Episode 78
Oil Shocks, Dollar Moves and Private Debt: What Expats Should Watch Now
Geopolitical shocks, market volatility, and policy uncertainty can create a lot of noise for investors, especially those managing wealth across borders. For expats, the challenge is not just understanding the headlines, but knowing what they actually mean for currency exposure, inflation risk, portfolio construction, and long-term financial plans. When markets move quickly, reacting emotionally can be costly. A measured approach, grounded in strategy, is often what matters most.
In this episode of Expat Wealth, Richard Taylor – dual UK/US citizen and Chartered Financial Planner – is joined by Brian Dunhill, his UK-based counterpart serving Americans in the UK, Europe and further a field. Together, they unpack the latest macro developments affecting cross-border investors, from the market implications of rising tensions with Iran to the knock-on effects of oil price volatility, inflation fears, and shifts in the US dollar. They also explore concerns building in private debt markets and why liquidity still matters just as much as yield. For internationally mobile families and retirees, the key message is clear: market headlines may change fast, but disciplined portfolio positioning remains essential.
Richard and Brian discuss:
How oil shocks affect expat investors: Rising tensions in the Middle East have pushed oil prices higher and renewed concerns about inflation, consumer pressure, and market instability. Richard and Brian explain why energy price spikes matter so much for global portfolios and why expats should pay close attention to how geopolitical events filter through to daily costs, investment returns, and central bank policy.
Why dollar strength can create planning opportunities: While the US dollar briefly strengthened as investors moved toward perceived safe-haven assets, Richard and Brian explain why this may be a temporary move within a longer-term period of dollar weakness. For expats planning retirement abroad, funding major overseas purchases, or rebalancing assets between currencies, short-term FX moves may offer useful opportunities.
The risks emerging in private debt markets: Private debt has grown rapidly in recent years, but concerns are mounting around defaults, underwriting standards, and liquidity. Richard and Brian discuss why these products can look attractive on the surface, why they may not suit many retail investors, and why access to liquid, transparent fixed-income options remains a priority for cross-border financial planning.
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Expat Wealth is supported by Plan First Wealth. Plan First Wealth is a Registered Investment Advisor serving fellow expatriates and immigrants living across the US on matters such as retirement planning, investment management, tax planning and non-US asset management.
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Expat Wealth is affiliated with Plan First Wealth LLC, an SEC registered investment advisor. The views and opinions expressed in this program are those of the speakers and do not necessarily reflect the views or positions of Plan First Wealth.
Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Plan First Wealth does not provide any tax and/or legal advice and strongly recommends that listeners seek their own advice in these areas.
ABOUT RICHARD:
Richard Taylor is a British expat, dual citizen (UK & US). Originally from Bolton, he now lives in Greenwich, CT, where Plan First Wealth has its head office.
As the firm’s leader, Richard launched Taylor & Taylor, now Plan First Wealth, and continues to fuel the firm’s growth. Richard is a Chartered Financial Planner (UK – CII) in addition to holding the IMC (CFA UK) and Series 65 (US – FINRA).
Connect with Richard on LinkedIn
TRANSCRIPT:
Brian Dunhill:
[00:00:00 – 00:00:15]
Absolutely. But why don’t we recount the last week just, just in case anybody’s lost track. America, America goes into Iran. We had $72 a barrel oil right now all of a sudden we usurped the $100 a barrel limits.
Richard Taylor:
[00:00:16 – 00:00:22]
It’s crazy how sensitive Americans are to gas prices. I mean, it’s like the ultimate barometer. It’s like it matters more than anything else.
Brian Dunhill:
[00:00:22 – 00:00:25]
You know, it makes me feel much better about my electric car.
Richard Taylor:
[00:00:27 – 00:00:41]
Let me just go back a little bit more. So after, just give people this even more context. I think this is really interesting. After the global financial crisis and you. And by the way, if you think any of you think any of this is incorrect, jump in and we’ll, we’ll go toe to toe. My understanding of all this.
Brian Dunhill:
[00:00:41 – 00:00:43]
Have I ever been shy with you? Richard?
Richard Taylor:
[00:00:45 – 00:02:18]
Welcome to Expat Wealth, a Plan first wealth podcast dedicated to helping ambitious expatriates in America and Americans overseas thrive. I’m your host Richard Taylor and Plan first wealth is the business I founded and run today. And we work with successful expatriates, immigrants and internationally minded Americans to make the most of their opportunity and avoid the expat landmines. First, a quick disclaimer. While Plan First Wealth LLC is an SEC registered investment advisor, the views and opinions expressed in this program are those of the speakers and do not necessarily reflect the the views and positions of Plan First Wealth. Information presented is for educational purposes only. Now if you aren’t already receiving our emails, please go to our website, planfirstwealth.com and sign up there. It’s free and you’ll be notified every time we drop a new episode and so much more. Okay, let’s get back to this week’s show. Welcome back to another episode of Macroaggressions. I’m back with my friend Brian Dunhill and we are here to discuss what’s going on in the world and how it might infect cross border investors like our clients. Just a reminder, I am a Brit living in America, mostly serving fellow expatriates in America. Brian is my counterpart on the other side of the pond. He’s an American in Britain serving Americans in the UK and Europe and further afield. And we come together once a month to, to dissect what’s going on and you know, come up with solutions, put the world to rights. You know, we have all the answers.
Brian Dunhill:
[00:02:18 – 00:02:30]
When you talk about us as like twins of opposites, you make me feel like you’re Arnold and I’m. I’m Danny DeVito over here, you know, trying to figure out which ways. I’m digging back into the film Arsenal Deep.
