A smooth finish?

0:00BBC Sounds. Music, radio, podcasts. Wake Up To Money from BBC 5 Live.

0:34trade relationship? And finally, is it starting to feel like a season finale or more like a cup final? This is twisted. Just the way I like it. Yes, that's the last episode of The Traders. It is on tonight at half past eight on BBC One. Some venues are even throwing viewing parties. We'll be digging into how a reality TV show became a national and now global obsession. Wake Up To Money from BBC Radio 5 Live.

1:31There is no Taurus at all. That was also taken off the table. Thankfully, it is Friday. We're going to talk about that with our Friday panel. I wanted to introduce Victoria Scholar, Head of Investment with Interactive Investor in London. Good morning, Victoria. Morning. Thanks for having me on. Yeah, of course. Well, listen, thank God it's Friday. Have you had the same whiplash? I assume if you're an investor, you know, you're looking at all this stuff going up and down and here and there that you're pretty busy. Yeah, pretty busy, to say the least. So much going on with Davos, geopolitics and Greenland, headlines around AI.

2:12I thought we were going to start with a quiet week, to be honest, because the US markets were closed on Monday. But we had that big sell-off on Tuesday, rebounding on Wednesday and Thursday. So it feels like volatility really is kind of the name of the game at the moment. Really volatile. One of the things that, you know, I didn't quite understand, and maybe you can shine a bit of light on me for this, but, you know, for the markets, they ignore so much, don't they? They price in so much about tariffs. And what was it this time that really sent markets into a bit of a tizz? Yeah, I mean, you're right.

2:48I think markets have been quite resilient to the backdrop of global geopolitical instability. But when we see those geopolitics play out on the stage of global trade and tariffs are threatened on listed companies, then that's when markets really start to listen because that could have a downward effect on revenue and profitability as well as economic stability. We saw that Trump was threatening tariffs on eight European countries at the start. So we then threatened 200 % tariffs on French wine, sending shares in companies like LVMH, which own champagne brands, lower. Then he reversed those. And then there was this whole big risk on sentiment again.

3:31So it's kind of when the geopolitics then looks as though it's going to have a significant impact on companies. That's when the stock markets really listen, I think. Well, you cleared that up for me. I'm also going to bring in George Lagarias, chief economist at Forvis Mazar's UK. Good morning, George. Good morning. So I'm just like thinking of you, you know, you're kind of like the person sitting behind the desk, you know, the investor's desk at the moment. And you're just looking at all this playing out. And I mean, I feel like this is a real moment in time in history that we might look back on this.

4:03Maybe, George, you'd be doing the analysis on everything that happened this week and just put it into context for us. Like how big of a flashpoint was this in terms of economic history? I'm not sure much happened, to be honest. I mean, some words were spoken and threats exchanged. History tends to record actions, though. So we threatened tariffs and then, you know, they took them back. They threatened to take over Greenland. They took it back. They threatened to invade Iran just a week before and they took that one back. we have to understand after nearly 52 weeks of this presidency that the volatility and the generation of volatility is actually part of the strategy itself.

4:54And that's how we're treating it at the moment. We'd rather react to something the White House does rather than something the White House says. because the things they do are a much smaller number than the things they say they might do. Well, that's solid advice when you're looking at the news and you're thinking, wow, is this a big deal or is it not a big deal? Also, my last panel guest is Emily McCorkle, founder of Low and Slow Barbecue in Derry in Northern Ireland. Good morning, Emily. Good morning. Emily, I'm sure you come into, well, first of all, actually, you've been on the programme before, so welcome back.

5:33But can you just remind our listeners, you know, what you do and who you interact with? You interact with a lot of tourists, don't you? Yeah, we do. Yeah. So we have our barbecue classes. We teach people how to cook over fire. We do a lot of catering. So we've got tourists that come to us. We've got visitors coming to Northern Ireland to the city. And then we also do food and drink walking tours. So we interact with a lot of people internationally, a lot of different political opinions too. Yes. But yeah, so very much like what George was saying, depending on actions and not words is kind of the key in the tourism industry.

