WEBVTT
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This is a City AM Studios production.
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Hello and welcome to Business as Usual brought to you by Workday.
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I am Matt Kenyon and today I will be joined by our editor-in-chief, Christian May, and our politics and economics reporter, Rissy Alanka.
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Welcome both.
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I've been promoted.
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It's a big yes.
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I've occasionally been a guest and here I am sitting as co-host.
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Should I be wearing a baseball cap?
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I think possibly.
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I want to make a bold claim and say I think today is the first proper year of the day of the new school year.
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It feels like September has landed.
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We've got some Well, I think you say now because you don't have kids.
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We've got some big economic news coming up for the rest of the week.
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We're going to be talking about the Mayor of London, who the next one will be, possibly after Sadiq Khan, if he doesn't run again.
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We're also going to be talking about whether Labour is entrenching work from home even further.
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But first off, let's talk about this comment from Andy Haldane, who's an absolute Bank of England veteran, major economist.
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He made the quite he also advised Andy Burnham in a informal way while he was running for leadership.
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And he's now suggested that the PM is a socialist with better TikTok.
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Christian, what do you make of that?
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That's a bold claim.
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Better TikTok than whom is the first question.
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Yeah, than than Vladimir Lenin, maybe.
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Other TikTok socialists.
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I mean, there's much that that Andy Burnham is doing which is objectively better than his predecessor when it comes to communication.
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Maurizio will talk us through why Andy Haldane is such an interesting figure because we'll come onto this in a moment.
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He was, of course, one of the three advisors that never were.
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The big three advisors who was as revealed by Maurizio in CCAM, one of the big three advisors who was who was paraded as brains behind Burnham, none of whom then actually took up any position in government.
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He has a very good turn of phrase, there's no doubt about it, Andy Haldane.
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He was speaking to LBC and he was specifically talking about bond market reaction to trajectory of government policy, government borrowing in particular.
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And not for the first time by any stretch, Haldane was talking about uh the extraordinary level of public spending and the fact that markets have woken up, it would appear, to the idea, to the realization that this this government has simply got no intention of cutting public expenditure by anything like the extent which needs to be achieved in order to reassure markets and bond markets in particular that they they have plans um that add up.
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So it was a very punchy phrase, um, but he was talking about market reactions, which has been the dominant story of the week.
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Yeah, Marissa, so he's gone from potential advisor to LBC critic.
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Tell us a bit about Andy Palbane.
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Yeah, and it's funny because he's also followed Jim O'Neill, who was the other advisor, one of those other three advisors that we're talking about, who have actually been pretty strong talking about Burnham very publicly.
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Jim O'Neill, of course, warned Burnham and Chancellor John Healy, of course, we should mention him too, because he is the chance of delivering the budget on the side.
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He feels like less of a protagonist, maybe, than Rachel Reeves, but he's still very much in number 11.
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Um, warning against capital gains taxes, and Andy Haldane echoed that in his LBC interview, but he was also speaking more about the triple lock pension, which is the kind of hot button issue right now.
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We know that the triple lock pension will go up by£490 a year, even next year.
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Yeah, why?
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Yeah.
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A lot of criticism, people um who make the case that the triple lock should go.
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And by the advocates of abolishing the triple lock by which the state pension is guaranteed to rise by a certain amount, um, they're only really saying that it should just rise in line with inflation.
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The problem comes when it because of the calculations, under the triple lock it rises by much more than inflation.
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Um, and a lot of people say, um, what is outrageous?
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You think£13,000 a year is enough to live on?
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To which nobody says yes.
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What people say is no, the estate pension should be in addition to your own private pension, your own savings.
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Um, I appreciate not everybody's gonna be in that position, but um that part of the problem around the debate is that there is a sense, particularly among people who are not yet drawing on their state pension, that this is designed to cover you throughout your old age for as long as you shall live.
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It's also being boosted by wage growth, much of which is public sector wage growth.
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And that's that's gonna keep pushing that number up.
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Russia, speaking of people who are gonna feature heavily on LBC uh in the coming months and years, you've been diving deep into the 2028 mayoral field for Mayor of London.
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You've been talking to a couple of candidates.
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Who are they?
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What have they been telling you?
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Okay, so at Reforms Conference, which was a party conference, I think they wouldn't like you see.
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Just for the record, I'm in no way denigrating their party.
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You just forgot that it happened.
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I forgot the you know what, you know what.
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You didn't go, but Maurizio was there.
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You were there.
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I was there, and I spoke to Leila Cunningham, who is uh Reform UK's London mayor pick, and she is the candidate, unless Reform and Nigel Farrar turned around and say no, no, no.
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Um so I spoke to her for half an hour.
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It was a sort of first proper interview that City M has done with her, and she's talked a lot about reducing crime in the city and uh sort of going after grooming gangs, for example.
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But I wanted to know a bit more about her business policies.
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Um, she'd sort of spoken very openly about her intention to automate tubes.
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Um so that was the first bit of interviews that I did, and the second one this week was.
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Sorry, can I pick you up?
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Can I pick you up on Leila Cunningham?
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She wants to automate the tube system.
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She wants to automate the tube system, which is.
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A lot of us feel a lot of us feel sympathy for that argument on strike days in particular.
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But it does come with a price tag of some billions upon billions.
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Yeah, so this was like we'll we'll stick to Layla Cunningham then because that was actually a quite funny or interesting part of the interview where I sort of asked her, okay, how are you gonna pay for it?
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How are you gonna defeat the unions?
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And she just says, Give me the money, I'll fix it.
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And I'm you know, this was a similar conversation I was having about how she was gonna pay for the repairs to Hammersmith Bridge.
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Was you know, how are you gonna fund this m massive 300 million pound project?
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And she's sort of get it sponsored, you know.
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Do you want to make it sub you know stick a corporate logo on a spawn con, get a sticker.
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She she said um she wants London to run like an iPhone.
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I imagine not a folding phone, though.