Richard Taylor:
[00:02:30 – 00:02:37]
That is a classic, though. What is that movie? Big Twins. Isn’t there another one, though? Didn’t they do another one?
Brian Dunhill:
[00:02:38 – 00:02:41]
They’ve already. They’ll make 100 remakes of anything that.
Richard Taylor:
[00:02:41 – 00:02:48]
No, no, no, not a remake. I’m thinking Daddy Daycare or something. I’m getting. Anyway, I’m getting confused. I’m getting confused. It’s kind of got Iran on the mine.
Brian Dunhill:
[00:02:48 – 00:02:54]
Maybe we’re both going to be watching Arnold movies tonight and that’s, that’s our problems. Not everybody puts into problems.
Richard Taylor:
[00:02:58 – 00:03:03]
Unusual segue. Yeah. Right. So we’ve got the answers, haven’t we, Brian? That’s why we’re here, right? To.
Brian Dunhill:
[00:03:04 – 00:03:13]
Absolutely. You know, everything that’s coming out of the White House is completely clear. So we know exactly what’s going on. Oh, God.
Richard Taylor:
[00:03:13 – 00:03:46]
Right. Well, I can’t believe how much. I mean, since we last spoke, I can’t believe how much has happened. And I know, I know stuff is always happening. It’s not. We had a. We had a meeting with a client yesterday and they said, they mentioned the, the, they uttered the famous phrase when things settle down. And I just said, look, we are in a period of particular craziness right now, but honestly, things never settle down. There’s always a crazy story. However, this is particularly crazy. And the last month, last year, the last, however, is particularly crazy. So let’s start there.
Brian Dunhill:
[00:03:46 – 00:04:22]
Is it particularly crazy or is it just the norm that there’s some sort of nonsense and we’ve kind of dialed down the past nonsense? I mean, like you said, in the last century, we’ve not had a decade where a major developed country has not been at war. And so this one’s the same time around. It just happens to be from a president that was boasting that he deserved the Nobel Peace Prize just a couple months ago. I’d love to go back to that, but this doesn’t look so different from potentially the 70s and 80s, and therefore we should be looking at those different things.
Richard Taylor:
[00:04:22 – 00:05:04]
Yeah, very good. And frankly, yes, this is a bigger conflagration, partly because it’s not gone the way they expected, to the extent it seems to me they expected it to follow the Venezuela playbook. It hasn’t. And here we are, be clear. It’s less than a year from Liberation Day that everything went to, sorry to swear, everything went to in April and people freaked out and look what happened thereafter. Then we had Venezuela that we’ve had a million things in between that we’ve forgotten about now because we just remember the, the headline chaos. It’s just a constant stream of mayhem. It’s, I do think it’s, I do think it’s particular, a particular brand of mayhem, this administration, but it’s always mayhem.
Brian Dunhill:
[00:05:05 – 00:05:18]
Absolutely. And we should continue to expect it. I mean, there’s already rumbles that they’re off in Ecuador battling drug lords and therefore that’s going to be the next stage. Or is it Cuba? Or, you know, there’s so many. And then
Richard Taylor:
[00:05:20 – 00:05:39]
isn’t that just a classic example of the fact that we’ve already forgotten half of the, half of the craziness. It was on the verge of invading Greenland, like, yeah, I don’t know what’s around the corner. But this Iran conflict will end at some point. I’ve got some thoughts on that we’ll talk about in a second. And then there will be something else within two to three months.
Brian Dunhill:
[00:05:39 – 00:07:24]
Absolutely. But why don’t we recount the last week just, just in case anybody’s lost track. America, America goes into Iran. We had $72 a barrel oil right now, all of a sudden we usurped the $100 a barrel limit. The White House got scared. So all of a sudden they say they’re escorting ships, they delete the tweet, then they deny that they actually said that oil in the meantime dropped down to $80. And now we’re back in the 90 range, probably edging on $100 because this doesn’t look like it’s going to be clear cut, as you pointed out astutely, like Venezuela, when we’re looking at the number of, of Iranian guards, we’re looking at four to six hundred thousand troops in Iran. So even when they’re talking about wrapping in the Kurds, like the Americans have done so many times, promising them independence, they’re probably just going in there for another slaughter. And that’s if they can even get them to want to be the ground troops on there. So it’s more likely this becomes this warfare of drones that cost the Iranians 25 to $50,000. And we as the Americans or the Israelis go in there and spend a million bucks to put a missile to, go ahead and knock it down. How long will we as citizens support that type of aerial attack? And how long will we want to put up with losing American troops and our allies getting attacked? And most importantly, how long will we put up with $100 a barrel of oil, $0.50 increases on gasoline prices and therefore everything playing into inflation.
Richard Taylor:
[00:07:24 – 00:07:30]
It’s crazy how sensitive Americans are to gas prices. I mean, it’s like the ultimate barometer. It’s like it matters more than anything else.
Brian Dunhill:
[00:07:30 – 00:07:34]
You know, it makes me feel much better about my electric car, you know,
Richard Taylor:
[00:07:35 – 00:08:44]
So I was listening to Ed Elson this morning on the markets, I think it’s called. You know, they were kind of gaming out, like, worst case scenario. Worst case scenario is horrendous. You know, just as it was invading. The threatened to invade Greenland, just as it was breaking away from Europe, you know, versus it was on Liberation Day. Worst case scenario, it is horrendous. But in terms of it, I do think what we have seen is Trump is sensitive to public opinion in terms of markets, and he grades himself right. And I do think if the market starts really, really reacting, I think that will have an impact. The other thing I think is critical is we are. It is the midterms this year. Public opinion is massively, massively important. And if it really turns sharply against him, which I think, or against this endeavor, which I think could well happen, I think that will lead to a change in policy. So I, I’ve got concerns, just as everyone has, but I ain’t. I don’t think the worst is likely yet.
