In this week's Markets Happy Hour Podcast we sit down with Michael Blayney, who is General Manager, Dynamic Asset Allocation at Hesta, an Australian Superannuation fund with $100 bn AUD in assets under management. The sting in the tail is a reference to AI and the "sting" being the job losses that have moved from murmurs to full-blown company announcements, with more to come. As always we kick off with our inflation discussion, where it does indeed appear that 3% is now the new normal in the US, where expectations and core measures are all higher, and Australia too is experiencing a negative surprise - it's number jumped to 3.2% for the year in the latest print, up from 2.1% in the last quarter, in that case due to electricity rebates expiring in some states. Whereas in Australia that might herald a pause in interest rates, in the US a 25 bps cut came as expected, but it was, as Michael suggests, a "hawkish cut" given the abundance of caution in Chairman Powell's statement about "slowing down", "driving in the fog" etc. Spreads are still tight across the board in fixed income, suggesting that risk is either being underpriced or that risks are low, and this euphoria has indeed carried over from the fixed income area to the equity market, with a few exceptions, one of which is discussed below.Equity markets continue to grind higher, with the S&P in reaching distance of a 7000 target and Nvidia just crossing the $5 trillion market cap barrier, which is greater than the market cap of the UK public market and Singapore combined. One exception to the ebullient treatment is the diversified financials segment - which includes many alternative asset managers. The shares of these companies have struggled year to date and we ask whether investors are signaling their concern about some of the fundamentals in private credit as well as structural headwinds in private equity given a low level of distributions and some issues with fund raising. We look outside the US to China and its strong pace of growth as well as the dependency that both China and the US have on the outcome trade negotiations. Finally we examine the areas for R&D for an allocator at present - which may include bitcoin as a new "element" and gold as an traditional element that is continuing to act differently. While these are portals of discovery for allocators, they often do not represent mainstay or even token investments, and we discuss the kind of insights that these emerging asset classes can provide about investor sentiment and market risk.