WEBVTT 00:00:00.440 --> 00:00:01.840 Welcome to School of Thought, 00:00:02.240 --> 00:00:04.759 a podcast from Ontario Teachers' Pension Plan, 00:00:05.440 --> 00:00:07.519 where we speak with global decision makers 00:00:07.919 --> 00:00:10.720 about opportunities, risks, career journeys 00:00:11.160 --> 00:00:12.240 and lessons in leadership. 00:00:13.519 --> 00:00:15.160 Welcome to today's podcast. 00:00:15.919 --> 00:00:17.079 My name is Jo Taylor. 00:00:17.519 --> 00:00:20.519 I'm the CEO of Ontario Teachers' Pension Plan. 00:00:20.559 --> 00:00:24.199 We're really pleased today to have with us as our guest, Katie Martin. 00:00:24.480 --> 00:00:28.199 Now, a lot of you will know Katie from her time at the Financial Times. 00:00:28.839 --> 00:00:32.960 Katie's a career journalist who spent a lot of her life covering financial markets, 00:00:33.200 --> 00:00:36.000 probably best known for her column The Long View. 00:00:36.240 --> 00:00:38.119 It's great to have Katie with us today. 00:00:38.320 --> 00:00:42.439 And as well as joining our podcast, she's an expert in this field, 00:00:42.880 --> 00:00:47.359 having been a long standing co-presenter of the FT's podcast, Unhedged. 00:00:48.159 --> 00:00:54.520 So Katie, probably a good way to break the ice is to say 20 years as a financial journalist. 00:00:55.240 --> 00:00:57.960 How did you get to that career and what keeps you there? 00:00:58.679 --> 00:01:01.119 You're making me feel quite old here Jo, I'll be honest. 00:01:01.240 --> 00:01:04.000 But yeah, I've been in this game a fair old while. 00:01:04.599 --> 00:01:06.719 I always wanted to be a journalist. 00:01:06.760 --> 00:01:10.359 I don't think anyone wakes up as a child and wants to be a financial journalist as such, 00:01:10.439 --> 00:01:12.879 because why would kids know what bonds and stocks are? 00:01:12.920 --> 00:01:18.439 But I always wanted to be a journalist, in no small part because Lois Lane was really cool 00:01:18.480 --> 00:01:22.120 and she had a typewriter in the Superman movies, and that was enough for me. 00:01:22.719 --> 00:01:25.040 So, I always wanted to do this. 00:01:25.319 --> 00:01:30.000 And so I started off at the trade press. Lots of us do that. 00:01:30.120 --> 00:01:32.760 So I was at Euromoney, which you're probably familiar with, 00:01:33.239 --> 00:01:35.359 started off there and then went into wires. 00:01:35.439 --> 00:01:39.480 So Dow Jones Newswires, that kind of became the Wall Street Journal. 00:01:39.879 --> 00:01:42.439 So I was with that group for like 11 years. 00:01:42.599 --> 00:01:43.200 Okay. 00:01:43.319 --> 00:01:48.120 Then I hopped over to the F.T. I've also been there for 11 years. 00:01:48.239 --> 00:01:53.879 So I don't move about much and I don't know how to do anything else is the short answer. 00:01:54.719 --> 00:01:57.760 So I want to delve a bit more into the financial world that you cover. 00:01:57.920 --> 00:02:04.640 But just going back a step, I think you studied Russian before becoming a journalist. 00:02:04.719 --> 00:02:08.439 Now I've got some overlap with you because I studied Russian history. 00:02:09.840 --> 00:02:13.039 What got you into Russian as a as a career choice? 00:02:13.120 --> 00:02:16.400 Was it you want to be a spy or something? I don't know. What's the story? 00:02:16.599 --> 00:02:17.759 It is a bit random. 00:02:17.919 --> 00:02:23.319 So, when I was at school when I was 13, it was presented to us. 00:02:23.520 --> 00:02:26.479 There was a choice. You could either do ancient Greek- 00:02:27.400 --> 00:02:28.319 A dead language. 00:02:28.439 --> 00:02:29.560 Didn't really see the point of that. 00:02:30.240 --> 00:02:33.120 Or you could do Russian, or you could learn to cook. 00:02:33.439 --> 00:02:34.520 It was a girls school. 00:02:35.400 --> 00:02:36.960 And I thought, mmmnnn. 00:02:37.080 --> 00:02:39.599 So I went and studied Russian. 00:02:39.639 --> 00:02:42.159 And I don't know, it just sort of stuck. 00:02:42.199 --> 00:02:46.439 I've got like, no, I've got no family from out there or anything like that. 00:02:46.520 --> 00:02:49.120 I was good at languages. So it was just kind of my thing. 00:02:49.159 --> 00:02:55.280 So I picked it up at school and then I went and studied Russian at Cambridge. 00:02:55.479 --> 00:02:56.599 I promise I'm not a spy. 00:02:56.680 --> 00:03:01.840 I did consider becoming a spy for a little while, but yeah, not for me. 00:03:01.919 --> 00:03:05.639 I think I'm better at telling secrets than I am at keeping secrets. 00:03:06.960 --> 00:03:09.879 So, yeah, I mean, you know, from studying the history. 00:03:09.919 --> 00:03:15.199 I mean, it's just a fascinating place, like a fascinating culture. 00:03:15.680 --> 00:03:18.199 The language is, you know, it's not the easiest. 00:03:18.319 --> 00:03:25.879 But as a sort of, you know, introduction into the grand sweep of 20th century European history, 00:03:26.039 --> 00:03:30.360 it's pretty difficult to beat spending a bit of time in Russia. 00:03:30.360 --> 00:03:37.719 So I would say my perception of your current activities are you talk to lots of people 00:03:37.840 --> 00:03:43.759 and you're trying to sort of sense which people are actually saying something you think really resonates, makes sense to you, 00:03:43.800 --> 00:03:49.360 and which people are probably sort of talking their own marketing or a bit of BS, as you might call it, 00:03:49.400 --> 00:03:52.840 in terms of how they are trying to persuade you of something. 00:03:53.680 --> 00:03:59.319 How do you use your antenna to sort of say that one is something I can build into, something I'd want to share with readers, 00:03:59.439 --> 00:04:05.000 versus it's actually something I just discount because it doesn't make too much sense to me. 00:04:05.039 --> 00:04:08.280 Yeah, part of it is sort of spidey senses, right? 00:04:08.360 --> 00:04:19.480 And the other thing is, I actually think there is value in speaking to and listening to like the BS merchants, right? 