00:00Last week was amazing. Is this week going to be any different? Are we going to see the AI story
00:04fading a little bit?
00:05Does the inflation picture, the more benign inflation picture, give us a more positive risk on kind of momentum?
00:10What do you think?
00:11I think, you know, if you take the realms of equities, I think AI is obviously going to be incredibly
00:16dominant.
00:16We saw from the price action last Friday that once again it's these IT stocks, these communication services stocks, which
00:21are slumping.
00:22And I think the thing for the market is how much can the rest of the broader tape, you know,
00:25offset things.
00:26We're negative year-to-date for NASDAQ and S&P 500.
00:30And I've been arguing for a while that, you know, if the big large-cap companies can't contribute to the
00:35rally, there's only so much, you know, that U.S. stocks can do.
00:38And I think people are looking elsewhere, looking towards Europe, they're looking to South Korea.
00:42But I think the thing is, though, at some point, these are still, you know, good companies.
00:45And I think when they start screening in valuations and becoming more attractive, that will put a flaw into how
00:50far we can go.
00:51But I think the real fear of the market is that anything that is AI-adjacent or, you know, related
00:55to that field is in the firing line.
00:57We've seen some of these, you know, asset management companies, these software companies, which are getting attacked.
01:01So for now, I think people are just going to park in, you know, areas which aren't as exposed to
01:05those factors.
01:05And how AI-adjacent is Europe?
01:08Is it seen as sort of an alternative in this society, just not touching it quite as much?
01:11And, of course, you know, thinking about kind of the space of Europe and the sort of buy-Europe trade,
01:15is that really something that you think is gaining traction with investors?
01:17Well, I think, you know, the thing for Europe is what's been its weakness for the past few years is
01:21now actually playing to its strengths.
01:23You know, it doesn't have this really solid IT sector.
01:26So if you're looking to diverse away from some of these AI plays, then Europe is actually a pretty good
01:30place at the moment.
01:31You know, it's got financials, which inform them really well.
01:34It's got industrials.
01:35You know, it's in all this increased EU spending.
01:37So the story for the EU is very different to the US.
01:40And, you know, if you take things like the dollar, people are trying to reduce dollar exposure,
01:44then, you know, Europe is a good avenue for people to look at.
01:46Now, I keep hearing this view, though, that if we see the US go down, if you diversify into the
01:54rest of the world,
01:55the rest of the world is going to be just fine because if tech goes down in the States, the
01:58rest of the world will be OK.
02:00Korea will be amazing because we've still got this DRAM story, this high-band memory story going on.
02:05But is that true?
02:06If US equity markets go down from here, isn't the kind of the Europe, the diversification, just a relative trade?
02:12Right. Everything goes down.
02:14The US equity market goes down.
02:15Is that right or is that wrong?
02:17I think to some extent there will obviously be some element of contagion.
02:21But I think, you know, from a broader macro perspective, this is a relatively positive global growth environment.
02:25You know, even if we have seen a deficit pricing for the Fed, US growth is still good.
02:29And looking outside of the US, you know, global growth expectations are relatively high.
02:34This is a nice cyclical environment to be in at the moment.
02:36So I do think that will contain some of the contagion.
02:39And also, you know, if these AI companies can become more responsible for their spending,
02:42then it can shake out some of the weak hands, you know, some of the weaker players.
02:46And, you know, this can, you know, we still can see global equities deliver significant returns, even if the US
02:50lags.
02:51Well, Adam Linden, thank you so much for joining us this morning for your take on the markets
02:55and everything that we're watching going into this week.
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