Gravitas Spark CrowdFunding

Tag: finance

  • 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….

  • Time To Look At The Big Savings Picture

    Time To Look At The Big Savings Picture

    As Artemis II hurtles towards a lunar orbit we are reminded of how distance can give us new perspectives on our little planet. So too for time and our savings habits. Funnily enough, those perspectives are more reminders than new lessons. And, it’s definitely a good week for reminders. Top prize for memory-jogging was the Reform UK’s housing spokesperson, Simon Dudley, whose outstanding contribution to post-Grenfell safety debate was that “everyone dies in the end” while attacking current safety regulations. Thus ended Dudley’s 23-day reign as Reform housing guru –  even Igor Tudor’s stint at Spurs was 44 days. Of course, on a bigger stage, Pam Bondi learned a very old lesson this week that in a lawless society, the shelf-life of an Attorney General is limited no matter how good the cosmetic surgery. Let’s not go there with ex “ICE Barbie”, Kirsti Noem, except to say that these evangelical-political types really do have the most astonishing fetishes hidden in those bible-stacked closets. Poor Cricket clearly knew too much. Now, let’s take a look at areas of investment where we might need to know a bit more.

    In the week of Ireland’s first Savings & Investment Forum, we must applaud any efforts to put our savings capital to better use. The critical impetus is to move from a ‘savings’ no-risk culture to an investment wealth-creation culture. However, I’m personally concerned the investment options in new tax and incentive frameworks might be quite narrow. So, as luck would have it, the most striking thing I read this week highlights the dangers of a relatively ‘narrow’ approach to investment. Credit to Ben Carlson of A Wealth of Common Sense for highlighting the updated findings of Hendrick Bessembinder’s work. If that name sounds familiar it’s because we quote Bessembinder’s work extensively in our EIIS Private Portfolio brochure and newsletters. The Professor of Finance at Arizona State University in a 2018 research paper made a very powerful case for diversification, or a ‘portfolio approach’ to investing. His view, and mine, is that ‘picking winners’ is beyond the capability of all but a handful of people on the planet. Hence, my encouragement to build multi-year portfolios. His research covering S&P 500 stock returns since 1926 flagged two key features of investing:

     

    **60% of all stocks underperform risk-free government bonds(Treasuries).

    **Only a tiny 4% of the entire stock market’s securities (company shares) account for the vast majority of investor gains.

     

    The enormous concentration of performance in just a few stocks is strong justification for just buying ‘the market’ or indexing. Think about the Magnificent 7 or MANGO stocks these days and the ‘cost’ of not being invested in a single name like Nvidia (350,000 % outperformance since 1999). Now, let’s take a look at Bessembinder’s latest updated research with a full 100 years of data in the analysis. The inclusion of an extra 10 years of data shows that concentration of performance has accelerated into an even smaller pool of stocks:

     

    “Over the 1926 to 2016 period studied in Bessembinder (2018), 89 firms accounted for half of the $43 trillion in net wealth creation. After including outcomes for the most recent nine years, just 46 firms account for half of the $91 trillion in net wealth creation over the full century.”

     

    Wowzers! $45 trillion of wealth generated by just 46 companies accounts for more than half of ALL returns over time. However, I want to concentrate on the almost 60% of stocks who don’t even beat cash/Treaury bonds. That’s not a figure which helps the marketing departments of private client stockbrokers or active fund managers. But….. it does help those of us who are trying to increase investment in private assets including venture capital, private equity and infrastructure projects. You might wonder why, given it seems to ‘prove’ that investing can result in many companies failing to beat cash – at last count there’s more than €340 billion in Irish bank accounts. Well, one of the most common rebuttal arguments of investing in young venture capital type opportunities is that “most companies fail”.  Now check out that figure from the PUBLIC markets. Yes, 60% of those publicly listed companies fail to beat cash in performance terms. So, here’s the mindset change required for investing in private markets – many of the investments won’t better cash but it’s worth it if you can just find a few winners in your portfolio. Furthermore, that should not merit a guffaw from a professional advisor that those winners are too rare to justify investing in the asset class. Repeat slowly back to him/her that 46 companies over 100 years delivered half of ALL returns in the S&P 500. This week we also received a reminder of what private markets can deliver for early stage investors.