Brian Dunhill:
[00:08:45 – 00:11:03]
Michael Lewis astutely pointed it out as the fifth risk. And the fifth risk is incompetence. And incompetence is something that, okay, yes, 90% of the time, I do feel like this administration grades themselves on the stock market, and therefore this is something that can be contained. They’re playing with the Federal Reserve, they’re playing with other stimulants, but it’s that small probability that they can’t contain things. And then we have to go back to that 70s and 80s playbook of how do we deal with hyperinflation. Tariffs on top of high oil is something that’s uncontrollable by any administration. And that’s. That’s why we always have to have that in our back pockets. Of how should we be changing our allocations somewhat to reflect what happens if we have hyperinflation? We did the same thing last year. I didn’t have any commodities in my portfolio. A year and a half ago, Trump administration came in. All of a sudden, we started introducing commodities into our portfolio. Now we’ve continued to expand it because if we think about in the 70s and 80s, gold alone expanded by 20 times. That’s why gold increased 70% last year. People are starting to think about that. Playbook from last year. When we look at the commodity sector, just a general commodities fund like First Trust Commodity Fund that you can use for British expats, up 21% year to date. There’s a reason for that. People are hedging themselves for that other side. And it’s not. It’s not to say, go all in on commodities. It’s to say, how do you proportion the risk inside of the fixed income market? To barbell that strategy of if my bonds go down because interest rates go up, because inflation goes up, I will be hedged by those commodities. So we started at the beginning of last year based on an Allianz report that it’s on a 18 vantage point. I’d increase that just that little bit because essentially it’s a little higher probability that those commodities are going to go up and therefore the bonds are going to go down.
Richard Taylor:
[00:11:03 – 00:11:06]
So you think commodities are the way to hedge?
Brian Dunhill:
[00:11:06 – 00:11:30]
It’s the safest way. I pulled the optimal portfolio from the 1970s and 80s. Now think of your typical strategic allocation where we’d say kind of 60, 70% stocks, 25% bonds and a couple percent cash and a couple percent alternatives. Right. Optimal portfolio for the 70s, 25 to 30% commodities and gold, 25 to 30% value equities.
Richard Taylor:
[00:11:31 – 00:11:31]
Right.
Brian Dunhill:
[00:11:31 – 00:11:42]
No growth, 15% in energy and resource companies, 15% cash, 15% real estate. That’s the optimal portfolio for that decade.
Richard Taylor:
[00:11:43 – 00:11:46]
You said 70s and 80s. Is that where you think we’re heading?
Brian Dunhill:
[00:11:46 – 00:12:20]
I hope not. But I find maybe. Maybe I’m too much of a Boy Scout. If we plan for the worst, then we can hope for the best. And so I’m not radically changing my portfolios, but I’m shifting towards a heavier commodity position. And every single time that I see the oil stocks dropping, I hate to say this for all my friends that are very ESG and I like to try to be over the course of time, but. Well, you were probably around in the States back when we had the fuel surpluses on the airlines. Oh, yeah.
Richard Taylor:
[00:12:20 – 00:12:21]
Oh, that rings a bell.
Brian Dunhill:
[00:12:22 – 00:13:09]
Okay. Yeah, it was probably. Probably early 2000s. Every single time, instead of raising flight prices, they’d toss on a fuel surcharge, but it’d take them longer to pull it off than it would to put it on. You know, even. Even if jet fuel prices were going down, I feel that oil prices and gas prices act in that same way. They go up faster than they come down, except for when the White House starts throwing out fake tweets. So I’m buying into the energy sector in a big way. I’m buying into commodities in a big way to hedge that risk. But I’m trying to optimize it. I’m not going over the limits to where if that ends up going the opposite way, that it would hurt the portfolio. It would just counterbalance a compelling argument
Richard Taylor:
[00:13:09 – 00:13:13]
that this is finally the, the event
Brian Dunhill:
[00:13:13 – 00:13:15]
straw that breaks the world back.
Richard Taylor:
[00:13:15 – 00:13:36]
Well, in one section, yeah, but, but in another way, in the, the final, the, the, the, the thing that the world needed to happen to make it embrace renewables. And I know America is particularly hostile to renewables right now, but if there’s ever a case we made for energy self sufficiency, which for most countries, America is different because we’ve got fracking. But for most countries that’s going to be renewable sources of energy, this is it.
Brian Dunhill:
[00:13:38 – 00:14:29]
Absolutely. I mean, you look at it the last year, the best performers were emerging markets. Asia, Europe was the second best and the US was last amongst global stock markets. But Europe and emerging markets were hit the hardest. Well, essentially Europe, it’s really easy to make that determination that we’re energy dependent. Whereas essentially, like you said, the US is a net exporter. So when the US is a net exporter, okay, energy prices went up. Cool. They’re more profitable. Right. When Europe is dependent on that, we’re sitting here going back into that same model of how do we make sure that our reserves are high enough before the next winter? You know, does this go on until next winter, which is the only reason that we had a bigger, bigger hiccup here in Europe than we did in the United States?
