Welcome to School of Thought, a podcast from Ontario Teachers Pension Plan, where we speak with global decision makers about opportunities, risks, career journeys, and lessons in leadership.
Welcome to today's podcast. My name is Joe Taylor. I'm the CEO of Ontario Teachers Pension Plan. We're really pleased today to have with us as our guest, Katie Martin. Now, a lot of you will know Katie from her time at the Financial Times. Katie is a career journalist who spent a lot of her life covering financial markets, probably best known for her column, The Long View. It's great to have Katie with us today and as well as joining our podcast. She's an expert in this field, having been a long-standing co-presenter of the FT's podcast, Unhed. So, Katie, probably a good way to break the ice is to say 20 years as a financial journalist. How did you get to that career and what keeps you there?
You're making me feel quite old here, Joe. I'll be honest. But, yeah, I've been in this game a fair old while. I always wanted to be a journalist. I don't think anyone wakes up as a child and wants to be a financial journalist as such because why would kids know what bonds and stocks are? But I always wanted to be a journalist in no small part because Lois Lane was really cool and she had a typewriter in the Spider in the Superman movies and that was enough for me. So I always wanted to do this and I started off at the trade press. Lots of us do that. So I was at Euromoney, which you're probably familiar with. Started off there and then went into wires. So Dow Jones Newswires that kind of became the Wall Street Journal. So I was with that group for like 11 years.
Then I hopped over to the FT. I've also been there for 11 years. So I don't move about much and I don't know how to do anything else is the short answer.
So I want to delve a bit more into the financial world that you cover. But just going back a step, I think you studied Russian before becoming a journalist. Now I've got some overlap with you because I studied Russian history. What got you into Russian as a career choice? Was it do you want to be a spy or something? What's the story?
It is a bit random. So when I was at school and I was 13, it was presented to us there was a choice. You could either do ancient Greek, a dead language. Didn't really see the point of that. Or you could do Russian or you could learn to cook. It was a girl school. And I thought, so I went and studied Russian. And I don't know, it just sort of stuck. I've got no family from out there or anything like that. I was good at languages, so it was just kind of my thing. So I picked it up at school and then I went and studied Russian at Cambridge. I promise I'm not a spy. I did consider becoming a spy for a little while. But yeah, not for me. I think I'm better at telling secrets than I am at keeping secrets. So yeah, I mean, from studying the history, it's just a fascinating place, a fascinating culture. The language isn't the easiest, but as an introduction into the grand sweep of 20th century European history, it's pretty difficult to beat spending a bit of time in Russia.
So I would say my perception of your current activities are you talk to lots of people and you're trying to sort of sense which people are actually saying something you think really resonates and makes sense to you and which people are probably talking their own marketing or a bit of BS as you might call it, in terms of how they are trying to persuade you of something. How do you use your antenna to sort of say that one is something I can build into something I'd want to share with readers versus something I just discount because it doesn't make too much sense to me?
Part of it is sort of spidey senses, right? And the other thing is I actually think there is value in speaking to and listening to the BS merchants. It's really important to understand how other people think because financial markets, as you know very well, they don't care what you think. They don't care what your preferences are. They don't care what your worldview is. They're a sort of amalgamation of what everyone else in the world thinks and you're just a tiny little speck in it. And so you might think a particular asset class makes no sense or a particular investment makes no sense but it might work out regardless. Or you might think markets are too optimistic or too pessimistic. And I just think it's really worth speaking to as broad a range of people as you possibly can to understand that full spread. What I've always said to colleagues of mine, junior colleagues coming up through the ranks in financial journalism, is be fussy who you speak to. So people can be controversial. They can have wild out there ideas, but try and avoid actual idiots. Try and avoid people who are just sort of tap dancing along and pretending they understand things. And particularly try and speak to people who are actually managing money. If you've got skin in the game, it is a completely different conversation. You're not just spitballing and saying this is what I think's going to happen. When you're actually managing money and particularly when you're managing other people's money, you have that sense of responsibility. I think it makes for more informed commentary and opinion and news analysis.