00:04:19.519 --> 00:04:24.759 It's really important to understand how other people think because, you know, 00:04:24.839 --> 00:04:28.240 like financial markets, as you know very well, they don't care what you think. 00:04:28.480 --> 00:04:32.759 They don't care what your preferences are. They don't care what your worldview is. 00:04:32.800 --> 00:04:36.560 They're a sort of, you know, amalgamation of what everyone else in the world thinks, 00:04:36.600 --> 00:04:38.160 and you're just a tiny little speck in it. 00:04:38.160 --> 00:04:41.839 And so you might think, you know, a particular asset class makes no sense 00:04:41.879 --> 00:04:45.560 or a particular investment makes no sense, but it might work out regardless. 00:04:45.639 --> 00:04:50.040 Or you might think, you know, markets are too optimistic, they're too pessimistic. 00:04:50.079 --> 00:04:57.199 And I just think it's really worth speaking to as broad a range of people as you possibly can to understand that full spread. 00:04:58.120 --> 00:05:01.600 What I've always said to colleagues of mine, 00:05:01.639 --> 00:05:05.600 like junior colleagues of mine kind of coming up through the ranks in financial journalism, 00:05:05.639 --> 00:05:08.279 is be fussy who you speak to. 00:05:08.800 --> 00:05:16.680 So people can be controversial. They can have wild out there ideas, but try and avoid like actual idiots. 00:05:16.680 --> 00:05:21.639 Try and avoid people who are just sort of tap dancing along and pretending they understand things, 00:05:21.639 --> 00:05:26.160 and particularly try and speak to people who are actually managing money. 00:05:26.160 --> 00:05:30.600 You know, if you've got skin in the game, it is a completely different conversation. 00:05:30.600 --> 00:05:34.959 You're not just spitballing and you're not just saying, this is what I think's going to happen. 00:05:34.959 --> 00:05:43.600 When you're actually managing money, and particularly when you're managing other people's money, you know, you have that sense of responsibility. 00:05:43.600 --> 00:05:49.720 I think it makes for more informed commentary and opinion and news analysis. 00:05:50.120 --> 00:05:51.000 It's a really interesting point. 00:05:51.480 --> 00:05:55.439 I remember I was in a room the other day where there's probably a hundred investors, 00:05:56.240 --> 00:05:58.560 probably a third were investing their own money, 00:05:58.600 --> 00:06:01.839 and a third were people who raise money to invest. 00:06:01.959 --> 00:06:06.920 And it was quite a stark difference between the view and conservativism, actually, 00:06:06.959 --> 00:06:13.759 of people who are putting their own money to work from a sort of evergreen fund or off the balance sheet like we do. 00:06:16.279 --> 00:06:19.360 So I guess the other question is, you know, I think in the UK, 00:06:19.480 --> 00:06:23.720 we're well known for being quite sometimes quite critical of the world. 00:06:24.839 --> 00:06:30.319 How do you walk that tightrope between being sort of curious, critical, 00:06:30.480 --> 00:06:34.720 but not getting to be too cynical about some of the things you hear and you see, 00:06:34.800 --> 00:06:37.720 because I guess that must be sometimes a temptation. 00:06:38.959 --> 00:06:43.000 So this is something that we grapple with at the FT. 00:06:43.079 --> 00:06:46.000 And I imagine people at other news organizations do the same, 00:06:46.120 --> 00:06:49.720 which is, you know, are we always too miserable? 00:06:50.000 --> 00:06:52.360 Are we always looking for things that can go wrong? 00:06:52.519 --> 00:06:55.680 So, you know, you have like a crash in the markets, 00:06:55.759 --> 00:06:58.279 you know, "a crash," say you're down like 5% in a day. 00:06:58.560 --> 00:07:01.319 That's a pretty bad day in the office for the stock market. 00:07:01.879 --> 00:07:02.759 We're all over it. 00:07:03.920 --> 00:07:07.600 Do we give the same amount of attention to days when the market is up by 5%? 00:07:07.759 --> 00:07:08.519 Maybe. Maybe not. 00:07:08.600 --> 00:07:12.040 So there's a kind of ecosystem here, right, 00:07:12.120 --> 00:07:16.639 where people don't want to read stories that say everything's probably going to be fine, actually. 00:07:16.920 --> 00:07:22.240 People want to read stories that say to them, this is where we think the potential pitfalls are. 00:07:22.360 --> 00:07:25.759 This is where things are going wrong. These are the things to watch out for. 00:07:25.759 --> 00:07:28.519 So does that make us too miserable? 00:07:29.879 --> 00:07:32.639 You know, it's an open question and we try and fight against it. 00:07:32.680 --> 00:07:37.519 And actually, I think we do, you know, the FT deal with markets pretty even handedly. 00:07:37.519 --> 00:07:39.600 You know, there are there are good days, there are bad days. 00:07:39.600 --> 00:07:45.600 There are forces that pull stock markets higher even, you know, and there are forces that pull stock markets lower. 00:07:45.800 --> 00:07:48.319 And we try to sort of deal with them evenly. 00:07:49.839 --> 00:07:52.920 It is tricky though, and I think we're all... 00:07:52.920 --> 00:07:55.079 We don't want to be doom mongers. 00:07:55.199 --> 00:08:00.920 We don't want to encourage our readers to miss out on opportunities and to be sort of too cautious 00:08:01.000 --> 00:08:04.439 because, you know, that's the easier path. 00:08:04.480 --> 00:08:08.519 And also pessimists make more noise than the optimists, right? 00:08:08.759 --> 00:08:13.959 They do you know that they can be very noisy, sometimes pretty empty vessels 00:08:14.079 --> 00:08:19.879 and they get, you know, a lot of time, much more air time than they should. 00:08:19.879 --> 00:08:27.879 And I think, you know, when journalists write about financial markets, you know, again, it can be very easy, 00:08:27.920 --> 00:08:29.519 and it's a temptation that we must avoid, 00:08:29.560 --> 00:08:31.560 to impose our personal politics on it, 00:08:31.920 --> 00:08:33.440 or our publications' politics on it, 00:08:34.039 --> 00:08:37.159 because you see instances where, you know, in the UK, for example, 00:08:37.360 --> 00:08:40.759 you can look through any number of newspapers that are convinced 00:08:40.799 --> 00:08:47.279 that we're in the teeth of a horrendous crisis in UK government bonds and a horrendous crisis in in sterling. 