00:00Part of our constructive view on Europe is inflation.
00:04So I think in contrast to popular perception, inflation is good for European equities in particular.
00:10We have a lot of real asset exposure.
00:13We have banks exposure, banks benefit from inflation.
00:17You're overweight banks.
00:18Yeah, we're overweight.
00:19That's our primary, I mean, our number one diversifier recommendation is banks,
00:23but then we have more broad exposure.
00:25We have that AI capex exposure also inflationary.
00:29So if you add up the areas of the European earnings pie that benefit from inflation,
00:3560% of the European earnings pie.
00:38So I think people don't realize how much we benefit from inflation.
00:44Consensus earnings growth for Europe this year now are 17%.
00:48The last time we were anywhere near this was 2022.
00:52The last time we had inflation and kind of moderate low growth.
00:57So inflation is great for European equities, just given the exposure of the index.
01:04And then people were getting really excited.
01:07And I saw some of our competitors were saying, you know, oil is going to go down to 60.
01:12Or clients were saying maybe we go down to 50.
01:14I think actually if we stay 70 to 80, that's actually a very, very healthy range for European equities.
01:21Given our exposure, we need a little bit of inflation to keep earnings healthy.
01:27And margins have just broken out to all-time highs in Europe as well.
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