00:00I would say the sectors that we're not recommending right now is a good example can be staples.
00:05If you look into, you know, the markets overall, still quite a cyclical move that we're seeing in the market.
00:10So staples are not growing as fast and they're quite expensive.
00:14So we don't think that this is an interesting part of the market.
00:17You also believe in diversifying away from tech to a certain degree.
00:20I mean, we can, you know, you might be right about it, but, you know, it's never a straight line
00:23up, right?
00:23So where are you sort of diversifying into? Where are you trying to find this sort of, yeah, the sort
00:27of shelter from the tech trade?
00:29I would say the biggest conviction for us globally actually is industrials.
00:32So when you look into what is happening in the industrial sector, massive beneficiary from the AI trade, but also
00:38other parts of capital expenditure rising.
00:41We've seen very strong backlogs. We're seeing very strong orders on the macro side and on the micro side as
00:47well.
00:47And we think that both the European and the U.S. companies are benefiting from this trend.
00:51Just look into U.S. ISM manufacturing data a couple of weeks ago, really, really strong print.
00:57Actually, the highest since 2022 August. So we're seeing that data already coming through on macro and macro side.
01:04Let's come back to the staples story. Staples are up 15 percent. Consumer staples are up 15 percent year to
01:09date in the United States.
01:10Energy and materials have done better. Financials, consumer discretionary, infotechnology and communication services are all negative for the year.
01:19What turns that around? What is the catalyst to turn that around?
01:23I think it's all about earnings. If you look into, for example, the sector that have underperformed this year, health
01:28care, financials, we actually think that they are in a very good spot this year.
01:33I mean, let's look into health care, for example, in the United States.
01:36Yeah, they have underperformed for two years in a row because of the policy uncertainty, but also earnings disappointing.
01:44We think that we're now probably at the inflection point for that sector.
01:47If we look into financials as well, financials also another great example underperformed this year.
01:53There was a bit of a dent on deregulation earlier this year, but we think that overall the earnings are
01:58still quite solid.
02:00Remember, they reported a while ago, just a month ago, but overall the earnings actually were quite good.
02:06I think what we're just seeing right now is an interesting reflection of the sector rotation and the fact that
02:13you shouldn't be just in the tech, for example.
02:15You want to diversify. If you look into one of the best performing sectors this year in the U.S.,
02:20industrials speaks to the diversifications, but also not just the U.S., but also international.
02:26The reason why we're positive on emerging markets, for example.
02:29What happened? If we continue to see this rotation, though, is the index level just going to stay where it
02:34is?
02:35Or is the index level? You're talking about it going higher.
02:38Do we need to rotate back to tech in order to get the index to go higher?
02:42I mean, yes, tech is a very important part of the S&P story for sure, but I think in
02:47terms of the tech, we need to distinguish between software and semiconductors.
02:50And this is where software may be a bit oversold.
02:53You know, there may be some interesting opportunities, but we continue to be positive on semis per se, because, again,
02:59these 600 billion that hyperscalers are spending, semis will benefit the most from that.
03:04Thank you very much.
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