Prof G Markets - Is Imperialism Good for Your Portfolio?

Episode Date: January 12, 2026

Robert Armstrong, U.S. financial commentator for the Financial Times, fills in for Scott. He and Ed break down Trump’s “Donroe Doctrine,” what it signals for markets, and how investors should navigate the shifting landscape. Then, they dig into why bank stocks surged last year and examine the effects of deregulation under the Trump administration. Robert explains why he thinks consolidation in banking could be potentially beneficial. Finally, they go over Robert’s predictions for the rest of the year.  Subscribe to the Prof G Markets newsletter  Order "Notes on Being a Man," out now Note: We may earn revenue from some of the links we provide. Subscribe to No Mercy / No Malice Follow the podcast across socials @profgmarkets Follow Scott on Instagram Follow Ed on Instagram, X and Substack Send us your questions or comments by emailing [e-mail] Learn more about your ad choices. Visit podcastchoices.com/adchoices

Support for the show comes from Funrise. For the past seven years, there's been a room in finance most people couldn't enter, a room where you could have invested in some of the biggest names in tech companies like Airbnb and Uber before their multi-billion dollar IPOs. I'm talking about venture capital. Fundrise recently took a sledgehammer to those closed doors by launching a venture capital product that's available to anyone. Their mission is to give everyone the chance to invest in the best tech and AI companies before they go public. You can visit Funrise.com slash ProfG to check out Funrise's venture portfolio and get in early today. All investments involve risk, including the potential loss of principle.

Past performance is not indicative of future results. This is a paid advertisement. Every year, hundreds of thousands of people from all over the world flock to Las Vegas for the Consumer Electronics show. And they spend a week trying to sell each other on the weirdest gadgets you've ever seen in your entire life. This week on the Vergecast, we're talking all about everything happens. happening at CES. From the TVs to the AI gadgets to the humanoid robots that everybody is hoping might someday do your laundry and wash your dishes. All that and much more on the Vergecast wherever you get podcasts. Today's number 200. That is how many days of the year the weather

is foggy in the Grand Banks in Newfoundland. This makes the Grand Banks the foggiest place on the planet, according to NASA. Scientists have also attempted to catch the fog. However, they missed. Welcome to Profite Markets. Scott is still on vacation, but he will be back later this week. So today, the person you hear laughing, very heavily on the other end of the line,

we have Robert Armstrong, U.S. commentator for the Financial Times, favorite of the podcast, Rob, welcome back. thank you for standing in. I think you've found such an excellent metaphor for our profession there, Ed. Catching the fog. We are fog catchers.

It's true. It's what we do. Fog catches. And we do miss. It just keeps slipping through the net, you know. That's exactly right. Man, it is. And it's not getting any less foggy out there, I notice.

Not this week. That's right. We're going to catch something today. I know that. So we got a lot to talk about. here. And we're going to start with our first story. And this is going to be about what we've seen in Venezuela and Greenland. So President Trump opened the year with a dramatic show of force, announcing U.S. troops captured Venezuela's president, Nicholas Maduro. Just a few days later,

he revived his push to acquire Greenland and signaled that he would consider using military force if necessary. And Trump has framed these moves as part of a broader vision for American power, which he is calling the Donroo doctrine. And this is a reference to the Monroe Doctrine, which was first articulated in 1823, when President James Monroe declared that the Western Hemisphere was America's sphere of influence. The idea back then in the 1800s

was to kind of fend off colonialism from Europeans, and it basically holds that any intervention in the Americas in the Western Hemisphere is potentially some hostages, style act against the U.S. So the administration has actually endorsed this publicly, the Monroe Doctrine specifically. They did that in November. And now we're seeing it play out in Venezuela, more recently Greenland. And we're basically seeing the United States is being treated at this point as like an imperial regime. And now Trump is talking about maybe taking action against Cuba as well, maybe against Colombia. Also, we shouldn't

forget what he said about Canada last year. He wanted to fold it into the U.S. And MAGA supports this. This was a quote from Representative Andy Ogles, which we're going to play. We have a greater vested interest in Greenland than geographically speaking than the Denmark the Danes have. And so when you look at the Monroe Doctrine, when you look at the Western Hemisphere, we are the dominant predator, quite frankly, force in the Western Hemisphere. So all of this begs the question. And I know that we're not geopolitical experts, so we're going to try to tie this into markets as much as we can. But what would an imperial America look like? How would it change the world if we really went out there and decided we are the apex predator? And then how would it affect markets and perhaps the economy? Rob, over to you. I have two diametrically opposed thoughts about this, which shows you that I'm intelligent.

You know, that was the, this was, this is the, I guess it was a Fitzgerald quote, you know, genius is the ability to hold contradictory thoughts in your head at the same time. And my first thought is that people like me, and I think you too, Ed, who believe in free markets and commerce and letting economics and markets lead. to how we structure our, at least the commercial part of our lives, we kind of want markets to punish all bad ideas. Right? We want it to be a kind of final court of justice for the world. And I'm afraid that that is not true. You know, what does stocks do?

They discount future cash flows of corporations. What do a bonds do? You know, they are a bet. on the solvency of a nation, you know, and that could connect to geopolitics a little more closely, but you can have an empire that's plenty solvent. There's been a lot of them in history, where you'd wanna own their bonds.

So we can't turn to markets to solve these kind of political and moral dilemmas for us. But, so that's the thought number one. The contradictory thought is this, where we see markets flourish in history, where, where, markets are places where people can make good money over a long time and retire and be happy and compound wealth and all that, those almost one-to-one turn out to be places that have

rule of law. You can't overtime make money in the Russian stock market. You haven't. You haven't consistently made money over time in the Chinese stock market. And importantly, in the case of China, you haven't made good money there. despite the fact that the economy has grown leaps and bounds, right? So investors didn't grow with the economy in China, a place where rule of law is an open question. So if you think we're heading in a direction where the rule of law doesn't apply, where the imperial attitude extends not only to other countries but to our own citizens, then you might, see markets in the long run have a problem, but they're not discounting that right now, that's for

sure. 100%. Just to go look at what's actually happening in the markets right now, because it's, I mean, it's true. We had this in Liberation Day where Trump does this incredibly stupid thing and the market punishes him severely for it, which is kind of what made Taco so great. And for those who don't remember, Robert Armstrong came up with the phrase, Tarko. which took over the world. Yeah, and now it's possibly obsolete, as my friends on the internet like to remind me.

You know, at least in the geopolitical realm, it doesn't look like a taco world anymore. Exactly. But what we're seeing right now is just exactly as you're saying, this administration, despite deciding that they want to go and invade the region of an ally in Denmark, no, they're not really being punished for it. In fact, we're not seeing that much movement overall. seen some big moves from some very specific individual names. So if we look at Venezuela, for example, the oil refinery stocks climbed a lot. So Philip 66, up 6%. And have stayed high.

