One Knightsbridge Capital Monday Espresso Podcast

Monday Espresso Podcast - 12th January 2026

[00:00:00] Rory Dowie: Good morning. It's the second week of 2026. Today is Monday the 12th of January. I'm Rory Dowie, Portfolio Manager here at Marlborough. We had a slightly quieter week, but still lots going on. Today we're going to cover how markets have started the year, the jobs data that came out to the US on Friday, and we're gonna touch on the big tech event, which we had last Monday in the form of the Consumer Electronics Show in Las Vegas.

[00:00:21] Rory Dowie: There were tech leaders from around the world speaking on the latest developments in AI and tech. So joining me to unpack all of this. Nick Warmisham. Nick is an Investment Analyst here at Marlborough. Firstly, Nick. Good morning.

[00:00:31] Nicholas Warmisham: Good morning, Rory.

[00:00:33] Rory Dowie: We've got a lot to get through, so let's get straight to it. Firstly, how have markets started this year?

[00:00:38] Nicholas Warmisham: Yeah, it was a solid week for markets. Clearly, very early on in the year still, but last week it was Europe leading the way. Returning 2% behind Europe was Emerging Markets and the UK both up around 1.5%. The US was up 1% whilst Japan was up 0.2%. If you look at sector performance across developed markets, interestingly tech has been the worst performer.

[00:01:00] Nicholas Warmisham: It's actually down 40 basis points this year, while more cyclical parts of the market have done better, for example, sectors like industrials, materials and consumer discretionary are all up between 3 and 4%.

[00:01:11] Rory Dowie: Brilliant. So a steady week to start the year, and I guess with parts of the market, which are more sensitive to economic growth performing well, so there's more cyclical parts of the market as you mentioned there Nick. I guess let's get to the main event last week. Those jobs numbers that we had on Friday, what was the data telling us there and how did investors react?

[00:01:29] Nicholas Warmisham: Yeah, well, the job data on Friday was the first clean read, if you like, on the broad economy's employment trend following the six week US government shutdown from October to mid-November.

[00:01:40] Nicholas Warmisham: Obviously, the shutdown delayed the production of labor reports in September, October and November, so getting to the numbers themselves, non-farm payrolls came in at plus 50k i.e. 50,000 jobs were added in December. However, this was below the expectation of 60 to 70,000. Additionally, previous months were revised significantly lower.

[00:01:59] Nicholas Warmisham: October's data was revised down to a loss of 173,000 jobs skewed by the late 2025 government shutdown, and November was down to 56,000. On the back of the 50,000 additions, the unemployment rate dropped to 4.4%. Economists had expected it to hold steady around 4.5%.

[00:02:18] Rory Dowie: All right, Nick, so what did that mean for the likelihood of a rate cut in January in the US?

[00:02:22] Nicholas Warmisham: The gradual cooling in the labour market in 2025 meant we had three rate cuts. Following this print, given the unemployment number came in lower than expected, it is unlikely that we get a US rate cut in January. Though the expectations are still for two rate cuts this year.

[00:02:36] Rory Dowie: Great. Thanks Nick. So I guess let's wait and see what the rest of the year brings with respect to unemployment and rates, but hopefully still on that, you know, cutting rate phase in the US.

[00:02:45] Rory Dowie: Let's pivot to the CES, the Consumer Electronics Events that was held last Monday in Las Vegas. We had a number of high profile speakers, CEO of Nvidia, Jensen Huang was the keynote. Could you give the listeners some of the headlines?

[00:02:57] Nicholas Warmisham: AI was once again the buzzword. However, the theme shifted dramatically from digital chat bots such as ChatGPT and Gemini, to physical AI, which is defined as intelligence that interacts with the real physical world.

[00:03:09] Nicholas Warmisham: Nvidia spoke about their foundation model of the world that they have
aptly named Cosmos. Cosmos is essentially an AI model which understands the laws of physics. Think of an autonomous vehicle. That vehicle needs to understand how to react if there's ice on the road or if it's wet. This model has a logic within it to be able to be deployed into the real world for such applications.

[00:03:32] Nicholas Warmisham: Following that, they announced a collaboration with Mercedes that they have been working on for five years. Mercedes and Nvidia will have their autonomous vehicle on the roads in Q1 of this year. In fact, it's already in production. So a real example of how AI is becoming more physical.

[00:03:47] Rory Dowie: Very interesting Nick. We are moving from these large language models such as ChatGPT, as you said, where it's all on a computer to actually now the real world application of this AI technology. So autonomous vehicles potentially robots. So very interesting kind of dynamic shift going on there. And there's some really interesting, you know, speakers speaking about that.

[00:04:06] Rory Dowie: And actually a couple of them had some robots up on stage with them. So if you've got some time, worth a watch. I guess any other points of note from the conference?

[00:04:14] Nicholas Warmisham: Yeah, another tech leader, Lisa Sue, CEO of Advanced Micro Devices, NVIDIA's closest competitor was also speaking. She talked about the uptake of ChatGPT and how it went from 1 million active users in 2022 to now over 1 billion and within five years, they expect 5 billion active users.

[00:04:31] Nicholas Warmisham: She also spoke about how much more compute is required to support these advanced AI models and adoption. Compute being the process power to generate the AI output. In doing so, she introduced a new term. She said 'We need 10 yottaflops, more compute than we had in 2022'.

[00:04:48] Rory Dowie: Nick, I'm sure you know, but for our listeners, what on earth is a yottaflop?

[00:04:51] Nicholas Warmisham: It's a one followed by 24 zeros after it. So in short, a lot.

[00:04:57] Rory Dowie: Yeah, so basically a very, very, very big number and really that underpins the AI story. A lot of that AI spend and actually the potential that AI still has. You know, it is very clear from the event that these CEOs believe we have much more capacity or needing much more capacity brought online. Physical AI, as you just spoke about, Nick, that needs exponentially more compute power than large language models like ChatGPT. So yeah, really, really seems like people are still believing in this AI trade, if you like. Brilliant Nick, to finish what our listeners look out for this week.

[00:05:29] Nicholas Warmisham: Well, this week we have more data inflation, retail sales and home data in the US and similar macroeconomic data in Europe. Main point is that earning season kicks off. Again. JP Morgan often the first major company to report, report their fourth quarter earnings on Friday.

[00:05:44] Rory Dowie: Brilliant. Thank you Nick. All eyes on the upcoming earnings season then, let's see what updates we get. Thanks for joining me today, listeners. I hope you found that useful. As always here if you have any questions and wishing you all a great week ahead.