00:00Lucy, of course, we're focused here in New York on the U.S. markets. You're talking about the United States, but we've seen real outperformance in the rest of the world.
00:10What do you expect in terms of that kind of continuation? Will we still see Europe, Asia, EM outperforming U.S. equities into the end of the year and next?
00:22Well, I think as you look longer term, you're right. The expectation that you're going to see perhaps better earnings growth coming through in other parts of the world is definitely something that investors are focused on.
00:33Usually when you have a Fed cutting cycle, and by the way, our view is that the labor market is weak enough, given some of the data we've just seen, the layoff data, to get this cut in December and then a couple more cuts next year.
00:44When the Fed's usually cutting, that broadening thesis tends to hold both in terms of the U.S. stock market performance, but also in terms of rest of world.
00:53And so our expectation is you are going to see that. I've just come back from China as an example, and there was a lot of buzz there, particularly around AI.
01:00And again, that's a market where it's trading on 13 times forward earnings relative to obviously the S&P on 23.
01:06So there's much less of a valuation concern in terms of the capping of that upside and an expectation that you can have some really, really strong earnings growth from some of those high-tech sectors.
01:17So we like many of the emerging markets, China included, where we'd be overweight.
01:22And even for Europe, when we look into next year, we've sort of got mid to high single-digit upside in earnings.
01:28And then obviously in terms of that expansion in the market next year, I think the concerns people have has been around some of the narrowness, both in the European market
01:37and in the U.S. market, as being an indicator of, again, issues to watch for.
01:41So we're cautiously optimistic, and we're still very much long and overweight equities from an asset allocation perspective as we go into next year.
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