Postmodern cycle and equity outlook (with Anna, Tom)

Asks about the setup for H2 2026 after a strong first half driven by tech.

Anna

Peter Oppenheimer

Earnings will drive markets; valuations won't contribute much. Gains will be more moderate but broadly based.

Tech earnings still strong (20%+ growth in S&P), but hyperscalers have derated. AI capex is trickling into other sectors.

Asks about Europe's ability to continue outperforming given rate and political risks.

Anna

Peter Oppenheimer

Europe has a valuation advantage even after sector adjustment. Profit growth will be the main driver; rates are not expected to trend down soon but will next year.

Europe has been only marginally weaker than US since 2025 despite lower tech exposure, reflecting strong cash flows and shareholder returns in value sectors.

Asks about European companies' role in AI infrastructure and whether there's further upside.

Tom

Peter Oppenheimer

Still early stages of a super-cycle in capex combining AI infrastructure buildout and government spending on defense, energy, supply chains.

This is the first major tech infrastructure buildout since the internet, coinciding with increased government borrowing.

Asks about the 'postmodern cycle' and whether higher inflation/yields are a concern.

Anna

Peter Oppenheimer

The postmodern cycle brings higher cost of capital and differentiation between companies. But it also creates new growth drivers and investment opportunities, increasing the importance of alpha over beta.

The last 10-15 years had excess savings but few investment opportunities; now there are many.

Asks about UK equities' place in this story.

Tom

Peter Oppenheimer

UK fits well in the value space; highest free cash flow yield globally (~5.5%), high shareholder returns. M&A is picking up due to attractive valuations and liquidity issues in mid/small caps.

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