00:00Mark, on the face of it then, risk on. Oil is lower, yields are dropping, stocks are expected
00:06to bounce here in Europe. How much do you just ride that or look through it?
00:12Absolutely risk on. You know, we've got several factors. The most obvious one being
00:16the US-Iran looking to sign their memorandum of understanding this Friday. Obviously,
00:22we don't have the full details, but the clear direction of travel is positive. The fact that
00:26they seem to have reached an agreement, even without the details, is a positive sign that they
00:30want to get to a deal. Now, where we are in two months might be at risk, but this is
00:35not the time
00:35to fight that, even if you're cynical. Now, this positive news that we didn't, we largely priced
00:41into the weekend, but not definitely expected, comes in the back of other factors that we knew
00:45were there. We had the SpaceX IPO that went successfully. We know that the mechanisms that
00:50there was likely to support for the market this week with only 5% free float and it joining some
00:55of the indexes, of course, pretty soon. So, therefore, some passive investors have to get
00:59involved there. And, of course, the World Cup is a volatility subduing effect as well. So, we knew
01:05it was like a slightly positive dynamic this week. The US-Iran deal is the cherry on top. I don't
01:10think you can fight this optimism in the short term. On the flip side, it's hard to get excitedly
01:15bullish here because, as I said, two of the factors were known in advance. The US-Iran deal is largely
01:20priced. And now that, you know, we're trading that outcome, there's, of course, a tail risk that
01:26something goes wrong before Friday. So, I think it's absolutely bullish right now, but not exciting
01:31top side. It's more we're going to drift upwards while we kind of look at the central banks this
01:35week. Short term means this week, right? Is that it? Is that as far as we can look at the
01:41moment?
01:43Yeah, I think that's right. It's not that, you know, there's a reason to suddenly turn bearish next
01:47week. But yeah, I think that the positive momentum from this deal is only probably going through to
01:54Friday. If it signs on Friday with no issues and we're happy with the details that get revealed
01:59and it seems like it's implementable, it seems like we have a clear plan, well, then, of course,
02:04that'll give us another kind of dose of enthusiasm into the week after. But, you know, I struggle to
02:09get very excited here given how things are priced. But there's, you know, you can't be bearish
02:14without a negative catalyst right now and there's not one at the moment. So, if you want to take any
02:19position, it's got to be an optimistic one. It's just the risk reward is not very appealing at these
02:23levels with how much is priced. Does the deal, Martin, does the deal make the job of the central
02:27bankers easier this week? Slightly. At the margin, yes, of course, because, you know, we now don't have
02:38complete uncertainty. We don't have exact certainty. We don't know the details of the deal. We're not sure
02:42it's going to get implemented, but at least it provides a little bit more of a reason to be
02:47able to look through some of the inflationary impacts and hope that some of them will be more
02:51transitionary. It's not going to change central banking pricing radically. We're probably going
02:56to see a little bit of the hikes that are priced into the curve come out. But essentially, you know,
03:00we still expect the ECB to hike again this year. We expect the Bank of England to hike again this
03:05year.
03:05We think that the Fed is in a tough position because the economy is strong and may ultimately be forced
03:10into hikes, but they're going to try avoiding them for as long as possible. And that doesn't change this week.
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