Tech shares zigzag

Software stocks got crushed. Did they have it coming?

Jul 7, 202620 minSummary

In this episode of Unhedged, hosts Katie Martin and Rob Armstrong explore the turbulent performance of software stocks in the wake of the AI boom. Since February, the software sector has faced significant pressure, with major companies trading well below their recent highs. The hosts examine whether this market sell-off is a rational response to the potential disruption caused by artificial intelligence—often dubbed the "SaaS apocalypse"—or an overreaction by investors. The discussion highlights how fears that AI will enable businesses to bypass traditional corporate software providers have hit the sector hard. However, the hosts argue that these companies remain deeply embedded in the mission-critical operations of large enterprises, making widespread displacement unlikely in the near term. Furthermore, the episode touches on broader market concerns, including findings from the Bank of England regarding the high concentration of risk within a small group of AI-related stocks. Ultimately, the hosts suggest that while markets are prone to cycles of panic and euphoria, the current divergence between software stocks and the rest of the market raises difficult questions about long-term valuations and systemic stability.

Halftime for the markets

Jul 2, 202622 minSummary

In this episode of Unhedged, hosts Katie Martin and Rob Armstrong reflect on the halfway point of the year, attempting to make sense of a market environment that feels increasingly erratic. The discussion centers on the breakdown of the long-standing master narrative that markets move in lockstep with the Magnificent Seven tech stocks. As these giants have stumbled, leadership has shifted, revealing significant underlying rotations, including a surprising resurgence in small-cap stocks. The hosts delve into the ongoing mania surrounding semiconductor stocks, drawing parallels to the irrational exuberance seen in previous market cycles. Despite geopolitical tensions and economic turbulence, broader market indices have largely plateaued rather than crashed, leading the hosts to consider whether momentum is fading. They also analyze recent U.S. labor market data, noting that slowing job creation and cooling wage growth might actually provide a necessary reprieve for the Federal Reserve regarding future interest rate decisions. Ultimately, the episode captures the tension between market resilience and the pervasive sense of uncertainty as the hosts look ahead to the remainder of the year.

New UK prime minister, same bond market

Jun 30, 202620 minSummary

In this episode of Unhedged, the hosts examine the transition of power in the United Kingdom as Andy Burnham prepares to step in as the next Prime Minister. Despite his reputation as a figure from the left wing of the Labour Party, the bond market reaction has been surprisingly stable. The discussion explores why the UK gilt market remains calm, contrasting the current outlook with the volatility experienced during earlier inflation shocks fueled by global energy price instability. The episode delves into the structural challenges facing the UK economy, including high debt levels, sluggish growth, and the lingering impacts of Brexit. The hosts analyze the difficult feedback loop between political instability and the bond market, questioning whether the UK is facing a structural crisis or if a new leader can break the cycle. A key takeaway is the potential for a game of chicken between the incoming administration and investors, as the government attempts to balance fiscal constraints with the urgent need to drive national growth. The show concludes by considering whether growth can act as the ultimate solution to the country’s ongoing political and economic pressures.

How to surf turbulent markets

Jun 23, 202628 minSummary

In this episode of Unhedged, hosts Katie Martin and Robert Armstrong are joined by Ruchir Sharma, chair of Rockefeller International, for a live conversation regarding the current state of global financial markets. The discussion centers on the prevailing feeling that the market is in the midst of a massive technological bubble driven by artificial intelligence. Sharma outlines his framework for identifying such bubbles, citing overvaluation, over-investment, over-ownership, and excessive leverage as the primary indicators. While acknowledging the transformative nature of AI, he warns that history shows significant technological breakthroughs often lead to speculative frenzy. The conversation explores the unique challenges of the current era, particularly the unprecedented U.S. government deficit, which the hosts argue complicates the traditional economic cycle. The participants debate whether investors should attempt to time the market or remain invested despite the risks. Sharma suggests a defensive, long-term strategy, proposing that investors look toward high-quality, neglected stocks to hedge against potential volatility. Ultimately, the hosts and their guest emphasize that while the current market structure feels precarious, exiting the market prematurely is often a costlier mistake than weathering a correction.

Kevin Warsh’s first remarks

Jun 18, 202621 minSummary

In this episode of Unhedged, hosts Katie Martin and Rob Armstrong analyze the debut of Kevin Warsh as the new chair of the Federal Reserve. The discussion centers on Warsh’s shift toward a more opaque, traditional communication style reminiscent of the Alan Greenspan era. A primary highlight was the dramatic reduction in the length of the Fed’s official statement and Warsh’s decision to remove his own projection from the famous "dot plot," signaling a departure from the practice of providing extensive forward guidance. The hosts explore the contradiction between Warsh’s background as an inflation hawk and the political expectations surrounding his appointment. While Warsh projected a firm, serious demeanor—repeatedly emphasizing that inflation is a policy choice that must be brought under control—the hosts remain cautious, noting that he avoided addressing specific questions about past policy decisions. The episode also touches on the complex challenge of managing the Fed’s massive balance sheet alongside high government deficits. Ultimately, the hosts frame Warsh’s tenure as a test of his ability to lead the committee while balancing the "trilemma" of maintaining financial stability, fiscal responsibility, and market expectations.