Richard Taylor:
[00:14:29 – 00:14:44]
Yeah. You remember when Russia invaded Ukraine and then there was all panic about Europe running out of natural gas to heat the houses by this winter. And then it just absolutely didn’t come to fruition, did it? Like most of this stuff doesn’t know.
Brian Dunhill:
[00:14:45 – 00:15:45]
Well, it balances out over the course of time. You know, the, the capital markets help that. You know, I, I think any net exporter of oil is going to be motivated by 100, $120 oil prices. It just happens to be a huge amount. I think 20 or 25% of the oil goes through the Strait of Hormuz. So therefore it’s the time period that it takes to get to that level. And that’s where, thank goodness, this is happening here in March instead of back in September or October going into winter. Thank goodness this is after that Russian crisis where most European countries have larger reserves and nobody’s, nobody’s dipping into them just yet because they don’t have to. So we have this hope that this is only going to last the summer. We have the hope that we’re only going to be counting days instead of weeks, months, years. But at the same time, Iran is a little bit bigger foe than Venezuela.
Richard Taylor:
[00:15:45 – 00:16:39]
It is, it’s a vastly, it’s not just a bigger foe. It’s a vastly better organized and I think more ideologically driven. Thus, you know, the zealotry is a big factor here. Nation. They’ve just, they’ve been off a lot more than they expected. And it remains to be seen if they’ve bitten off more than they could chew. But I do think I was listening those reminded of a quote from Donald Rumsfeld at the beginning of the Iraq campaign saying it might take six days, but it could go on for six, for six months. And it ended up going on for well over six years. So, you know, we can obviously get drawn into something long and protracted here. I just don’t think Trump will go, will let that happen because of his temperament and what that would mean for popularity in the markets and everything else. But he might not, it might not be, you know, to your point, it might be out of his control.
Brian Dunhill:
[00:16:39 – 00:16:59]
He might not have the control. I mean, the Iranians strategy is going to be the same strategy as Muhammad Ali, right. You know, you think of him when he was fighting George Foreman, right? He’d sit there and Foreman would just sit on. I’m sorry, Ali would just sit on the ropes, taking the ropes.
Richard Taylor:
[00:16:59 – 00:17:02]
Were you there? Were you in the audience?
Brian Dunhill:
[00:17:02 – 00:17:14]
I was totally there. Thanks for that, Richard. You know, I make one comment about the forehead and all of a sudden you’re just leaning into the whole thing.
Richard Taylor:
[00:17:14 – 00:17:16]
Point taken, though. Point taken. Yeah.
Brian Dunhill:
[00:17:17 – 00:17:18]
You Brits with your wit.
Richard Taylor:
[00:17:19 – 00:17:23]
Okay, all right. So that’s, that’s a mess, I guess. Well, we’ve tick, we’ve solved that. Right.
Brian Dunhill:
[00:17:24 – 00:18:48]
So, well, let’s, let’s, let’s, let’s talk about one last topic on there, which to me is the, the important topic when it comes to all of our expats that listen to this. The last year, essentially the dollar has been trying to push themselves down. Last week, essentially the dollar popped up. This is what we would call a flight to safety. People jump into the currency that they feel becomes the safest place, the safest haven to have their funds. This is a great opportunity right now because I’d say both of us would agree that at some point in time this is going to end. Right? Whether that be weeks, months or years. The last two times that we had long term dollar weakness caused by policy in the United States, I. E. When both Nixon and Reagan did that, they lasted 10 to 15 years. And here we are a year and a bit into it and we’ve got a blip that has made the dollar stronger. So this is an opportunity, if you’re thinking about bigger projects or retirement outside of the United States, to actually buy those pounds, euros, whatever else it might be a cheaper price or reallocate pieces. We want to take advantage of the noise that’s out there instead of always just looking at it.
Richard Taylor:
[00:18:48 – 00:20:07]
Absolutely, yeah. I’m excited to announce that Expat wealth has its first sponsor, the Global Financial Planning Institute. The GFPI exists to provide education, community tools, resources and ongoing research for financial planners and other advanced financial professionals working with international and cross border clients in the US And Americans abroad. I’m a GFP Institute fellow and I’ve put all our employees through their GFPI programs when they join us. I’ve met some great people, I’ve learned a ton. It’s a genuine community of internationally minded folk doing their best to serve their clients properly and critically sharing what they know in the oftentimes challenging and ambiguous US Cross border environment. And as anyone in this sector will tell you, you’re always learning. So if you work with international clients and or Americans abroad, or if this is an area you’re looking to get into, check out the gfpi@www.gfp.in stute you will be glad you did and I hope to see you there soon. Okay. Right, well, we were also going to talk about private debt and the trouble that is brewing there. So should we just give people a bit of a. For the uninitiated, should we just give people a bit of a summary on what we’re actually talking about, first of all?
Brian Dunhill:
[00:20:07 – 00:21:01]
Absolutely, absolutely. This has been something that’s been rumbling for months now, probably in the circle is probably about a year. Private debt has become this nice instrument where smaller companies can access capital from private individuals or I’m sorry, private companies. And essentially for the most part, because it’s not listed, you get this nice consistent return and that’s, that’s what it will be pitched on most of the time. This last year we’ve seen some really big names, predominantly JP Morgan, writing down entire pieces and locking those pieces up. I think the last report I saw was something like 150 companies have now defaulted on their debt in these instruments. Whether that was a correct figure or not. Please. Well, send Me an email and tell
Richard Taylor:
[00:21:01 – 00:21:16]
me if I let me just go back a little bit more. So after just give people even more context. I think this is really interesting after the global financial crisis and by the way, if you think any of you think any of this is incorrect, jump in and we’ll, we’ll go toe to toe. My understanding of all this is.
