UBS' MacLeod on Trade, Investor Sentiment

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00:00What did we talk about?

00:01There's so much to talk about, David.

00:03Where do you want to start?

00:04Okay, the big topic clearly was trade and the uncertainty that that's created.

00:09And I'm wondering, are we any closer to certainty?

00:12How are people managing what seems to be uncertainty is really having its moment?

00:19David, there's always, as we know, there's always uncertainty in markets.

00:22There's always a topic that people are uncertain about.

00:24But I think what's made this much harder is the backwards and forwards, the persistent

00:29uncertainty, the political uncertainty that adds a totally different dimension to what

00:33investors are normally facing.

00:35And it has been the topic of interest for the last four months.

00:38When we were putting this conference together nine months ago and you're trying to think

00:42about what the key themes are, to be honest, we were a little bit fortunate in a sense that

00:47we'd asked Pascal Lamy, the head of the WTO, the former head of the WTO, to come.

00:51You're not entirely sure if tariffs are going to be quite so relevant at that point in time.

00:54But of course, given what's happened over the last four months, that's been incredibly

00:58important.

00:59And the tariff issue is the number one issue for clients.

01:03But you talked about the uncertainty.

01:04We have this court ruling, you have political change.

01:07The backward and forward, that volatility, I think, is really the key issue that investors

01:11have been struggling with.

01:13I'm interested to see if you could give us any insights into some of the sessions with

01:18corporates, because that's really how the rubber meets the road here.

01:21And what they're saying and how they're coping.

01:26Well, look, one of the great things about a conference like this is you've got so many

01:30corporates speaking that if you're a fund manager, you're getting terrific data points.

01:34We've got 350 companies here.

01:36That's, just in context, about half of Asia and Japan's market cap is here.

01:40So, if you're an investor and you want to find out issues like tariffs, this is one of the

01:44reasons why you've come to a conference as big as this.

01:47So, to your question about what are we hearing, it's an issue for companies in the sense that

01:51they, too, are uncertain.

01:53We're not actually getting many data points that companies are seeing that are showing

01:57up in revenues.

01:58So, there's nervousness, as there is with investors.

02:01The hard data is showing the same sort of thing, which is elements of slowdown, elements

02:06of concern.

02:07But we're not seeing consistent weakness yet, but companies are nervous about it.

02:11They're more nervous about what they think is coming down the pipe than what they're seeing

02:15today.

02:16The effects of volatility that a lot of this is causing is also a concern for them.

02:20And there's some preemptive behavior in terms of cost cutting that they're putting

02:24in place just to try and manage through this uncertainty.

02:26So, we're in a slightly strange position where nothing's really hit yet, but everyone's

02:32watching and very nervous of it.

02:34How would you describe, if we could sort of summarize investor, market sentiment, investor

02:41sentiment, how would you describe that?

02:43Nervous.

02:44OK.

02:45I think people are, we've obviously seen the rebound over the last couple of months.

02:50It's made people a little bit more relaxed than they were, but there's a nervousness.

02:56Where does the cycle go?

02:57How much more of a slowdown do we get?

02:59What happens with monetary policy?

03:00What is the ebb and flow on the politics?

03:02Do the tariffs come in?

03:04Do they not come in?

03:05So, that nervousness, I think, is really underpinning what's going on, and it's back to this issue

03:09of uncertainty.

03:10It's always there, but it just seems incredibly housing compared to what it normally would be.

03:14Is there a consensus on US exceptionalism fading?

03:18To a degree.

03:19One of the interesting statistics of the conference is we were up about 50% from last year in terms

03:26of overseas visitors from outside of Asia-Pacific, which is probably indicative of the fact investors

03:31are looking at alternatives.

03:32Of course, when markets move and the US is on to perform, there's always a bit of backfilling

03:37of those stories, just as there was when the US was doing very well.

03:40It was easy to describe that about exceptionalism.

03:42Certainly, when we look at the number of participants from overseas, there's more interest in Asia.

03:46And my colleagues in Europe tell me the same thing about Europe as well.

03:49So, yeah, I think there's certainly a looking for alternatives.

03:52Is there anything we missed?

03:54Clearly, this has dominated most things, but you guys have put in a terrific program across

04:00different tracks.

04:01What did we miss?

04:02What else stood out to you?

04:03Well, yesterday was all about the macro, largely.

04:05So, you've had Olivier Blanchard earlier on today.

04:07We had some fantastic economics panels.

04:09We had a great political panel.

04:11Populism is obviously such a key determinant of what's happening on and shaking, or at least

04:15shaping the parameters for the economics.

04:18Pascal Lamy on tariffs.

04:20One of my favorite panels yesterday was with Maria Konnikova talking about uncertainty.

04:23How do you deal with it?

04:25And she's a well-friendly poker player.

04:26Professional poker player.

04:27Yeah.

04:28So, what can you learn?

04:29How can you deal with these issues?

04:30So, that was terrific.

04:31Today, the focus shifts a bit towards tech, and especially to AI.

04:35That theme is just getting more and more important.

04:37We've had Microsoft on this morning talking about just the pace of the rollout of all their

04:43products from co-pilot right the way through to AI-enabled cloud.

04:46So, a lot of the panels we've got today are focusing on energetic AI, what it means for companies,

04:52what it means for cybersecurity, what it means for robotics.

04:55And I'm pretty certain those panels are going to be very full this afternoon, as they were

04:59yesterday as well.

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