6:06There's a lot of things that can be said that can spike fear, you know, in travel trends and spending and stuff. But it's paying attention to what's actually happening on the ground. And Emily, judging by your accent, you are not a dairy native. No, I've been here 20 years, so I should sound a bit more local. But unfortunately, no. Maybe that's your radio voice. Maybe that's your radio voice. But no, but it's interesting. I think you saw where I was going with that. I mean, you interact with a lot of tourists, a lot of different opinions and, you know, people coming over and they'd be buying stuff from possibly, you know, the island of Ireland and taking stuff back.

6:43And what have you, have you gleaned anything in the last couple of months from people? Yeah, I mean, I think we found a lot that discretionary spend is down for sure for a lot of people, for the general public. But then we found a lot more luxury, high-end tourism, definitely getting a little bit more of an interest here. So the people who really want to spend money are saying, this is exactly what I want. This is what I'm looking for. And this is the price I'm paying. What else can you add to it? But otherwise, you know, so it's a really funny balancing act when we're engaging with the public.

7:17We've got to watch our margins and be really careful. And then we get these luxury kind of bookings that come in. It's, you know, the dichotomy is huge. And you never know, some of those people might have been at Davos. Well, listen, yeah, exactly, exactly. Well, listen, we're going to talk about Davos now because if we thought the new year was going to bring some calm, we have yet another week of extraordinary world events for the panel to discuss this morning. The World Economic Forum convened at Davos against the backdrop of one NATO member limbering up to forcibly take over territory belonging to another.

7:49Canadian Prime Minister Mark Carney said this. Let me be direct. We are in the midst of a rupture, not a transition. Over the past two decades, a series of crises in finance, health, energy and geopolitics have laid bare the risks of extreme global integration. But more recently, great powers have begun using economic integration as weapons. Tariffs as leverage, financial infrastructure as coercion, supply chains as vulnerabilities to be exploited. And US President Donald Trump has this to say. I won't do that. OK, now everyone's saying, oh, good. That's probably the biggest statement I made because people thought I would use force.

8:33I don't have to use force. I don't want to use force. I won't use force. Then on his truth social app, Donald Trump also backed off from his threat to slap tariffs on those European countries, including the UK, who objected to a takeover of Greenland. So, yeah, a lot happened. George, despite how this all ended, do Mark Carney's comments still stand? Are the global order, is it effectively over? No, I think its demise is probably exaggerated. I think Mark Carney is issuing a stern warning. I do think that we'll never return to the world that we knew before 2016, to be sure. But then again, the world does move forward.

9:17We will move on to newer ways to work with each other. And I don't think that the global order is over for one simple reason. The global supply chain, you know, the thing that brings us our smartphones that we need so much to our homes, requires the cooperation of many countries. Okay, modern electronics, our cars, they require the cooperation of many countries. For businesses to run, for global finance to run, we require cooperation of many countries. So, yes, we have reached the point where things are rupturing, but there is a very big demand in the backdrop for cooperation. And somehow more optimistic that at the end of the day, the business demands for cooperation will overcome the political turmoil, which could be more temporary than we think.

10:15Now, you were kind of mentioning earlier these apparent about turns from President Trump and Greenland on tariffs, whatever it might be, but you find them to be quite predictable and you think essentially it's a strategy. It happened consistently most of the 52 weeks he's been in office. It's always been one thing after another, after another, after another. They have even named it, his advisors, the flooding the zone strategy. strategy. This strategy achieves two things. One is that it allows the government to move faster than the courts. Okay, so by the time the courts catch up, which takes time, a new status quo has been created, and it's more difficult for them to issue rulings that are against what the government has already done.

11:06This is one. And that's how the tariffs have played out. Various courts have said, okay, we're not exactly sure that this is legal, but keep it for now until it reaches the Supreme Court. Second and more important aspect of the strategy is that it allows you to confound your opponents. By the time they have figured out the strategy how to deal with X, you have moved on to Y and to Z. Okay, and to be sure, this isn't my finding. These are well-documented strategies. Okay, that the White House decided to move. In those kinds of strategies, noise creation is the strategy. But as investors, we have one job above all else to segregate the signal from the noise.

