This is Market Pulse by Faster Ford from
Northern Trust Asset Servicing.
My name is Mark Mallett. I'm the chief
strategy officer for Northern Trust,
and I'm joined today by Gary Pollan,
who and I'll take a moment, because Gary
is really,
you know, thinks his title is very important,
head of International Enterprise Client Solutions at Northern
Trust.
There's a lot in that, Gary. So I'm
very interested to hear, you know, what you
know, where you're spending your time. So today,
we're going to be talking about some investment
themes that Gary has been focused on. You
know, it's great to have you back.
Always exciting to have you on on the
podcast,
and really looking forward to today's conversation. It's
great to be here. You know, what I
thought we'd start off with,
was just hearing, like, what's top of mind?
You know, you've been writing about a lot
of different things over the last few months
since the you've last been on, the podcast.
You know, anything in particular in the market,
you know, that that's, that's top of mind?
So what what what's top of mind is,
isn't the market so much as is more
the Olympics.
In France, there's a French philosopher, a guy
called Albert Camus, who said,
the best way to understand the world,
is to sometimes turn away from it. So
I've turned away from markets, and I've focused
heavily on the Olympics of late, which I'm
just enthralled by.
I'm now madly in love with Celine Dion.
She is, just
somehow recaptured my,
my my my attention,
which, I thought what she did was incredible.
And also there's a couple of other,
characters that really stand out,
one of which was an Australian hockey player
who broke his finger 2 weeks before getting
on the plane to go to the Olympics
to be told by a surgeon that if
he operates, which he should, he won't be
able to play. So you know what he
did? Chopped his finger off. Now that's commitment.
I'm sure you'd you'd shown that sort of
commitment to Northern Trust. This is, this is
field hockey. This is field hockey. That is,
you know, tough times don't last but tough
blokes do. That was very impressive.
But
back to markets, I mean I think sport
always has
some some relevance to markets and the Olympics
notwithstanding.
And I think what what the Olympics does
always remind you of is, you know, the
importance of shared experiences. It shows how, you
know, it unites, it brings people together.
It also reminds us that team spirit is
found at the bottom of a plank glass,
which was certainly where I found it last
night, and it also,
I think
reminds you of the importance of of national
identity.
And this is the segue back to markets.
I think this idea of, you know, national
identity
transcends not just sport, but also politics
and potentially even asset allocations.
And one of the things, you know, you
you see, I mean, everyone over here, the
big sport is the elections,
and everyone's trying to predict who's going to
win that.
I'm trying to think
what will endure beyond that. And so you
thinking through the next year when we move
from
from campaigning to governing. And, you know, are
there any
characteristics today that will continue then? And I
think one of the
underlying themes is this idea of
nationalism.
And the reason I say that is I
think,
you know, if you want to find an
amazing technology, you could point to AI. But
I think perhaps the most profound technology we've
had over the last 30 or 40 years
has been horizontal drilling and fracking. Why? Because
the US is now self sufficient in energy.
So back when the US was heavily involved
in external affairs, be it in the Middle
East, Russia, wherever, they were heavily dependent on
external forms of energy importation.
That's no longer the case, and I think
that's hugely impactful.
And it just means that they no longer
need to be so mindful, and they're starting
to focus a little bit more
internally. And and that has, I think, quite
profound implications.
We call it a tectonic shift,
and I think that's a really apt metaphor
because if you think of,
back when we were Pangaea, we were one
continent and it split. It split into 2
and then it fragmented more. And I think
that idea of fragmentation
is starting to percolate more and more into
how we think about,
asset allocation. If the world is no longer
flat and the world is fragmented, then I
think you might start to see allocators start
fragmenting their,
allocation. And if you are really excited about
the UK, like I am,
or Japan, or or or other parts of
the world, and you wanna get exposure to
those
interesting opportunities, well, you're not gonna find those
exposures in the aqui
world, because there you will just find the
US and probably 4 or 5 stocks
within that. So, you know, you talked about
some of the areas, some of the,
countries that they're interested in, you know, UK,
Japan. What what about, you know, those areas
is is, you know, makes them interesting?
