Monday Espresso Podcast - 20th October 2025

[00:00:00] Nathan Sweeney: Good morning everybody. It is Monday the 20th of October, and today I'm really pleased to be joined by Raj Manon, our head of investments. Good morning, Raj.

[00:00:10] Raj Manon: Good morning, Nathan.

[00:00:11] Nathan Sweeney: So, firstly, I'll start with a quick recap of market performance last week. So if we look at markets, it was a highly volatile market last week.

[00:00:20] Nathan Sweeney: So what we had at the beginning of the week was this spillover from the previous week where we had tensions between China and the US related to trade and the potential for escalation of tariffs. And what we saw over the course of the weekend was that Donald Trump backtracked on some of those comments, and we had a strong market rebound on Monday, but we had some mixed performance during the week as earnings results came out, and then towards the end of the week, we had a little bit of a dip in markets as news came out about two American regional banks called Zion's Bancorporation and Western Alliance, and the news was related to the fact that some of their clients had possibly committed fraud. So Raj, I think it's probably good to start there. So what happened with this Zion's Bank and Western Alliance?

[00:01:14] Raj Manon: Yes, you're correct there, there was some nervousness emanating from these two regional banks. Zion said it had to write off around $50 million, and that was because of two businesses failing to repay their loans. And they may have also given false information. Western Alliance also said that it's taking legal action over a loan linked to suspected fraud, and that involved a borrower connected to the same investment group.

[00:01:44] Raj Manon: So these announcements together ignited some concern in the market, and the fear from the market is that this is just a start and there could be other hidden loan problems that could exist in the regional banking system, and as a result, shares in both banks fell sharply. And this also dragged down other regional banks.

[00:02:05] Nathan Sweeney: Yeah. And it was interesting that though, on Friday afternoon, 'cause you know we're in the middle of reporting season and some of the regional banks came out with their results. And this actually reassured investors. So you did see a bit of a bounce coming into the market close on Friday as a result. So we think that, you know, market's obviously probably oversensitive to banks and what's happening within banks and any sign of any kind of issue, and you tend to get an overreaction and that's just an overhang, emotional overhang from financial crisis.

[00:02:33] Nathan Sweeney: But we don't think there's anything t oo concerning here, but market's just a little bit jittery after the strong run we've had. I think the other thing to focus on is the oil price, because if we look at the last couple of weeks, we've seen about three consecutive weeks of the oil price falling, and actually oil is now at about $57 a barrel.

[00:02:52] Nathan Sweeney: So it's really peace deals driving this. And I suppose, what's the expectation there, from the markets? What's the market thinking around these peace deals and how does that help the oil price?

[00:03:04] Raj Manon: So President Trump was announcing plans to meet with Russian President Putin in the coming weeks, and that was to discuss a possible resolution to the war in Ukraine.

[00:03:14] Raj Manon: That's fueled speculation that a positive outcome is on the horizon and could ease
restrictions on Russian oil input, potentially adding to global surplus oil supplies.

[00:03:28] Nathan Sweeney: Yeah. Okay. So if we get a peace deal there, it's likely that this Russian oil comes back on stream, floods the market, and therefore you've got more supply than demand price comes down.

[00:03:38] Nathan Sweeney: So, yeah, that makes sense. Given what was happening with Zion's Bancorporation and you know, the oil price and obviously Trump and China and trade, it's very easy to overlook some of the other data points that come out. So was there anything of note on the data front?

[00:03:54] Raj Manon: We had inflation data from the Eurozone, and that's continued to be well behaved.

[00:03:59] Raj Manon: We also had growth data from the UK uninspiring, but mildly positive at 0.1% month on month.

[00:04:07] Nathan Sweeney: Yeah. So I think you're right on that. T he inflation data isn't that really concerning? You know, after a period of really, really high inflation, inflation has come down a long, long way. So something we're definitely less concerned about today.

[00:04:18] Nathan Sweeney: I suppose if I look at the kind of the week ahead. Look at some of the key things. Actually, inflation data will be on the table next week. So we do have a number of countries reporting their inflation data. So this includes the UK, we'll see some inflation data coming out. We'll also would see inflation prints from Japan and the US but you have to remember in the US they've got this government shutdown.

[00:04:40] Nathan Sweeney: So it means that some of the data that's produced may not be produced because the government departments that produce it. Nobody's working in them at the moment, so that could be a bit of an issue for some of the data on that points. That's the kind of the real focus, but I think markets will be on edge anyway, just to see if there's any spillover from this Zions Bancorporation and any of the regional banks.

[00:05:00] Nathan Sweeney: And they'll be keeping their eye on the trade negotiations, which are coming up between the US and China. H opefully you found that insightful. Raj, thank you for joining me. So have a great week everybody, and thank you for listening in.