00:08:47.320 --> 00:08:49.799 And I look at the charts and I think, I just don't know what you're talking about. 00:08:49.799 --> 00:08:50.440 Right. 00:08:50.440 --> 00:08:54.600 But again, it's a reflection of your priors and it's a reflection of your politics. 00:08:54.639 --> 00:08:58.960 And the worrying thing about that is that it actually does affect investor behavior, 00:08:59.080 --> 00:09:02.159 particularly among, you know, self-directed retail investors. 00:09:02.320 --> 00:09:08.679 So I think, I guess the moral of the story for consumers of financial news is 00:09:08.759 --> 00:09:13.200 think about the politics behind the publication and think about what they're trying to achieve. 00:09:13.240 --> 00:09:18.440 And just question is this objective? Is this fair? 00:09:18.600 --> 00:09:25.240 Does does this sort of express the possibility that, you know, that markets could move the other way? 00:09:25.360 --> 00:09:26.960 And is it even handed? 00:09:26.960 --> 00:09:28.519 So yeah, be careful what you read. 00:09:28.960 --> 00:09:30.000 Yeah, that's a great tip. 00:09:30.000 --> 00:09:37.360 But let's be honest, there's some issues I think around at the moment where you might say there are definitely risks around in the world. 00:09:39.080 --> 00:09:47.000 Well covered in terms of some of the geopolitical risk, the Iran conflict and what that's probably going to mean going forward. 00:09:47.600 --> 00:09:51.440 I mean, I guess at Teachers', you know, we try to have what we call an all weather portfolio. 00:09:51.480 --> 00:09:55.159 Hopefully it can deal with most things that come along and challenge us. 00:09:55.200 --> 00:09:56.480 And how do you see things? 00:09:56.559 --> 00:10:03.480 I mean, I guess I would be more in a world where we expect lower growth, higher inflation type of oversimplification. 00:10:03.559 --> 00:10:05.759 Is that something that you would resonate for you? 00:10:05.759 --> 00:10:10.039 Yeah, definitely. There's a real tension in markets at the moment. 00:10:10.120 --> 00:10:14.279 And you know, again, I try and speak to as broad a range of people as I can. 00:10:14.279 --> 00:10:18.159 When I talk to people in stock markets, they're like, this is great. 00:10:18.159 --> 00:10:21.440 Corporate earnings are doing fine. My portfolio is working out fine. 00:10:21.480 --> 00:10:27.080 We've recovered from the shock from the war in Iran. 00:10:27.080 --> 00:10:28.720 I don't know what you people are worrying about. 00:10:29.480 --> 00:10:32.960 You talk to people in the energy market and they say "Hell is coming." 00:10:34.559 --> 00:10:35.440 It's already come, I think. 00:10:35.519 --> 00:10:36.279 You know. 00:10:36.360 --> 00:10:38.600 In certain parts of the world it has already come. 00:10:38.840 --> 00:10:41.320 I don't understand why you people are so chilled out. 00:10:41.480 --> 00:10:45.519 You know, a lot of these energy traders are pretty much running on vapors at this point. 00:10:45.600 --> 00:10:49.159 And they're worried about what's going to happen, 00:10:49.200 --> 00:10:54.639 and they're very conscious that you can end the war, you know, pretty much with a click of the fingers. 00:10:54.720 --> 00:11:01.360 But you cannot restart the flow of energy supplies around the world just instantaneously. 00:11:01.360 --> 00:11:03.639 And then in the middle, you've got the bond market. 00:11:03.639 --> 00:11:08.399 And like typically bond investors are a more miserable bunch than equity investors. 00:11:08.840 --> 00:11:11.519 Stock market investors are always thinking about what can go right. 00:11:11.519 --> 00:11:12.279 Yeah. 00:11:12.440 --> 00:11:15.080 Bond investors are always thinking about what can go wrong. 00:11:15.559 --> 00:11:18.919 They're very different types of people kind of individually. It's quite interesting. 00:11:19.000 --> 00:11:23.600 They're different tribes, but they're sort of caught in the middle where the bond market is saying: 00:11:24.759 --> 00:11:27.879 Yes, we think slower growth, but we think higher inflation, 00:11:28.159 --> 00:11:32.120 and we think more borrowing is coming from governments around the world 00:11:32.159 --> 00:11:36.039 who suddenly have realized they've got to spend more on energy, 00:11:36.279 --> 00:11:37.639 they've got to spend more on green energy, 00:11:37.679 --> 00:11:39.200 and they've got to spend more on defense. 00:11:39.240 --> 00:11:39.879 Yes. 00:11:39.919 --> 00:11:46.919 And so you have this, like, weird thing going on in the market at the moment where they really don't match up. 00:11:47.200 --> 00:11:49.919 I find that tension quite, quite interesting. 00:11:50.000 --> 00:11:51.960 I mean, I don't know how are you dealing with it? 00:11:52.039 --> 00:11:54.440 It's like you're getting such mixed signals, right? 00:11:54.879 --> 00:11:56.320 Well, I think so. 00:11:57.320 --> 00:12:01.320 I think the interesting question is because probably for the last two years, 00:12:01.440 --> 00:12:08.080 the equity markets around the world have generally trundled along, as you rightly pointed out, with quite a lot of resilience. 00:12:08.879 --> 00:12:13.200 You sort of almost come back to what's going to be the catalyst to make that change. 00:12:14.159 --> 00:12:17.320 And, you know, I thought potentially the Iran conflict could be that. 00:12:17.320 --> 00:12:21.200 We seem to be sort of still tiptoeing away from that. 00:12:21.279 --> 00:12:26.080 Honestly, I would probably say above and beyond our focus on trying to deal with inflation, 00:12:26.120 --> 00:12:31.480 because it's a big issue for a pension plan, particularly with inflation linked liabilities to our members. 00:12:32.759 --> 00:12:35.559 It might be food if I was picking one thing out. 00:12:35.679 --> 00:12:40.000 So, you know, you could see a scenario where not as much planted 00:12:40.039 --> 00:12:43.519 because of the cost of fertilizer or even the availability of fertilizer. 