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She doesn't want to Yeah, she I think I think she's living up to this idea of innovation.
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She also spoke about AI as the using it to the max as uh as she puts it, whereas Sadiq Khan has obviously said AI will be this weapon of mass destruction.
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I think he meant it in terms of jobs, not in the terms of more apocalyptic terms.
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Actually killing people.
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Do you think that she has because she she wants to talk about um the issue of grooming gangs, which have never really been linked with the capital, but which is undoubtedly an issue here as it has been elsewhere?
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She wants to talk about crime and how London has fallen.
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Traditionally, candidates who run on a sort of London is doomed platform don't do very well.
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Um, do you did you get a sense that she is preparing to make a more optimistic case, a kind of forward-looking case for a reform male research?
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I did ask her about this because she's also accusing cleverly of uh stealing her slogans.
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There's all this kind of comms battle, I think, between the kind of different candidates.
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And she said at the end, I am the unifying uh candidate to or mayor for London.
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I don't think any reform candidate has claimed claims that mantle.
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She would push back absolutely on the sort of idea that she's just a gloomster and a doomster, and she's very negative about London.
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Um, I guess politicians, opposition politicians have to be, right?
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They have to point out the problems.
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We've touched on Cleverly.
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What's he been telling you?
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So Cleverly is still at the beginning of his campaign.
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He's not yet the Tory pick.
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Um he still has to sort of go through the party agreement, but he's put himself forward.
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Um, obviously, he was foreign secretary, home secretary, he was under Kenny Badenock's um shadow cabinet as a local government.
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He's run for leader a couple of times as well.
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Ran for leader was nearly leader.
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I think some tactical voting didn't go his his way uh back in 2024 after the election.
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But um now he wants to sort of reset that sort of political ambition, go to London and push for it for the mayoralty there.
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It's quite interesting though, because some parts of my interview I sort of picked out bits where I hadn't heard other Tories speak about so much.
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So, for example, he was actually very positive about Boris Johnson's um legacy that he left, the golden legacy as he put it, that was left to Sadiq Khan.
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So does that feel wise backing Johnson at this stage?
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Well, Johnson was sort of diff a very quite sort of radical man in many ways of in terms of infrastructure and um you know cycle hire scheme and so on, the Boris bikes.
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Um, but I guess speaking so sort of positively about conservative leadership has become a sort of become harder.
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Yeah, it's become harder.
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Yeah, it's it's um yeah, people aren't willing to go out.
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Just we're we're we're we're slightly coming up against time.
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Can I just ask you both your thoughts on this um Lou Haig comment?
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Uh this was, I think, made at the TUC conference.
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Um, obviously, Lou Hague, Burnham's de facto deputy, I'd say probably chief enforcer as well.
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She suggested that businesses uh might have a tougher time uh under new rules um stopping people from working from home.
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What do you do make of that?
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So it's catnip to the TUC, the Trade Union Congress.
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Um they, of course, are very happy with Labour's uh Employment Rights Act.
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Um a lot of employers are less enthusiastic about it.
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Um but uh Lou Haig wanted to, this is she is first Secretary of State, she's a very powerful figure in in Burnham's government.
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Um, and she spoke to the Trade Union uh Congress and said that they're going to strengthen further the laws that will um give workers the right to work from home, um, and that if an employer refuses that request, then there will be a legal requirement for them to sit down in a formal meeting with the employee and explain to them their rationale, etc.
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Um, I feel like in the private sector people have kind of got this susp, you know, that people have figured out their own cultures, people have figured out their own policies, a lot of employees themselves have figured out whether they like or not working from home.
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Um the problem still exists quite profoundly in large parts of the public sector.
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Uh, across Whitehall government agencies, people can sort of show their face for 45 minutes a week and uh not many more questions are asked.
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But the unions loved it, they lapped it up, and they and and indeed a lot of them have said in the last week or so that this is unfinished business, that there's a lot more that can be done to strengthen employment.
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And that there is an incredible irony to this because it was just last week that Gareth Southgate on tour with the sort of neat star Alan Melbourne talking about young people out of work, and he said, I hate working from home because it stops young people from getting the mentors they need and the experience they need.
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So it just there's kind of comms in trying to help young people, but also help, I guess, some workers, maybe mothers or fathers or whoever.
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Um, it's not all matching up, the policies aren't aligned.
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Flexibility is key.
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I will park that there, but many threads to be picked up on in uh in future programs.
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Uh, we're gonna take a short break now, after which I'll be talking to Alex Edmonds.
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He is a top economist, and he's gonna be talking about how regular people can navigate these strange geopolitical circumstances and make the most of markets.
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That's after this break.
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Guessing is for game shows, not your business, especially when your margin for error is zero.
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It's a new workday.
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Welcome back to Business as Usual.
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It is no secret to anyone who's been watching or listening to anything that we've put out, or frankly, consuming any business media over the last year or so, that markets are in turmoil almost constantly, geopolitics, AI transformation, buffeting everyone.
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But what can you do if you're a normal person, perhaps a normal person who has a portfolio of investments, to try and make the best of all of this?
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Well, we have a guest with us now who possibly has some answers or at least some pointers as to what those normal people can do.
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That's Professor Alex Edmonds.
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Welcome, Alex.
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Thanks, Matt.
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It's great to be here.
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So you've got a new book out along these lines.
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What have you been writing about?
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And I suppose what's your take on an increasingly turbulent, multipolar, and technologically chaotic world?
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My take is that markets typically will overreact to information.
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So we often think if you snooze, you lose, don't just sit there, do something.
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So it will be tempting for an investor to look at the news that is always on your newsfeed and to react to that.
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But we often will overreact.
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We will take some information and blow it out of proportion.
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For example, let's say the pandemic happened, Zoom went up by 700%.
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Well, certainly the pandemic was good for Zoom, but people didn't realize that Google Teams and would would react to this, that the world would reopen and then people would enjoy human interaction again with each other.
