00:00With that focus on tech, did the momentum swing back to the U.S. in the second half of this year?
00:04Yeah, it's already begun. So the momentum has swung back to the U.S.
00:08We think that that continues for now. The U.S. just has much more AI exposure than Europe does.
00:15So that will continue to drive things. And then that's coming through in earnings as well.
00:20So at this point, Europe has almost 0% earnings growth. In local currency terms, the U.S. is 9%.
00:26So that divergence.
00:27How much is pricing on tariffs when it comes to the 0%, almost 0% earnings growth for European stocks?
00:33I think 10% is price, 10% tariffs. If we get higher than that, then we're going to get some downgrades.
00:39But the tariffs exposure in Europe, something we've been saying a lot, is quite idiosyncratic.
00:45You have about 6% of revenues in Europe that are directly exposed to tariffs.
00:49And then much more broadly in terms of the kind of lingering uncertainty and direct effects of tariffs.
00:54Does stimulus coming through from Germany predominantly and some others, does that offset the tariff impact?
01:00Not yet. That's the problem.
01:02Is it a 2026 story?
01:04You'll start to see the trickle through into earnings in 2026, but more kind of in the back end of the year.
01:10And then really, it's actually a 2028 story, because a lot of the projects have three-year lead times.
01:16So you'll see more of the earnings impact in 2027, and then the big blowout in earnings will only come in 2028 for Europe.
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