00:00Mark, as we wait for NVIDIA then, what is catching your eye in the global narrative?
00:03Are we pausing for breath on the higher yield story?
00:07Is that the message out of Japan and, again, here in Europe as well?
00:13I think that the yields move is getting to those levels where this is getting close to the end for
00:18the now.
00:18I'm not quite sure it's over yet.
00:21I think what is interesting is that bond markets are suddenly over the last week, the last nine sessions or
00:28seven trading sessions, I should say, have priced in the straight being closed for a substantial amount of time.
00:35But central banks being asleep at the wheel.
00:37And that's why we're seeing the long end in particular get hit.
00:40We're seeing that steepening.
00:41If they thought central banks were going to react to inflation, then we'd see more aggressive flattening.
00:45So bond markets are kind of pricing the straight closed almost in isolation.
00:50We're not seeing it in other asset classes.
00:52The other thing out there is, just as you guys have been discussing with Neil Campling, is I think the
00:57Samsung story is potentially massive.
01:00We just outlined recently that Samsung and SK Hinox are two of the five most influential stocks on global portfolios
01:06at the moment, given their volatility and what that's having on other asset classes.
01:11Not two of the five largest in terms of markup, two of the five largest in terms of impact on
01:16global portfolios.
01:17And I think because retail is driving the trade, they're kind of ignoring what's happening on this Samsung strike.
01:24And if the strike does go ahead, you've got a major problem on Korean stocks, which are really kind of
01:30the bellwether or the poster for AI retail enthusiasm.
01:35And I think that will have massive contagion effects, never mind the secondary effects that Neil Campling was arguing about,
01:41you know, the fact that we might have a shortage of memory chips later on.
01:43That's it. That's another problem.
01:45Just the immediate stock market impact will be quite large.
01:47So I think there's quite a bit going on at the moment.
01:48And I'm getting a little bit more nervous again.
01:52What about what's happening in the Gulf? Getting nervous there?
01:57Well, my base case assumption is that there must be material escalation to resolve it.
02:03Now, obviously, I have no geopolitical insight or kind of special kind of knowledge there what the U.S. is
02:09going to do.
02:10But there doesn't seem to be an obvious resolution.
02:11And that needs to be resolved.
02:13If that is not resolved, we're going to get major asset price dislocations in the coming months.
02:18So even though material escalation perhaps this weekend would be negative in the short term and see dramatic headlines, that
02:25is actually the better outcome for risk assets.
02:27I'd be much more bearish if we are not getting the straight resolved anytime soon.
02:31Mark, can I just tie that back to your first answer on what we've seen in terms of the bond
02:35markets?
02:36If we start to hear more hawkish time from central banks and action potentially, does that then put a cap
02:41on yields, particularly at the long end?
02:46So that'll see front end yields go higher again.
02:49It'll probably be more problematic for stocks just because we get a further kind of tightening at the front end.
02:54But ultimately, yes, we will see flattening.
02:56It'll get everyone kind of realizing, hey, we're going to have a growth impact here because the central banks are
03:02tightening financial conditions
03:04just as we're getting a stagflationary impulse.
03:06So we'll see a flattening of the curve.
03:07We'll see the long end come lower while front end goes higher.
03:11Either way, it wouldn't be great for stock markets, which is why I think the deterioration there is going to
03:16linger a bit longer.
03:18OK, continued pressure, at least in the short term, across the global equity markets.
03:23Thank you, guys.
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