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Speaker 1: Organize trains.

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Speaker 2: I'm Joel Webber and I'm Eric Belchernes.

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Speaker 1: So we spent last episode talking about why the US

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Speaker 1: is so great? Yeah, is there a contrarian take that

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Speaker 1: we should visit today?

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Speaker 3: Yeah, so a couple things.

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Speaker 2: First of all, yes, I still think the US has

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Speaker 2: some elements that are special. But this year so far, Joel, Europe,

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Speaker 2: which a lot of times gets dumped on narratively, it's,

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Speaker 2: you know, been in the doghouse for years. It's basically

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Speaker 2: tripling the S and P five hundred. This year it's

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Speaker 2: up nine ten S and p's up two point four percent.

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Speaker 2: You know, will it last or is another head fake?

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Speaker 2: I think it's a good time to give Europe at

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Speaker 2: least a strong case. You know, we were a little

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Speaker 2: negative last time, and I thought, you know, it would

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Speaker 2: be a good time to look at the other side

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Speaker 2: of the story and maybe there is a reason to

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Speaker 2: allocate there. We have on our team, in the broader

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Speaker 2: strategy team, there has been some research and data that

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Speaker 2: indicates it might actually be for real this time, and

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Speaker 2: I thought we should share all that, get it on

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Speaker 2: the table, and then the listener can can decide.

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Speaker 3: We'll let them be the jury.

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Speaker 1: Okay, so joining us, we're going to have your boss,

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Speaker 1: Gina Martin Adams, who's the chief equity strategist at Bloomberger Intelligence,

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Speaker 1: as well as Todd Son, who's the senior ETF and

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Speaker 1: technical strategist at Stratigis Securities, this time on Trian's the

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Speaker 1: case for Europe. Todd, Gina, welcome to Trillions.

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Speaker 4: Thank you, thank you for having us.

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Speaker 5: Great to be here with you guys.

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Speaker 2: Quick note here, Todd is such a trooper that he

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Speaker 2: is doing this from LaGuardia Airport in the pet relief Stagia.

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Speaker 2: If that's the first, and that is a first. So

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Speaker 2: if you hear any little background noise, that's why. And

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Speaker 2: if a dog peas on his leg, we promised we'll

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Speaker 2: let him re record that part. Okay, so just fy,

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Speaker 2: Thank you Todd for being a so dedicated eric.

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Speaker 1: I want to start with just what is the data

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Speaker 1: when you guys are assessing something like this, What are

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Speaker 1: you looking at beyond just indexes?

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Speaker 2: Right? So, one of the things that has been apparent

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Speaker 2: for a while is evaluations. Right in the US, the

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Speaker 2: average price to earnings ratio is very high.

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Speaker 3: In Europe it's lower.

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Speaker 2: That gap is pretty much I think at historical records, right,

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Speaker 2: So that's the data we would look at now. We

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Speaker 2: only we don't maybe go more than a couple feet

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Speaker 2: deep in the ETF world, but I work with people

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Speaker 2: who go deep into the number. So Gina has put

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Speaker 2: out some reports recently that talk about the weakness in

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Speaker 2: the US and ipso facto a little strength in Europe.

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Speaker 2: And then Todd put out a note that I read about,

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Speaker 2: I don't know three months ago where he said, I

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Speaker 2: think he called the case for Europe, but his thesis

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Speaker 2: was it can't get worse, which I thought, what an

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Speaker 2: investment thesis is, Hey, come invest here, it can't get

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Speaker 2: much worse. Anyway, that's sort of the state of Europe.

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Speaker 2: So I think we start with Geno with just you know,

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Speaker 2: the US weakness maybe and how that relates to Europe

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Speaker 2: maybe having some good signs.

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Speaker 4: Yeah, and it's very much the same the same case,

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Speaker 4: just in the polar opposite that you just made, where

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Speaker 4: Europe by November of last year was training at an

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Speaker 4: all time historic discount relative to the rest of the world.

