Transcription
Hello everyone and welcome to Synapses. We will obviously focus on the financial market with our guest of the day, Christian Paris, President of Altaïr Economics, and we will proceed with a brief overview of the outlook. But before starting this interview with Christian, a ritual reminder: to support us, subscribe, it's important, comment on the shows, we like to read your comments, share the shows, it's also important for us to gain visibility, and then give a thumbs up if you appreciate them, it's pleasing and it supports referencing. Christian, hello. Hello. So, let's start with the United States. We have long feared an inflationary shock due to the rise in tariffs. An inflationary shock that we haven't really seen, even though inflation is higher than it should be according to the Federal Reserve. So, this shock, will it be like the Arlésienne? We will never see it coming, or on the contrary, is it imminent? Well, we have to start with the simple things. Who pays the tariffs? Because tariffs are an increase in taxation, however you look at it. The money does go into the US budget, it comes in well. So this money is indeed collected somewhere. What we see and what we know is, in any case, it's not the countries that export to the United States who pay these tariffs. So, we have an indicator that clearly shows us this, it's import prices. These import prices are calculated in the United States before tax is paid. And we see that these import prices continue to rise despite the increase in tariffs. So this means that overall, those who export to the United States continue to raise their selling prices, and then the tariffs are applied. So this means that, in short, it is American importers who pay the bulk of these tariffs. We think that about 16% is actually paid by those who export to the United States. So you see that the share is very, very small. Well, once we have that, then there is the whole question of whether it will be the American consumer or American importers who will absorb it from their margins. For now, what we observe is that, according to estimates we can make today, it would be mainly American companies that bear this on their margins, at over 60%. So, why such a level, and why don't they pass it on immediately in their prices? There is perhaps a phenomenon that we may have underestimated but which seems to play an important role: American companies were warned that there would be these tariffs, and we know that they have built up a huge amount of precautionary stocks. So they are selling off their stocks for the moment, but not yet passing on the cost because they haven't yet had this cost reflected in their selling prices. So for now, we have deferred this effect, and perhaps they will do it gradually because they cannot pass it on. Many companies cannot raise their selling prices by 15%, 20%, 30% overnight. So there might be an effect over time, but that means it will spread gradually. After that, one might say this only concerns the prices of imported goods, but we know there will be a second effect because, initially, I will increase the price of washing machines, for example, the price rises quite gradually, but then those who use washing machines will pass it on in their services. So afterwards, there will be a second phase where we will see that it will cause inflation in services. So that's a first point, it's coming and it will come. And I don't think that just because inflation isn't visible today, we shouldn't believe that it won't gradually spread. After that, it will depend, the pace will depend broadly on consumers' acceptance or not of paying higher prices. If a company sees that it cannot raise its prices, it will weigh much longer on its margins, or it will pass it on to the consumer, and then the consumer will bear this cost increase. So you mention this inflationary shock, but do you also agree that this shock will be contained in time and therefore not so serious? Yes, I entirely agree. That is to say, it is a, we are increasing taxation, we are increasing fiscality, so we are putting an additional tax rate, we are increasing the price of a good by 15%, so naturally, then there is the whole story of who will pay this tax, but overall, in the end, after several months, it will be the American consumer who will pay it. We have always seen it that way, but it's a one-off. Unless we imagine that Mr. Trump will increase tariffs every month, from the moment it is set, when there is a trade agreement, it is just a price level effect that is raised. So that in itself, we agree, it is to say that it is not necessarily a wage-price spiral, and we know that when we talk about inflation, we often talk about something that is self-sustaining. Inflation is a generalized rise in prices that is self-sustaining. So that's the definition. So we cannot talk about inflation, we can talk about a price shock. Well, a price shock in itself can be absorbed by the economy. Now, be careful, because we might rejoice, we might say it's a price shock, but that means that somewhere we are assuming that there is no wage-price spiral, because either we are in a dynamic logic and we say, we have this 15% price increase, I ask for a 15% wage increase, and at that point, we can pass it on to the consumer, but it will be self-sustaining. Or, second hypothesis, I have this 15% price increase, but I don't