11:57Victoria, as an investor, how do you deal with all that? What have you learned about tariffs, even maybe since 2016, since what George has mentioned? Or maybe you've learned even more in Donald Trump 2.0. Yeah, I mean, obviously, Donald Trump has been absolutely dominating the headlines and markets have been paying attention for good reason. But you've got to weigh that up against the potential for the taco trade playing out. So Trump always chickens out. And we saw that around the Liberation Day sell-off last April when there was that huge market sell-off. And then we saw a lot of those declines actually reverse course after Trump actually followed through, didn't follow through entirely on those threats.

12:48And we've seen a similar thing this week. So even though he was threatening these very aggressive tariffs at the start of the week, there could have been the potential for investors to go heavy in the selling at the start of the week. And there was some selling, of course. But I think you've got to also take it with a bit of a pinch of salt because we know that he can change directions in terms of his views very quickly. And we saw that in terms of car shares, for example, which are big exporters to the US. So we saw declines in companies like Volkswagen and Volvo and Porsche. And then we saw that they rallied quite a lot yesterday.

13:30Similarly, with luxury stocks, we saw the same thing play out. But I think all of this uncertainty does play into the hands of those safe havens because investors are thinking there's a lot of uncertainty out there. Trump is very unpredictable. We don't know how the geopolitics is going to ultimately affect markets. So we're going to have some of our investments in those safe havens. And that's why they've been doing very, very well. I see gold has had a bit of a rally. Absolutely. And it had an incredible run last year. And it feels as though gold could continue to push higher. So even as markets might stabilise or even push to fresh highs, we can also see that gold rallies at the same time.

14:17So that kind of shows the sense of unease, I'd say, overall in how investors are feeling at the moment. Now, Emily, bring this back to the real economy for us, you know, the one that you and I interact with most of the time. When there is this level of political and economic uncertainty, how does that land for a business owner like you? Does it have any impact on you? I mean, I think everything, there's reverberations for sure. whether you're, you know, acutely paying attention to what's being said, the politics have shown up on the news and the radio or not. I think there's reverberations that hit for sure.

14:52We saw it with the markets, which has been discussed, you know, there were threats that were made. The market responded, the Dow dropped a little bit, the threat for Greenland was lifted and Dow, you know, came back up again. So I think definitely, you know, that all has a trickle down In effect, the fear on the ground, especially with hospitality, is, you know, people, any kind of uncertainty, people clutch their purses a little bit tighter. So whenever there's that little bit of instability, a little bit of uncertainty, people are a little bit less willing to spend. We're seeing that. We're definitely seeing that.

15:25January has been a really funny month. People are spending a little bit less in some places. And then on those little, you know, coffees here and there, we've seen all the smaller spend places are really increasing their spends. Yeah, that is interesting. And then what about, you know, you say people are clutching their purse strings. How about you? What does that instability affect how confident you feel about investment? Sometimes there just might be something at the back of your, you know, monkey on your back saying, maybe I shouldn't invest in that other, you know, coffee shop. Yeah, definitely.

16:00I mean, that's always one of the fears. And I think especially where we are here in Northern Ireland, we've got our rates that are being looked at in April. Our VAT here is very high. And so we're still at 20%. And so that's something that MPs are heading to Westminster. They're discussing some of our elected ministers. So for any strategic business decisions, it definitely makes me pause and think and say, right, OK, how firm is the footing going head forward? How many of these threats will actually materialize? How many of the threats have actually done damage that I need to pause and wait? So it's definitely gives me a little bit of a two second stop to stop and think and consider a little bit more carefully and say, do I really want to spend this money or is it going to get a bit tense in days ahead?

16:50And we had a busy week for UK economic data, wages and jobs, government borrowing, inflation for December. Inflation came in higher than expected, 3.4%. Here's what former Bank of England rate setter Michael Saunders had to say. We do have an issue that inflation is relatively sticky and the underlying trends are well above the 2 % inflation target. Now, in the next few months, the headline rate will come down because there's some cuts to energy prices and railfares are being frozen. But again, those things are temporary. Looking through those, which is what the Bank of England are going to do, the issue of sticky inflation is still going to be there.