    SpaceX has filed paperwork to IPO in June. The plan is to raise $75 billion of new money at a valuation of….. $2 trillion. For historical context, please note that the previous global record IPO was Saudi Aramco which raised $29 billion in 2019. In 2025 the entire US capital markets raised a total of $44 billion across 202 IPO listings. For the valuation curious, SpaceX looks like it’s hoping to raise money at circa 100x this year’s revenues. I think the big picture pointer here is that private asset ‘winners’ can generate an outsized proportion of your overall investment returns while the majority will destroy wealth/purchasing power. However, the big learning reminder today is that this outcome is not much different to what happens in those orderly, liquid, mature public markets.

    Hopefully, Europe and Ireland will grasp that lesson and understand that diversification should not stop at publicly listed investments. Each asset class has its own risks but the bigger picture doesn’t look too different, be it public or private assets. FORTY SIX companies tell that 100 year old story. Now, Europe must think about how it can fund its own SpaceX and mobilise the €14 trillion of European household savings sitting in wealth destructive low-yield bank accounts. Yep, FOURTEEN TRILLION. It seems apt as we look to the skies and the possible this week, that Artemis is both the Greek goddess of hunting….and transitions.

  • What’s The Crack…?

    What’s The Crack…?

    God bless the Taoiseach, Micheál Martin’s script writers for his St Patrick Day’s trip to Generalissimo Trump’s Oval Office. The Taoiseach might succeed in avoiding eye contact with Secretary of State, Marco Rubio’s over-sized shiny shoes chosen by the Boss (no seriously), but the usual exchange of pleasantries laced with some colloquial Irish banter could scupper the whole event. As the non-strategic ‘genius’ of trapping 20% of the planet’s oil supplies in the Strait of Hormuz begins to hurt the entire global economy, it would probably be best to avoid slipping “That’s gas!” into the chat, or “Now we’re suckin’ diesel!” or even “What’s the craic?”.  Zero craic for the Taoiseach’s advisors anyway. But, on a broader level, the Trump regime bluster is beginning to crack. Current commentariat thinking is that Trump will avoid an Iran quagmire by declaring ‘victory’ soon and flooding the media with the usual deflections and outright lies. Bizarrely, this time I wish that messaging strategy would work. However, there’s a tiny flaw in this plan. Or, as Captain Blackadder used to say to Private Baldrick, “It’s bollocks”.

    The opening of the Strait of Hormuz is in the gift of the new hardline regime in Tehran, not Washington.  Yep, that regime change thing isn’t going so well. Unless the US puts boots on the ground, there won’t be much need to crack hydrocarbons in the Persian Gulf for the foreseeable future. Oil production volumes in the region are already being wound down but the bottom line is that the global economy is ‘missing’ circa 8 million barrels of oil per day (out of approx. 100m global demand). This doesn’t sound like an earth-shattering proportion of overall demand but …..welcome to the world of commodities. Any supply/demand imbalance can lead to outsized price movements as the marginal price (most expensive barrel) sets the price for the entire market. The International Energy Agency is already describing the situation as “the largest supply disruption in history” and has released 400 million barrels from reserves. However, despite this announcement (delivery times vary) the price of oil continued to rise to over $100. That doesn’t feel like price control. And, Trumpolini can go on Fox News every night and bluster but the gas prices at the pump are the only truth for voters. It’s not the only crack in the victory messaging….

    There are other critical products which travel through the Strait of Hormuz. Seaborne diesel disruption could cause global supply to fall by up to 12%. To be clear, diesel is the most macro-sensitive oil derivative product in the global economy. Think freight, agriculture, mining and industrial activity. Then think of all those ‘always winning’ MAGA voters employed in those sectors. Also, keep an eye on headlines from India and Indonesia who are both frantically seeking new supplies of urea, ammonia and other fertilizer feedstocks. Bangladesh has already closed its universities to save fuel and now we’re talking about the guts of 2 billion people impacted by the basics of food production, education and power. However, if you thought this was just a developing world problem, let’s take a look at the very highest echelon of the financial food chain.

    I’ve always been conscious that financial fragilities and leverage can exist in the global economy for extended periods of time but ultimately something cracks. And, that crack can be far removed from the specific vulnerable market. We frequently write about the perils of depending on “other people’s money”. We have also written about the massive growth in a market known as ‘private credit’. In other words, private loans to private companies which do not come from banks. This market has grown five-fold since 2010 to $2.5 trillion globally. Remember these are loans from institutions (not banks) like Blackstone, Apollo, Ares, HPOS, Carlyle, Blue Owl etc. Of course, the explosion of AI investment spend on infrastructure has accelerated the growth of this asset class (private credit) but, as always with fast-growth lending, due diligence standards slip, risk management gets sloppy, and bang….. there’s a problem. Well, this multi-trillion dollar asset class already had two problems:

     

    1. In October 2025, two companies in the US in quick succession suddenly collapsed. Private credit instruments backing auto-parts supplier First Brands and car dealership Tricolour suffered catastrophic losses. Suddenly, risk entered the private credit equation.
    2. In January “SaaS-pocalypse” became a market driver as investors began to fear for the growth and security of once-robust software (SaaS) business models under threat from AI. This, in turn, affected perceptions of the security of loans extended to software companies. Companies like SAP and Oracle saw their share prices fall up to 50% from their highs.

