 2025 - View from Over the Border

In this week's Markets Happy Hour Podcast - which comes to you from over the Canadian Border and Banff, Alberta - we discuss the brewing uncertainty as the market quarter nears. In what has been the worst quarter for the S&P since 2023 we have wrestled with an unprecedented volume of news flow, noise - some of which even contains some "Signal". We look at the inflation numbers within the US which are not quite as reassuring as in Europe, where the next interest rate cut is all but assured. In the US, consumer sentiment is taking a dive, particularly as regards near term measures of income, job security and economic growth, and we cite the same growth uncertainty which has been in place since called out by the Fed at their last meeting. As early April and "Independence Day" nears, meaning the effective date for new tariffs we look at the simple as well as the systems thinking impact of such measures. We conclude with some observations on other moving parts - such as demand for AI-related IPOs (CoreWeave) as well as data centers.