Gravitas Spark CrowdFunding

Tag: Banks

  • Technology Sector Serves Up Critical New Pension Risks…

    Technology Sector Serves Up Critical New Pension Risks…

    That was quick. Half the year gone already but no World War III, no AI ending humanity and no gains for all those crypto lemmings who increased the wealth of the Trump family by $1.4 billion. The Donald deftly sidestepped the crypto shake down with the reassuring deflection of a practiced mobster – “The stock market is going up…Everybody’s profiting”. Sure, Jan. Between Love Island and the upcoming weekend sports-fest one can understand people lacking a little financial focus. So, I will keep it brief today. I’d like to take a look at a number of technology sector financial milestones which have been achieved and then flag a couple of unintended consequences, and probably pension risks. First, the milestones….

     

    • Tech-heavy Nasdaq Index gained 20% in H1 vs S&P 500 up 9.5%.
    • Semiconductor/chip sector went rocketed 82% in the same 6 months (Nvidia, Broadcom, Intel etc)
    • Memory chip stocks like Sandisk, Micron, Hynix and Samsung are up a whopping 120% in H1.
    • Research house, Gartner, say AI spending will hit $2.6 TRILLION in 2026.
    • The AI hyper-scalers – Google, MSFT, Amazon and Meta – are set to spend $650 billion on AI infrastructure in 2026. 
    • The combined weight of AI-focused stocks across hyperscaling, semiconductor chips, power, hardware and software tots up to 51% of the total value of the S&P 500 index.
    • Nine major AI companies accounted for almost half of global technology borrowing, raising $122 billion in corporate bonds in a single year to fund data centres and infrastructure.

     

    So, my first observation based on these milestones is that, if your pension is tracking global/US stock markets, then there is a strong possibility you are ‘running’ a significant bet on AI without actually realising it. It’s what the pensions/wealth industry might refer to as a ‘concentration risk’. And, I think the following headlines are flagging a few other AI risks right now….

     

    • OpenAI Leans Toward waiting Until Next Year For IPO – New York Times
    • Tesla Caps Employee AI Spend At $200 Per Week After Adoption Push – The Information
    • OpenAI in early talks to give 5% stake to US government – The Guardian

     

    OpenAI, as a reminder, is attached to almost $1 trillion of AI infrastructure projects and the ‘mood music’ in the above headlines is not great. These projects have been funded by trillions of equity and debt from technology and banking partners. So, these partners must be wondering why OpenAI feels the need to grease Donald Trump’s tiny toddler fingers. I’m wondering too, but speculation gets us nowhere. Of course, the complete anti-Donald antidote is truth, numbers, facts and genuine science. So, I was intrigued to come across some excellent research by former colleagues of mine at Quant Insight. These guys use big AI computational power and principal component analysis (PCA) to strip out all the ‘noise’ attached to the pricing/trading behaviour of financial instruments in the equity, debt and FX markets. The benefit of this huge analytical undertaking is to identify the key factors/drivers of a share price or bond price in the current market environment/regime. This is what they found was driving the $10 trillion semiconductor sector ETF (SOXX) which rocketed 80% in Q2 alone….

    It turns out that the biggest external (macro) factor driving the share prices of semiconductor companies was….. lower cost of corporate borrowing. Now think about these companies involved in heavy capex manufacturing and infrastructure activities. A glance at the financial milestones above and trillions of dollars of planned investment spend means these tech companies need external funding given their own revenues and cash flow can’t keep up with the pace of investment required. This means technology companies are now borrowing which was never really a feature of these high margin/cash flow companies previously. For pension funds this ALSO means the whole AI infrastructure story is not just a stock market story. Hidden behind the headlines, there is a borrowing, credit, balance sheet story. Now, think about that 51% exposure of the S&P 500 index to AI. You think you’re getting equity and AI exposure but….. you’re also acquiring an exposure to a credit (lending) book as large as many dedicated private credit funds. Now check out the recent headlines on private credit funds.

    Actually don’t. Enjoy the weekend sport first!

  • Tales On Tour

    Tales On Tour

    Events dear boy. That was Harold Macmillan’s famous response to the query about what can cause government failure. Undoubtedly, there is significant truth attached to that guidance. However, we are currently in an era of unmatched clown-car incompetence, chronic short-termism and self-interest at the highest levels of political power. On Brexit’s 10th anniversary we are about to welcome the 7th occupant of 10 Downing Street since that embarrassing day. Who knew Ed Milliband’s scuppering of his brother David’s bid for leadership of the Labour Party would facilitate Brexit passivity and bonkers trade assumptions across the UK political spectrum? Meanwhile, the Russians are discovering Vladimir Putin is the worst military leader in Europe since Olaf the Hairy accidentally ordered 80,000 Viking helmets with the horns on the inside(thank you Blackadder). And, of course, how can we forget the failed casino, burger, vodka, sneaker, NFL, airline, crypto toddler himself….the Orange Emperor with no Hormuz close (!) babbling about reflection swamps in Washington.  Prepare for Algae-fa to be designated a single-celled terrorist organization. Despite that swampy distraction, it turns out that the Donald is going to go down in history as the worst-returning oil acquisition strategist after his Venezuela and Iran escapades (unless you have an insider trading account).  We seem to be receiving months’ worth of news in mere days so forgive me if I’m a bit event focused. But, I’m not the only one….let’s go on an events tour.

    Prediction markets are the hottest thing in the finance world right now. Regulators in the US decided companies like Kalshi and Polymarket were trading derivatives, rather than betting platforms for events from sports to elections to wars. Famously, a US Special Forces sergeant was arrested having placed a trade on Polymarket to win $400,000 on the probability of Maduro losing power in Venezuela….. just before he hopped on a Black Hawk chopper to abduct Maduro and his wife. Maduro isn’t the only one suffering right now. Sports betting companies like Paddy Power/Flutter, William Hill and Bet 365 are losing out to these new ‘events prediction’ players. Kalshi sports volumes are up 300% since the World Cup started and is now valued at $22 billion. For context, global leader Flutter/Paddy Power is currently valued at $17 billion slightly more than Polymarket’s $15 billion value underpinned by a recent $600m investment from the New York-based Intercontinental Exchange (ICE).  That’s a big bet but after a recent trip to the UK, I’m beginning to wonder about another event prediction…

    Macroeconomic strategists are currently analysing the impact of another economics-light Labour leader in Andy Burnham taking the PM reins in the UK. And lurking in the background is the crypto puppet, Nigel Farage, anticipating a general election win in a few years. At last, thanks to the excellent Sally Nugent on BBC, the ‘ordinary man’ mask is slipping off Nigel (the car crash interview is worth a watch) as are the Reform Party’s electoral hopes. However, Westminster intrigue could amount to a financial distraction. It was acutely apparent during the worst of the Iran war volatility that the UK’s sovereign debt/bonds did worse than most other major advanced economy financial assets. That’s a very worrying signal. It means the UK is considered a ‘vulnerable’ sovereign risk. So, here’s an event prediction not being discussed in the UK financial or political press right now. My personal view is that the UK’s 8th political leader (after Burnham) will be the IMF/Troika who will have to impose financial sanity on the nation. Just saying, but there’s a huge amount of evidence that the UK has failed to do very much over the last 3 decades…

    In recent weeks, both on a recent IMI panel in Dublin and at a business lunch in London, the theme of under-investment was raised as a huge factor in UK decline. It is striking that the UK has quietly lagged at the bottom of the G7 rankings by corporate spending in 24 of the last 30 years. UK investment averaged 23.7% of GDP between 1970 and 1990. But, after that it fell by a quarter, to an annual average of just 17.9%. In contrast, other major OECD economies have, on average, kept their investment levels above 20% of GDP. Back in 2024, I also had highlighted this shocking lack of long-term planning:

     

    “The Institute for Public Policy Research estimates the under-investment in business at $500 billion less than what other comparable OECD countries have invested since 2005. Public sector investment (infrastructure) was a further $200 billon below the G7 average. All in, this chronic lack of investment places the UK 27th out of 30 OECD countries.” 