have a wage increase. So my purchasing power will decrease, and at that point, it will be very recessionary for my consumption. So the central element is to know how this shock will ultimately destabilize the economy or not. And either it will be more inflation that will be self-sustaining because it will increase the cost for businesses and we can pass it on to the consumer, but behind that it leads to a wage-price spiral, or there is no dynamic at all, it is a one-off shock, but at that point it is rather recessionary, it will weigh on the economic situation. So, we will study the second scenario. But before that, to fully realize that the shock is coming and that there is data to support it, I suggest we display on the screen, in fact, American inflation. So we have consumer prices and prices charged by American companies. What they announce. There. So I'll let you comment on this graph, but what we do see is that the prices announced by companies must increase significantly. So consumer prices must also, in the end, follow this rise in charged prices. Yes, this is a survey conducted by S&P Global. It's a survey, it's the PMIs, it's the charged PMI. So it's the companies telling us how they will charge, how their prices will evolve. The question is about the present, but we notice that this graph works well because it has a somewhat prospective character. That is to say, between the time they tell us they will raise prices and when it really shows up in inflation statistics measured by the BLS, measured indeed with the consumer, we see a lag of 3, 4 months. So there might be a slight delay compared to what is announced. However, you see that the trend is very clear at the end of the period. We are seeing a very strong acceleration in prices. And if we wanted, and if there were a perfect correlation, and we wanted to establish a relationship, it would mean that consumer prices in the United States will increase by one point. They will go to around 4%. They will be above 4%. So we can understand that the US central bank, even if it is not in a scenario where it says this is something that will be self-sustaining, it is still delicate for it because it is sending us a message, I am starting to lower my rates, everything is fine, it's just temporary inflation, but it will still be necessary to bear in the coming months statistics showing that inflation is accelerating and is reaching 4%, so that is a first point for the central bank. It will have to be firm. It will have to say: I really don't believe it's a one-off shock, I really don't believe it will continue, that we are going to 4%, we will stay there for a while and then we will come down immediately. No, I really believe it will be a one-off shock. That's really it. It will have to be credible on that, because otherwise, naturally, the markets will say it's letting inflation run away, it doesn't care at all. So communication will have to be cautious regarding this shock. After that, we can, we can indeed say, well, it's just the time to pass on these tariff increases, and then it will be over. But that's the first point. Well, okay, it's a shock. But then the second point is how will the American consumer react? That's our real question. Will the American consumer accept this inflationary shock? Especially if they don't get a wage increase. And here's the big problem, and it's perhaps the variable that is somewhat underestimated by the markets in their scenarios. What we need to see is that we have an inflationary shock at a time when the labor market is turning. So why is this important? It's important because it removes any risk of a wage-price spiral. Indeed, that's what Powell and members of the US central bank are saying, they say, ultimately, there is no wage-price spiral, there is nothing that will sustain it. Why? Because precisely the labor market is doing poorly. So, we could rejoice, we could say great, they can lower rates calmly, it won't resist. But I could also tell you in a much more negative way, which is that they are very negative about the impact of this shock. Which is that this shock will not be durably inflationary, it will be rather recessionary for activity. Why? Because if households don't get wage increases, it means they don't have purchasing power, they will limit their consumption. At that point, companies will not, either they will not be able to pass on price increases as they wish, it will be margins that will be under pressure, or they will sell much less than anticipated. Revenue will be significantly lower than expected, and in any case, they may be encouraged to start reducing their workforce, to start laying off people, to compensate for the rise in costs related to tariffs, and at that point, the labor market will degrade even further. So, we could have a real recessionary shock linked to this inflationary shock. So, to illustrate the deterioration of the labor market, because the situation of the employment market in the United States is the focus of all attention. We see that everything revolves around this. A first graph concerns youth unemployment. It's the one that is rising, in fact, since the unemployment rate has gone up to 4.3%. But ultimately, the rise in unemployment is that of young people aged 19 to 24. So that means, roughly, young graduates. Yes. People who are entering the labor market today. Here, it's 16-24 