ALO32: AI Booms, Fiscal Strains and the New Macro Regime ft. Joe Little
Top Traders Unplugged
Regime Shift: From Disinflation to Supply Constraints
Joe contrasts the 2010s flexible-supply world with a new regime driven by supply shocks, regionalisation and sticky inflation.
Alan Dunne speaks with HSBC Asset Management’s Global Chief Strategist, Joe Little, about what happens when the old macro rules stop working. Joe traces the shift from a demand led, low inflation world to a supply constrained regime of sticky and spiky prices, where 2 percent becomes a floor rather than a target. He explains the “reverse bond conundrum,” rising term premia and the quiet return of fiscal dominance. The conversation explores AI as investment boom, not yet productivity cure, the maturing of emerging markets, the fate of the dollar and how to build truly multipolar portfolios.
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Episode TimeStamps:
00:00 - Opening clip, long bonds misbehaving and the “reverse bond yield conundrum”
00:55 - Introduction and risk disclosure for Top Traders Unplugged listeners
01:50 - Joe’s path from economist to global chief strategist and house view author
05:16 - From post crisis disinflation to a supply constrained, sticky inflation regime
10:32 - Why 2 percent looks like a floor, tariffs, profits and delayed inflation effects
13:34 - 2026 baseline: muddle through growth, positive policy impulse and inflation nuance
16:42 - AI as capital expenditure boom, echoes of the 1990s and the missing productivity surge
20:40 - China and Asia: regionalisation, industrial policy and an exit from deflation
24:54 - Role reversal in 2025 and why future Asian performance must be earnings led
27:22 - Debt, deficits and fiscal dominance, from UK gilts to French OATs and US Treasuries
31:34 - Steeper curves and rising term premia, how the bond market can “murder” the cycle
32:26 - Rethinking 60/40, weaker bond diversification and the case for “diversifying diversifiers”
35:32 - Hedge funds, macro and why emerging markets may now be structurally less fragile
37:13 - Can EM really decouple, and what India versus China tells us about country effects
41:59 - Dollar overvaluation, policy preference for weakness and the fading of the dollar smile
47:27 - Fed succession, populism, and why 2 percent inflation will not feel like a ceiling
51:23 - Gold’s rise, stock bond correlation and the search for genuine risk mitigators
53:53 - Investor sentiment, nervous equilibrium and how institutions are repositioning risk
58:00 - Ten year return assumptions and constructing multipolar, all weather portfolios
01:02:04 - Book recommendations, learning macro and closing reflections
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