17:27Sticky inflation. There you go. Emily, I'm going to come back to you on this because you were mentioning this just a few minutes ago. are high prices still a headache for your business? Yeah, yeah, absolutely. I mean, we've got our raw food costs, beef is up, milk, cheese and eggs, oils, fats, fresh foods as well because of climate crisis and imports, it's all affecting things. So yeah, definitely, you know, we're looking at price increases for sure. It's encouraging us to try to support local where possible. We know where things are coming from. We don't have to worry about, you know, import disruptions, but yeah.

18:04It's tough. How do you deal with that? Do you pass it on to the consumer? And are your customers happy enough for that? Or do you have to keep some of that back? I think there's only really so much you can pass on to the consumer because it's not just, you know, the industry that's getting hit with these prices. It's also, you know, the thing that we think about is our consumers are too. You know, I've got kids. I've got a home to run here as well. So, you know, coming out and spending some food, some money, sorry, with me for food is a treat. and being able to respect our customers, making that choice to part with their hard-earned money when they've already got so many pressing financial increases at home is really something we take quite seriously.

18:43So there's only so much that we can pass on to our customers. We look at reducing our margins kind of a little bit more smartly, looking at how our staff can rework their hours, where they can use AI support, maybe lower hours. We look at reworking our menu, maybe less focused on these items have to be on the menu all the time to these are seasonal this is what's available this is what our butcher has available and having a little bit more of a flexible and fluid menu so those are some of the things that we're doing. Sounds lovely to be honest I love a seasonal menu. Our numbers don't always like change though so that's always a tricky thing where they think well that was what I wanted yesterday where is it today why can't I have it we'll all go somewhere else.

19:28Right. Maybe you have to have your signatures then just the rest of the season. I don't know. I have no idea how to run a food business, so I don't know why I'm giving you advice. George, I'm going to come to you now. Was there much in the inflation figures that surprised you at all? There were some parts of the inflation figures that were troublesome. So I wouldn't have expected transportation to be higher. And I do understand food and beverages because they tend to be volatile. But transportation, given lower energy costs, I didn't expect it to be marginally higher as it was. It was a big contributor to higher CPI.

20:11The thing that worried me the most, however, was announced a few days, well, one day earlier, I think, and it was the labor market and it was wage inflation, where we see, you know, that's where we see the sticky part. I would have expected wage inflation, given pressures on growth, to come down a little bit faster. Okay, that's perplexing me a little bit. Having said that, the outlook for growth is weak, and weak growth is not generally breeding grounds for persistent inflation. House prices as well appear to be rebounding again. What's driving that? So yeah, we had the right move index, which suggested that house prices were marginally positive, up from marginally negative.

21:05I do think I don't see a bigger trend here. I do see volatility in the data, which is well within statistical norms. But I don't see a trend. It could be just that people are tired of waiting for much lower prices and some have decided to say, okay, let's go ahead and let's take the offer. But honestly, I don't see a bigger trend right now. We're at a point where the economy is balancing right and left. It's trying to find the footing. That's why you might see the data jumpy a little bit. And we might discuss inflation this month and disinflation the next month. Victoria, is inflation, how do you feel about those numbers?

21:58And what does this mean for the Bank of England? Do you think this complicates the picture for the Bank of England? Yeah, so obviously in the latest inflation data, we saw that there were kind of notable rises in alcohol and tobacco restaurants and hotels and transport prices that you mentioned there. And even though inflation did rise to 3.4 % in December, I think the broader trend is for inflation to fall this year. Inflation is likely to head back towards the 2 % target, which of course is good news for the Bank of England. I don't think there was much in the latest report to suggest that the Bank of England would change tact in terms of its outlook for interest rates.

22:48I think in the near term, a cut is unlikely. You know, we've already had six cuts this cycle. And maybe later this year, we might start to see cuts come through again. Emily, you know, you hear that and you hear inflation, it's easing in theory, it should be back to the 2%. Does that match, though, what you're seeing on the ground? I think customers will always have a little bit of lag time, especially where we're located. There's always going to take, I think, maybe a couple of months behind, if not more. So we'll hold our breath. We'll wait patiently, always be optimistic about it. But yeah.

