Why Investors Are Pricing in Risk of K-Shaped Economy

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00:00I think people are looking at competition coming through and it's not just within the US. You look

00:04at models elsewhere within Europe, within Asia, you know, China's launching quite a few right now,

00:09the cost effectiveness. So I think there's been a lot of talk about how to make AI training and

00:15more cost effective, right? So I think now that's what the market is looking at right now. I still

00:19feel this is a rising tide that lifts all boats in terms of total market capitalization and value

00:22that's essential. But again, going back to our data, we're not our clients are not really taking

00:26their positions away from AI or semis right now. That's quite resilient. If I look over the last

00:31few weeks, but our clients exposure in US consumer related stocks, discretionary staples by food

00:38production, for example, that really is coming off. So it's coming off. So that's where I look at more

00:43of the K-shaped economy issue. That's what our clients are pricing in. Yeah. Tell us more about

00:49that because we're going to get another take on the US consumer at the end of this week, I think,

00:52Michigan sentiment, a whole lot of data coming from the States. So the K-shaped thing is real

00:58and people are investing around it. That's what our clients are positioning. And you can think

01:03about it in two ways. A, it's if earnings growth in real terms, that starts to come off and it's

01:08being eaten away by inflation. Or from a corporate investment point of view, from equity performance

01:13point of view, if companies are worried about US consumers starting to unwind a bit, then they

01:18have to sort of upper end consumers through them. No, no, no. So on the food production

01:22side, consumer staples. Yeah. Consumer staples seems like an odd thing to be doing in that

01:28sense as much as more stress. You would have thought the margins. Yeah. So it might be just

01:33potential margin stress coming through. Again, that's not totally in sync with the macro data

01:37that we're seeing right now. But it feels like where clients where they have limited resources

01:41or they want to deploy their allocations, certainly much more skewed towards the investment side,

01:46the capex side rather than consumer side.