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Perspectives: Episode 136 – Between Trump and a bond place   In this episode of Perspectives, Escala Chief Investment Officer, Tracey McNaughton, explores the collision between US fiscal stimulus and tighter monetary policy, why rising bond yields aren't necessarily bad news for equities, and how investors can find opportunities in a world where capital costs more.   (0:55) We are in an interesting environment right now. The US is running two economic policies that are working against each other. (2:55) And all of this spending is making its way into the economy. The US is growing in nominal terms, that is, accounting for inflation, by over 6%. That is well over the average for the past 30 years. (4:48) We normally associate strong economic growth with strong financial markets. Yet recently we've seen bond yields rise and equities come under pressure. Has good economic news become bad news for investors? (7:11) So let's start with what happened in the Treasury market this week. (9:27) And this brings us to equities. Higher yields means that earnings generated way out in the future need to be discounted back to the present at a much higher interest rate (11:48) So Tracey how do you translate all of this into portfolio construction? (13:27) If we're looking for protection against a recession, long-duration government bonds may still have a role. In a conventional growth shock, inflation tends to fall, central banks cut interest rates and bond prices rise. But we don't see a recession anytime soon. (15:53) What about infrastructure – will that protect you in an inflationary environment? (18:20) What about the currency. We had a question at our morning meeting today – should US equity investors hedge the US dollar? (18:46) So you're not suggesting investors should become more defensive. You actually telling them to be more deliberate – be conscious of the risk you are taking and why?

In this episode of Perspectives, Escala Chief Investment Officer, Tracey McNaughton, talks about why we are not trying to build the portfolio that performs best if we're right. Rather, we're trying to build one that can still achieve its purpose when we're wrong. (1:03) Do you think there's another shortage emerging that investors probably aren't thinking enough about? (3:09) Japan still owns roughly US$2.4 trillion of overseas debt. So nobody is suggesting Japanese institutions are suddenly going to dump that portfolio and bring the money home, are they? (3:49) But presumably Japan isn't the only reason yields are rising? (5:16) Since the risk-free rate sits underneath almost every asset valuation, this rise in bond yields, the rise in bond yields is becoming an equity market story as well. (6:23) We've talked about the price of capital. But you had an interesting question from a client last week which takes this discussion in a slightly different direction. That's the location of capital. (8:09) But gold is gold, so why does it matter whether it's sitting underneath New York, London, or Amsterdam? (9:01) So this is not just a gold story, is it? I remember during the GFC, it was important to know which bank kept your savings because some of those banks were ring-fenced by the government, but others weren't. (10:24) This is almost precisely the philosophical change we've been making in our new asset allocation methodology. (12:13) One of your strong criticisms of the traditional way we label assets in a portfolio is the label itself. What do you mean by that? (13:22) How does your methodology deal with that? (14:34) And what would today's discussion change? (16:53) That sounds less like optimization and more like engineering, doesn't it? (17:38) But presumably there's a cost to doing that

Perspectives 134 – Ride to the Conditions   In this episode of Perspectives, Escala Chief Investment Officer, Tracey McNaughton, looks at the changing conditions facing investors, from persistent inflation and a stronger Australian dollar to rising government debt and the return of fiscal discipline.   (0:44) Tracey, we spend a lot of time talking to clients and advisers about what is happening in markets, but I thought today we might turn that around a little and talk about what they are asking us. (3:13) You think there are good riders and bad riders in markets as well? (4:36) So how do you tell the difference between a good investor taking risk and a reckless investor who just got lucky? (5:08) And presumably that means there will be times when the more reckless investor actually looks like the better investor? (6:39) So what are the conditions around us today? (8:04) Which makes inflation harder to get rid of because the constraints on supply negatively impact growth. (9:34) Let's move onto the Australian dollar. We've seen quite a move recently. In the last month and a half we have seen almost a 3 cent move higher. What's going on? (10:21) US government debt has just passed US$40 trillion for the first time. It has doubled in roughly a decade and about US$3 trillion has been added in the past year alone. (11:43) And we're seeing the bond market respond to that now. The US 30-year Treasury yield has recently been above 5.3 per cent, the highest level since 2007 (13;49) Are we seeing that happen? (15;46) And presumably there's a feedback loop here as well. Higher yields make the debt problem worse. (17:11) Meanwhile, back home, the Australian Commonwealth government debt hit its own milestone last week topping A$1 trillion for the first time.