00:12:43.799 --> 00:12:47.279 If it's not actively planted and there's a bad harvest, 00:12:47.279 --> 00:12:51.759 you could easily see shortage of food as much as high prices, 00:12:51.840 --> 00:12:56.679 and that starts to become a very clear downward pressure, I would say. 00:12:56.720 --> 00:13:01.000 So that would be the one I would be, not knowing it's going to be the issue, 00:13:01.080 --> 00:13:04.679 but it could easily be the sort of catalyst that would tip us into a different frame of mind. 00:13:04.720 --> 00:13:06.519 I don't know whether you agree with that. 00:13:06.639 --> 00:13:13.240 Yeah. When I speak to investors, that's broadly the kind of path that they're picking through this, right? 00:13:13.279 --> 00:13:18.240 That there will be higher inflation through food prices, there will be higher inflation through energy prices. 00:13:18.279 --> 00:13:22.840 There's likely to be slower growth than you than you might previously have seen. 00:13:23.720 --> 00:13:26.759 I mean, this is just such an interesting moment, right? 00:13:26.799 --> 00:13:31.639 We're seeing like multilateral organizations that we've all grown up with 00:13:31.639 --> 00:13:35.679 and taken almost to be like a sort of an element of nature, right? 00:13:35.759 --> 00:13:39.960 So you look at NATO, you look at the UN, you look at OPEC, 00:13:39.960 --> 00:13:43.919 you know, okay, these are all flawed organizations, 00:13:43.960 --> 00:13:49.720 but they're organizations that bring people together and force them to thrash out arguments and ideas. 00:13:49.720 --> 00:13:52.480 And all of those organizations are under enormous pressure. 00:13:52.559 --> 00:13:56.279 Now, I would have thought... A few years ago if you'd said to me 00:13:56.320 --> 00:14:01.759 that NATO would be in the sort of position that it is now where its membership is unstable, let's say, 00:14:01.840 --> 00:14:03.840 and some of the alliances are crumbling. 00:14:04.960 --> 00:14:08.399 I would have said that's worth 10% off the stock market any day of the week. 00:14:08.519 --> 00:14:09.039 Right. 00:14:09.080 --> 00:14:10.120 But actually... 00:14:10.120 --> 00:14:11.200 But it didn't happen. 00:14:11.399 --> 00:14:14.600 Like, what is NATO worth to investors? 00:14:14.639 --> 00:14:16.279 Like, it's a really open question. 00:14:16.320 --> 00:14:19.159 And I, and I really don't know. I don't know the answer. 00:14:19.200 --> 00:14:22.360 And I think it comes back to that point that you raised, which is resilience. 00:14:22.440 --> 00:14:30.000 You know, we had Covid, you know, the entire global economy shut down pretty much overnight and markets recovered. 00:14:30.120 --> 00:14:38.039 You had Liberation Day last year, this this threat of massive trade tariffs from the US across the whole of the rest of the planet. 00:14:38.080 --> 00:14:44.000 Some of that got rolled back, but still big market shock. But it recovered. 00:14:44.039 --> 00:14:49.240 And I think, certainly in stock markets, we're so accustomed to this idea that, don't worry, they will bounce back. 00:14:49.399 --> 00:14:52.080 Either they will bounce back naturally through corporate earnings, 00:14:52.080 --> 00:14:54.799 which are doing very well in the States in particular at the moment. 00:14:55.039 --> 00:14:58.440 Or they will bounce back from some sort of safety net, whether that's fiscal. 00:14:58.519 --> 00:15:04.200 So taxes or whether tax and spending or whether it's through monetary policy, so through interest rates, 00:15:04.200 --> 00:15:08.919 people are just conditioned to thinking someone will turn up and fix this. 00:15:10.159 --> 00:15:12.039 And look, that's fine. That's great. 00:15:12.080 --> 00:15:15.799 And I'm absolutely, you know, a fan of, of stock market resilience. 00:15:15.960 --> 00:15:18.120 I think it's a net positive for the world. 00:15:18.240 --> 00:15:21.480 But there is a little part of me in the back of my head that just says: 00:15:22.720 --> 00:15:27.399 Will the music stop one day? Is this really sustainable? 00:15:27.440 --> 00:15:31.519 You know, you can trot out a list of reasons why this would go wrong. 00:15:31.600 --> 00:15:34.840 I'm very happy that they haven't, you know, crystallized at this point, 00:15:34.960 --> 00:15:37.399 but it remains something that I think we should take seriously. 00:15:37.879 --> 00:15:40.960 Maybe we could go to a sort of a parallel area. 00:15:41.000 --> 00:15:45.600 And this is our attempt to move out of bond territory into more sort of equity and optimism territory. 00:15:46.519 --> 00:15:49.039 And you might look at, say, climate. 00:15:50.639 --> 00:15:58.000 So for me, you know, climate suddenly became subordinated to fourth or fifth on the list of things to talk about rather than 1 or 2. 00:15:58.840 --> 00:16:05.320 And particularly when you see all the challenges that may be coming our way through oil and gas availability and pricing, 00:16:06.120 --> 00:16:11.240 maybe it will be a bit of a shot in the arm for alternative ways of generating energy. 00:16:11.519 --> 00:16:18.840 So, you know, we know some parts of the world aren't too keen on wind power as versus solar and battery storage. 00:16:18.960 --> 00:16:26.039 But from our point of view, you know, Teachers' has been a very strong proponent that we want to be involved in the energy transition. 00:16:26.080 --> 00:16:33.279 We believe in trying to find other ways of producing energy as well as transmitting it to the right destination. 00:16:34.360 --> 00:16:39.039 Maybe this is a chance for some of those sort of stalled projects, particularly around things like wind 00:16:39.080 --> 00:16:42.039 to get back on the agenda. I don't know what you think. 00:16:42.039 --> 00:16:50.120 I mean, you know it blows my mind that the world did not get this memo in 2022, with Russia's full scale invasion of Ukraine, 00:16:51.000 --> 00:16:55.360 violent moves in gas prices, natural gas prices and in oil prices, 00:16:55.480 --> 00:17:00.720 and, you know, a real clamping down on the availability of energy, particularly in Europe 00:17:01.320 --> 00:17:06.319 and still large parts of the world just sort of carried on regardless and thought, 00:17:06.319 --> 00:17:09.960 well, we're just going to have to pay the higher the higher prices and bring in some subsidies 00:17:10.039 --> 00:17:12.359 to try and lessen the impact on households. 