Stade high. Valero, up 12%. The oil service stocks also climbing, Halliburton, Schlumberger. There are a few kind of specific names. By the way, the same thing's happening in Greenland, where there are some publicly traded rare earth companies that operate in Greenland. They've sought. So critical metals up 25%. Energy transition minerals up more than 30%. I mean, big, big, big moves, but only in a very, very small handful of stocks. The market as a whole doesn't seem to care that much. The S&P is up a little bit, but overall, I mean, these very cataclysmic events in the world of geopolitics, Venezuela and Greenland, the market doesn't really care. The most interesting one is is that Chevron doesn't really care.

Chevron, the only American oil company operating in Venezuela, is back to where it started on Thursday. Right? People are like, oh, this is exciting. And then you look at the, you know, we don't have to go into this, but the actual dynamics of oil extraction in Venezuela. And you realize this is not a great look for the drillers themselves, you know, like the Chevron's and the X-Rond. You know, you might make a joke that it's a lot easier to

extract a president from Venezuela than it is to extract oil. Yeah. So I think that's fascinating. But there is a kind of side plot that you haven't mentioned that takes us kind of from the macro to the micro that I'd like to mention in this context. Like while all this stuff has been going on in Venezuela, we have seen the emergence of a character that I am calling Donald Trump with Elizabeth Warren characteristics. And this is someone who in the last few days, Donald Trump, has come out and said he doesn't

want defense companies to pay dividends or buyback shares or pay their CEOs a lot of money because now presidents apparently decide whether how private companies allocate capital and pay their employees. and he you know those stocks are now up because he then went on to say after those stocks tanked we're going to spend a lot more money on guns half a trillion half a trillion more yeah who needs congress to throw another half a trillion dollars at the military we'll see if that happens or not so the stocks recovered but the point was the guy came out and said we're taking control of these private companies capital allocation until they do what I say and then he comes out and

says, and this one's even stupider, we're not going to let institutional investors buy houses anymore because it's making houses unaffordable. And Blackstone, who's in that business and invitation homes, those stocks tank. Right. And never mind that they own a tiny percentage of the houses out there. The idea here is, I mean, you can't make this stuff up. It's like, we're going to discourage investment in housing as a way to make housing more affordable. This was the big plan. You know what I mean? And so, but again, that sounds like the president being imperial towards Americans. Right.

To me. So, by the way, I don't think those things will happen. I think this is just big talk, which we're familiar with from this guy. Interesting that Wall Street seems to disagree with that, that he says something that seems perhaps implausible. I mean, I remember as soon as he said, I'm not going to allow. public defense companies to issue dividends, they're not allowed to do buybacks.

The first message in our research group was, can he do that? And if you look at the stock, you think, I guess he can because the stocks are way, way down. They're down. They have recovered a little bit to be fair, and the first move you can't always judge by, you know.

But no, but that's kind of what they're going to put on Trump's gravestone, right? Can he do that, question mark? You know? It's a really important question. And I think, crucially, just to go back to the Monroe, the Donroo doctrine that we're describing here, it seems as though in the last few weeks he's gotten kind of an appetite for going in with guns and shooting people

and blowing things up, taking things, winning, and it seems to have emboldened him to have that approach towards everything. And I guess that is sort of what you're saying here is, it's not just in the world of geopolitics. It's kind of everything. And it's almost as if reverse taco might be the defining feature of 2026, where he's decided, actually, you know what? I really don't give a fuck. I thought I did.

But I don't. I don't. And, you know, this is a historical pattern. You know, I don't know anything about politics. But everything I do know, I learned from Thucydides, Peloponnesia War, you know, which somewhere in my education. occasion somebody forced me to read it. And the gag there is, Athens decides it's the hegemonic power. And I don't even know if I'm saying that word correctly, by the way, hegemonic power in the Mediterranean. And it's like they literally say, we're the strongest. And, you know, this is where

the famous phrase, the strong do what they will and the weak suffer what they must comes from. That's attributed by Thucydides to the Athenians. And the whole gag of that book, the Peloponnesian war is you start thinking that way and you get in trouble. Yes. Right. Eventually you overstep. And I think, you know, again, as a non-politics expert, I think that makes sense. You know, you do something, it works. You try the next thing.

You try the next thing. The only thing that stops you is disaster. I like that framing because I like that it doesn't appeal to the ethics of it all, which we must recognize doesn't seem to be a huge part of the calculation for this administration. I'm sorry, it isn't. Yeah, and we can say, and you can look at American history, you know, the kind of maga realists will say it's always been about force. We were just hypocrites before, and now we're just being less hypocritical. And, you know, there's a perfectly plausible reading of history that that's true. You know, it's always been about a contest of force.

You know, we just know it now. I'm not endorsing. that, I'm just saying it's not stupid. Right. I think let's take that to its end. Like, let's take ethics entirely off at the table. Let's go fully realpolitik. If our only goal

is to make more money, let's assume that's all we care about. Should we invade nations and take their stuff? And I do think that if you're thinking in the short term and also if you're thinking in election cycles as he does, there is

an argument to be made that, yes, you should. Because, you know, just put very simply, like, if I successfully rob a bank, I will be richer and the other guy will be poorer. And if I do it again, I will get doubly as rich. But to your point, I think the trouble arises over the long term, and this is, as you say, what historians have studied for years. And that is, if you overplay your hand, if you start abusing other nations to a crime. degree, if you're abandoning treaties, if you're threatening populations, it can be really bad. And this is what this historian Paul Kennedy talks about. He calls it imperial overstretch. And that is, we saw it with the Romans, we saw it with the Spanish, we even saw it with the British.

You keep on trying to take, take, take, and then one by one, if you kind of overstep your boundaries, then suddenly you have a colony that's rebelling, and then sure enough, the entire thing collapses. So from a pure wealth perspective, it doesn't seem a good idea over the long term. Yeah, over the long term. But the problem with these kind of arguments is you don't know when the long term is. Right. You know, the investing horizon of the average investor, the time from when they have enough money that they have something to invest to the time that they retire and have to start spending the money or whatever, you know, you've got a 20-year horizon there. You're middle-aged by the time you have anything to invest, and then pretty soon you're retiring. So like, you know, over a period of 100 years, maybe you're right, but we're not playing a hundred-year game.

Nobody in the stock market is playing. Nobody in the bond market is playing a hundred-year game. You know what I mean? So it's, it's, you can understand why the market might not price these things in well, because nobody in all the people, when the comeuppance comes, everybody in the market today is going to be dead or in a retirement home. Yes. Exactly.