It's a really interesting point. I can remember I was in a room the other day where there's probably a hundred investors. Probably a third were investing their own money and a third were people who raise money to invest. And it was quite a stark difference between the view and conservatism actually of people who are putting their own money to work from us, like either an evergreen fund or off the balance sheet like we do. So I guess the other question is, I think in the UK we're well known for being quite sometimes quite critical of the world. How do you walk that tight rope between being curious, critical, but not getting to be too cynical about some of the things you hear and you see? Because I guess that must be sometimes a temptation.
So, this is something that we grapple with at the FT and I imagine people other news organizations do the same, which is, are we always too miserable? Are we always looking for things that can go wrong? So, you have a crash in the markets, say you're down like 5% in a day. That's a pretty bad day in the office for the stock market. We're all over it. Do we give the same amount of attention to days when the market is up by 5%? Maybe, maybe not. So there's an ecosystem here where people don't want to read stories that say everything's probably going to be fine. Actually people want to read stories that say this is where we think the potential pitfalls are. This is where things are going wrong. These are the things to watch out for. So does that make us too miserable? It's an open question and we try and fight against it. Actually I think we at the FT deal with markets pretty evenhandedly. There are good days, there are bad days. There are forces that pull stock markets higher and there are forces that pull stock markets lower. We try to deal with them evenly. It is tricky though and we don't want to be doomongers. We don't want to encourage our readers to miss out on opportunities and to be too cautious, because that's the easier path. Also, pessimists make more noise than the optimists, right?
They do. They can be very noisy, sometimes pretty empty vessels, and they get a lot more airtime than they should. I think when journalists write about financial markets, it can be very easy and it's a temptation that we must avoid to impose our personal politics on it or our publications politics on it. Because you see instances where in the UK, for example, you can look through any number of newspapers that are convinced that we're in the teeth of a horrendous crisis in UK government bonds and a horrendous crisis in sterling. And I look at the charts and I think I just don't know what you're talking about. But again, it's a reflection of your priors and a reflection of your politics. The worrying thing about that is that it actually does affect investor behavior, particularly among self-directed retail investors. So I think the moral of the story for consumers of financial news is think about the politics behind the publication and think about what they're trying to achieve and just question, is this objective? Is this fair? Does it express the possibility that markets could move the other way and is it even-handed? So be careful what you read.
That's a great tip. But let's be honest, there's some issues around at the moment where you might say there are definitely risks around in the world. Well covered in terms of some of the geopolitical risk, the Iran conflict and what that's probably going to mean going forward. I mean, at Teachers, we try to have what we call an all weather portfolio. Hopefully it can deal with most things that come along and challenge us. How do you see things? I guess I would be more in a world where we expect lower growth, higher inflation type of oversimplification. Is that something that would resonate for you?
Definitely. There's a real tension in markets at the moment. I try and speak to as broad a range of people as I can. When I talk to people in stock markets, they're like, this is great. Corporate earnings are doing fine. My portfolio is working out fine. We've recovered from the shock from the war in Iran. I don't know what you people are worrying about. You talk to people in the energy market and they say hell is coming.
It's already come, I think.
You know in certain parts of the world it has already come. I don't understand why you people are so chilled out. A lot of these energy traders are pretty much running on vapors at this point. They're worried about what's going to happen and they're very conscious that you can end the war with a click of the fingers, but you cannot restart the flow of energy supplies around the world instantaneously. And then in the middle, you've got the bond market. Typically bond investors are a more miserable bunch than equity investors. Stock market investors are always thinking about what can go right.
Bond investors are always thinking about what can go wrong. They're very different types of people kind of individually. It's quite interesting. They're different tribes, but they're sort of caught in the middle where the bond market is saying, yes, we think slower growth, but we think higher inflation, and we think more borrowing is coming from governments around the world who suddenly have realized they've got to spend more on energy, they've got to spend more on green energy, and they've got to spend more on defense.
Yes. And so you have this weird thing going on in the market at the moment where they really don't match up. I find that tension quite interesting. I mean, I don't know how are you dealing with it? It's like you're getting these such mixed signals, right?