     

    Thatcherism might need to be reviewed. At least, the English football team is in better shape these days. In fact, sport is on my mind too.

    Closer to home, the return of world-class tennis to Ireland at the Dublin ATP Challenger Tour event at Elm Park opened eyes up to the possibilities of showcasing memorable sporting experiences. There is a reason why sports franchises, festival events, city-break tourism and concert tickets continue to smash valuation records. The experiential industry plays to scarcity, living in the moment and shared memories. Check out the acceleration of NBA franchise valuations from 2020 to 2025. Utah Jazz was acquired for a record $1.66 billion in 2020, but in 2025 the LA Lakers were bought for a new record franchise value of $10 billion. That’s a 6x shift in asset values. So, just as Big Tech companies have become bigger than sovereign states (and borders), it feels like sport will be a border-less global platform. Indeed, the recent reports about an ice hockey franchise coming to a Dublin home (in Cherrywood) and a brand new stadium could be flagging some very interesting long-term thinking? Follow that puck, and reach for the stars….literally.

    One can marvel or guffaw at SpaceX’s peak post-IPO valuation near $3 trillion, but there are big lessons for Europe. Global business in many communications and technology sectors is dominated by quasi-monopolies. That global monopolistic ‘north star’ for start-up founders in the US seems to be a cultural differentiator. Apple, Amazon, Google, Microsoft, Netflix, Nvidia and Meta dominate their sub-sectors and have benefitted from the massive depth of US capital markets prepared to back global domination. We should, of course, celebrate the recent $3.6 billion exit by the founders of Fin/Intercom. But, at a strategic level, Europe needs to mobilize all its financial innovation and resources to plot the building of trillion dollar global champions over the coming years. So, on a positive note for both Europe and the UK, I’m looking at one huge sector still fragmented and missing the economies of scale which digital dominance can deliver. I’m thinking banking where London is still a major financial centre combining centuries of financial experience, stable common law, a concentration of necessary skillsets and….rapid  innovation.

    The UK is the second biggest fintech hub on the planet behind only the United States. In 2025 UK fintechs raised $3.6 billion across 534 separate deals, more deals than the next five European countries combined. Also, London is home to Revolut, now worth around $75 billion and  the most valuable private tech company in Europe. In fact, 8 of the top 10 fintechs in Europe come from the UK. It’s entirely possible London will produce Europe’s first trillion dollar financial services company. Ironically, with my monopoly/north star thinking cap on, the much-maligned fragmentation of Europe’s banking market could help the growth of a new trillion dollar financial franchise. Currently, Europe is home to over 9,000 banking entities. That’s not sustainable, but we might have to wait for events dear boy.

  • Google Growth, Giddiness and Gullibility…

    Google Growth, Giddiness and Gullibility…

    Deep breaths…I’m searching for expletives. Google has not only become briefly the most valuable company on the planet last week, it also has its own eponymous verb. Now I’m wondering will there one day be a verb “Farage”? Could someone ‘farage’ a nation? Not quite damage or ravage, more like persuade a country to screw itself repeatedly. I’m staring at the screens over the last few days and gasping at the fact that millions of UK voters are trusting dear Nigel (again) and his Thai-based crypto billionaire backers to lead them to the “sunlit uplands” which escaped them on Brexit. Anyway, back to Google and another prediction which has ended up going horribly wrong. Remember how the commentariat gurus confidently predicted AI was going to destroy Google because of its dependence on search? Well, the reality today is far sunnier…

    Google’s AI focused cloud business delivered $20 billion of revenues in its last quarter. That number is astonishingly growing at 63% year-on-year and surpassed the expectations of all herd-like analysts on Wall Street. As mentioned earlier, Google last week briefly passed Nvidia as the world’s most valuable company at almost $5 trillion. Incredibly, 38% of that value, or $1.3 trillion, was added in April alone. Growth is still being rewarded, despite the simultaneous chaos caused by the strangulation of the global economy’s critical energy supply route in the Persian Gulf. This tug-of-war between positive and negative macro drivers is both scary and fascinating to long-time market watchers. Clearly, as stock markets hit all-time highs, the AI growth story is winning the battle for investors’ mindset. Indeed, the S&P 500 in the midst of strategic White House chaos has managed to add $10 TRILLION in value in the past month. It’s not just sentiment and valuations on the rise. The fundamentals look pretty good too.

    The year-on-year earnings growth (yep, that income thing after sales) for the median S&P 500 company in Q1 hit a double-digit 12% pace (Source: Deutsche Bank). The average across all 500 companies actually reached a monster 25% growth rate. That pace of fundamental profit growth hasn’t been seen in at least 4 years and has nothing to do with a pandemic recovery or other macro rebound. Fundamentals like income and earnings matter for the more risk-averse investors. So, it was encouraging to see US high-yield bonds perform strongly in April, European M&A volume at its highest since 2007 and the European bond market just had its busiest day ever.  Yes, people are concerned about supply/demand imbalances in the AI infrastructure world but, if anything, demand is running ahead of capacity. Check out the deal just done by Anthropic and SpaceX. This is all about Anthropic’s urgent need for compute power to meet demand. For illustration, Anthropic had planned for 10x revenue and usage growth in the first quarter of this year. In fact, the growth has been closer to 80x……. yep 80x, not 8x. Euphoric stuff, but it’s time for a word of caution.

    Confidence and rising expectations are great for driving valuations higher. However, this also brings over-confidence and speculation. Arguably, the gullible are in danger of being sucked into the wrong ‘opportunities’. Two outstanding examples of over-confidence and gullibility working in tandem appeared on my screens this week. First, the original meme-stock, GameStop, which gathered a huge retail investor following from online communities like Reddit and Mashable, announced a $56 billion bid for the much larger company, eBay. However, no matter how many times GameStop CEO, Ryan Cohen, awkwardly told his CNBC interviewers the financing was “half cash, half stock”, nobody sane could make the numbers add up. At best, GameStop equity valued at $11 billion, plus $9 billion cash in the bank, plus an offer of $20 billion of financing from Toronto Dominion was still going to be $15-20 billion short of the asking price. Nuts stuff which probably won’t end well. However, you don’t have to wait to find out with Fermi Inc.

    Fermi Inc listed publicly (IPO) as recently as October 2025 with a valuation of about $19 billion. Fermi was riding the coat tails of the AI infrastructure-chasing-energy theme. Its solution was a promise to supply 17 gigawatts of nuclear-powered AI infrastructure….with zero revenues and zero clients. In the subsequent months the CEO and CFO have both departed, and the company still has not signed a single customer. Unsurprisingly, gullible investors have taken serious pain. The Fermi Inc share price has imploded by 85% wiping $16 billion from the IPO valuation. Customers and market traction remain a critical consideration for sensible investors and thankfully there are investment themes out there which are showing encouraging form. Here’s two worth watching.

