00:00Laurie Calvacino of RBC writing, the U.S. is a global safety trade in the context of the war and
00:04seems likely to continue benefiting as long as concerns about the war's duration remain elevated.
00:10Laurie joins us now for more. Laurie, good morning.
00:12Good morning.
00:12This is an important question. How war dependent is this tech rally?
00:16So, you know, what we've said is that once the clouds clear, if and when they do, we wouldn't be
00:21surprised to see Europe make a move, right?
00:23That seems more like the recovery trade if the U.S. is the safety trade.
00:26However, I did a survey of my analysts in early April.
00:30So we did it after the ceasefire essentially started, a few days after that, conducted it for about a week,
00:35week and a half.
00:36And what we found was that my European equity analysts don't see a lot of value in their own market.
00:41And, you know, it's something that we've sensed, frankly, talking with European investors as long back as December of last
00:49year.
00:49And it's just this idea that you've had this nice run there.
00:53So I do sort of question how long a rebound trade could last.
00:56And what we've said at the end of the day, if you look at it from the growth versus value
00:59sleeve and growth value in the U.S. tends to mimic U.S. versus non-U.S.
01:02What we have seen is that the earnings story is simply there for the A.I. trade, for the Mag
01:077, for the growth trade.
01:08And whatever residual damage we have coming out of this conflict in Iran, even if we dial down the geopolitical
01:14hostilities, get the straight open, you know, we hear the energy community talk about how long it's going to take
01:18to rebuild things, all the damage that's going to be done.
01:20I don't really see that hitting the earnings of the A.I. and the tech trade that much.
01:25I do see it hitting things like materials.
01:27I see it hitting things like industrials.
01:29I see it hitting things like consumer discretionary and staples.
01:31That is the broadening trade, right?
01:33So I see that headwind, even if we dial down the hostilities, there for quite some time for that part
01:39of the market.
01:40Are you suggesting the exuberance in ships right now is justified?
01:42It's rational.
01:43Look, I try to be the calm voice of reason at both tops and bottoms.
01:48And, you know, we certainly look at semis revisions.
01:50I've talked about this a lot in meetings.
01:52They are at peak-like levels.
01:53That always makes me nervous.
01:55I tend to be a little bit more of a contrarian by nature.
01:57But I have to admit that when I go back and look at the history of semis upward revisions,
02:01they can stay stuck at elevated levels for quite some time.
02:04So I'm watching that chart very closely to see if we get a hint of deterioration.
02:08And we're just not really seeing it right now.
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