So let's start with the the premise that
I think where
Alpha could be sought best going forward with
an an equity standpoint is by moving away
from the index
and thinking more regionally.
Not just because
politically we're thinking more more regionally. I think
there are interesting
things going on in certain markets. Now,
as you know, I've been writing about Japan
for some time and I I still think
that
bull market is young. I think it's a
young bull worth riding,
and once we get through this carry trade
unwind, I think there's an opportunity there.
There's still good value in Japanese stocks.
I recently
looked at
some screens
and about 50% of the topics still trades
below book value,
and
about 20% trade below 0.6 times book, which
means they need to double to get to
1 times book, which is the target of
the Tokyo Stock Exchange.
You've got incredible amounts of cash being generated.
You've got record buybacks, and you've got 4
times the amount of cash on the balance
sheet to what you have in the US.
So I think Japan is still,
at an early stage. You don't fix the
3 decades of behavior in in in 12
to 18 months. So I think that's still
very interesting. I think China is really interesting.
Obviously, there's lots of
risks, but I think those risks
are starting to be discounted in in in
price.
You've also got reforms,
and these reforms are very much aimed at
domestic consumption. Now, forgive me for being rather
simple about this, but you can't fix consumption
unless you fix confidence.
And the easiest way to fix confidence is
by increasing collateral values. Right? Wealth affects. And
what are the 2 biggest forms of collateral
value in China? One's property and the other's
stock market.
So I think property and stock markets become
policy levers,
and I think they will be pulled,
and
I feel reasonably
comfortable,
playing alongside that that lever being pulled.
The UK is still perhaps the one I'm
most interested in, and and there's a little
bit of a bias because that's where I'm
situated.
But we've also got catalysts now, and the
catalysts come in a range of forms. We've
got,
incentives. Government the government stopped beating up on
bankers, by the way. So sentiment wise, that's
that's quite a big thing, because the bankers
were part of the problem. Now they're part
of the solution, which is interesting.
We've got stable government, which is governing from
the center,
right, as the rest of the world is
trying to tear itself apart.
That's unique. That's interesting. That feeds into risk
premia, and risk premia,
in in in the UK is is still
extremely,
high relative to other parts of the world,
particularly here in the US. It's almost double.
We've got Catalyst in the form of incentives
to create more of an equity culture and
getting retail investors back into the market who
basically have fled,
alongside with Brexit,
and have invested everywhere else but their home
market.
We've got tax incentives that might bring them
back. That's that's important.
We've got reforms around MiFID, so more research
provision.
We've eased our listing rules to make capital
more attractive to being listed in the UK.
But far and away, the most important is
pension reform. Now you hear a lot about
pension reform in the UK, but it matters
because
pensions are such an enormous part of the
available
capital that can be put to work.
And it wasn't that long ago,
late nineties, where UK pension assets
had about half of their available assets invested
in UK stocks.
Fast forward to today, that number is about
2. In fact, the government's own pension fund
has 1.7%
of their assets in UK stocks. Now
that is about to change for two reasons.
1 is
we're a predominantly defined benefit system, but that's
now changing. They're all in surplus, so a
lot of the corporate funds are in surplus.
That means the corporates no longer have to
keep filling the pension pot. They can use
that money for other things like buybacks or
capex,
something rather new and exciting. Was that driven
by in the interest rate environment? Did that
help the, you know, creation? A 100% because
they their liabilities are discounted to the yeah.
So as liabilities as the discount factor interest
rates went up, their liabilities went down.
So it's certainly been been an impact. But
that's that's relevant, and now they're moving they're
being,
sold on those liabilities to insurance companies.
But we're now seeing a move towards more
defined contribution. Now for the first time
ever in May, defined contribution inflows out were
bigger than defined benefit inflows. That hasn't happened
for a very long time. So I think
the forced selling stopped, and now we're about
to see more money flow into defined contribution.
Defined contribution typically invests
in in in more growth assets,
whereas defined benefit need to match their assets
and their liabilities. So one's more risk averse,
the other one.
