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Speaker 1: Right now. We have been telling you for weeks there

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Speaker 1: are a couple of big risks to the economy. A

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Speaker 1: couple of those roosters are coming home to roost. I

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Speaker 1: think I've said that wrong now. The risks are policy uncertainty.

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Speaker 1: We've also been talking about excess retail investor enthusiasm, so

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Speaker 1: many more things. Now, where are we at and what

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Speaker 1: does all of it mean for investors? Sam Dicky is

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Speaker 1: with fisher Farms. Sam, good eating to you.

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Speaker 2: Good evening.

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Speaker 1: Tell me equity markets have fallen a handful of a

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Speaker 1: percent in the last couple of weeks. What's going on?

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Speaker 1: What are you putting it down to?

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Speaker 2: Yeah, you're right, Ryan, So they have been under a

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Speaker 2: bit of pressure, and it is because several of those

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Speaker 2: risks you and I have been talking about playing out,

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Speaker 2: rearing the head coming home to roost, as you said.

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Speaker 2: So the exceptional policy uncertainty, so not just the will

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Speaker 2: he won'ted tariff noise, but uncertainty around how the DOGE

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Speaker 2: or Department of Government efficiency inspired federal government cost cutting

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Speaker 2: could be a drag on the economy. There's the escalating

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Speaker 2: US versus trying a computer chip bore, the extraordinary amount

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Speaker 2: of capital that the largest tech companies in the world

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Speaker 2: are spending right now with uncertain return on that capital.

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Speaker 2: And finally, there's the animal spirits we've talked about, or

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Speaker 2: irrational exuberance that had crept into the market since Trump's election.

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Speaker 1: They seemed to take all the upside of Trump He's

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Speaker 1: going to cut taxes, he's going to cut regulation, and

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Speaker 1: ignore all the potential downside i e. The terwiffs. It's

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Speaker 1: almost like the markets didn't really take him seriously that

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Speaker 1: he would actually do it.

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Speaker 2: That's right, I think, you know, memory muscle memory is powerful.

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Speaker 2: So people remember last time that when he was elected,

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Speaker 2: everyone was quite bearish. He actually did a pretty good job,

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Speaker 2: and equity markets were up sort of twenty one percent

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Speaker 2: in the year following his election. However, the starting points,

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Speaker 2: as you say, were very different. Last time, the market

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Speaker 2: was much cheaper, the expectations were very low, and he

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Speaker 2: sort of over that pretty low bar. This time around,

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Speaker 2: expectations were super high, and as you say, all the

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Speaker 2: upside was priced in without a lot of the risk,

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Speaker 2: and those risks are kind of manifesting now we're right

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Speaker 2: in the thick of it. So if you think about

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Speaker 2: some of those risks. US policy uncertainty as near as

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Speaker 2: high as it's ever been since we started measuring it

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Speaker 2: sort of fifty years ago. According to business surveys in

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Speaker 2: the US, US trade policy is the highest it's ever been.

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Speaker 1: Oh sorry, trade.

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Speaker 2: Policy uncertainty is the highest it's been in fifty years.

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Speaker 2: So set another way, imagine sitting in a boardroom ryan

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Speaker 2: in the US, Southeast Asia, or even Mexico or candidate

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Speaker 2: and being asked to sign off on a huge capital

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Speaker 2: project or a three year strategy document with this type

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Speaker 2: of sort of fifty year high uncertainty, and at the

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Speaker 2: very least I think it would give you pause. So

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Speaker 2: when we think about the drag on the economy, is

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Speaker 2: this actually manifesting? It really is?

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Speaker 1: It's early days.

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Speaker 2: So if you think of something like economic surprise, which

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Speaker 2: tracks you know, every piece of key economic data in

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Speaker 2: the US when it comes out, does it surprise people

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Speaker 2: on the upside or downside? A couple of months ago

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Speaker 2: that was surprising sharply positively. Now that's surprising sharply negatively negatively.

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Speaker 2: So we might be seeing some of these risks actually

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Speaker 2: start to manifest in a slow down in growth.

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Speaker 1: Is this at this point having more of a shock

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Speaker 1: to those indicators you're describing than COVID.

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Speaker 2: No, the I think, I thank COVID was a one

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Speaker 2: and one hundred year event and then you know, fifty

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Speaker 2: percent of the world's economy came to a grinding holt.

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Speaker 2: I think this is more mild, much more mild. It's

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Speaker 2: just that, you know, running into this from US, say

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Speaker 2: a month or two ago, expectations were very high. So

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Speaker 2: we had, you know, sentiment gauges, retail sentiment gages running

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Speaker 2: red hot. We had a lot of irrational exuberance in

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Speaker 2: the market. As you say, all of the good news

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Speaker 2: that Trump had talked about was pricing, none of the risks.

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Speaker 2: So it's more about the starting point in terms of

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Speaker 2: the actual drag on the economy versus COVID.

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Speaker 1: That's much much more mild. And what does it mean

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Speaker 1: for investors then going forward? Do you? I mean, if

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Speaker 1: you're a business, let's take because investors are basing their

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Speaker 1: decisions off what they think the businesses are going to do. Right,

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Speaker 1: So if you're in business and you're not wanting to

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Speaker 1: throw your money at this, or throw your money at that,

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Speaker 1: or buy the new plant, or hire the new person,

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Speaker 1: because it's uncertain. I mean, at some point, if uncertainty

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Speaker 1: is constant, you get used to it and you invest anyway,

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Speaker 1: don't you.

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Speaker 2: I think that's right. I think people will at the

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Speaker 2: very least, this will be an excuse for people who

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Speaker 2: are going to sign off on a marginal project to

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Speaker 2: take a wait and see approach. However, I do think

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Speaker 2: and by the way, it never does feel good as

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Speaker 2: an investor when these risks are coming home to roost

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Speaker 2: or plan out, as you said. But the good news

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Speaker 2: is there is a lot less irrational exuberance than the

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Speaker 2: market today than was it a month ago. So those

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Speaker 2: sentiment engages that were red hot have gone to more normal.

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Speaker 2: And I guess when you think about whether you're going

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Speaker 2: to sign that check or not for that three year

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Speaker 2: capital project, I do think of this un does start

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Speaker 2: to drag on the economy too much, and it becomes

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Speaker 2: very evident that to Trump himself, that he is intentionally

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Speaker 2: hurting the US economy. I do think that a reasonable

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Speaker 2: base case is that rationality will prevail and maybe some

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Speaker 2: of these things will be reversed. And we saw that

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Speaker 2: again last night when he buttoned off again on these

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Speaker 2: tariffs and the stock market rally very sharply. So for now,

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Speaker 2: the good news is that a lot of these risks

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Speaker 2: we're talking about are coming home to roost. They have

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Speaker 2: partially played out, and the sentiment has gone from red

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Speaker 2: hot over at SKIS to sort of more normal.

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Speaker 1: Sam. Thank you for that really interesting stuff. Sam Dicky

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Speaker 1: Fisher funds with us Tonight.

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Speaker 2: For more from Hither Duplessy Allen Drive, listen live to

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Speaker 2: news talks it'd be from four pm weekdays, or follow

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