00:00Many people think that 5% is a magic number, right?
00:04Our economies don't think we are going to go to these levels.
00:07So we are still quite, I'm talking about treasuries, right?
00:12But their concern is, and that's my concern as well,
00:16is that the higher bond yields eventually will mean lower GDP growth, right?
00:21Because the financing of the very high debt in the US is going to be even more expensive.
00:27This is going to eat into growth.
00:30And it's not an ideal situation with the pressures to growth
00:33that we've been already seeing through the tariff risks.
00:38What does this do to the fund flows from US equities or US assets into European assets?
00:43Does it accelerate that story?
00:45Or does it lead to broader contagion risks and money on the sidelines?
00:49That's an interesting one.
00:50So we've been flagging the need of diversifying away from the US assets.
00:57It's diversifying, right?
00:58And given the scale of the US assets, just small diversification means a lot for the prices of other asset classes.
01:06And we started to see it in the fund flows, right?
01:08So the last few weeks, well, since the start of the year, we've finally started to see inflows into the European equities and around 30 billion, right?
01:20Just below 30 billion.
01:21So that's a lot for European equities. However, in the grand scale of things, given how much outflows we've seen beforehand and since the Ukrainian war has started, we've seen 16% of assets under management worth of outflows.
01:37So the latest inflows have offset only 10% of the previous outflows.
01:42So there's another 90% to go. And the stock 600 is up 99% year to date. The S&P is essentially flat over that time frame.
01:50That story, that divergence then continues through the year.
01:53I think so. And it's not only the story of inflows into Europe that has been very under-owned.
01:58It's also the story of the US, which has been fully owned, especially for the international investors.
02:05So there are signs. And again, if it's going to happen, it's only starting because it's just made a small dent in the previous inflows.
02:14So international European investors diversifying back to home.
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