The 2 countries in the world that have
the most defined contribution, Australia and and and
the US, what do they also share? The
2 best performing share markets over the past
a 120 years. Right? So a bit of
supply side of of sort of yeah. The
the push of funds into the market Exactly.
Is gonna Exactly. So so I'll give you
some some numbers. So about a $1,000,000,000,000 has
come out of UK equity markets
from that pension pool
and
I mean the market's only just over 2,000,000,000,000
so it's an enormous now,
in 2 or 3 years' time, the government's
going to force pension funds in the UK
to disclose their holdings.
Now in a world of nash see above,
you know, national identity, I think it's going
to be incredibly hard to justify an underweight
position.
And I think you'll find that others and
some might go way beyond that, especially if
markets going up, which I think they will.
So I believe we have a pension put
emerging.
Now we've got a Fed put. I think
we've got a pension put in the UK
that's starting to emerge. And and if I
was an allocator, I'd be seriously considering
finding alpha regionally and reallocating
towards the UK, which I think is still
one of the more interesting opportunities.
The other market I'm really interested in is
Finland.
Okay.
Because I think the other mis priced outcome,
something we're not talking about so much, what
we talk about, I don't think we think
through it, is I think we're mispricing
the probability
of peace
in
Ukraine.
Now, I'm not saying that's going to happen.
I'm just saying that the market's mis pricing
that outcome, and if you were to get
it, then one of the countries most likely
to benefit who shares the largest border with
Russia is Finland.
And there's another reason why I think Finland
is really interesting, we'll perhaps come on to
in later questions. But so anyway,
so being a bit Finland aside, I think
I think the UK is a very interesting
opportunity. Japan, I think, still, you know, if
you look back at
Japan only very recently broke above its
1989 peak. You go back to when the
Dow broke
up above its 29 peak, you know, it
compounded 11% for the next 10 years.
Yep. Could history rhyme? Yeah. I think it
might. Yeah. I suppose if we're seeing a
different view from regional, but if we look
at sort of, you know, if there are
any sort of thematic, you know, things going
on, you know, that,
that you find interesting.
So I think last time I was on,
we're talking about GLP 1 drugs and the
impact that's having for obesity
rates, but also
some of the implications there. I think we're
starting to think now about the second order
effects, and now we've had more time to
experiment with these drugs. You know, some doctors
are microdosing.
Some of the the data that's coming back
is just extraordinary.
So we mentioned, you know, the impact of
of on not just fixing things like, you
know, diabetes, but also heart disease.
And if you're thinking
productivity,
and we all point to AI as the
great hope for productivity.
Well, just think about,
a recent paper written by
the Tony Blair Institute, the think tank in
the UK,
and they were looking at
heart disease of workers over 50.
About 20%
of workers over 50 will leave work before
retirement because of heart issues,
and if you were able to
fix 1 fifth of that cohort
then, you know, you're increasing
productivity by worker productivity by £2,000,000,000 to £3,000,000,000
per annum.
So there's huge amounts of hope for these
drugs, not just in terms of the health
benefits, but also the economic ones. So when
I say second order effects, I'm starting to
think through more about the the economic benefits.
The other really fascinating
aspect of these drugs is they seem to
be impacting the reward networks of the brain,
so they're impacting
people's addiction
to eating, obviously,
to smoking,
drinking, gambling, and I'm starting to question whether
it might also start to impact
our addictions to, because it's the same reward
network, it's dopamine, social media.
Now, this is the most so the the
book I've been reading, which if anyone's got
young children, prepubescent,
pre teen children, I think it's almost essential
reading, is called The Anxious Generation
by Jonathan Haidett.
And I think this is gonna be one
of those touchstone books that, you know, changes
behavior, certainly of our parents, and
basically what what he's done is he's, you
know, there's always been this assumed correlation between,
social media and,
and and teen depression.
Well, he's now
attempted to prove it using using evidence. And
so he looks at Gen zed, so those
children born after 20 sorry, 1995,
and the
they are the 1st cohort to go through
puberty with a portal in their pocket.