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So if indeed people typically will overreact to information, maybe the best thing to do is to sit tight and stay put and to benefit from one of the most beautiful things in finance, which is the power of compounding.
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Just to be in the market for any reasonable time period, even if you're only getting 10% per year, you're not finding the next NVIDIA, that 10% compounded over 10 years is not 100, but it's 150% in terms of your return.
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So it's one of those phrases uh which always done does the rounds, um, maybe in a slightly meme way in uh finance circles is monitor the situation.
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So should should people be actually monitoring the situation a little bit less, trying to take a longer view, trying to ignore the noise?
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I suppose what sources of information do you think people should be looking at and what do you think people what sort of noise do you think people should be trying to zone out about?
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Well, one view is that actually you should look at no information at all.
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And that might seem completely crazy because it isn't investing about using information.
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But information is only useful if it's something which is not yet priced in.
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So for you to make an active trade, which might be for a household investor to pick an individual stock, you need to know, you need to explain why you have unique insight on that stock compared to the professional investors who are looking at this every day and probably look at many other pieces of the picture from you, they might have access to management as well.
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So maybe the most relevant information to look at is your own personal situation.
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So what is your risk appetite?
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Are you investing for a 40-year horizon?
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Or are you in my case where I have a mortgage being refinanced next year and therefore my investment horizon is small, is shorter?
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What is my day job?
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So if I was an investment banker, then my income is already very tightly linked to the market.
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If I'm a finance professor, then maybe I'm able to take more of equity risk.
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So I think the information which might be relevant will be based on your objectives and your risk appetite, not so much individual stocks, because even if that information is relevant, it might have already been priced in.
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And how would you advise people when they're looking at, say, the fluctuating price of oil, in many cases the skyrocketing cost uh price of gold, maybe more last year than this year, and and these other indicators, what do you think are the the healthiest indicators to actually look at at that point to avoid what you describe as the madness of markets?
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So it's to look at the long-term fundamentals which will be driving the economy and therefore driving the stock market.
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So something like oil, this does gyrate a lot, but because it gyrates so much, it may spike one day and then the next day it will ease.
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So just to reallocate your portfolio based on seemingly short-term information may well be something which is not worthwhile.
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But perhaps long-term growth prospects, so what you think is going to be uh GDP growth or changes in demographics might mean that certain sectors uh will be more in vogue.
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Maybe changes in other trends, so the move towards electrification, those things will be more relevant, but those are more secular long-term factors.
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So I'm not saying just ignore information and never look at your portfolio, but people might typically want to review it every six months or every year.
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One of Warren Buffett's biggest pieces of advice was don't look at the market too closely.
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Now he didn't say don't look at the market, but the idea that we have in our pocket real-time news feeds and we have buzzers going off all the time, that gives us the temptation to do something and we think that we're active and we think we're improving our portfolio.
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Sadly, a large uh body of research finds that typically when individual investors trade, they lose money.
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The stocks they sell typically outperform the ones that they buy in their places.
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It strikes me there's an interesting uh division between the UK and the US in terms of those sort of risk appetites.
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In the US, there is a huge retail investment culture, which successive governments have tried to stimulate in the UK, many trade bodies have tried to.
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What do you think explains that difference?
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And uh if you were trying to persuade someone who just doesn't invest that they should, what what what sort of argument would you make to them?
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Yeah, so I lived in the US for 10 years and I can see a greater risk appetite, greater tolerance for failure, and perhaps greater innovative spirit.
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But then what matters is is that risk appetite being correctly channelled?
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So if you end up just channeling it into investing in a couple of individual stocks, you are taking risk, but perhaps not getting return because you're losing out on one of the biggest things in finance, which is diversification.
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But if instead you channel that risk appetite into investing more in equities more generally and perhaps less in bonds and less in cash, that is something which is beneficial because another big puzzle in the stock market is known as the equity premium puzzle.
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The return that stocks give you over cash or bonds over any time period is much higher than it should be for the level of risk.
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So there's in fact just free money there just by investing in equities over over any reasonable time period, just get into the broader market, harness the power of the equity premium, harness the power of compounding.
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You might not get rich quickly, but you will still get rich.
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I suppose many people have been getting rich quickly off this huge AI boom.
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We've got simultaneously some mega possibly trillion dollar IPOs, poison to happen, an open AI one uh being mooted, also an anthropic one, but also these growing fears in the market about and in politics more broadly about the safety implications, even some of these AI bosses involved.
00:18:26.960 --> 00:18:33.359
What what what do you make of the scale of hype but also fear around AI at the moment?
00:18:34.079 --> 00:18:35.279
So this is more tricky.
00:18:35.440 --> 00:18:40.480
So there have been times where it has been possible to call a bubble even without the benefit of hindsight.
00:18:40.640 --> 00:18:45.119
So in 2000, Cisco had a price earnings multiple of 190.
00:18:45.279 --> 00:18:54.480
So Cisco was clearly a popular company because the internet would be the future, but in order to justify that evaluation, it had to grow six times within the next five years.
00:18:54.799 --> 00:18:59.519
It did grow six times, but it took 25 years to get there rather than rather than five.
00:18:59.839 --> 00:19:03.839
So the market often gets the direction right, but the speed wrong.
00:19:04.000 --> 00:19:06.720
Yes, the internet was the future, but it took a while to be adopted.
00:19:06.799 --> 00:19:08.559
And that might also be the same with AI.
00:19:08.640 --> 00:19:14.240
Maybe people take a while before they're willing to look to AI for medical advice or for investment advice.
00:19:14.880 --> 00:19:20.240
However, it's not clearly a bubble because when you think about the price earnings ratios, they're about 25 to 30.
00:19:20.400 --> 00:19:24.880
Now, one reason for that could well be because the earnings, the denominator is inflated.
00:19:25.119 --> 00:19:28.000
For example, there's huge spending by some of the hyperscalers.
00:19:28.160 --> 00:19:33.279
For some companies, such as Microsoft, some of their earnings could be the gains on, say, OpenAI and Anthropic.
