00:00Talk to me about what is happening here, because at the moment it appears we have two trades that are
00:04on.
00:05One is the oil trade, and the other one is the AI trade.
00:08And the Venn diagram doesn't appear to overlap right now.
00:12Does it? Should it? Will it?
00:17I don't think it will overlap massively.
00:19Of course, everyone goes that the AI trade is ultimately an energy trade.
00:23But essentially, they are price setters, so they can just pay the cost and kind of pass them on.
00:27Or at least that's the narrative at the moment in AI.
00:30So even though you think that there's a massive overlap and people have tried to play the AI trade over
00:34the last year,
00:35even long before the contract, through the energy angle, they don't completely overlap right now.
00:39I think the AI theme is much more important.
00:42For the last year, it's been all about AI, and everything else has been kind of secondary.
00:46And it took us a while to kind of register that, you know, all the noise around trade tariffs, everything
00:50else, all secondary to AI.
00:52Now, for the last, you know, two months or maybe less than that, for maybe only just for March,
00:57we temporarily got distracted from the AI theme to focus on the Iran conflict.
01:03But, you know, since ceasefire was declared the start of April, we've been back on the AI trend.
01:07Now, does it stay that way for the rest of the year?
01:10I'm not convinced.
01:11I think there's two things to think about.
01:12I think one is, obviously, if the narrative in AI changes suddenly,
01:15then the backdrop otherwise is more negative.
01:20And therefore, you shouldn't rush to buy that dip if it turns negative on AI.
01:24If it turns negative on other reasons, people will still buy the dip.
01:27So I think that's one kind of narrative there.
01:30The other thing is that, you know, if the Iran conflict, because there's still no resolution,
01:34if it really kind of flares up again, because that's seen as the only off-ramp is for the U
01:39.S. to re-escalate,
01:40well, then that'll come back into the kind of radar and kind of steal the limelight again
01:43for a few weeks while we get through that.
01:46Mark, when do higher yields become a problem for equity on markets?
01:52You know what?
01:53Not right now.
01:54Not while we're so focused on the AI theme.
01:56What they're doing is they're eroding the background fundamentals.
02:01So, again, they're making the dynamic much worse if and when the AI narrative changes.
02:08But they're not going to be the catalyst in isolation to change that story.
02:13And I think, unfortunately, we do have a real stagflationary impulse coming through from the conflicts in the Middle East
02:18that's going to continue to feed through the data.
02:20But, again, that doesn't change the narrative alone.
02:22AI is the most important story.
02:24What it just means is that, you know, last year, if the AI story took a bump, you bought the
02:28dip rapidly.
02:29You knew it would be temporary.
02:30The underlying fundamentals were so bullish until the Iran conflict.
02:33What's changed is the underlying fundamentals are not quite so bullish.
02:37They're still pretty constructive.
02:38And, therefore, if the AI narrative turns suddenly, well, then things could really fall quite powerfully.
02:44But, again, you don't want to preempt that.
02:47Mark, you've just come back from the U.S.
02:50How different is the view of U.S. investors on what is happening in the Gulf versus what the rest
02:57of the world is seeing in the Gulf?
03:01Yeah, they've been much more relaxed about it.
03:05I think correctly so.
03:06Remember, they are much more insulated from the direct effects.
03:08And their energy exporters say in many ways that their companies are more oblivious to this.
03:12They are starting to realize there's not an easy resolution.
03:15And the energy impact is starting to feed through over there.
03:17So they're suddenly turning more negative over the past week or so.
03:19So they're starting to see what's happening in the Gulf of the Gulf of the Gulf of the Gulf.
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