00:00We started the year positive equity, really on the view that earnings will deliver and will continue to drive equity
00:07higher.
00:09And the fact is we haven't changed that view.
00:11A lot has changed since the summer of the year.
00:12A lot has changed and we come to that.
00:13But I think when it comes to earnings, when you look at the fundamentals, things haven't changed, right?
00:18Earnings have continued to deliver very strongly.
00:20They've been not only resilient, they've been remarkably strong.
00:24And I think this is really what we say at the beginning of the year, which is this is going
00:28to drive the market higher.
00:29And so far, we're sticking to that view that as long as the earnings are strong, we see no reason
00:34why equities should slow down.
00:36Is that a this quarter story, though, as we look out to future quarters, given the margin squeeze that could
00:42be coming through?
00:43Does that does that does that narrative start to erode the longer this this straight of foremost closure continues?
00:49Is that is that the risk?
00:50I mean, there is it is clearly a risk.
00:52And I think, you know, we were talking about what has changed.
00:54And I think what has changed is probably at the beginning of the year, when we were looking at risk
00:59scenarios, all the risk scenarios were skewed more towards the inflationary risk.
01:03Today, we have to acknowledge that with the disruption in the Middle East, the risk between inflation and growth are
01:10more balanced.
01:11So I think clearly we have to acknowledge that.
01:13So it's a question of time if we, you know, if we if we meet if we sit here again
01:18in six months time and all is still at 100, 150, then probably our base baseline view is going to
01:24be challenged.
01:24But for now, earnings are being are being delivered.
01:28We're seeing actually upgrades in earnings expectations.
01:31So we think still strong fundamentals which support the idea of a strong equity market is that any story only
01:37limited, though, to what we're seeing in tech.
01:40So there is no no hiding from the fact that clearly the earnings story has been narrow.
01:46Right.
01:46You're right.
01:46Tech has been driven by tech has been also driven by energy.
01:50But by itself, this is nothing really new.
01:52Right.
01:52We've been in this environment for for a long time.
01:55So we have to accept that part of the markets of narrow part of the market is driving the markets.
01:59It doesn't mean it's bad by itself.
02:01I think the second point is if you look outside of tech and energy, the rest of the sector.
02:06Yes, we haven't seen upgrades, but we haven't seen downgrade neither, which I think is quite remarkable in such an
02:12environment.
02:12So I think it shows that the underlying data, the underlying economy are quite in good shape.
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