Well, I think so. I think the interesting question is because probably for the last two years the equity markets around the world have generally trundled along as you rightly pointed out with quite a lot of resilience. You sort of almost come back to what's going to be the catalyst to make that change. I thought potentially the Iran conflict could be that. We seem to be still tiptoeing away from that. Honestly, I would probably say above and beyond our focus on trying to deal with inflation because it's a big issue for a pension plan particularly with inflation linked liabilities to our members, it might be food. Picking one thing out, you could see a scenario where not as much is planted because of the cost of fertilizer or even the availability of fertilizer. If it's not actively planted and there's a bad harvest, you could easily see shortage of food as much as high prices. That starts to become a very clear downward pressure. So that would be the one I would pick. Not knowing it's going to be the issue, but it could easily be the sort of catalyst that would tip us into a different frame of mind. I don't know whether you agree with that.
When I speak to investors, that's broadly the kind of path that they're picking through this, right? That there will be higher inflation through food prices. There will be higher inflation through energy prices. There's likely to be slower growth than you might previously have seen. This is just such an interesting moment. We're seeing multilateral organizations that we've all grown up with and taken almost to be like an element of nature. You look at NATO, you look at the UN, you look at OPEC. These are all flawed organizations, but they're organizations that bring people together and force them to thrash out arguments and ideas. And all of those organizations are under enormous pressure. Now, I would have thought a few years ago, if you'd said to me that NATO would be in the sort of position that it is now, where its membership is unstable and some of the alliances are crumbling, I would have said that's worth 10% off the stock market any day of the week, right?
But actually, it didn't happen.
Yeah. Like, what is NATO worth to investors? It's a really open question and I really don't know the answer. And I think it comes back to that point that you raised, which is resilience. The entire global economy shut down pretty much overnight and markets recovered. You had Liberation Day last year, this threat of massive trade tariffs from the US across the whole of the rest of the planet. Some of that got rolled back, but still big market shock, but it recovered. And I think certainly in stock markets, we're so accustomed to this idea that don't worry, they will bounce back. Either they will bounce back naturally through corporate earnings, which are doing very well in the states in particular at the moment, or they will bounce back from some sort of safety net, whether that's fiscal, taxes and spending, or monetary policy through interest rates. People are just conditioned to thinking someone will turn up and fix this. And that's fine. That's great. I'm absolutely a fan of stock market resilience. I think it's a net positive for the world. But there is a little part of me in the back of my head that just says, will the music stop one day? Is this really sustainable? You can trot out a list of reasons why this would go wrong. I'm very happy that they haven't crystallized at this point, but it remains something that I think we should take seriously.
Let's maybe go to a parallel area. This is our attempt to move out of bond territory into more sort of equity optimism territory. You might look at climate. For me, climate suddenly became subordinated to fourth or fifth on the list of things to talk about rather than one or two. Particularly when you see all the challenges that may be coming our way through oil and gas availability and pricing, maybe it will be a bit of a shot in the arm for alternative ways of generating energy. We know some parts of the world aren't too keen on wind power as versus solar and battery storage, but from our point of view, Teachers have been a very strong proponent that we want to be involved in the energy transition. We believe in trying to find other ways of producing energy as well as transmitting it to the right destination. Maybe this is a chance for some of those stalled projects, particularly around things like wind, to get back on the agenda. I don't know what you think.
It blows my mind that the world did not get this memo in 2022 with Russia's full-scale invasion of Ukraine, violent moves in gas prices, natural gas prices and in oil prices, and a real clamping down on the availability of energy particularly in Europe. Still large parts of the world just sort of carried on regardless and thought, well, we're just going to have to pay the higher prices and bring in some subsidies to try and lessen the impact on households. Some countries have been quite innovative here. You look at the example of Spain which went all in on solar. They have plenty of sunshine in Spain. The result of that is that the impact of the energy shock that we've seen over the past couple of months has been quite subdued actually in Spain. They're much more in control of their own energy network. And I think this is definitely a wakeup call. As you say, there was this sustainable investing and investing through this sort of ESG lens where you have very kind of green tinted glasses on, always looking for green solutions to energy. That encountered a real kind of PR problem, if nothing else, around the second Trump administration in particular. Lots of asset managers that we speak to who could not stop talking about ESG at one point suddenly gone. The phrase has been expunged from their websites. They never speak about it like it never happened. And I'm thinking, am I going mad? I definitely remember this was a big thing for you a couple of years ago. The reality is, especially in Europe, we never turned our back on it. It's always been there. We just haven't shouted about it in quite the same way as we did before. And I think it is time to have a much more honest conversation about that. Green bonds, for example, have just sort of motored ahead. There's plenty of investor demand for them. I gather from asset managers that if you want to get any kind of mandate for any kind of public pension scheme in Europe and you don't have some sort of ESG lens, you are wasting your time. You just don't get through the door. So we've kind of carried on. The US can do what it's going to do. The green energy revolution, which is still playing out, is just going to be so interesting politically and geopolitically and financially. You look at the strides that China has made in this space. I think it already accounts for like a third of spending on green energy globally.