In this episode of Perspectives, Escala Chief Investment Officer, Tracey McNaughton, discusses just how large the AI capital expenditure budgets have become, where the money is coming from, and which parts of the AI supply chain are most at risk of overinvestment. (0:51) It feels as though every major technology company is announcing another massive increase in AI investment. Just how big has this AI spending boom become? (2:00) What's interesting, though, is that the spending doesn't seem to be slowing. If anything, every earnings season the budgets seem to get bigger. (4:10) Microsoft seems to have convinced the market that the investment is paying off. Was that true for everyone? (5:58) For Alphabet and Meta, investors are still asking, "Show me how this next wave of spending turns into future earnings." (6:57) If the hyperscalers are collectively spending more than US$400 billion this year, where is all that money actually coming from? (8:38) Where does that capital come from? (10:47) AI has become one of the world's largest consumers of investment capital. The unfortunate thing is this is happening at the same time as bond yields are hitting multi-decade highs. (12:12) So, Tracey, whenever we see an investment boom of this magnitude, history tells us that eventually somebody builds too much. Is AI heading down the same path? (12:49) Let's work through the supply chain. Where do you think the risks are highest? (13:54) What about data centres – surely that's where everyone's worried about a bubble? (14:41) What about the companies actually making the equipment? (16:01) So, not all parts of the AI supply chain should be treated the same – particularly when we are talking about capex?

In this episode of Perspectives, Escala Chief Investment Officer, Tracey McNaughton, explores why productivity has become the defining investment and economic challenge - and why getting it right could unlock stronger growth, lower inflation, higher living standards and a more durable bull market  (1:00) What do you think? What are you saying to clients? (3:55) Those high expectations tend to be a feature of a mature cycle. Is that more the issue? (5:03) The first was the Prime Minister's new AI strategy. The second was the debate around whether Australia's superannuation system should play a bigger role in funding nation-building projects. (9:15) So perhaps the role of government isn't to direct capital. It's to create the conditions that attract it (9:23) How do you think this will change how Australians choose to invest? (13:03) If fewer investors purchase rental properties, there's also the possibility that rental supply becomes tighter, placing further upward pressure on rents. (15:02) Tracey, listening to everything we've discussed over the past two weeks, it feels like all roads lead back to one issue. Productivity.

In this episode of Perspectives, Escala Chief Investment Officer, Tracey McNaughton, explores the question: who will pay for the building of strategic capability? From sovereign balance sheets and bond markets to private capital and Australia's superannuation system, she examines how the "Price of Sovereignty" could reshape investing for years to come. (0:44) Can governments actually afford another nation-building cycle? (3:30) Does that mean bond markets become a much bigger part of this story?  (5:13) So, the price of sovereignty isn't just the cost of building new infrastructure. It's also the cost of financing it. (6:13) Who are the alternatives? You may have just given us a hint in your last answer. (6:57) On the surface, it looks like another trade dispute. Do you think it's actually something much bigger?  (8:47) So, if governments are constrained and taxation becomes politically difficult, that inevitably pushes more of the burden onto private sector capital.  (9:33) Why is that such an important distinction for investors?  (10:34) We're already starting to see governments actively encourage private companies to become partners in rebuilding strategic capability. South Korea is probably the best example this week. (12:05) How do governments ensure the benefits are shared broadly across society, rather than simply accruing to a handful of companies and shareholders?  (14:33) Maybe one way of getting that alignment is by having each of us invest in it via our superannuation fund. Do you think this debate eventually arrives here?

In this episode of Perspectives, Escala Chief Investment Officer, Tracey McNaughton, explores why the world is shifting from efficiency to resilience. Drawing on insights from General David Petraeus, the discussion examines how nations are rebuilding strategic capability, why private capital is increasingly funding critical infrastructure, and what the rise of the Sovereignty Trade means for investors. (0:56) For years investors thought of geopolitics and technology as separate conversations. (2:33) What changed? Why are governments suddenly prepared to sacrifice efficiency in favour of resilience? (5:48) Why does the pursuit of resilience inevitably lead governments back to infrastructure? (6:52) And artificial intelligence is the most recent example of that? (8:24) We've talked about AI as infrastructure. You have spoken to clients about an interesting example in the health sector. (10:59) So, if resilience requires infrastructure, and infrastructure requires investment, are we witnessing the beginning of a new capital cycle? (12:07) Another difference this time around is that many of these infrastructure projects aren't being funded by governments – they're increasingly being funded by private capital. (13:25) Is SpaceX the ultimate example of the Sovereignty Trade? (15:27) If you had to leave listeners with one final thought?