     

    In recent months we have been reading smallish headlines about private credit funds experiencing “difficulties”. Guess what? Depending on “other people’s money” can be tricky when headlines cause anxiety. Yep, people who invested in these private credit funds and vehicles (SPVs) wanted to get their money back. Blue Owl was the first high profile name to suspend redemptions. Then it was Blackstone limiting investor withdrawals, followed by the Big Daddy of them all, Blackrock/HPS. Now, Morgan Stanley and Cliffwater are doing the same this week. So, that’s 6 ‘financial gates’ closing as fast as the Strait of Hormuz. You don’t need to guess what other investors in other funds are thinking. Now consider the impact of a disrupted global economy and how the traditional providers of capital to the global economy are reacting. Clearly, deal conversations with Tokyo banks, UAE sovereign wealth funds and European family offices are going to be of a very different tone to those held just a few short weeks ago.

    Listen carefully…that sucking sound is not Kash Patel, JD Vance (how quiet is he!) or Howard Lutnick simpering to the Dearest Leader’s latest delusions. Nope, that’s the sound of the global financial system experiencing geopolitical and leverage cracks simultaneously, and the beginnings of capital flows going into ‘flight to safety’ mode. Hopefully, stability will return to the Middle-East soon. We have stared down the barrel of threatened global chaos before. In fact, for 47 years senior US strategic security personnel gamed out the theory that the Iranians would never shut down the 2-mile wide Strait of Hormuz knowing that the US and their allies’ response would be too damaging. That theory is now dead because the White House moved first and apparently (based on this week’s Truth Social outbursts) had no coherent plan for after…..

    Now, that would be gas if it wasn’t so serious.

  • Battle For Capital Starts At Home

    Battle For Capital Starts At Home

    Investment capital does not come easy. Unless you’re Kristi Noem, the very recent US Secretary of Homeland Security. It seems Kristi had no problem accessing capital to fund a $220m personal branding campaign, a fleet of $70m luxury jets with queen-sized beds to ride around the nation and multiple photo shoots of the DHS Secretary on horseback at national monuments. Those rides – that word is doing some heavy lifting – are now over. “Generalissimo Bonespurs” bravely reached for his social media keyboard last night and fired her via Truth Social. At least it was a fate less lethal than that experienced by Kristi’s late puppy, Cricket, who was shot by “ICE Barbie” for discipline issues. No tears from Cricket, or the rest of the caring world me thinks. Anyway, I’d like to stick with investment capital and discipline.

    The screaming headlines away from the Arabian Peninsula in 2026 have been again all about AI, and the ‘space race’ to spend more and more money to build that AI future. Leaving aside the discipline or uncertainty of returns(success) on that capital spend, there is one certainty. This enormous shift of investment capital – $650 billion spend this year by MSFT, Amazon, META and Google alone – risks ‘crowding out’ other sectors desperately looking for capital to fund their own growth plans. In fact, Pitchbook data indicates funding for AI exceeded half of all VC deal value in 2025 (53% of $513 billion). However, this sector concentration phenomenon highlights a challenge for Europe. Clearly, the investment capital is out there but Europe is struggling to muster up ‘big ticket’ investment to truly dominate/gain monopoly on the global stage. Consider SAP as the only European ‘startup’ of recent decades to achieve a valuation of over €100 billion. Then think of the still privately owned SpaceX eying up a 2026 IPO with a $1.7 trillion valuation. The US is on a different planet to Europe in terms of swinging the investment capital ‘bat’. Indeed, Mario Draghi’s report on EU competitiveness way back in 2024 flagged a couple of things relevant to today’s article:

     

    • Europe needs to radically overhaul innovation. Draghi noted only 4 of the world’s top 50 tech companies were European.