00:19:33.359 --> 00:19:36.559
So the bubble is sort of justifying the price earnings multiple.
00:19:36.720 --> 00:19:44.240
However, the fact that the multiples are not as crazy as one might think means it's difficult to call this definitively a bubble.
00:19:44.400 --> 00:19:46.960
And this is why you see people on both sides, quite smart people.
00:19:47.039 --> 00:19:51.200
Some of them will say there's more room to run, and others say, well, maybe it's time to cash out.
00:19:51.519 --> 00:19:58.799
Alex, such a sensible voice, cutting through a lot of hysteria there that very much all of us in the media have been uh baking up for a while.
00:19:58.880 --> 00:19:59.920
So thank you for all those insights.
00:20:00.079 --> 00:20:03.200
Thank you very much for joining us, and uh good luck with the book launch.
00:20:03.440 --> 00:20:04.400
Thank you so much for having me.
00:20:04.559 --> 00:20:04.880
Thank you.
00:20:05.039 --> 00:20:10.400
Thank you very much, as ever, for listening to Business as Usual brought to you by Workday.
00:20:10.640 --> 00:20:16.880
As ever, also don't forget to subscribe to our various daily and weekly newsletters, and of course, our free app as well.
00:20:17.119 --> 00:20:22.880
This episode was produced by Joey Creator Nina, and we will be back in your podcast feeds tomorrow at 6 a.m.
00:20:23.119 --> 00:20:24.880
But for now, goodbye.
00:00:00.000 --> 00:00:02.959
This is a City AM Studios production.
00:00:04.240 --> 00:00:08.560
Hello and welcome to Business as Usual brought to you by Workday.
00:00:08.720 --> 00:00:15.839
I am Matt Kenyon and today I will be joined by our editor-in-chief, Christian May, and our politics and economics reporter, Rissy Alanka.
00:00:16.079 --> 00:00:16.640
Welcome both.
00:00:17.039 --> 00:00:17.839
I've been promoted.
00:00:18.000 --> 00:00:18.800
It's a big yes.
00:00:19.039 --> 00:00:21.920
I've occasionally been a guest and here I am sitting as co-host.
00:00:22.320 --> 00:00:23.920
Should I be wearing a baseball cap?
00:00:24.480 --> 00:00:25.199
I think possibly.
00:00:28.559 --> 00:00:32.880
I want to make a bold claim and say I think today is the first proper year of the day of the new school year.
00:00:33.039 --> 00:00:34.399
It feels like September has landed.
00:00:34.479 --> 00:00:36.880
We've got some Well, I think you say now because you don't have kids.
00:00:48.240 --> 00:00:50.560
We've got some big economic news coming up for the rest of the week.
00:00:50.719 --> 00:00:56.159
We're going to be talking about the Mayor of London, who the next one will be, possibly after Sadiq Khan, if he doesn't run again.
00:00:56.320 --> 00:01:01.280
We're also going to be talking about whether Labour is entrenching work from home even further.
00:01:01.520 --> 00:01:08.400
But first off, let's talk about this comment from Andy Haldane, who's an absolute Bank of England veteran, major economist.
00:01:08.560 --> 00:01:13.920
He made the quite he also advised Andy Burnham in a informal way while he was running for leadership.
00:01:14.000 --> 00:01:18.000
And he's now suggested that the PM is a socialist with better TikTok.
00:01:18.560 --> 00:01:19.680
Christian, what do you make of that?
00:01:20.239 --> 00:01:21.120
That's a bold claim.
00:01:21.599 --> 00:01:23.599
Better TikTok than whom is the first question.
00:01:23.840 --> 00:01:25.359
Yeah, than than Vladimir Lenin, maybe.
00:01:26.239 --> 00:01:27.680
Other TikTok socialists.
00:01:28.159 --> 00:01:34.640
I mean, there's much that that Andy Burnham is doing which is objectively better than his predecessor when it comes to communication.
00:01:35.359 --> 00:01:40.239
Maurizio will talk us through why Andy Haldane is such an interesting figure because we'll come onto this in a moment.
00:01:40.400 --> 00:01:43.840
He was, of course, one of the three advisors that never were.
00:01:44.159 --> 00:01:57.680
The big three advisors who was as revealed by Maurizio in CCAM, one of the big three advisors who was who was paraded as brains behind Burnham, none of whom then actually took up any position in government.
00:01:58.079 --> 00:02:01.120
He has a very good turn of phrase, there's no doubt about it, Andy Haldane.
00:02:01.200 --> 00:02:10.319
He was speaking to LBC and he was specifically talking about bond market reaction to trajectory of government policy, government borrowing in particular.
00:02:10.479 --> 00:02:35.120
And not for the first time by any stretch, Haldane was talking about uh the extraordinary level of public spending and the fact that markets have woken up, it would appear, to the idea, to the realization that this this government has simply got no intention of cutting public expenditure by anything like the extent which needs to be achieved in order to reassure markets and bond markets in particular that they they have plans um that add up.
00:02:35.439 --> 00:02:41.039
So it was a very punchy phrase, um, but he was talking about market reactions, which has been the dominant story of the week.
00:02:41.280 --> 00:02:46.319
Yeah, Marissa, so he's gone from potential advisor to LBC critic.
00:02:47.120 --> 00:02:48.400
Tell us a bit about Andy Palbane.
00:02:49.199 --> 00:03:01.439
Yeah, and it's funny because he's also followed Jim O'Neill, who was the other advisor, one of those other three advisors that we're talking about, who have actually been pretty strong talking about Burnham very publicly.
00:03:01.680 --> 00:03:10.000
Jim O'Neill, of course, warned Burnham and Chancellor John Healy, of course, we should mention him too, because he is the chance of delivering the budget on the side.
00:03:10.479 --> 00:03:14.639
He feels like less of a protagonist, maybe, than Rachel Reeves, but he's still very much in number 11.