    Amazon’s cloud business, AWS, was built around its first, best customer, Amazon’s e-commerce business. Now Amazon is launching Amazon Supply Chain Services (ASCS). And guess what? Amazon itself will be this logistics business’s first and best customer again. This allows Amazon to invest massively in infrastructure to challenge the incumbents, UPS, FedEx etc.  Regular readers will know we have strong positive views on the logistics infrastructure space and have recently raised money for OOHPod. Now, think how Amazon invented cloud computing before it was “hot”. This writer believes logistics infrastructure in the coming years will attract lots of investment capital and… customers. Check out Bloomberg’s view:

     

    “The world’s largest online retailer on Monday announced Amazon Supply Chain Services (ASCS), offering other companies access to its “full portfolio” of supply-chain and distribution offerings. The service largely consolidates a package of existing products — air and ocean freight, trucking and last-mile delivery — into a new suite it says companies like Procter & Gamble Co. and 3M Co. are already using.”

     

    Not bad, P&G and 3M on the customer roster already. Of course, our angle in logistics infrastructure is more deals and more M&A. So, it was interesting to catch another positive signal on M&A activity in recent days. It looks like Chicago’s boutique investment bank, Lincoln International, is looking to go for IPO in 2026. This will be the first boutique investment bank to go public since Perella Weinberg in 2021, and is enjoying a 31% income growth tailwind from 2025. Of course, the perkier M&A environment has helped. Data from Pitchbook would seem to confirm same…

     

    “2025 was a record-setting year for global M&A activity, with both deal value and volume shattering the previous highs set in 2021. PitchBook data tracked 50,810 transactions last year—the first time deal count has ever surpassed 50,000; and combined deal value hit nearly $5 trillion, up 37% from the prior year. In its filing, Lincoln contends that the growth of private capital will create a “larger and more durable M&A fee pool,” particularly for sponsor-led deals.”

     

    Again, we have written frequently about the structural shifts in finance and fintech investment. The opportunities to leverage technology in financial services are enormous, and particularly for small disruptors. The standout number for me in April was the trading revenue achieved by a firm unknown to most. Jane Street is a financial trading firm with 3,500 personnel and a lot of technology. In the last 12 months Jane Street generated $39.6 billion in trading revenues. JP Morgan with 316,000 employees did $35.8 billion; Goldman Sachs and its 46,000 superstars did $31.1 billion. The average revenue per employee at Jane Street was an incredible $11 million. Technology and trillions of dollars of investment capital flows can be a phenomenal combination. So, it is timely that Spark Private investors in the coming weeks will be shown two excellent fintech platform prospects. The beach can wait….

  • Summer Looking Hot….

    Summer Looking Hot….

    Last week was biblical. Firstly, President Trump became Jesus online, before dodging to “doctor” retreat on evangelical outrage. Secondly, Vice President, JD Vance, fresh from blowing up Viktor Orban’s election chances in Hungary, told the Pope to tread carefully on….theology. And then, Secretary of War, Pete Hegseth, presented a biblical verse, Ezekiel 25:17, at a Pentagon prayer service which turned out to be more fiction than truth. In fact, it was Pulp Fiction and the words delivered by Samuel L. Jackson’s character in Quentin Tarantino’s cult classic. Who needs The Gimp character with these White House slaves to ignorance?? Sadly, there’s little chance of ball gags for the Trump crime gang just yet as they ‘flood the zone’ with reality-defying nonsense. Meanwhile, our job in the macro risk world is to look behind the eye-rolling headlines connected to the on/off blockade of the Strait of Hormuz, and make sense of real events and numbers. Coincidence or not, I was about to write a rather upbeat piece before any Persian Gulf news broke. Here’s the real stuff which caught my eye away from the Oval Office clown show…

     

    Big Tech stocks leading a $4 trillion market rebound – Bloomberg

     

    Systematic hedge funds bought stocks at a record pace last week – Reuters

     

    Global Venture Capital (VC) investment surged to a record $330 billion in Q1 –   KPMG

     

    Emerging Market bond sales are soaring again as investors dive back into risk  – Bloomberg

     

    It feels like markets and investors have moved on, and confidence is building rapidly. Goldman Sachs research reported that March was the best month in a decade for long/short trading hedge funds. The actual average return in one month for these type of funds was 7.7%, and will be music to the ears of investment banks who need these huge institutional generators of commissions, M&A fees and securities lending to be “feeling good” and chasing opportunity/risk. Indeed, quarterly updates from all the US investment banks showed Goldman Sachs delivering a best-ever quarter for their equities trading operation, and the Guardian has reported almost $50 billion of profits (Q1) generated by just 6 banks – Goldman, Morgan Stanley, JP Morgan, Citigroup, Wells Fargo and Bank of America. It’s all about confidence and we’ve been waiting a while for the IPO market to come to life. In the private equity world, and the Spark world, this public listing channel (IPOs) is critical in providing the much needed ‘exits’ while pumping liquidity flows (and confidence) through the financial ecosystem. The latest numbers look encouraging.

    In Q1 there were 22 IPOs in the US with a combined stock sale value of $9.4 billion compared to just 15 exits the year before and $7.9 billion of liquidity generated (Source: PwC). So, the pace is picking up but we must brace ourselves for the ‘galactico’ listings promised later in the year. Elon Musk’s SpaceX alone could raise $75 billion on a $2 trillion valuation and the listings of OpenAI and Anthropic will be massive conduits of capital back into the AI ecosystem. War or no war, there seems to be no end to investor demand for a slice of AI action. CB Insights research showed that global venture capital (VC) markets invested $226 billion in AI in Q1 of this year. That compares to the $217 billion raised by private AI companies in ALL of 2025. Note that the ‘concentration’ effect familiar to many observers of the ‘Magnificent 7′ tech dominance of public markets can also be seen in private markets; more than 94% of the value of Q1’s VC funding was funnelled into deals worth more than $100m. But it’s not all AI giddiness…

    The biggest industrial IPO this century was just completed last week. Madison Air Solutions, in the ‘hot’ HVAC sub-sector critical to hi-tech construction, officially claimed the title of the largest industrial IPO since UPS in 1999, pricing its $2.23 billion offering at the top of its range and surging 18.5% in its Thursday debut. Madison Air delivers the cooling systems for servers in the data centre space but one can’t help feeling things are generally hotting up, and could make for a very interesting summer. Of course, there are big ‘IFs” on the macro geopolitical front but the longer-term picture is beginning to reveal some emerging trends. In particular, I’m watching Jeff Bezos going BIG into physical robotics and manufacturing automation with a planned  $100 billion fund named Project Prometheus. It is noteworthy how often the AI chip king, Jensen Huang of Nvidia, refers to robotics as the next multi-trillion dollar wave of the AI economy after agentic services (eg Claude, Gemini, ChatGPT etc). However, there’s another agency service which is quietly picking up speed and needs watching.