     

    • His solutions included innovation in Europe’s financial markets: 5% of European GDP (or €800 billion per annum) needs to be invested in Europe’s best innovative companies, infrastructure, energy etc. This capital could be unleashed through joined-up thinking on common EU debt instruments and unlocking the vast private savings pools in Europe’s aging societies.

     

    Closer to home, the government and Tanaiste Simon Harris are promising a new savings scheme to incentivise savers to deploy some risk capital. Despite the presence of so many bold brave successful US multinational corporations in Ireland’s economy, we have become a nation fearful of risk. Possibly we have been spoiled and become risk flabby due to multi-national ‘air cover’. The €170 billion of savings sitting in Irish banking deposit accounts earning returns below the rate of inflation is a damning indictment of our national financial literacy and an exercise in mass wealth destruction. Something radical needs to happen so we will be writing further on this theme in terms of what’s possible and what we believe might work. After all, we are pretty much the only Irish free-to-access platform for investing and purchasing the shares of young fast growing companies. So, we do have a view close to the coalface and….. we also know the hurdles currently experienced by both the companies seeking investment and the institutions assessing the returns prospects of those companies. Let’s first consider how venture capital institutions, family offices and private equity houses make that returns assessment.

    One of the more thought provoking pieces I have read in the last 12 months was an article by Progress Ireland’s Sean Keyes. He used real numbers in an investment decision example to demonstrate how an Irish company when competing against other European companies (not even US ones) for investment “need to be smarter, harder working, or luckier than Europeans to achieve the same results”.  Why? Simply put, investment companies have a ‘hurdle’ or returns target which they put in all their marketing literature for their investors, partners, shareholders etc. It will be expressed as an annual rate of return over the duration term of the investment (eg 20% or 30% per annum over 5 years). However, this is NOT the same as what the investee company achieves in its own operations. Think of two companies earning profits of €1m per annum for 5 years and then selling/exiting for €10 million to a new owner. You’d be right to think that both companies delivered €15 million over the holding period of the investment. But…. that is NOT what the investment company will receive. That will depend on the tax regime of the relevant investment. Here’s where the numbers don’t look good for Ireland’s companies. We DO have a low corporation tax (15%) but other taxes significantly change the returns picture for investment companies. Consider the following:

     

    • Ireland taxes dividends at the highest rates in Europe (remember the distribution – out of company – of those €1m per annum profits)
    • Capital Gains Tax is the 4th highest in the EU (remember that €10 million exit)

     

    Clearly, the post-tax picture for investors in Irish companies compared to the exact same average EU company is lower. Therefore, an investment manager needs to know that an Irish company is going to deliver a supra-normal PRE-tax performance in order to deliver a post-tax result in line with his ‘hurdle’ requirements. The Progress Ireland article is worth a read to understand the framework calculations but for the purposes of this article (and Friday lunch deadline approaching) I would flag the two key numbers which standout. An Irish company receiving €1m of VC funding and required to beat a hurdle of 30% per annum over 5 years needs to generate€ 23.7m over the 5 years. Meanwhile, the average EU start-up receiving the same €1m VC investment only needs to deliver €11.3m over the same period. That feels like an Irish start-up needs to be roughly twice as lucky, smart and hard working than average. It also feels wrong. Not the maths, the returns hurdle implicit in any Irish start-up investment by an institutional player is way too onerous. Radical thinking is required and none of these challenges are addressed if we end up incentivising SSIA-type savings schemes which steer investment capital into publicly listed companies on global stock markets.

    We already have an incentive solution for that. It’s called a pension. So, we will return to this topic again with more on the potential solutions and the wider imperative for Europe to mobilize its vast savings’ pools. Frankly, if we and Europe don’t encourage risk-taking discipline, then we all economically end up like poor Cricket.

     

  • Things Getting Very Real….

    Things Getting Very Real….

    I know, I know we’re not supposed to throw the “F” word about lightly. But things are getting serious, and expletives aren’t even close to what I’m thinking. I’ll save those for counting freezing Freezbrury water minutes. No…my reluctant F word is  FASCISM. Possibly over-used in recent times….until now. Check out the enormous banner poster of Donald Trump which has just been hung on the outside of the headquarters of the US Justice Department (DOJ). Gobsmacking. The capture of the rule of law in the US is now almost complete. While business leaders are removed, senior foreign government officials resign in disgrace and the 8th in line to the throne of the UK is taken into police custody, Trump’s private legal firm (the DOJ) is desperately trying to deflect and pretend there are no US-based Epstein predators. Deflection tactics from the White House have now moved on to releasing files on Aliens (the non-ICE versions) and UFOs. However, the biggest ‘bread and circus’ deflection show is the 15- day countdown to conflict with Iran.

