00:00We have the latest iteration of the AI trade scare, don't we? It seems to be rolling from
00:04one sector to another. Before everybody in a white-collar job decides to go off and retrain
00:09as an electrician or a plumber, what can you tell us about the latest instalment?
00:14That sounds like a good idea, doesn't it? If you become a person who's good at installing
00:18data centres, then you're going to be minted for the next few years, Anna. But, you know,
00:22as far as investments are concerned and what the stock market is doing, this latest event
00:26is kind of interesting because it's sort of come from nowhere. This company that used
00:30to be like a karaoke company reinvented itself as a logistics firm instead. And people are
00:35looking at the business model that it has and how it's using AI to allow for scalability
00:41at reduced costs and thinking, well, this is one more area where AI can excel and can therefore
00:47do the job that other companies are doing at much more expensive levels, much more cheaply
00:52and undercut them. I think there's a really good quote in the story, which is about this
00:55idea. The level of paranoia is category five. So basically, people are looking at what is
01:01AI going to be able to do sometime soon, which companies are vulnerable, which ones are the
01:05ones with the high costs, high human kind of work hours, labour intensive, those kinds of
01:10things. Those are the models that are under pressure at the moment. And so that's where
01:13we're seeing that sort of, you know, series of selling efforts coming in right across the
01:18market.
01:19It imported karaoke machines. So it was tangentially in the logistics business.
01:25Bad for America, good for Asia. Is that the trade?
01:30It's definitely one thing that we've been seeing playing out. I've been really interested
01:34in this, just how much the US market has underperformed this year, Guy. So the S&P went negative year
01:40to date yesterday in trading. In Asia, we're still displayed a setback today, you know, more
01:46than 10 percent for the year to date. And part of that is this idea that, you know, Asia is
01:50at the top of the sort of supply chain when it comes to all of the AI infrastructure, equipment,
01:55chips. And some of the companies are doing extremely well as a result of that, not just the memory
02:00chip makers in South Korea, but also in Taiwan, TSMC, and the Japanese firms as well. And so that's
02:06leading to this big outperformance. But I think that it's more than that, because it's not just
02:10Asia, right? Over in Latin America, the market's up 20 percent this year. So it's more this idea that the
02:15rest
02:15of the world is outperforming the US quite considerably at the moment.
02:19Paul, when I think chips now, I think inflation. We have CPI out of the US later today. How
02:25vulnerable are the markets to a higher print?
02:30Yeah. So the Fed pricing has been wobbling around quite a lot at the moment, hasn't it?
02:35And the payrolls that we got earlier in the week, confusing us enough, which is because it was on a
02:39Wednesday, not a Friday, sort of had everybody pushing back again their forecast for when the Fed
02:45would begin cutting interest rates. If we get high inflation on top of that, then, you
02:50know, people are going to be thinking, well, how on earth is Walsh going to be able to convince the
02:54FOMC to do those cuts that we decided to price in? And that could be bad news, not just for
02:59the bond
02:59market, but also for the stock market, for people who have been counting on the idea that the Fed is
03:03going to be
03:03lowering interest rates through the course of this year, based on the fact that we're going to have a new
03:08Fed chair that would lead
03:09them, the rest of the board to do that decision.
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