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Speaker 4: The US was training at its PreK peak relative to

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Speaker 4: the rest of the world valuation premium. So the US

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Speaker 4: case the anti US case is really the opposite of

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Speaker 4: the pro Europe case when it comes to valuations. At

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Speaker 4: the same time, you have to work through the mental

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Speaker 4: gymnastics of what that really means, and what that really

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Speaker 4: means is expectations for the US going into twenty twenty

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Speaker 4: five were extremely high, whereas expectations for Europe are extremely low,

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Speaker 4: and momentum shifts in global stocks oftentimes occur because of

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Speaker 4: expectation extremes. There's almost no chance that the expectations embedded

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Speaker 4: in US stock prices can be met by US companies,

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Speaker 4: at least in the short term, and you have that

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Speaker 4: adjustment process that emerges, and we've seen that play out

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Speaker 4: real time through earning season, in particular with tech, where

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Speaker 4: suddenly we have competitives, competitors in the tech space that

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Speaker 4: no one thought it would exist three months ago. That

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Speaker 4: creates a very different environment for tech and for the US,

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Speaker 4: whereas for Europe there was no expectation for growth and

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Speaker 4: suddenly earnings estimate stopped falling. So it wasn't a fantastic

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Speaker 4: evolution of great news for Europe, but expectations were solow

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Speaker 4: they couldn't get much worse. And then we have decent

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Speaker 4: earnings come through, You've got the Central Bank still easying,

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Speaker 4: You've got some relief in terms of political pressure that

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Speaker 4: has emerged over the weekend with Germany, and that's been

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Speaker 4: enough to get a little bit of momentum moving in

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Speaker 4: the favor of Europe.

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Speaker 1: Can I say this differently and see how you react

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Speaker 1: to it? Is the US the ultimate growth story and

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Speaker 1: Europe is the ultimate value story?

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Speaker 4: Yes, I think that's a lot of what we're seeing

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Speaker 4: is also the US is the ultimate tech story and

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Speaker 4: Europe is in some cases the ultimate financial story. So

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Speaker 4: it's a growth value expectations dichotomy and sector performance diconomy

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Speaker 4: that creates an opportunity for Europe and probably puts the

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Speaker 4: US behind rest of the world at least in the short.

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Speaker 3: Rund Let's go ahead and bring you in.

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Speaker 1: What did you see as you were working on on

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Speaker 1: your thesis?

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Speaker 6: So I agree with Gina about low expectations, and to me,

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Speaker 6: it's all about sentiment as well. And one of the

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Speaker 6: funny ways I think I can sum up European ETFs

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Speaker 6: listening in the US is there's fifty ETFs, both combined

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Speaker 6: of the region as well as single country, and they

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Speaker 6: have about fifty seven billion assets, and keep in mind

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Speaker 6: the who've been around for about twenty five years or so.

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Speaker 5: Take that in comparison.

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Speaker 6: Relative to the ey Shares Bitcoin ETF, which has only

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Speaker 6: been around for about thirteen months, and that has the

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Speaker 6: same amount of assets. So along with the lines, if

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Speaker 6: it can't get any worse, we're talking about a newer

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Speaker 6: aspect class. It's the same amount of assets as what

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Speaker 6: is a cornerstone of investor portfolios for international and I

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Speaker 6: think along with just assets under management, you look at

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Speaker 6: product launches, issuers have given up on the space. There's

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Speaker 6: only been two European ETFs launched over the last six years,

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Speaker 6: and they're both very thematic, focused on luxury goods and

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Speaker 6: aerospace and defense. So I like that there's this apathy

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Speaker 6: from issuers. They're not really focusing on the region. I

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Speaker 6: think that's really interesting from an expectations and sentiment standpoint.

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Speaker 2: So Europe is having this nice pop, I'll call it

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Speaker 2: right up ten percent. That's a lot for Europe, but

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Speaker 2: the flows are not there. Normally, you know, you have

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Speaker 2: a little run, the flows will follow, at least some

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Speaker 2: models will go in. But there's there's been about just

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Speaker 2: shy of a billion dollars into European ETFs from US

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Speaker 2: investors this year. Now that compares to about eighty billion

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Speaker 2: that have just pumped into US equities as usual. My

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Speaker 2: thesis is that it would take six to nine months

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Speaker 2: to kind of overcome the feeling that we've seen this

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Speaker 2: movie before, or I call it a short film, where

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Speaker 2: it's two months of Europe and then all of a sudden,

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Speaker 2: the cues like a runaway bus just like runs over

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Speaker 2: Europe once again. And that's happened like ten times, and

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Speaker 2: so I understand the Pavlovian response to like not do

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Speaker 2: anything and just wait for the cues to come back.