    I am struck by how complacent current geopolitical risk thinking is right now, and what desperate measures Tehran’s murderous regime might take to strike a blow against the US and its allies in the region including Israel.  Any regime which murders 20,000 of its protesting citizens in a matter of days is capable of awful stuff. So, it concerns me that the emotionally stunted “Admiral Bonespurs” in the Orange House and his War Secretary, “Whiskey Pete”, in the Pentagon will be the key decision makers if US forces take larger casualties than expected. We are into very unpredictable territory now. However, Iran is not the only risk reality creeping up on us.

    The financial markets have been focused on the carnage wrought on software company share prices year-to-date. Valuation destruction has been close to $2 trillion as the latest Wall Street thinking is that AI will blow up software business models. It even has its own event taxonomy – “SaaSpocalypse”. The basic premise is that companies will build their own workflow, HR, process applications etc. in-house with increasingly powerful AI coding tools. Thus, software companies could face growth and competition challenges which in turn impacts valuation/sales multiples framing that growth. In fact, this invasion of artificial digital expertise is in danger of commoditizing software. Ironically, there has been a complete reversal of the valuation hierarchy between hardware and software. In tech terms, things are getting very real. Real stuff like memory chips(DRAM) and logic chips (GPUs) are perceived as supply constrained and ditching their historic ‘commodity-type’ characteristics. The best illustration of this shift in investor perceptions is the stunning statistic that 89% of semiconductor companies’ (real stuff) share prices are flying (trading above 200 day moving average) while precisely ZERO software company (digital bits) share prices are exhibiting any technical strength(evidence of buying). However, we are in danger of focusing on the trading trends of financial markets while missing the bigger AI picture. Technology insiders are becoming more nervous about the power of AI without adequate guardrails…

    It’s difficult to get away from Anthropic’s founder, Dario Amodei, confidently predicting a world where AI systems would be “better than almost all humans at almost everything” within 2 years. Implicit in this forecast is the rapid realisation by the rest of us that AI systems are soon going to be coding their own optimised functions. If you’re thinking Terminator and Skynet you wouldn’t be far wrong and we’ll definitely need more than Arnold this time. As the global geopolitical balance shifts towards lawless autocracy and fascist ‘might over right’, we seem as a species particularly ill-equipped for what’s to come. Amodei himself describes the challenge:

     

    “Humanity is about to be handed almost unimaginable power, and it is deeply unclear whether our social, political, and technological systems possess the maturity to wield it.”

     

    It feels like a moment of AI truth is approaching. If I were to strike an optimistic note, I’d be encouraged reality is beginning to break through to the public consciousness on a number of fronts. This could bring a very welcome return to valuing credibility, data and honesty. Populists beware and feast your eyes on these beauties:

     

    Brexit: The UK’s Office of Budget Responsibility (OBR) has estimated the various costs of Brexit at 6-8% of GDP, £100 billion per year of structural economic losses, 4% productivity loss and 15% lower trade volumes.

    US Manufacturing: All the trade shakedowns, foreign investment ‘promises’ and noise about making America  manufacture again (Oh Mama!) resulted in 2025 manufacturing/factory construction spend actually FALLING by 7%. Oh, and the US has lost 70,000 manufacturing jobs since tariff ‘Liberation Day’ last April.

    US Trade: Just in…. the US trade deficit remained a stubborn $900 billion in 2025. That’s a microscopic 0.2% reduction in the deficit despite all the ‘winning’ and tariff chaos trumpeted by Agent Orange. And now for more breaking ‘winning’ news…. The Supreme Court of the United States has reportedly ruled, in a 6–3 decision, that tariffs imposed by Donald Trump were illegal. The ruling could leave the U.S. facing more than $150 billion in potential tariff refunds.

    That final datapoint of almost zero deficit reduction is just embarrassing. But it gets better. Shockingly, to nobody outside the US, other countries trading with the US are smarter than Howard “Nutlick” and his Commerce Department lackeys. The US trade deficit with Taiwan is now bigger than that with China. The last time that happened was in 1992!! It seems like the rubber is meeting the road for quite a few of these populist distractions. Indeed the final irony, 250 years after the US gained its independence, might be that the epic downfall of a British prince reveals the true colours and deceptions of a ‘King’ in Washington…..

  • Software Is Eating Your Pension….

    Software Is Eating Your Pension….

