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The Polaris Financial 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 - 19th January 2026
[00:00:00] Rory Dowie: Good morning. Today is Monday the 19th of January. I'm Rory Dowie, Portfolio Manager here at Marlborough. Today, I'm delighted to be joined for the second time and as many weeks by Nick Warmisham. Nick, if you remember, is one of our Investment Analysts on the team. So Nick, good morning.
[00:00:14] Nicholas Warmisham: Good morning, Rory.
[00:00:15] Rory Dowie: Last week we had a number of items to discuss. I'm keen to go through data on US inflation touch on the start of earning season, we had JP Morgan, the big US Bank reporting, and also TSMC, the company who manufactures all the advanced AI chips who gave an update and there were some important themes, which I think were emerging. Nick, before we get into some of that, how do markets get on last week and how are they looking so far this year?
[00:00:38] Nicholas Warmisham: Yeah, well, last week was another pretty solid week for markets. It was mainly non-US regions, which performed well with emerging markets in Europe leading the way. If we look at the year to date figure, so far, emerging markets are ahead up over 5%. Behind them, it's Japan and Europe each up around 4%, and then the UK up 3%.
[00:00:57] Nicholas Warmisham: The US is then at the bottom of the major market pile up under just 2%. So the headline story is that the markets are continuing in a similar fashion to how they ended in 2025 with notably strong performance evident outside of the US. It will be interesting to see whether 2026 continues in the same vein as 2025 did.
[00:01:14] Rory Dowie: So the US has been lagging and I guess for us it feels a little bit like a valuation rotation more than anything. So what do I mean by that? The US is the most expensive major market. It has been for a little bit of time, though it is underpinned by some of the highest quality companies as well, which perhaps warrant a valuation premium relative to the rest of the world.
[00:01:31] Rory Dowie: But I guess investors are just perhaps getting a little bit nervous about those valuations. So it seems they're rotating into the relatively cheaper areas of the Global Equity markets and perhaps there are still some of those lingering concerns about those AI names in the US. Names like Microsoft and Apple, for example. Changing tact, we had US inflation data last week. Nick, what was the takeaway?
[00:01:51] Nicholas Warmisham: Yeah, well, the December consumer price index was released on Tuesday, and that was the week's most anticipated economic data. We saw the headline inflation figure fall to 2.7% year over year. However, versus November inflation actually accelerated by 0.3%.
[00:02:07] Nicholas Warmisham: This was primarily driven by housing related inflation, along with food prices, which rose sharply month on month. Although this was broadly in line with what economists were
expecting going into the print. So overall, it was a bit of a non-event really.
[00:02:20] Rory Dowie: So I guess in summary, small acceleration from November, but nothing too scary that hadn't been expected.
[00:02:26] Rory Dowie: Moving on to the start of corporate earning season in the US that started last week. As I've mentioned before, companies report four times a year usually, and companies are now beginning to report the operational performance for fourth quarter 2025. So that's September to December period last year we had JP Morgan.
[00:02:42] Rory Dowie: Who reported pretty decent numbers, but I think the most important was TSMC. TSMC being Taiwan Semiconductor Manufacturing company, and they're a good broer of AI trades. Essentially, they manufacture the advanced AI chips, so performance and guidance from that company can give us a good idea on the health of some of their customers.
[00:02:58] Rory Dowie: Those customers like Nvidia. Apple or Amazon, and clearly they make up quite a large weight of the US stock market, so it can be quite interesting to see what TSMC has to say. Nick, what did the print tell us then?
[00:03:11] Nicholas Warmisham: Yeah, well, they actually gave a very positive update. Revenue grew 26% year on year and was 3% ahead of what the market was expecting.
[00:03:19] Nicholas Warmisham: Impressively, that high performance compute segment, the core of the AI demand grew 19% versus just last quarter, demonstrating that AI demand is still very much there. Also worth noting was the general investor concern surrounding possible lower margins. This concern was driven by the idea that the company's proposed new factories in the US would be much more expensive than their Taiwan based ones, but actually the gross margin that is the revenue minus the cost of production, rose to 62% for the quarter, which was ahead of expectations.
[00:03:49] Rory Dowie: So very strong numbers there. And I guess, did the company give any guidance or comments on some of their customers?
[00:03:55] Nicholas Warmisham: Yeah, the management did indeed make a few comments. They stated that their cloud service provider customers are seeing tangible financial returns from their AI investments. And management, again, upgraded their growth forecasts through to 2029.
[00:04:08] Nicholas Warmisham: They're now expecting revenue to grow 25% per year to 2029, underpinned by AI accelerator growth, which they expect to grow 55% per year over the same period. So they're certainly seeing some very strong demand.
[00:04:22] Rory Dowie: Yeah, so companies give guidance on how they're expecting or forecasting their
business to perform, and here TSMC are basically saying that they expect even faster growth than they previously had done. And that's essentially all because the AI demand is so large. If you remember listeners, we spoke last week about the Consumer Electronics Show in Las Vegas, and Nick told us about Nvidia and Mercedes partnering with one of their autonomous vehicles coming on the road this quarter.
[00:04:45] Rory Dowie: It's the real world application of AI like this, which needs exponentially more compute that is expected to continue to drive the demand. And you can see that here in t he TSMC guidance for 2026. Great. That's very clear. Nick, I guess finishing up, what should our listeners look out for later this week?
[00:05:01] Nicholas Warmisham: So looking ahead this week, earning season will continue chugging along and we will of course be watching that closely for any surprises, both on the up and downside. Then a bit closer to home. We have inflation data in both Europe and the UK.
[00:05:14] Rory Dowie: Great. Thanks for joining, Nick. Listeners, we hope you found that useful. As always here if you have any questions and wishing you all a great week ahead.