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Speaker 2: Do you think this has legs basically? And do you

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Speaker 2: think that's when investors might actually turn around?

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Speaker 1: I love comparing this to short films, which is like

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Speaker 1: its own category in the Oscars, but like, did you

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Speaker 1: watch it?

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Speaker 4: Not?

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Speaker 5: Really?

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Speaker 4: I think that's the best picture, right, Yes, But I

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Speaker 4: think we need to think about how we measure the legs. Right,

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Speaker 4: there's a very distinct possibility that Europe gathers legs without

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Speaker 4: the ETF universe recognizing it. Because the biggest investor in

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Speaker 4: Europe is the European investor, and that's where you saw

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Speaker 4: the biggest flight from Europe occur is Europe. For Europe

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Speaker 4: was no longer a thing by twenty twenty four. So

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Speaker 4: I think first you probably get direct investments from Europe

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Speaker 4: in Europe. Some of that is a real nationalistic sentiment

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Speaker 4: that could emerge as a result of the political environment.

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Speaker 4: Some of it is a currency play, some of it

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Speaker 4: is a financial play as a result of the ECB.

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Speaker 4: But we may not actually see US investors contribute to

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Speaker 4: the European story in the form of flows in the

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Speaker 4: ETF landscape, and that we could still see Europe outperform.

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Speaker 4: I would agree to get the US investor interested in Europe.

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Speaker 4: It is a much much bigger hurdle. The US investor

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Speaker 4: is very isolated in their strategy. They think that all

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Speaker 4: they need to own is the US. The US is

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Speaker 4: the best way to invest in the globe. Is a

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Speaker 4: lot of the rhetoric that you hear from the US

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Speaker 4: investor base that theory will have to get dismantled through

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Speaker 4: several months, if not several quarters, maybe even several years

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Speaker 4: of evidence before the US investor capitulates and says I'm

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Speaker 4: going to fly into Europe. I'm gonna buy a bunch

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Speaker 4: of europe as an opportunity just is very unlikely it

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Speaker 4: could emerge. This is something that's very unique to this situation.

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Speaker 4: In a world where we have deglobalization as a centralized theme,

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Speaker 4: US companies will potentially have less access to the rest

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Speaker 4: of the world, will become much more isolated as inherent entities.

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Speaker 4: And if that's the case, then suddenly this thesis that

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Speaker 4: you can only invest in the US, you only need

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Speaker 4: to invest in the US in order to access global

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Speaker 4: markets really starts to go away. But that's a really

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Speaker 4: long term, long tail, secular possibility. It's not likely to

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Speaker 4: emerge in the next month or two.

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Speaker 2: And just to give some data behind that, Athnoscios on

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Speaker 2: my team Ransom numbers and the percent the last couple

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Speaker 2: of years, a lot of people overseas have invested in

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Speaker 2: the US. That's helped the markets. Europe, though the percentage

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Speaker 2: in in the US has plummeted this year, so they

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Speaker 2: are the ones driving this rally. But elsewhere in the

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Speaker 2: world it's still gone up. People like Asia still buying

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Speaker 2: the US, US still buy in the US. So it

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Speaker 2: is interesting. I have this narrative thing that I think

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Speaker 2: and narratives matter. I think they can change price can

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Speaker 2: change narrative, so if it goes up enough, then narrative

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Speaker 2: could be broken. But I think most people sit there

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Speaker 2: and think, well, look, yeah, maybe there's a mean reversion

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Speaker 2: trade here, but long term there's more growth in the US.

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Speaker 2: People here work crazy hours. You know. I wrote a

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Speaker 2: note about Jack Bogel, who said you don't need international

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Speaker 2: and he got more savage as he got older, and

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Speaker 2: here's what he's One of the lines he said was,

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Speaker 2: you know, everyone says I'm wrong. I said, for a

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Speaker 2: lot of reasons, you don't need an international and he

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Speaker 2: says something here, the third largest country in IFA is France.

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Speaker 3: The soul of hard work. He can't see.