    Is it time to rip up our favoured playbooks? No, I’m not trying to steer Andy Farrell after that first half ‘traffic cone’ tackling effort in Paris. Nor will I hold out any hope of Britain’s Labour Party saving its government from the existential fallout of ignoring its own “Prince of Darkness” links to Epstein. Sir Keir Starmer’s premiership is already “dead in the water” but I will stick with the trading theme. Long-time political commentators are rightly appalled that Peter Mandelson tipped off Jeffrey Epstein and his elite rolodex/assets about a €500 billion bailout of the euro currency during the Greek debt crisis. The €500 billion number is huge in its own right but the derivative opportunities in banking debt, currencies, bond markets etc at the time were in the trillions and available for exploitation by Epstein & Co without any obvious trace. So, following on from last week’s article, we promised to dig deeper into the huge AI numbers hitting our screens. Actually, we won’t. Instead, we will focus on a related huge number with potentially massive knock-on/derivative investment implications.

    For me, the big number this week is the $1 trillion of value wiped from software stocks (and their SaaS subscription/business models) in just 6 days of trading. Of course, this is directly connected to the threat of AI and some developments, in particular, from the Anthropic/Claude suite of products which are making massive strides in assisting coders and companies to develop/manage their own work processes. Software, of course, is the incumbent go-to solution for companies seeking to optimise work processes and engagement with their customers. Indeed, the venture capital guru, Marc Andreessen, in 2011 was moved to say  “software is eating the world”. From Netflix to Uber to Amazon, digital subscriptions gave companies and consumers access to technology-optimised services. As AI invades the digital opportunity, software is possibly no longer the ‘always’ solution on the Boardroom table. In fact, software could be on the displacement menu itself. The twin threats of AI are summarised well by Business Insider:

     

    “First, if employees get more efficient using AI tools, companies may not need to buy as many business software subscriptions. That would dent the growth of “seats” or how many subscriptions software companies sell. Each employee has a seat, so if there’s no new hiring, growth stalls.

     The second threat is more existential. If AI tools and AI agents get good enough, companies could replace the software they use entirely and instead rely on new AI-powered workflows. And with AI coding tools showing big improvements lately, companies could even develop their own software, without needing to buy it from established vendors.”

     

    There are plenty of analysts and observers who disagree with the gloomy interpretation of AI’s eventual impact on software companies like SAP, Salesforce, Adobe, Figma and HubSpot. However, these company share prices falling by 30-40% in just one month, is telling us the ‘fear’ is real. The $1 trillion of value evaporation in less than a week is not an earth-shattering number given some individual companies are valued in the trillions alone. But… perhaps looking at the software value obliteration in isolation is misguided. The commentariat might think software fears are ‘overdone’ but, if you have a pension, this might be the less scary of TWO outcomes. The first is that software stocks growth and valuations are hit severely by AI replacement. However, there’s a second set of updated numbers/data to take a look at. While the software sector was being hammered, the AI/Cloud giants were announcing quarterly results. Interestingly, their earnings and sales growth numbers were pretty much ignored as the market focused on just one number; capital expenditure spend on AI infrastructure and development. Last week Facebook promised $135 billion of INVESTMENT in 2026 which equates to their total sales in 2023. Microsoft told us their number was circa $105 billion. This week it was Google and Amazon’s respective turns to talk the AI ‘space race’…

    Google, perceived as the AI leader these days, told the market it would spend a cool $185 billion. That equates to its total revenues in 2020(!). Meanwhile, Jeff Bezos seems happy to test out the theory that “Democracy Dies in Darkness” at the investment-starved Washington Post, as his primary wealth creation vehicle, Amazon, announces a planned $200 billion capex spend for 2026. So, the Big 4 are up for a $625 billion investment splurge this year and probably every year for the foreseeable future. That looks like a bet of $3 trillion to $5 trillion on AI, and I’m just wondering what the ‘risk’ calculations could be? I chose the ‘space race’ phrasing earlier deliberately. It feels like the prospect of AI failure for these companies is existential in terms of economic power and analogous to the geopolitical calculations at the height of the Cold War in the 1960s. Well, the historians would probably agree that Reagan’s “Star Wars”  broke the Soviet empire. It’s too early to tell who will ‘break’ in the AI race but software is in the crosshairs right now. However, the sense that big tech including software is ‘going for broke’ introduces a very new risk for financial markets.

