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The Mearns & Company Monday Espresso is your essential five-minute investment briefing, equipping you with everything you need to know for the week ahead. Marlborough's Multi-Asset Solutions Investment Team summarise market events over the past seven days and preview the key events in the week ahead, while also sharing their expert insights.
Monday Espresso Podcast - 2nd March 2026
[00:00:00] Rory Dowie: Good morning. Today's Monday the 2nd of March. I'm Rory Dowie, Portfolio Manager at Marlborough. Today I'm delighted to be joined by Andrew Shaw. Andrew's one of our Senior Investment Analysts on the team. So Andrew, firstly, good morning.
[00:00:11] Andrew Shaw: Morning, Rory.
[00:00:12] Rory Dowie: The major news was over the weekend as US initiated military action in Iran before we had the retaliations, clearly first and foremost there are humanitarian aspects to this, and we send our thoughts to all those caught up in the conflict and we hope there is a speedy resolution.
[00:00:27] Rory Dowie: Nathan did speak last week about the potential ramifications of conflict in the Middle East and how that may affect markets and the oil price. The equivalent of about 20% of oil passes through the Straits of Hormuz next to Iran. And as you may expect, this has led to surges in the oil prices this morning. Brent is up 10%.
[00:00:45] Rory Dowie: We did actually do a chart of the week last week on this, so I urge you to have a look at our socials. And aside from that, as you may expect, equity markets are signaling to open down this morning, when they open. US futures are also indicating a move lower of between 1 and 2%. Clearly, it's still early days and we're monitoring the situation closely, but we remind investors the time in the market trumps timing the market.
[00:01:05] Rory Dowie: Volatility is part of investing. However, we will as a team continues to offer updates as the situation develops. Andrew, moving on February is over and obviously before the carnage over the weekend, how our market's looking so far this year.
[00:01:19] Andrew Shaw: Markets are performing well this year, Rory, on the whole, they're up, but the theme really has been strong performance everywhere other than the US.
[00:01:27] Andrew Shaw: The S&P 500, the US market is around 1% this year, and that's lagging all major regions. Leading the way this year is emerging markets and they're at 15%. Japan is in second spot at 13.5%. Closer to home in the UK with just up shy of 10% and Europe returning year to date figures of 6.4%.
[00:01:52] Andrew Shaw: Really for us, it's actually been a story of investors rotating out of big tech in the US. If you look at the more cyclical parts of the US market, performance has actually been quite strong. For example, if you look at the Russell 2000, which tracks the small companies in the US that has returned nearly 8% this year.
[00:02:11] Rory Dowie: So equity market's generally in quite good shape this year, with the exception of some of those larger tech names in the US. We're continuing to see the strong performance in emerging markets and also Japan. We've obviously spoken a lot about them over the course of this year. Emerging markets benefiting from a weaker dollars as the borrowing costs, ease of the dollar denominated debt, and Japan's sentiment's really been improving due to the new Prime Minister and her pro-growth agenda.
[00:02:35] Rory Dowie: Okay, moving on. Andrew, Nvidia, the largest company in the world, reported their Q4 results on Wednesday evening, and once again, they didn't just beat expectations, they blew them outta the water revenue was up 73% year on year to over $68 billion. For our listeners who see these eye watering numbers, what's actually driving this?
[00:02:53] Andrew Shaw: More of the same, really Roy, but on steroids this time, the engine room for Nvidia is their data center business. Think of a data center, like a massive digital warehouse where the world's processing happens. Companies like Microsoft and Meta are still buying these Blackwell chips as fast as Nvidia can make them.
[00:03:11] Andrew Shaw: But the spark this week was the term sovereign AI and usual Nvidia sells to big tech companies. But now we're seeing nations countries like Japan, Singapore, and various European states building their own AI infrastructure. And they want their own digital brains so they aren't dependent on foreign tech.
[00:03:31] Andrew Shaw: It's basically the new space race. But instead of rockets, it's silicon.
[00:03:36] Rory Dowie: That's a great analogy. So instead of just selling to big tech, they're now selling to big government, basically. Does that make growth more sustainable for investors, or are we reaching a peak maybe, Andrew?
[00:03:46] Andrew Shaw: Well, that's the multi-billion dollar question really. Nvidia's guidance for next quarter is $78 billion. To put that into perspective for listeners, that's like adding the entire yearly revenue of a Fortune 500 company to their books in just three months. While some fear an AI bubble, the fact that governments are now joining the bidding war suggests that the runway might be a bit longer than we originally thought.
[00:04:12] Andrew Shaw: And revenue generated from sovereign AI actually grew three times year on year.
[00:04:17] Rory Dowie: Yeah, it's a quite remarkable number there. So the spend by sovereigns on AI with Nvidia grew three times over the last year, really highlighting kind of the shifting dynamics going on there. I guess moving away from the magnificent tech world, it wasn't all sunshine and rainbows for the
broader economy.
[00:04:31] Rory Dowie: We had some slightly sticky inflation data in the US, specifically the core PCE index. Andrew sounds like a slightly dry piece of statistics, but it's a Federal reserve's favorite temperature check, isn't it?
[00:04:43] Andrew Shaw: Yeah, exactly. If the CPI is the thermometer we use at home, then the PCE is the professional grade one the doctor uses, and in this case, the Federal Reserve uses to decide on the treatment.
[00:04:56] Andrew Shaw: It stayed firm at 3% year over year. Think of it like trying to get your heart rate down after going through a long run. It drops quickly at first, but then it's hovering at a level that's just a little bit too high for comfort and because it hasn't fallen to that 2% target yet. The interest rate cuts everyone is hoping for are being pushed further down the road.
[00:05:18] Rory Dowie: Okay, so that PCE remaining above the fed's, 2% targets, we'll obviously be keeping an eye on the latest data there, but at the moment, inflation, it looks to be a little bit stubborn in the US. I suppose a quick nod to Europe and the UK. We saw European stock setting record highs last
week. UK's also obviously been quite strong this year.
[00:05:37] Rory Dowie: Why has the divergence happened from the slightly choppier US market?
[00:05:41] Andrew Shaw: It's a classic rotation. Investors are looking at the US and seeing very high prices for tech and then looking at Europe and the UK and seeing companies that look up a bit like bargains. If you look at the UK, it's currently trading at a 38% discount to the US. Though over the last 10 years, it is typically traded at a 35% discount.
[00:06:00] Rory Dowie: So investors basically liking the value they're seeing outside of the US in essence. Alright, Andrew, before we go, what have our listeners got to look out for this week?
[00:06:08] Andrew Shaw: It's a heavy week for data. This week, Rory, we've got ISM manufacturing data in the US that tells us if the physical economy, so factories and production is growing or shrinking.
[00:06:20] Andrew Shaw: And the main one is Friday. The big one is the US non-farm payrolls. This is the gold standard for job data. If it's too strong, the Fed stays tough. If it's too weak, the rate cut hopes come roaring back. There's also some CPI data out in the Euro zone.
[00:06:37] Rory Dowie: Brilliant. So inflation to look out for in the Euro zone on Tuesday.
[00:06:40] Rory Dowie: Andrew, thanks so much for joining me. Listeners, hope you found that useful. As always, please reach out if you have any questions and wishing you all a great week ahead.