In today's Markets Happy Hour Podcast we conduct a "review" of the drama (and at times melodrama) that has played out at Davos this year, and digest what it has meant for markets.

We are joined by CIO and founder of Vistamark and former CIO of the consulting firm Fiducient - Matt Rice, who works with institutional investors and shares his insights on market dynamics and portfolio construction. Starting at our usual starting point of inflation Matt shares his view of the long term deflationary impact that AI is likely to have we touch on the impact of the oil price weakness that will in the more immediate term depress prices. Turning then to the economic "vibe check" we note the sensitivity of equity markets to the prevailing geopolitical drama around both the rhetoric on Greenland as well as the on-again/off-again tariff announcement on European countries.

The uncertainty over recent days has been reflected in equity markets, which clearly still show some sensitivity to geopolitical risk, and the ascent of metals continues - clearly reflecting a risk aversion and a concern about currency debasement. Oil, on the other hand, remains flat - reflecting high inventories and only some sensitivity to geopolitical news (in this case the news from Iran).

Moving to other sources of risk, even Secretary Bessent has attributed some of this week's weakness in US equity markets to the dramatic movements in the Japanese long dated government bond market over the past week. In what may be Japan's Liz Truss moment (echoing the weakness in UK markets which ultimately led to the downfall of Prime Minster Liz Truss towards the end of 2022). In recent developments the Japanese 40 year bond yield had surpassed 4% for the first time, while the 30 year bond had never suffered such a large drop in a single day. In our discussion Matt suggests that this correction was well overdue and could be the canary in the coal mine for other economies with high levels of government debt.

We end our discussion with a reflection on Europe, firmly in the cross-hairs now at Davos, and remind ourselves of the positive impact on European defense stocks that has been a direct response to the challenge from President Trump, as well as on some of the other areas said to be trailing (IT infrastructure) as well as "financial plumbing".

We started the year with some chilly weather, some American football inspired blocking and tackling and a tech challenged yet warmly engaging live podcast in New York. The video and slides will follow next week, but for now please enjoy the audio.

In front of a live audience we discussed the inflation picture, the delayed transmission effect of tariffs and the ongoing disconnect with consumer's price experience on the ground. We examined the market reaction to the announcement last week of a criminal investigation into former Chairman Powell. The decisive push back, via video recorded by Chairman Powell, seems to have been viewed as a form of checks and balances working as they should, and, as ever in recent years, bond markets have reacted calmly, being decidedly unbothered.

Equity markets have been somewhat lack luster this week, coming off the prevailing uncertainty in geopolitics and domestic checks and balances, but the US market still stands alone in having experienced few "flight" events in recent years - a flight event being defined here as a simultaneous fall in equities, bonds and currency. This underscores the sense of "might is right" that dominates not just in equity markets but also - now - in geopolitics.

We discuss some of the tangential effects of the recent rhetoric around Venezuela and the importance of military power. We examine whether this is galvanizing efforts in Europe to join forces, as well as within other trading partners - namely China, which is seeing its largest ever trade surplus.

In this week's Markets Happy Hour Podcast, we are joined by Alan Dunne, founder of Archive Capital, who has written a recent white paper on the regime adaptive portfolio. It is a particularly appropriate topic given the heightened discussion of regime change that we have seen over the past week – both at the level of a specific country, as well as at a broader level as a new form of foreign policy is now emerging, fairly unprecedented its scope.

We start our discussion by reflecting on the likely impact on the oil price that the Venezuelan situation may have – so far the impact has been muted, and an increase of supply should – according to traditional metrics, lead to lower prices. The mixed signals that inflation is sending – lower oil prices on the one hand – continuing pressure on services on the other is also being noted by the US Fed, and the latest minutes of their most recent meeting underscore the divide that is in place there.

Moving to the outlook for interest rates, Alan underscores the mixed data facing the Fed as well as the rising fiscal burden and concern about central bank independence that defines this regime as different from the last one.

Equity markets remain robust, particularly according to market commentators in the US, but we ask whether it is likely to be a 1995 or a 1999 in terms of market outcome, and we then proceed to examine the sectors that are most likely to offer diversification and resilience.