Brian Dunhill:
[00:21:16 – 00:21:18]
Have I ever been shy with you, Richard?
Richard Taylor:
[00:21:18 – 00:22:51]
My understanding of all this is in the aftermath of the global financial crisis, after all that severely lax lending by the banks, the, the legislation came in, Dodd Frank, that severely curtailed the. The how easy it was for banks to lend money. As a result of this, all these private companies, Blackstone, Blackstone, one of them blackrock, Berries, Cliff Water, KKR sprung up and have done roaring trade lending on the private markets to companies and for a number of years. And these attract a higher rate of interest and thus a higher rate of return. And for many years this was, it was mostly institutions investing in these private debt offerings. But in the last few years, three or four years, it has just exploded onto the wealth management scene. And with some good reason, I think there is good opportunity there. But as always when something explodes onto the wealth management scene, it attracted every man and his dog. And what we started hearing rumblings of is to accommodate this influx of money coming in from retail clients, inevitably underwriting standards were laxed, slash collapsed. And this has just been rumbling on and on and on. And we had a big default last year from was it Ultimate Brands or there was a big company that I think was more fraud than. But it’s just that kind of like a light on this, on this sector. And it just seems now to be bubbling up to the surface.
Brian Dunhill:
[00:22:52 – 00:23:55]
Absolutely. And the, the Blue Owl story is the big story that, that we’re n. Naturally following. And, and the fear is that this turns into a domino effect. Hopefully it will be contained amongst that smaller scene. But if it becomes a domino effect and that causes more and more of a run on the bank for some of these issuers, etc. And for them to start pulling out of other sectors, that’s, that’s the part that we have to fear. Sometimes people like to buy these things on margin. Those are the types of things we, we fear because that can cause that domino effect where a margin call pushes from one issuance to the next. I don’t use private credit for a big reason and essentially it’s because we’re at the latter end of the curve. If we were at half the price, if we were at much a higher Yield, I might consider it because it’s always calculating how many defaults you’re going to have. Just kind of like when you buy high yield, are you the same?
Richard Taylor:
[00:23:55 – 00:25:13]
We don’t. It, it’s not that that puts us off so much as the liquidity your retail clients. For no matter what they say in that moment when you’re talking to them, when they, when, when, when things get dicey, they want slash need liquidity and it doesn’t matter if what they sign, what they agree to, if when it all gums up, if they can’t get money out, all hell breaks loose. I learned that lesson in. I entered this profession industry, just on the verge of the, of the financial crisis and the firm I was at had people in property funds in the UK that all got gummed up and it just caused absolute havoc. And I was also burning that same because I, as another job I had then, I used to go around all the different financial advisors and they were, this was the rise of the, the alternatives back then, just the weird and wonderful stuff. We had this thing called Arch Crew. There were student loans, there was student accommodation stuff and it all just blew up and got, and people got stuck in it and I just, I was so burnt by that experience. It doesn’t matter what people say, what they say, what they test to, what they sign, if they can’t get their money out, they will freak out.
Brian Dunhill:
[00:25:13 – 00:25:34]
I, I always got a good laugh out of the student accommodation ones because that’s how I learned English, geography, you know, they, they’d throw in all these places I’d never hear of and I’d say, can I buy the portfolio of just the London properties? Because at least if student accommodation doesn’t work out well, you can convert it into something else. They’d say, no, you’re stuck with all these other cities as well.
Richard Taylor:
[00:25:35 – 00:25:44]
I don’t want accommodation in Hull. Sorry, Hull. I don’t know why, I don’t know. I don’t know why I came to Hull then. Hull’s great.
Brian Dunhill:
[00:25:44 – 00:25:49]
No, actually I was in Hull not too long ago and, and they’ve, they’ve cleaned themselves.
Richard Taylor:
[00:25:49 – 00:25:50]
What were you doing in Hull?
Brian Dunhill:
[00:25:50 – 00:25:52]
Beautiful town. Now. I was sailing.
Richard Taylor:
[00:25:52 – 00:25:52]
That’s a good idea.
Brian Dunhill:
[00:25:52 – 00:25:59]
I sailed into Grimspian. I sailed right out of Grimsby as quickly as I could and went over to Hull and Hull.
Richard Taylor:
[00:26:00 – 00:26:04]
Okay, so I upset Hull. You’re upsetting Grimsby. So what I, I as.
Brian Dunhill:
[00:26:04 – 00:26:07]
No, no, Grimsby, Grimsby. Grimsby.
Richard Taylor:
[00:26:07 – 00:26:57]
So you sailed there. So that, that, that’s one view and, and obviously I respect that. My take Was I worked in Leeds for a year and in, when I was working in Leeds, this is. It was corporate insolvency and it was a company. I had to go to a company in Hull and I remember going down the M62, the M62 from Leeds. So it was from Manchester to Leeds, where I was living. Manchester to Leeds, then Leeds to Hull and you. And it’s all, you know, you’re going down the M62 to Hull and then life just, it just, everything just falls away and you’re on this road and there’s nothing and you’re like, where, where am I going? Am I literally going to the end of the earth? And then out of nowhere Hull arrives and that. And I don’t remember anything about Hull. I just remember being on the M62 thinking, Am I, am I just going to drive off the end of it? Is the world actually flat? I’m about to drive off. That’s all I remember.
