The Weekender is my bi-weekly take on macro shifts and emerging themes. It’s not investment advice — or even our firm’s official view. I aim simply to inform, challenge, and maybe entertain. If you’d like this in your inbox every other Saturday morning via Northern Trust, subscribe to The Weekender.

It’s been a packed week in London with a trio of conferences — digital assets, alternatives and quantitative investing — and a series of client events. Some highlights:

• The Digital Asset Summit coincided with the U.K.’s Financial Conduct Authority lifting retail constraints on digital assets, culminating in a major announcement on Wednesday (more on that shortly).

 

• At the Billingsgate Fish Market,it was standing room only. What struck me most was the lack of debate around the legitimacy of digital assets — it was assumed. The focus had shifted to infrastructure and application layers.

 

• Also surprising: the demographics. The crowd was far more seasoned than expected.

 

• On Tuesday, I participated in a roundtable with commodity and China experts, gaining insights into precious metals (gold/silver), strategic resources (copper/uranium) and rare earths.

 

• One of the week’s most engaging dinners was with U.K. wealth managers, where we cracked the code on AI productivity, dissected the U.K. budget furiously debated the origins of the Scotch egg, and discovered a CIO whose hobby is collecting calculators (who wouldn’t invest?).

 

• These face-to-face moments reminded me that creativity is a contact sport, trust requires oxytocin (not possible on Zoom) and team spirit is still found at the bottom of a wine glass.

Risk Management

Until last Thursday, Oct.16,  the S&P had gone 119 days without a 2% drop, fostering complacency as implied correlations and volatility neared extremes  —  leaving markets vulnerable to shocks like President Trump’s Truth Social tweet on Friday, Oct. 10.

These volatility spikes remind us that low realized volatility doesn’t ensure low implied volatility, prompting risk managers to potentially de-risk further, especially with the Chicago Board Options Exchange Volatility Index (VIX Index) spiking, sub-prime bankruptcies (First Brands, Tricolor Holdings), regional bank weakness, trade uncertainty with China, and October’s historical market fragility. However, for now, the sub-prime issues appear idiosyncratic and contained, with fraud allegations not indicating systemic risk. Leverage loan defaults are stable, high yield spreads remain historically low, and bank earnings show improved credit quality.

While we must stay vigilant and monitor the situation closely, absent broader economic deterioration, we remain pro-risk: fundamentals are solid, full expensing of the One Big Beautiful Bill Act (OBBBA) is yet to kick in, the Fed is leaning toward rate cuts, and early earnings show consumer resilience and strong AI capex — underscored by Taiwan Semiconductor Manufacturing Company’s (TSMC) report of tightening AI capacity. While volatility is likely, any material weakness may be bought.

The Path to Truth

I suspect the Genius Act; and Clarity Act in the U.S. may do for blockchain, digital assets and stablecoins what the Telecoms Act of 1996 did for the internet. Without regulatory clarity, investor confidence falters. Regulation provides the scaffolding for growth, and the Telecom Act triggered a capex boom.

So, it was timely that on Day 3 of the Digital Asset conference, the FCA announced its support for tokenization to enhance efficiency and innovation in asset management. That same day, David Sachs, current AI czar under U.S. President Donald Trump, declared at the Dreamforce conference that digital assets will be fully integrated into the regulatory system within three years. Add to this the voices of the SEC Chair, the U.S. Treasury Secretary, a majority in Congress and now the U.K.’s FCA, and we’re seeing broad institutional support for on-chain finance, stablecoins and the tech underpinning them (Ethereum/Solana).

And in terms of real-world adoption, this deal stands out. Walmart has tied up with OpenAI to allow its 150 million shoppers transact via ChatGPT. This will pave the way to agentic commerce and payments, potentially opening another on-ramp for stablecoin proliferation. As German philosopher Arthur Schopenhauer noted, all truths pass through ridicule and rejection before becoming self-evident. Tokenization is past ridicule and rejection, fast on its way to becoming reality. Prepare accordingly.

Gray Power

We’ve often discussed the influence of mega-forces in the Weekender, and demographics top the list. These forces rewrite the rules or render them obsolete. Consider the welfare state: when Western governments designed pension schemes, they assumed each generation would outsize the last, ensuring more contributors than beneficiaries. Reality diverged. In France, the worker-to-pensioner ratio has dropped from 5:1 to below 2:1 and continues to decline. French pensioners not only receive larger checks but also start earlier (at age 63) and now earn more than the working population. True story. Their voting power is formidable (see: fourth PM in nine months) and growing, placing increasing strain on the state.

