MARKETS HAPPY HOUR PODCAST

In this first Markets Happy Hour Podcast of the New Year, we reflect on the dark turn that many of the “Year in Review and Look Ahead” commentaries took over the traditionally slow period between Christmas and New Year. Some of this related to the new financial “nihilism” and not only was there a Wall Street Journal on the topic but an X post describing a degenerate generation attained over 20 million views. This suggestion that Generation Z is increasing opting out when it comes to traditional professional paths and paths of wealth creation and are opting to “bet the house” to aim for large and outsized gains, hence the increase in gambling and betting, such as Kalshi and Polymarket. This suggestion that there is divergence in terms of meaning and wealth creation is also a subcurrent of one of our themes for 2026, which is a theme of “enough”. Equity markets have ended the year on a positive note, although recent sharp sell-offs in silver after the margin requirements were altered by CME have been a reminder of the volatility that has now become a feature instead of a bug in markets, and another reminder of the perils of leverage. We discuss some positive news in real estate which shows how some real estate is becoming affordable due to overbuilding as well as the technical factors that baby boomers will be downsizing at around the same time that many Gen Z buyers are (belatedly) preparing to buy their first home. This may make affordability fall within reach for some, and is a welcome antidote the common doom-laden refrain about housing being out of reach for an entire generation. Financials have had a strong year and the top 6 US “too big to fail” banks now top $2 trillion, with JP Morgan representing one third of that. Similarly green energy has had a surprisingly strong year despite the headwinds presented by the Trump administration, as the demand for energy and electricity has been so high. In a final sweep through other asset classes we note how the Bitcoin Treasury frenzy has died down given the volatility in Bitcoin. As we have done before we compare it to other diversifiers such as metals – and note that the drivers for using these diversifiers is actually quite different. While metal purchasers may be driven by greed, it may also be fear – fear of currency debasement, fear of rising fiscal imprudence, lack of trust in traditional assets. Bitcoin, on the other hand, is driven more by greed than fear, particularly as it is still not a universal store of value.