00:00You can make a strong argument for the flation right now.
00:02Can you make a convincing argument for the stag?
00:04No, and I think that that's the reason why we're still, you know, we're cautious, but we're not bearish.
00:11And I think that's the thing that's got to really change here, Jonathan.
00:14And our argument has always been you have to see these elevated commodity prices remaining higher for longer.
00:23And historically, if you go back over 100 years, you know, each of these big stagflation shocks that we've had
00:29has seen interest rates go up.
00:31And I heard you talking about interest rate rises this morning.
00:34So what's in the futures market?
00:3525 basis points.
00:37That's nothing.
00:38Normally, if you have a stagflation response, a policy response that's going to deliver stagflation,
00:43it's 250 basis points.
00:45It's 400 basis points.
00:46That's the kind of policy move you'd need to see coming out of the Fed.
00:50If you look at where we are now, the data's OK, the earnings are great, big tech's still spending,
00:55and the Fed's not hiking, it's hard to be anything other than bullish, isn't it?
00:58Well, you know, you have to be somewhat cautious because it could tip the other way.
01:03As you say, if we move back into a kinetic world, you know, I'm a bit more pessimistic, perhaps.
01:09I think if we saw oil prices up to 120, you know, after a few attacks on Iran starting again,
01:14you know, then you'd actually start to see the bond market, maybe that 30-year above 5%.
01:18That starts to weaken people's, you know, positive outlook.
01:23But underlying that, you are absolutely right, Jonathan.
01:25The point we've been making for a year and a half, double-digit earnings growth with interest rate expectations
01:30still, you know, a year out, down rather than up in a meaningful way.
01:35You know, hard to be too bearish, isn't it?
01:37You know, hard to be too bearish, isn't it?
01:37You know, hard to be too bearish, isn't it?
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