00:00And Mark, do you have a sense of whether market expectations here are quite limited, quite realistic,
00:05this might all be about chips and rare earths, or do you think that market expectations are wider,
00:10broader, thinking that today we get something bigger picture on US-China?
00:16Good morning, Anna. No, I think they are quite limited. I think they are quite realistic expectations.
00:21No one's expecting any grand deal today. They want to see that there's some signs of progress.
00:26And I think, in fact, the market is probably, you know, maybe having a small bet on a positive surprise.
00:33I think if we just get the agreement on some rare earths being allowed to export it in return for some tech exports in the other way from US to China,
00:40then people will ultimately be a little bit disappointed.
00:43We've just got the updated data on the real effective tariff rate from the US in April.
00:48It's above 7%. That's on all trade partners is the average effective tariff rate.
00:53That's the realized rate. You know, so that's several multiples of where it's been for most of the last 25 years.
00:59On China, it was up in the high 30% in April. Now, I know it's come down a little bit since then,
01:04but these are really, really extreme levels. And so I think unless you get a positive surprise today,
01:09I feel like the market might just start drifting lower, people start taking profit.
01:13And that's because we're getting towards the end of that suspension period from Liberation Day,
01:18and we haven't had many deals yet. So no fresh record highs for US stocks, for global stocks?
01:27I don't think for US stocks. As you know, Guy, I remain a structural bull on global equities,
01:33and I remain deeply convinced that US stocks will continue to underperform.
01:37What we've seen over the last four months is that US stocks have underperformed by about 7 trillion.
01:41That was mainly a really, really sharp decline underperformance from early February to mid-March.
01:48Since then, they've kind of kept pace with global stocks, and there's no been real further underperformance.
01:53But I have deep conviction in that kind of theme of US relative underperformance.
01:57Can US stocks make a fresh record high? Sure, it's so close.
02:00But, you know, my bet is they actually fail before them. They don't make it to there.
02:03We really need a new, fresh, positive catalyst. I'm not seeing where one is coming on the horizon.
02:07OK, we've been having some really fascinating conversations about FX this morning, Mark, around the dollar weakness story.
02:15OK, today, we've actually got a little bit of dollar strength and euro weakness.
02:18But one guest we spoke to a little bit earlier was putting out there the possibility, at least, that we get to 140 on euro dollar.
02:25Are you having lots of conversations with markets thinking in pretty extreme ways about how weak the dollar gets?
02:31I mean, 140, I'm delighted. That's a new kind of fresh high target.
02:36We've talked a lot in this program over the last four or five months with my kind of theory that euro dollar goes to 130 before 104.
02:42As I said, now I've upgraded that 130 before 106.
02:45I haven't heard a more ambitious target. I'm delighted someone's going even higher.
02:48I think that's absolutely feasible.
02:50Structurally, the US dollar will overall continue to decline a significant way in the coming years.
02:56But it won't be in a straight line.
02:57Can euro dollar overshoot? And I would call that an overshoot to 140.
03:01Sure, it's perfectly feasible, but it won't be in this year.
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