00:00Mark we just talked to Marty about just what we kind of got out of this read but the markets are shrugging their shoulders. Is that because the positivity was earlier this week or is this a nothing burger? I think you're absolutely right. I think that this week has seen a big development in the U.S. China relationship. As Marty outlined things haven't gotten worse. If anything there's a slight kind of improvement at the margin situation. But most of the actual positives which Trump confirmed today were negotiated earlier in the week in Malaysia. So everyone's kind of going oh we're delivered exactly what was
00:29said in the tin. No positive surprises and at the margin there wasn't a discussion of Blackwell chips which is the driver of yesterday's market moves in NVIDIA that kind of pop there. So at the margin it disappointed today but this week it's been positive. You're really risk on. You don't see any downside at the moment. Why? I just I've been looking all day for a reason to be bearish. There's only one theme that matters in markets and that is the AI theme.
00:59You know the U.S. China thing has been a bit of a distraction. These central bank meetings don't really matter at all. There's loads of them but they don't really matter at all. It's all about AI and we've talked about the breadth of market. There is there's no breadth. That's not a reason to be bearish as we discussed before. It's a reason to kind of worry about that one theme. But I'm just not seeing any reason why you'd be bearish AI right now. I do believe we're in an AI capex bubble. I do believe it's going to burst disastrously at some point. But I think it's probably well into 2026. Now I'm completely open-minded.
01:29I'll be ready to spot the bubble bursting as soon as it happens. But why is it going to happen now? All the messages we're getting from all the companies at the core of this is that the spending is still immense.
01:39Earnings are still strong enough. So we're kind of inflating the capex bubble even further. It's not close to bursting from what I'm seeing. And therefore I find it very very hard to be bearish.
01:50Now I understand why you might not want to buy more because everything is expensive. The bullish story is priced. Fair. Don't buy more. That's going to be. But there's no reason to be actively bearish here.
02:01Mark you're making me put my bear hat on. How much of this equity rally even if it is Mark I pull it out for Mark when he turns bullish every once in a while.
02:10Mark how much of this equity rally at the end of the day is really the market getting lucky because you have a range bound bond market a range bound FX market and frankly a range bound oil price.
02:21How much of this is luck given that there are no bigger cross asset moves.
02:25Is that luck or is that the fundamental drivers. I mean some of the fundamental drivers are is that the Fed is is is cutting rates despite the fact that assets are a record high despite the fact there's no real looseness in the labor market yet.
02:39So it's an unusual time to be cutting rates and we're getting guidance that's me cut. So that's the reason we don't have the rates volatility. We haven't had FX volatility for years. That's fine.
02:48And you know we're getting constant pressure to get increase in oil supply which is also good for the market. So I would say that there are positive fundamentals rather than luck.
02:57I think you know the base case here is very very bullish. At some point there may be a black swan to derail it and that will cause the volatility you're talking about.
03:06But I don't think it's luck to just see the fundamentals as being supportive.
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