    The beauty of software and SaaS business models is recurring revenues, huge scalability at minimal incremental cost, 80-90% margins and enormous cash flow generation. The end result can be seen in the massive spending plans of Big Tech; these companies’ balance sheets were sitting on enormous cash piles (or equivalent liquidity). Simply put, these were the most robust (credit risk) companies on the planet. Pension funds, family offices, sovereign wealth funds and Swiss bank accounts loved the security/risk safety attached to loans and bonds issued by tech/software companies. These instruments were considered “defensive”. Now, not so much.

    Stock/equities markets (as my former boss Terry Smith used to point out to me) occupy 28 of the 30 pages of the Financial Times. But, the last two pages covering debt, currencies, commodities etc are much more significant for financial markets. Now the bonds and loans associated with big technology companies are receiving intense scrutiny (and investor selling) as they each seek to out-spend their cash and balance sheet credibility. This has incredibly important implications for your pension. The credibility of the United States and global technology stocks are being reviewed for their ‘risk safety’. Some serious investment institutions are already acting and re-positioning. This doesn’t mean just selling. What investors are buying at the moment is telling too. Here’s a few data snippets to alert you to what is happening right now….

     

    *Software sector selling activity is the worst since 2008

    *Software valuations – forward price/earnings multiples of 20x – are now at levels (low) not seen since 2014.  

    *Now the buying: defensive consumer staples companies (Nestle, Mondelez, Heinz etc) have been up 1% on consecutive days while technology sector companies fell 1% on the same days. That divergence of performance has not happened since ….2000.

    *The same consumer staples stocks are experiencing buying intensity (“RSI” for the technicians) not seen since 1995. Other indicators (DMA 200 day) are 4.2 standard deviations above average.

     

    It looks like people are buying ordinary stuff; petfood, protein, household goods, chocolate….. really boring but real. We have written before that investors are flocking to atoms (real) and hedging/selling their risk with bits(digital code). One suspects the meltdown in crypto land (Bitcoin at $65,000, down over 50% from its highs) is also partly driven by digital ‘fear’. So, for those keeping an eye on the headlines and their pensions, you might want to check with your advisors on three areas:

     

    1. Pension exposure to technology (software or AI spend). It could be as high as 30% of your portfolio.
    2. Pension exposure to defensive real stuff. It could be as low as 5% of your portfolio.
    3. Pension exposure to the USA. It could be as high as 70% but there is currently a lawless armed militia running around the country, a Supreme Court in dereliction of its duty, international grift on an epic scale and the real threat of mid-term election suspension.

     

    The advisors won’t have all the answers but it should be on ALL pension radars. This period of history offers mind-boggling opportunity but we must be also aware that there is an unusual confluence of technology ambition/confidence and global political leadership operating in an environment where traditional values and rules are being disregarded. Hopefully, rules-based leadership will return soon but here’s a warning from Andrew Ross Sorkin’s book, 1929:

     

    “It’s a haunting elegy for a fractured era, a timeless reminder that progress is fragile, choices have repercussions, and the flaws embedded in the human condition are ours to confront”

     

    Might be time to make better choices and confront those flaws (including White House ape videos)….

  • Don’t Get Angry, Get Ready….

    Don’t Get Angry, Get Ready….

    I was right. The first of my predictions for 2026 was spectacularly on the money. Sadly, it won’t make any of us wealthier given its focus on noise rather than direction. To refresh memories, the final words in my last article, Themes and Dreams For 2026, were as follows: “I’ve a feeling I won’t be short of writing material in 2026.” Little did I know there would be a year’s worth of material in just the first 10 days of 2026. Where do we start?

    The US is celebrating its 250th birthday by re-branding as an exploration company with an army (hat tip George Carlin) as Venezuela is ‘acquired’ and ‘takeover bids’ are lined up for the Panama Canal and Greenland. Back at HQ, the Boss re-asserts control of executive salaries and cash flows in the company’s defence supply divisions while promising a 50% expansion of investment ($1 trillion to $1.5 trillion) in its Business Development unit, previously known as the Department of War, and before that, as the Department of Defense. Meanwhile, the company’s traffic stop management division has secured immunity from regulatory or criminal oversight of its shoot-to-kill (or stop) policy on a nationwide basis, not just in Minneapolis. Of course, none of these revolutionary business initiatives can happen without funding. The company’s Treasury unit has set up overseas bank accounts to deposit proceeds of its newly acquired Venezuelan oil unit. In the interests of tax efficiency these bank accounts will be overseen directly by the Boss, and will not be consolidated in the parent company accounts. But, of course. However, US Inc is not the only company turning to oil….