Alan then sets forth his thesis on what a regime adaptive portfolio should look like. We discuss the characteristics of the current regime, how different asset classes are behaving and the role that traditional diversification will play.

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.

This week’s Markets Happy Hour Podcast comes to you the day after Christmas and is the last of 2025. We ask whether in what often seems to be a season of plenty – we are about to enter the year of “enough”. Will 2026 be the year when consumers declare that they have had enough of the productivity enhancements that technology – and particularly AI – can bring? Will they have had enough of price rises and vote with their feet accordingly? Will affordability become the new siren call?

Will they have had enough tokenization and cut some of their streaming subscriptions – again hearkening back to affordability?

Consumer spending data continues to underscore the sharp K shaped divide – with over 50% of consumer spending in the US coming from only 10% of the households. This supports the fact that thus far in this cycle, the struggles of the consumer at the lower end of the spectrum don’t move markets. Markets buy what they know. Most market participants come from the upper earning end of the spectrum. Other trends of note in the markets as we near the end of the year are the strong contribution of cyclicals and the fact that Asian markets have actually outperformed US and European equity markets year to date.

Flows into ETFs are at record levels, and now are approaching $60 trillion in traded value with over $1.5 trillion in flows and over 1000 ETFs launched in 2025 alone. While this data does not differentiate between active and passive ETFs the majority of ETFs are passive (90%) which suggests that the flows into passive investing remain extremely robust. Meanwhile Gold is on a trajectory to have its best year since 1979, having hit records on no less than 50 occasions this year alone. The year has been framed as a “defining” one for metals. The dollar, on the other hand, is set for its largest annual drop since 2017.

In today’s Markets Happy Hour Podcast - our last before the Christmas break, we ask ourselves how happy markets are feeling in this market are joy - and the answer is, well, a touch of Bah, Humbug. We first start with the surprise drop in UK inflation which may well serve as a welcome Christmas treat for the UK consumer. With inflation now coming in at 3.2% in the UK (and US inflation expectations of closer to 3.1%) could it be that the UK has slayed the stagflationary beast of Christmas past? The Bank of England is poised to cut rates today to 3.75% (from 4%), just as the US did in early December and current expectations in the US are around one further rate cut in 2026, although it is quite clear that there could well be more if the new Chair decides to start with a splash. Despite this lower inflation and recent rate cut, the consumer remains hyper focused on inflation and affordability, which continues to hurt consumer sentiment and has become elevated to a live and real election issue. Markets have been unsettled recently despite clear signs that commentators and strategists are bullish, and investors too, evidenced by the flows into equity funds and the fact that cash levels have fallen to recent lows. This is somewhat surprising given the still meaningful return on cash and it is in sync with the broad optimism that are seeing in the now ubiquitous 2026 outlooks.

The wrinkle in this optimism is the recent skittishness in equity markets just in the last few days, most of it traceable to AI concerns, and we discuss the unease around Meta’s “turbulent” AI trajectory, which has led to it underperforming some of its Magnificent 7 counterparts. In fact, if we look to the breadth of the Magnificent 7 Counterparts and how they have performed year to date it has really been Alphabet and Nvidia that have been outliers, as the chart below shows. Tesla has had the most negative sentiment, probably due to some unique leadership and market factors, but even the other stocks - despite dominating the newsflow - remain bare round trips year to date.

We look at some of the change in sentiment around China, which has seen a fascinating U turn of its own - having gone from “uninvestable” in the aftermath of rising trade tensions, concern about regulatory overreach and concern about a precarious retail sector. While fund managers assiduously removed China from EM portfolios - creating EM ex China strategies, behind the scenes something was changing. This came to the fore during Covid, when it was apparent that surveillance and technology in China had reached sophisticated levels, but also the launch of Deepseek sealed the impression that there was a giant emerging in not only AI but also EVs. This has now dawned upon investors and it has been not lost on them that Chinese stock markets have started to really resemble technology sector developments and could be a real play on technology - but maybe a questionable diversifier to the US, which is also, itself, a play on technology.

