00:00Adam, it feels like Friday was a whirlwind and yesterday had hallmarks of just recovery from that.
00:05So do we regroup? I mean, how do the markets feel to you after what was an incredible correction?
00:10Is that the right word on Friday? Where are we now?
00:13Yeah, I mean, I think obviously the price action on Friday was relatively extreme.
00:16But over the weekend, when you're thinking about it, the more interesting thing is how do we trade on Monday?
00:20How do we trade at the start of the week?
00:22And I think all things on that perspective have been relatively positive.
00:25We've seen some positivity carry through into today.
00:27We've even seen some of the real leverage parts of the market, such as Korea, positive overnight.
00:32So I think ultimately it's kind of seen as a bit of a healthy correction.
00:35The kind of underlying story around AI that, yes, earnings expectations are high,
00:39but underlying earnings momentum is relatively strong at the same time.
00:43I mean, obviously, you know, there's going to be hurdles along the way.
00:45We saw that with Broadcom last week and we could see it again this week with Oracle.
00:49And then obviously, you know, we've got these big IPOs on the docket.
00:52We've got SpaceX now, OpenAI.
00:54That's a lot of capital for the market to consume.
00:56But so far, indications for SpaceX are relatively positive and they've been brought to market with confidence in capital markets.
01:03So it doesn't really feel like we've had this big AI negative catalyst that's going to serve its inflection point
01:08at the moment.
01:09Could it be on the horizon in the medium term?
01:11Possibly.
01:12I think, you know, the Market's Live blog today.
01:14Anthony Stevens, these are some really good stuff about the, you know, tokenization efficiency for AI.
01:20The US is very expensive.
01:21China is a lot cheaper.
01:22So if you see some of these, you know, pivot towards China from the US, does that undermine some of
01:28the, you know, profitability for the live-scale hyperscalers?
01:31Yeah.
01:31Is that the risk or is higher rates another risk for the equity rally that we're seeing revived today?
01:37I mean, with the ECB coming up, we were hearing from BNP early in the show, they expect the Fed
01:41to hike three times towards the end of this year, back-to-back hikes.
01:44But the ECB is coming up.
01:46Yeah, I think for the ECB, I think, you know, I mean, I think the thing I'm kind of looking
01:50at for more is the FX channel in terms of the things I look at for.
01:53You know, obviously, they're going to hike.
01:54It's not relatively interesting.
01:55It's the messaging of what comes thereafter.
01:57And, you know, they remain laser-focused on fighting inflation.
02:00And, yes, on a day that may elicit some euro support.
02:03But, again, I've made parallels with 2011.
02:06You know, they either may need to reverse course eventually, in which case it would be euro negative, or they
02:11could be tightening policy into a growth slowdown.
02:13The data has been relatively downbeat.
02:16We've seen the awful PMIs.
02:17We've seen negative German factory orders.
02:19And then with the U.S. side of the equation for the dollar, yes, there's that inflation angst.
02:23But there's a lot more positive growth story.
02:25Sort of the ISMs, you sort of non-farm payrolls.
02:28So, absent a material de-escalation with the Strait of Hamuz, I still fancy euro dollar to potentially tilt lower.
02:34OK.
02:34Yeah, BNP is saying to us earlier that they see the ECB and the Fed hiking for very different reasons,
02:39echoing your point, very different growth narratives.
02:41And what about the role that Iran plays in the Strait of Hamuz right now?
02:45I saw some Bloomberg economics research that was suggesting six months until you get real, real issues around inventories.
02:53We're down on oil prices this morning.
02:55Yeah, I think, you know, if you look, you see a lot of intraday fluctuations when it comes to Iran.
02:59If you look at the past few weeks, we haven't really seen actually too much traction through the market.
03:03I think the big thing is that Brent's holding below 100.
03:06A big part of that is the U.S. doesn't really want to escalate at that point.
03:09So, unless we get a material escalation, then in terms of actual traction for Iran, now that we know more
03:13about how central banks respond, we'll probably be a little bit less.
Comments