They can knock out solar panels like double quick. They know what they're doing and they're very good at making electric vehicles. So ultimately the winner, if you like, of this conflict that we're seeing in Iran is likely to be China. It sets a lot more geopolitical weight on China, a lot more innovation onto China, a lot more focus on what it can do in terms of unlocking that green energy transition. So I think one of the lasting impacts of what we've seen over the past few months in the Middle East is going to be this reset into more defense spending, more green energy spending. I can't see a scenario in which Europe, for example, passes up that opportunity.
So we've talked a bit about climate, talked a bit about some of the vulnerabilities around. I guess we may look back on 2026 as the year of the big IPO. There's still quite a few questions in what felt like a very bullish part of the market opportunity set.
Yeah, it's a bit hard to know which way is up with the AI trade sometimes, right? We spent a large part of last year of 2025 saying, is this thing a bubble? Does AI actually work? Does anyone want this stuff? There seems to be large sums of money being thrown at things that don't make a lot of instinctive sense. Is this just kind of us chasing our shadow here? And then pretty much for no reason at all, in the opening weeks of 2026, that narrative turned absolutely on its head to, oh, actually AI is too good. We don't need humans anymore. So then it became a conversation about podcast now. Then it became a conversation about what are the social and political ramifications of getting rid of a lot of human jobs and putting them through machines instead. It's like, how did we go from one thing to another? The thoughtful asset managers that I speak to say, look, this is what markets do when they don't know. And I think they really don't know at the moment. They don't know, is this technology monetizable? Is there a real revenue stream that comes from this? And if there is, what does that revenue stream look like? And where is it distributed? Which companies are going to do well? And which companies are going to do badly? And the companies that aren't focused on AI, are they going to use it? Are they going to become much better versions of their current selves as a result of using it, or are they going to be wasting their money? So the only answer is there's going to be disruption, but I don't really know what that looks like. I think a lot of these questions are going to really bubble up to the surface as a result of the proposed IPOs of some AI names. It's like, okay, we get it. We see the technology. Some of us use it. We like it. Claude is very good at building charts for me and all that sort of stuff. But who's going to pay for it? And are they going to pay for it loyally? Are they going to pay for it every week or every month? What's that going to look like? That remains a really open question. Whether the technology works or not is almost not the question anymore. It's who's going to pay for this stuff.
Also, I think there's a big split at the moment between people who use AI all the time in their private life as well as at work and people who are probably a bit more standing on the touchline wondering how that's going to play out. I do think that the data center model feeding into AI is quite difficult still to establish who makes the money. It's probably been further distorted by a lot of firms in and around the component parts of data centers investing in each other to sort of make those growth scenarios happen at the speed that investors are expecting.
That whole thing I struggle to get my head around. They've got stakes in each other and they've got sort of offtake agreements with each other. It is quite a weird ecosystem. But I think one thing that gets lost in all that is that it's often assumed that the AI boom is a stock market question and it begins and ends in the stock market. That's not true at all. The hyperscalers have issued a lot of money in corporate bonds to fund part of this data center buildout. So this idea that you can avoid AI and that it's a theme that you can exclude from your portfolio is rubbish. You can be in emerging markets and guess what the big EM stocks are? They're related to the AI trade. You can be in corporate bonds. Well, guess what? A large chunk of that is baked into the AI trade. So it doesn't matter where you are. Doesn't matter where your portfolio is. It has to touch AI at multiple points. So does that make us more resilient or less? I don't honestly know the answer to that question, but there is no way to avoid it.