00:03:15.039 --> 00:03:26.000
Um, warning against capital gains taxes, and Andy Haldane echoed that in his LBC interview, but he was also speaking more about the triple lock pension, which is the kind of hot button issue right now.
00:03:26.159 --> 00:03:32.960
We know that the triple lock pension will go up by£490 a year, even next year.
00:03:33.280 --> 00:03:34.000
Yeah, why?
00:03:34.080 --> 00:03:34.240
Yeah.
00:03:34.639 --> 00:03:38.719
A lot of criticism, people um who make the case that the triple lock should go.
00:03:38.800 --> 00:03:47.680
And by the advocates of abolishing the triple lock by which the state pension is guaranteed to rise by a certain amount, um, they're only really saying that it should just rise in line with inflation.
00:03:48.479 --> 00:03:53.599
The problem comes when it because of the calculations, under the triple lock it rises by much more than inflation.
00:03:53.759 --> 00:03:57.360
Um, and a lot of people say, um, what is outrageous?
00:03:57.439 --> 00:03:59.599
You think£13,000 a year is enough to live on?
00:04:00.000 --> 00:04:01.199
To which nobody says yes.
00:04:01.360 --> 00:04:07.039
What people say is no, the estate pension should be in addition to your own private pension, your own savings.
00:04:07.120 --> 00:04:20.480
Um, I appreciate not everybody's gonna be in that position, but um that part of the problem around the debate is that there is a sense, particularly among people who are not yet drawing on their state pension, that this is designed to cover you throughout your old age for as long as you shall live.
00:04:20.720 --> 00:04:24.560
It's also being boosted by wage growth, much of which is public sector wage growth.
00:04:24.639 --> 00:04:26.480
And that's that's gonna keep pushing that number up.
00:04:26.800 --> 00:04:36.399
Russia, speaking of people who are gonna feature heavily on LBC uh in the coming months and years, you've been diving deep into the 2028 mayoral field for Mayor of London.
00:04:36.560 --> 00:04:38.160
You've been talking to a couple of candidates.
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Who are they?
00:04:38.879 --> 00:04:39.759
What have they been telling you?
00:04:40.079 --> 00:04:44.560
Okay, so at Reforms Conference, which was a party conference, I think they wouldn't like you see.
00:04:45.839 --> 00:04:48.160
Just for the record, I'm in no way denigrating their party.
00:04:48.800 --> 00:04:49.680
You just forgot that it happened.
00:04:49.839 --> 00:04:51.040
I forgot the you know what, you know what.
00:04:51.360 --> 00:04:52.800
You didn't go, but Maurizio was there.
00:04:52.879 --> 00:04:53.199
You were there.
00:04:53.439 --> 00:05:03.360
I was there, and I spoke to Leila Cunningham, who is uh Reform UK's London mayor pick, and she is the candidate, unless Reform and Nigel Farrar turned around and say no, no, no.
00:05:03.759 --> 00:05:06.000
Um so I spoke to her for half an hour.
00:05:06.079 --> 00:05:16.480
It was a sort of first proper interview that City M has done with her, and she's talked a lot about reducing crime in the city and uh sort of going after grooming gangs, for example.
00:05:16.639 --> 00:05:19.600
But I wanted to know a bit more about her business policies.
00:05:19.680 --> 00:05:24.959
Um, she'd sort of spoken very openly about her intention to automate tubes.
00:05:25.279 --> 00:05:30.319
Um so that was the first bit of interviews that I did, and the second one this week was.
00:05:30.720 --> 00:05:31.360
Sorry, can I pick you up?
00:05:31.759 --> 00:05:33.360
Can I pick you up on Leila Cunningham?
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She wants to automate the tube system.
00:05:36.480 --> 00:05:38.160
She wants to automate the tube system, which is.
00:05:38.399 --> 00:05:42.000
A lot of us feel a lot of us feel sympathy for that argument on strike days in particular.
00:05:42.240 --> 00:05:46.800
But it does come with a price tag of some billions upon billions.
00:05:47.040 --> 00:05:56.319
Yeah, so this was like we'll we'll stick to Layla Cunningham then because that was actually a quite funny or interesting part of the interview where I sort of asked her, okay, how are you gonna pay for it?
00:05:56.560 --> 00:05:58.800
How are you gonna defeat the unions?
00:05:58.959 --> 00:06:01.199
And she just says, Give me the money, I'll fix it.
00:06:01.279 --> 00:06:07.759
And I'm you know, this was a similar conversation I was having about how she was gonna pay for the repairs to Hammersmith Bridge.
00:06:07.839 --> 00:06:12.319
Was you know, how are you gonna fund this m massive 300 million pound project?
00:06:12.480 --> 00:06:14.879
And she's sort of get it sponsored, you know.
00:06:15.120 --> 00:06:20.079
Do you want to make it sub you know stick a corporate logo on a spawn con, get a sticker.
00:06:20.480 --> 00:06:23.920
She she said um she wants London to run like an iPhone.
00:06:24.160 --> 00:06:25.839
I imagine not a folding phone, though.
00:06:25.920 --> 00:06:30.399
She doesn't want to Yeah, she I think I think she's living up to this idea of innovation.
00:06:30.480 --> 00:06:39.600
She also spoke about AI as the using it to the max as uh as she puts it, whereas Sadiq Khan has obviously said AI will be this weapon of mass destruction.
00:06:39.759 --> 00:06:43.680
I think he meant it in terms of jobs, not in the terms of more apocalyptic terms.
00:06:43.920 --> 00:06:44.480
Actually killing people.
00:06:44.720 --> 00:06:55.040
Do you think that she has because she she wants to talk about um the issue of grooming gangs, which have never really been linked with the capital, but which is undoubtedly an issue here as it has been elsewhere?
00:06:55.199 --> 00:06:57.839
She wants to talk about crime and how London has fallen.
00:06:58.160 --> 00:07:03.439
Traditionally, candidates who run on a sort of London is doomed platform don't do very well.