    It is probably more accurate to say some companies are breaking with a seismic global shift to electric power. Again, it’s American-sourced exceptionalism. This week General Motors (GM) has followed Ford and abandoned its move in to electric vehicles (EV). These recent investment write-offs amount to $7 billion and $19 billion respectively which will hurt. But… that might not be the end of the pain. The train, or car, has already left the station. The Electric Age, per the superb Noah Smith, is here with 25% of cars purchased in 2025 of the EV variety. In many Asian and a few European countries that penetration rate is through the 40-50% level. China leads the world in the entire EV technology stack and have focused their attentions on battery production, manufacturing scale and grid expansion (solar). Fewer moving/motor parts, efficiency and superior performance are the current and long-term edge for EVs which will kill the internal combustion engine (ICE). Writer’s note: Be careful how you say or ‘weaponise’ that acronym these days.  All is political these days rather than factual which highlights why the US is making a fatal error on oil over electric. Noah Smith writes:

     

    The main reason America is missing the EV transition is that we’ve insisted on thinking of EVs in terms of climate — as a “green” technology whose purpose is to save the environment, rather than a superior technology whose purpose is to save you time and money. Trump canceled EV subsidies because he associates them with the environmental movement and the political left.

     

    It’s not just electric vehicles(EVs) experiencing their electric break-through moment. EVs share the same components as drones, trains, cameras, phones …..and robots. Just this week at the massive CES 2026 conference in Las Vegas, Nvidia’s Jensen Huang didn’t even blink when asked how long it would take for humanoid robots to match human-level ability. “This year”, he said. Guess what – those robots run on many of the exact same components which go inte EVs. Think batteries, power/motor electronics, sensors, software…..and AI. Clearly, in the AI piece of the assembly package, the US is perceived as the global leader. However, even AI and its support infrastructure is inextricably tied to electric power. And, before you say “but, but, but… the Venezuela oil reserves”, get ready for more non-delivery from the “stable genius” back at HQ. Venezuela currently produces less than a million barrels of oil per day. It’s like a rounding error of less than 1% of global oil production. Yes, that production level can grow but please note the lack of announcements from US oil company executives about investment plans and potential commercial negotiations with Venezuela’s 5,000 plus generals and regional warlords. While the Department of War was planning ‘business development’ in Latin America, China built more solar power capacity than the rest of the world combined in 2025. For perspective, that additional solar capacity of 380GW built in 2025 equates to 5x China’s total existing nuclear capacity (58 plants). Get ready or get digging on two fronts.

    First, we have written a lot in 2025 about the asynchronous explosion of excitement and revenue projections for the AI world and the mining sector. At certain times in 2025 one AI company, Nvidia, was worth 4 times more than the entire publicly listed mining sector. Get ready for a change. Gold, silver, platinum and copper prices have soared which has finally juiced the risk spirits of mining sector executives. We said the sector needed a big deal. Well, global giants Glencore and Rio Tinto are talking a megadeal again with a copper focus (yep, all that electricity) and a $260 billion valuation. Metals of course in earlier times were the basis for currency. In time, central banks became the back-stop or guarantor of currency but we might have to dig again.

    The global reserve currency, the US Dollar, lost almost 10% of its value in 2025. In isolation, this is not unprecedented. In fact, the Trump regime are quite keen on a softer dollar and lower interest rates for trade deficit and investment reasons. However, we must get ready for a further assault on institutional independence in the US. The current Fed Chair, Jerome Powell, is due to leave his post in May this year. The new appointee (apparently already decided by the Boss) will be expected to cut interest rates dramatically to keep Trump happy. However, the potential unintended consequence of this action in the context of a $40 trillion US national debt is loss of credibility for the Fed and its ability to prudently manage that debt, and the currency. Hopefully, the bond markets are more effective than Russian or Chinese radar systems in spotting and thwarting that assault on Fed and dollar credibility. A final word on markets and pensions.

    Those of you reading your pension updates/reviews for 2025 might be underwhelmed by the performance. Before you get angry, I would recommend a read of Terry Smith’s own review of his $20 billion fund which underperformed in 2025. As always, my former boss writes superbly and highlights some key factors driving investment markets these days. Terry always sticks to the basics and this might well be a theme for 2026. The thoughts above should ready minds for investment opportunities in electrification, real assets, financials, mining and assets located outside the exploitation company, US Inc, formerly known as the United States of America…..

  • 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.