Year-end market rally fueled by fear of missing out on AI, says Man Group's Rowe

2025-12-29_11-44 • 4m 37s
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The markets pushing toward a strong finish for the year. Our next guest says the rally is being fueled by AI FOMO or fear of missing out. Also optimism around future rate cuts and resilient consumer spending despite some affordability stress. Joining us now Matt Rowe, ManGroup
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managing director of Solutions. Matt, good to see you.
Matt Rowe (Managing Director of Solutions) 00:17.280
Um Good to see
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you. We have global equity markets at highs. We have stock and bond volatility at lows. You know corporate credit spreads are are pretty benign. Market sending a signal that I guess the the the global fundamentals look okay. Do you think take issue with that into next year?
Matt Rowe (Managing Director of Solutions) 00:31.680
Yeah, I mean, I think the global fundamentals don't look disastrous. I think the theme for 2026 is going to be that there's a there's a have and a have not story that will play out. And we've seen dispersion in the market among equities and among factors, but I think globally
Matt Rowe (Managing Director of Solutions) 00:45.880
we're going to see different economies perform differently. I think we're going to see a separation from the everything rally and we're going to see more differentiation.
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In what direction would that differentiation Well,
Matt Rowe (Managing Director of Solutions) 00:56.400
I think you've got non-uniform fiscal policy, non-uniform monetary policy, interest rates are coming down in certain parts of the world and going up in others. Cost of capital is going to be something that people are actually newly sensitive to, I think, in this coming year, but
Matt Rowe (Managing Director of Solutions) 01:10.360
it's really played out pretty well with the with the AI story and the CapEx that we've seen there.
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And so the outperformance of non-US markets this year has really, I mean, it looks great on a one-year basis, on a five-year it kind of doesn't look like much. Right. Um so how do we think about that going into next year?
Matt Rowe (Managing Director of Solutions) 01:29.040
I mean, there's been a lot discussion around de-dollarization. And I don't want to say that people are abandoning US markets. They're not, you know, throwing American exceptionalism in the trash can. Um but there is a attitude towards diversifying to different markets,
Matt Rowe (Managing Director of Solutions) 01:43.320
specifically European defense spending and uh policy in general there is driving a lot of constructive narratives along with current valuations of US equities. And to me, it feels a lot like the late '90s when I was watching this show sitting on the floor of the Pacific Exchange
Matt Rowe (Managing Director of Solutions) 02:00.000
and seeing many different tech companies booming and Literally
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not sitting on the floor.
Matt Rowe (Managing Director of Solutions) 02:06.000
Now?
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No, no Oh oh you mean on the on the floor Yeah I was I was I was working on the Pacific you can you can get a share right I mean you can
Matt Rowe (Managing Director of Solutions) 02:13.520
Yeah if you sat down you didn't stay there very long. Yeah. But it it was a it was a time where people would buy a little bit of a hundred different things and if two of them hit Yeah. the whole portfolio paid off it feels that way in AI right now. What
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do you make of the move in precious metals? I saw that you think gold is a little over at skis at this point. Yeah,
Matt Rowe (Managing Director of Solutions) 02:34.360
I mean look 4,000 years of data is relevant on one hand and irrelevant on another. If you look back that far, the ratio of gold to silver is roughly 10 to 1. We're at this morning, I think something like 70 to 1. The stretch of the rally and gold is pulling up the rest of the
Matt Rowe (Managing Director of Solutions) 02:52.560
metal complex and a relative value framework. So I think silver is the most directly aligned. There's an argument that platinum might be the best industrial replacement for silver and it trades at half, I think, of what gold trades today. So, there's a real relative value play
Matt Rowe (Managing Director of Solutions) 03:08.720
there. I mean, I think I think it's a really interesting thing to watch globally because gold plays many different roles. It plays an inflation defense role, which is arguably, you know, not as effective as people like to say it is. It also plays a sort of global diversification
Matt Rowe (Managing Director of Solutions) 03:24.920
role. So, when you see people pushing into gold to the degree that they are, I think they're worried about inflation. I think they want to be sort of fluid from a currency exposure perspective. And they are seeing a lack of other things to place the money in. So it's sort of a
Matt Rowe (Managing Director of Solutions) 03:39.720
under the mattress if you will, trade.
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So what do you think kind of shifts that narrative and shifts the direction of gold as well as silver which sounds Yeah. like uh more of a beta play on on gold in many respects. Yeah.
Matt Rowe (Managing Director of Solutions) 03:50.960
Um I mean I think once you see a little more certainty around the the global framework, right? I think people aren't super excited about buying equities in the US because of the value evaluation, but they feel like they're forced to remain invested. I mean, nobody in our
Matt Rowe (Managing Director of Solutions) 04:04.200
business gets paid to sit in cash, right? So, we need to find in the business and broadly needs to find ways to remain constructively invested. And I think gold has been a tremendous story this year and so to have all all of the metals. So, it's really worked out well. Um, you
Matt Rowe (Managing Director of Solutions) 04:21.440
know, I I personally would rather own a ratio of platinum and silver even at today's prices to being long gold, but I think, look The easiest way to get in trouble with your boss or your clients is to not be exposed to things that go up over 100%.