So there we are, you know. And it explains a lot. It explains a lot of the behaviors. And it almost makes me think that we are just doomed. And history would tell you, or not as, I'm probably not doomed, you're probably not doomed, we're fine, but grandchildren, great grandchildren, I mean, I even think of this when we think about the debt cycle, it's like we just cannot think long term. All we care about is the next one, two, three.

three or four years. And it doesn't seem like that is a good signal. I mean, I would like, I'm basically trying to come up with a reason as to why, if you had no care in the world about morality or ethics, why it would still be a bad idea to go in and steal things. That's what I'm trying to do. We had a pretty good thing going. I know a lot of people don't agree with that. And our system, by which I mean the American system, or perhaps the developed world system, a lot of people sit in a lot of different places in that system and we'll have different experiences of it. But I think overall, in terms of wealth and health and all the stuff that I want, you know, I listen to the complaints about that system that are made by Trump and his

his team and they just seem wildly exaggerated. So like the argument I would lean, if I had to make an argument, I'm like, whoa, whoa, whoa, things are pretty good? Are you sure you want to start rolling the iron dice here?

When we're all, you know, living long, you know what I mean? We have all this nice stuff. You know, since World War II, all things considered by the standards of history have been pretty peaceful. richest country by a mile in the world. And it's like, yeah, I understand things are tough in the Rust Belt, and I respect that. And I respect the pain that, you know, inequality and unequal

distribution causes. But I feel like we have a lot at stake here. You know, these are very general observations from a guy who sits around thinking about stocks, but there you go. That's what we're here to do. Just to sort of zero in on the natural resources question, because that has been interesting to watch that play out in the markets, where it seems, it's so funny, Wall Street seems to react almost in step with the way I react. It's sort of like, oh my gosh, there's oil in Venezuela, buy, oh, but wait, it's going to take 10 years and cost $100 billion to get the oil out of the ground, sell.

And that is kind of what's happened here. And so the reason, I mean, I think a big question that people are trying to think about with this question is like, what are the main reasons that we are invading? Is it a geopolitical question? Is it about Maduro and is it about socialism? Or is it about the oil in the ground and the idea that we can take that? Or is it about China and trying to keep them out of the picture? Greenland, it's a similar thing happening. There's sort of a geopolitical strategic incentive to have that land. But then also they've got all. of these rare earth elements, and the numbers are quite staggering. Experts say that they might have 18% of all the world's metals, and if you compare it to the US, we've got only 2%. And then you compare it to China, which has almost 50%. And this has been such a big piece of the US-China fight, the rare earth element

conversation, where we thought that we had leverage over China, and then we suddenly realized, oh wait, they've got this thing called rare earth elements and it's really important for electronics and for weaponry and for energy, all of these things that are strategically critical for the U.S. And perhaps Greenland is a way to catch up with them. What do you make of all of that and also how Wall Street has reacted to this? I think the Wall Street, with a very limited number of exceptions, like the companies that have refineries on the Gulf Coast, where if there's more very heavy oil flowing around, that's profits for them. That what the numbers on, you know, coming out of stocks

on Wall Street are telling you is this is not a big economic event. Right. I can't make, as a proposition, the removal of President Maduro in Venezuela. I can't make sense of that as a let's get the oil strategy. I just can't. Given the, you know, the oil market, how it works, where else there is oil in the world, how much, you know, the differential and extraction costs, the potential risks involved. It just doesn't work as an economic play. And similarly, I would say the same thing about Greenland. Now, it may be that people in the White House have a very different perspective than I do. People disagree. Maybe I'm an idiot. Maybe they're idiots. But I can't make sense of it. So that just defaults me to this is about politics, not economics, which is not to say

that Trump doesn't like to talk about everything like it's a business deal. You know, and he talks about we get the oil and we're going to have this number of billions. They're giving me that and we're going to be controlling. Everybody's going to be rich. But that's just standard Trump rhetoric. He puts that on top of everything. Right. So, you know, just on the facts, because it doesn't make sense in any of the ways I think. It has to be in the political domain because it doesn't work for me. I think I'd take a slightly different view, which is I think it justifies the action to the president and to the administration. I look at the way he has handled autocrats and murderous dictators in the past, and historically he hasn't had that much of an issue with them. He

even have an issue with, like, socialists, and we saw that in his interactions with Mamdani, where he was very playful and liked it. So I don't think it's, I mean, I think there's perhaps a piece of that in these invasions, but I think what gets him over the line is when someone says to him, hey, by the way, see this area, there's 300 million barrels of oil in it. Yeah. And the same thing happens with Greenland. By the way, look at this gigantic, number, at which point it becomes no longer a question. Maybe it was a question before, maybe we were thinking about it, but now that I see how much money I can supply, and also the story that I can tell to America and to Wall Street, the idea that I can, and he's now

beginning to tell that story. He now is actually talking about the oil and how rich we're going get from it. So I take your point, but I think I think the resource part of this is larger than you do, is what I would say. You know, I hear you. And I think the general kind of explanation that you're reaching for there, that a lot of different stars aligned in the case of Venezuela, that is clearly right. Maduro made fun of him is one. There is a lot of oil. He just published a document saying we're not putting up with any nonsense in our hemisphere. And et cetera. So all these things got into place at the same time.

I would just put the emphasis on the kind of hemispheric dominance, wild machismo side rather than the economic side. Yeah, it's a good point. Just before we move on to our second story here, I love what you say about how markets, we want markets to tell us the right story. here and we always want markets to tell us the right story here. But they just don't. Yeah. Because the markets can only, they only care about so much. And it's really interesting. One of our research analysts on our team, Kristen O'Donoghue, was listening to the J.P. Morgan call and they're talking about what's happened in Venezuela and what's happened in Greenland. and was pointing out that the way that they talk about it

is so strikingly academic and uninterested in how cataclysmic the event really is. I mean, we're talking about guns, war, death. We're talking about very, very serious things, but in a very unsatisfying way, it's the market's job, and it's the Wall Street analyst's job to sort of treat it as if it's this,

I don't know, academic term or something that you write about in a research paper, which is so frustrating because it isn't that. There is a very long thread, kind of intellectual thread that runs back to, I don't know, the 18th century, maybe even the 17th century, that says, if people just stuck to business, if we all just worried about our material well-being and our economic interests, everything would get better, right? And people have been talking that way since Montesquieu.

And you saw it, for example, in the view that we had 20 years ago that no two countries that had a McDonald's would go to war, or that Russia, once the wall fell and communism ended, it became a capitalist country, of course they're going to be our ally, and they're going to join Europe and whatever. And so that kind of general school of thought that says economics will save us is really deeply ingrained in a lot of people. It's too bad that it's not true. It's just not. Right. And we have to be reminded of it every quarter of a century or so. So there's mortal life. We'll be right back after the break.

