00:00Yeah, it tells us to focus on the fundamentals, and that's why we continue to remain positive on equities for
00:05this year,
00:06because when you look at the earnings trajectory for equities, it's just gone from strength to strength for 2026.
00:12Is it all because of tech? I mean, is this dispersion so weak where it's all piled into one or
00:18two sectors? It's not good math?
00:19It is definitely tech leading the charge, but we are also seeing outside of the MAG-7, the 493 are
00:25also pulling their own weight.
00:26I saw recently you took your view on gold down to neutral, and it's down about 18% just since
00:34kind of late January time frame.
00:36What's the call there?
00:37Yeah, in terms of gold, we think about it as a pause in our views.
00:41So that central bank demand story is still ongoing, but the correlations between gold and other asset classes have clearly
00:48shifted over the last few weeks.
00:49The old drivers of real yields and the dollar are reasserting ourselves.
00:53And so in a multi-asset portfolio, we think it's prudent to pause on that view.
00:58Higher, it looks like energy costs higher for, I guess, a little bit longer than people maybe initially hoped at
01:05least.
01:05How does that factor into your inflation call, your growth call, and maybe your asset allocation call?
01:11Yeah, in terms of where we stood on February 27th, the day before the conflict began,
01:16we definitely saw more upside in terms of inflation risk, but we also saw the economy as running hot this
01:22year.
01:22And that's what led us to be negative on duration overall.
01:25Clearly now that inflation risk has picked up, and that just reinforces our more cautious stance on bond yields for
01:32this year.
01:35Equities, you know, we had seen equities performing quite well.
01:38We'd actually seen a rotation a little bit in the U.S. equity market starting late last year.
01:43Is that rotation into more cyclical, maybe more value-oriented?
01:47Is that still a play for you guys?
01:49We're taking a pause on that rotation at the moment because when it comes back to bonds,
01:53clearly the driver of higher bond yields has been inflation, bond volatility, the pricing out of central bank cuts.
02:00And that is a toxic mix for cyclical parts of the market.
02:03I love it.
02:03It's a toxic mix.
02:05It's not Schroeder's talk.
02:06It's a toxic mix right now.
02:09Ten-year real yield, I'm sorry, it's a toxic mix.
02:12Where is your range bound where there's a breakout?
02:14I got the tenure here, 2.02.
02:17It's been 180, 190.
02:19Boring.
02:20At what point does that come up and get outside its recent collar, its band?
02:25Yeah, we're actually thinking about nominal yields.
02:28So if we see a break above 4.5% on the U.S. tenure, we think that would be
02:33the tipping point for equities.
02:35So we're not there yet.
02:36We do think 4.5% will hold.
02:38But if we were to break materially higher, that would cause us to reassess on the equity deal.
02:43How does China play into your – I mean, Schroeder's goes back to China.
02:46I mean, they were there like 1864.
02:48How does China play into all that we're talking about?
02:53I mean, I guess GDP's threatened, global GDP, I think Gita Gopaness is sub-3%.
02:59How does China play into all this?
03:01Yeah, when we think about the international markets, we've actually been focused on select economies.
03:07So less emphasis on China this year, more on the Asia tech, Korea, Taiwan, where you do have that memory
03:13in the semiconductor cycle that continues to power through and support the fundamental outlook that I spoke about with equities.
03:19I think coming into 2026, one of the, I guess, more favorite trades was continued weakness in the U.S.
03:27dollar.
03:28That's turned around.
03:29Yes.
03:29So how do you think about the currency markets in the dollar here?
03:32Yeah, so we have upgraded our view on the dollar.
03:35We like to play the dollar versus the euro.
03:37Clearly, when it comes to U.S. exceptionalism, one of the bedrocks of that has been energy independence, and investors
03:44are now reminded of that.
03:45That being said, if you were to ask me in February where do I think the dollar would trade, euro
03:50dollar, more likely 1.1 instead of 1.15 where we are today.
03:56So you still see there is a bit of a political risk premium embedded in the dollar, which we think
04:00will persist.
04:01Did you participate in the Korean moonshot, the Kospi moonshot?
04:07Oh, yes.
04:08We have favored Asia tech, and the reason for that is because there is clearly within the A.I. space
04:15in the U.S., there is clearly a battle that's playing out between the A.I. winners and losers.
04:19When we think about which parts of the market are going to be more agnostic to that battle, we think
04:24it's Asia tech, Korea, Taiwan, which has led us to be long those markets since the middle of last year.
04:31Wow.
04:32So talk about alpha generating.
04:35I mean, to me, Kospi is the roulette wheel of Asia.
04:38That's the first thing I looked at every morning as well.
04:42Quickly here, what is your insight for people scared stiff?
04:48I think the thing to remember is that when it comes to geopolitical shocks like this, they are, while often
04:54scary in the moment, they are short-lived when you compare to other sort of shocks like a labor market
04:59weakening or higher rates.
05:01And so we do just have to bear that in mind when thinking about in the fog of war, we
05:05need to focus on what we know and what we know is the fundamentals at this point.
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