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Recently there’s been a lot of commentary on a potential bubble in AI. Some suggest challenges lie ahead for those exposed to US equity, where elevated valuations are concentrated in AI-related stocks. Others say that investing is worthwhile to fuel innovation in a revolutionary technology. While discussions around a bubble are important, one thing that’s missing is a reminder about investing basics when it comes to assessing US exposure. Several factors suggest being underweight in the US is sensible: the nature of current valuations, underlying economic conditions and other metrics that indicate the AI narrative is largely driven by speculation…

The advice profession is evolving rapidly. One of the biggest shifts we’re seeing is how firms approach investment management. For years, most advisers managed client portfolios in-house through a centralised investment proposition (CIP). But with increasing regulation and complexity of client needs, the administration and risk associated with designing portfolios and rebalancing are becoming harder to manage.

It’s not surprising, then, that many firms are outsourcing portfolio management to discretionary fund managers (DFMs)…

During Trump’s tour of Asia, Trump and Xi Jinping agreed to suspend China’s rare earth export controls in return for the US cutting the “fentanyl tariff” from 20% to 10%. China have also committed to buying a “massive” amount of American farm products including soybeans.

Trump rated the talks as a “12 on a scale of 1 to 10” but nothing has been signed yet…

The 64-year-old won a clear majority on Tuesday – 237 votes in the powerful Lower House and another 125 in the Upper House – as leader of the ruling Liberal Democratic Party (LDP). Her economic views align closely with those of former Prime Minister Shinzo Abe, who promoted a reflationary policy framework known as “Abenomics.” She has long called for aggressive government spending to boost Japan’s economic growth rate and criticized the Bank of Japan for tightening monetary policy.

On Tuesday, the Governor of the Bank of England (BoE), Andrew Bailey joined the growing number of finance leaders worried about the AI boom and the inflated value of tech companies. In his letter to other G20 finance ministers and bank governors he said, “While most jurisdictions have seen a rebound in financial markets in recent months, the resulting asset valuations could now be at odds with the uncertain economic and geopolitical outlook, leaving markets susceptible to a disorderly adjustment.”

The next day, the International Monetary Fund (IMF) echoed Bailey’s comments when it released its latest World Economic Outlook report…

Despite lingering concerns from earlier tariff shocks and geopolitical tensions, equity markets rallied on AI-driven optimism, cooling inflation, and expectations of central bank rate cutting. The latter notably from the Federal Reserve in the US. Whilst at the same time, the US showed economic resilience with Gross Domestic Product (GDP) growth for the third quarter, with GDP being revised upwards to nearly 4% on an annualised basis. Positives certainly seemed to outweigh any negatives…