Today's number, $33,000. That's how much

the average wedding cost in 2025. Ed,

true story, on wedding night, my wife

said to me, um, my ex-wife I should add,

said, "I've got very good and very bad

news. It's going to make you very happy

and very angry." And I said, "Let it on

me." And she said, "Oh my god, your dick

is so much bigger than your brothers."

>> What happened to the PG jokes when all

guests are on?

>> I could keep going.

How are you, Ed?

>> I'm doing very well. It's freezing here

in New York. It is unbelievable.

>> Yeah. Do you miss me? You haven't seen a

lot of me in the last month.

>> I do miss you. Where are you?

>> That was very sincere. I'm in Jackson

Hall. I've been in LA, New York, Davos,

and now Jackson Hall, which by the way,

those routes aren't easy. That's not

like there's no airline that has direct

routes to all those places.

>> There's surely some private air flights.

That's kind of the those are all the hot

spots now.

>> Yes. And don't call me Shirley.

>> What are you doing in Jackson Hall?

>> I'm speaking. Am I allowed to say this?

I'm at the annual meeting of

>> You're not allowed to say it. Sorry.

>> He's at an Illuminati meeting is what he

means to say.

>> I'm the keynote speaker at a And notice

how I said keynote, not just I'm a

speaker. Desperate for everyone's

affirmation. I'm a speaker at a

conference of an investment bank that is

here in Jackson. All that's all I'm

allowed to say.

>> Not do not doing a good job defending

against the Illuminati rumors. What's

going to happen? Are we going to

sacrifice babies and

dance in a circle at Bohemian Grove?

What? How does it work?

>> No, no, no. At 3:00 there's mountain

biking and then at 4:00 we have

redrawing the maps of the world in the

the lounge downstairs

and income inequality. How How to Make

It Worse. That's at 4:30.

>> Yes, that sounds like good fun.

>> And then Yeah. And then I'm going I go

back home on Friday and I'm spending a

[ __ ] ton of time trying to organize and

get some traction around this national

economic strike. Everyone's calling my

bluff and saying, "Okay, [ __ ] get on

with it. What do we do?"

>> Yeah, it was interesting that that got a

I mean, it got a lot of attention.

Basically, Scott on the other show, uh,

as I always call it, the show that will

not be named, Scott discussed the

implications of what we should be doing

about ICE and suggested that one way to

fight back is to just go on a general

economic strike, bring down the GDP of

the nation, and that could

uh create some incentive to change

things. It got a ton of feedback. Um, I

know you're not on Twitter, but I mean,

you were all over my Twitter feed. A lot

of people were talking about it.

>> Did they have me in a bikini?

>> Not yet. Not yet. But I can speak to the

people at X make it happen. Um, what did

you make of the reaction from the world?

Um, I I I was honestly I wasn't

expecting that people would have such a

visceral reaction to that comment. I've

heard from governors,

uh, actors,

economic ministers saying, "Yeah, it's a

great idea. What are you going to do

about it?" So, literally people are

saying, "Okay, ch people are calling my

bluff." So, this morning I was on the

phone with Katherine Dylan putting

together a website trying to figure out

how I'm going to curtail my own

spending. But the basic logic is I don't

believe that I think protests are

powerful. Political parties don't start

movements throughout history. It's

people and political protests are very

cinematic. They make people feel good.

But I would argue over the course of the

last couple years, we've had some really

dramatic protests, including one of the

biggest for the no kings movement. And

then we feel good and then nothing

happens. And I just think we need to be

more strategic about this and say, what

is the strongest weapon we have? And in

America, consumers control 70% of the

economy. And at every moment, we are hit

with incredible offers to spend more

money. And it's striking how little a

slowdown in spending would dramatically

roll the markets. I'm like, well, let's

go for the soft tissue. Let's go to the

epicenter. What? Well, how do we start a

chain reaction? What's the grid where we

fire photon tubes into it and takes down

the entire death star? And what I've

circled in on is AI. And specifically,

if chat GPT, just as an example, if we

could convince a bunch of people to

unsubscribe in the month of February,

I'm calling this movement unsubscribe

February or resist and unsubscribe. If

Open AI were to see for the first time

in its history a down month in

subscriptions, they would have to report

that to other investors. I think it

would send a chill to Nvidia, Microsoft,

Amazon. If people cancel their Amazon

Prime, their Amazon TV, their Apple TV

Plus, put off buying an iPhone for a

month. I think that any significant

move, anything, not even an

insignificant move in the subscription

rates and the revenues of these

companies would have to be disclosed.

And I think you would immediately see a

reaction across these companies

valuations. And then given that 40% of

the S&P

is represented by these companies, um

you would see potentially just a

dramatic echo effect and that is a chain

reaction. And if you look at Trump, he

doesn't respond to citizenry, doesn't

respond to shame, doesn't respond to the

media. He responds to the markets. And

that is the only times he ever backs

away from this weird behavior is when

the equity markets goes down. He

withdraws from this these [ __ ]

tariff when he draw or an invasion of

Greenland. The when the Japanese bond

market got wobbly, he backed away from

tariffs. And in recent history, the

greatest political action in history in

terms of action and speed was exactly 6

years ago. And that's when in Q1 of

2020, COVID hit. You saw literally the

government move on a dime. Tons of

stimulus, tons of mandates. Whether you

agree with them or not, we've never seen

that kind of political action globally

in history at that speed. And it wasn't

because people were dying. That's where

they get it wrong. It's because GDP

plunged 31%.

The most radical act of protest in a

capitalist society is nonparticipation.