00:07:03.600 --> 00:07:10.480
Um, do you did you get a sense that she is preparing to make a more optimistic case, a kind of forward-looking case for a reform male research?
00:07:10.800 --> 00:07:17.439
I did ask her about this because she's also accusing cleverly of uh stealing her slogans.
00:07:17.519 --> 00:07:22.560
There's all this kind of comms battle, I think, between the kind of different candidates.
00:07:22.720 --> 00:07:29.040
And she said at the end, I am the unifying uh candidate to or mayor for London.
00:07:29.759 --> 00:07:32.319
I don't think any reform candidate has claimed claims that mantle.
00:07:32.800 --> 00:07:40.720
She would push back absolutely on the sort of idea that she's just a gloomster and a doomster, and she's very negative about London.
00:07:40.879 --> 00:07:44.959
Um, I guess politicians, opposition politicians have to be, right?
00:07:45.199 --> 00:07:46.480
They have to point out the problems.
00:07:46.639 --> 00:07:47.600
We've touched on Cleverly.
00:07:47.680 --> 00:07:48.720
What's he been telling you?
00:07:48.959 --> 00:07:51.279
So Cleverly is still at the beginning of his campaign.
00:07:51.360 --> 00:07:52.959
He's not yet the Tory pick.
00:07:53.120 --> 00:07:57.680
Um he still has to sort of go through the party agreement, but he's put himself forward.
00:07:57.759 --> 00:08:04.399
Um, obviously, he was foreign secretary, home secretary, he was under Kenny Badenock's um shadow cabinet as a local government.
00:08:04.800 --> 00:08:06.240
He's run for leader a couple of times as well.
00:08:06.560 --> 00:08:08.160
Ran for leader was nearly leader.
00:08:08.240 --> 00:08:13.680
I think some tactical voting didn't go his his way uh back in 2024 after the election.
00:08:13.839 --> 00:08:21.839
But um now he wants to sort of reset that sort of political ambition, go to London and push for it for the mayoralty there.
00:08:22.079 --> 00:08:30.879
It's quite interesting though, because some parts of my interview I sort of picked out bits where I hadn't heard other Tories speak about so much.
00:08:31.040 --> 00:08:39.440
So, for example, he was actually very positive about Boris Johnson's um legacy that he left, the golden legacy as he put it, that was left to Sadiq Khan.
00:08:39.840 --> 00:08:42.399
So does that feel wise backing Johnson at this stage?
00:08:42.720 --> 00:08:53.600
Well, Johnson was sort of diff a very quite sort of radical man in many ways of in terms of infrastructure and um you know cycle hire scheme and so on, the Boris bikes.
00:08:53.759 --> 00:09:02.000
Um, but I guess speaking so sort of positively about conservative leadership has become a sort of become harder.
00:09:02.159 --> 00:09:03.360
Yeah, it's become harder.
00:09:03.600 --> 00:09:05.919
Yeah, it's it's um yeah, people aren't willing to go out.
00:09:06.399 --> 00:09:08.559
Just we're we're we're we're slightly coming up against time.
00:09:08.720 --> 00:09:12.559
Can I just ask you both your thoughts on this um Lou Haig comment?
00:09:12.639 --> 00:09:14.720
Uh this was, I think, made at the TUC conference.
00:09:14.799 --> 00:09:20.320
Um, obviously, Lou Hague, Burnham's de facto deputy, I'd say probably chief enforcer as well.
00:09:20.480 --> 00:09:27.039
She suggested that businesses uh might have a tougher time uh under new rules um stopping people from working from home.
00:09:27.200 --> 00:09:28.080
What do you do make of that?
00:09:28.320 --> 00:09:31.200
So it's catnip to the TUC, the Trade Union Congress.
00:09:31.279 --> 00:09:36.000
Um they, of course, are very happy with Labour's uh Employment Rights Act.
00:09:36.159 --> 00:09:39.600
Um a lot of employers are less enthusiastic about it.
00:09:39.679 --> 00:09:46.559
Um but uh Lou Haig wanted to, this is she is first Secretary of State, she's a very powerful figure in in Burnham's government.
00:09:46.639 --> 00:10:07.039
Um, and she spoke to the Trade Union uh Congress and said that they're going to strengthen further the laws that will um give workers the right to work from home, um, and that if an employer refuses that request, then there will be a legal requirement for them to sit down in a formal meeting with the employee and explain to them their rationale, etc.
00:10:07.440 --> 00:10:19.759
Um, I feel like in the private sector people have kind of got this susp, you know, that people have figured out their own cultures, people have figured out their own policies, a lot of employees themselves have figured out whether they like or not working from home.
00:10:19.919 --> 00:10:24.559
Um the problem still exists quite profoundly in large parts of the public sector.
00:10:24.639 --> 00:10:31.840
Uh, across Whitehall government agencies, people can sort of show their face for 45 minutes a week and uh not many more questions are asked.
00:10:32.000 --> 00:10:40.720
But the unions loved it, they lapped it up, and they and and indeed a lot of them have said in the last week or so that this is unfinished business, that there's a lot more that can be done to strengthen employment.
00:10:41.200 --> 00:10:57.200
And that there is an incredible irony to this because it was just last week that Gareth Southgate on tour with the sort of neat star Alan Melbourne talking about young people out of work, and he said, I hate working from home because it stops young people from getting the mentors they need and the experience they need.
00:10:57.440 --> 00:11:06.559
So it just there's kind of comms in trying to help young people, but also help, I guess, some workers, maybe mothers or fathers or whoever.
00:11:06.720 --> 00:11:09.759
Um, it's not all matching up, the policies aren't aligned.
00:11:10.159 --> 00:11:11.120
Flexibility is key.
00:11:11.200 --> 00:11:16.000
I will park that there, but many threads to be picked up on in uh in future programs.
00:11:16.159 --> 00:11:20.399
Uh, we're gonna take a short break now, after which I'll be talking to Alex Edmonds.