year olds that you have on the graph. We are at 10.5% unemployed in this age group. What does that tell us about the behavior of companies and their expectations? Well, that's the whole problem we have today with employment figures. When we say they are bad, they are not bad because we still have an unemployment rate of 4.3%. So, we could say, frankly, at 4.3%, we cannot say that we are in a very deteriorated labor market. However, there are several small indicators that are quite worrying. So, first indicator, we have people leaving the labor market. Now, generally, when people leave the labor market, it's because they are having trouble finding a job, they are not encouraged to find a job because they don't find offers everywhere, and so they prefer to withdraw from the labor market. Well, then, there might be a small migratory element, the fight against illegal immigration could also encourage some immigrants to hide, to leave the labor market. Well, let's say, there might be these elements, but anyway, it means that the unemployment rate remains low, but it's because people are leaving the labor market. So, that shows you that something is happening in the labor market behind that, and then we see that young people who want to enter the labor market, they don't find jobs. And that's a real signal of labor market deterioration. Now, I'm not going to tell you that we are in a classic situation, because a real situation of labor market reversal, especially in the United States, happens very quickly. Companies lay off massively, and at that point, unemployment claims explode, and we have a real rise in the unemployment rate with people who have lost their jobs. That's not the case here. When you look at the unemployment rate for the core workforce, those under 50, but between 30 and 55, we see that the unemployment rate remains stable. Those over 55, unemployment rate stable. So people who are employed, who have jobs today, are not losing their jobs. There is no deterioration of their employment. However, if you lose your job, you don't find a job. You won't bounce back. And there is an indicator that shows this well, and households, Americans are aware of it. This is a survey conducted by the New York Fed among American consumers every month. And they have a question, they ask them, "If you lose your job, are you confident about finding another job? What probability do you assign to finding another job?" And we are at the lowest point since this survey has been conducted, since the 1970s. So that's paradoxical. I just told you that the unemployment rate is at 4.3. Americans tell us, "Ah yes, but if I lose my job, it's over, I won't find work." So that proves they have a very deteriorated view of the labor market. They really feel that it is very difficult to get hired today, and that shows that companies have completely frozen their hiring. So it's not a deterioration as usual. Again, there are no mass layoffs. But it shows that something is happening. Now, perhaps some will say that this is perhaps a signal of artificial intelligence. In any case, what is certain is that we are seeing some companies returning to say that they are no longer hiring juniors because they want to see if artificial intelligence is not replacing part of the workforce, and this would affect juniors more than senior jobs. After that, it will pose a problem of senior renewal in the long term, but it could partly explain this element. The other element, quite simply, is that there is so much uncertainty about how the economy will evolve, how the economic situation will evolve, that I am keeping my staff because perhaps things will get better, but since I am not sure that things will get better, I prefer not to hire and I am very cautious in my hiring. And indeed, there is an element that is not misleading in the PMI surveys. Now, we were talking about the price component, but if we look at the economic outlook, it remains well below the long-term average, even in the United States. We have the impression that everything is fine. We have announcements from Wall Street that are at their highest, we have investment announcements, business leaders are still very cautious about economic prospects. So, in any case, there is a frozen labor market, and that is an important element, because since we are going to have an inflationary shock, even if it is temporary, we know that we will not have wage increases. So, it's perhaps reassuring for a central banker, he will say, okay, I don't have my wage-price spiral... but it's a problem given everything you're saying. It's a problem for the consumer. The consumer will experience a price increase, their wages will not increase. So there is indeed a purchasing power problem in the United States that is emerging for the end of the year, and someone will pay the bill, and it could also end up in company margins. So, precisely to indicate that the labor market is weakening in the United States, we have a second graph that is interesting to display and show. It's that of job openings, more precisely the ratio of job openings to the number of unemployed. So when it's above 1, it means there are more job offers than unemployed people. Well, here we are at equilibrium, 0.99. Let's say we are at one, so we do have this complete tension, but this immobility, in any case, this rigidity of the labor market. Now, this gives