And they've moved from this sort of,
real world play to,
to to phone time. So they've moved from,
I can't remember what it was, but it
was they're spending all of their free time
now on on on phones, and and this
coincided
coincided with this movement to really overprotect our
children in in the real world and almost
let them free on the online world, you
know, without protection.
And he's saying it's rewired children, and especially
those at that age, because the prefrontal cortex
isn't fully developed, and that that's the part
of the brain that's your, sort of, your
second order, your thinking part,
delayed gratification,
your control of temptation, all those sorts of
things, is not fully developed and therefore it's
incredibly vulnerable
to these influences.
And so he that's, I think, of real
interest in bringing it back to markets. He
suggested we need to age gate,
iPhone and social media. Now, we are starting
to see this being adopted.
California's
just
New Zealand's just, I think, banned iPhones for
lots of schools, and my kids' school in
the UK, they're doing the same. Now,
back to Finland.
Instead of us allowing to give them an
iPhone, they're actually giving us
the brick phone, so we can stay in
touch with them and SMS.
Do you know what the phoners?
It's a Nokia. I was gonna say the
old Nokia. Nokia. The Nokia.
And Nokia once had 70% market share of
the Finnish stock market. You think Nvidia's got
concentration risk. Go and have a look at
Nokia in 2000.
So, you know, it could be the antidote
to this
counter movement towards social media,
it could be a way of, you know,
it could be picked up as a way
to help our kids, and,
and of course you might get a a
peace dividend, and Finland
could be one of those beneficiaries.
So, those sorts of things have been top
of mind. The other sort of thematics which
I'm still very interested in,
space. I think we mentioned when we were
here last. Space is fascinating. There's so much
stuff going on in space, and in fact
part of the military issues are currently in
space.
We just don't see it. Why? Because there's
no reporters up there, there's no photo ops.
But, there is a huge economy already in
space.
Yes, military is a big part of it,
but also communications, Wi Fi, Starlink, these sorts
of things.
Space solar
is possibly one of the answers
to,
non intermittent baseload power
that doesn't leave a nasty side effect like
nuclear does. So that's interesting. Apparently, the US
military are already using it,
I. E. Those folks that bought us
things like GPS,
the microwave, the Internet, radar
may soon bring us
solar.
So I think that's interesting. And keep an
eye next year, you know, just linking back
to this idea of of nationalism, I think
we might actually see that fragment into subnationalism,
provincialism.
Kind of look what's happening in Texas. Texas
is talking about setting up their own stock
exchange.
I can't help but think there could be
a certain person behind that, a certain Elon
Musk, right, who would love to IPO
SpaceX
and launch it from,
you know, Texas.
I'm just speculating, but you know, these are
this is my reading of the tea leaves.
And if you think of SpaceX, I think
SpaceX could be an extraordinary,
opportunity because, you know,
like what NVIDIA is to GPUs in terms
of market share, they are to low orbit
satellites. I think they account for about 70%
of low orbit satellites and their speed and
efficiency advantage is miles ahead of anyone else.
It's more than China, more than NASA put
together the satellites. They're still the only ones
with, with repeatable rockets. Exactly. They get back
to it. So watch this space.
Sorry.
So that's that's of interest. And there's another
thing that comes from space.
Did you know?
I'm waiting to be enlightened. Gold.
Okay.
Gold comes from outer space.
True story. So we're mining gold in outer
space. No. Gold, that's how it was formed,
from some, you know, cosmic collision.
Look it up. Alright.
Gold's another space play.
I'm still very bullish on gold, not just
because it is one of the ways to
that enables central banks to
provide a safer
reserve asset in a world that's fragmenting.
Right? See above.
And that's why we're seeing the biggest demand
is still the,
the central banks that perhaps fall outside of
the US sphere, the Washington Consensus,
for obvious reasons.
Gold could also play a role in fixing
the debt problem.
Right? You have to bear with me here,
but,
in the US,
I understand,
that,
the Treasury has a large
gold holding,
but it's valued at $42 an ounce.
And they could, if they wanted to, in
some form of debt jubilee, actually utilize the
Fed operating handbook,
and
revalue it to current levels or above, and
so doing you know, releasing liquidity the mark
without increasing their debt issuance. So that could
have a role to play in that, but
that's not a reason to own it. Just
interesting.