00:11:20.559 --> 00:11:29.440
He is a top economist, and he's gonna be talking about how regular people can navigate these strange geopolitical circumstances and make the most of markets.
00:11:29.519 --> 00:11:30.480
That's after this break.
00:11:30.639 --> 00:11:35.200
Guessing is for game shows, not your business, especially when your margin for error is zero.
00:11:35.440 --> 00:11:43.279
Workday is the enterprise AI platform for HR, finance, and IT with a deep understanding of your organization's context and guardrails.
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So every AI action is permission aware, giving you accuracy 24-7 and the ability to not just get work done, but get it done right.
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It's a new workday.
00:11:53.120 --> 00:11:55.200
Welcome back to Business as Usual.
00:11:55.279 --> 00:12:10.799
It is no secret to anyone who's been watching or listening to anything that we've put out, or frankly, consuming any business media over the last year or so, that markets are in turmoil almost constantly, geopolitics, AI transformation, buffeting everyone.
00:12:10.960 --> 00:12:19.360
But what can you do if you're a normal person, perhaps a normal person who has a portfolio of investments, to try and make the best of all of this?
00:12:19.600 --> 00:12:26.720
Well, we have a guest with us now who possibly has some answers or at least some pointers as to what those normal people can do.
00:12:26.879 --> 00:12:28.720
That's Professor Alex Edmonds.
00:12:28.879 --> 00:12:29.440
Welcome, Alex.
00:12:29.840 --> 00:12:30.240
Thanks, Matt.
00:12:30.320 --> 00:12:30.960
It's great to be here.
00:12:31.200 --> 00:12:33.759
So you've got a new book out along these lines.
00:12:34.000 --> 00:12:34.960
What have you been writing about?
00:12:35.039 --> 00:12:42.480
And I suppose what's your take on an increasingly turbulent, multipolar, and technologically chaotic world?
00:12:43.039 --> 00:12:46.559
My take is that markets typically will overreact to information.
00:12:46.720 --> 00:12:50.639
So we often think if you snooze, you lose, don't just sit there, do something.
00:12:50.720 --> 00:12:56.240
So it will be tempting for an investor to look at the news that is always on your newsfeed and to react to that.
00:12:56.639 --> 00:12:58.320
But we often will overreact.
00:12:58.399 --> 00:13:01.039
We will take some information and blow it out of proportion.
00:13:01.200 --> 00:13:04.879
For example, let's say the pandemic happened, Zoom went up by 700%.
00:13:05.279 --> 00:13:16.320
Well, certainly the pandemic was good for Zoom, but people didn't realize that Google Teams and would would react to this, that the world would reopen and then people would enjoy human interaction again with each other.
00:13:16.480 --> 00:13:27.360
So if indeed people typically will overreact to information, maybe the best thing to do is to sit tight and stay put and to benefit from one of the most beautiful things in finance, which is the power of compounding.
00:13:27.519 --> 00:13:38.879
Just to be in the market for any reasonable time period, even if you're only getting 10% per year, you're not finding the next NVIDIA, that 10% compounded over 10 years is not 100, but it's 150% in terms of your return.
00:13:39.200 --> 00:13:46.879
So it's one of those phrases uh which always done does the rounds, um, maybe in a slightly meme way in uh finance circles is monitor the situation.
00:13:47.200 --> 00:13:53.440
So should should people be actually monitoring the situation a little bit less, trying to take a longer view, trying to ignore the noise?
00:13:53.840 --> 00:14:00.559
I suppose what sources of information do you think people should be looking at and what do you think people what sort of noise do you think people should be trying to zone out about?
00:14:01.120 --> 00:14:04.720
Well, one view is that actually you should look at no information at all.
00:14:04.960 --> 00:14:08.799
And that might seem completely crazy because it isn't investing about using information.
00:14:09.200 --> 00:14:13.919
But information is only useful if it's something which is not yet priced in.
00:14:14.080 --> 00:14:30.879
So for you to make an active trade, which might be for a household investor to pick an individual stock, you need to know, you need to explain why you have unique insight on that stock compared to the professional investors who are looking at this every day and probably look at many other pieces of the picture from you, they might have access to management as well.
00:14:31.360 --> 00:14:35.759
So maybe the most relevant information to look at is your own personal situation.
00:14:35.919 --> 00:14:37.759
So what is your risk appetite?
00:14:37.919 --> 00:14:40.000
Are you investing for a 40-year horizon?
00:14:40.080 --> 00:14:46.399
Or are you in my case where I have a mortgage being refinanced next year and therefore my investment horizon is small, is shorter?
00:14:46.639 --> 00:14:47.600
What is my day job?
00:14:47.759 --> 00:14:52.480
So if I was an investment banker, then my income is already very tightly linked to the market.
00:14:52.639 --> 00:14:57.440
If I'm a finance professor, then maybe I'm able to take more of equity risk.
00:14:57.679 --> 00:15:07.919
So I think the information which might be relevant will be based on your objectives and your risk appetite, not so much individual stocks, because even if that information is relevant, it might have already been priced in.
00:15:08.559 --> 00:15:30.080
And how would you advise people when they're looking at, say, the fluctuating price of oil, in many cases the skyrocketing cost uh price of gold, maybe more last year than this year, and and these other indicators, what do you think are the the healthiest indicators to actually look at at that point to avoid what you describe as the madness of markets?
00:15:30.480 --> 00:15:36.000
So it's to look at the long-term fundamentals which will be driving the economy and therefore driving the stock market.
00:15:36.159 --> 00:15:42.960
So something like oil, this does gyrate a lot, but because it gyrates so much, it may spike one day and then the next day it will ease.
00:15:43.039 --> 00:15:49.600
So just to reallocate your portfolio based on seemingly short-term information may well be something which is not worthwhile.
00:15:49.759 --> 00:15:58.799
But perhaps long-term growth prospects, so what you think is going to be uh GDP growth or changes in demographics might mean that certain sectors uh will be more in vogue.