us two important elements. First element, it explains why the US labor market has held up so well so far. Why has it held up well? Because we were understaffed. So, I had many positions to fill. I have an economic slowdown, I have uncertainty, I don't want to hire anymore, but I won't lay off because ultimately I was understaffed. Well, now, the slowdown is indeed there, it is clearly present, it is becoming visible in certain sectors. I no longer need it, in fact, I thought I would hire two more workers, but since my order books are a little less full and it's slowing down, I won't hire these two people anymore, but I haven't laid them off because I was already understaffed. So that explains why we had a labor market that ultimately reacted very little to uncertainties and remained relatively solid, and why we didn't have an explosion in the unemployment rate. Now, it also means that in the future, we no longer have this safety margin. So if there is a further slowdown, it means that it can weigh on employment. Let me draw my little diagram. I have an inflationary shock, my consumers are no longer there. My revenue is growing much more slowly. I can't raise my selling prices despite having this additional tax to pay. So I have rising costs, so my margins are under pressure, and I am no longer understaffed. So now, I can perhaps start to think, to say, shouldn't I start to reduce my staff a bit to maintain my margins and to absorb all this? So, we are entering a risk zone. I'm not saying we're there, but we're entering a risk zone because I no longer have that buffer of saying that I was understaffed and that even if the economic situation deteriorated a little, even if there was a slowdown, it wasn't a big deal because I needed my current workforce. So, the labor market is becoming riskier for households because we say there is this element. And then behind that, we see that now, that's what they say, that is to say, the guy who loses his job, he no longer has 10,000 job offers from companies. So he has the feeling, and that's why we have these households perceiving a tightening of the labor market, because it's a reality, it's a measured reality. There are no longer companies today willing to hire at any price. So there is indeed a real change in the labor market. Even if the unemployment rate is 4.3%, behind that, we still see signals appearing that have really changed in a few months. So what you are saying is that we should still be wary of this inflationary shock given the fragility of the labor market. Ultimately, you would lean more towards the recessionary scenario, wouldn't you? Yes, recessionary. That's why it's recessionary. I wouldn't say the same thing if I had full employment, if I had households with an acceleration. Indeed, there is one member, we are almost there, at full employment. Well, we are at 4.3% again, but we are not seeing very dynamic wages either. So that means that we will not easily absorb this inflationary shock. So it could be the little element, the little extra drop that further weakens the US economy. That is to say, we are not in an American economy as booming as one might believe, given everything we hear today and especially given the valuation level of Wall Street. And we finally understand the very divergent opinions within the Federal Reserve's monetary policy committee, because we do have brilliant people, whatever one thinks of them, they are brilliant, who cannot project themselves 6 months ahead, or at least have an aligned view 6 months ahead. That's the element that is perhaps most surprising when one questions the members, the different members who vote on monetary policy, the members of the FOMC, the monetary policy committee, they give us their economic forecasts and their expected interest rate level at the end of the year. And there, we logically find a wide dispersion for the end of this year and next year, which shows that they have very divergent scenarios among themselves. So it's not necessarily bad, there are debates and they make decisions. But it's still surprising because they all have the same. Now, it's especially the dispersion for the end of the year that strikes me. We are not very far from the end of the year. That means, within 3 months, let's say, they cannot tell us whether we should lower interest rates a lot, a little, or do nothing. And we have really both extremes. Some are for a very rapid return to interest rates of 2%, 2.5%. Others say we should return to their estimate of a neutral rate of 3%. They already disagree on the level of the neutral rate. But others say we should go to 3%, but not necessarily go below. We must be very cautious and proceed very carefully. And then there are others who tell us, "We lowered it once, it gave us a sort of safety net. We reacted a little, we did ease the restrictive nature of monetary policy a bit. But we shouldn't go much further, we should do nothing until the end of the year." So we are dealing with people who have all the same statistics. But behind that, behind these rate expectations, they have completely different visions. That is to say, some say, "Oh dear, it's a catastrophe in the labor market, it's going to turn around, we risk a recession." A bit like the scenario I described previously. So I would lean more towards a scenario of rapid rate cuts by the Fed. But well, let's say that's their