    We have written before about Waymo and autonomous driving passenger miles growing rapidly. So, the most recent data from start-up funding database, Crunchbase, is striking. Autonomous vehicle start-ups have already raised a record $21.4B across just 34 deals in 2026 year-to-date, versus $5.9B across 99 deals in all of 2025. Waymo led with a $16 billion round at a $126 billion valuation, while Shield AI raised $2 billion and Wayve raised $1.3 billion. Again, automation and human-collaboration are very much our future, and are driving (!) investor animal spirits. This also confirms the theme of a book I cite often, The Future Is Faster Than You Think, and highlights how technologies are converging – think battery power, AI, and robotics in combination. Feel free to follow the ridiculous Trump headlines, but there’s a danger you’ll miss the bigger picture. It’s hotting up out there….

  • Short Prompts, Longer Impacts….

    Short Prompts, Longer Impacts….

    That was exhausting. And it was only a short week. Iranian civilization and the White House insider trading desk were given a bit more time to exist under autocratic regimes while Schrödinger’s ceasefire broke out everywhere but in the Strait of Hormuz and Lebanon. This paradox seemed to inspire Melania Trump who went to the Presidential podium to assure the world’s press that Epstein criminality was not a hoax, but at the same time that she “never had a relationship” with dear Jeffrey.  I’m thinking that’s a “relations” denial but that’s the Clinton nostalgia in me. Anyway, this very strange First Lady intervention has prompted some very short-term thinking about what exact Epstein bombshell is about to drop. The longer term implications might take a bit longer to decipher but, at the bare minimum, Melania appears to be keeping an eye on the catastrophic GOP polling for the mid-term elections this November. In fact, there were a few other developments this week which prompted relatively light commentary levels but could have far weightier longer term impact. Let’s start with a prompt, but one of the AI variety…

    Anthropic is the parent of the chat bot Claude which recently fell out with the Pentagon. Well, it looks like Anthropic might have prompted one of their LLM chat bots (large language models) rather too well. The latest reports suggest a cousin of Claude (certainly not Greg), Mythos, could be a bigger threat to the planet than Agent Orange in the Oval Office. Yeah, seriously. Apparently, and this is the really simple language version….Mythos was tasked/prompted to find vulnerabilities in software and systems deployed by the world’s biggest institutions, banks, utilities and blue chip companies. Mythos didn’t come back with one or two “exploits” or ways to hack software, it came back with hundreds even thousands of ways to hack into software systems. Mythos was SO good, Anthropic has taken the immediate decision not to release the model to the public. That’s not all. Some very senior people have been spooked by Mythos. Treasury Secretary Scott Bessent and Federal Reserve Chair Jerome Powell called the CEOs of America’s biggest and most important banks into a closed-door meeting this week at the Treasury building in Washington, D.C. Expect to hear a lot more about Mythos and wonder how long before Polymarket or Kalshi start running betting books on the probability of world destruction being at the hands of digital weapons rather than nuclear weapons. But if we stick with the nuclear threat…..

    Earlier in the week, CNBC’s Trump-cheering anchor, Joe Kernen, was destroyed by former Transport Secretary, Pete Buttigieg in a toe-curling TV clip which has gone viral. Kernen tried desperately to amplify Tehran’s imminent nuclear capabilities but struggled to deflect from the strategically disastrous consequences of the Iran war including the shutting down of the Strait of Hormuz. “Whataboutism” is about to hit peak volume in MAGA land to drown out the inevitable rise in prices, inflation and voter discontent in the “golden age” of the USA. Peace talks begin at the weekend in Islamabad but the longer term consequences of world fuel supplies being cut by 10-20% will be felt for months to come. As each day passes, the global economy will pay the price of minimal shipping traffic passing the Strait of Hormuz. Before the war, daily shipping traffic averaged 130 vessels. Currently, Schrödinger’s ceasefire is delivering a daily traffic total of…… 6-7 vessels. Not 67, six…or seven. No wonder Trump is panicking, and that’s before he even checks the latest polls and actual votes.

    Amid all the ceasefire headlines, US voters are beginning to shift sharply. In Georgia, former Trump lovey, Marjorie Taylor Green’s seat witnessed a 25 point voter move towards the Democrats. In another swing state, Wisconsin, politicised Supreme Court elections saw a 20 point shift to the Democrats. According to the election analysis publication, the Downballot, Democrats have improved upon their 2024 presidential election margins by an average of 11% in special elections so far in 2026 and roughly 13% since the start of 2025. Prediction markets, Kalshi and Polymarket, are giving Democrats 88% odds of House control and 53% for the Senate in November 2026. Meanwhile, closer to home, Hungary goes to the polls this weekend with the real possibility of Trump and Putin fanboy, Viktor Orban, being ousted from power. A particularly eye-rolling moment during the last week of the campaign was the the arrival of US Vice-President JD Vance to complain about EU interference in the election……while on a trip to Hungary to interfere in their election. The EU-US relationship has never looked so broken, and will take years to repair. Indeed, it’s increasingly clear from a European perspective that no senior US leader gets a pass for staying quiet during this insanity. It’s not the only upside-down shift in the world we used to know…

    The downturn in the performance of software stocks like SAP, Salesforce and Microsoft has been a feature of financial market commentary in recent months, spawning multiple SaaSpocalypse headlines. I’m not convinced the valuation meltdown of software under the threat of AI is fully merited. Current valuation multiples, price/earnings below 20x, are back at pre-Covid levels and below those of lower growth consumer staples stocks like Walmart. In fact, Walmart is currently trading at higher valuation multiples than Amazon. Clearly, longer-term prospects for software have currently shifted in investors’ minds but perhaps the bigger story is in hardware. The semiconductor sector (ETF $SOXX) has risen by 108% over the past year while the software sector (ETF $IGV) has declined by 14% over the same period. This scale of market performance divergence is unprecedented and is a reminder (if the Strait of Hormuz isn’t already) that the securing of the supply of physical assets (atoms, molecules) is becoming THE strategic business edge in the global tech race, and not digital code (bits).

    A final thought on performance, as Ireland’s government considers new tax frameworks and savings products to encourage households and businesses to take risk with circa €340 billion sitting in bank deposits. Of course, Spark (and our 60-strong stable of companies we have funded) have skin in this game so one hopes the government is mindful of the benefits of diversification across the entire investing spectrum. A narrow solution steering monies into already publicly listed (and funded) companies would be a missed opportunity to drive investment into our capital starved start-up and SME sectors. Oh, and the investment returns in private assets are certainly worth investigation. Our own EIIS Private Portfolio service launched just over two years ago has funded 24 companies to date. Current valuations and funding milestones/marks indicate an estimated (average) performance by the entire portfolio of somewhere near 25%. Steady stuff, and early yet as these companies are just 2 years into their scaling up journey. However, there is one other BIG factor to consider. The EIIS tax rebate scheme does work, and all Spark investors have been receiving their tax rebates. Now, here’s the interesting twist. That return of cash completely changes the returns profile of the portfolio above. The average return  to investors (if you had invested in all 24 companies) is actually over 100%. In just 2 years, and that’s mostly cash, not just paper. Expect us to write lots more on this very soon.

    Let’s call that a little prompt, with a very big long-term impact.