Solutions? 1) Tax hikes/welfare reform (unlikely — see average PM tenure and ongoing protest), 2) Productivity growth, or 3) More debt, persistent deficits and monetary debasement. While option 3 seems inevitable (good news for supply-constrained real assets), let’s be optimistic. Let’s explore productivity. It’s nearly Christmas, after all.

The Productivity Miracle

Why call it a miracle? Because it might achieve what four French PMs, Elon Musk (and DOGE), and Rachel Reeves couldn’t: reform the welfare state and fix the debt burden. These are U.S. numbers, but the principle is universal. The Congressional Budget Office projects debt-to-GDP at 156% by 2055. Add 0.5% productivity growth, it drops to 130%. Add1%, it falls to 110% and 2% gets you below 100%. That’s meaningful.
 

While it’s risky to reason by analogy, drawing parallels with the internet boom: Between 1995–2000, labor productivity rose to 2.8% annually, up from 1.0% in the prior five years. If we’re entering a tech-led, non-inflationary boom akin to the late '90s — as U.S. Treasury Secretary Scott Bessent and others suggest — then we could see material benefits to deficits, Federal Reserve rates, discount factors, and long-duration assets like U.S. equities. So, I’m praying for a miracle and that mangoes become the greatest fruit. Ever.

Why MANGOs Are My Favorite Fruit

First came FAANG: Facebook, Amazon, Apple, Netflix, Google. Then the Magnificent 7. Now, in the age of generative AI, we have MANGO— Microsoft, Anthropic, Nvidia, Google DeepMind and OpenAI. Notably absent: Amazon and Meta. Newly included: Anthropic. These are the headline-makers, the dream employers for computer science grads worldwide. FAANG defined an era of domain-specific dominance — social media, mobile, streaming, search. MANGO defines an era where AI reigns supreme. If MANGO succeeds, so too might social welfare.

Bubble Math: Continued

Following our recent piece Beyond the Bubble, here’s more food for thought. Bears cry “bubble,” bulls fear one, but we arguably lack the conditions to call it that. Yes, echoes of the past exist  —  circular financing is concerning  —  but prices aren’t divorced from earnings, valuations are high but not extreme, funding is mostly from cash flow, not credit, and system collateral remains scarce and valuable.

Contrast this with the dotcom era’s “dark fiber” overbuild. In a must-listen BG2 Podcast, Nvidia CEO Jensen Huang argues fears of overbuilding are premature. He believes hyper-scalers will consume the current capacity, while general-purpose compute must wait its turn for AI upgrades. This narrative feels more enduring than say, Y2K. If we must label it, skip “bubble” or “mania” — terms defined post-mortem — and consider something observable: Industrial Revolution. We certainly meet the criteria.

Rare Earths Are Not That Rare

One of the week’s more intriguing insights came over lunch with commodity/China experts. Rare earths markets are small — about $7.5 billion last year, roughly the size of avocados. Despite the name, they’re also not rare. They’re globally abundant, but extraction is costly and polluting, making permits hard to obtain. Hence, China’s dominance and the geopolitical leverage.

But that leverage may be fleeting. Some believe China’s restrictions could backfire, prompting the U.S. and others to accelerate stockpiling and infrastructure for specialty materials. Companies like Lithium Americas (+215% year-to-date) and MP Materials (+475% year-to-date) may be early beneficiaries. Uranium stocks are surging, and more investment is likely — from the Office of Strategic Capital, hedge funds (see investor Stan Druckenmiller’s latest purchase,  JPM who announced a $10B push into critical minerals, or BHP reopening copper mines due to the “breathtaking level of ambition and urgency” in the U.S. around the supply of critical minerals).

Rare earths may soon be common, driven by a refrain from my youth repeated at lunch: The best cure for high prices is high prices. And prices look poised to climb, thanks to a new buyer with deep pockets and little price sensitivity — the U.S. government.

Debasement and Scarce Assets

In The Search for Real Returns, we explored hurdle rates that account for inflation and monetary debasement. Since then, the “debasement trade” narrative has gained traction — not just of the U.S. dollar, but all fiat currencies are under pressure (see Exhibit 1). During fiscal dominance and monetary debasement, it’s wise to own supply-constrained real assets that can’t be printed. Especially those free from sanctions or third-party liabilities. Gold remains the benchmark. central banks still hold proportionately less than in the 1970s, with new buyers like Tether, digital gold, broadening collateral usage and the space industry on the horizon. Silver faces structural shortages and rising demand from energy transition and solar, needing to triple in real terms to reach its peak. Copper is now strategic, not just cyclical. Ditto uranium — and the last 17 metals on the periodic table. Then there’s Bitcoin. Real or not, it’s no longer ridiculed or rejected. Perhaps it too is on the path to self-evidence.