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Get started at vana.com.com slash markets. That's VANTA.com slash markets. Vanta.com slash markets. Support for the show comes from Funrise. For the past 70 years, there's been a room in finance that most people couldn't enter, a room where you could have invested in some of the biggest names in tech, companies including Airbnb and Uber, before their multi-billion dollar IPOs. I'm talking about venture capital. But unless you had millions of dollars in the right connections, the door to the venture capital room was closed. You were stuck waiting in line with everyone else. But recently, Funrise took a sledgehammer to that door

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They're automating tasks, handling workflows, and making decisions. But here's the thing. Sometimes they mess up. They might delete the wrong files, make changes you didn't authorize, or just go off script. And when that happens, you're stuck trying to figure out what went wrong and how to fix it, unless you're using Rubric Agent Cloud. Rubric Agent Cloud is a platform that allows you to monitor, govern, and rewind AI agent actions. That means one platform to help you unleash more agents faster without the risk. It's running in the background the whole time, watching what's happening and making sure things stay on track, so you'll be able to get full visibility and set guardrails so agents don't go rogue. Plus, if something breaks, you'll just roll it back.

If your business relies on AI agents, you need the ability to monitor, govern, and rewind their actions. Right now, our listeners get exclusive early access to Rubrik Agent Cloud. Head to rubric.com. That's rubr-brick.com. We're back with Profi Markets. Fourth quarter earnings season kicks off later this week with all of the big banks reporting and we'll break down the results on next Monday's episode. But today, we want to zoom out and focus on the broad.

shift reshaping the industry. One of those shifts is deregulation. The Trump administration has made several moves to loosen banking rules. That includes rolling back parts of Dodd-Frank, the post-2008 framework that was designed to limit risk-taking. And the result is it is a really good time to be a bank. And we can just look back at the year 2025. The big bank stocks rose 30% over the course of the year. That's nearly double the gain of the market at large, the S&P. So, Rob, looking ahead to, well, let's, I guess, start with last year, which was the strongest year for banks since the pandemic. What do you make of what happened last year in the banking industry, and what can it tell us about the year ahead? A couple of stars

aligned here in a really nice way. The first and most obvious one is that banks do as well as the economy that they're sitting in. A bank, you know, and the American economy was pretty good, and that's where you have to start any time you want to talk about banks. When the economy is strong, people borrow money, people pay back the money they borrowed from you before, all of that stuff. They deposit, they make deposits in your institution, et cetera. So that's good. Then you already hit the second important point, which is with the election of Donald Trump, the regulatory overhang lightened significantly. And, you know, the most important for the big banks aspect of this is there were all these rules that hadn't arrived yet, that they were kind of coming down the

pike that were going to increase the capital requirements of the big banks even more than they already have been increased. They were, of course, massively increased and hardened after the financial crisis. This is, to say, say how many dollars of actual equity capital you have to have for every dollar of loans or assets or whatever you have out there. So we were worried that what they call Basel 3 endgame was going to mean, you know, J.P. Morgan has to hold two more dollars in addition to the $11 or $13 they already hold for every $100 of assets. Looks less like that's going to happen. Acquisite, you know, mergers are getting easier. They're getting executed faster. All this good stuff. So regular

Ray, right? Good. That is good. Now for the tricky part where listeners should either pay attention or just tune me out altogether. One or the other. Take your pick. So back when interest rates were really low before 2022 and there was inflation and rates got higher, any asset a bank bought then has a really low yield on it. If you bought a mortgage or even a business loan, or the 20-year treasury, you bought it at a yield of just a couple of percent. When interest rates go up, the price of all those assets has to reprice to the new interest rate, which means the value of those assets goes down, right? So if you buy a mortgage bond with a yield of 2 percent and rates go to 4 percent,

the market value of that asset has to go down to make its yield 4 percent to. Okay, the sound of your listeners going to sleep, I can hear it now. So this was a very bad occasion for certain banks. It hurt a lot of banks. This was at the root of what happened to Silicon Valley Bank last year, et cetera. But what's happening now is that assets that were purchased back when rates were really low are rolling off of banks balance sheets. So you lose a loan you made in 2020.

you replace it with a loan you're making in 2025, you're getting rid of something that yields 3% and replacing it with something that yields 7%. So that, and that was going on last year, and it's going to go on even more this year. So there's this natural lift under banks' income just as the old old world stuff rolls off and you replace it with higher yielding new stuff. So that's, and final point. And now readers, listeners who tuned out can tune back in. For the very big banks, when you have very active capital markets as we had last year, that's very good for your investment banking and your trading desk. So, I mean, if we were to look at what happened in 2025, all of those things that you describe

leads to one of the strongest years we've ever seen for the banking industry. And by the way, just a side note, this is ironic because when Trump comes in, the whole message is the guys on Wall Street have won for too long and we're going to hand it back to Main Street. It's not about getting them rich. And what do you know? I mean, everyone on Wall Street is getting richer than basically ever before. than ever before. I mean, let's look at just the big bank stocks and their performance over the year.

I mean, I mentioned the banks index, but that includes all of the smaller banks. Let's look at the big, big banks. J.P. Morgan gained 34%. Citigroup gained more than 60%, 63% over the year, which was kind of unbelievable. And for all of those reasons you describe, you have these regulatory conditions, which are better. You have more M&A, global M&A volume was up more than 40%. for the year, which means that your investment banking business is crushing it. Also, one thing that I would add there that you didn't mention is the volatility that we saw on the stock market,

which is so good if you're a trader. Fantastic. I mean, just the more it goes up and down, which it did, the more trading activity happens and the more money you make from facilitating those trades. So trading revenue was up 15% last year. So I think the question then is you'd think that because we had such a big year in 2025, we're probably not going to have that kind of year again in 26. But I'm not so sure because I don't see any of these conditions changing, and then I would add one other thing,

which is it seems that the IPO market is going to explode. Explode might be a strong word, but it seems like it's going to really come online this year. if you've got SpaceX in the pipeline, potentially open AI, potentially anthropic, that would be a great thing for the banks too. These would be some of the largest IPOs of all time. So my preliminary thought is, 2026 is going to be a great year to be a bank as well. But I want to see what you think. I think that's probably true. I mean, there will be more of this replacement of bad assets with good assets. That will still happen. I think that, as you say, there's every reason to think borrowing a crash or something.

awful, that the trading and investment banking business will be good. And I think, as the economy is positioned right now, the economy seems pretty solid to me. So all the conditions are in place for good performance. But you have to remember, at the beginning of 25, bank stocks were cheap. They're not cheap anymore, right? And so the reason people were excited about owning banks is that the stocks look like bargains. They don't anymore. I've been hearing a lot of chat. I've been hearing a lot of chatter in the space where people are like, is a JP Morgan a good buy at this price? I mean, you can understand why Citibank went up 60% because it's a troubled bank historically, and it went from being mediocre to being slightly less mediocre.