But of course the third thing is this
idea of digital gold. You know, everyone gets
excited about Bitcoin being, you know,
a good form of it, but it's an
imposter to the real thing.
And I urge anyone here to listen to
the interview we did with
David Tait, who's the CEO of the World
Gold Council,
whose ambition is
to create a ledger of all responsibly sourced
gold. Right, bring governance
to gold mining,
put it on a distributed ledger and then
tokenize it
and create a digital version of gold, which
is backed by the real stuff.
Okay? Which the people of my generation, we
like real things as opposed to and this
could help bring that generation into the digital
world and bridge that gap. So So is
that increasing liquidity? Is that what's what's what's
his what does he think that the the
what on the what's on the other side
of that? What's the benefit of, of that?
Well, the benefits of the ledger are that
you get provenance.
So if you're a central bank and you
want to ensure that you're buying from a
reputable source, well, it it's registered. You've you've
got that ledger. And What that means is
you remove a lot of bad actors
from,
you know, in Africa, for example, some of
the the biggest buyers of artisanal gold, for
example, are, you know, these mafia organizations, and
quite often you might find that money ends
up in the hands of rogue states,
Russia.
And so I think that will help minimize
that, which is which is really important.
But then if you can imbue
the characteristics
of
Bitcoin, I. E. Transferability,
portability,
divisibility,
with a physical
component.
Or you're bringing the best of
goals past
with the digital future,
and actually creating something that could also become
a currency.
So, watch this space,
sorry,
but I think that is
extraordinarily
interesting,
and I do urge anyone to listen to
David's story because it's not just about what
he's doing with the World Gold Council, it's
his backstory which is, you know, he's climbed
Everest 5 times,
He does it because he gives a lot
of money to a charity in the UK,
which is all about protecting children from from
from from abuse, And it's it's an incredible
story, and I and I urge you to
listen to it. So what we sort of
pivoted a little bit to asset classes, I
suppose, but are there any, you know,
other asset classes that,
you think our viewers should be thinking about?
So yeah. I mean, a lot of allocators
are sort of thinking forward and questioning, right,
what are the big risks and what do
I need to,
think about in terms of assets to hedge
those risks.
Fear of inflation hasn't gone away. Right? In
fact, we're about to re liquefy the system,
and I think inflation, like it did in
the seventies, could be an issue we deal
with again in years to come. And
how do you fix inflate? Well, how from
an allocator's point of view, what are the
types of assets that should do well in
an inflationary environment? Well, hard assets are 1.
And I think we're all under invested in
hard assets,
gold, infrastructure,
agriculture. You know, those sorts of things are
interesting and a lot more conversations around them.
Inflation is another way to fix the debt
problem.
And again, you know, hard assets play to
that, but the other asset class I'm starting
to see people start to think about again
as innovation as an asset class. How do
you get exposure to innovation?
If you're, you know, if you're not Sequoia,
if you're not, you know, a large Ontario
Canadian pension fund and you can't go direct
to Sequoia,
How else can you actually get exposure to
to that asset class that is innovation? There's
been some interesting developments in that space, which,
I've spent some time with recently.
The counter to that though is for the
first time I've noticed a few questioning
the role
private equity plays within their portfolio,
because
I think there's a growing understanding that it's
not immune to the cycle, like, you know,
all asset classes have a life cycle,
and,
it's clearly showing
those characteristics of where it is in its
cycle, which is quite late.
But more perhaps relevant is its role as
a diversifier.
So is it a risk diversifier? Well, unsure.
The key is in the name, equity.
And the bigger issue that folks are starting
to raise now is its role as
a return diversifier.
One of the inherent,
attributes was this ability to smooth returns, But
now as you enter more retail,
investors and you become or get closer to
the regulator, the regulator demands
more transparency and more frequency
of valuation.
Right?
And the more you measure something, the greater
its volatility. Volatility is a function of measurement.
Right? So if an elephant and a mouse
agree to meet 300 miles down the coast,
they'll end up at different pubs.
