00:00I do agree that while earnings have been a driver so you haven't really seen valuation
00:05move up. In fact if anything it's generally moved down a tiny bit globally. You've also
00:11got a bond market which is now yielding in the case of Germany sort of two and a half
00:17to three percent. In the case of the UK and the US around four and a half five percent.
00:21These are very high yields. They must provide some attractive alternative asset to equity.
00:27I think that part of the problem is the big fear for investors is inflation and they regard
00:31equities as a little bit of a savior, a safe haven in an environment of slightly higher
00:35inflation. Yeah. And then which sectors become more resilient or look more resilient if yields
00:40stay higher for longer? Well I think the sectors that would be most damaged by constantly higher
00:45yields would be rate sensitive sectors say like real estate or home builders. They would benefit
00:51of a quick resolution in this war. If energy prices start coming down they would certainly
00:55benefit from that relief, that relief in inflation, that relief in rates. If you don't get that
00:59if they stay sticky and high then you want to be in things that can grow out of your problems
01:03as it were. Things like tech, things like utilities, things like industrials.
01:07Okay. Just coming back to what Neil was talking about. I wonder how you play the AI story when
01:12it comes to Europe. Yeah it's it's trickier in Europe because there are fewer names with very
01:17direct exposure but there certainly are some. So we like tech in Europe where we do think that
01:23there are big beneficiaries of the AI transformation that we are seeing. But industrials are another
01:28way. Utilities, especially renewable companies, we're going to need more energy. Not just for
01:33the AI story but more generally broadly across Europe you need more. So I think there are actually
01:38plenty of sort of market cap ways to play it in Europe as well. And you don't worry about the
01:42single
01:43dominance. There's I mean it's a global trend but of single stocks so strong within the tech space.
01:49Within the tech space. It is a worry for global investors and in fact in some ways it's to
01:53Europe's advantage because U.S. investors in particular see that when they invest in the U.S.
01:57they're investing in five or six companies really and they're very concentrated in their sector
02:00exposure. Whereas if you invest in Europe it's been much. The breadth has been wider. It's not
02:05been as concentrated. It's not been as strong either. I mean it's not been as concentrated and
02:09that's one attraction for global investors of investing in Europe.
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