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.

As we race to year end it is the time for Market Outlooks, although this year it seems that the funny holiday videos have outpaced Market Outlooks in fanfare and promotion.

In this podcast we summarize some of recent market outlooks and question their utility. There is another kind of outlook that seems quite a bit more useful however - this Tech in 2025 Outlook from the Wall Street Journal. We go through some of these forecasts and look at their likely implication for a portfolio. See: https://www.wsj.com/tech/personal-tech/life-changing-2025-ai-ev-self-driving-tiktok-c2d5c80b?mod=wknd_pos1

We also cycle through market performance in the last trading week of the year and discuss some geopolitical skirmishes that are lighting up our news feed but have received little enough attention given the holiday week. We spend a few minutes on the invincible US consumer too - comparing their savings rates to that of Europe but also question whether the divergence in high and low earning consumers is a sign of the K shaped recovery that seems to characterize the current "soft landing".

Thank you for tuning in to the Markets Happy Hour Podcast this year and see you in 2025.

In this special live podcast we host an audience in Chicago - we cycle through our usual indicators that are relevant to putting an investment portfolio into context. These indicators are inflation, interest rates, equity markets, other assets and geopolitics. Our podcast came right after the Fed's third rate cut, and we debated whether inflation was ultimately in retreat, as well as the fundamental differences between European markets and US markets. The topic of the day is the questioning of American Exceptionalism and we examine investor exuberance around equity markets.

The Markets Happy Hour Podcast has its roots in the virtual "water cooler" discussion about markets and implications held weekly at Moneta every Friday at 11 am. While we moved this to a "Tea with the CIO" and now a "Markets Happy Hour" we have rarely made it a live discussion with a live audience - until now!

Welcome to our first such discussion, live from a bustling Dublin City Centre and the Daly Room at Trinity College Dublin, Aoifinn's alma mater. Hot on the heels of an Investment Committee Meeting of the Trinity College Endowment, Aoifinn discusses:

The intense geopolitical developments of the past 5 days - including regime change in Syria, and what this means for the distribution of power in the region, and particularly the influence of Russia and Iran.

The triumph that France experienced amid its political chaos - as world leaders attended the reopening of Notre Dame after a devastating fire.

Whether this is evidence that perhaps a counter-narrative to the "Europe is past its prime" argument should emerge. Other evidence of this is the pending need to spend up to 500 bn Euro on defence, as well as the post-Covid recovery trajectory actually being quite a normal one for the region - it being the US recovery that was an outlier.

On slide 8 and around the 11 minute mark I say Intel instead of Nvidia -It was Nvidia which reached $3.4 trillion in market cap rising by 816% since February 14, 2021, while Intel lost 59% of its market cap over the same period*

5 days in to our Advent Calendar and already December has provided lots of tricks and treats.

We have seen more market highs in the US, and illustrate why America First just keeps going - more than ever.

Over the last decade, in price terms, the MSCI Europe has lagged the S&P 500 by an average compounded rate of 7.7% per year, while the MSCI Emerging Markets has lagged by 9.6% - this is meaningful underperformance that is naturally leading to big investor questions.

The strength of the US stock market is also evident in company fundamentals too - earnings and margins and pricing power are all more robust in US companies.

We look around the world to crises that have emerged in unexpected places - such as France and South Korea and look to other winners and losers. Will the incoming SEC commissioner mean "the end to a non-stop anti-crypto crusade?"

Find out why after coming for our coffee they may also be coming for our chocolate!

This Thanksgiving 2024 it seems appropriate to reflect on where we were this time last year and what we have to be thankful for:

• Inflation - being in check and certainly in reverse since one year ago
• Economic Growth - steady as she goes, although struggling in Europe Mortgage Rates - slowly tracking downwards although far from last year's 22 year high (USA)
• The US election campaign is over - regardless of the outcome, the end of the campaigns in this Election Year like no other is something to behold
• Soft landing - the fact that we have had one, should not be taken for granted

We then move to look at some of the positive developments around employment and house prices in the US, the negative headlines around France and Germany and how we are trying to figure out tariffs and they likely impact.

Incoming Treasury Secretary Scott Bessent has an interesting take on tariffs- claiming they are not inflationary as they do not put more money into circulation but merely take it from one expenditure and towards another. This is an intriguing perspective, which may underestimate the ability of the consumer to borrow to plug a gap if higher prices stretch them more or of their ability to drain savings to do the same.

Overall looking at history is not as instructive as usual these days, given the fact that inverted yield curves, rate hiking cycles and soft landings did not play out as the history books might have suggested.

Happy Thanksgiving to all.

Market Banter, not investment advice.