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Welcome to the Marrion Talks Money Market Rap.
We were talking about the biggest weeks on the market this week and what is driving them.
I am marrion' dunset, web editor at largely Bloompogy.
Go well, and I'm joined Stowic senior reporter and author of the award winning money Distilled News Later.
Yeah, don't you You've got to say, and I'm just saying, right, how long ago is that award?
Edge cool Movie's a couple of years now. Yeah, for some more, I.
Think we should enter for some wards. I do know what entering for awards is really boring?
Admin?
If anyone knows of any wards that we can be entered for without having to do any admin at all, and it will probably win deeply to let us know, because that's a lot easier.
Maybe they could get EI to do it. Ei to do it. I was like, meant to be good for boarding paperwork, but.
Also makes mistakes, make mistakes. What have it entered us into?
I don't know, sports podcast complication or something like that.
If we win.
One of those competitions, are only people with the correct ideology.
When that's going on.
We don't want any of this anyway.
I wanted to move straight from that onto things people don't deservetles, brutal markets.
So here we are.
There's a lot going on. The world is changing very dramatically. Geopolitics is absolutely nuts. We've talked over and over and over about how the world has changed as it is material stuff, not ethereal stuff that matters.
All these things we've talked about over and over.
We can look around us, we can see the geopolitical conflict, we can see the risks of further geopolitical conflict. Very good podcast coming out on the on Monday, by the way, do you watch out for it. And even though all these things are happening around US, erratic leaders, bizarrely lefty leaders, all these things, markets are.
At new hives.
Sure, so the S and.
Pes keeps going up back where it was the Japanese market is that you know.
This year, John, help me out here. It's going on. Can we really can we really look through all this? We can look through.
An energy crisis, we can look through in actual war and say it's okay, now that's really mad.
He is.
Let's think instead about earnings forecasts for individual companies.
Said, I just don't think so, and I don't like saying that because I hate seeing the market is wrong exactly because.
The market is wrong. It's so arrogant and it's so ridiculous happen.
You know, when a market is wrong, where a market is right, the market is a whole maybe picking up thing that you and I don't understand, maybe ridiculously pessimistic.
We maybe do cinnicle, We may not understand something. They would say, the market is wrong, the crowd is wrong, right, embarrassing.
Not all I've learned plenty of times in the past that you know, yeah, if you think the market is wrong, it is probably not. The market is probably you. And also, you know, geopolitics famously doesn't affect markets that much for that length of time. Usually, you know, it's every time something like this happens, you get a big list of all the other times like crazy things happened, like GfK
getting assassinated barely put a dent in the market. You know, even something like September eleventh didn't put a big dent in the market relative to the economic stuff that was going on at the time. So you know, we sort of should have learned from that. But at the same time, I mean, this is a very clear escalation down the road to the kind of world that I suppose we've been on and off, you know, I good few a lot of years now.
Well, I suppose the key point is that it's not just geopolitics, right. We know often when we're talking about geopolitics from something very far away that doesn't have a particularly impact on your day to day life. This isn't just geopolitics. This is a massive, massive, one of the greatest energy shocks that you and I have known in our careers. So it's going to affect not just the price of energy, but the price of everything else. That's
going to affect everybody's cost base. It's going to feed through into inflation. It makes although the Bank of England governor in the UK this week has been talking about her we shouldn't jump the gum on rate rises and he doesn't know yet and don't assume there's going to be a rate rise after rate rises?
Who can possibly tell that not jump the gun excepter. But nonetheless, we.
Know that in an inflationary environment, and we are now in an inflationary environment, that's going to feed through.
Into great rises. So this is not distant geopolitics.
It's slow burn right, And there's I was talking seven earlier in fact, on my podcast That's the Monday, who was pointing out that this is a crisis that moves at the speed of a tanker fifteen miles an hour something like that. So it's slow burns. It's easy to forget quite how serious it is. But it's not small. It's big. And I find it extraordinary that everyone can just look through it and market can be back at their house.
And I suppose part of the problem is that the oil price itself, although it's gone up an awful lot, it's not going up as much as it did, say in twenty eleven, or even in twenty twenty two. I think that's maybe one thing. Well, the most visible oil price hasn't. I'm vaguely aware that lots of other things
kind of have. But I'm also wondering if this is one of those situations where it's a little bit like we keep getting We've talked about this before, but the idea that the wake up call that we all get this time round is not going to be a price shock, is going to be an actual shock, you know.
I mean, I'm.
Hearing people talking about kind of europe run jet fuel, you know, in like six weeks reach John.
But I'm both beginning to.