So, it's less about ideology and cinema

and just more about mechanics. So, I'm

trying to figure out a way to start a

movement. And I believe so many people

have moved from the indignance part of

the program to okay, what the [ __ ] do we

do now? And my thesis is that the

easiest way to create a dramatic

reaction that the administration has to

listen to is a very targeted surgical

national economic strike. And that's

what I'm thinking about and trying to

organize. Yeah, I like the emphasis on

targeted and surgical because I think

one of the criticisms which I think is a

fair criticism is that you don't want to

try to hurt the Trump administration by

hurting

the real economy by hurting regular

American businesses. You don't want to

just, okay, I'm going to stop going to

my local grocery store because I want to

stick it to Trump, which would end up

backfiring on your neighbors and your

local groceryer. But I do like the idea

of a targeted surgical strike towards a

handful of companies that were okay with

being very upset, i.e. the big tech

companies, i.e. the AI companies. But

these are really hard things to

organize. And I think one question will

be, you know, I wonder how many times

you get to play this card. Um how how

possible is it to get people on mass to

strike in this way? because we have

become pretty dependent on a lot of

these products and services. Um, but I

do think it's a really good point and I

think if it can be pulled off um, and it

can be targeted also in its messaging on

on what the demands actually are, I

agree. I think it could be very

powerful.

>> Well, you said a lot there, but one I

agree with you. I don't think it's fair

for, you know, someone with some money

sitting in Jackson Hole to tell people

to stop buying groceries.

>> Yeah. And I think that this also the

onus has to be on some of the most

fortunate above among us who have

benefited from the incredible system of

rule and law which is why I like

>> and who make up half the spending. I

would also just

>> Yeah, exactly. And the reality is I

could take my consumer spending down

30%. The average household can't do

that. They just can't do that. And I in

terms of a target list, my target list

is very strategic. all those sickopants

and people who think if they wake up

with the president's jizz on their face

that he'll take their stock up. And

that's the individuals who went to that

ridiculous meeting and Tim Cook

presenting the president with a an

inscribed hard drive. And I think you'd

be shocked at how I don't want to say

easy it is, but I subscribe to three

LLMs. I'm going to go down to one. I am

thinking about withdrawing my funds and

my stocks from US banks and transferring

them to a Canadian bank in the short

term. I I have seven streaming media

platforms. I'm going to go down to one.

I'm not I'm not suggesting that people

just sit at home. But these companies

are so fragile in the sense that if they

if anything if anything looks like their

growth, their subscriber growth is

coming down. They're going to put off

buying an iPhone for two months. I was

about to go buy an iPhone, a new one.

I'm going to wait a couple months.

>> That's a good one.

>> Uh it has to be surgical. that has to be

around the most overvalued and quite

frankly it has to go after the people

that he listens to. And if if if Open AI

all of a sudden had its first negative

subscription month, it would leak into

all AI companies, 40% of the S&P, and

you can bet the administration would

respond. So, as I've constantly said on

this show, one of my many faults as a

professional has been the difference

between being right and being effective.

I get indignant. I know I'm right. It's

like, okay, great. Now what? If you want

to be effective, an national economic

strike that puts a dent in the growth of

AI centered companies that could start a

chain reaction that would absolutely

freak out the people who the president

listens to and the president himself.

Enough indignance, enough outrage. Let's

move to action. All right, let's get

into our conversation with Katie Martin,

markets columnist and editorial board

member at the Financial Times. Katie,

thank you for joining us.

>> Yeah, pleasure.

>> So, a lot we want to get into here. Um,

I thought we would probably start with

what happened last week at Daravos,

uh, where we saw a lot of controversy

and drama over Greenland, which

eventually led to another taco, which

your colleague Robert Armstrong has

talked about a lot on our podcast as

well. He of course invented the term

taco. We saw another one. I guess I just

start with, what were your takeaways

from yet another taco that seemed to

move markets again? Um, what did we

learn?

>> I think the main thing that we learned

was that this

taco was much smaller than the last one,

right? So, if you look back to April

last year, we had the the announcement

of the big liberation day tariffs and

very quickly markets just got it in the

neck and started falling incredibly

quickly.

This time around, we saw a much more

modest reaction in markets. you know,

stocks, okay, they fell about 2% in the

States. It's not nothing, but it's it's

nothing like on the same scale as we saw

last year. And I think that's because

investors have be become so accustomed

to this idea that Trump always chickens

out, right? He's he's chickenened out on

various things before. He's chickened

out on the scale of the tariffs before,

therefore he will chicken out on on

Greenland. And so I think there's a lot

of people in markets who never took it

that seriously to begin with. Um so I

guess the dangerous thing there is that

it just means that without that sort of

stabilizing force of markets, without

that pressure that comes from stock

markets really taking a serious hit, we

get ever closer to the day where you're

closer to to disaster. You're closer to

some sort of accident. But I think

there's still a lot of people who think

that market's primary function is there

to be as some sort of check and balance

on the president and that's just not how

it works. Something you wrote recently

about the taco trade. You said, quote,

"One of the reasons this moment in

history is such a head fake for

investors is that it demands they do

opposite things at the same time. They

need to shut out the noise, but also

listen to it carefully, ignore it, but

also take some pretty radical action." I

feel like that pretty much sums it up.

And something that we've been thinking

about, you know, something Tom Lee has

said, which I think on the one hand is

true, is that if you want to perform,

outperform as an investor, you kind of

need to pay a lot of attention to what's

happening in the White House because the

White House is moving markets. You need

to see what is Trump's what are Trump's

priorities. What is he who which

companies is he trying to award? Which

businesses is he going to award? That's

something you need to keep in mind. But

at the same time, if you just follow

that, he also tacos half the time, which

means you're going to be whipsed in

multiple different directions and

probably lose money in the process. So,

it's hard to know what rubric to follow.

either you go with what the president is

telling us and and assume that it's real

and follow it or you kind of completely

tune it out. But if you go with either

of those strategies doesn't really work.