And those kind of transitions is where you really make money in the stock market, not from good to great. The big money is from like trouble to slightly less trouble. you know. But you don't do that twice, right? You know, and so it's going to be hard, in terms of stock market performance, it's going to be hard, I think, for the banks to repeat what they did last year. But I think performance-wise, your central case has to be that they're going to be just fine.

Yes. Okay, I think that's a good way to frame it. The pressure on the stock will be the multiples. By the way, one thing that I find quite interesting that Tom Lee, who's the head of Fundstraat, he says that he thinks that bank stocks are going to eventually and in the near future receive tech-like multiples because he thinks that there's all of this.

It's like, I'm just going to get on my hand with my broker and sell everything. when Tom Lee says that banks are going to trade like tech stocks. I think it's time to hit the doors. You don't like it. Well, I just think they're banks. You know what I mean? His view is that there's so much power in AI, I mean, so much layoff potential, really,

that these are extremely human capital-intensive businesses. Yeah, that's fair. Which could open up new opportunities for multiples. I mean, if J.P. Morgan decides to AI charge its business, then suddenly you have a company that looked, more, when you look at the business, looks more like a software company than, say, a bank with a bunch of physical branches. I got two things to say about that.

One, yes, high fixed costs and human capital costs are part of the reason that bank stocks traditionally trade at something of a discount to the market. The other reason is that their earnings are very volatile because they're sensitive to the economy and to the stock market. And that's not going away in the AI world. That's right. So that factor will keep multiples down. Two, this world in which AI gets a lot of people fired, maybe a world will be arrive at much more profitable companies in certain sectors, but it's going to be a hairy ride to get there.

So, like, I was just looking the other day at this bank truest, which your listeners may or may not know of, but it's a very large regional bank that was built out of a merger of two, to quite big regional banks, BB&T and SunTrust five years ago. The stock's been a dog ever since the merger. And they did fire the people. They had something like 58,000 employees as two independent companies. And now they got 38,000. And they got more assets. So like mission accomplished on firing people, not by AI, but by doing a merger.

Right. But you hear the war stories about what it was like getting from point A to point B, the culture clash. The people who leave because they're pissed off at everybody, the stern and drang, right? You know, if you, if the thesis is banks are going to fire a third of their people. Like, is it going to be fun to be at those banks while that's happening? And if the people inside the institution are like afraid to their lives, do you really want to own it while that is happening? Yeah, that's a great point.

It's all a lot easier said than done. I mean, we may get there. It'll take some time. It'll take some time and some pain. Yes. This is a nice transition to something that you've been talking a lot about in your newsletter, which I want to get your thoughts on. You've been saying that, I mean, just for some context,

we usually say on this podcast that consolidation is kind of a bad thing, because it generally involves a monopolistic entity going in and buying up all of the smaller players, which reduces competition, it leads to potentially price gouging. We generally are not huge fans of when a big company goes and buys, or a big company goes and buys another small company. Your view that you've been talking about, and I want to hear more about it, is that consolidation in the banking industry would actually be a good thing. Why do you say that?

I think it would be pro-competitive. I think that what you look at, you know, I don't know what I should actually figure out this number, but what percentage of the profits in the banking industry are made by J.P. Morgan, you know, and then if you put J.P. Morgan, Bank of America, Wells Fargo, City Group, and U.S. Bank, together, you know, they're just squeezing most of the profits out of the industry, and there's your oligopoly. Right. Right.

You know what I mean? And the fact that there is 1,970 other banks in America that are squeezing out tiny little drops of profit doing local banking doesn't mean the industry is really properly competitive. And from an investor point of view, the small, you know, the regional banking industry has been a terrible place to invest. And so on the, I think consolidation of the, that issue, would be good for investors. I think it would be pro-competitive for the industry. The problem is the more I read about it, and the more bankers I talk to, integrating a bank merger is a nightmare. Why? Why is it a nightmare as opposed to anything else? Okay, so one reason is because it's such a human capital industry. So the first thing that happens when BB&T and SunTrust get together is that everybody at the competing banks calls up the best banker at the merging

banks and is like, you really want to put up with three years of bullshit while these guys screw around changing their name and re-upping. Why don't you come work for me instead? And that banker, maybe it's a commercial banker who makes loans to banks or it's somebody, a trader, whatever, you know, they just walk out and they take a lot of their clients with them. Right? You know, as people used to say about Goldman Sachs, our assets go up and down in the elevators every day. And to a certain degree, that is true of all banks, you know, even like a traditional, like branch

banking bank. And you go through the disruption of a merger. All of that is at risk, you know? So that's a big problem. Also, regulation in banking is so much stricter than every other industry. So you've got the regulators on the top, less so now under Trump. but you have the regulators on the back while you're on your back while you're trying to do it. That's another issue.

And, you know, culture is really important in banking. You know, vibes, you know, it's a people business again. So you mess with that corporate culture and you've got an issue. So it's just really hard to do. Not say it won't happen. I just like, the more I talk to bankers about this process of consolidation, the harder it looks to me from the outside. Something you also mentioned in a previous conversation is that,

if you're the head of a regional bank, you're the man of your town, which I think is a really important point. And you don't want to give that up. No, you're like, you're the national bank of wherever, like, you know, whatever it is. You're the head of name the town you want, you know what I mean, middle town, wherever. And you're head at the national mic of middle town. You are the man at the country club. You're the head of the rotary. you know, everybody loves you

and you got this great job in this great life. And like basically the deal, if you sell your bank, you're no longer the man anymore. And you're looking down at all the people who work for you and you say, look, it's been great. We just got bought out at a premium valuation. It's great for the shareholders. A third of you are going to get fired.

Goodbye. Yes, exactly. Which is another example I would add of people, don't think in terms of economics. We are not why there are moments where there are things outside of economics that are outside of money that trump money. And it happens in a lot of situations. This would be one of them. I'm the head of the Rotary Club and I'm the CEO of the regional bank here. Yes, technically speaking, this would be a better deal. But I don't want to give up these things that I enjoy in my life. And, you know, I don't want to hurt the people around me. And, you know,

the opposite mal incentive also applies. So they don't have, if you're the head of a small regional bank, your CEO, you have a strong incentive not to sell. If you're the buying bank, you have a strong incentive to overpay. Barclays, the investment bank, did a great chart of this.

There's, there's like an incredibly strong correlation between bank size in terms of assets and banker CEO pay. So like if you run a bigger bank, you just get paid more money. So like whether it's good or bad for the shareholders, you do an acquisition. Maybe you overpay it destroys value, whatever. You double the assets you're managing as a banker.