00:17:13.359 --> 00:17:15.240 Some countries have been quite innovative here. 00:17:15.279 --> 00:17:19.440 So you look at the example of Spain, which went all in on solar. 00:17:19.480 --> 00:17:22.119 They have plenty of sunshine in Spain. 00:17:22.599 --> 00:17:26.720 And the result of that is that the impact of the energy shock 00:17:26.720 --> 00:17:30.519 that we've seen over the past couple of months has been quite subdued, actually, in Spain. 00:17:30.559 --> 00:17:34.640 They're much more in control of their own energy network. 00:17:34.680 --> 00:17:37.279 And I think this is a definitely a wake up call. 00:17:37.400 --> 00:17:43.640 As you say, there was this kind of, you know, sustainable investing 00:17:43.720 --> 00:17:48.279 and investing through this sort of ESG lens where you have very kind of green tinted glasses on. 00:17:48.359 --> 00:17:50.680 You're always looking for green solutions to energy. 00:17:50.680 --> 00:17:53.720 That encountered a real kind of PR problem, 00:17:53.720 --> 00:17:56.000 if nothing else, you know, 00:17:56.000 --> 00:17:59.519 around the second Trump administration in particular, 00:17:59.640 --> 00:18:04.079 and lots of asset managers that we speak to who could not stop talking about ESG, 00:18:04.079 --> 00:18:06.119 at one point, suddenly- 00:18:06.839 --> 00:18:07.240 All gone. 00:18:07.640 --> 00:18:10.640 Gone. The phrase has been expunged from their websites. 00:18:10.680 --> 00:18:13.079 They never speak about it like it never happened. 00:18:13.119 --> 00:18:17.759 And I'm thinking, am I going mad? I definitely remember this was a big thing for you a couple of years ago. 00:18:18.000 --> 00:18:23.279 The reality is, especially in Europe, we sort of never turned our back on it. 00:18:23.440 --> 00:18:28.119 It's always been there. We just haven't shouted about it in quite the same way as we did before. 00:18:28.160 --> 00:18:31.920 And I think it is time to have a much more honest conversation about that. 00:18:31.920 --> 00:18:36.319 And I think, you know, so Green bonds, for example, have just sort of motored ahead. 00:18:36.400 --> 00:18:38.759 There's plenty of investor demand for them. 00:18:38.799 --> 00:18:45.160 You know, I gather from asset managers that if you want to get any kind of mandate for any kind of public pension scheme in Europe 00:18:45.200 --> 00:18:49.160 and you don't have some sort of ESG lens, you are wasting your time. 00:18:49.279 --> 00:18:51.119 You just do not get through the door. 00:18:51.160 --> 00:18:55.279 So we've kind of carried on. The US can do what it's going to do. 00:18:55.799 --> 00:19:02.680 But yeah, I feel like the green energy, you know, revolution, which is still playing out, 00:19:02.920 --> 00:19:10.240 it's just going to be so interesting sort of politically and geopolitically and financially and all the rest of it. 00:19:10.319 --> 00:19:13.759 You know, you look at the strides that China has made in this space. 00:19:13.839 --> 00:19:18.640 I think it already accounts for like a third of spending on green energy globally. 00:19:19.359 --> 00:19:23.200 They can they can knock out solar panels like double quick. 00:19:23.240 --> 00:19:27.640 They know what they're doing and they're very good at making electric vehicles. 00:19:27.720 --> 00:19:34.200 And so ultimately, the winner, if you like, of this conflict that seeing in Iran is likely to be China. 00:19:35.200 --> 00:19:42.279 It sets a lot more geopolitical weight on China, a lot more innovation onto China, 00:19:42.279 --> 00:19:47.160 a lot more focus on what it can do in terms of unlocking that green energy transition. 00:19:48.079 --> 00:19:53.519 So yeah, I think one of the lasting impacts of what we've seen over the past few months in the Middle East 00:19:53.559 --> 00:20:00.680 is going to be this reset into more defense spending, more green energy spending. 00:20:01.079 --> 00:20:02.680 You know, I think it would be... 00:20:03.119 --> 00:20:07.279 I can't see a scenario in which, you know, Europe, for example, passes up that opportunity. 00:20:07.599 --> 00:20:11.519 So we've talked a bit about climate, talked a bit about some of the vulnerabilities around. 00:20:13.079 --> 00:20:17.920 I mean, I guess we may look back on 2026 as the year of the big IPO. 00:20:18.400 --> 00:20:25.079 There's still quite a few questions in what felt like a very bullish part of the the market opportunity set. 00:20:25.279 --> 00:20:29.839 Yeah. It's a bit hard to know which way is up with the AI trade sometimes right? 00:20:29.920 --> 00:20:34.599 So you know we spent a large part of last year - of 2025 - saying: 00:20:34.720 --> 00:20:39.039 Is this thing a bubble? Does AI actually work? Does anyone want this stuff? 00:20:40.079 --> 00:20:45.200 You know, there seems to be large sums of money being thrown at things that don't make a lot of instinctive sense. 00:20:45.279 --> 00:20:49.440 You know, is this just kind of, you know, we're chasing our shadow here? 00:20:50.400 --> 00:20:57.279 And then pretty much for no reason at all, in the opening weeks of 2026, that narrative turned absolutely on its head to: 00:20:57.519 --> 00:20:59.079 Oh, actually, AI is too good. 00:20:59.079 --> 00:20:59.559 Yeah. 00:20:59.559 --> 00:21:00.599 We don't need humans anymore. 00:21:00.599 --> 00:21:05.480 So then it became a conversation about... 00:21:05.559 --> 00:21:06.960 We're all doing podcasts now, that's why. 00:21:07.759 --> 00:21:13.680 Then it became a conversation about, you know, what are the social and political ramifications 00:21:13.920 --> 00:21:18.079 of getting rid of a lot of human jobs and putting them through machines instead? 00:21:18.119 --> 00:21:20.920 And it's like, how did we go from one thing to another? 