European Equities and Bond Market Opportunities (with Anna, Tom, Guy)

Gautam Samarth from M&G Investment Management sees opportunities in European equities following the de-escalation in the Middle East, expecting capital to flow back. He favors emerging market energy importers like India and Indonesia. He argues that bonds offer value, especially at the long end, due to steep curves and positive real rates. He believes the BOE could plausibly cut rates by year-end if the oil price shock fades.

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European Equities and Bond Market Opportunities (with Anna, Tom, Guy)

dxy

He sees capital flowing back to Europe, which could imply a weaker dollar. He also sees value in non-US bond markets, suggesting a potential rotation away from USD assets.

metals

No direct mention of metals. His focus on EM energy importers like India and Indonesia suggests a neutral view on metals, as these countries are net importers.

ndx

He sees potential for a market broadening and believes the AI productivity story is plausible, which could support tech. However, he is more focused on value and relative trades, suggesting a cautious rather than aggressive up view.

rut

He discusses a market broadening and opportunities in lagging sectors and regions. This could benefit small-cap stocks in the Russell 2000, which are more domestically focused and could benefit from a rotation away from mega-cap tech.

wti

He discusses the oil price spike as a supply-side shock that central banks should not hike into, implying he expects oil prices to normalize downwards.

yields

A definitive announcement could see yields 50 basis points lower in a couple of weeks.

1 calls

no reliable edge (random outcomes)

2/17/2026 12:42:30 PM	short term cautious down	5 days later	-1.23%	+0.61%

What are you thinking about European stocks at this point?

Anna
Gautam Samarth

With the Strait of Hormuz apparently opening up, you can see capital flow back into Europe in a way we saw at the beginning of this year. The relative trade between Europe and the US is alive and well.

We had a rotation whereby capital flowed back to the US during the conflict. Now that headline risks are going away, that can reverse.
Are we talking about value in stocks as a whole, or is it all relative trades?

Tom
Gautam Samarth

The real opportunity is in relativity. Some plays that have lagged, like Indonesia, have structural growth drivers. We'd be looking for picking and choosing relative winners within the equity market.

Equity risk premia have compressed, but bond yields are also high. The relativity between the two has been stark.
Emerging market energy importers look like an opportunity?

Anna
Gautam Samarth

Yes, from a tactical perspective. Places like India, valuations are much improved and earnings growth looks robust. You can buy the index.
Is it easier to have conviction in equities than in bonds at the moment?

Guy
Gautam Samarth

You should have more conviction in owning bonds. With the US 30-year at 5%, you have pretty good odds of beating inflation over the next 30 years. There are opportunities in playing a normalization of yield curves.

Real interest rates are positive in most parts of the world, and you have steep curves on top of that. Buying the long end, where the trauma exists, is a big opportunity.
Where do you see value in the gilt curve?

Tom
Gautam Samarth

There is value across the curve. The front end repriced from pricing cuts to two hikes on the oil price spike. I don't think central banks should be hiking into a supply-side shock. That became an opportunity at the intermediate terms.

The market has been conditioned not to take headline announcements at face value. A definitive announcement could see yields 50 basis points lower in a couple of weeks.
If oil gets to pre-war levels by the end of July, does the BOE have scope to cut before the end of the year?

Anna
Gautam Samarth

It's plausible. The jobs market is very different in the UK than in the US. The underlying strength in the economy isn't as clear. It is quite plausible that we can get cuts.
Do you think Kevin Warsh can make the case that AI is deflationary?

Guy
Gautam Samarth

He'll certainly try. He's towing a very fine line. He wants to bring other members on side, so he'll have to show central bank independence and strength. But it's a pretty good case. If you look at prior technological revolutions, those productivity gains came through.
Is there an argument that you have to have a bust in the AI trade to get to the deflationary story?

Guy
Gautam Samarth

The 90s is instructive. We had an inflation scare, the Fed hiked, and then was forced to cut. Growth was robust, yet inflation kept surprising to the downside. That was the productivity gains coming through. That could well happen today.

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