Brian Dunhill:
[00:26:58 – 00:27:22]
I’m not going to touch that with an American accent. I can’t. I got to be nice, right? So to me, the perfect transition from, from private, that is, first of all, I don’t think it’s the end of the world. I don’t think you think it’s the end of the world. I think, I think it’s one of those, that it’s still on the sideline and I wouldn’t be jumping in. I wouldn’t be attractive trying to catch a falling knife. As the, the trike concept goes in our industry.
Richard Taylor:
[00:27:23 – 00:27:36]
I think there will be some controlled, controlled explosions, but like some isolated explosions and if you got in at the wrong time to the wrong fund, I think you could suffer. But in general, do I worry about this like being the start of a conflagration? I don’t.
Brian Dunhill:
[00:27:36 – 00:28:36]
I agree. And I tend to think that there’s a lot of, a lot of these public markets that are extremely attractive on the bond arena as well. And for us in the expat space, it helps for any of the clients that are European in America or Americans in Europe, Poland Capital is finally introducing one of their high yield emerging. I’m sorry, high yield bond funds on the American exchanges. They’ve been on the European exchanges for years, but they’ve finally been convinced there’s enough Americans in Europe that need fixed income exposure only in Euros, that they’re going to launch a US etf. And I think this is wonderful for our space because it gives us more tools in the shed instead of having to buy individual bonds and not being able to access the high yield market. Unless you buy all developed markets, which is only call it 60% Europe and then you get 40% other things which might be exposure you don’t want.
Richard Taylor:
[00:28:36 – 00:28:53]
This is going to be a US based etf. So it is going to be priced in dollars because all US ETFs are priced in dollars. But everything under the bonnet, or sorry to my Americans, everything under the hood is going to be a euro fixed income instrument.
Brian Dunhill:
[00:28:54 – 00:29:06]
Exactly. Well, I mean it’s high yield. So they are lower grade bonds, 40 well researched bonds inside of there so that you’re getting pure euro exposure on the high yield.
Richard Taylor:
[00:29:06 – 00:29:12]
And then will they just let the, will they just like do nothing about the conversion into dollars or do you think we’ll hedge it?
Brian Dunhill:
[00:29:12 – 00:29:54]
No, the entire intention of this is for the American expat clients or Europeans in the States that will return back to Europe at some point in time. So the entire point is not to hedge it because if you hedge it then you no longer get that natural currency hedge. That essentially means that sometimes we’re going to look at the performance chart and we’re going to think they’re the biggest geniuses in the world and other times we’re going to go, you guys are fools. But if we look at say platforms like Interactive Brokers, Morningstar or Pershing, they have reporting in euros as well. So you can flip that switch, put it in euros and you can look at things in that euro exposure.
Richard Taylor:
[00:29:54 – 00:31:01]
Right? So sorry, the currency makes my head hurt and it makes my head hurt, you know, no clients falling onto this. So we may have to edit this out, but just help me. Right, so I’m an American in Europe, so I’m living in euros. But I, because of the PFIC rules and everything else we talk about, I’ve got to invest in a US etf. So awesome. I can now take, I take my, I get paid in euros, I convert it into dollars, I invest in my interrupted broker Schwab whatever account and I buy this US denominated ETF that underneath the hood are purely euro bonds, not hedged. And this means, to your point, when I look at a chart in dollars, I’m either going to look like a loser or a winner because it’s going to be the return plus the currency fluctuation which you’re saying they’re not hedging because once you reverse engineer that back so you go from euros, you take it out in dollars and then you convert it back into euros where you’re living, you take out all the Effectively take out all the currency movements and end up back with just a pure euro movement. Am I thinking exactly.
Brian Dunhill:
[00:31:02 – 00:31:06]
I’m going to dorkly say it’s just the transitive formula, except for applied to currencies still.
Richard Taylor:
[00:31:06 – 00:31:07]
What formula?
Brian Dunhill:
[00:31:07 – 00:31:09]
You don’t remember your days in algebra?
Richard Taylor:
[00:31:09 – 00:31:11]
No. What did you say I missed? What did you call it?
Brian Dunhill:
[00:31:11 – 00:31:12]
The transitive formula.
Richard Taylor:
[00:31:12 – 00:31:13]
The transitive formula?
Brian Dunhill:
[00:31:13 – 00:31:16]
Yeah. If A equals B and B equals C, then A equals C. I never
Richard Taylor:
[00:31:16 – 00:31:21]
learned that, so therefore I might have learned the formula. I don’t know if I learned. It’s called transited formula.
Brian Dunhill:
[00:31:24 – 00:31:52]
We’ve just applied how big of a nerd I am. Sorry, Richard, you’re like, you’ve known this the entire time you’ve known me. Yeah. If. If all of a sudden we’re buying euros inside of a Z account, then we get the exact same exposure that we really want at the end of the day. So in a simple format, how, how we, how we help our clients, and you’ve seen this many times because we have clients together, we’ll do our balance sheet in dollars and we’ll do it in pounds.
Richard Taylor:
[00:31:52 – 00:31:52]
Yeah, yeah.
Brian Dunhill:
[00:31:52 – 00:32:09]
So they can see what is the value in dollars, what’s the value in pounds? Because if they live in pounds, that’s all they care about. Right? If, if a Brit lives in America but they get their sip statement in pounds, who cares what the pound value is? It’s what the dollar value exactly matters. And that’s why we want this natural.
