Two focuses: 1) Broadening out of the AI theme into chips, hardware, energy, infrastructure, materials. 2) Back to basics on inflation and interest rates.
Helen Jewell
We remain overweight European banks. They benefit from rates not being cut and have strong capital returns.
What about defense stocks and the US budget news?
Tom
Helen Jewell
Defense spending is real and will accelerate, but valuations are more full. The investment case is earnings, not dividends.
What's the bond market telling you?
Guy
Helen Jewell
Rate cuts are not as baked in as 2-3 months ago. This is a headwind for European exporters and quality growth names.
Worried about the US economy slowing with 6% deficits?
Guy
Helen Jewell
Not super focused on it. There's real strength in the underlying US consumer, supported by the wealth effect from markets.
The UK consumer is struggling. Is this stagflation? A harbinger for the US?
Guy
Helen Jewell
No, the US story is different due to consumer strength and wealth. The BOE needs to move sooner rather than later to reinvigorate the UK.