  • When Words Are Definitely NOT Our Bonds…

    When Words Are Definitely NOT Our Bonds…

    There’s only one thing sicker than an Irish parrot outfit this morning. That’s the global bond market. The biggest bully of them all is sick of the nonsense. Not just the front-running of the US President’s social media posts. The Financial Times rightly flagged this week the gob-smacking scale of corruption and ‘insider’ trading going on close to the Oval Office but, in real financial terms, the pricing reactions of equity and oil markets to Trump’s Monday TACO were relatively muted. Of course, oil prices dipped below $100 earlier in the week but they’re back above $110 now. Similarly, the S&P 500 spiked for a day but it too is back slightly below Monday levels. Arguably, Trump’s words have been losing credibility since his first TACO retreat on tariffs in April last year but there’s a much more dangerous aspect to this credibility failure now. Truth has officially fled the higher echelons of US institutions and that impacts the biggest contracts of them all, United States Treasury bonds’ (or IOUs) credit worthiness with the rest of the world. Here are the headlines you’re not reading…

     

    • The yield on the US 10-year Treasury bond has deteriorated/risen by 13.5% (in yield or cost of money terms) since the Iran war began.
    • The yield on the US 20-year Treasury bond has deteriorated/risen by 11% in the same period (25 days!!).
    • The yields on US Treasuries are used to price almost everything so the average cost of a mortgage in the US is now at a 7 month high despite job creation being at a multi-year low.
    • It’s not just the cost of US assets. The global disruption caused by the Iran ‘operation’ has driven Japanese government bond yields up by 16%.
    • UK bond yields above 5% are the highest seen in 20 years.

     

    The price moves above are the ones that really count. And their message is very clear: the damage done to energy infrastructure and global supply chains is inflationary. The bond traders don’t believe a word of what is coming out of the White House and Pentagon propaganda machines. The opening up of the Strait of Hormuz is dependent on Iranian cooperation and the ability of logistics companies to commit their ships and crews to a safer and insurable environment.  At current levels of reduced shipping activity, the world is losing 11 million barrels of oil every day, as well as numerous other critical distillates like ammonia, diesel, helium, urea etc.  The key point is that bond markets do not “price” temporary cost spikes or supply squeezes. The bond market is explicitly contradicting the Trump regime and suggesting longer-term disruption. In fact, the French government have laid out the following observations:

    • 30-40% of Gulf oil refining capacity is destroyed.
    • That is the worst energy infrastructure destruction since WW2.
    • Full repairs could take 3 years.

     

    Thanks Donald. Actually, you don’t need to thank him. Speaker of the House of Representatives, Mike Johnson, went full North Korea at this week’s National Republican Congressional Committee fundraiser by presenting Trump with a new award. The Guardian reports:

     

    “The president has done so much for the American people and we want to honour him, in some small way, some token of our appreciation for his leadership,” said Mike Johnson, the US House speaker. “So, tonight, we have created a new award.” Johnson then introduced the “America First” award, made up of a golden eagle statue. “We could think of no better title for what that is,” said Johnson. “That’s this beautiful golden statue here – appropriate for the new golden era in America.”

     

    Idolatry and empty words. Asia might have other words right now. Latest headlines suggest crisis:

     

    Pakistan is reducing government working hours to save energy

    India is diverting gas from factories to homes

    Philippines declares a national emergency

    Japan to temporarily lift coal power plant curbs over Hormuz crisis

     

    Clearly, bond markets are looking East and not West for the true story. Indeed, it was striking how most commentators and traders earlier in the week were looking to Tehran to verify whether the US President was telling the truth about ‘negotiations’. Yes, an autocratic theocracy is now more credible than the leader of the ‘free world’.

    It’s a very strange world, but I suspect the bond market will have a very big say about how events unfold in the Middle East from here.

  • Themes And Dreams For 2026

    Themes And Dreams For 2026

    This won’t help my US visa application any time soon. However, it is possible to be on the right side of history and seek investment opportunity too. History may record that 2025 was a dark year of barbarity in Gaza, criminal meat-grinder slaughter in Ukraine, trade tariff chaos, war crimes in Venezuelan waters and full strategic capture of US national security policy by the Kremlin. And, yet I’m hopeful. I will leave it to more mainstream outlets to review 2025. Instead, I’d like to take a look at a number of 2026 investment themes – new and old and not AI – which are developing in potentially unexpected ways. Many, in a good way.  Let’s take a look at the data and start to dream….

    Global Trade: Dare we return to Brexit. Anybody see the UK paying over €600m to re-join the EU’s Erasmus student exchange programme? Don’t worry. We are not going to re-visit Brexit but we are going to cite this as an example of slow-moving sanity repairing self-inflicted harm. Similarly, the “America First” tariff policies in Washington are now beginning to reveal some awkward truths. The mighty US dollar has slipped by 9-10% against other major currencies, US equities (+15%) have underperformed global equities (+29%) and the US manufacturing sector has been losing jobs for 7 months consecutively. Oh, and China, the original bipartisan focus of US trading ire, has just seen its trade surplus exceed $1 trillion for the first time in history. So much winning. What are the chances of US trade policy moving away from tariffs? Well, the polling for US mid-term elections in 2026 is looking pretty bleak for incumbent Republicans. And, the spectacular Vanity Fair quotes (more of them later) from Trump chief-of-staff, Susan Wiles, are prompting Washington insider speculation of a policy re-set or ‘cry for help’ from within the White House. To be clear, nobody sane thinks Wiles (in 11 recorded interviews with Vanity Fair) was unaware of the likely end result.  Bank on that. So…..

    Financials: If you’ve been dazzled by AI you might have missed the massive performance of financial stocks this year.  Financials in the US (+20%) have outperformed technology (+18%) but check out UK banks being tortured by a chaotic Labour government. The FTSE All-Share Banks index is up just the 56%!! In Europe the Euro Stoxx Banks index has clocked a 76% increase in value year-to-date. Meanwhile, Europe’s fintech banking star, Revolut, has completed its second funding round since August. The latest round was eye-catching for the $75 billion valuation achieved (vs $48 billion in August) and the backing of Nvidia’s venture capital arm. That’s a 56% increase in value in just a few months. More importantly, healthy performance in banks and financials usually reflects overall confidence in the global economic cycle despite the dark headlines. Bluntly, banks feel the fear first. It’s not there. In fact, the latest Bank of America investment survey shows investor sentiment at its strongest since 2021. And, that confidence might be showing up in strange places…

    Europe: There appears to be a growing view that Europe has been shocked into taking responsibility for its destiny on the geopolitical stage. The loss of the US as a reliable ally – outlined in the recently published National Security Strategy 2025 – means Europe must back its own. All the way. It was striking to read recently that in Europe, over the past 50 years, just 14 companies started from scratch ended up with valuations over $10 billion. In the US that number is 241!  German defence company, Rheinmetall AG, at €70 billion is now worth more than BMW, VW or Mercedes. Its value has appreciated 15x since the outbreak of the war in Ukraine. Unsurprisingly, Franco-German defence company, KNDS, is eying a €25 billion IPO in Amsterdam in 2026. Furthermore, conditions of ‘war’ have historically driven innovation. So, when the head of the UK’s MI6 intelligence services and its chief of defence staff both warn in the same week of the need “to be ready to fight”, we should expect a massive step up in investment in Europe across the board, to strengthen not just defence but energy grids, communications, technology, supply chains etc. Europe’s prompt for action might be scary but there might be a surprise further east….