Richard Taylor:
[00:32:09 – 00:32:25]
It’s exactly that formula. That’s exactly what it is. I’m glad you brought that to my attention. That’s a really simple way of, of explaining it because I always struggle with that. Because if anyone listened to what we just said, you can’t really follow that as a, as a layperson. But what you just. That is a much better way to position it.
Brian Dunhill:
[00:32:25 – 00:33:08]
I think of it as, um, our safe money is fixed income. So we want to go ahead and be able to buy our baguettes with our safe money. If I buy dollar bonds, especially last year when we had a 10% drop in, in the dollar. If I buy dollar bonds and I get 4% and the dollar drops 10%, that means if I’m living in France, I’ve lost 6% in real terms for buying my baguettes. Luckily, baguettes are really dirt cheap in France, so therefore you’ll hopefully get by. But it’d be better if you made 3% in euros than 4% with the opportunity of going up and down with
Richard Taylor:
[00:33:08 – 00:33:18]
the currencies yeah, very good, very good. All right. So, yeah, I know. I was just thinking, I can’t think of anything but baguettes now. But specifically French baguette.
Brian Dunhill:
[00:33:20 – 00:33:23]
Absolutely. Okay, bye.
Richard Taylor:
[00:33:26 – 00:33:36]
I’m envisioning you just getting up, walking out your office door, walking to the dock, getting your boat, sailing across the channel, getting a train to Paris and buying a baguette and then coming all the way back. I’ll see you in a month.
Brian Dunhill:
[00:33:37 – 00:33:42]
We’ve got a pause just up the street. You know, thank goodness the, the French bring us class over here.
Richard Taylor:
[00:33:44 – 00:34:03]
My wife sent me this wonderful video, TikTok or something, Instagram reels, whatever, of this French guy in London trying pret a manger and just being disgusted in that, in that ultimate French way. He is so horrified. You can tell it hurts his in. Deep in his soul.
Brian Dunhill:
[00:34:04 – 00:34:12]
You know, it’s. It’s no different than like in, in America a Stella would be a high class import beer. Right. And here in the uk it’s him.
Richard Taylor:
[00:34:12 – 00:34:21]
He’s awful. In the uk, I will say though, it does taste different in America and It is, it’s 5% in America versus 5.2. It is a different beer in America.
Brian Dunhill:
[00:34:21 – 00:34:28]
The fact that, you know the difference between the alcohol percentages impressive or we have to have intervention, I’m not sure.
Richard Taylor:
[00:34:28 – 00:35:16]
We don’t anymore. The reason I’m so attuned to percentages in America is because when I first arrived in America, I was, I went to a bar and, you know, in the typical British way, I just sank six or seven pints, which is what I used to do when I was younger and what we do in the UK at speed, you know, And I was, I was in a world of pain. I was it. I woke up the next day, I was like, what the. Am I just pathetic in America or more pathetic in America? Don’t say anything to that. And then it transpired. I was unwistingly drinking IPAs at like 7 or 8%, so no wonder I was a complete mess. So now I’m very, very. I like my beer on the weaker side. I like my Modelos, I like my Guinness and I try and stick. I’m very cognizant. I don’t want to get hit with the 6 or 7 percenter again.
Brian Dunhill:
[00:35:16 – 00:35:20]
I, I will have to bring you over to Belgium and get you a proper 10 or 12.
Richard Taylor:
[00:35:20 – 00:35:23]
Thank you. Yeah, caught flat footed by that as well.
Brian Dunhill:
[00:35:24 – 00:35:27]
Speaking about all the breweries, did. Did you see the news about Brewdog?
Richard Taylor:
[00:35:27 – 00:35:28]
I did, yes. Yeah.
Brian Dunhill:
[00:35:29 – 00:35:31]
Cannabis company taking them over for 30
Richard Taylor:
[00:35:31 – 00:35:38]
something million shenanigans between the owners. And they take like a load of money out having. Making no profit and then get little investors involved.
Brian Dunhill:
[00:35:38 – 00:35:59]
That’s. I know, I know. You have your regular podcast recommendations. Back in 2022, the BBC did. I think it’s five episodes and they’re half an hour episodes, so it’s not that long of a bit. I listened to it the other day when. When the buyout happened. Fascinating story. I mean, Watts, this, the CEO over there, he’s an interesting.
Richard Taylor:
[00:35:59 – 00:36:05]
Very. He’s very loud, so I know exactly who you mean, but he’s quite a marketer.
Brian Dunhill:
[00:36:05 – 00:36:05]
Yeah.
Richard Taylor:
[00:36:06 – 00:36:22]
From what little. I know, it does sound like they kind of. They. They extracted maximum value, made some promises that were. Could never be kept, and it was obvious we’re never going to be kept, and left the little guys, the. The small investors through Kickstarter or whatever it was, holding the bag. That’s not cool.
Brian Dunhill:
[00:36:22 – 00:36:32]
They started doing that way before Kickstarter was real. I mean, basically crowdfunding. They were one of the originators of it, and yet they basically fleeted the entire group.
Richard Taylor:
[00:36:32 – 00:36:36]
Anything else you want to throw at people? Wallop them over the head. Before we go.
Brian Dunhill:
[00:36:36 – 00:36:58]
I think the most interesting piece of news that I had to actually Google to find out whether it was satirical or not is that Scotland has gotten approval from their parliament to issue one and a half billion pounds worth of Scottish bonds. But this is the part that I had to actually Google it. Do you know what it’s called, Richard?