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Speaker 2: I can't see that I'd make more money in Britain

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Speaker 2: or Japan, YadA YadA, or France where they could and

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Speaker 2: pass the law saying you had to work thirty five

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Speaker 2: hours a week. And I think generally Americans are like

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Speaker 2: in Europe, everyone's at the cafe at three o'clock. Yeah,

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Speaker 2: the companies actually run, but it's just just to get

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Speaker 2: enough done to not like go to hell. And I

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Speaker 2: think in the US it's everyone is in such fierce competition,

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Speaker 2: you get all this, all these flowers blossom in the

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Speaker 2: forms of new companies and growth and opportunity. How true

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Speaker 2: is that narrative and how hard will that be to

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Speaker 2: a race?

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Speaker 3: I think it's pretty true.

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Speaker 4: Frankly, though, I go back to my thesis that a

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Speaker 4: lot of that narrative also is about globalization. In the

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Speaker 4: era of globalization, where the US was becoming this global hegemon,

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Speaker 4: where the US was driving activity, where US corporates were

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Speaker 4: constantly seeking international locations for the destination of their products,

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Speaker 4: where they had a tremendous global dominance. Of course, the

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Speaker 4: US companies were more productive. At the same time, You're

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Speaker 4: absolutely right, the ructural landscape, the policy landscape in Europe

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Speaker 4: became less and less productive, more and more government interventionist.

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Speaker 4: I think you're at a moment now where Europe is

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Speaker 4: starting to recognize that, in particular in Germany. We saw

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Speaker 4: it very, very profoundly over the course of the last

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Speaker 4: year in Germany. The Germans themselves are recognizing that they're

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Speaker 4: taking a back seat economically and financially to the rest

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Speaker 4: of the world, and there's a lot of frustration there.

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Speaker 4: So I think there's a potential rallying moment for Europe

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Speaker 4: to think about privatization, think about ways to enhance productivity,

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Speaker 4: think frankly about how to form global relationships outside of

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Speaker 4: their relationship with the US. So you could make a

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Speaker 4: case that as Germany becomes tighter with China, for example,

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Speaker 4: as Germany seeks other markets to enhance his productivity and

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Speaker 4: global presence, you could see some pretty big sea changes

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Speaker 4: in Europe. The other thing that I would say that's

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Speaker 4: so fascinating to me with respect to Europe right now

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Speaker 4: is the countries in Europe that went through a reckoning

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Speaker 4: moment in the European debt crisis. Now, I know that

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Speaker 4: this is a long time ago. Not a lot of

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Speaker 4: us remember twenty eleven, but it was a big moment

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Speaker 4: in time for Europe, but only for the debt laden

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Speaker 4: what we called at the time pigs economies Portugal, Ireland, Italy,

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Speaker 4: Greece and Spain. Those economies have transitioned remarkably over the

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Speaker 4: course of the last decade in change. Those are the

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Speaker 4: areas of Europe that are starting to outperform most profoundly.

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Speaker 4: The best performing markets in Europe this year are Spain, Italy, Switzerland,

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Speaker 4: to a lesser degree. Germany certainly is participating, but where

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Speaker 4: did Spain and Italy come from? That comes from a

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Speaker 4: legacy of change, right, And in the European debt crisis,

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Speaker 4: they had a moment of reckoning, they had to write

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Speaker 4: size spending, they had to think about structural changes. Many

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Speaker 4: of those appear to have been enacted, and the economic

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Speaker 4: optimism in those peripheral economies is significantly greater than some

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Speaker 4: of the other legacy economies, like you is the example

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Speaker 4: of France or even Germany. So I think that, you know,

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Speaker 4: Europe is a conglomeration of countries and that's something that

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Speaker 4: we need to keep in mind as well. Europe has

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Speaker 4: one big entity, maybe not as investible as some of

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Speaker 4: these other smaller country markets that have been doing very

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Speaker 4: well over the course of the last year or so.

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Speaker 1: But to Ton's point earlier, there's like a dearth of products,

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Speaker 1: Like Todd, is there a big opportunity here to like

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Speaker 1: actually bring you know, some innovation and ETFs to this space.

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Speaker 6: So I totally agree with what Gene is saying about

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Speaker 6: the countries are changing, right how they function, and I

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Speaker 6: think this is where there is opportunity for active managers, right,

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Speaker 6: It's nearly impossible based on data to outperform US large

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Speaker 6: cap growth, but because Europe has struggled in terms of

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Speaker 6: performance for so long, I wonder if you're you have

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Speaker 6: an opportunity for active Europe. Not just active developed markets

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Speaker 6: because those are already just out there, but the there

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Speaker 6: are no active, straightforward European products, and I think those

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Speaker 6: managers can find, you know, the winners of this change

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Speaker 6: that's going on there. I do think it's really interesting

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Speaker 6: the constituency of Europe and ETFs are changing. They were

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Speaker 6: typically very financials heavy and that's still true, but consumer

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Speaker 6: staples influence in the Europe and ETFs has really dropped.

