00:00How big do the dips have to be to be for them to be worth buying? I'm looking at airline
00:04stocks,
00:04for example, down today, but surely at some stage things will open up again. Korean stocks down
00:10today, but you're talking about that positive underlying story. That's there, isn't it, for the
00:14cost? Exactly. So if I take Korea as a great example, Korea is a really good example of if
00:20you look at the actual number of how much it pulled back, it's enormous. I think it's one of
00:24the kind of top 10 biggest ever pullbacks. But if you actually look at it versus where it was
00:28at the point it pulled back, it was up something like plus 60. So plus 60 to then minus 12
00:33is not actually as much. Then it's still like basic maths plus 48, right? So they are where
00:38it's really interesting to buy the dip because you've got the structural opportunity set within
00:44the Korean market. It's a really interesting market, emerging markets. On the one hand,
00:48you've got the structural winners of AI. And on the other hand, you've got some really interesting
00:52value opportunities, particularly in Latin America. That is where it's worth buying the
00:56dip. Where it's more nervous in terms of buying the dip, Lizzie, is where they are potentially
01:01value traps. Now, actually, where it looks to travel, that is a real area that it's very
01:06interesting and important to be selective. We still, for example, are underweight autos.
01:11It is an area that we still think is under real structural pressure. So don't be buying the
01:15dip there, but be buying the dip where you still see the structural opportunities. The other nervousness,
01:21I would say, and I think the thing that I would love, and I know that you've already talked
01:24about this this morning, it's important we don't get macro complacent. I want to go back
01:30again to this jobs data we saw on Friday. It was not great jobs data. A couple of weeks
01:34ago, we were talking about AI and the implications of AI. I think that's where we need to focus
01:39because we don't know where home is going to be reopened. We could all sit and speculate
01:44on that, but actual macro data, not great. This is interesting because we had a debate
01:48at the start of the show as to whether or not the jobs data was important in this environment.
01:52Helen Jewell, you're coming out and saying, yes, it absolutely is. In fact, that's partly
01:56where you're, or more largely, where your attention should be. So what does the US face right now?
02:01Is this a stagflationary environment? What assumptions are you making about the Federal
02:04Reserve as the labour market weakens and inflation shocks come through?
02:07So it's a bit too early to call it stagflation. I mean, stagflation is a kind of much longer
02:12period where you've got the higher inflation and you've got lower growth, but they have now
02:16got a less clear path forward in terms of the Fed. It was pretty clear that the Fed was going
02:21to cut rates. It's going to be much more difficult for them to do that if you've got the stickiness
02:26in inflation. And all of that will come back to how long Hormuz stays compromised for. If
02:32this goes on, and I think kind of the end of the month is currently the feeling that if
02:36it reopens before then, that we will start to see the oil price kind of pull back and the
02:41inflationary concerns go away. But if it goes on for much longer than that, then there is
02:45no doubt that they are caught between the inflation on one side and the lower growth that potentially
02:49is coming through on the jobs for the other. So I think compromise, Fred, is definitely
02:54what we are seeing. And again, therefore, what we're seeing is we're seeing a move towards
02:59where there is resilience in the earnings numbers and when there is certainty in earnings as well.
03:04It's only a month ago or so we were talking about the uncertainty around AI. So you've got
03:08these two blocks of uncertainty at the moment, both of which means that there is a real focus
03:13and a flood to certainty in earnings where that's not already been overbought. So a huge
03:19amount that is going on. And I think that's again where you can't just look too much into
03:22saying, OK, that sector, you know, defense this morning is off. That kind of in some ways
03:27doesn't make sense. But that is because it's a crowded area that when the markets and portfolios
03:32are de-risking, that is where the portfolios are de-risking from. So short answer, Tom, uncertainty
03:38about the Fed path, which we didn't have just a few weeks ago.
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