00:00We were just hearing from Germana about the timing of the Xi Trump meeting next week, Mark.
00:04And I wonder if that is starting to loom large on the or in the thinking of market participants right
00:10now
00:11as they watch the strength that we've seen in equities on the back of limited news flow really out of
00:15the Middle East.
00:18Very much so. I think it is the big event risk.
00:21And I say that despite knowing that we've got non-farm payrolls tomorrow, which is normally a big data point.
00:26But in reality, you know, we're not going to worry about that job story right now.
00:30The big factor is, of course, the AI theme and the tail risk of what might happen in the Iran
00:35conflict.
00:35So I think Xi Trump is bigger than the data that's coming out.
00:39And then you've also got the conflict itself.
00:41Now, the base case for markets is that there's incentives from both sides, both Iran and the U.S.,
00:48to keep some kind of ceasefire negotiations going into that Trump-Xi summit.
00:52It'll be very hard to have that Trump-Xi summit happening amid a major re-escalation in tensions.
00:58So that's why people are assuming it'll be positive into the summit.
01:01The one other reason why it looms very large in the radar, not only because there's such key players in
01:07global markets,
01:08but also because, you know, something we've experienced over the last 18 months or maybe a little bit less,
01:14is the concept maybe of a Trump call.
01:16We used to talk about the Fed put.
01:17But, you know, quite often when markets are trading, most strongly is when we get a curveball.
01:21And I think there's a little bit of understanding for markets that if we go into that meeting with kind
01:27of confidence around Iran,
01:28stock markets at record highs, everything looking good for Trump on the markets and economy point of view,
01:34then that might be most aggressive on China demands.
01:38And that's when it might really collapse and we suddenly might get some dramatic headlines about trade war, etc. happening.
01:43So I think the base case is to be pretty positive into that meeting or its cancellation.
01:48But it's an extremely hard environment for traders because even though the base case is for continuing to see this
01:55rally,
01:56this extraordinary rally, you know, the risk reward gets increasingly uneasy as we get closer to the summit.
02:04Mark, how comfortable are you with the nature of this rally?
02:06We saw it broadening out a bit yesterday.
02:07About 60% of S&P stocks were in positive territory, about 80% in the euro stocks 600.
02:12So a little bit of breadth yesterday, but the nature has been quite narrow in recent days and weeks.
02:17Is that a concern?
02:18Do you worry about the kind of, again, this narrative of a lack of breadth with that domination of AI?
02:24The short answer is no.
02:26Breadth doesn't worry me too much.
02:28This is an AI-driven rally.
02:29But AI is that, you know, are all the most important names, the most important theme in markets.
02:33And it looks like it's got legs to go further.
02:36I think, you know, we're still in that inflation stage, that bubble.
02:39So I think AI will continue to drag the market higher.
02:42And actually, other parts might play catch up in the short term.
02:46How far does it take us?
02:50So I think it'll actually be, again, even from here, more powerful than people expect.
02:57It's one of those rallies where everyone's going, it's too far, too fast.
02:59I get it.
03:00But you need a catalyst to change.
03:02So even though it seemed extraordinary from here, it's going to get more rocky.
03:04It's going to get more volatile because we're seeing such a powerful move.
03:07It means that the negative headlines, people leap on them.
03:10They get very excited.
03:11But ultimately, with the core momentum higher, I think we're going to get some really crazy, you know, superlatives over
03:17the next week into that meeting.
03:19When then, we'll see.
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