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Speaker 5: Over the last few years, and now you're seeing more.

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Speaker 6: Industrials take control and as well as technology, and SAP.

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Speaker 5: On a given day is the largest weight in Europe.

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Speaker 5: I'm not sure how many people know that.

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Speaker 6: If you put fifty people in a room, they might

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Speaker 6: guess it's a financial or a healthcare type of company,

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Speaker 6: but it's SAP and then there's ASML.

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Speaker 5: So I like that there's this change.

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Speaker 6: Going on and the way we invest in Europe, and

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Speaker 6: I do believe it also speaks to where actives should

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Speaker 6: focus in terms of ETF.

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Speaker 2: For Shures Todd, one more question for you is what

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Speaker 2: I've found as an ETF anaist over the years is

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Speaker 2: when it comes to emerging market countries and even developed

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Speaker 2: market countries, a lot of the money that would go

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Speaker 2: into say VGK, which is the larger Europe, is retail

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Speaker 2: and that's the money that's not biting right now. However,

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Speaker 2: if you take UK or France or Germany, there is

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Speaker 2: you know, about a billion in each of these single

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Speaker 2: country ETFs. But they tend to be used by traders

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Speaker 2: who are usually betting ahead of an election, and so

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Speaker 2: a lot of times, like the Brazil ETF comes to mind,

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Speaker 2: if there's some kind of a big event coming up

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Speaker 2: that's geopolitical, a lot of times you'll see flows Russian

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Speaker 2: ahead of that and they'll kind of it's almost like

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Speaker 2: a geopolitical sports book. They're like, I really think UK

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Speaker 2: is going to bounce with this election or this situation.

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Speaker 2: Do you think that is what we need to see

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Speaker 2: first is a couple traders get excited with the single

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Speaker 2: country ETFs, and then retail will follow with the sort

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Speaker 2: of bigger, broader ones later.

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Speaker 6: I think so that makes sense, and I'm not even

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Speaker 6: sure about retail, but I'm more so looking at the

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Speaker 6: model providers right so you can look at JP Morgan,

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Speaker 6: you can look at State Street and see what their

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Speaker 6: allocations are to Europe as well, and I don't see

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Speaker 6: much going on there right now.

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Speaker 5: So I think this is the great part about ETFs,

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Speaker 5: as that was mentioned.

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Speaker 6: You can place a bet on an event, outcome, election,

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Speaker 6: whatever it might be. But I don't know if Europe,

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Speaker 6: if retail, will follow along or not. It's just it's

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Speaker 6: not sexy enough. It's not leverage, it's not a reconductor.

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Speaker 6: I mean, what about two x pigs? Does that start

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Speaker 6: to get who reason? Does that start to get spicy?

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Speaker 6: And then Europe you can go through.

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Speaker 3: Put two x on anything and you'll get a couple

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Speaker 3: of bytes.

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Speaker 5: I boil it down to Okay, we'll retail come back.

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Speaker 5: I don't know.

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Speaker 6: And then when do the models start coming back to

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Speaker 6: overweight Europe? And I'm just not sure we're anywhere near

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Speaker 6: there yet. It will take far more outperformance for that

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Speaker 6: to continue.

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Speaker 2: And I have a question for you, Gina, does Europe

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Speaker 2: even have tech? I mean, you know, you think I

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Speaker 2: looked at the best performers in Europe, the financials have

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Speaker 2: driven it. They're up fourteen percent. But I'm looking at

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Speaker 2: the performers. I don't really see any tech e. Is

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Speaker 2: there even a europe Tech ETF. I mean not sure

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Speaker 2: if one exists, Todd would know real quick.

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Speaker 5: Uh it's almost like a.

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Speaker 3: Military intelligence.

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Speaker 6: Yeah.