It has also been a time of turbulence in geopolitics with governments in Europe now openly speaking about the threat from Russia, and President Trump imposing a blockade on Venezuelan oil. This has already been reflected in the oil price and is likely to be a fairly contained regional skirmish, but it is nonetheless yet another piece of flooding of the zone, which will make 2026 hard to navigate.

Moving to other asset classes we reflect on the fourth annual loss for Bitcoin, although it significantly lower than previous annual losses, but ask what this means for risk sentiment broadly and the likely behaviour of this asset class.

We reflect on where portfolios may sit now that we are at the end of 2025. Clearly equity markets have done well and we do now see breadth creeping in, not only to markets themselves but also by investors seeking to diversify into other cap sectors and other asset classes. Bonds remain expensive, so are less interesting as return drivers, and we continue to stress diversified (global) equity exposure as strong growth drivers as well as infrastructure and real assets, which build in both diversification and inflation resilience.

Finally, we wish all of our listeners and followers a wonderful holiday season. See you on December 26th for our next episode, and thank you for your support in 2025.

Today’s Markets Happy Hour Podcast is recorded live in St. Louis, just ahead of the holidays, and features a wide-ranging and candid conversation with Stephen Douglass, Chief Economist at NISA.

We begin with an economy “vibe check,” exploring the growing disconnect between headline inflation data and lived experience. From partisan consumer sentiment to the K-shaped reality facing households and businesses, we discuss why inflation still feels very real for lower-income consumers even as markets remain buoyant.

We then turn to monetary policy, unpacking the high probability of a near-term Fed rate cut, the concept of “risk-management cuts,” and how the Fed is balancing downside labor risks against renewed tariff-driven inflation pressures. We compare the US outlook with other major central banks and ask whether policy rates may now be flatter — and higher — for longer than markets expect.

A deeper dive into fixed income follows, focusing on why bonds are behaving unusually. Despite tight credit spreads, all-in yields remain attractive, raising important questions about portfolio construction, liquidity, and the growing fragility of the Treasury market as supply rises and traditional sources of demand wane.

From there, we explore the K-shaped economy across multiple dimensions — consumers, corporations, and capital markets — including why large firms continue to add jobs while small businesses shed them, and what that means for the resilience narrative.

We spend significant time on private credit, examining where stress is building beneath the surface, the rise of PIK interest and “extend and pretend” dynamics, and why headline default statistics may understate the true level of risk. This leads naturally into a discussion of private equity, venture capital, and whether the current wave of retail democratization is well-timed.

Turning to real estate, we assess surprising shifts in vacancy rates across industrial and residential markets, alongside emerging shortages in top-tier office space. We also touch on data centers, infrastructure demand, and the energy and power implications of the AI build-out.

Finally, we tackle equities and AI, discussing valuation concentration, bubble dynamics, and why timing matters as much as narrative. We close with a sobering look at US fiscal sustainability, the limited policy levers available, and what all of this means for investors as we look ahead to 2026.

As always, the conversation ends with a clear focus on what these macro crosscurrents mean for real-world portfolios.

Today's Markets Happy Hour Podcast is live from Miami, and was kindly accommodated by the ALTSMIA conference in Miami. We start with a discussion of an economy vibe check where one guest describes a basket of identical goods being tracked from Whole Foods, which is up a whopping 30% year on year - significantly higher inflation than is being reported in the data.

We turn then to the seemingly high probability of a US rate cut this week, and compare the trajectories of other central banks, which, interestingly have been thought to have reached a bottom in terms of rates again after some stabilization. Moving to equity markets we reflect on what our expectations were at the beginning of 2025, and whether the concept of resilience to threat is going to be "forever" or whether we should still be mindful of cracks that can be seismic to a sector such as banks or private credit.

We look in particular at real estate and some of the bright spots (e.g. London office) as well as the warning signs - e.g. vacancy rates ticking up in residential and some areas of industrial. We also examine some stats regarding private equity and venture capital returns and ask whether now is the right time for democratization.