True story.
The reason is because they use a different
measure
That's the same thing. It's fractal geometry apparently.
They tell me. Mhmm.
And so I think be, you know, be
careful what you wish for. So the more
measurement, more volatility,
higher risk,
less risk adjusted returns. So you know it
would then just start to align more with
public equities, so you wouldn't get the diversification
that you Yeah. Yeah. And now I'm fascinated
by what, BlackRock have just done with Prequin,
and, you know, they're talking about indexation.
That's a very late cycle thing. You know,
could that sort of squeeze out even more
of the alpha element,
which is interesting to watch. It'll be fascinating
to see how that evolves,
because it could force
change in that asset class being about an
alpha play to a cosplay.
So then it's the it favors the big
players again, which I'm not sure what that
does to the industry, but anyway watch this
space, forgive
that. But so that's interesting.
But the flip side of that is I'm
I'm looking for alternative alternatives
that you know, the average return on private
equity at the index level,
we're in the single digits. Of course, there
are some managers that are way beyond that,
and probably some way below, but but the
average, the index is is single digit, and
that could last for a couple of years.
So I'm looking for alternative alternatives.
Now, the key, I think we've mentioned this
is
regional alpha.
You know, I can find,
things in other parts of the world in
public markets that will deliver me a positive
carry,
that will compound over time,
that are liquid, and they're called
dividends.
Now you're not gonna be like the real
popular guy at the party
but you know, you could get rich. You
might be you might be able to pay
for the party. Well, yeah. In retrospect at
least.
I'll take credit.
When you think about it, I mean, I
I I
there's loads of 5% dividend stocks that grow
their dividend higher than a rate of
from your private equity portfolio, and year 7
it's doubled, it's double digit. By year 10,
you know, you've got a pretty good return,
assuming
no leverage
and price and no price appreciation. The current
bid
in some of the foot in in the
FTSE, for example, of private equity buying,
these public assets is 50% premium.
So I think that's a good risk adjusted,
quite safe, slow, boring way, and boring is
good, I don't mind, let's get rich slow.
Which for allocators
who are presumably taking a long term view,
why they're happy enough to invest and lock
their money up for 10 years in private
equity. I think that's
an area where they should be thinking more
about.
So,
Gary, we've covered a lot a lot of
ground, talked about,
you know, some you know, talked about the
Olympics a little bit,
talked about some regional things that are going
on, some asset class stuff, or anything that
we haven't covered that you think, you know,
might be interesting. We we we haven't covered
AI in a meaningful way. I mean, how
how can we have a conversation and and
not talk about AI?
So artificial intelligence
is the antidote to
natural stupidity.
Well, then there's hope for me. Excellent.
And that's why I use it so much.
Look, so, right, I guess there's a couple
of questions here, you know. Where are we
in the cycle? You know, do we keep
buying AI stocks?
I kind of feel we're
I don't think it's
over, but I think we may have run
a bit too fast too quick. I think,
you know, we've partied pretty hard, and I
think there's a period of sobriety about to
emerge.
For people who have lived through the dotcom
bubble, we may have seen this before. Is
that a Yeah. I I don't think this
is a bubble. Yeah. And so far that,
you know, if you look at valuations they're
they're above fair value for sure. I don't
think anyone would contest that, but you know
I've seen them
far higher above any estimate of what fair
value is.
But I think the narrative needs to change.
A couple of reasons for that. I mean,
at the moment it's all been about capex.
I mean, the amount of capex spent from
the MAG 7, it's extraordinary. I mean, you
know, what the MAG 7 are spending on
CapEx
as a percentage of the S and P
500 is, you know, it's about a 5th.
It's just it's it's eye watering. It's enormous.
But, of course, we need to ensure that
those investments deliver a return.
Starting to see some some question marks around
the consumer applications
and the return profiles of of of them.
We're starting to see, as you always do,
more
competition enter that space.
Those that provide the picks and shovels to
that infrastructure spend, obviously, is still doing quite
well, but we're starting to now start starting
to see a few more entrants like Cerabras,
who had just announced their IPO.