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Speaker 4: There was one play in Europe with a semiconductor wave

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Speaker 4: and that was asml in uh U have SaaS out

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Speaker 4: of Germany, but these are not This is a very

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Speaker 4: small component of the European broader market and that's the

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Speaker 4: biggest reason I would suggest why Europe underperformed the last

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Speaker 4: two years is there just isn't a lot of tech,

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Speaker 4: and tech was the area of growth opportunity. It was

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Speaker 4: the area that led global indices, not just the US,

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Speaker 4: but global markets with the most tech exposure outperformed. Aka

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Speaker 4: Taiwan was a huge outperformer. So that legacy of limited

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Speaker 4: tech is a big part of the story for why

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Speaker 4: Europe was not performing. Now it's helping because tech dropped.

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Speaker 4: It was the only sector in the US that dropped

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Speaker 4: in January. You know, it's not been performing well so

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Speaker 4: far this year as investors are rotating into other opportunities

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Speaker 4: and tech has proven to be a bit of a laggard.

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Speaker 1: This really does feel like to bring it back to

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Speaker 1: that growth versus value thing, it's like growth will run

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Speaker 1: away with everything and then every once in a while.

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Speaker 3: Yeah, every decade, Yeah, value will show up and yeah.

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Speaker 4: Well, if you look at the long term, when did

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Speaker 4: Europe actually outperform for an enduring period of time. It

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Speaker 4: was in the two thousand and one to two thousand

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Speaker 4: and seven period when tech took a backseat to everything.

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Speaker 4: Tech was kind of there, but not outperforming everything, not

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Speaker 4: leading markets. We had a commodities boom, we had a

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Speaker 4: financial sector boom through a lending cycle. Those are the

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Speaker 4: type of that's the type of environment in which Europe

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Speaker 4: will outperform inevitably because of constituent bias and concentration.

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Speaker 2: One question, if you're somebody who has a large chunk

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Speaker 2: of your equity allocation in US ETFs, would you would

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Speaker 2: it make more sense just rotate to international and have

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Speaker 2: some Asia in there, or maybe just do Asia. How

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Speaker 2: does Europe compare to other regions relative to the US

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Speaker 2: in terms of this like possibly having a moment coming up.

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Speaker 4: Yeah, it's very interesting because China has actually performed very

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Speaker 4: very well so far this year, But India has been

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Speaker 4: officially in a bear market, so Asia is in the

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Speaker 4: eye of the beholder. What do you mean by Asia?

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Speaker 4: I have to say because if you think of Asia

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Speaker 4: as China, then it does appear that opportunities are emerging

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Speaker 4: in China, particularly now that we have tech plays emerging

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Speaker 4: as a potential competitor to the US. But Asia is

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Speaker 4: a very mixed bag because India is in a bear

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Speaker 4: market now, and we have to acknowledge that India had

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Speaker 4: some unique structural issues as well that elevated prices there

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Speaker 4: even as much as they were elevated in the US,

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Speaker 4: and now India is taking a back seat. So Asia's

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Speaker 4: a bit of a mixed bag. When you look at

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Speaker 4: Latin America, you also have a really mixed view between

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Speaker 4: Brazil and Mexico. Emerging markets in the Middle East and

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Speaker 4: Africa stand out for US as an opportunity, but the

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Speaker 4: investibility of that region is hugely, hugely questionable. How do

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Speaker 4: you even get access to that region, how do you

402
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Speaker 4: put money to work in that region? But that does

403
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Speaker 4: appear to be a region of the world where emerging

404
00:21:18,640 --> 00:21:23,439
Speaker 4: opportunities are huge. Yeah, definitely helps Japan and Australia are

405
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Speaker 4: areas of the world we haven't talked about. So if

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Speaker 4: you want to talk developed market, Asia, Japan and Australia

407
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Speaker 4: are two totally different markets. Japan is also in a

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Speaker 4: bit of a slump after leading along with the tech

409
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Speaker 4: wave until the middle of last year, and Australia is

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Speaker 4: a very commodity sensitive sector. So it depends on what

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Speaker 4: your thesis is. These are all very very different markets.

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Speaker 4: But right now, yeah, Europe kind of stands out relative

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Speaker 4: to the rest, mostly because of that valuation discount.

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Speaker 2: And can we talk about the currency real quick, because

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Speaker 2: Todd is old enough to remember, like I am the

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Speaker 2: about ten years ago, these currency GTFP like we're like

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Speaker 2: rock stars. So HGDJ was the big one heads Europe.