Can Trump make a deal with Iran?

Jun 11, 202624 minSummary

In this episode of Unhedged, the hosts explore the persistent uncertainty surrounding U.S.-Iran relations and the viability of a deal under the Trump administration. Joined by the Financial Times’ Middle East editor, Andrew England, the discussion dissects the complex, circular nature of recent negotiations. Despite the frequent claims of imminent breakthroughs, deep-seated distrust and escalating military rhetoric—marked by strikes and counter-strikes—have left the situation in a volatile stalemate. The episode examines the strategic motivations for both sides: Trump seeks to reopen the Strait of Hormuz to stabilize energy prices and claim a political win, while Iran needs an economic reprieve to address its domestic financial crisis. However, the hosts and England highlight the immense difficulty of finding a durable framework when both leaders are prone to unpredictable public posturing and are constrained by intense political pressure. Ultimately, the conversation suggests that while a temporary "muddle through" agreement is possible, achieving a long-term resolution remains unlikely. The episode provides a sobering look at how geopolitical crises are managed—or mismanaged—when policy is driven by personal rhetoric and reactive measures rather than established institutional strategies.

Why are investors so jumpy?

Jun 9, 202618 minSummary

In this episode of Unhedged, hosts Rob Armstrong and Dara McFadden analyze the recent turbulence in the equity markets, attempting to make sense of the erratic price fluctuations and investor anxiety. The discussion centers on a surprisingly robust May jobs report, which unexpectedly triggered market volatility. While strong employment figures generally signal economic health, the hosts explain that in the current climate, such data raises fears of a reaccelerating economy, persistent inflation, and the subsequent likelihood of the Federal Reserve maintaining higher interest rates. The conversation explores the narrow focus of current market appetite, noting that growth is heavily concentrated in AI and semiconductor sectors, leaving other industries behind. The hosts also touch upon the strain on the average American consumer, as real wage growth flattens amidst rising costs. Finally, they examine the supply side of the market, specifically the impending wave of high-profile IPOs and secondary offerings, such as SpaceX. They conclude that the market’s stability may hinge on the success of these upcoming listings, as institutional players are highly motivated to maintain momentum for the broader equity market.

Big energy getting bigger

Jun 4, 202622 minSummary

In this episode of Unhedged, the hosts examine the massive acquisition of Dominion Energy by NextEra, a deal that highlights the intersection of utility giants and the rapidly expanding artificial intelligence sector. NextEra’s move is framed as a strategic play to meet the voracious energy demands of data centers, particularly in the critical Virginia corridor. The discussion explores the tension between corporate expansion and the political necessity of maintaining affordable electricity for consumers, especially during an election year. The hosts note the irony of tech-driven AI innovation requiring such heavy, traditional industrial infrastructure. They also analyze how the regulatory environment has shifted; companies are now meticulously tailoring their deal-making strategies to align with the political priorities of the current administration while navigating local public service commissions. Beyond this specific merger, the episode touches on how the urgency of the AI boom is transforming corporate strategy, leading firms to favor unconventional structures—such as talent-focused acquisitions—over traditional mergers to bypass lengthy antitrust hurdles. Ultimately, the episode illustrates how the demand for AI power is cascading through the economy, reshaping industries from energy production to industrial manufacturing.

Could we interest you in $675bn in tech stocks?

Jun 2, 202621 minSummary

The hosts examine the recent surge in initial public offerings and stock market listings, focusing on the massive influx of AI-focused technology companies hitting the market. They discuss the significant volume of capital involved, with expectations of hundreds of billions of dollars in new listings and share issuances. The conversation centers on whether this feeding frenzy represents a genuine opportunity for investors or a signal of market exuberance reminiscent of the dot-com era. The discussion covers several key themes, including the tendency for tech giants to remain private for longer periods, the role of insider lock-up periods in market liquidity, and the potential for share dilution. The hosts also touch upon the macroeconomic implications of an economy driven heavily by capital investment in AI, while highlighting the uncertainty surrounding the actual profitability and business models of these high-valuation tech firms. By exploring both the hype and the underlying risks, the episode offers a critical perspective on the current state of financial markets, questioning the sustainability of the intense demand for AI-linked stocks and the motivations behind these timely market entries.

The chip and memory stock frenzy

May 28, 202624 minSummary

In this episode of Unhedged, the hosts dive into the current frenzy surrounding chip and memory stocks. They analyze whether the semiconductor sector is caught in a market bubble or a permanent supercycle, noting that the sector's valuation growth is driven by massive, genuine earnings rather than mere investor exuberance. By comparing the semiconductor industry to the cyclical nature of the cattle market, the hosts debate whether the current demand for data center and AI infrastructure is sustainable or if it will inevitably lead to a supply glut. The discussion extends to the growing divide between chip makers and software companies, which have struggled as investors fear that AI will eventually replace traditional business software. Beyond market mechanics, the hosts explore the social and political backlash against the AI buildout, touching on the concentration of power in the industry, the potential for cybersecurity risks, and the ongoing debate over how the wealth generated by this technological shift should be distributed across society. Through this lens, they highlight how the rapid expansion of AI is creating high-stakes economic implications for both global markets and the workforce.