So I guess my question like what is the

strategy? How are you supposed to tell

what's real and what isn't?

>> God, I wish I knew. But when I speak to

asset managers, hedge fund managers, you

know, people who run large pots of like

quite conservative pension money, for

example, around the world,

they split into two camps, right? The

there's asset managers who are in the

states who are US dollar-based. They

don't kind of really care if the dollar

goes up or down. It's not that material

to their bottom line and to how their

portfolio performs. they see in front of

them a US market that performs

beautifully and a lot of them really

don't see that much of a problem here.

Now when I speak to asset managers who

are in Europe, who are in the UK, who

are in Asia, they all say a very similar

thing to me, which is no, something here

has broken. The first of all, the dollar

has broken. the dollar is a lot weaker

and it and if you didn't manage to hedge

out that dollar risk last year in 2025

then you had an absolute stinker in US

markets if you're euro based or sterling

based for example so the dollar has

broken down but more fundamentally than

that trust has broken down and so now

you know particularly actually since the

heat really increased on Greenland what

investors are saying to me is that look

we have to accept that we live in a

world that where a president who is

willing to demolish the east wing of the

White House and make threats against the

Federal Reserve and like literally in

real life threaten to invade a NATO

member is willing to do all sorts of

things with your investment portfolio.

Maybe, you know, when people are

wargaming very extreme scenarios, that

goes right up to including is he going

to pay me back on my treasuries or is he

going to get into some sort of argument

with with me or with my government that

means that maybe he won't do that one

day? What's the risk premium that I need

to embed in my US assets to compensate

me for these sorts of risks that didn't

exist before? Also, as you mentioned,

there are companies that he favors and

companies that he doesn't favor. It

makes it a very difficult decision for

for an investor to think, well, do I get

involved in those companies? Do I avoid

them? What are the ramifications of me

selling down a holding, for example, in

a company that that is on on Trump's

good list, if you like? So, there's a

whole bunch of reasons why investors

outside of the United States are saying

we need to hedge our dollar exposure and

we need to diversify. There's a lot of

investors who have just mechanically

churned 60 70% of their equity exposure

into the US just because that's how big

it is in in the global indices. And

maybe that number is too high. So maybe

they need to put more money to work in

Asia, in Europe. And by the way, those

markets had an absolutely fantastic run

in in 2025. So people are thinking very

very differently about what it means to

invest in the US and how risky that is

and what they want to be compensated for

it.

>> Do you think that is the reason why all

these global foreign markets

outperformed the US by such a huge

margin last year? Is this basically I

mean there was talk of the sell America

trade last year which was getting a lot

of momentum and heat early on after

liberation day. Then it kind of

dissipated but quietly at the same time

maybe people weren't putting a lot of

selling pressure on US stocks cuz the

S&P rose pretty significantly around

17%. But as you say all of these other

markets way outperformed the US. Is that

a result, as you point out there, of

these European pension fund managers

deciding, okay, maybe I'm not going to

sell my US stocks, but I'm certainly

going to increase my international

exposure.

>> It's certainly part of it. And look,

you can't avoid the US and you can't

avoid US markets. They are just so much

bigger than European markets. you can

fit like the whole of the Footsie 100

index just inside Apple multiple times

in terms of the market cap. You know

that it it's important to bear in mind

just the sheer size of this of this

thing. The entrances into European

markets for example are much much

narrower and that's why when you have

not even a huge crowd moving into

European markets but just more people

than usual moving into European markets

you get gigantic moves. So you look at

the performance of Spain last year for

example, I think it added 50% in euros

or 70% in in dollars. You know, some of

the moves here are incredibly um

substantial, but it's exactly as you

say. I think it's very tempting to paint

this whole phenomenon as sell America.

It's not quite sell America. What it

means is that over time you take that

allocation down. And I know that's less

dramatic and it might be somewhat less

satisfying to some people, but that is

the reality of it. And it takes ages and

uh I was just today speaking to a very

large pension manager who was saying

we're very conscious that we don't want

to over rotate. We don't want to move

too far out of the US. We don't want to

sacrifice the performance or find

ourselves overly exposed to other small

markets. So, you know, I it's easy to

forget, especially with some really, you

know, large conservative

investors, just how many investment

committee meetings you have to go

through to get to the point where you

take a conscious decision to peel away

from a big global benchmark. It's really

not straightforward. It can take a

really long time. But I do feel like

this is a a durable shift in how global

asset allocation works and that we will

be looking back on this moment in 10

years time and thinking that was it.

That was the point at which the US

started to lose its its global

centrality.

>> You brought up a key point that I think

a lot of market analysts miss or the

media misses and that is while the

headline number the S&P is up 17%.

If you're a foreign investor and you're

one of the many markets where the dollar

declined by 10% basically all your

returns are wiped out. I mean the US has

not been a great performing market for a

lot of foreign investors over the last

year if you take in the currency

devaluation.

Lead into my question

a lot of activity in tumult in the

Japanese bond market. Why should we

care? The Japanese bond market has, as

I'm sure you know, for the longest time,

been aggressively boring.

>> Aggressively boring. I love that. That

describes me at a bar in the 80s.

Welcome to PropG Markets, Katie. I'm

sorry, Katie. The Japanese bond market.

>> Sufficiently boring that genuinely some

Japanese government bond trading floors

have like mini golf set up on them,

right? It's just that nothing happens.

If you get a few slivers of a percentage

point move in one direction or another,

it's a huge drama. Okay, so that's that

era is over. What we're seeing now is

actually quite lasting inflation in

Japan, which they've had the opposite

problem for the past few decades. They

finally got inflation that sticks.