You can double your income. So you have the, there's a conflict of interest between the CEO and the investor. And you, and like you don't want to, you just don't want to be that involved in an industry where management and investors have different interests. Yes, exactly. And it's the same thing that we see in, say, venture capital, where, I mean, the whole industry seems to be getting overrun by the management fee. And that is, you're not making money on the 20. You're making money on the two. And that basically incentivizes companies and firms to just buy up as much stuff as humanly possible. Same thing is true in fund management. And that's why all funds tend to look the same. The important, the thing that's going to make you retire rich is retaining, you know, hopefully growing, but like retaining assets and earning that 2%. Yeah. You don't even need to invest well. You just need to invest lots. Yeah, yeah. You just, so, so you have a strong infinitive, like not to screw it up than you have to like really, you know, go for it. You know, it's a huge issue. We'll be right back. And for even more markets content, sign up for our newsletter at profiteymarkets.com slash subscribe.

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We're back with Profi Markets. So Rob, you are one of our first guests of the year, so we want to get your take on what is in store for 2026. So we are going to go through some of the predictions that you shared in your unhedged newsletter. And I'm just going to ask you questions and hear more about what you think is going to happen. Can I just say something as a way of presses?

Like, I don't think these predictions, I don't think my predictive powers are particularly strict. wrong. Right. You know, there's this guy, Dan Davies, who's a writer, and he says, the reason to make predictions is that otherwise you don't know what to be surprised about. Do you know what I mean? Like, when events happen, the natural tendencies always to be like, oh, yeah, I saw that coming. Yes. You know what I mean? And once you go on Ed's podcast and you say it out in front of everybody, at least people will call you up and tell you what an idiot you are when it turns out to be wrong. You know what I mean? That's literally the main reason to do predictions is,

is a discipline. Yes, exactly. So it's not because I have some crystal ball because I think about markets all day. Nobody does, right? But it's an accountability machine in some way. 100%. And also an important way to catalyze the conversation

and frame what we should be thinking about. Correct. And watching for as the year continues. I'll just say our listeners are very familiar with this because Scott makes many predictions. In fact, he makes a prediction every single week. Good. Some of them are right.

Some of them are wrong. We try to keep track. But let's get into it. And let's start with this first question, which is, are we in a bubble? And will the bubble burst? And you say, yes, we are in a bubble, but no, it won't in 2026. Well, that's just numbers, right? I mean, this, as I said on my own show this morning,

in finance. Either you believe in valuations, you don't. I believe in them. We are in the top, not even decile, but what's after decile, like a hundredth or the 95th percentile. We're in the 95th percentile, the 97th percentile of how expensive risk assets are related to history. And always before in history, that predicts low returns over the long term, you know, over the next 10 years or so. as you might think, pay a lot for something, right? You know, the profits aren't going to be as high. And in history, those low profits over the long term, over the next 10 years, don't come with a slow deflation. They come with a big step down.

So history says, primarily for this reason, but also for others, we are in a bubble now. But the problem is that long term, you know, do we have that big step down? in 2026 or in 2013 or one year in between. I have no idea. And while I'm waiting around for it to happen, I'm giving up returns. So if it happens three years from now, and I've been sitting on the sideline not earning stocks,

what have I achieved? So, so like this is just probability. The probability is we won't have a pop this year because most years we don't. It's that dumb. Right. Is that really your reasoning?

Because most years we don't? Most years we don't. You know, even at these levels of high valuation, these things can go on along for quite a long time. And I would add on top of that, the general setup is pretty benign right now. The economy is strong. We can talk about the somewhat wobbly labor market,

which is a red flag, but in terms of growth and spending activity and a lot by a lot of measures, things are good and perhaps even getting better. We might have Fed cuts coming. We definitely have massive fiscal stimulus coming. You know, like, it's an environment that is quite benign, which means there is less possible triggers for the deflation of the asset bubble that we're in right now.

I would completely agree. I guess the way I was thinking about it have been thinking about it is, I mean, if you believe that there is a bubble and you're trying to think about how to invest or how to bet on whether or not it pops, the idea of betting on it popping in a year where we are about to see this flood of fiscal spending that is going to prop up the market, where we are seeing interest rates coming down, it's just a bad bet when you look at the reality of what else is happening. Look, there's midterms coming.

baby. You can believe that Scott Besson and Donald Trump are going to throw the kitchen sink at this economy. And 2027 be damned, you know, they're going to do everything they can for 2026. 100%, which is why my view on 26 and we said it on a previous episode, I just think returns are going to be kind of air. Like it's going to be, you have all of these downward forces which are related to what you're saying that valuations are too high. You also have all of these expectations around AI, and I don't think that people really understand where the ROI is going to be and what the ROI is going to be. I think it will likely disappoint people as it has done throughout history. The one good thing that I would note is that we're not seeing huge amounts of leverage and

huge amounts of debt. Very good point. These companies are spending, you know, they're spending on data centers with money that they have for the most part. There are a few outliers. They might get crushed. But would that pop the entire thing? Would that cause a real correction, a real crash? Especially when you got those forces propping

things back up? I think no, and then it all kind of goes in sort of a semi-flat line. I mean, one thing that is interesting about where we are now as opposed to in 2008, say, is that, and this is the kind of sentence that gets you in trouble, but I'm going to say it anyway.

Most or all of the leverage seems to be in the government. In 2008, there was leverage in households and also in companies. And since then, households and companies have cleaned up their balance sheet with the assistance from governments, which have this infinite appetite for debt. That's such a good point. So that doesn't sound like a very good sustainable solution and way to live your life as a world to me, but it might make, at least in the short term, a crash, less. likely because the crashes we know in in developed countries at least they tend to happen they started with households panicking or or private institutions and somebody will write in and find an exception to me but most of the debt is in the government and they've got a printing press

which leads to the next important point the big spoiler the thing I'm worried about most is inflation right when you have all this debt in the in the public realm and you're forcing all this stimulus into the economy fiscally and you're cutting rates and the economy's doing pretty well and you've reduced the labor supply by throwing all the immigrants out. I can't predict inflation. You know, I don't even, I don't understand that. But like, if there is inflation, every, all the nice things I just said are not true. Right.

You know, inflation goes up. The 10 year yield goes to 5.5%. It, you know, it's a different game. Yeah. You said that was on my list here. The biggest risk in 2026 will be inflation. What do you make, just a quick side note, what do you make of the inflation report that we saw recently where it came down to 2.7, which shocked me and then I learned, I mean, I guess I'm sort of answering,

but give me your take first. Let me just ask you, what did you make of it? That's fair. You know it as well as I do. Well, I guess I don't believe it, or I didn't believe it at first, and I always hate being the guys, I don't believe the numbers. But then we talked with Morg Zandi, and he basically took us through all the reasons why the data was completely flawed. And so in reality, we're actually still at 3% based on the analysis that they did. Yeah, I mean, it looks to me, and again, the data is flawed, and we have this gap. and it's surprising.