scenario. But others say, "Well no, it's very solid. There's consumption that remains solid. Why? Because households that are employed, they also have a wealth effect with the rise in the stock market, they have an environment that is very supportive. They are not losing their jobs, there are no mass layoffs, so we will have solid consumption. We have investments, strong companies, stimulated particularly by artificial intelligence, which remains a major investment driver that makes the US economy solid. And so, why would we aggressively lower rates? We shouldn't, because we are still very far from our inflation target. We will also have this inflationary shock. So we are already starting from a level where we are very far from our target, and in addition, we will have an inflationary shock that will pull inflation upwards in the coming months. So lowering rates today is suicidal when we have a resilient economy. So we see that the debate is very open and very, I would say, very broad. But we see that I don't understand why Wall Street is euphoric in this case. One might think, at least out of caution, that there are real sources of uncertainty. So when you have central bankers saying, "We don't know where we're going, we don't agree among ourselves," and we have many open scenarios, it's not necessarily very reassuring for the future. And in any case, we don't understand why the VIX, Wall Street's volatility index, isn't higher. So if you don't understand that, it means that you still believe that we are in a risky situation in the American markets, even though they are objectively rather expensive. Yes. So why? Because, as always, the American markets are playing a scenario. Now, perhaps I am wrong, and they are right to play this scenario. If that's the case, they are right, and we have not much to fear. The scenario they are playing is having your cake and eating it too. That is to say, US growth remains solid, slowing down only slightly. We certainly have a more fragile labor market, but it's not dramatic. And we have a central bank that is lowering its rates. Now, before the last FOMC meeting, they were even on a very aggressive rate cut. It was a bit paradoxical because, on the one hand, they were giving us 3% growth in their expectations for results and growth. And on the other hand, they estimated that we would quickly go below three, or even have a very accommodative policy. Well, perhaps they were confused by Mr. Trump's messages, and they thought there might be something much more violent than what would actually happen. But anyway, we have resisted well because, on the money markets, we have revised upwards and we have fully integrated that the US central bank would be cautious, that it would not be so aggressive, and yet we have not seen a correction in the stock market. So that means that we are still in a very complacent market, which believes that we are still on strong growth in the United States, perhaps around two, perhaps not three, not very strong, but around two, between 1.5 and 2%, and that we have a central bank that is lowering its rates. And so, we are thinking in purely flow logic. There are many people who were afraid of the future, who were afraid that the economy would do badly, and who put a lot of money into money markets. There are 7 trillion dollars in money markets, and money markets will yield nothing more because the central bank is lowering rates, and since there is no economic risk, they will put everything into stocks, and so, well, we must not miss the stock rally. Here, there are 7 trillion dollars that will come into stocks because we will see rate cuts and a solid economic situation. So, it's true that it's a real call for this scenario. The big risk, the big risk is that there is a slight change of mind. So, either it's an element where we misestimated inflation, inflation is higher, and we say the rate cut won't happen, and so ultimately the central bank will do nothing, and so we will leave the money in money markets, and there won't be this additional surge. Or, we have underestimated the economic situation, and we have either a contraction in profits, or revenues that are significantly lower than expected, and then we will say, we may have underestimated the economic risk, the cyclical risk. The central bank is right to lower rates, but it must continue to do so, but it's not enough because we are very disappointed by company results. And at that point, we don't want to leave money markets, you know. Even if we know it yields less. We say, we'll stay in money markets, we'll wait for all this to calm down before buying companies that will post mediocre results at a very high price. So, in both cases, I am a bit surprised that we remain in this scenario. And so the big risk is when the scenario changes. Because when the scenario changes, investors are generally black or white. So there are very violent reactions on the stock market. So, be careful this end of the year, at some point, expectations will probably have to be adjusted. So we are at a pivotal moment. However, the AI theme that is driving the market, but we will come back to that in another show, because there is a lot to say on the subject, doesn't it remain a priority theme, ultimately, because it is relatively immune to the recessionary risks you mentioned? Yes and no. Yes, of course, it is immune in principle. We won't