This is a difficult adjustment for the

Japanese economy, for the Japanese

population and Japanese financial

markets to to get used to. And there is

a suspicion that the central bank is

slower than it might have been in

raising interest rates to to tackle

that. And of course, if you get

inflation, that means that it it's bad

for bonds and that pulls up the bond

yields. It pulls up borrowing costs.

Now this can where this goes next is uh

that's the sort of pertinent question I

guess and there have always been people

who've been looking for a crisis in the

Japanese bond market because it's so

big. You know Japanese debt's GDP is

what 200% something like that. It's

always been enormous. So there have been

people who've been calling for some sort

of reckoning in that market for a really

long time and it simply hasn't happened.

It is plausible that we get a serious

problem now. And what that serious

problem would look like is potentially

that that yields blast higher, right? We

get a really meaningful drop in in

Japanese government bond prices. Yields

blast higher. We get something that

looks like the Liz Trust moment in in

the UK government bond market in 2022.

And that's first of all leaves a lot of

important Japanese investors with with

big losses, but also means that all of a

sudden yields in Japan are so high that

why would you as a Japanese life

insurance company bother investing in

the US with all the problems that you

can see in in the treasuries market? Why

would you bother with the French

government bond market or German or or

UK or whatever?

>> And that's referred to as the carry

trade. Is that right?

>> Currently, exactly that. They go

overseas because they want to get those

higher yields. why would they bother if

you can get the higher yields at home?

There is potential for that to be

disruptive, but I think it's sort of

slightly kind of, you know, disaster

hunting to think that that is

necessarily what is around the corner.

Um, most likely, you know, Japan is is

blessed with very smart policy makers.

They know what they do they're doing.

They know what's at stake. The most

likely path from here is that you

actually end up with a with a government

bond market that offers decent

compensation to to domestic investors,

maybe even to overseas investors. That's

a healthy adjustment, but it does mean

that along the way you get some moves

that do feel a little bit uncomfortable

for people who are used to the Japanese

government bond market being a place

where fun goes to die.

We'll be right back after the break. And

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>> We're back with Profy Markets.

>> One of our big thesis in 206,

um, Ed has used this academic term to

describe open AI as a [ __ ] disaster.

>> Train wreck.

>> Train wreck. I always said sorry. I got

the f bar. I got the fbomb. Right. But

one of our our big thesis is that we

just don't see how these companies can

have growth and earnings that justify

anything resembling their current

valuations.

Unless they're able, their clients are

able to recognize such extraordinary

efficiencies, which is Latin for

layoffs. I mean, one of two things needs

to happen. either these companies need

to be cut in half or more, which by the

way, most big tech companies at some

point in the recent his, you know,

recent past have been down 50% in

12-month period, or you're going to have

to see their clients saying, "Oh my

gosh, our earnings are exploding because

I was able to lay off 10, 20, 30% of my

workforce." We literally see it as I'll

speak for Ed here because I pay him so I

I get to speak for him, but we literally

see either one of two things here.

either a very significant destruction

in human capital labor in key industries

or

uh these companies valuations get cut 50

60%. Let me add that's not that big a

deal. Nvidia is down 95%.

Amazon down 97

in the dot bomb. More recently

meta lost twothirds of its value in

2022. The difference though is that if

these companies in unison lose 40 60 80%

of their value, you know, the whole

global economy is going to catch

pneumonia. Your thoughts on the notion

that one, we either see a destruction in

the market valuation of these companies

or pretty much chaos in the labor

markets. Your thoughts on that thesis?

>> Yeah, I think that thesis is correct. I

think

there is,

you know, investors spend a lot of time

noodling over this point of, you know,

is is there a bubble in AI? Do

valuations make sense? Do, you know,

does does the stock market make sense?

Is it is it really tracking, you know,

realized earnings or is there a lot of

kind of you a wing and a prayer going on

here? What strikes me is that, you know,

I think it was the chair at OpenAI in

Davos saying, "No, no, sure. There's

definitely a bubble going on here. You

know, Sam Alman is saying, "No, sure,

there's a bubble going on here. There's

some money that's getting misallocated."

Jeff Bezos is saying, "Oh, yeah, there's

a bubble going on here, but it's a good

type of bubble." You know, the people

inside the room are saying there is a

heap of stupid stuff going on here.

There's there's a lot of opium. There's

a lot of, you know, imagining that some

sort of computer god is being created

and and it's all powerful and and mon

crucially that it's monetizable.

For me, you know, that that argument is

not one. But what I think probably

happens here is look, sure, Nvidia is a

proper company, right? It makes

shedloads of money. This isn't like the

dot boom and busted in that regard. But

there's a really thick layer of just

like bubbly nonsense that sits on top of

this space. And I think a lot of that

froth does need to get blown off over

over the course of this year.

the the other sort of flip side extreme

scenario that you allude to is is

exactly that is is not that AI is a load

of old rubbish. It's that it's much

better than we currently envvisage and

that all of a sudden as you suggest we

don't need humans. Now what are those

humans going to do and what are the

socioeconomic

ramifications of those humans having

nothing to do? I don't know and I don't

know which scenario I would kind of

rather see but I think it's you know in

terms of how markets respond to all this

I do think it's important to remember

that it's you know the US dominates this

whole debate of course you know these

big big tech companies account for

something like you know 25% or a third

of like the entire S&P 500 you know

they're absolute monsters but you know

Korean stocks last year had a fantastic

year why because they've got three

gigantic AI I contingent companies that

account for almost the entire market.

Japanese stocks had a great year last

year. Same kind of story. So there's no

escaping it. And increasingly there's no

escaping it. Not just in the stock

market, but in the corporate bond market

and in private markets. There's an awful

lot of private credit, private equity,

venture capital capital that again is

all contingent on this one thing of of

AI hitting that sweet spot where it

enhances efficiency and it's

monetizable, but it doesn't work so well

that it puts us all out of a job.

