Logic Monday Espresso Podcast

Monday Espresso Podcast - 2nd June 2025

[00:00:00] Nathan Sweeney: It is Monday, the 2nd of June. Today I'm joined by Rory Dowie, who's a portfolio manager within our personal portfolio team. And what that means is if you're looking for some of that direct equity exposure, that's the area that Rory focuses on, and he is v ery knowledgeable on underlying equities, and we'll actually touch upon a couple throughout the morning podcast.

[00:00:20] Nathan Sweeney: But firstly, let's start with a market recap. You know, so obviously we've had returns, but we've also had the month of May. So Rory, what was that looking like?

[00:00:29] Rory Dowie: Yeah, so Month of May was pretty solid for markets broadly. US market was up about 6% for the month with other regions slightly behind, but still pretty strong returns up between 3 and 4%.

[00:00:40] Rory Dowie: Actually, if you look at that US monthly number for May, that was the best monthly return since November, 2023. So it obviously amidst the backdrop when we're getting all the sort of the negative headlines on tariffs and the uncertainty, you know, US markets were very, very strong. So again. Quite surprising and again, highlights the importance of remaining invested and just staying in the markets even amidst volatility.

[00:01:01] Nathan Sweeney: Yeah, I think that's a very, very important message, and I suppose a lot of clients will have been really concerned over the course of the last couple of months, and probably weren't expecting the returns that we're actually seeing. So yeah, really, really important message there and great points.

[00:01:15] Nathan Sweeney: So if we look at the week, so just over last week, you know, obviously tariffs is still the key news and we did have some really positive developments coming out on Wednesday on the tariff front.

[00:01:26] Rory Dowie: Yeah. So on Wednesday, a US court basically. Stepped in to block Trump's tariffs. They cited emergency economic powers and they basically used their power to kind of block the tariffs.

[00:01:37] Rory Dowie: We did actually see the administration immediately appeal the ruling when that came out. There's obviously still uncertainty, but actually markets took that news quite well because they might see a way out of tariffs. Tariffs now, obviously they've been driving a lot of uncertainty in the markets, you know, potential inflationary pressures coming down the line.

[00:01:53] Rory Dowie: So obviously if that was to disappear completely with this power and the ruling from this international court, you know, that would be very positive for markets. And actually you saw the US market and other regions react quite positively on Wednesday. On the back of that news.

[00:02:06] Nathan Sweeney: I did see the markets have coined a new phrase, so it's a new acronym called a TACO, which stands for Trump always chickens out. And u ltimately this just meaning that obviously he puts on these high tariffs and then obviously there's a little bit of pressure from politics and markets, and then obviously the tariffs are lowered. So I'm not sure if the acronym best describes what's happening, but you know, we all know that this is just part of the negotiation tactic.

[00:02:30] Nathan Sweeney: Aim high to get to the number he wants to get to, but. He's not very happy with that acronym, which has been ascribed to his style of negotiating. But let's move on to the next piece. So I think one of the big items this week was Nvidia. So this is, you know, one of the biggest companies in the world. It's really focused on AI and developing the chips, which are integral to the development of AI. So how did that go?

[00:02:57] Rory Dowie: Yeah, so after the bell on Wednesday, Nvidia reported their Q1 numbers and the last, the magnificent seven to report. And the good news is the numbers were very solid. Data center came in ahead of expectations and revenue growth was a very, very strong year on year.

[00:03:11] Rory Dowie: But really the big takeaways for me were some of the comments made on the call by Jensen Huang, the CEO, and really it was about Nvidia opening up their AI infrastructure to allow chips from other companies. So for example, you could get an Amazon chip now, and you can plug it into the Nvidia infrastructure.

[00:03:27] Rory Dowie: You can kind of think of it a little bit like what Apple have done with apps on the iPhone. So, you know, apple own the iPhone ecosystem and other companies are developing apps which then consumers can access on the iPhone. Nvidia are basically trying to do that with AI. So they want to be kind of the Apple, you know, or the AI space, or the AI infrastructure space.

[00:03:48] Rory Dowie: And essentially what that means, it will solidify their position in the markets and should hopefully lead to increased demand for the Nvidia infrastructure as more people can now use it using different chips basically. So I thought that was very, very interesting.

[00:04:01] Nathan Sweeney: Yeah. So, fascinating really there on Nvidia. So clearly big company, but they're putting in measures in place to ensure that they can be more central to the AI piece going forward. And so yeah, that will remove a lot of questions that people have about Nvidia and kind of continue with the great earnings that they've had.

[00:04:19] Nathan Sweeney: I think the takeaway there is yes, we think they can, what's on the agenda?

[00:04:23] Rory Dowie: On the actual data front there's not too much, it's generally the softer economic data. So things like inflation expectations and consumer confidence. So again, it'd be interesting to see if there's been any change in that.

[00:04:32] Rory Dowie: Obviously we saw quite a deterioration in some of that softer data, you know, over sort of April and the beginning of May. So we'll be looking at that very carefully. And then as always, we expect some continued development on that tariff front. So we'll be watching that.

[00:04:46] Nathan Sweeney: Excellent. So yeah, thank you to all our listeners for listening in.

[00:04:48] Nathan Sweeney: Obviously a lot happening in markets, but clearly, you know, markets still liking some of the reversal on the trade front, which has been a real positive development. So it really just does highlights staying the course, not getting too drawn into a lot of the issues which can create those emotive responses in markets.

[00:05:05] Nathan Sweeney: For investors as well because truly there is a lot happening in the tech space, which is driving growth as we saw with Nvidia's earnings. So if you do have any questions, send 'em in. We'd love to bring them up on the show. Always happy to do so and have a great week everybody.