suddenly have Nvidia selling fewer processors, and we won't be able to fill the holes we've made to build data centers. So there is an investment effect. Now, perhaps if the economic situation deteriorated enormously, major investors like Microsoft, Meta Platforms, well, they would still be impacted by the economic situation. Meta depends on advertising, Microsoft also depends on corporate spending. For example, if you sell a Windows, it's because you have an employee. If you have one less employee, you sell one less Windows. So they are still sensitive to the economic situation, don't believe otherwise. But since these are construction investments, they won't cut everything at once. So they might slow down a bit, but we still have good visibility. When you see that Nvidia has already sold all its chips that will be produced next year, well, we are not at all in something risky. So I would say that yes, in theory, these are defensive stocks. Indeed, this has been played out partly in this spirit, by saying that whatever happens, we are at least sure that the order books are there. The only risk, well, it's mainly the appetite for risk, because these are defensive stocks, but we pay a very high price for them. And so, today, the real risk is if there is a reversal, if there are fears, we risk making losses on certain assets because everything is going up, it's great. We had the bond market that went up, we had the stock market that went up, so it was great. But when you start to have some losses, well, you take your profits. Here, we had the most performance. So, there's that, and then we know very clearly that when the appetite for risk is a little less strong, well, it's the most valued stocks, the most expensive stocks, that suffer the most in the first place. And so, that's where your risk of reversal lies. So, I'm not saying it's bad, I'm not saying there won't be profitability in these companies. I'm not saying I'm questioning artificial intelligence, I'm just saying that at the current valuation level today, if there is the slightest doubt, it will reverse very quickly, and if liquidity is needed, it will be on these stocks that we will have a correction. So, necessarily, they will suffer in case of deterioration and change in the economic scenario. Well, so they won't be immune to bad news. So, a rise in risk inversion in the markets. So, regarding the American stock market, you believe we need to be cautious, if I'm following you correctly. The American bond market, quickly, what do we do there? Well, that
It depends on your scenario, but for me, my scenario is rather a recessive aspect. My inflationary shock is rather a recessive aspect. I didn't say recession, it's more like something that weighs on growth. So that means the bond market will perform rather well. In addition, I am rather of the idea that the American central bank will continue to lower its rates because it will have bad news. So it's rather positive for the bond market, as it will be elements of support. Again, as long as we are not in a wage-price spiral scenario, the real risk for bonds is a scenario where the labor market holds up, we have an inflationary shock, and we demand wage increases. And at that point, it fuels inflation. So the central bank at that point cannot lower its rates. And then, we would have a correction in the bond market. This is not my preferred scenario. But you see that both scenarios remain open nonetheless. But overall, given what we have today, the indicators, the most probable thing is still a good performance of the American bond market. Let's quickly talk about Europe. The outlook is not extraordinary. Nevertheless, given that the outlook is already quite degraded, is there a big risk of a downturn? And so, on this ground, is there not much to hope for, but also not much to fear? Yes, that's a bit the picture we have for Europe. That is to say, as Mrs. Lagarde tells us, the European economy is resilient. It has resisted many headwinds, after all. We must remember that. There is the war in Ukraine, there was the rise in energy prices which was quite significant and which was a major handicap. We now see that we have this risk of Chinese imports being redirected towards Europe and very significant Chinese competitors. Uh, we still have the instability, well, the political instability in France, which is an important country for the Eurozone. Well, I can give you a long list, and then finally, when I consider the Eurozone as a whole, I'm not just talking about France, but when we really consider the Eurozone globally, we still have growth. Well, it's not very dynamic in Germany, there are the southern European countries which are rather well oriented, and overall, on average in Europe, we are on something indeed resilient. So, can we say that we will have a very strong acceleration of growth in Europe? There are supporting elements, military spending, infrastructure spending in Germany, we expect a lot. It will spread, it will take time, but that is a supporting element. And we are starting to see a small signal in German order books where things are picking up. Now, we have to adjust a bit for military orders because they are strongly increasing, but well, in core German orders, let's say, it's improving a tiny bit in trend, so it proves that there might be small signs of improvement, but it's not, it's not AI, you