You know, if it wasn't for the fact that

Trump was threatening to invade

Greenland, we would probably still

obsessively be talking about this all of

the time. it does remain a a very

pressing danger for for global markets

and and investors that I speak to are

very conscious that they are kind of

accidentally very overexposed to this. I

just saw a survey recently which I think

was quite telling about what is

happening in AI and it basically asked a

series of seuite executives

um what AI is doing to their week

basically how much time is it saving you

and they asked that same question to a

series of employees and workers who work

for those seuite executives and

basically what it found is that there is

a gigantic divergence in the between

workers and CEOs

on the extent to which AI is actually

helping the business and saving them

time. So 40% of workers say that AI

actually saves them no time during the

week. For seauite executives that number

is only 2%. Those C same seauite

executives say that 45% of them say that

it's saving them more than 8 hours per

week. The number among workers is tiny

compared to that. So this brings up kind

of an interesting point to me that I I I

think is crucial in terms of our

understanding of how to value AI is

there seems to be a huge

misunderstanding between different types

of um workers on how valuable it

actually is. And I think that it's quite

good evidence of there potentially being

a bubble because what it tells me is

that workers, the people on the ground,

the people who are supposed to be using

the AI products themselves, they're

telling us actually this stuff isn't

that useful. But the guys who run the

companies who probably aren't using the

AI that much themselves, but are telling

their workers to use the AI, they think

that they're getting a lot of value out

of this. And that might be true between

the between the workers and also the

investment community. It could be that

investors really think that AI is

working. It's juicing the economy,

saving people time, and yet on the

ground that isn't the case. I thought

that was quite interesting. I just

wanted to get your reactions to the

results of that survey.

>> So, what you're saying is we can put all

the chief execs out of work and all of

the workers share the profits. Is that

where we're going with this? Is the

great socialist revolution in AI form?

>> That is another implication. Yes. survey

data around who uses AI and what kind

of, you know, utility they get out of it

are kind of all over the place. You

know, that that rings true to me. But

so, one little anecdote here, we we do

this thing at the FT called Weekend

Festival and uh last September, one of

the speakers there was Nikolai Tangan,

who runs the Norwegian Oil Fund, a

gigantic pot of money in Norway, like $2

trillion.

and he loves his AI and he was talking

about, you know, he was asked on a on a

session about, you know, how do you get

people within the oil fund to to use AI?

And he said, oh, it's very simple. You

have to be, and I quote, a maniac about

it. You need someone at the top of the

organization who effectively forces it

down people's throats day and night.

mandatory training, drop-in sessions,

champions on every team, constantly

getting everybody in the building, and

they employ hundreds of people to use AI

to make themselves more efficient. And I

thought, huh,

if this stuff is so useful, why do you

need a maniac to tell you to do it at at

the cost of otherwise losing your job,

right? and and at the end of this

process where people are kind of forced

to use this technology which you know

Nikolai thinks is of great benefit to

the organization but at the end of this

process they send a survey to everyone

in the building and say how much more

efficient are you as a result of AI and

and I think the result was something

like 12%. Of course, you're going to say

that if your boss is forcing you to use

the technology, right? But I don't have

anyone breathing down my neck telling me

to use telephones or telling me to use

WhatsApp or telling me to use email

because it's just an obvious efficiency

to my day. So, it's this constant

question around technology, isn't it? It

creates it creates productivity, but you

just can't see it anywhere. So there is

a valid question around how useful this

stuff really is. And I think also you

know what I gather is that you know

companies are asking much tougher

questions now. It's like hang on before

we commit this money and this time and

this resource to this technology

show me the proof points and actually

that's something that investors are

becoming somewhat more rigorous about as

well. It's kind of you know like show

me. You can't just sort of wave your

hands and say oh some something

generative AI. you can say, "No, no, no.

I need practical evidence that this

stuff is any good." Um, so

that sort of rigor is is probably

helpful. But yeah, and you know, there

have been famous surveys. There was the

study last year, was it from MIT that

said something like 95% of companies

that have adopted AI think it's a total

waste of time.

>> Yeah,

that was a big one.

>> I personally don't use it.

>> You don't use it to prove, fact check

your art, your your drafts, your

articles, nothing?

>> No, nothing like that. Um, my

17-year-old son can I mean he can barely

get out of bed in the morning at all,

but he he can barely tie his own

shoelaces without asking chat GPT how to

do it. You know, there's a whole

generation of kids that are absolutely

that that use it for everything, for

revision, for school work, for all sorts

of things. Um, but I, you know, maybe

it's just me, but it doesn't really

touch my life.

>> Wow. I think your point there like it's

it's almost like in 2020 or at least in

2025 the name of the game was just wave

your hands as much as possible say AGI

AGI AGI and then you get half a trillion

dollar uh valuation. It seems that in

2026 the vibe has shifted and there is

more of an emphasis on show me the

money, show me that you are actually

generating a return from these

investments which is why I think a lot

of these companies are doing quite well.

I think Anthropic has got it right. I

think the emphasis on enterprise

business is working out well and I do

think it is actually a bright spot for

open AI that they have now rolled out

ads because to me that that tells me

okay you guys are taking seriously that

the job is to make money. So let's see

how much money you can go out and make

and I I would be very interested to see

how much people are are willing to pay

how much advertisers are willing to pay.

Apparently, they want $60 CPMs, about

three times higher than what Facebook

charges. So, we'll see if that actually

works. But I do agree with you. It seems

like we're entering the phase where,

okay, we've waved our hands. We've sort

of made these large uh projections about

what the world's going to look like.

