00:00That resilience that we're seeing, that push higher, okay, it might come to an end today, but that push higher in U.S. stocks, has that come as something of a surprise?
00:09It's been very impressive, price action in U.S. stocks, and like Critti, I was quite stunned by that rebound in consumer confidence.
00:18I think the nominal levels are still way well down from where they were only a few months ago because we really fell a long way, but it was quite a powerful bounce,
00:25and we seem to be seeing this impact that we get a threatening tariff headline, we get a Trump reversal,
00:31and we nearly seem to be in a better position than we were before, which doesn't really make sense because there is uncertainty for businesses,
00:36there is raised costs for businesses. As we know, in April, we talked a lot about we expected a relief rally.
00:42Markets had got over bearish on what's a very, very long-term multi-year theme of the end of U.S. exceptionalism.
00:48But still, this resilience has gone further than I expected, price action is very good, and I think the pain trade from here is to continue to squeeze higher.
00:55So maybe NVIDIA beats tonight. That said, the backdrop, the long-term trade, we always said this, you know, Guy asked whether we're in the fog right now.
01:03We are in the fog. We knew that we were going to be in the fog because the hard data is probably not going to show real pain until at least June and maybe not until July.
01:11And therefore, we always knew that this was going to be a really tough period to trade because the long-term structural trades are clear.
01:16The Sell America trade is valid. Dollar weakness, long-term. Treasury is going to stay under pressure long-term.
01:22And U.S. stocks will underperform. But are they going to underperform in a bull market or a bear market? That's what's harder to know.
01:29Mark, I'm trying to figure out the 40-year, the Japanese 40-year. I've never cared about the Japanese 40-year before in my life.
01:38And suddenly I care about the Japanese 40-year. How is the Japanese 40-year connected to the rest of the world?
01:44Why do I need to worry about it? Should I be worrying about it? Is this some sort of systemic risk story that I need to be thinking about folding into other asset classes?
01:57Yes. I think the short answer is yes. We probably don't have time to go into the details of that.
02:01You know, for the details, probably read my colleague Simon White's piece on this excellent from a week ago macroscope column.
02:06But the fact is, Japan has this massive debt. Now, yes, a lot of the debt is owned by the BOJ and it's owned domestically.
02:14But that doesn't change the fact that they've got this very, very large debt pile.
02:18And many people see the long-term outcome is they're going to have to monetize it.
02:21And now with rising inflation, rising yields, they're in a bit of a negative spiral there at the moment.
02:26And the fact is, if Japanese investors, who are one of the largest holders of foreign assets around the world, particularly U.S. assets,
02:32if they bring capital home to buy higher yields in Japan, that's going to have knock-on consequences around the world.
02:37So that's the short answer. Not enough time for the long one.
02:41All right. Well, putting on the spot, Mark, 20 seconds. When does that sentiment bleed into Europe?
02:49I think it will do. I think this is a global debt reckoning. But this is a really long-term story.
02:54You know, we're debating this morning, is this even a story for this year or is it more for next year?
02:58I feel like we're at the initial stages of this debt blowout. How quickly it moves is really, really hard to predict.
03:04These things go very quickly, then really slowly, and then suddenly they go off a cliff again.
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