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Speaker 2: That one's up twelve percent this year, so two percent

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Speaker 2: better than regular Europe.

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Speaker 3: What about that?

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Speaker 2: Could yeah, could a strong dollar actually maybe bring people

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Speaker 2: in back to that currency heads trade?

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Speaker 4: Yeah? Yes, currencies are a big theme for us this year.

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Speaker 4: We've been focusing a little bit more on the en

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Speaker 4: than anything else. The en, you know, it is typically

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Speaker 4: a very risk off signal. The yen performing very well

427
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Speaker 4: would suggest that we're maybe some of our optimistic assumptions

428
00:22:33,119 --> 00:22:37,199
Speaker 4: regarding global equity performance should be questioned. But with respect

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Speaker 4: to Europe, there are quite a few people who suggest

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Speaker 4: that it was really the dollar rip that ultimately created

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Speaker 4: the downside for Europe and the second part of the

432
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Speaker 4: latter part of last year, because as the dollar was ripping,

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Speaker 4: the euro was the predominant downside risk that plays its

434
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Speaker 4: way through earnings in the short run in a very

435
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Speaker 4: very negative way. So we saw massive negative earnings or

436
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Speaker 4: vision momentums when the dollar was at its biggest rip

437
00:23:01,880 --> 00:23:05,240
Speaker 4: or it's biggest gaining at the point in which it

438
00:23:05,280 --> 00:23:08,240
Speaker 4: was gaining the most. Now we're seeing a little bit

439
00:23:08,280 --> 00:23:11,560
Speaker 4: of normalization there and that may be helping Europe. But generally,

440
00:23:11,640 --> 00:23:15,240
Speaker 4: if the euro gets cheaper, that's great for European exporters,

441
00:23:15,760 --> 00:23:20,240
Speaker 4: and a lot of these developed market European groups are

442
00:23:20,359 --> 00:23:22,800
Speaker 4: very sensitive to European exports. So if you get a

443
00:23:22,800 --> 00:23:27,560
Speaker 4: combination of China's growth improving and the Euro getting cheaper,

444
00:23:28,200 --> 00:23:30,119
Speaker 4: that's usually a pretty good sign that we're going to

445
00:23:30,119 --> 00:23:32,200
Speaker 4: get some earnings momentum emerging in Europe, and that may

446
00:23:32,240 --> 00:23:33,760
Speaker 4: be starting to price in.

447
00:23:34,320 --> 00:23:38,480
Speaker 6: For the less sophisticated folks out there who listen. I'm

448
00:23:38,480 --> 00:23:40,960
Speaker 6: always a fan of the fifty to fifty allocation fifty

449
00:23:40,960 --> 00:23:42,639
Speaker 6: hedge fifty unhedged.

450
00:23:43,760 --> 00:23:45,840
Speaker 5: Just because it's so hard to get a market right

451
00:23:46,160 --> 00:23:47,960
Speaker 5: and then get the FX right of it. And I

452
00:23:48,000 --> 00:23:51,880
Speaker 5: wonder if that's just the water down version of trying

453
00:23:51,920 --> 00:23:53,960
Speaker 5: to play Europe or international and there's ets for that.

454
00:23:54,080 --> 00:23:56,520
Speaker 5: So I like the fifty to fifty aspect.

455
00:23:56,600 --> 00:23:59,400
Speaker 1: Okay, so just speaking of ETFs for that, I thought

456
00:23:59,440 --> 00:24:01,840
Speaker 1: what you said arelier about this being a great opportunity

457
00:24:01,880 --> 00:24:05,760
Speaker 1: for active investors potentially if you could put together that

458
00:24:06,000 --> 00:24:08,119
Speaker 1: three X pigs or what have you.

459
00:24:08,240 --> 00:24:09,240
Speaker 5: What what would you.

460
00:24:09,240 --> 00:24:12,080
Speaker 1: Want this to look like for Europe if you could,

461
00:24:12,200 --> 00:24:14,280
Speaker 1: if you could get go into Europe and have exactly

462
00:24:14,280 --> 00:24:15,840
Speaker 1: what you want, what would it look like?

463
00:24:16,359 --> 00:24:18,359
Speaker 5: Well, I like to defend the industrial names.