In this episode, Escala Investment Analyst, David Bruty interviews Paul Moore, founder and Chief Investment Officer of PM Capital. Paul discusses how he and his team implement their contrarian investment philosophy, how the PM Global Companies Fund is constructed, and how healthcare is an emerging theme in the fund's portfolio.

In this episode of Perspectives, Escala Chief Investment Officer, Tracey McNaughton, unpacks a series of eye-opening conversations with leading AI investors and operators exploring how AI-native companies are redesigning workflows, reshaping industries, and blurring the lines between software, services, and private equity. (1:34) What struck me reading through your notes wasn't just the excitement around AI – it was that people are starting to describe AI not as a tool anymore, but as an operating system. (4:21) One thing that also came through very strongly in these conversations was the gap between Australia and the US in terms of AI adoption. (6:53) You also seemed genuinely shocked by how far behind wealth management still is. (7:24) It amazes us that we still don't receive information like tax reporting any faster than we did 10 years ago. The pipes need fixing. (8:36) Now, the General Catalyst discussion really went to another level because they're not just investing in AI software companies anymore – they're buying industries. (10:08) The call centre example was extraordinary. (11:22) The healthcare discussion may have been the most radical of all – because they literally bought a healthcare system. (13:03) Then you move to Bain Capital Ventures, and the discussion becomes incredibly technical. (16:23) Bain also raised a really important point: if everyone can build with AI, what becomes defensible? (17:34) There was another huge theme across all these discussions – services businesses becoming software businesses. (18:56) There was also a very strong undercurrent around private markets becoming even more important. (20:17) So, after hearing all of this, what do you think the biggest takeaway is?

In this episode of Perspectives, Escala Chief Investment Officer, Tracey McNaughton, takes us inside the Milken Institute Global Conference 2026, from space-based AI breakthroughs to the massive infrastructure buildout powering the next wave of innovation. (1:09) Alright, you've been roaming the halls at Milken earlier this week. Before we get into that, tell us about how it feels on the ground in the US right now. (3:27) You mentioned before you left that there were over 300 sessions across two hotels – the Beverly Wilshire and the Beverly Hilton. (5:03 How did he arrive at creating this conference, which has been running annually for almost 30 years. (5:45) What's the underlying theme this year – if you had to distil it? (6:52) What would you say was the most eye-popping session you went to?         (7:51) Okay, let's talk specifics: what actually happened that got your attention? (8:37) So, a supercomputer that was able to learn in space was the breakthrough. What did it learn? (9:21) Sounds like he could be another Sam Altman. What does this do for the space industry? (10:40) Where does this hit us day-to-day? (12:13) Judging by the photos you sent back to us, I'm guessing the most exciting session for you was the one where Jensen Huang, CEO of Nvidia, was being interviewed. (13:58) Did the issue of job destruction come up? (15:14) So, again, it comes back to that distinction between automating tasks and eliminating entire roles? (15:50) What about the next constraint in the system? (16:28) And just finally, stepping back from all of that, what's the main idea he leaves you with?

In this episode, Escala Head of Managed Funds, Stephen Dickinson, speaks with Richard Blackburn from CVC Capital Partners. Richard discusses CVC's origins and evolution into a leading global private equity firm, why Europe remains a particularly attractive market for private equity returns, and how CVC creates value through disciplined underwriting, active ownership and long-term value creation across its portfolio.

In this episode of Perspectives, Escala Chief Investment Officer, Tracey McNaughton, explains why today's geopolitical tensions signal a deeper structural shift – and what it means for markets, alliances, and investors. (1:08) Is the current state of the world only as permanent as Trump remains in office? In other words, is this just a phase, or are we actually living through something more structural? (2:30) So, even if the political backdrop changes, the system itself has already shifted?  (4:29) Let's talk about that, because alliances have always been the backbone of the global system.  (5:27) And that realignment has second-order effects in places people might not immediately think about.  (6:29) So, even if nothing changes domestically, the global context could undermine that progress?  (7:56) To bring it back to the original question – this isn't just about who's in office.  (8:20) Let's move to the second theme, which builds directly on that idea: the Age of Chokepoints. It's a phrase we're hearing increasingly. Tell us about it.  (11:46) What does that redesign look like in practice?  (13:59) With all of that as the backdrop, it would be reasonable to expect markets to be under significant pressure. And yet, particularly in the US, equities have been remarkably resilient. Why is that?  (14:50) So, even with all the uncertainty, the underlying growth drivers are still intact?  (15:37) Are markets effectively looking through the noise?  (16:16) How should investors think about this environment?