23:30So do you feel like customers, they're still trading down at the moment? Yeah, and unfortunately, we're still hearing of businesses that are closing. There was one that closed this week in our city that was, you know, everyone would have thought this was a great business. It was doing well. It was always packed. It was busy. And due to rising costs, food costs, you know, national insurance contributions, VAT, you know, a variety of compounding factors, they closed the doors this week. And unfortunately, I think there's still more to come. hospitality is one of the first to get hit with financial upheaval financial crisis it is one of the I think the first industries that helps a society come out of financial hardships as well so yeah it's you know George said food and stuff very volatile so hopefully we can just stay steady through that as inflation starts to drop and George I'm going to give you the last word on this because we're going to sadly have to say goodbye to you quite soon.

24:30But when I hear Emily, I think, is that an economy that's cooling or is it just refusing to cool evenly? It is an economy that's cooling and it's an economy that refuses to cool evenly. So overall, yes, overall, it is cooling, to be sure, but it doesn't cool exactly the same for everyone. Some parts are cooling faster than others and some may even be reheating. But you should expect this at this volatile time. Look, we got too used to a thing called the great moderation. Okay, low inflation and central banks controlling inflation. So growth was okay and slightly too, you know, and the economy was growing at an okay way.

25:17For many years, we managed to avoid recessions. We have forgotten what macroeconomic volatility looks like. and we are being introduced to it because of higher inflation and because of all the geopolitics, especially after the pandemic. But I assure you that 25 years ago, this was actually pretty standard. It's just that our generation needs to come to terms with it. You should get used to it. George, I'm going to have to say goodbye to you. Any plans for the weekend? Are you going to be watching the traders? I'm a dad. I have no plans for the weekend. rather than what my own big teeth. Fair enough.

25:56Fair enough. Well, you know, if you get to watch it back at some point, The Traders is great. Thank you very much. Really appreciate you being up and hopefully you have a great dad weekend. George Ligarius, Chief Economist at Forbif Mazar's UK. Thank you so much for joining us. Wake Up To Money from BBC Radio 5 Live. Welcome back to Wake Up To Money. Now, we're going to be talking about The Traders. Obviously, everyone is talking about The Traders because it's the final episode. season four tonight. Are you ready? It's definitely been the talk of our office here for weeks. People with theories, people with bad theories, good theories.

26:31And we are now less than a day away from finding out who is taking home the prize pot. And The Nation, it's on Tenderhooks. Some people have been calling for their local pubs to screen the finale, just as they do the football on the weekend. We've had a text in, mourning anyone but Rachel or Stephen, to win the Traitors. Davian Darbyshire, no! I really love Rachel Emily McCorkle founder of Low and Slow Barbecue in Derry in Northern Ireland have you been watching? No I have to that's alright in hospitality when do I get an evening free to sit in front of the TV oh fair enough I'm going to get my small violin out as well like I have my alarm set for 3am so I'm just like how am I going to make it until half 8?

27:17I have no idea my husband's probably going to be just going to have some sort of just alarm next to me be like wake up we must watch this but have you heard anything about it Rachel is from Noori so maybe even if you're not watching you might be like I want her to win Yes so I mean I know bits and pieces I mean it's kind of like a TV version of the game Mafia right maybe that's telling my age here but yeah it's very it sounds really cool um I'm there's four seasons that have passed so it's one of those things where I feel like oh my gosh it's not just catching up on like oh what's happened this season but there's so much um so I probably need a holiday just to sit down and watch it all but yeah it it sounds great and I mean tv is great too sociologically speaking it's a great way to bring communities together like you're talking about you know pubs screening it people coming together to watch it it's it's good it's it's good in every way it's entertaining it's good for this society yeah I I'm a big fan of reality TV actually.

28:19I think it's almost like a sociological experiment, you know, just getting to look at how people interact. It's quite funny. Victoria Scholar, head of investment with Interactive Investor in London. Are you watching it? I am. I am a Traders mega fan. Although I didn't watch it. Was it on last night? If it was, I haven't watched it yet. Listen, no spoilers. This is the thing. It's one of those things you have to watch it while it's on live because if you dare open Instagram or X or anything, you get spoilers, memes, literally immediately. So I'm trying to not look at anything apart from financial news this morning.