Great exactly exactly would someone think of the tourists. I mean, but it is whenever things like people get their holidays canceled because there just isn't a flight anymore, that you know, maybe we start to see a panic. And also, I guess the other issues. America is still by far the biggest stock market in the world, and it is to a great extent the police that is most insulated from this because it actually has its own energy. So I do wonder how much that's got to do with it.
And also the constant talking de escalation. I mean, nobody, we're still in a place, I think where nobody wants to get caught on the wrong side of a massive bounce in the market. And that's why we actually haven't had a big fall at all, because everyone actually has been buying the dip basically all the way through this. And that's one also, I mean arguably, I mean, I think it's very hard to say that trumps necessarily thinking, particularly strategically, but I do think that his kind of
strategy would be the wrong thing. It's just instinctively got that ability. It's on the poke people in the vulnerable spot. And he keeps doing that whether it looks as if anyone's going to give in to you know, disappaired as it well.
Yeah exactly.
So you know, everyone is frightened that they're going to end up missing out on the piece. And Dena has a phrase for it, fomo opp.
For fair missing out on peace on pace of of course. Oh yeah, oh yeah, okay.
By not being fully invested.
When it turns and add that to S and P five hundred, earnings rising at a very fast pace, and suddenly everything kind of looks okay, except that it kind of doesn't.
How can they be rising? This is the thing that I do struggle away, the idea that earlings are going to rise even the low all these costs of residents like we I mean, okay, I guess the other thing is just general and I think general inflation has sort of because we live in this much more inflation in the environment. I think prices are probably less reliable in a lot of ways than the you know, than they
have been. That's a very vague feeling. But I think it's when the recession, for example, it's just because there's a load of money constantly going in with her, and it's always hard to actually measure things in real terms.
All right, listen, I'm going to introduce yet and the new what we've had today, we've had it's just forgotten already, fair of missing apple piece. And then there is another one in circulation, the biffs.
Ah, yeah, we've heard this one this morning.
It's remember the pigs right around the pigs, etcetera, etcetera.
Now we have the.
Biffs, who are the three European economy as well Europe plus US who have the nastiest debt problem. So the biggest rises in borrowing cross from mccustomers likely to find themselves and come home of physical crisis, and they are Italy, France and Britain. The best of our round Britain franceff. I don't know anyway, We mustn't we mustn't do French. Remember what they've talked about us.
Doing French before. The listeners don't like it.
Anyway, So we have this, and this makes you look at the UK, and we do have to think about the UK rise we've got this incredibly high tax burden already, we've got this.
Awful physical problem, incredibly a.
High level of debt to GDP, and a government that keeps promising more spending on anything except for defense obviously, which seems to be the one thing They're not prepared to shine anything up. And at the same time we have this really odd dynam this report out recently when everyone knows that that UK GDP per head is but not everyone actually, but we know that UK.
Gdpeeperhead is bizarrely low.
And there was this and the last few years everyone was looking at UK gdpeeperhead relative to gdpeeper per head in Mississippi, which is the poorest state in the US.
Are we going to slip follow them or not?
But there's recent study looked at how rich most people in the UK think the UK is. So it turns out that in fact, the majority of people in the UK believe that the UK is rich rich, like Switzerland or something like that. Now, crucially, it is absolutely true that the UK has one of the biggest economies in the world, right I think we're number six.
Number six.
Having the sixth largest economy in the world does not mean that your individual members of the population are the six richest people in the world. Because, of course, when you break it down to GDP per head in the UK, things have been absolutely horrible for decades. Real inflation adjusted gdpeeperheads literally barely moved for twenty years since the financial crisis, So in fact, individually we're really we're very poor.
I mean, well, it's interesting because someone pulled the Green Party leader Zac Polanski up for this on Twitter the other day. I noticed because he described the UK as being the sixth sixth wealthiest country in the world, and the two things are not the same at all, And I do think, I mean rather that suggested to me that, I mean, obviously people use these terms sometimes with a kind of mendacious intent they wanted to sound as if we're richer than we are. But also think a lot
of politicians are genuinely confused. It's like back in the day whenever David Cameron used to get confused with deficit and debt, and one thing that most politicians didn't seem to have a handle on is what was the difference between your annual deficit and the overall national debt? And they would use the terms interchangeably that's stopped because of I guess I kind I would say a kind of media education campaign. Actually maybe this will be the same
with gdpeople head. But yeah, no, it's pretty disastrous. But I thought you were making a really good point about how that can this kind of miss and misperception explains why people are so angry angry.
Yeah, and I think it might.
I mean, one of the one of the problems we've had in the UK is people simply not getting richer gdpeper head in real time, simply not going up. So your life one year of the next, one year of the next, one year of the.
Next is not improving. It's not improving, and that's going to make you pretty irritated to begin with.
