Markets Happy Hour Podcast July 30, 2026 - 9, 3 and Pleading the 5th

In today's Markets Happy Hour Podcast we discuss the split US Fed as they look to the next direction of interest rates. We also touch on the devastation caused by the wildfires across Europe so far this summer - and ask about their impact on policy, productivity and morale. Moving back to market forces, we remain pretty much where we were already with the state of geopolitics and the Strait of Hormuz - we have had a halt to hostilities then an outbreak again. The oil price remains the most hard hit asset and has swung around fairly notably in the past week. All of this adds "fuel" to the inflation worry, which bond markets seemed to take seriously this week. The split Fed and the lack of direction - deliberately - under the new chairman left a rather sour taste, with bond market selling off. This deliberate lack of telegraphing and the Fed itself almost "Taking the Fifth" went down like a proverbial lead balloon and it is interesting to ask if there will be an erosion of trust and therefore a sundering of the link between the Fed and the bond market that it may seek to influence. Other economic vibes percolated, particularly around Europe where on the one hand old industries like German carmakers, continued to struggle, while there was some surprising pockets of growth - such as among German start-ups, while defence stocks continued to perform well. Sovereignty is increasingly a buzzword when it comes to AI - whether at a corporate level - where there is increasing reticence around giving up the proprietary layer IP to a frontier model, such as by feeding it to Claude. This was first raised by Alex Karp of Palantir, reinforced by Satya Nadella of Microsoft and now increasingly in evidence as the frontier model labs roll out everything from design studios to their own drug development channels. Sovereignty is in issue too within Europe where countries have started to reject the use of Palantir and to "urgently" seek national champions due to security concerns with the uniformity of this software. The rise of French company Mistral as an Open AI competitor, while the other French AI company ChapsVision is emerging as the European competitor to Palantir and the French authorities announced in June that they would replace Palantir after a period of transition. Equity markets were unsettled, with some chartists suggesting that the fall in the Magnificent 7 was a sign that they were losing their place in the sun, replicating how the FAANGs had fallen out of favour after 2018-2019. This rotation out of tech had favoured European indices with some commentators suggesting that they are now the anti-tech index. - is this a good or a bad thing thought? For investors seeking to diversify their portfolios it is surely a good thing - not every company will be a tech company will they? In other news prediction markets are now not optimistic on an OpenAI IPO even in 2027. Times are changing.