    Geopolitics: Europe is still reeling from the stunning geopolitical alignment of Russia and the US sealed with the Kremlin’s approval of Washington’s National Security Strategy “as largely consistent with our vision”. Read that twice, watch the party of Ronald Reagan spin in its grave (yep it’s dead) and remember those famous Russo-proverbial words borrowed by Reagan…. “trust, but verify”. Then think about who is really driving the Ukraine peace talks. In recent weeks we have seen oil hit 5 year lows, the Russian economy battle rampant inflation, the Russian central bank selling its gold reserves and Europe moving to seize ‘indefinitely’ $200 billion of Moscow’s foreign reserve assets. If I were to offer a contrarian view on current peace talks, or even dream, I’d say Russia and Putin has more problems than we think. Furthermore, the unseemly haste of Trump’s agents, Witkoff and Kushner, to rush Ukraine into a Russian-written deal has a ‘frantic’ feel about it. Just a thought, or dream.  Of course, these are not the only deals which could light up 2026 in an unexpected way….

    Private Exits: The IPO pipeline of 2026 could break all sorts of records. Databricks has just completed a $3 billion Series L funding at a $134 billion valuation – yep that’s an “L”. We hear it so often now, but the private market really needs some big exits. OpenAI could be up for a $500 billion IPO. ByteDance ($480 billion) and Anthropic AI ($180 billion) are also on the blocks, as is Stripe with a $100 billion promise. I’m loath to mention the biggest of the lot, SpaceX, which is targeting a whopping $1.5 trillion 2026 valuation and thus pushing its owner Elon Musk in to trillionaire territory. Unless……

    Electric Vehicles: Ford might be grabbing the headlines this week with a monumental $19 billion walk away write-down of its electric vehicle (EV) projects. And, people worry about AI infrastructure over-spend? As China continues to accelerate away from the EV pack in its global dominance of the EV manufacturing ecosystem, whither Elon Musk’s Tesla? First, one can’t miss the opportunity to re-print Trump chief of staff Susan Wiles’s marvellous Vanity Fair assessment of Musk this week among others in this “only the best” Trump inner circle/cabinet. The New York Times summary is best:

     

    Trump’s White House Chief of Staff Susie Wiles describes Trump as an “alcoholic’s personality”, JD Vance as a “conspiracy theorist for a decade” and Elon Musk as “an avowed ketamine user” and an “odd, odd duck” in an interview with Vanity Fair

     

    Hmmm. An odd, odd duck. Tesla might just be reaping the DOGE or DUCK whisperer whirlwind. Tesla currently is valued at $1.5 trillion with a price/earnings valuation of 327x. Yep, 327x – I might raid the ketamine jar too. You’d expect Tesla to be growing, right? Well, the ducks are lining up. November sales for Tesla were the lowest seen since 2022. The brand destruction by Musk’s dive in to right wing politics has been epic. In Europe not a single country achieved sales of more than 750 units, except France. If it walks like a duck, tweets like a duck…….we can only dream.

    Old Economy: Surprisingly, 5 of the “Magnificent 7” tech stocks have under-performed the AI-giddy market this year. In fact, the original perceived AI ‘loser’, Google, has been the stellar performer, up 56% year to date. Now, it might be worth taking another look at other ‘losers’. Defence and banking  stocks are already back in vogue, but in ‘war-like’ conditions the basics become critical too. So, it’s possibly no great surprise that the Basic Materials sector in the US has clocked the best sector performance by far, up 33%. As the race to electrify the global economy accelerates, critical minerals, precious metals and mining stocks stand to benefit from urgency, security and scarcity. Gold is up 65% year-to-date, silver has more than doubled and platinum is up 117%. Keep an eye on Mr Copper too with a 34% uplift in 2025.

    Plenty to think about above, and possibly dream too. What a year! I’ve a feeling I won’t be short of writing material in 2026.

    That’s nearly it folks for 2025. Thanks for reading and the words of encouragement along the way.

     

     

  • Banks Are So Back!!!

    Banks Are So Back!!!

    It’s a weird world right now. I endured another episode of “The Celebrity Traitors” last night and wondered how the US version would work without offending the Kremlin ‘besties’ and reality TV cast of Mar-a-Lago. And who knew Joe Marler would out-smart Stephen Fry? Serious kudos to the rugby front row forwards fraternity. Anyway, park reality TV and let’s face market reality. Another weird one very close to home – Irish banks are now achieving 89% customer satisfaction ratings. It’s amazing what one can achieve by leaving the small business sector completely unbanked in terms of risk capital. However, it can’t be denied that banks are SO back in a global sense. And, some are really ratcheting up the risk dial. Today’s article is really a whistlestop tour of global financial sector developments which caught the eye in recent weeks.

    Let’s kick off with Blackrock Inc. It’s results season and Larry Fink’s giant asset manager recorded net inflows of investment monies in excess of $250 billion in Q3 alone. Blackrock’s current total assets under management (AUM) have just hit a record $13.5 trillion, yep trillion. You might say Blackrock is not a bank but if you look closer at those investment inflows, you’ll see private credit(lending) is a huge driver of asset growth. You’d be right in thinking that other institutions are competing or replacing banks in the financing space. That trend brings its own risks. Indeed, the IMF took the opportunity in its 6 monthly Financial Stability Report to warn about “the rapid growth of non-bank financial institutions”. Then, the EU’s Single Resolution Board (which ultimately sorts bank collapses) also warned this week of the “dire” consequences of a non-bank failure. Sounds nervy, but the financial services sector is enjoying record growth thanks to the lack of nerves among investors…

    Robinhood, the trading platform loved by meme-stock and crypto fund day-traders, has seen its share price rocket by 250% since January this year. Then check out Charles Schwab, the US broker/trading platform which started out in commercial life as a newsletter with 3,000 subscribers, and was briefly owned by Bank of America in the 1980s. I had to wipe my eyes on this one, but Schwab now holds $11.6 trillion of investor assets and has just announced its intention to offer digital currency (crypto) trading in 2026. That number was just over $4 trillion when Covid-19 struck. This growth in assets can be equated to the growth of balance sheets and collateral to be used in further investing activity. We can’t avoid mentioning AI but the infrastructure spending by cash rich tech giants is another boon for investment bankers. The latest data from research house, Gartner, is that global AI spending will be $2 trillion in 2026. Amazingly, the star of our most recent article, OpenAI, sits in the middle of $1 trillion of that spending. Needless to say, Wall Street investment banks are doing cartwheels as big tech names compete with each other to announce bigger and bigger spending plans as their share prices(and executive option pools) rocket on each headline. No wonder luxury laggard, LVMH, is seeing its share price suddenly perk up. It’s not alone.

    Investment banking blue chips like JP Morgan, Morgan Stanley and Goldman Sachs all posted record equity trading activity and revenues. The Daily Upside summed up the joy across the wealth and brokerage spectrum:

     

    “Results from other financial firms this week also showed that clients from scrappy retail traders to high-net-worth jetsetters are hankering for equities and investments. Wealth units at Bank of America  (revenue up 19% year over year to $1.3 billion), Goldman Sachs (up 17% to $4.4 billion), Morgan Stanley (up 13% to $8.2 billion) and more notched high marks. Customer assets at Schwab competitor Interactive Brokers rose 40% to $757.5 billion, and daily trades there rose 47% to $3.86 million.” 

