#49 Michael Frazis | War Time Markets & Where Capital Is Flowing in a Fragmenting World

In this episode of The Rate of Change, Murdoch Gatti sits down with Michael Frazis, Founder and Portfolio Manager of Frazis Capital Partners, to discuss the shifting macro landscape and how capital is being deployed in an increasingly fragmented global market.If you are interested in war time markets, capital flows, artificial intelligence, and how professional investors are positioning portfolios in a changing world, then you will enjoy this conversation.Markets are no longer being driven by a single narrative. Geopolitics, energy shocks, inflation and technological disruption are colliding — creating a far more complex and uneven investment environment.In this environment, capital is not flowing evenly.It is concentrating into specific areas — AI infrastructure, semiconductors, defence, energy and large-scale platform businesses — while other parts of the market, particularly software and consumer-facing sectors, face increasing pressure.Frazis outlines how this shift is reshaping opportunity sets globally, and how his firm is navigating risk, volatility and changing market regimes through a combination of fundamental insight and quantitative risk management.In this conversation Murdoch and Michael discuss:• How war time dynamics and geopolitics are actively reshaping global markets and capital flows • The shift away from globalisation towards a more fragmented, multipolar world• Why capital is no longer flowing evenly — and instead concentrating into specific sectors and themes • Why energy, commodities and defence are emerging as structural beneficiaries in this environment • The pressure on consumers from higher fuel, labour and input costs — and how that flows through markets • Why Australia, as a commodity exporter, is relatively well positioned in this cycle • How currency movements, particularly the Australian dollar, impact offshore investing outcomes• The scale of AI capex and the infrastructure build-out required to support it • Why semiconductors and key bottlenecks (NVIDIA – NVDA, Broadcom – AVGO) are critical to the next phase of AI • The broader capex cycle spanning AI, energy, defence and industrial capacity• Why market returns are increasingly being driven by a small number of mega-cap companies (Alphabet – GOOGL, Microsoft – MSFT, Amazon – AMZN, Meta – META, Apple – AAPL) • How passive flows are reinforcing these winners and creating dispersion beneath the surface• The growing divergence between large platform businesses and traditional software companies • Why parts of software (Atlassian – TEAM, Adobe – ADBE, WiseTech – WTC.AX, Block – XYZ, Salesforce – CRM, GitLab – GTLB) may face structural pressure from AI • How AI is beginning to reshape business models, margins and competitive moats in real time• Lessons from companies like Costco (COST), Walmart (WMT), Tesla (TSLA), BlackBerry (BB) and DHL Group (DHL.DE) in understanding scale, disruption and durability• Why this is becoming a true stock picker’s market, with increasing dispersion in outcomes • The importance of risk management and portfolio construction in a volatile, late-cycle environment • How professional investors are positioning portfolios to navigate uncertainty and capture asymmetric opportunitiesFor investors and industry professionals, this episode provides a clear framework for understanding where capital is flowing, what is actually driving markets today, and how to position portfolios in a more fragmented and uncertain world.