We have this gap from the government's shutdown, and it's surprising how that affects the data in months. Like all this stuff is kind of path dependent and all this stuff. But what it looks like is we're still above Target. Goods is maybe getting a little bit better. Services outside of housing is not. That was kind of my takeaway. And that's the bit that's like dependent on wages and et cetera, et cetera.

So I think it's hard to say, you can't say we're at Target. but I think it's hard to look at all the numbers all in and say things aren't getting a little bit better, right? That's why I say I'm not predicting anything. I'm not saying I'm not that I'm not that I think inflation is going to happen for whatever, what it's this X, Y, or Z probability event. What I'm saying is it's the worst thing that could happen now. Within the realm of probability. All the things that are good going into next year. year depend on inflation staying under control. Right? And so if something should happen in that area,

you know, we got to reconsider all of our assumptions. For all of the reasons that we're outlining here, I don't see it improving. That's that's that's that's really why I saw the 2.7% I'm like bullshit. No what no way. And I was very relieved to see the analysis which said I'm right. Okay. Well, I'll give you I'll give you two reasons. You know, you can take these or leave, but these are two things why it might improve. The first reason is we lap, at some point this spring, we lap the April tariffs. So like, you know, if that turns out to be a one-timer, right, we lap that. And so that falls out of the goods numbers.

Yes, that would be huge. I'm, that, that, if that happens, yes, fair enough. And on the kind of services side, we do have. a bit of a mushy labor market, which tells you maybe wages, wage growth won't be that strong this year. And, you know, although a lot of things surprise me, surprise you, people do teach you back in school that inflation and wage growth are very intimately linked. And it's hard to get hot inflation when wages aren't going up. So I'm not sure I buy those arguments either, but I guess those would be the standard ones that the inflation doves would roll out right now.

Definitely. I mean, the basis of my belief is really tied to tariffs. And who knows what's going to happen with tariffs at this point, especially we've got the Supreme Court ruling in the pipeline. So, you know, this is going to be an ongoing conversation. But in a tariff world, unlike, it only goes up. I do want to keep us moving because you have more predictions. Will AI Euphoria cool? You say, yes. Kind of linked to the bubble, but let's just get a quick why? Because it's a choice. already happening. I love these predictions. Invidia has been going sideways. The stock's been going sideways for four months. Meta is struggling. Oracle is struggling.

There is a sense visible in market prices that the market is becoming more cautious about this narrative. And of course, the dream scenario, what we should be all happening, is that we have kind of incremental caution rather than a moment of freak out, that this kind of just cools down. And, you know, look, as somebody, as a really smart investor, Patrick Kayser at Brandywine Global put it to me this week,

he was talking about the moment you're worried about is not that revenue that like AI data center spending just suddenly stops in the middle of 2026. That's not going to happen. The cranes are already there. the purchases are made, the cement is rolling. The moment you're waiting for is some moment in 2026, when people look out to 2027 or 28 and they can see the end of the runway out there. Right now, the road just goes on forever, right? But the moment we're waiting for, because the market discounts forward.

The market doesn't care what's happening today, right? So at some point, the worry is that you see the end of the runway sometime in 2026. And I just feel like, I don't know, my guess is no. It's not a high probability prediction, but I am reassured by the fact that the market is already exercising a little bit of discipline. It is interesting, the discipline that we're seeing in the markets. And I think one of my predictions for AI is that the winners in AI are going to be the ones that can signal a level of responsibility. I mean, if you look back at the previous couple of years in AI, you were rewarded for being unrealistic. You were rewarded for saying, we have this gigantic idea, it's going to be artificial general intelligence,

we're going to take over the world, and then people gave you money for saying that. I think that it's beginning to flip now, where if you start talking with that sort of techno-babel language, you begin to get punished, and it's the companies that are signaling the level of responsibility, and usually signaling that means you are actually being responsible. And so a company that I think would be rewarded as an example would be anthropic this year versus Open AI. Okay. So this is a question I would put to you that I would think about earlier today.

So let's suppose, and I have no, I should emphasize at the outset, I have no grounds for thinking this is going to happen whatsoever. Let's suppose the wheels properly come off Open AI this year. Right. Like they try to raise some money and they can't. Or like the revenue stops. growing and they have some horrible conference call. They try to sell the thing. You know, pick your scenario. Wheels come off badly at OpenAI. How big an event is that for the market at large?

I think it's gigantic, personally. I mean, the amount of money, the good news is that the market is beginning to sort of understand that possibility. So that one and a half trillion dollars that they said they were going to spend over time, I mean, immediately you look at Oracle. and the market says, it's real, it's great. And he goes, shoot up, it goes crazy. Eventually, they started to discount that one and a half trillion because they realized it's less realistic than we thought. But on top of that, I think that Open AI has become such a symbol of the AI story.

I mean, the gains, the biggest moment in the past five years is the launch of ChatGBT. And that was the seminal moment where we kind of have to measure what is how to measure. happened since then. And since then, 75% of the gains in the stock market have been AI. It's all AI related. So I think because of the power of that story, if you have a blowup similar to what we saw with FTX, I think it might be another good example. That was sort of what anchored the whole crypto story. If that just comes off the rails, I think that really shakes people's confidence. Yeah, no, I don't know what to think about it. That's why I asked you, because I don't know what to think about that. I can imagine a scenario where the world's like, look, Google's still Google.

Microsoft is still Microsoft. Invita probably takes a monstrous hit that day. And eventually, I think that would happen. I think you see the crash and then eventually people would realize, actually, this doesn't mean it's over. Yeah, yeah. It's just that this is a project that failed and onto the next path. Yeah, yeah, yeah. Exactly. Moving on. Interesting prediction here. Will U.S. stocks trail the rest of the developed world? you say, no, they won't, which is the reason that's kind of relevant is because last year, the S&P rose 16%, and then the rest of the world ripped higher than that. So you say that's not going to happen.

And by the way, to further congratulate the rest of the world, they ripped higher in their local currencies. They didn't even need the weak dollar to beat the U.S. a couple, I mean, earnings growth is just like comparing to Europe and Japan. I'll restrict the discussion to Europe and Japan just for simplicity's sake. Our economic growth is stronger and our earnings growth is stronger. And at the beginning of last year, it's a bit like the banks. The lower earnings growth and the lower economic growth was very much priced in to European and Japanese indexes. now they have a higher hurdle to jump. And so I just feel like they had a great year next year.

