00:00In terms of what's driving the market, there's fundamentals, there's investor behaviour,
00:03but nowadays we've got to worry about market structure as well.
00:05And so this is almost entirely an artifice of market structure.
00:09The fundamentals haven't changed.
00:10I don't even think investor behaviour has changed materially.
00:13But clearly, as you mentioned, levied ETFs, the significant amount of call option buying,
00:18the margin usage and the concentration of investors in certain securities
00:22means that you're going to get volatility.
00:24This isn't the first time we've seen this.
00:25The cost to be about a month ago was down 8% two days in a row
00:28and then up 8% on the third day and then rallied to new highs.
00:32So that is the new normal?
00:33Yeah. Volatility within single stock securities is at record highs,
00:37especially relative to the index.
00:38And it's an artifice of market structure that I suspect is not going away.
00:42How do you invest with that?
00:45It makes it a lot more difficult.
00:47Yeah. So first of all, if you're holding for the medium term,
00:50you need to focus more on the fundamentals.
00:52The fundamentals are still that capex estimates for the hyperscalers
00:56continue to not just grow, but also be revised higher.
00:59And that means the entire supply chain can be revised higher on earnings expectations as well.
01:04So it's still a very structural story of data centre growth.
01:08We can actually add to that a US domestic acceleration, which we can talk about as well.
01:14So, you know, if you're a longer term investor, these are your options.
01:16You can continue to invest in AI capex where you're looking at the supply chain beneficiaries
01:20that are making a huge amount of money and continuing to see that those revisions higher.
01:24There are opportunities to broaden now that they weren't for a long while.
01:29So you can broaden into other cyclicals in the US because there's been a significant
01:33de-stocking phase for the last three years.
01:35New orders have basically been neutral.
01:37Now we're seeing factory orders that are growing quite substantially,
01:40manufacturing new orders that are up at about 57,
01:42whereas they've been at about 50 or below for the last three years.
01:45So there is just a broader cyclical acceleration in the US,
01:48which means you can buy other cyclical value companies in the US.
01:51You can buy European companies exposed to the US, which have been real dogs.
01:55They've been flat for the last year on average in our basket of stocks.
01:59The euro weaker is going to help those.
02:01In addition to that, finally, pharma is worth buying.
02:04You know, it has cheapened.
02:05It is not well invested.
02:08The GLP-1s have been a major driver of that, including Novo,
02:10with just consistent downgrades taking you down into low double-digit PEs.
02:14Finally, we're now getting upgrades.
02:16You've got the Medicare system in the US confirming that they will be buying GLP-1s
02:20at a rate of $50 per month.
02:23You've got the oral version of GLP-1s coming through as well.
02:26So investors are just looking around going,
02:28I wish I didn't have so much AI because I'm pretty concentrated.
02:30I know everyone else is as well.
02:32What else can I buy?
02:33And we're getting a little bit of that rotation.
02:34You saw that yesterday with pharma being the best-performing sector.
02:36Hello.
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