With 4 days to go until inauguration markets have been vacillating between enthusiasm and trepidation about the expectations for the incoming Trump administration 2.0. We know that policy change on the horizon will be abundant, and much of that is already being factored in, with companies such as Meta, McDonalds and Walmart preemptively abandoning DEI programs such as diverse slate hiring and even DEI training, and disbandment of asset owner alliances relating to Net Zero commitments.

There has been more volatility in fixed income markets as we ask whether the stock market is starting to heed this volatility, and clearly incoming treasury secretary Scott Bessent is not in favor of removing tax cuts, so the governments potential actions will be limited when it comes to fiscal flexibility.

An Israel-Hamas ceasefire bodes well for that region's stability, while the review of the ban on TikTok in the US reveals the deep insecurities and suspicion around data usage, secrecy and cybersecurity.

Lots of newsflow as we embark upon regime change in the US as it continues to demonstrate its exceptionalism particularly with respect to the economic outlook.

In this week's Markets Happy Hour podcast we were sadly not live from Dallas, where we had hoped to be hosting a group of you at the gorgeous Old Parkland campus. Unfortunately a forecast winter storm got in the way of our plans, and we will be rescheduling that for a later date - hopefully well out of the winter storm woods - in April.

On a day that markets are closed for President Carter's funeral, we reflect on some unease at the start to the year, and the return of the good news is bad news conundrum. The "good" news in this case was the positive US employment numbers and a revised (upwards) PMI which only gave more substance to the notion that the formerly predicted pace of rate cuts would not happen (10) as expected. The expectations are now around 6 rate cuts, 4 of which have already happened in the US.

The bond market continued to swing around quite wildly, with the yields on 10 year bonds rising sharply - and this was a global phenomenon. We discuss how certain markets have more intrinsic resilience around these developments that others - with a case in point being the UK which is experiencing perhaps some PTSD around the Liz Truss Mini-Budget chaos of the end of 2022, and fearing a similar sell-off.

We move then to discuss the "message in a bottle" whereby geopolitics are moving around the volatility of President Trump's tweets - in this case with respect to Greenland, Panama and Canada, and we ask if this reflects a fundamentally different world order with different security concerns etc. Finally we turn to the devastating Los Angeles fires which continue to burn at the time of writing, and ask whether we need to factor this risk assessment into all investments - particularly real estate - in a more intentional way.

In today's slightly shorter New Year edition we reflect on a chilly start to the year - both literally and metaphorically. The New Year's Eve terrorist attack in New Orleans in the US was a chilling reminder of the near-shoring of overseas terror, while the death of President Jimmy Carter at 100 crowded out some of the chatter around the incoming President Trump.

Otherwise all forecasts are centering on Maganomics, and the future looks bleak according to the 222 economists surveyed, not only for the US but especially for its trading partners. We should caution, however, that many economists predicted a recession in 2024 that did not come to pass.

The ongoing volatility in bonds suggests that fixed income investors continue to be concerned, whether about the budget deficits or coming spending, and this begs the question as to whether central banks actually have the control they used to - or whether control is waning - can monetary policy actually move the needle - to stimulate the economy (as is needed in the UK and the Eurozone) or to choke off activity - as was intended with the recent run up in rates.

We then turn to whether the Fed can be accused of flip flopping, due to its strict data dependency, when data has, admittedly, been quite varied, and without a particular patter. So a lot more questions than answers this week, but that is a good, open-minded way to approach the year.