I'm a kind of politics aside, American exceptionalism believer, meaning I think there is a reason that U.S. markets get a premium that makes perfect sense. And we're now into the normal range for that premium, better earnings growth, better economic growth. Okay. I think that makes sense. we also have here, you say that cyclical high volatility stocks will outperform defensive low volatility stocks. Why do you say that? And then also, what are cyclical stocks? So, cyclical stocks, we talked about banks, which I think are good. These are just stocks that are very tightly, they respond very much to the underlying economic growth. So like a classic example would be a construction company. You know, if the economy's shrinking, put the cranes away,

nobody's calling. And if it's growing, you can, you can price any way you want. So you're going to be, you're going to be like the economy plus or the economy minus. So that's a cyclical stock. I mean, look, fiscal stimulus, cutting rates. We had a kind of sludgy fourth quarter that seems to be ending. And some, you know, a lot of the cyclical stocks as opposed to tech stocks are still not bonkers in terms of what you're being asked to pay. So I think the Xx, you know, the extra. economic background is good for them, and growth investors are probably looking for somewhere to go that isn't tech. And again, this is one of these predictions that's easier because it's already happening. Over the last month or so, banks, materials, industrials, they've gotten a nice

lift. Again, this is a perfect example of the inflation problem. If inflation perks up, the rate cuts come off the table, the investors are going to run out of industrials, banks, cyclicals at top speed. So this is the perfect example of how inflation gets loose. All of these predictions change. All bets are off. Final prediction here. Will the Fed funds rate end the year below 3%? You say no.

Why? And also just what do you make of what's going to happen to the? Fed in 2026. We've got a new Fed chair who will come in. We don't know yet, but someone's coming in in May. Jerome Powell's out. A friend of mine, Ed Al-Husani, who is a fixed-income guy at Columbia Threadneedle, is one of my best sources and a friend. He put this in this way. He said, we're heading into situation where the chair of the Fed is going to be a dissenting vote right, which is kind of new. And I looked this up and one of my colleagues came back to me and said, actually under Reagan, chair Volcker, even the great chair Volker, Paul Volker, did get outvoted by the committee once or twice.

So it's not unprecedented for the chair, but it's like a weird and novel situation. How important is it that we seem likely to get a Trump Patsy as chair of the Fed? And I guess I'm thinking maybe that's just another vote. Like the press conferences are a little weird, granted, if they keep having press conferences. But, you know, the guy just gets outvoted. And there's a long history of people getting appointed by politicians who are then in safe jobs like their Supreme Court justices or they are Fed chairs. and then disappointing their former master because they're safe. So, you know, I'm, but I will admit that this one does keep me up awake a bit more than the other predictions.

I was partly saying, we're only getting one or two, one or two cuts because I wanted to be provocative. You know what I mean? Because everybody's out there saying it's going to be. whether it's Warsh or whoever it is, which Kevin it is, they're going to come in there and it's going to be like suddenly the whole committee is going to be calling for 50, 100 points of cuts right off the bat. And I just wanted to push back against that narrative. I think it's a really important point. And I think it's sort of an important reminder of how the Fed actually works. And for those who don't know, there is a committee, and each person on the committee gets one vote,

including the Fed chair. So the question is, what power does the Fed chair really have? And, you know, there's power in the sense that they set the agenda for the committee. They decide which things are going to be talked about and how the conversation is going to proceed. They're also the person who gets on the TV and talks to the country about what is happening. But it is a really great point. It's like, but also they just have one vote. There's no doubt that the way central banking works is less through the actual impact of the interest rate and more through signaling and messaging. You know, the actual interest rate, we're talking about quarter point increments at a rate that very few people in the economy pay, right?

what's important. And so where the chair can have sway is everybody on that committee knows that they're sending a message as a group to the world. Right. So there is pressure for them to, you know, one or two dissents are okay, but the world does not need a split committee from the Fed. And the open market committee is aware of that. So, you know, we're going to have an interesting experiment in kind of group dynamics here that we haven't had in many decades. Such an interesting point. I really hadn't considered that. And I love it because it's such an obvious point. Yeah. Okay, let's take a look at the week ahead. We will see inflation data from the Consumer Price Index for December. We will also see the producer price index for November.

And of course, we will see earnings from JP Morgan, Bank of America, Wells Fargo, City Group, Morgan Stanley and Goldman Sachs. Rob, this is the part of the show where we ask Scott for a prediction, but we've already kind of heard some predictions from you. Yeah, you've already done it to me. You give me a prediction. I ask you for a prediction.

I'm not going to give one. I'm not going to put myself in that position. Instead, I will ask a more general question. Is there anything you're watching closely this year or anything that you're looking forward to this year or perhaps anything that maybe you're excited about this year, and it doesn't have to be markets related. Well, for the last two summers,

each of the last two summers I did a triathlon. Wow. And like this is the year, as a man in my mid-50s, I think this year I'm going to try to get, really see what you can do with a 55-year-old body. And the answer may be not very much. But, you know, that's my kind of thing. I mean, it's sort of a trite New Year's resolution.

But like, I'll do a couple more of these races. I'm going to try to slim down a little bit and just see what sparks of youth I can recapture. And we'll see how it goes. I love that. So these triathlons, what's the, how far are you running and swimming and what is it? It's an Olympic distance. The two I did in the last two summers are Olympic distance. So you swim about a mile and you ride your bike for about 25 miles and you run for about six miles.

And what that really turns out to be is two bullshit events and a run. You know, the run is where you pay. That's where you pay. The rest is easy. I love it. So is it going to happen? Are we going to see you in a triathlon this year? Or you're mulling it over?

Yeah. Again, I'm into do it again. I've signed up. You know, I put the money down. So, you know, the sunk cost fallacy may drag me into it. Well, I love that. And we're going to need to get a selfie and maybe we'll have you FaceTime in. Maybe we'll record an episode while you're running.

That will get clicks. Please don't. Running, by the way, is a slight exaggeration in terms of what I do. It's not exactly walking, but it ain't running either. Robert Armstrong is the U.S. commentator for the Financial Times, and he writes the unhaged newsletter. also co-hosts a podcast by the same name. Previously, he was the FD's US Financial Editor

and Chief Editorial Writer, before becoming a journalist. He worked in finance and studied philosophy. Rob, thank you so much, as always, and thank you for standing in for Scott. Yeah, this was fun. It's great talking to you. Absolutely, this was fun. Thank you, Rob.

This episode was produced by Claire Miller and Alison Weiss. Mia Silverio is our research lead, our research associates, our Isabella Kinsell, Dan Shalon, and Kristen O'Donohue, Benjamin Spencer is our engineer, Drew Burroughs is our technical director, and Catherine Dillon is our executive producer. Thank you for listening to Profi Markets from Profi Media. Tune in tomorrow for a fresh take on the markets.