00:00Is this a healthy consolidation that we're seeing when we look at the NASDAQ 100, when we look at the
00:04COSPI,
00:05or does it point to a more kind of foundational and structural shift in sentiment?
00:11I mean, it's been a remarkable rally. It's been pushing these momentum stocks up a lot.
00:17There's a lot of speculative positioning that has built up, leveraged ETFs, all kinds of options positioning.
00:22So I think you could say it is healthy, that you get a bit of a step back.
00:26I think the rally was very much driven by earnings, which was unusual.
00:30You remember, you have like 320% earnings growth on the COSPI this year.
00:34So it was already fundamentally more healthy than a lot of these momentum rallies that we've known before.
00:39Less valuations, more earnings.
00:41But I would say, considering what we see on some of the positioning data,
00:45it's probably not a bad idea to see a bit of a consolidation,
00:47to kind of see if there is some leverage buildups that get flushed out.
00:52And I think fundamentally, obviously, we had the Broadcom results,
00:55which made people kind of rethink, in general, kind of how you want to extrapolate those earnings,
01:00because it's a very cyclical industry.
01:03Like tech hardware and semiconductors, 320% earnings growth for COSPI.
01:07You need to be very careful what you extrapolate from that.
01:10So it's quite healthy to rethink that.
01:11You're very clear that semiconductors remain cyclical.
01:14I think, listen, it's a good question, because you have a multi-year trend here in AI CapEx,
01:20and you could say, look at NVIDIA, how it's starting, how it's still going.
01:23So, like, you could say that's also a cyclical company, theoretically, linked to tech hardware,
01:28but it's been doing really well for multiple years now.
01:31So if you think the AI CapEx boom is a structural thing that lasts for multiple years,
01:36maybe it's a bit less cyclical in the near term,
01:39but it's still a very high operational leverage kind of cyclical industry normally.
01:43What if the Iran war ends? Does that knock AI leadership and the S&P
01:47and then bring investors back to EM and Europe as well?
01:51I think so. I think there is definitely a divergence currently between growth optimism,
01:56especially in the US, which is boosted by AI CapEx,
01:59which is boosted by a reasonably resilient US manufacturing sector.
02:03You saw the ISM manufacturing.
02:04So it does feel like the growth optimism has been very strong,
02:08but rates relief has not been happening.
02:11So if you get now the reopening, you'll probably get rates relief,
02:15which can drive a bit of a broadening out.
02:18I mean, think about the divergence between momentum stocks and low volatility as a style,
02:22which are these bond proxies, low volatility stocks.
02:25They have literally done the worst you've seen in a long time.
02:28So they're obviously linked to rates and they're not exposed to tech.
02:32So they're in the worst spot.
02:35They had kind of the upward pressure from rates and they had no tech.
02:38So if you get a bit of broadening out, a bit of rates relief,
02:41you could get a bit of a snapback there.
02:43So I would say the reopening of this trade could definitely help create a bit more broadening,
02:48a bit more kind of healthy kind of rally.
02:50So I'm going to go ahead and see the next bit.
02:50So if you guys are talking about the T-Mobile Market,
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