MARKETS HAPPY HOUR PODCAST

In this week’s Markets Happy Hour Podcast we are joined by special guest Richard Tomlinson, CIO of Local Pensions Partnership Investments, who brings a strong institutional investing lens to our discussion today. We obviously can’t discuss market events without the oil price moves as a starting point, and we start there, noting that the situation remains very fluid with prices spiking past $110 per barrel today. Equity markets are remaining relatively resilient to the price moves, which is somewhat surprising, as we can see the very direct impact that fuel prices have on the savings rate, and therefore the cushion against adverse conditions that consumers can maintain. Equity markets were less impressed by new messaging regarding the trajectory of interest rates, and while the US Fed maintained rates on hold, their telegraphing regarding current uncertainty and likely future rate moves, triggered a negative reaction. Otherwise traditional safety trades are not working as intended, and we distinguish in our conversation between maintaining shock absorbers in a portfolio and cushioning against shocks and building in far more long-term protections around something like Stagflation, which is now rearing its head not just in the UK where it has been a frequent interloper. Now that fund managers see this as a likely scenario in the near term we turn to the thought experiment as to what works when inflation is high and growth is anemic to stagnant. There are few obvious answers to this – although we do toy with the idea that defensive and staple holdings – the last bastion of consumer spending will remain resilient in this scenario. Our conversation takes a whistle stop tour through the UK and China – taking a view on their respective economic states of health, and then turns to analyzing the behavior of gold and short term government bonds as the uncertainty in markets continues to cascade. Our last word is on private credit and the nagging concerns that plague this market. Stay tuned for next week’s podcast which will be live from Washington DC.