On 19th February 2025, we attended our annual Portfolio Construction Summit. This is our one day 'get the year off to a hiss and roar' conference, where there are fantastic speakers talking about what is happening in the world and more detailed information on portfolio construction.
Pre-covid, we used to travel to Sydney for this conference and an associated Finology conference, but for the last 4 years, we have watched this online (a long day from 10am until 8pm, but worth it!)
There were three fantastic presenters that you may be interested in, and I have summarised some important points that they have made for you here:
Ron Temple - https://www.lazard.com/our-people/ronald-temple/
This was a fast-paced (hard to keep up he talked so fast!) summary of Trump's policies and the impact on the economy and the world. Fortunately these are all recorded and we can watch them afterwards, and read the paper that he has presented. But the highlights are:
Trumps policies that are good for markets and the economy: Personal Tax Cuts, Corporate Tax Cuts, Deregulation of Financial Services (we aren't entirely sure about this one), Deregulation of Energy (freeing up Fossil Fuel production, including on Government land)
Trumps polices that are bad - Trade Deficit targeting and tariffs. The average tariff in the US economy now is 2.75%. If all the tariffs that are proposed are implemented, this could increase the average tariff rate to 20% - which was last seen in the 1940's. Despite Trumps Tariff Czar Peter Navarro insisting that other countries pay the tariffs, not the American people. (https://podcasts.apple.com/nz/podcast/a-conversation-with-the-architect-of-trumps-new-trade-war/id1200361736?i=1000693430505), the economists believe that the tariffs would lead to inflation and a fall in GDP.
The deportations that are being proposed will be the biggest in US history - which won't help with labour scarcity (particularly in New York and Texas and the construction industry.
Cutting Government Spending - 91% of this spending is more or less unable to be cut - with 61% mandatory (Social Security, Medicare - for over 65 year olds, Medicaid - for poorer people, Interest on debt.) On top of that there is 17.80% spent on Defence and Veterans and another $100 billlion each spent on Transportation (think Air Traffic Controllers) and Education & Unemployment.
Dr Pippa Malmgren. https://en.wikipedia.org/wiki/Pippa_Malmgren
We always enjoy listening to Pippa as she challenges us - see last years blog post on her talk https://www.moneyworks.co.nz/blog/post/135196/dr-pippas-futuristic-visions/
This year she challenged us to query what we are hearing from the media that we consume about what Trump and Musk are doing. In particular:
a. They are 'shining the light' on how Government works, as it has always operated in darkness.
b. It is not Elon Musk and his team doing all the sifting through the data, it is AI.
c. It isn't 'Left' vs 'Right' - it is anti-establishment fighting the establishment and the goal is to de-classify everything except things like nuclear and weapons related information, so that everything is transparent.
d. Robert Kennedy brought the tech community with him into the Government Pippa said last year that he was key to the election outcomes).
e. Before 1914 USA had no income tax, they funded all their activities from tariffs - Trumps ERS (External Revenue Service) may have the same vision.
f. Bully Tactics and using a baseball bat is working - so he will keep on doing it.
g. Trumps plan is to get a Nobel Peace Prize, but getting US Russia and China to stop being enemies, and aim to stop 'forever wars'. The underpinning is AI and that everyone should work together to make it universal. [She didn't comment on what happens to the people in Ukraine, Gaza etc that will be affected on the way.]
Jonathon Pain - https://www.thepainreport.com.au/
As with Dr Pippa, we love listening to JP - this was the 17th year in a row that we have heard him talk. At the 2000 conference he was the only one who saw what was going to happen with Covid. He doesn't always get it right, but the information that he consumes is different to what everyone else consumes.
JP talked a lot about us needing to get out our ecosystem of information and start accessing information from other sources - we will see how our 4 trial newsletters of his report goes (they can be very technical and fund manager oriented). He encouraged us to go to the source material (ie JD Vances actual 17 minute speech at the Munich Security Council https://www.youtube.com/watch?v=pCOsgfINdKg) instead of relying on the interpretation of the media that is in our ecosystem.
He said a number of things that Dr Pippa and Ron had covered - reinforcing the information - particularly around Trump and 'peace' and tariffs, but he also ended the conference with the following comments:
Wall Street loves Trump
Main Street (business) loves him even more
Media hates Trump
Academia hates Trump even more
The prism through which we must view Trump is:
a. America First
b. His Davos Speech https://www.youtube.com/watch?v=iOWiuXhuaz4
c. Transactional not ideological.
Summary
We came away from the conference relatively optimistic about how our clients portfolio's will perform over the next few years, given the focus that Trump has on the stockmarkets as his 'job performance indicator', but with work to do to expand our ecosystem of information inputs!