00:21:20.960 --> 00:21:25.039 Now the sort of the thoughtful asset managers that I speak to say: 00:21:25.480 --> 00:21:30.240 This is what markets do when they don't know. 00:21:31.079 --> 00:21:33.200 And, and I think they really don't know at the moment. 00:21:33.279 --> 00:21:37.000 They don't know, you know, is this technology monetizable? 00:21:37.119 --> 00:21:39.599 Is there a real revenue stream that comes from this? 00:21:39.640 --> 00:21:43.319 And if there is, what does that revenue stream look like and where is it distributed? 00:21:43.359 --> 00:21:47.000 Which companies are going to do well, and which companies are going to do badly? 00:21:47.039 --> 00:21:50.640 And other companies that aren't focused on AI, are they going to use it? 00:21:51.160 --> 00:21:55.519 Are they going to become much better versions of their current selves as a result of using it? 00:21:56.000 --> 00:21:57.519 Or are they going to be wasting their money? 00:21:57.680 --> 00:22:02.480 So the only the only answer is there's going to be disruption. 00:22:02.480 --> 00:22:04.640 But I don't really know what that looks like. 00:22:04.680 --> 00:22:08.519 And I think a lot of these questions are going to really bubble up to the surface 00:22:08.559 --> 00:22:12.279 as a result of the proposed IPOs of some some AI names. 00:22:12.319 --> 00:22:13.759 It's like, okay, we get it. 00:22:13.759 --> 00:22:17.519 We see the technology, some of us use it, you know, we like it. 00:22:18.000 --> 00:22:23.359 You know, Claude is very good at building charts for me and all that sort of stuff. 00:22:24.400 --> 00:22:27.839 But who's going to pay for it? And are they going to pay for it loyally? 00:22:27.880 --> 00:22:31.960 And are they going to pay for it every week or every month? What's that going to look like? 00:22:32.000 --> 00:22:34.599 And that remains a really open question. 00:22:35.319 --> 00:22:40.440 So whether the technology works or not, is almost not the question anymore. It's who's going to pay for this stuff. 00:22:40.559 --> 00:22:49.079 Well, and also I think there's a big split at the moment between people who use AI all the time in their private life, as well as in in work, 00:22:49.279 --> 00:22:55.799 and people who are, as you say, probably a bit more standing on the touchline wondering how that's going to play out. 00:22:56.240 --> 00:23:04.680 I do think that the data center model feeding into AI is quite difficult still to establish who makes the money. 00:23:05.480 --> 00:23:11.440 And it's probably been further distorted by a lot of firms in and around the component parts of data centers 00:23:11.480 --> 00:23:19.359 investing in each other to sort of make those growth scenarios happen at the speed that investors are expecting. 00:23:19.519 --> 00:23:23.319 Yeah. That whole thing I struggle to get my head around. 00:23:23.359 --> 00:23:27.039 They've got stakes in each other and they've got sort of offtake agreements with each other. 00:23:27.079 --> 00:23:29.160 And it is quite a weird ecosystem. 00:23:29.200 --> 00:23:31.559 But I think one thing that gets lost in all that is that 00:23:32.079 --> 00:23:38.880 it's often assumed that the AI boom is, is a stock market question and it begins and ends in the stock market. 00:23:38.920 --> 00:23:40.440 That's not true at all. 00:23:40.480 --> 00:23:47.680 You know, the hyperscalers have issued a lot of money in corporate bonds to fund part of this data centre build out. 00:23:47.799 --> 00:23:55.519 So, you know, this idea that you can avoid AI and that it's a theme that you can exclude from your portfolio is rubbish. 00:23:55.680 --> 00:24:02.640 You can be in emerging markets, and guess what the big EM stocks are? They're related to the AI trade. 00:24:03.160 --> 00:24:07.920 You can be in corporate bonds. Well guess what? A large chunk of that is baked into the AI trade. 00:24:07.960 --> 00:24:11.480 So it doesn't matter where you are. It doesn't matter where your portfolio is. 00:24:11.480 --> 00:24:15.000 It has to touch AI at multiple points. 00:24:15.440 --> 00:24:19.599 And so does that make us more resilient or less? 00:24:20.200 --> 00:24:23.119 I don't honestly know the answer to that question, but there is no way to avoid it. 00:24:23.559 --> 00:24:28.279 Let me take you somewhere else because, I mean, obviously, Teachers' is from Canada, 00:24:29.000 --> 00:24:34.240 and I guess for our Canadian viewers, a couple of quick questions if I could. 00:24:34.359 --> 00:24:37.799 So how do you see Canada in the world at the moment? 00:24:37.839 --> 00:24:41.960 Obviously, there's been a bit more coverage with Mark Carney and his Davos speech, 00:24:42.039 --> 00:24:49.880 as well as trying to knit together sort of an alternative to the US trade options that we currently have. 00:24:50.200 --> 00:24:52.559 Is Canada's standing in the world still good? 00:24:53.039 --> 00:24:54.400 I think so. 00:24:54.480 --> 00:24:58.079 I think, you know the Carney speech at Davos like was a big moment. 00:24:58.160 --> 00:25:06.359 And it was a kind of galvanizing moment for smaller economies to band together 00:25:06.400 --> 00:25:10.960 and to think about a world that doesn't necessarily revolve around the same great powers 00:25:11.000 --> 00:25:15.720 as we've been used to over the past, you know, in the postwar period. 00:25:15.799 --> 00:25:18.240 So for me, that's very healthy. 00:25:18.720 --> 00:25:22.200 Like criticisms that I sometimes hear about Canada from a distance is, 00:25:22.839 --> 00:25:27.279 well, they seem to have plenty of internal trade barriers over there that I wasn't previously aware of. 00:25:27.279 --> 00:25:31.599 And, you know, and the economy is also very oil heavy. 00:25:31.680 --> 00:25:37.039 And so is Canada in the right position to be talking about multilateralism and breaking down barriers 00:25:37.079 --> 00:25:41.079 and thinking about a world beyond fossil fuels? Fair. 00:25:41.160 --> 00:25:47.559 But I do think Canada stands out as a obviously a friend to the UK, as a friend to to Europe. 