     

    But it is a weird world. The crypto universe cratered last weekend as Bitcoin elevator-shafted investors with a 20% drop in price from $126,000 to $105,000. Then gold keeps marching remorselessly to $5,000/oz in $100 clips. There is a sense that different cohorts of investors are buying different assets but there’s enough liquidity (investment flow) to drive EVERYTHING upwards. It was striking to see in Schwab’s record inflows that Gen Z and Millenial investors accounted for a third each of new accounts being set up and looking for equity exposure mainly. Meanwhile in California, there’s a new bank coming. Erebor is a new crypto-focused bank which received federal approval this week. The excellent Morning Brew newsletter reports:

     

    “The new venture will offer traditional and crypto-oriented banking to upstart tech companies and the ultrawealthy, according to its charter application and approval letter. It needs another stamp of approval from more federal officials before operations can commence, but road bumps are unlikely under President Trump’s crypto-friendly administration.”

     

    Before you think it’s all crypto and AI out there, keep an eye on more familiar moves. Goldman Sachs has done an interesting deal buying Industry Ventures for nearly $1 billion. Small beer you might think, but Industry Ventures is in the venture capital ecosystem with $7 billion of VC assets bought from other VCs (known as secondaries). Clearly, Goldman is taking a view on more VC deals/exits happening and should be a boost for the start-up world. Oh, and JP Morgan are going to put $10 billion to work in nationally important industries and supply chains. In fact JP Morgan sees itself involved or banking $1.5 trillion of projects in the coming years. Here’s what those deals might look like…

    Meta/Facebook has just sealed a $30 billion private capital deal to finance its Hyperion data centre build in rural Louisiana. Here’s the kicker – Meta retains only 20% ownership. Morgan Stanley has arranged $27 billion of debt and $2.5 billion of equity in a special purpose vehicle (SPV). Yip, that’s a more than 10:1 debt-equity structure. Welcome to the world of superhero collateral in the form of AI infrastructure. This is the largest private capital deal ever but expect many more over the next few years. Of course, there are concerns.

    FT headlines this week highlighted poorly structured loans (read opaque dodgy) going wallop and hitting US regional banks’ share prices badly. Also, volatility in financial markets is picking up. However, the key drivers of global investment activity are big tech firms, private capital, sovereign funds etc and they have trillions of cash and collateral to deploy. This is not quite TMT era when the major players, telcos and media, were already swamped with debt. Returns on investment will obviously be the metric to watch in the future but arguably we are a few years away yet from getting visibility on AI’s payback. So get ready for more deals, more AI and more financial services profit joy. You’d almost be tempted to get exposure to these big structural trends. Well….. keep your eyes peeled next week as Spark Private will have a very interesting deal for you with a strong blend of alternative assets, financial services and AI baked into the offer.

    We are SOOOO back.

  • Are We Ready For Another Banking B-AI-L Out?

    Are We Ready For Another Banking B-AI-L Out?

    Domestic business and investing titan, Dermot Desmond, upset the orthodoxy this week. Ireland’s 500-year plan to build the Metrolink might be cut short, even ended. Desmond suggested the €12 billion urban rail project due to start in 2028 could be a white elephant project superseded by AI and autonomous-driving vehicles. Any bets on the kilometres per annum build speed on this 18 kilometre ‘monster’? Actually, don’t bother. Reflect on China’s average motor expressway construction build of circa 8,000 kilometres per year. Then think about the UK adding barely 65 miles of motorway over the past ….decade. Given the Irish public service obsession with tracking the UK National Health Service or UK Housing/Planning as benchmarks, one shudders to think what our ‘ambition’ could deliver in over-spend and century-shifting deadlines. On a more positive note, AI could be one of the tools which could dig us out of our transport infrastructure black hole.  A bit early to call that one you might say, but I’m beginning to think another crucial economic sector which gets its fair share of criticism is enjoying the halo AI effect. Don’t bank on it but the banking sector is suddenly looking interesting….

    The ”animal spirits” of Wall Street and record financial market highs always help the banking sector. Indeed Wall Street’s banks have just finished reporting quarterly results where trading revenues clocked a whopping $34 billion in Q2, up 17% on the previous year. Yes, the phenomenal gains in AI-focused stocks like Nvidia and Microsoft inflate bank trading revenues and drive increased investment activity but there’s more going on. You might have read about meme-stocks and unheard of companies in the US smaller cap markets (Russell 3000) tripling their share prices since April; 33 companies at the last count and only 5 actually making profits. But, banks as meme-stocks? Really? Well check out the Financial Times headline this week:

    “European banks get their meme-stock moment”

    Not even US banks, but European ones tracking an economic bloc getting its tummy tickled on tariffs by the Fiddler on The Roof of the White House. Can’t wait for the South Park treatment on that one, but back to the FT and European banks. When French banks like Societe Generale see their share prices increase by more than 100% year-to-date then my “spidey sense” tells me this is not about mundane cyclical banking drivers like trading revenues, interest rates or the shape of the bond yield curve. The aggregate European bank sector is up a whopping 40% in 2025 and there could be an (infra)structural driver of this story. Think back to our earlier sniping about Ireland’s struggles on transport infrastructure. Banks have struggled with unwieldy data and service infrastructures which have been a nightmare to upgrade to modern customer expectations. As we have written many times on these pages, the banks sit on some of the richest consumer data on the planet. Critical information on individual and institutional funding, spending and income patterns are in the possession of the banks. What if that data could be mobilised in a far more efficient way using AI and its agentic tools? Like Dermot Desmond’s thinking, could AI allow banks to skip an infrastructure bottleneck? It is early days but let’s take a look at a company you’ve probably never heard about before.

    Palantir Technologies might be named after a Tolkien crystal ball but it looks like its future might be right now, thanks to AI. The Denver-based company has been around since 2003 and specializes in software to analyze or “mine” data. Its early customers were government departments seeking assistance with unwieldy datasets and looking for actionable information. In particular, it gained traction with security/police departments searching for surveillance and predictive intelligence solutions. Sound familiar, or creepy? Park that thought and think banking. Then consider Palantir only just hit quarterly revenue run rates of $1 billion in its most recent results. However, that was enough to make it one of the 20 most valuable companies in America. Stock market investors think it’s worth $440 billion which is bigger than the mighty healthcare player, Johnson & Johnson (J&J) and its 138,000 employees. Yes, if you were wondering if the valuation of Palantir was looking a bit punchy, you’d be correct. Annualized revenues of just over $4 billion (vs J&J’s $85 billion) means the Palantir valuation multiple is currently 110x current revenues. The excitement and valuation is driven by two recurring messages whenever Palantir is mentioned:

     

    1. AI is accelerating the monetization of data infrastructure
    2. AI is reshaping enterprise software and Palantir is uniquely positioned

     

    Palantir is expanding beyond government into commercial sectors like healthcare, finance and energy. The first thing that should strike readers about government and these three specific sectors is that they have enormous customer/user bases. This is the banking sector clue, and possibly its infrastructure B-AI-L out. AI will very likely remove the need for “transition” projects to upgrade data infrastructure and provide banking organizations with valuable action prompts which might even be carried out by AI-agents/bots. That’s a business model ‘Hail Mary’ for the bank sector and Wall Street’s banking analysts are doing something unusual too.