Richard Taylor:
[00:36:58 – 00:36:58]
I don’t.
Brian Dunhill:
[00:36:58 – 00:37:06]
Okay. UK bonds are naturally, UK Government bonds are gilts. Scottish bonds will now be known officially as kilts.
Richard Taylor:
[00:37:07 – 00:37:08]
All of them.
Brian Dunhill:
[00:37:08 – 00:37:17]
And you know, you know that we’re just going to ask what’s underneath the kilt? Are they going to be able to repay these things?
Richard Taylor:
[00:37:18 – 00:37:22]
So this is really happening. All Scottish bonds are going to be called kilts.
Brian Dunhill:
[00:37:22 – 00:38:08]
So they’ve approved this in 2026. This year or next year, they’ll be issuing up to a billion and a half of kilts. And the coolest part is Moody’s and S P have given them the same rating as the uk. So this is important for two reasons. First of all, well, Scottish independence. Okay, that we need to have six pints. And then I’d love to discuss that and learn everything you know about all of that, but that’s a political discussion that has nothing to do with this podcast. The most wonderful part is it’s going to expand the universe of things that we’re going to be able to buy and most of the analysts are expecting it to price about 1% above a UK government guilt because it doesn’t have a long long.
Richard Taylor:
[00:38:08 – 00:38:10]
Is the UK government behind it, though, or is it.
Brian Dunhill:
[00:38:10 – 00:38:19]
You are more British than I am, so therefore I will ask you the question, is the UK government ever behind anything that leads towards further Scottish.
Richard Taylor:
[00:38:19 – 00:38:37]
No, but I would assume, though, if it’s been issued by Scottish government, which is currently still under the ultimate direction of the British government, that the uk I don’t know how you even call it British government, UK government, whatever, then I would imagine it’s backed by the full force of the Exchequer. Right. So therefore, why wouldn’t it be done at the same. Why would it apply at the same level?
Brian Dunhill:
[00:38:37 – 00:38:44]
Well, essentially the bond markets are the bond markets. You know, you have to issue it what people are willing to buy it, and it’s a billion and a half, I guess.
Richard Taylor:
[00:38:44 – 00:38:50]
Is that, is that because they are saying, yeah, right now you’re, you’re backed by the Exchequer, but one day you might not be. Is that what, is that what you think that is?
Brian Dunhill:
[00:38:51 – 00:39:14]
And I think that’s that main reason. I mean, I’ve, from, from the political vantage point, I’ve always just assumed that Scottish independence comes up whenever oil prices go above $100 a barrel. I mean, that’s yesterday’s news, that it’s over a hundred dollars a barrel. We’re back under a hundred dollars a barrel. So essentially this is significant because that could be leading towards that question.
Richard Taylor:
[00:39:14 – 00:39:18]
They still got oil. I thought we’d emptied all that.
Brian Dunhill:
[00:39:18 – 00:39:21]
I’m pretty sure they. It’s one of the big resorts in the world.
Richard Taylor:
[00:39:21 – 00:39:22]
North Sea.
Brian Dunhill:
[00:39:22 – 00:39:38]
Yeah, I’m pretty sure. Okay. I mean, the Norwegians still have access to it. I think I, I think the difference is that they sold off most of it, whereas the Norwegians kept it interior. So I think they still get payments from it. But I’m, I’m not your Scottish historian in any way, shape or form. I just watch both.
Richard Taylor:
[00:39:40 – 00:39:49]
Right. Well, on that bombshell, I’ll go and find myself some kilts, load up on. I don’t know where I’m going with this. Anyway.
Brian Dunhill:
[00:39:49 – 00:39:49]
Right.
Richard Taylor:
[00:39:49 – 00:39:58]
Thank you for, for coming back in, Brian. It’s great to see you as always. Yeah, I think I feel like we’ve solved most of the world’s problems in, in one episode and we’ll, you know, we’ll see what we can tackle next
Brian Dunhill:
[00:39:58 – 00:40:02]
week and, and you promised me next episode in Barcelona, so I’m holding you to that.
Richard Taylor:
[00:40:02 – 00:40:07]
I’d like to go first, I miss London, but we’ll, we’ll. We’ll do a world tour. Don’t worry, it’s coming.
Brian Dunhill:
[00:40:08 – 00:40:12]
There used to be a podcast booth in the Brewdog and that would have been perfect.
Richard Taylor:
[00:40:12 – 00:40:18]
Okay, well, podcast, sure. We’ll find that. We’ll, we’ll find a worthy successor to that.
Brian Dunhill:
[00:40:18 – 00:40:19]
So next episode.
Richard Taylor:
[00:40:19 – 00:41:20]
Okay? Look forward to it. Cheers, mate. Good to see you. All right, folks, that’s another episode of Expat wealth under Our Belts. Thank you for listening. I appreciate it and I appreciate you. If you’re enjoying the show and would like to support the mission, which is to help ambitious expats thrive in America, I’d ask you to subscribe to the POD wherever you listen and also consider leaving a rating and review. This stuff really does matter. Please help us get this information to the people who need it, that is to your fellow expats. Just a quick reminder that this show is brought to you by Plan First Wealth. We are a US Based financial planner and wealth manager and we help successful American and international families living across the US to make the most of their opportunity and ultimately to retire happier. If you’d like to know more about how we might be able to help you, you can find us on our website, planfirstwealth.com or you can look me up on LinkedIn. Do get in touch. We’d love to hear from you. As always, thank you to the podcast guys for their help producing this episode and the entire show. See you next week.
Production