00:25:47.559 --> 00:25:53.599 And I think the world does have to think a little bit differently about reliance on the US, 00:25:53.680 --> 00:25:57.759 whether that's in defense or whether that's in finance or whether that's in tech. 00:25:58.559 --> 00:26:02.200 It seems like a healthier place to be to spread that around a little bit. 00:26:02.279 --> 00:26:05.079 And I think Canada is in a good position to to grab some of that. 00:26:05.480 --> 00:26:09.759 So the other thing Canada is doing at the moment that you've probably seen is launching a new sovereign wealth fund. 00:26:11.559 --> 00:26:15.039 Do you think the UK should have something? A bit more of a look alike to that? 00:26:15.680 --> 00:26:18.920 Should the UK have a sovereign wealth fund? Good question. 00:26:19.400 --> 00:26:25.799 Look, there's a large part of our pension system that is unfunded that could be done differently. 00:26:25.960 --> 00:26:28.039 There are kind of pros and cons that come with that. 00:26:28.119 --> 00:26:33.279 So, you know, a large part of our pensions is funded through taxes rather than through a big pot of money. 00:26:34.680 --> 00:26:37.160 Would a sovereign wealth fund be the way to do that? 00:26:38.000 --> 00:26:44.359 I think, you know, being Brits, we would obsess about the potential downsides there 00:26:44.359 --> 00:26:48.599 and obsess about what investments are being made. 00:26:48.759 --> 00:26:53.680 What are the political motivations behind that, what are the special interests? 00:26:53.920 --> 00:27:02.359 And, you know, if we were to be as a country, effectively sending lots of money abroad to invest in opportunities overseas, 00:27:02.400 --> 00:27:06.359 then I think, again, it would get tricky and political quite early on. 00:27:06.359 --> 00:27:10.759 Why are you funding housing in this country and not funding housing in this country please? 00:27:10.799 --> 00:27:14.599 And why are you investing in infrastructure over there when you should be investing in infrastructure over here? 00:27:15.240 --> 00:27:18.319 So I'm not saying it's a bad idea. 00:27:18.599 --> 00:27:25.200 I am saying I can see how Brits are just too miserable to make this make this work. 00:27:25.279 --> 00:27:27.480 Too quick to see the downsides. 00:27:27.559 --> 00:27:32.039 Because, you know, we are often very downbeat about the UK. 00:27:32.039 --> 00:27:37.839 And it was really funny, I was talking to someone the other day who's a chief executive of a German company 00:27:37.920 --> 00:27:41.880 and they do kind of construction and infrastructure and all these sorts of things. 00:27:41.880 --> 00:27:44.799 And he was saying, we love doing business in the UK. 00:27:45.160 --> 00:27:50.319 Said you have, you're very clear, and you have very clear legal frameworks. 00:27:50.400 --> 00:27:55.440 And you have a very robust rule of law and you're very consultative. 00:27:55.480 --> 00:27:58.799 And you have, you know, a very skilled workforce, you know, and, and, and! 00:27:59.400 --> 00:28:03.480 And I was saying to him like, this is mad! Like people never... You know. 00:28:03.640 --> 00:28:04.680 It doesn't resonate. 00:28:04.680 --> 00:28:06.039 It's like, don't know what you're talking about. 00:28:06.759 --> 00:28:11.640 So, you know, I think we're very good at beating up on ourselves and in a way that, you know, 00:28:11.680 --> 00:28:16.839 obviously Americans are very good at kind of beating their chests and seeing all of the positives. 00:28:16.920 --> 00:28:18.920 I guess Canadians are somewhere in between? 00:28:19.119 --> 00:28:22.799 I think Canadians are generally, you know, glass half full people. 00:28:22.920 --> 00:28:29.400 Canada has a wonderful, backdrop of lots of natural resources and space. 00:28:29.920 --> 00:28:33.640 And, you know, there's not space, SpaceX, space to live. 00:28:34.240 --> 00:28:35.759 And they've done very well with immigration, 00:28:35.799 --> 00:28:41.599 which I think is to credit to all of the governments that have preceded the current Liberal government. 00:28:41.640 --> 00:28:47.200 Now, one bit of the world we haven't talked to maybe just sort of try and have a brief comment about this is Asia. 00:28:48.200 --> 00:28:54.640 In our case, we paused investing in China because we were finding it quite difficult to not only make the returns, 00:28:54.720 --> 00:29:02.799 but sometimes we'd be investing in sectors which would become strategic and therefore more difficult to find an exit or an end point for that. 00:29:03.039 --> 00:29:07.720 I guess the topic that we've seen discussed quite a lot is the "What if?" 00:29:07.759 --> 00:29:11.440 You know, what if you had to disengage from China, 00:29:12.119 --> 00:29:16.519 remove China from the supply chains of all of the companies you're working with. 00:29:17.319 --> 00:29:22.960 I would say for us anyway, unlike, say, Russia, when it came along, that wasn't too difficult. 00:29:23.000 --> 00:29:30.079 We didn't have too much exposure or exposure within supply chains, but China would be a completely different challenge. 00:29:30.759 --> 00:29:37.559 Any thoughts on, um, the probability of that ever happening through to how people might go about it? 00:29:38.160 --> 00:29:40.119 Oh, that's a big question, Jo. 00:29:40.599 --> 00:29:43.319 That's the nightmare scenario. 00:29:43.480 --> 00:29:46.400 And I think we've spoken a lot about how resilient markets are. 00:29:46.599 --> 00:29:52.200 But if for any reason the world felt a need to disconnect from China, that would be a completely different matter. 00:29:52.279 --> 00:29:59.279 You know, it's not just green energy and electric vehicles where China is is making huge strides. 00:29:59.319 --> 00:30:06.240 It's absolutely enmeshed in the supply chains for everything, whether that's low value goods or high value goods. 00:30:07.240 --> 00:30:09.359 That really would be difficult. 00:30:09.839 --> 00:30:16.039 I would say, you know, investors over the years, they really sort of swing around on China, right? 00:30:16.160 --> 00:30:22.160 And one minute everyone is all in, the next minute you get this raft of like regulatory announcements 00:30:22.279 --> 00:30:29.680 that just come out of nowhere affecting the education sector, which was a couple of years ago, right. 