In this week’s Markets Happy Hour Podcast we deal with the inundation – both literal and metaphorical that markets and populations are contending with this week – whether the flooding of the zone with newsflow and the actual inundation with rain and snow and parts of Europe.

We kick off with apparent evidence that inflation continues to ease – particularly in the case of the service component which is now lower.

This could, of course be a further indication of the waning power of labor and indicate the source of some of the consumer discontent we highlighted last week - all in all though, inflation is subdued in major developed markets, and in the UK in particular, there was a surprise drop to 3%, leading to heightened expectations of a near-term rate cut by the Bank of England.

Returning to the “calm” in fixed income discussed last week, we again refer to the diminished volatility in fixed income markets, as well as the record tight investment grade spreads, which are back to levels not seen since before the 2008 crisis.

Equity markets continue to be a model of “rotation” in action, as well as shifting investor sentiment away from lavish AI expenditure. The rotations that we discussed before are in evidence still - growth to value, Mag 7 to the other 493 stocks, and from US stocks to Asian and European markets.

AI expenditure is continuing to get scrutiny - and the Apple example is held up as an outlier, whereby the company has preferred to outsource its solutions to other companies while waiting on the sidelines when it comes to its own spend.

We end with a discussion of geopolitics, and ask whether the same inundation that we discussed at the beginning has led to investors capacity to understand and digest developments, particularly those as severe as the building tensions between the US and Iran. We do a brief thought experiment on what this could mean for markets were it to intensify . . clearly the oil price would be affected, but it might rattle anotherwise jittery set of investors.