In this episode of Perspectives, Escala Chief Investment Officer, Tracey McNaughton, explains how long-term investors are staying loose on the bars in response to the current oil shock. Plus, why managing today's risks is bringing back yesterday's solutions - from steering wheel locks to decades-old pipelines. (0:47) Tracey, there's a lot hitting markets at once. How do you keep your composure? (3:43) Back in 2022 when Russia invaded Ukraine, the oil price hit over $120 per barrel. The peak so far is under that. And yet, despite this, the price at the pump here in Australia is higher than it was in 2022. (4:56) Staying on the topic of macroeconomic policy, the Reserve Bank tightened monetary policy last week, lifting the official interest to 4.1% - the second consecutive rise. It was the first central bank among the majors to respond to the war in this way. (6:42) And beneath all of that, the real economy, at least in the US, seems to be holding up? (8:18) Let's talk about AI - because it still feels like the structural story cutting through everything else. (9:51) So, it's moving from assistant… to operator? And Huang's point is that this is bigger than the last wave? (11:20) So, AI is forcing governments to rethink how they operate? (15:44) So, this isn't just an AI story - it's an economic and political one as well.

In this episode of Perspectives, Escala Chief Investment Officer, Tracey McNaughton, talks about today's tensions in the Middle East, why geopolitical volatility is often shorter than feared and what it means for US-China relations. Plus, why credit investing demands ruthless diversification. (0:53) Let's start with the geopolitical shock. The United States and Israel have launched coordinated strikes on Iran, escalating tensions in a way we haven't seen for years. (1:42) We saw something similar in February 2022 when Russia invaded Ukraine. Oil spiked to over $120 a barrel. But within six months it was back under $80. Markets adjusted. (3:26) And it did create inflation back then – in the order of 9-10% in Australia. Markets don't like supply-side shocks because they tend to be inflationary. (4:46) How does this align with Trump's negotiating style. Historically, Trump's approach has often been to escalate early and aggressively — create leverage, create uncertainty, reset the negotiating dynamic — and then reposition any de-escalation as a deal. (5:28) Trump is due to visit China soon. And China is the world's largest oil importer. How does this conflict interact with US–China relations? (6:30) Are we entering a fundamentally more dangerous geopolitical era? Or does it just feel that way? (9:16) So, when investors assume every geopolitical event is the start of a structural bear market, history suggests caution? (9:46) What about defence spending? Are we entering a structural rearmament cycle? (11:16) And then there's globalisation. For years we were told economic interdependence reduces the probability of war. (12:48) So where does that leave investors? (14:17) Let's pivot to private credit. It's been back in the headlines recently. Some managers have tightened withdrawal terms, and it's prompted questions about risk. Is there something investors should be worried about? (18:17) When people see headlines about stress in a particular credit vehicle, what should they focus on?

In this episode of Perspectives, Escala Chief Investment Officer, Tracey McNaughton, talks about the release of Escala's The Agenda publication, what a shifting global order means for investors and how it is shaping the way Escala constructs portfolios. (0:52) This is the 7th edition now. Before we get into the details, remind us - what is The Agenda? Is this a tactical playbook for the next 12 months? (1:47) And that didn't just start yesterday, did it? Inequality has been building for some time in a number of countries – Australia and the US (3:07) So, markets recovered - but society fractured. You talk about this in The Agenda and describe it as a "bonfire of the vanities." (5:13) You could probably include the recent experience in Australia in that, with the breakdown in the marriage of the Liberal and National parties and before that the rise of the Teals. (5:52) So here we are in 2026. More minority governments, more fragile coalitions. More populist leaders. What are the consequences of all of this? (7:37) When you say politics is driving markets more, does that mean investors need to react to every tweet or headline? (9:02) Does adapting mean tweaking assumptions? Or is this a more fundamental change? (11:05) And portfolio construction? How are you thinking about that? (12:53) A clear example today is datacentres and power. Amazon can build a datacentre significantly faster than an energy company can supply the power to operate it. (13:54) You've described the gold chart recently as not a hockey stick but a right angle. Is inflation fear driving that? (15:12) You're becoming more nuanced, more inflation aware. Anything else? What about volatility? (16:49) So, this isn't about getting more defensive in portfolios?