Apparently, they're
a credible threat to to NVIDIA. I don't
that's a headline. There's nothing I've got nothing
to back that, but, you know, they might
chip away at their dominance. Forgive me.
Bad. Well played.
So that's it. Signals, I'm always
signals are always interesting in terms of where
we are on the hype cycle. A couple
of things happened recently,
and it's for you to decide whether they
are positive or negative signals.
We had the first I'd seen a company
change their name to Ad AI. Company called
Tempus.
It's now Tempus AI. It IPO'd recently. It's
actually done quite well, but, you know, that
might give people
some muscle memory of what happened back in
2000. We saw a number of I think
Viacom from memory may have changed or tried
to change its name to dotcom. And so
that that that's one of those signals,
for you to decide whether it's positive or
negative, and I think the share price will
tell you.
We've had the, you know, outlander
outlandish, valuation call on Nvidia.
Unfortunately, it comes from someone I really respect
and think is very, very good. And if
you read his rationale, it's it's incredibly thoughtful.
And that's James Anderson that used to run,
from Bailly Gifford, you know, early investor in
Tesla and all these sorts of things. And
he, you know, has made obviously, there are
some assumptions and these assumptions would have to
hold true, but if you do, he's got
a valuation of $50,000,000,000,000
which is more than the S and P.
So that's being caught by people, the headline.
But of course, as always, if you read
what's behind it, it's very rare. And he
doesn't give a he gives a low probability
of that outcome, but the headline doesn't know
that.
And we started to see some questions around
use cases not delivering up delivering on the
hope. You know, Microsoft
had a few clients drop their Copilot recently.
I think Meta dropped their celebrity AI chatbot,
you know, having Tom Bradley. Tom Bradley?
Tom? Tom Brady. Tom Brady, you know, talk
to you on chatbot for your that that's
pretty cool. But anyway, they've they've canned that.
And the,
what's the think tank that's come out, done
the survey, and showed that most people who
have been given targets by way of productivity,
about 70%
what's the name? Oh, I have to come
back. I'm in the show notes. Of the
the think tank. About 70%
of people surveyed
have no clue how they're gonna be able
to use AI to get to those productivity.
So there's a bit of of of of,
you know, questions starting to be asked. I
think we need to see new applications emerge,
which they will. But until we get to
that point, I think some
sobriety and some consolidation is probably is probably
quite warranted. Yep.
Yeah. Certainly, we're, you know,
trying to move from that that hype cycle
to,
tangible benefits is is really what what we're
gonna have to do. And I just think
about it from my own perspective as well.
I mean,
you know, one of my
whenever I'm asked about, you know, the industry,
in our industry, I, you know, I often
say, look, you know, the first challenge we
face is the data. And we've gotta get
the data
in the right shape, form, and place before
we can apply a clever,
LAM to it. So that's that's you know,
the first challenge. I don't think we're there.
At the industry level, I don't think we're
there yet,
but I think we're a lot closer than
what we were 5 years ago. So that's
the first challenge.
The second challenge is we're a really regulated
industry, and you know if there's ever a
steward's inquiry and they ask you to show
you're working, it's very hard to do and
you can't The answer comes out of a
of a black box. And the way those
neural networks are stressed. Until we solve for
that hallucination
point, I think that is a challenge for
our industry where we can't tolerate
error.
And then the final thing is,
to assume there is insights
from your data you must first assume your
data is insightful.
I had someone call me recently and said,
Gary, we could take all the stuff you
have written on the weekend and we could,
you know, put an LLM on it.
What are you going to find in that?
There's no there's nothing insightful.
So anyway
that's me on AI. There you go. Well,
I think that's
sounds like a great way to, to to
wrap up our conversation.
But, Gary, I really appreciate you taking the
time. Pleasure. Always great to have you on.
Looking forward to seeing how some of these
themes start to play out over the coming
months and until we can have you back.
But as always, a big thank you to
our listeners. Really appreciate everybody's time and attention,
and thank you for joining us on MarketPulse
by FastForward.
Look to look forward to seeing you on
our next episode.