    Typically, bank analysts stick close together and move their recommendations in tandem with their competitor analysts at the other investment banks. Remember, “nobody gets fired if we are all wrong” is an established career strategy for the average analyst. This also means that share price targets set by analysts move in relatively small increments so as not to spook the herd or attract excessive attention to their analysis or models (usually flawed as with all human forecasting exercises). So, I was checking a few market analytics dashboards today and spotted the following:

    KeyBanc target price moved UP from $60 to $100

    RBC Capital  target price moved UP from $63 to $97

    Raymond James target price moved UP from $79 to $95

    Believe me, 25%-65% banking share price target upgrades are not the done thing on Wall Street when TACO Trumpolini is threatening the Chairman of the Federal Reserve Bank on interest rate policy.  So, this is yet another sector to add to your list where the two letter response to any share price move query can be “AI”. However, at a structural level, you don’t need a Tolkien crystal ball to know that technology can transform the commercial prospects of a country or sector saddled with a perceived long-term ‘challenge’. I’m old enough to remember the gloomsters telling us Ireland was destined to perpetual under-development because we had no energy resources and could never compete in manufacturing/building things. Who knew? Maybe, the leaders who finally gave up on Ford in 1984 after welcoming and watching Apple begin manufacturing in Cork in 1980…..

     

  • Big Beautiful Bull Market Or Bust?

    Big Beautiful Bull Market Or Bust?

    It has been a very good week for the accused. Vlad Putin gets free war-crime shots at defence-stymied Ukraine courtesy of ‘Whiskey Pete’ in the Pentagon, P.Diddy is acquitted on the worst RICO charges, Bibi flies to Washington without fear of arrest and the US Supreme Court gives King Donald a July 4th gift of even more freedom to ignore other judges. Oh, and Trump’s “Big Beautiful Bill” was passed in the US Congress. Tempted to laugh, cry or rant? Don’t. Investors need to focus on the ‘cards’ dealt and be alert to an investment environment which is increasingly looking like a “Big Beautiful Bull Market”. Despite ongoing tariff tantrums and confusion (Japan and South Korea getting their letters as I write) we should be keeping a close eye on a number of market developments.

    The obvious pulse take on investment market health is the performance of stock markets. Irrespective of dollar weakness, the key US benchmark indices of the S&P 500 and Nasdaq hitting all-time-highs in recent days is a strong positive signal to investors. But it’s not just the headline numbers which are flashing green. There are additional promising signals in different parts of the capital markets. Many commentators believe the markets are entirely driven by AI optimism so it is no harm to see the AI chip poster child, Nvidia, regain its crown as most valuable company on the planet and gently ease its way to within 2% of a $4 trillion market value. The all-too-recent excitement about the first trillion dollar company (Apple in 2018) seems almost quaint amid such phenomenal acceleration in wealth creation. And, there’s more AI chip good news in Washington’s Big Beautiful Bill.

    There’s a quasi-arms race going on globally in AI chip manufacturing which the Biden administration spotted and supported with the CHIPS & Science Act. Trump might be happy to burn the planet (and Elon Musk!) by reversing the electrification revolution championed by Biden but…. he’s not reversing the CHIPS tax incentives. In fact, Trump’s bill has increased investment tax credits from 25% to 35% for any manufacturers building new facilities on US soil.  It’s not the only recent policy win for the industry. Last week, the US Commerce Department told leading semiconductor design software providers — including Synopsys and Siemens — that they are no longer required to obtain government licenses to conduct business in China. One can be sceptical about the true value being created by AI but there’s no doubt real money being spent by Big Tech companies like Microsoft, Amazon and Google has massive knock-on positive impacts in the global economy. Forget that old canard of “trickle down” tax reliefs for the wealthy benefitting the wider economy, but corporate incentives really do work. Indeed, if you want money to flow into the economy then it’s always good to see banks become more ambitious in their lending activities. Even better, if an entirely new bank comes along.

    Silicon Valley Bank may have failed the basics of asset-liability matching (term horizons) in 2023 but the venture funding world never really managed to fill that $218 billion gap left by the early-stage champion. Now, there are reports Musk billionaire buddy, Peter Thiel, and an investing team of tech titans have applied for a bank charter. The new bank will be called Erebor, another Tolkien reference like Anduril and Palantir, to assist the ‘innovation economy’ and companies engaged in developing cryptocurrencies, AI and next-generation defence technology. Banks don’t usually emerge in risk-off moments so there must be some confidence bubbling back into the private early-stage investing world. Of course, it’s great to see new money or new bank flows IN to riskier parts of the investment market but what about getting OUT the other side of the risk journey? More good news.

    IPO data compiled by Bloomberg shows that a slowish start to 2025 has delivered some very interesting performance figures. The weighted average performance of companies whose shares made their debut on US exchanges in 2025 was a punchy 53% compared to single digit returns year-to-date on the S&P 500. The highlights were stablecoin fintech Circle up a whopping 585% since its IPO in…. June. Not far behind, cloud computing player, Coreweave, has returned 300% since its March listing. Suddenly, but not surprisingly, it’s raining IPOs with another high profile fintech, Wealthfront, filing for IPO.  Crypto exchange, Gemini, has filed for a public listing too. Europe didn’t miss out on the IPO fun either in the first 6 months of 2025– a weighted average return of 38% for its newly listed companies is not too shabby. They are the public liquidity or exit events a market needs to see for confidence to flow into the early stage private markets and there’s early evidence of increasing optimism.

    Medtech VC funding activity had its best quarterly performance since 2022 with $4 billion invested globally in young companies (Source: Pitchbook). Meanwhile the value of VC exits hit a 3-year high in Q2 with almost $115 billion of deals completed and exits celebrated. It can be a little too easy to criticize the US these days at a political level but Europe needs to look in the mirror. This article mostly cites US capital market develoipments. For good reason. Mark Rubinstein in his excellent Net Interest newsletter titled “Ode to America” this week put it well:

     

    “European policymakers bemoan that while households in their part of the world save more than Americans, they keep a third of their assets in low-yielding deposits, compared with a tenth in the US. European pension funds allocate just 0.02% of assets to venture capital versus 2% for their US peers. And the median European venture-backed company receives around half as much funding as its US counterpart. European Central Bank president Christine Lagarde recently calculated that, if Europeans matched Americans’ appetite for capital markets, some €8 trillion currently trapped in bank deposits would be unleashed to finance transformation.”

     

    Wowzers. Eight trillion euro. Food for thought but we might need that eight trillion for other things. One can’t ignore that there is a critical part of financial markets which is not as cheery as a Republican pardon party. The half year reviews are in and the mighty US dollar is feeling the heat. A loss of purchasing power to the tune of 11% in just 6 months has not happened since Richard Nixon was President, and then he wasn’t. We might not want to draw a dreamy historical parallel but it is curious how quiet the bond market has been since the passing of the Big Beautiful Bill and its reckless debt implications. If the US dollar is pointing to a credibility issue and ultimately a US bond market BUST, it could be European savings pools which will be needed to stabilise things. The price will be a hell of a lot more than tariff tweaking and that’s not wishful thinking. Even if you’re on the beach, it’s worth following the money right now but do keep an eye on the bond market too.