00:30:29.759 --> 00:30:34.920 And, and people just get like wiped out on certain investments and just think, well, what is going on here? 00:30:35.039 --> 00:30:36.319 Why didn't I see this coming? 00:30:36.359 --> 00:30:39.759 And the policy uncertainty is really difficult for investors to deal with. 00:30:40.279 --> 00:30:45.039 And so I think a lot of asset managers, I know a lot of asset managers just said, I'm out, okay. 00:30:45.359 --> 00:30:48.160 This is just not a game that we really need to be in. 00:30:48.599 --> 00:30:50.440 US stock markets are doing so well. 00:30:50.440 --> 00:30:53.279 Why do we have to bother taking China risk? 00:30:53.799 --> 00:30:56.200 People are warming to China now. 00:30:56.559 --> 00:31:02.720 People are spotting signs that maybe this long running nightmare in the real estate sector in China 00:31:02.799 --> 00:31:05.200 is at least closer to the end than the beginning. 00:31:05.200 --> 00:31:07.400 It's been very difficult to figure out what's going on there, 00:31:07.480 --> 00:31:12.720 but it seems to be easing up and coming to a natural end, she says, touch wood. 00:31:13.920 --> 00:31:18.480 You can see the leadership that China is carving out in certain sort of high tech industries, 00:31:18.519 --> 00:31:21.039 and so people are again sniffing around and thinking, 00:31:21.119 --> 00:31:24.319 well, maybe it makes sense to have a little bit of an allocation there. 00:31:24.359 --> 00:31:28.480 It it diversifies me away from other parts of the world. 00:31:28.519 --> 00:31:32.839 There are some potential high growth areas. So it makes a lot of sense. 00:31:33.000 --> 00:31:36.319 But yet, you know, people have... 00:31:36.759 --> 00:31:43.480 The Taiwan question has kind of fallen out of sort of public conscience, I think, a little bit recently. 00:31:43.519 --> 00:31:48.960 And we've all been obsessed with Ukraine and we've been obsessed with with Iran, but it's still there. 00:31:49.000 --> 00:31:49.480 Sure. 00:31:50.559 --> 00:31:53.359 And it remains an open question. 00:31:53.400 --> 00:31:58.759 And yet, you know, that's the big shock that everybody hopes won't happen 00:31:58.839 --> 00:32:02.359 because in a lot of ways, it's not in China's interest either. 00:32:02.480 --> 00:32:04.359 You look at the kind of wealth accumulation 00:32:04.400 --> 00:32:10.240 and the industrial base that it's built up by being somewhat integrated with the West. 00:32:10.359 --> 00:32:12.880 Would it want to pull the plug on that? 00:32:13.000 --> 00:32:17.319 I doubt it, but, you know, we live in interesting times, I suppose. 00:32:18.000 --> 00:32:19.319 So I thought for a bit of fun. 00:32:19.519 --> 00:32:20.160 Okay. 00:32:21.200 --> 00:32:28.200 I'm going to rapid fire a few questions at you, which will help everybody watching this podcast understand Katie better. 00:32:28.200 --> 00:32:28.920 Okay. 00:32:29.000 --> 00:32:30.920 And if it doesn't, it'll be a bit of a laugh anyway. 00:32:31.079 --> 00:32:32.599 So, cat or dog? 00:32:32.759 --> 00:32:33.319 Dog. 00:32:33.599 --> 00:32:34.640 Beach or city? 00:32:35.200 --> 00:32:38.160 Well, it depends what for? Like to live, city. 00:32:38.559 --> 00:32:40.000 You just have to say which you prefer. 00:32:40.000 --> 00:32:40.720 That's quite hard. 00:32:40.720 --> 00:32:42.400 It's fine. Beer or wine? 00:32:42.559 --> 00:32:43.440 Wine. 00:32:43.960 --> 00:32:45.480 Theatre or cinema. 00:32:45.799 --> 00:32:47.960 Um... Cinema. 00:32:48.720 --> 00:32:49.640 Pounds or dollars? 00:32:50.640 --> 00:32:52.039 Sterling all the way. 00:32:52.119 --> 00:32:53.279 Pub or karaoke? 00:32:53.680 --> 00:32:55.359 Oh, I like a bit of karaoke. 00:32:55.359 --> 00:32:58.079 You can have both - karaoke in pubs. 00:32:58.119 --> 00:32:58.960 Good answer. 00:32:58.960 --> 00:33:00.359 What's your go to karaoke song? 00:33:00.759 --> 00:33:08.079 I normally do a sort of Beatles number, Get Back or something, because it's in a range where I can actually sing it. 00:33:08.920 --> 00:33:14.279 And there aren't that many tunes where I can sing it within the range, so that's normally where I try and go. 00:33:14.559 --> 00:33:17.960 It'll also depend on when I'm up, if I'm up later in the event, 00:33:18.000 --> 00:33:21.920 and I've had a few sherbets, as they say, I might be a bit more broad minded. 00:33:22.000 --> 00:33:22.519 Yeah. 00:33:22.519 --> 00:33:25.480 But it also helps if you know the song and you know some of the words, 00:33:25.599 --> 00:33:27.200 because that way you can really get into it. 00:33:27.359 --> 00:33:29.720 Yeah, Yeah. I didn't realize you were a karaoke fan. Okay, every day's a school day. 00:33:29.960 --> 00:33:31.279 I'm not really, but I'm just, you know... 00:33:31.279 --> 00:33:35.000 See, I can BS for a camera as much as anybody else. 00:33:35.000 --> 00:33:37.920 Well, let me just say, Katie, thank you so much for joining the podcast today. 00:33:37.920 --> 00:33:42.640 You've been a wonderful guest. Really enjoyed the discussion so far. 00:33:42.640 --> 00:33:45.200 And, hope we can talk again on other things. 00:33:45.200 --> 00:33:54.839 And let me just say, I am sure you will be giving people food for thought through your column and your thoughts. 00:33:54.839 --> 00:33:58.759 You certainly do for me. I always go to yours first at the back of the FT. 00:33:58.759 --> 00:34:04.160 And I think in an uncertain world, having somebody who can give a range of views, 00:34:04.160 --> 00:34:09.360 and share other people's views in terms of how that feeds into that, is really helpful. 00:34:09.360 --> 00:34:15.079 So thank you again, and thank you all to the listeners who joined our podcast today. 00:34:15.079 --> 00:34:20.599 It's been great to have you with us, and I hope we'll be able to see you again on our next podcast. 00:34:20.599 --> 00:34:22.199 We hope you enjoyed this episode. 00:34:22.199 --> 00:34:24.639 Please subscribe and follow us wherever you get your podcasts.