00:00How vulnerable are European markets if we do see the tide turn on technology as we've seen
00:05from the Samsung earnings? I think there's a benefit to having that European exposure in
00:09the sense that it is less vulnerable to that tech domination that we're certainly seeing come
00:14through in the US. But I think Europe is a very bifurcated story. It's more of a stock selector
00:19market. Because if you look at what earning expectations are for Q2, about 12% EPS growth,
00:25if you strip out the energy component of that, we're looking at about 3%. And even then that's
00:31going to be very sector specific. So industrials, materials, and pivoting away, I would say, from
00:36kind of more of those consumer oriented stocks, healthcare. So a very kind of picky market to get
00:41that kind of concentration, non-exposure, let's say, within the US. And so does that make Europe,
00:48is Europe well positioned for the second half of the year then? If we see either a pivot away from
00:53some of the very well played tech themes, or just a broadening out of the tech beneficiaries,
00:58does that play well for Europe?
01:00I think Europe will be a key beneficiary of that. I think this broadening trend that we're seeing
01:05away from US tech, I mean, I still think we're going to see tech leadership in the US dominate
01:09through the end of the year. But yes, I think Europe can get more tailwinds, predominantly in
01:14the sense that the geopolitical risks are kind of easing at the margin, Europe should benefit from that.
01:18And then from a bigger term perspective, Europe is still trading at a slightly elevated historical
01:25discount relative to its history to the US. So maybe there are opportunities there. I think
01:30there are kind of risks still involved in having that kind of shedding of the US tech exposure for
01:35Europe. But I think it's all part of a kind of that balanced portfolio from an equity perspective.
01:39Which tech? Because the MAG7s underperformed the gilt market so far this year.
01:43But I think one of the reasons why we could actually see a rotation back into the hyperscalers
01:48is because valuations have come off. We're now seeing revenue growth have a slight upturn going
01:54forward. And we've seen, you know, several weeks of consecutive outflows. So now there's positioning
01:59that's lighter in this space. And if we look heading into Q2 earnings season, this AI companies,
02:05they're going to dominate earnings once again, thinking about the top 10 stocks in the S&P 500,
02:10they're going to count for about three quarters of the earnings growth. So I think that will bring
02:15this kind of robust earnings picture back into focus.
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