00:00Short-term markets don't seem to be too perturbed by what's going on in Washington.
00:05I think the markets have always kind of made an assumption that there will be a deal.
00:09How long it takes was always a toss-up, but it looks like we are on the cusp of getting that deal.
00:14I think the markets are comfortable with it, but the markets always had a view, I think, that we were going to get a deal.
00:19Right.
00:19If we get this slew of data that's been so delayed, what are we going to be watching out for the most in the next few weeks and months?
00:27I think it's still the fundamentals, which is really what's happening in the labour market.
00:31Is employment actually likely to fall in one of these monthly readings?
00:35There was expectations of that potentially for September.
00:39Looking at the ADP data that suggests September could have been very weak, but October a little bit better.
00:44I think for the Fed to cut, they need to see some weaker data here.
00:47And so the market, I think, is very focused on that.
00:49And then, obviously, to what extent does core inflation continue to creep up as the tariffs come through into pricings?
00:56So we're entering, let's call it, the last six weeks of 2025.
00:59What are your team's suggestions and recommendations now across assets?
01:04Looking at it, as we wrap up, really, what's been a terrific year for risk assets.
01:07Yeah, it's been a fantastic year, despite some incredible volatility in between.
01:10Yeah, if you watched TV, you would have thought the world was ending.
01:12It did at one point, but then it revived itself.
01:15So, look, I think six weeks is a very short period of time, so to some extent we'll need to look well beyond that.
01:20I think the markets right now are going through a bit of a consolidation phase, precisely to your point, David, that we've had this great rally.
01:27The markets are needing to digest that.
01:29But I think our view is that the fundamentals, as we look into 2026, remain relatively good.
01:34When we look at growth in particular, macro growth, economic growth, we actually think this soft patch of weaker employment is going to pass.
01:42And I think the economy digests the higher tariffs.
01:46You know, one of the challenges with tariffs has been is that tariffs have come in, prices have risen, but wages, you know, usually get reset once a year for most people.
01:54You know, it's, you know, different times for different people.
01:57So the tariffs have come in, they've actually hurt real wages, and we've seen U.S. households, particularly the lower end, weaker households, struggling, and that's what we're seeing now in autos.
02:06But we think as we go into 2026, on the one hand, the tariffs are set, because we still have the issue of the Supreme Court, but in one way or another, the tariffs are probably going to stay.
02:19But wages will start to go up again next year, and so real incomes start to revive, and we think growth with that starts to pick up.
02:25So the fundamentals in terms of growth is good.
02:29The Fed debate, two cuts, three cuts, but at least we think at least two cuts.
02:33So you've got lower interest rates, you've still got decent growth, and corporates are outperforming the economy massively.
02:40We think that continues.
02:41It's a tech thing.
02:42So we have that.
02:43That is what we think is going to drive markets.
02:45Against that is the fact that a lot of it is in the price and valuations are high.
02:48And so there's this battle between great fundamentals, very difficult valuations.
02:53And the way we try to reconcile that is we lean into the fundamentals, but not all the way.
02:58The valuations just affect how much magnitude we want to take.
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