December 5, 2024

Profiles in Credit – The Annual Sit Down – Geoff Castle and Callum Thomas

Featuring: Callum Thomas, Geoff Castle

Market cycles, manias, and opportunities

Geoff and Callum revisit the big themes in 2024 and tally which of their 2023 calls went right. They look ahead to 2025 and beyond and discuss the current market cycle, and where opportunities are in Treasuries, commodities and the commercialization of space. A must-listen for professional and regular investors alike.

We apologize for the poor sound quality in places during this podcast but hope that you enjoy this one off conversation.

Key Takeaways

01:09	The strong US currency, “king dollar”, its current position along its historical trading range, bullish investor sentiment, and potential swing factors in 2025.
05:17	In last year’s podcast, Callum correctly called the positive outlook on US small-cap equities. His retrospective comments on why he went positive when others had a move negative outlook.
08:53	Against the backdrop of the recent US election, the non-recession, and technological innovation in AI, what are the most important ways the world capital markets have changed year-over-year?
10:37	The “Euphoria Meter”: When does confidence turn into complacency? A look at high-yield credit spreads.
12:25	Contrasting narratives in the equity and credit markets.
13:15	The potential catalysts for rising credit risks.
15:29	Economic readings are staying “stronger for longer”, global pivot to monetary easing, and other tailwinds but there are certain risks, too.
16:46	With 5-and 10-year Treasuries back up towards the highs of past couple of years, why there hasn’t been the expected slowdown?
18:56	The effect on long-dated loans taken by households and corporations during 2020.
19:56	Changing investor sentiment in the real estate sector, especially commercial real estate, REITs.
22:44	Low valuations in global small value and smaller company credits, the ongoing dominance of US large cap, and potential risks of increased anti-trust regulation for big tech. What happens when assets are priced for perfection, and you get less than perfection?
25:18	The trajectory of rates and the sustainability of current rates; reading the ‘tea leaves’ about the incoming US administration and tariffs, fiscal sustainability and efficiency, and the potential effect on Treasuries..
30:55	What’s driving precious metals (gold). “Are your diversifiers actually diversifiers? Are they protectors of risk or are they sources of risk?”
35:34	The outlook on oil over the next year or so.
41:38	One best idea from Callum - a sector, country, commodity or rate?
45:53	A book or an online resource from Callum? His growing interest in the commercial space economy. “It’s going to be huge”.