The UK has 6 relatively new “mega” Local Government Pension Schemes. They are investing in the UK and globally. But are they focused on the right things? Less than 10% of their significant PE assets are managed by UK based firms. They are giving their money to US firms – further deepening the negative feedback loop diminishing UK capital markets.

Regime Change occurred in the UK with relatively a few headless corpses left on the field of political failure… Burham is juggling with talent, spending and tax constraints, to maintain confidence. To succeed he needs to get radical. Social Housing is one avenue to growth he could pull off, and it could be funded off-balance sheet. The UK ain’t finished yet!

The UK’s long-delayed Defence Investment Plan was a final humiliation for Sir Keir Starmer as he struggled to gloss over the gaping defence funding gap. But it’s not how much is spent, but what it is spent on that matters. The frenetic pace of Mil-Tec evolution in the wake of the Ukraine War highlights how the next war will likely be fought. It’s time for a complete overhaul on the defence establishment’s approach to rearmament.

Andy Burnham, the UK Premier in waiting, has laid out his vision and plan for the UK. It didn’t scare the horses and contains some interesting ideas. What it didn’t answer about some of the big issues and “courageous” spending decisions is worrying. But the idea of moving the centre of UK political gravity out of London is inspired. Who knows… it might even work!

Stock Markets partied higher yesterday, utterly unbothered by the optics of the Iran Deal. Bond markets look at the long-term risks – wondering what the consequences of the Iran war might trigger in the coming years when today’s new bonds are set to repay. Traders will be trying to figure out what a new world will look like, and just how sustainable US Bonds markets might be as the global economy shifts.

The UK’s Defence Investment Plan has been delayed yet again, mired in cabinet warfare on spending. The DIP will focus on big projects like a new fighter-jet but will make a nod to the lessons learnt in Ukraine. The big issue is how the defence industry will evolve away from Defence Primes towards financing the start-ups that can change the battlespace with new tech that is adaptable, available now, cheap and good-enough.

Western economies succeed because bond and stock markets work together. Bond markets enable governments to finance the optimal conditions for invention and innovation, enabling growth and prosperity. Sometimes Markets fall out of line, while Politics are ruled by votes rather than experience – and that’s where the wobbles start to multiply.

Investing in defence was a sadly neglected skillset for many years following the end of the Cold War. Defence primes became utility like seeking to preserve margins as real budgets declined on the peace-dividend. The War in Ukraine has highlighted many things, but critically that what the Primes are selling isn’t what’s going to win the next War. To invest in defence – you need insights into the future of the battlespace.

The UK is not about to disappear in a puff of smoke because the Gilts Market is having a minor tantrum. But there is a serious Political Competency premium on Gilts, which will rise when the scale of Labour’s defeat becomes apparent, and the Starmer premiership is up against the wall. Trouble ahead.

Defence is among the most difficult areas to invest. Who would become an analyst after 30-years as a Cinderella sector in the wake of ESG and peace dividends? Now, the imperative for new defence investment is crying out for private capital. That puts a clear premium on knowledge, contacts and skill to invest. Here is a solution.