00:15:58.960 --> 00:16:06.639
Maybe changes in other trends, so the move towards electrification, those things will be more relevant, but those are more secular long-term factors.
00:16:06.799 --> 00:16:13.840
So I'm not saying just ignore information and never look at your portfolio, but people might typically want to review it every six months or every year.
00:16:14.080 --> 00:16:18.480
One of Warren Buffett's biggest pieces of advice was don't look at the market too closely.
00:16:18.639 --> 00:16:31.519
Now he didn't say don't look at the market, but the idea that we have in our pocket real-time news feeds and we have buzzers going off all the time, that gives us the temptation to do something and we think that we're active and we think we're improving our portfolio.
00:16:31.840 --> 00:16:37.360
Sadly, a large uh body of research finds that typically when individual investors trade, they lose money.
00:16:37.519 --> 00:16:40.639
The stocks they sell typically outperform the ones that they buy in their places.
00:16:41.360 --> 00:16:47.360
It strikes me there's an interesting uh division between the UK and the US in terms of those sort of risk appetites.
00:16:47.519 --> 00:16:54.799
In the US, there is a huge retail investment culture, which successive governments have tried to stimulate in the UK, many trade bodies have tried to.
00:16:55.200 --> 00:16:56.639
What do you think explains that difference?
00:16:56.799 --> 00:17:02.879
And uh if you were trying to persuade someone who just doesn't invest that they should, what what what sort of argument would you make to them?
00:17:03.519 --> 00:17:10.960
Yeah, so I lived in the US for 10 years and I can see a greater risk appetite, greater tolerance for failure, and perhaps greater innovative spirit.
00:17:11.200 --> 00:17:15.039
But then what matters is is that risk appetite being correctly channelled?
00:17:15.359 --> 00:17:26.480
So if you end up just channeling it into investing in a couple of individual stocks, you are taking risk, but perhaps not getting return because you're losing out on one of the biggest things in finance, which is diversification.
00:17:26.880 --> 00:17:40.720
But if instead you channel that risk appetite into investing more in equities more generally and perhaps less in bonds and less in cash, that is something which is beneficial because another big puzzle in the stock market is known as the equity premium puzzle.
00:17:41.119 --> 00:17:48.720
The return that stocks give you over cash or bonds over any time period is much higher than it should be for the level of risk.
00:17:48.880 --> 00:18:00.079
So there's in fact just free money there just by investing in equities over over any reasonable time period, just get into the broader market, harness the power of the equity premium, harness the power of compounding.
00:18:00.240 --> 00:18:03.119
You might not get rich quickly, but you will still get rich.
00:18:03.599 --> 00:18:08.319
I suppose many people have been getting rich quickly off this huge AI boom.
00:18:08.640 --> 00:18:26.640
We've got simultaneously some mega possibly trillion dollar IPOs, poison to happen, an open AI one uh being mooted, also an anthropic one, but also these growing fears in the market about and in politics more broadly about the safety implications, even some of these AI bosses involved.
00:18:26.960 --> 00:18:33.359
What what what do you make of the scale of hype but also fear around AI at the moment?
00:18:34.079 --> 00:18:35.279
So this is more tricky.
00:18:35.440 --> 00:18:40.480
So there have been times where it has been possible to call a bubble even without the benefit of hindsight.
00:18:40.640 --> 00:18:45.119
So in 2000, Cisco had a price earnings multiple of 190.
00:18:45.279 --> 00:18:54.480
So Cisco was clearly a popular company because the internet would be the future, but in order to justify that evaluation, it had to grow six times within the next five years.
00:18:54.799 --> 00:18:59.519
It did grow six times, but it took 25 years to get there rather than rather than five.
00:18:59.839 --> 00:19:03.839
So the market often gets the direction right, but the speed wrong.
00:19:04.000 --> 00:19:06.720
Yes, the internet was the future, but it took a while to be adopted.
00:19:06.799 --> 00:19:08.559
And that might also be the same with AI.
00:19:08.640 --> 00:19:14.240
Maybe people take a while before they're willing to look to AI for medical advice or for investment advice.
00:19:14.880 --> 00:19:20.240
However, it's not clearly a bubble because when you think about the price earnings ratios, they're about 25 to 30.
00:19:20.400 --> 00:19:24.880
Now, one reason for that could well be because the earnings, the denominator is inflated.
00:19:25.119 --> 00:19:28.000
For example, there's huge spending by some of the hyperscalers.
00:19:28.160 --> 00:19:33.279
For some companies, such as Microsoft, some of their earnings could be the gains on, say, OpenAI and Anthropic.
00:19:33.359 --> 00:19:36.559
So the bubble is sort of justifying the price earnings multiple.
00:19:36.720 --> 00:19:44.240
However, the fact that the multiples are not as crazy as one might think means it's difficult to call this definitively a bubble.
00:19:44.400 --> 00:19:46.960
And this is why you see people on both sides, quite smart people.
00:19:47.039 --> 00:19:51.200
Some of them will say there's more room to run, and others say, well, maybe it's time to cash out.
00:19:51.519 --> 00:19:58.799
Alex, such a sensible voice, cutting through a lot of hysteria there that very much all of us in the media have been uh baking up for a while.
00:19:58.880 --> 00:19:59.920
So thank you for all those insights.
00:20:00.079 --> 00:20:03.200
Thank you very much for joining us, and uh good luck with the book launch.
00:20:03.440 --> 00:20:04.400
Thank you so much for having me.
00:20:04.559 --> 00:20:04.880
Thank you.
00:20:05.039 --> 00:20:10.400
Thank you very much, as ever, for listening to Business as Usual brought to you by Workday.
00:20:10.640 --> 00:20:16.880
As ever, also don't forget to subscribe to our various daily and weekly newsletters, and of course, our free app as well.
00:20:17.119 --> 00:20:22.880
This episode was produced by Joey Creator Nina, and we will be back in your podcast feeds tomorrow at 6 a.m.
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But for now, goodbye.