And if you believe that the UK is a very rich country but you are not getting richer year after year after year, you must think that there is money somewhere that other people have and you should have.
And I think that's.
Where we get this demand for wealth taxes and this redistribution and all this sort of thing. It comes from this idea that everyone feels that they are pull but looking at the numbers, maybe everyone else isn't.
I think there's probably a lot of truth to that. I mean, I do. I think there's a lot goes into the general kind of sense of anger, and there's ploy all kinds of things tied up with anxiety and chaos and the sense of a lackey control over one's own environment. But definitely the idea that other people must be doing better than you, because how else do people
afford all these rising prices? And yeah, the promise is also it's going to make things worse, because you know, I was just we just saw that some of the SMP did their manifesto this morning and one of the things that they've explicitly said they'll imposes price controls on the price of essential goods. And I kind of like, well, man, you can't have a maximum price for bread and milk, surely in the UK. This is not South America circa
the nineteen seventies. This is you know, this is even more obviously disastrous and rent controls, and you know, we've talked about them enough times and yeah, this is the sort of thing that people are talking about, you know, and the Greens talking about how there should be a no bigger gap between the highest paid person in an organization the lowest paid than a kind of issue of you know, ten to one. So we really are looking at some really pretty radical suggestions.
On going down to that idea of the top which should not be more than ten times a lower wage, etcetera.
I mean, they're talking about pre tax and pre welfare.
And one of the things that you and I were looking at last week, was it last week or the week before, was the extent of the compression of net incomes in the UK?
Yes, and such that.
After tag ex after the endless benefits paid to working people, that gap is already down to not much more than three times.
I mean, it's really fascinating.
Wasn't it. Wasn't it the statistic that somebody had found that Britain, in terms of income equality was had actually achieved greater kind of like compression. And then the Soviet Union. Yes, yeah, So I mean, well this is the other night you think like a lot of people still believe that not. I mean, wealth inequality is a slightly different issues, more complicated, it's hard to measure, but income an equality is definitely going down. It peaked in about two thousand and seven
and it has gone down significantly since then. That you can. You cannot make the argument that income an equality in this country has gone up, and yeah, lots of people do so, I mean, yeah, I think there's a lot to what you're saying about people just thinking who the hell has got all the money? Because I know I don't.
Yeah, but I suppose that. I mean.
The key thing with you, however people feel about it or don't feel about it, The key thing is that it is proper economic growth, the pie getting bigger round that makes people happy. And that's why governments are always so desperate to talk about growth.
And we're going to get growth, and we're going to get.
Growth because you say, what we really need them to do is start stop talking about growth and start talking about grow head individual incomes rising.
And they don't because of course we judge.
Them on growth, Delware glimally everyone checked out these jdpumber They didn't talk about individual anyway. We're getting bogged down, John, We're getting bugged down interesting and it is worrying. We better say something else in that market.
Do you know what? It's something I wrote about this week The listeners might find interesting if they didn't read it, because it actually contained something approximating that kind of share tip in it was do you know how the other day you had a very good podcast with the Yanish Maraki, who was great. I thought it was a great guest,
really interesting. It was basically talking about how AI is quite possibly massively overhyped, and I was on the look at all the software as the service companies that sold off in the UK, and there's still so they took a dive in January and they're still sort of floating around the same level that they bottomed out in February, and I was just thinking, if you're looking for a hedge and an easy hedge against massive EI disappointment, then maybe buying a small basket of those stocks would be
quite a good diversifier for your portfolio. And conveniently they're all held by Nick Train's investment Trust, So I thought, as is quite an easy one to.
No.
It's been doing atrociously, like really badly, and for a good reason, because you know, the the quality style has been out of favor. It's the same way what's his name, Terry Smith, this sort of stuff has done poorly. But looking at again, you're kind of like, well, over fifty percent of the portfolio is in these you know, stocks that have been battled by the idea that AI is
going to destroy their business models. So maybe if AI does turn out to be incredibly disappointing, then that will benefit.
From it the pleasure to go maybe maybe one of these portfolios and has quite a lot of them in luxury good.
No, I don't think that one is in Diageo or but also inshrewed those which obviously did already because it had our bed for it. So I don't think you know it's Budby. It's called Baldbury, but again.
That that's what I was thinking of. Is that a luxury good.
I don't know much of it fashion obviously, but I've always been a little bit skeptical of the idea of Budbury as a kine you know. I mean, it's always had that problem, hasn't it. I mean, anyway, John, I think.
Anyone who's ever seen you on stage at any of our live events would say.
That you know a lot about fashion.
That's that's extremely caned. I'm just gonna let that one sit there with a responding to it.
Okay, and I'm going to end our conversation and just leave that one.
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