00:00Look, I know you say that probably a more favorable purchase. You don't have to get too obsessed about some
00:04of these day to day moves and you focus a little bit more on the long term.
00:07But I do want to start off with the short term, primarily because it does seem like it is having
00:12an impact on at least the long term thesis, whether it's the AI trade or really just the direction of
00:18inflation and interest rates.
00:19And I am curious as to how you sort of make what you make of the developments over the last
00:24few weeks.
00:24Absolutely. Thanks again for having me. You know, it's been a volatile period, not too surprising from what the rest
00:30of the year has been, honestly.
00:32And like you mentioned, family offices have a long term horizon.
00:35They withstand this volatility and if anything, use periods of immense dislocation to step in and be opportunistic.
00:42From an overall S&P and equity market standpoint, we remain pretty constructive.
00:46And like you mentioned, a lot of that's underpinned by earnings growth, which we've seen accelerate quite significantly.
00:51Twenty-four percent growth for this year, 13 percent for next year.
00:55And relating to the macro picture broadly, you know, the inflation report was largely in line with expectations.
01:02The payrolls report was encouraging.
01:04And so investors continue to spend time on that short term, but they're not making meaningful portfolio shifts as a
01:10result of this.
01:11You have confidence that the earnings picture will hold up.
01:13I mean, we just had two earnings seasons, that fourth quarter and the first quarter.
01:17Both were well above expectations.
01:19And it seems the consensus is that by the time we get to the end of the year, those final
01:24numbers that we see for the S&P in aggregate are going to be higher than what most people predicted
01:28coming into this year.
01:29That's exactly right.
01:29We're very constructive on the earnings cycle.
01:31And we see that, you know, payback from some of the capex spending starting to flow through.
01:36So it's something we're excited about.
01:38And, you know, do you think this year the level of growth we've seen from an earnings perspective, especially in
01:43the first quarter, is pretty phenomenal?
01:46Well, when you think about, you know, what we're seeing in terms of earnings growth, which has really been underpinning
01:52a lot of the bullish sentiment up until this point,
01:53you point out in your notes that you think about the percent of EPS growth that has been concentrated among
02:00the beneficiaries of AI infrastructure investment around, that's around 50 percent today.
02:04So you think about this broadening that we've been talking about, the resiliency of other sectors outside of AI, given
02:11that, you know, a lot of the earnings picture and the optimism and improvement that we're seeing there does tie
02:17back to AI.
02:18What is that portend for, you know, this improving breadth that we've seen?
02:23Can that continue?
02:24Yeah, we think it can continue.
02:26Look, the S&P is a market-weighted index, and we've seen that concentration with the top 10 stocks comprising
02:31nearly 40 percent of the index for a reason.
02:33And that concentration is a result of the benefit we've seen from an earnings perspective.
02:37A lot of that growth in terms of what we're recommending clients, you know, invest in is in the AI
02:43infrastructure segment of the market where you've seen the most return from an earnings perspective.
02:48But we think it's important to be diversified.
02:51You know, some of the other sectors we've seen clients spend time on, one is health care, which is a
02:55direct beneficiary of some of the segments, you know,
02:59through AI that are driving costs down and creating increasing efficiency from a data perspective.
03:03And also on the bank stocks just as a way to play the capital market cycle.
03:08Well, let's talk a little bit about public versus private right now, because as Romain alluded to, you work heavily
03:14with family offices.
03:16And I wonder, you know, what the mood music is, you know, what the appetite looks like when you think
03:21about what we're seeing in public equity markets versus the private markets.
03:25And the fact that, you know, some of the most exciting private companies are starting to come public.
03:30How is that, you know, changing your conversations right now?
03:33It's a great question.
03:34And, you know, we hosted our annual Global Family Office Symposium last week.
03:38We convened 200 family offices from 19 different countries around the world.
03:43And AI was really a pervasive theme in that discussion.
03:46We surveyed clients who attended, and over 80% of them said that they're adding exposure to AI across the
03:52public markets, private markets,
03:53or in specific single company exposure levered to that theme.
03:57We also heard from clients that, you know, late-stage exposure, whether it's venture or growth-related, remains a dominant
04:04theme.
04:04And that's largely because the scale and velocity of innovation and what that's translating to in terms of revenue growth
04:11in the private ecosystem is quite significant.
04:13But holistically, family offices are more overweight alternative assets than, you know, a typical high net worth client.
04:20That number is, give or take, 43%, 44%, depending on the year.
04:24So we do see that bias play into portfolios.
04:27Are they still overweight U.S. assets, or are we seeing them maybe a little bit more exposure overseas?
04:32We're definitely seeing U.S. overweight across both the private markets and the public markets.
04:38You know, the focus remains from our perspective on constructing globally diversified portfolios, but with a U.S. preeminence view.
04:44And given what we've seen in the semiconductor stocks and the opportunities in emerging markets in particular,
04:50you know, we have favored exposure to some emerging markets funded out of developed international markets.
Comments