464
00:24:19,119 --> 00:24:20,360
Speaker 6: I think you have to have some of the those

465
00:24:20,400 --> 00:24:23,240
Speaker 6: European tech because they've been a beneficiary of this.

466
00:24:23,480 --> 00:24:33,040
Speaker 2: Yeah and sorry.

467
00:24:29,680 --> 00:24:33,320
Speaker 5: Sorry too, s A P A, s M A, s

468
00:24:33,440 --> 00:24:36,199
Speaker 5: M L. And then the financials.

469
00:24:36,240 --> 00:24:37,520
Speaker 6: This is the first time I can remember that they're

470
00:24:37,560 --> 00:24:39,840
Speaker 6: actually leading and not causing a problem.

471
00:24:40,400 --> 00:24:41,720
Speaker 5: I think this is amazing that we have.

472
00:24:41,760 --> 00:24:45,360
Speaker 6: European financials are just stuck and higher, and I think

473
00:24:45,359 --> 00:24:47,080
Speaker 6: if you're really going to have an issue, whether it's

474
00:24:47,080 --> 00:24:50,560
Speaker 6: within Europe or within the global economy, you'll start to

475
00:24:50,600 --> 00:24:53,760
Speaker 6: see those names and their credit backdrop really deteriorate.

476
00:24:53,800 --> 00:24:55,520
Speaker 5: I'm sure Gina will be on top of that as well.

477
00:24:56,840 --> 00:24:59,720
Speaker 6: The European Financial eu f N, I think it's about

478
00:24:59,720 --> 00:25:02,600
Speaker 6: to hit new all time high. Eric's that's a long

479
00:25:02,640 --> 00:25:03,040
Speaker 6: time coming.

480
00:25:03,200 --> 00:25:03,600
Speaker 5: Historic.

481
00:25:04,280 --> 00:25:06,640
Speaker 3: By the way, there is a three x europe BTF.

482
00:25:06,640 --> 00:25:08,719
Speaker 2: There you go get some guts so much an assets

483
00:25:08,720 --> 00:25:11,359
Speaker 2: it has, Todd, Oh.

484
00:25:11,240 --> 00:25:12,800
Speaker 5: God, I don't even I don't even know what the

485
00:25:12,800 --> 00:25:13,760
Speaker 5: ticker is, to be honest.

486
00:25:13,680 --> 00:25:17,280
Speaker 2: It's b u r L twenty two million, which is

487
00:25:17,359 --> 00:25:21,119
Speaker 2: really small. That means no one cares, there's no juice.

488
00:25:21,240 --> 00:25:23,600
Speaker 5: No, but this is this is part of the argument.

489
00:25:23,640 --> 00:25:25,480
Speaker 2: But if you're a pops like this, one's up thirty

490
00:25:25,480 --> 00:25:29,120
Speaker 2: percent this year because it's cripple Europe need more though,

491
00:25:29,160 --> 00:25:30,840
Speaker 2: But you got some of these single stocky tips go

492
00:25:30,880 --> 00:25:31,760
Speaker 2: up thirty percent a day.

493
00:25:32,320 --> 00:25:34,720
Speaker 3: So this is just like child's play at this point.

494
00:25:35,080 --> 00:25:36,879
Speaker 1: All right, well we we have the thing that we

495
00:25:36,920 --> 00:25:39,760
Speaker 1: can watch now, uh Todd. Gina, thanks so much for

496
00:25:39,840 --> 00:25:41,080
Speaker 1: joining us on trillions.

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Speaker 4: Thank you for having us, Thank you very much.

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00:25:48,680 --> 00:25:51,679
Speaker 7: Thanks for listening. To Trillions until next time. You can

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00:25:51,680 --> 00:25:57,119
Speaker 7: find us on the Bloomberg Terminal, Bloomberg dot com, Apple Podcasts, Spotify.

500
00:25:57,160 --> 00:25:58,600
Speaker 5: Or wherever else you'd like to listen.

501
00:25:59,160 --> 00:26:01,920
Speaker 1: We'd love to hear from you. We're on Twitter. I'm

502
00:26:01,920 --> 00:26:05,159
Speaker 1: at Joel Webber Show. He's at Eric Waulchuna's.

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00:26:06,280 --> 00:26:11,800
Speaker 7: This episode of Trillion's was produced by Magnus Hendrickson. Bye