Now, let's see what it actually looks

like, which to me is almost less

concerning. And I'd be very interested

to see what what OpenAI's stock price

were to be if it were actually publicly

traded. I'm sure it would have gotten

hammered in the past 6 months or so. Um,

I'd like to just return to the global

rotation point. I think it's very

helpful to have you on uh this interview

right now because you are speaking with

those fund managers in Europe and I'm

realizing as we talk we haven't really

gotten that perspective yet. Um, so you

you said that you know fund managers,

pension managers in Europe last year

they were beginning to sort of diversify

out of the US.

What did Daros do to that rotation?

And what are your expectations for 2026?

Is that rotation going to continue? Will

it slow down? Will it accelerate? What

do you think?

>> Yeah, my expectation is that rotation

will absolutely continue. And look that

there are push and pull factors here,

right? You know, Trump is pushing people

out of the US for a whole host of

incredibly obvious reasons, but the, you

know, for a lot of investors, whether

they're in in Europe or elsewhere, the

the case for investing in Europe has has

rarely been stronger than it is today.

You know, you you look at the situation

in Germany. Yes. Okay. It has taken a

long time for it to start deploying this

extra money that it's been talking about

for the past year or so, but this money

is really going to start hitting in

terms of infrastructure projects and

defense spending and all of that lovely

stuff. So, you look at the sort of

fiscal expansion that you see in the

states and a lot of it is about sending

checks to people who don't necessarily

need it. The fiscal expansion that

you're getting in in Europe is about

real stuff. It's about roads and bridges

and and and infrastructure and energy

and defense. The multipliers on that are

likely to be much higher, right? So,

this really should be supportive to

European growth, which I know is

disappointed for a long time, but is

better than nothing. You look at the

European

financial sector, like I don't know if

you've looked at a chart of European

bank stocks recently, but they had an

absolute storming 2025. They've kept on

going into 2026. financial sector in

sharp contrast to where it was a decade

and a half ago is in is in is in

seriously good health. Now I know that

European financial markets are more kind

of creaky and sludgy and less sort of

fastm moving than they are in the states

but you can't argue with the performance

that you had in Europe last year. UK

even France didn't do too badly even

despite multiple government failures.

you know, Germany or all all sorts of

different markets across Europe had a

fantastic run last year. People are

definitely taking a fresh look at those

markets and even some US asset managers

are saying, "Huh, think we missed a

trick on Europe last year, especially

when you add in the currency effect. You

could we could have had some really big

winnings there." This is happening

across Asia, too. There is just a sense

that that it's important to be more

self-reliant. And you know

one thing as well that sort of hangs

over people when with regards to Europe

is that they people say look okay we

don't have it today we won't have it

tomorrow but at some point we will have

a ceasefire in Ukraine and at some point

we will have something that resembles

peace in Ukraine and at some point after

that there is a massive reconstruction

trade of that country. Wow. And you

know, if I were running a cement company

in eastern Poland somewhere, Poland, by

the way, stand out 2025,

I would be feeling pretty good about the

next 5 to 10 years. You know, the the

infrastructure spend and the rebuild

spend that's going to happen at some

point, hopefully sooner rather than

later, in Ukraine is going to be really

significant. So people can see a lot of

positives about investing in in Europe,

not just it's not just about avoiding

the states.

>> I think there's another question here

which is you know something Scott often

says is market dynamics trump individual

performance. And if the dynamic among

the markets here is that Europeans are

kind of collectively deciding to

reinvest in themselves

um then that is going to be a big deal

regardless of what happens in the world

regardless of which companies are

performing well in America. I guess the

question then is what level of

investment power does Europe really

have? Can Europe does how does Europe

have the fiscal power? Do they have the

the investment prowess to really move

markets in a significant way? And that

seems to be kind of a theme coming out

of Daros, which is there's a threat that

maybe Europe stands up to America. They

decide we're going to sell uh our US

holdings. We're going to sell US

treasuries. Uh we're going to decide

we're going to defend ourselves on our

own. But then the the followup is do you

really have enough to do that? Are you

really powerful enough to take on

America in the way that these

conversations seem to suggest? Um, it's

a very broad topic and question. I'm

sure there's no single answer, but what

what would you make of of that question?

>> I think the evidence for for the fact

that Europe does have some clout and

does have some leverage here is that

Scott Bessant was extremely pissed off

at this notion that European pensions

could start selling down their

treasuries. You know, you'll recall, you

know, there there was a note from

Deutsche Bank, not saying that Europe is

going to sell all of its treasuries, but

saying, "Huh, Europe owns an awful lot

of treasuries. Maybe it's not going to

carry on accumulating treasuries at the

pace that we've been used to for the

past few decades in future."

You know, Scott Besson had a word with

the the chief executive of Deutsche

Bank. All of a sudden, they're

distancing themselves from from this

analysis. And it it's very clear that

the US administration is very sensitive

to the idea that it could lose a pocket

of of very reliable buyers for the US

Treasury market. You know,

stocks do what stocks do. They're

typically very flighty, but Scott Besson

is very focused on keeping that 10-year

US Treasury yield at or about 4%. He

does not want it to spiral higher. He

doesn't want higher borrowing costs

either for the government or for anybody

else.

It's not in the US's rational

self-interest to scare off buyers of US

treasuries. Now, you know, again, so

we've had a couple of like quite small

Nordic pension funds that have said

we've got out of our treasuries, not

necessarily because of Greenland, but

because of a bunch of other issues, you

know, debt sustainability, fiscal

dynamics, the Fed, you know, all of that

stuff. Um, but it clearly leaves a mark.

You know, I I I don't think Europe is

going to just one day, you know, press a

button and sell all of its treasuries.

