00:00It's undeniable that the macro story is speaking up in Europe.
00:03We've got growth that is surprising to the upside, activity on the rise, and earnings that have been good.
00:09Actually, earnings have been exceptionally strong in the U.S., but also very good in Europe.
00:14It's been one of the best earnings seasons over the past few years.
00:17And all of this is happening in a context where positioning is low to neutral.
00:23So that points to a positive picture for stocks.
00:25Now, the counterpoint to that is that a lot of positive news is already in the price.
00:30And with seasonality that is not supportive for higher stock price up until the end of September, October,
00:36we like to position for what we call a grind higher in stocks.
00:39And we like to minimize the premiums that investors are spending on upside positioning.
00:44How do you mitigate the risks around inflation, whether it's soft commodities, whether it's diesel, whether it's gas, oil prices?
00:49If this is the status quo right now around Iran and that is prolonged, how do you hedge around that?
00:57So one of our top pick at the moment is the banking sectors.
01:01We think the banking sectors is one of the best sector positions for end of year.
01:06First of all, PMIs are on the rise, as I mentioned, activities picking up, earnings that have been good.
01:11But also higher inflation mean higher rates.
01:13We're expecting the ECB to rise rates come September meeting.
01:16And that is positive for the banking sector, a cyclical sector that has, yes, really performed well over the past
01:22few years.
01:22But we think there's some upside for that sector.
01:24How do you minimize premiums for investors?
01:27So you want to look basically at not paying the full right tail of the distribution.
01:31So looking at some types of call spread or call spread versus put, depending on the sectors that you're looking
01:36at or the index that you want to look at, is how we look to mitigate premium spend.
Comments