That would do us just as much harm as it

as it would do the states. It's it's

just it's not it's not plausible. But it

is plausible that so you're running a

pension fund somewhere your your very

old you know 10 20 year treasury you

know comes up for redemption and you

think well do I churn this into another

10 20 year treasury or do I say hm maybe

actually this time I'm going to stick

half of it in Germany I'm going to stick

half of it in in the UK maybe I'm going

to put some of it in Japan it's got nice

high yields now I think that this whole

moment at Davos has proven to be a

little bit of a reminder that you Europe

is is is not without its its tools at at

retaliation. You know, that's much more

obvious with China, which says, "Look,

we've got a whole heap of your

treasuries and and we can do what we

like with them. By the way, we've got

the rare earths."

But it doesn't mean that Europe has no

tools. And and and I do think that that

even that suggestion that maybe it won't

be mechanically plowing money into the

US has wrankled some nerves.

>> We'll be right back. And for even more

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>> We're back with Profy Markets. I can

make a case for the markets at some

point getting fed up with this sclerotic

behavior. The Japanese yields skyrocket.

People just lose faith in our

treasuries. There's just a bunch of

scenarios. AI being overvalued where you

can see a string gets pulled any number

of strings and the market takes a real

draw down. At the same time, we're going

into an election year. A lot of that big

beautiful bill stimulus has about to

take real effect in 2026. Typically in a

in an election year, the current

administration does whatever it can to

kind of juice the market.

So, and also our friend Josh Brown

constantly, you know, I'm a

catastrophist and a glass half empty

kind of guy and he says, "Look, Scott,

the optimists have beaten the [ __ ] out

of the pessimists and he's right." And

he he taught me something that was

really interesting. What you know,

always ask yourself what could go right.

So coming into 26 recognizing nobody has

a crystal ball when you look at all the

dynamics all the risks all the upside

stimulus spending threats of over AI

geopolitical uncertainty

where do you and the editorial board or

no don't don't speak for the editorial

board where do you Katie Martin if

you're advising clients or institutional

investors do you think the the US market

will underperform or outperform its

peers abroad? I would never presume to

advise anyone, but but what I can say is

that look, and it and it's silly to talk

about markets as if they're people, but

markets do kind of want to go up. US

stock markets want to go up.

>> They grind higher.

>> They grind higher. It's a function of US

growth. It's a function of the US tech

miracle, but it's also a function of the

fact that you do still have f fiscal

expansion and you do still have interest

rates that are heading lower. not

heading lower as quickly as Trump would

like them to, but they are nonetheless

heading lower.

That's a recipe for US stock markets to

pull higher. But what I think is, you

know, again, we go back to that

diversification point, that sort of sell

America point is that if you're not

based in the States and you're not based

in US dollars, then you still have an

enormous vulnerability around

institutional credibility and around the

resilience of the Fed. And if they get

chipped away out further and we get

another big pull lower in in the dollar,

then we're going to end up with another

wash out year for overseas investors

being being parked in in the US. And I

think, you know, one year you can kind

of write off as a bit of an anomaly. But

if this happens again, then we've got a

really serious problem. I do think that

the sort of the most likely outcome is

that US markets do pretty well,

especially if it can if if we can have

some credibility restored to the Federal

Reserve. Um but but the risks are are

substantial and I do think there's a

reasonable chance that US gets its you

know gets its ass kicked by the rest of

the world again in 2026 and and beyond.

Um, so really the the extent to which

you care about that matters what

currency you're in, what hedging

policies you've put in place and just

where you're doiciled. But the you know

people do just want a little bit more

compensation and certainty around

putting you know their stakeholders

money to work in the US with all of the

policy uncertainty that's hanging over

it.

>> Is there anything you're watching in the

markets right now that you think people

are not talking about enough? something

that deserves more attention that you

find interesting that isn't getting

enough clicks.

>> The thing that I think people are

probably not worried enough about is is

the Fed. We are all sitting around like

diligent little soldiers and podcasters

and journalists saying, "Oh, I wonder

which Kevin will be the new chair of the

Federal Reserve. Will it be this Kevin?

Will it be that Kevin? Maybe it'll be a

Maybe it'll be a Rick. Maybe it'll be

somebody else." And we're not seeing the

big picture here, which is that

Trump and Besson and and Steven Moran,

who's now at the Fed and other people

have made it very clear that they want

the Fed to look very different to how it

does now. And I just, you know, there's

a part of me that thinks, are we sort of

playing this game the old way and

thinking, okay, which Kevin is it going

to be? And actually what they're

planning is a much bigger

reconfiguration of the entire

organization. It's a tail risk, but I

think it's one that's worth taking

seriously.

>> If I were to upload

uh the the transcript of this into, you

know, my favorite AI model, which I keep

a secret, hoping that one of them will

show up with a big fat [ __ ] check for

me to say who my favorite.

>> What is that?

>> Yeah, that's just welcome to capitalism.

That but good news, Katie. I'm a [ __ ]

but I'm an expensive [ __ ] Anyways, the

um where was I headed with that? If I

were to upload everything that your

dialogue and your articles that the and

said summarize Katie's viewpoint and

recommendation in one word, it would be

diversification. Do you think that's

accurate?

>> I think that's accurate and I think

that's a um that's a very reasonable

representation of everything that money

managers are saying to me at the moment.

And again, it sort of doesn't matter

what type of money manager you are. It

can be wealth managers advising risky

individual, you know, wealthy

individuals. It can be managers of

enormous pots of pensions. It can be

hedge funds. It can be anybody. They're

all saying the same thing, which is

something has broken with the US. And

you know, the phrase that I always like

to use here is that you can't put the

ship back in the donkey, right? You

can't unsay that you're thinking of

invading Greenland. You can't.

>> We've got to have you again. That just

earned you a second, a third, and a

fourth appearance.

mic drop.

>> You can't unsay that you that the the

chair of the Federal Reserve is a numb

skull. The the stuff that you it's out

there. You you've said it now that the

trust has gone.

Even you know this is one thing that I

think is lost on on a lot of people

particularly in the states is that this

is going to hang over US assets much

longer than Trump is around. You know,

the next administration is going to have

to spend a fearsomely long time

rebuilding that trust with global

investors and trying to explain away a

kind of moment of madness and and trying

to put extra guard rails around the

institutions that that investors hold

dear. This is going to hang over for a

really a really long time. I'm afraid

there's there's kind of no way back.

>> Casey Martin is a markets columnist and

member of the Financial Times editorial

board. She writes the weekly long view

column on market trends and appears

weekly on the unhedged podcast.

Previously, she spent four years as the

FT's markets editor and also several

years on the FT's live news service.

Prior to joining the FT in 2015, she

spent 11 years at the Dow Jones Wall

Street Journal Group. Katie, this was

excellent. Really appreciate it. Thank

you.

>> Thank you, Katie.

>> Pleasure.

Yeah. Thank god we found someone other

than Robert Armstrong from the FT.

Jesus, they've been hiding Katie.

>> I know. She was excellent. What What did

you make of it?

>> Super smart, super measured. I like that

people like that are in financial

journalism.

It just drives home to the point of

diversification. She validated a lot of

the points you've made or that we've

made around people the, you know, this

great rotation. And that was our big

prediction for 25. It's happened and

it's accelerating.

The point that she made that people miss

is that okay, the

the US markets, the S&P is up 17%. But

if I'm in the UK and I've been or in,

you know, and I've invested in and had

to transfer pounds to dollars, I'm up

7%. Versus if I'd stuck in a European

market, it's up 30, 40, and 50%. the US

trade has not been a winner. The 17%

headline when when on a currency

adjusted basis, this has not been a

winner for people, this market. The

other thing, the only thing I would push

back on that she said was that there's

going to be an incredible post-war trade

in Ukraine. And I would say it's very

dependent upon the following.

If we do what Trump wants and what Putin

wants and enter into a shitty deal for

Ukraine and follow I interviewed Neil

Ferguson at the at Davos and the whole

interview I love Neil but it just pissed

me off so much because I think he was

basically paring Sergey Lavarov's

talking points that the war in Ukraine

is totally unsustainable for Ukraine. I

would argue it's totally unsustainable

for Russia. But if we end up with a

piece there that is basically

not, you know, that basically is not

preventing the next war, but scheduling

it. And that is if we give Russia

anything resembling what the peace plan

that Rubio and Trump and probably Putin

endorsed, we're just scheduling the next

war. And no one is going to invest in

Ukraine, especially in the civilian

infrastructure. a bunch of their drone

makers will all move to Silicon Valley

and become really rich, but no one's

going to invest in Ukraine, just waiting

for Russia to rearm and then take the

rest of Ukraine and possibly Poland. Um,

anyways, I I think that the Ukraine

trade is totally dependent upon the kind

of peace that is negotiated there. Um,

little in the weeds. Little in the

weeds. Uh, any thoughts, Ed? I thought

it was a really interesting point. I I

have to be honest, I haven't given the

reconstruction the Ukraine

reconstruction trade much thought, so

I'm not sure I have much insight there.

I think your points are also totally

reasonable as well. I think the thing

that was most interesting to me was the

fact that she has this direct line of

communication to all of these fund

managers in Europe. And it makes me

think that we should be spending more of

our time hearing their perspectives and

maybe having one of those guys on the

podcast because you know you were making

the the point last year that there would

be a global rotation. Other people

started to call it the sell America

trade and then when the S&P went up a

lot of people were quick to say, "Hey,

you were wrong. It wasn't a sell America

trade." That was never our point. The

point was a rotation trade. The idea

being that that fund managers are going

to increase their exposure to foreign

markets and that is exactly what

happened and that's why we saw the

outperformance of all of those foreign

markets not just on a in dollar terms

but on a currency adjusted basis the US

outperformed practically every other

market especially the European markets.

My assumption going into 2026 was that

we would see something of a reversal or

at least a reversion to the mean. And

that is I thought that all of these

European markets had ripped and then

maybe there would be some level of taco

taking effect where people go, "Oh, you

know what? That was a little scary, but

things in America are probably okay. Um,

let's not worry too much about getting

out of America." Given what we've seen

over the past month, given what we saw

in Davos, given everything she just told

us about what European fund managers are

thinking, I'm not sure that's true

actually or that that will happen. It

seems to me that actually this rotation

will, as she said, continue and maybe

even accelerate. And while I have said

that I think the S&P will end up in the

green this year, though I think it's

going to be kind of me returns. It's

going to be almost and pretty much flat

like you know low to mid singledigit

returns. I do think that European

markets given what she said have a real

real potential to significantly

outperform US markets again. And if that

happens, I think that will only add more

fuel to this uh momentum trade, more

fuel to the fire that the US long-term

isn't going to have the kind of returns

that we have historically expected. Uh

and that could be a big deal for

markets.

>> Let's turn to the tape. The S&P was up

17. Europe Europe stocks 50 or the stock

600 was up 19. The UK Footsie was up 22.

Japan was up 26. So I think the Cosby in

South Korea was up 70 something. I think

the Hang Sang was up what was it up 19.

I mean Canada was up 28%.

In some

uh wasn't the S&P the worst performing

market amongst the developed economies.

>> Exactly.

>> And then that's not even taking into

account if you were investing if you

were transferring your currency into

dollars of which you likely lost another

five or 10% on top of that because of

the weakening of the dollar. So

anyways, very much enjoyed her

perspective.

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