know. It's not massive investment, it's not announcements of hundreds of billions of investment every day. So it's something that will take time to implement and will gradually improve. We saw the September IFO survey which was quite disappointing because precisely, business leaders are getting impatient and it's taking longer to implement. So there are still supporting elements, meaning that to paint a very negative, very recessive scenario, we don't see it. The household savings rate in Europe is at its highest. So they can still save more, but well, we say that we have come a long way. Uh, we are not seeing a deterioration in the labor market. Now, the unemployment rate is rising a bit in Germany, but employment remains very dynamic in Southern Europe. So, overall, on average in Europe, it's not so bad. So frankly, to be very, very pessimistic about Europe, it's still difficult. We have a BCE that has been lowering its rates for over a year now, and the effects of the rate cuts are starting to be felt. We see it in certain sectors. There are certain sectors that are picking up very well. Now, as always, it's rather Southern Europe. Where we have the best surveys, it's in construction, it's in Southern Europe, Italy, Spain, where there is really an effect that is starting to play. Germany, Germany in the September survey, only Germany in the construction part does not see a deterioration. So Germany is also starting to benefit from this rate effect. France remains, which is really still in difficulty, but I think it's not a rate effect. These are other problems. But overall, if I consider all of Europe, we still have real supporting elements. So I would say, unlike the United States, there will not be much standard deviation. There is not much in terms of yield, hope for yield, but there is not much cyclical risk, much less. And we can say that if there are things, it will be rather positive. If there is a calming down in Ukraine, it's not done yet, mind you, but if there were a calming down, in any case, there is no longer this energy shock, there are many things that are currently attenuating. So, overall, it's a risk-return profile that is not so bad, but especially on the risk aspect, not necessarily on the return aspect. Whereas in the United States, you can have hopes for the return effect, but the risk is high. So, ultimately, we are not seeing such a strong divergence between, on the one hand, the United States being an ideal investment destination where everything is going well, and on the other hand, Europe being very bad. We see that there has been a good rebalancing, ultimately, between the two zones. But in Europe, aren't we condemned to primarily do stock picking? Because we don't see, apart from banks, and we should come back to that, they have outperformed, they have been in a bull market for 3 years, at least now. And perhaps they will still benefit from the rate cuts, if the BCE, we get the impression that the BCE might stop there, but that's perhaps not certain either. Uh, especially if the Fed cuts its rates, perhaps there will also be a desire to adjust rates so as not to have a euro that soars against the dollar. If the BCE lowers rates, banks could benefit again. But overall, isn't it primarily stock picking that should be practiced in Europe? Yes, I think that can also explain why non-residents hesitate to invest in Europe. Because there is one element, however, that is very, very visible today, and that is the widening economic gaps between European countries. Now, there are two elements that show this. The growth differentials, quite simply, we see that there is a much more favorable dynamic in some countries than others, and then inflation, because that's an important point, because on average in Europe, the BCE reasons on average in Europe and looks at it, it's at 2%, but between 0.8% in France and 3% in Spain, there is still a significant gap. So there is a very, very significant dispersion of inflation today, which means that 2% might be less significant than one might think. And uh, on the other hand, it means that when investing in European assets, there are clearly significant divergences that are occurring. Now, this surely hinders the flows of non-residents, because non-residents often reason with Eurostock 50, and that means playing Europe on average. But very clearly today, you should not play Europe on average. You should play Europe where there is growth, where there is potential. This has been done, you know. There is discrimination, we see it in the performance of European national indices. But you have to continue very clearly today. You have to play domestic demand, but rather in Germany than in France, because given the uncertainties we have, there is a real, a real differential that can emerge. You should rather, in my opinion, play the activity in Spain than the activity in France. So there are trade-offs to be made within European countries, and so yes, yes, there is stock picking to be done. Now, perhaps there is one element that the markets have abandoned a bit too quickly, it was mentioned, it's the BCE naturally, because if the BCE were to resume its rate cut cycle, and I think it will resume it too, because we will have average inflation that will fall below 2%, and from the moment we are below 2% inflation, at that point, the BCE will surely be encouraged to further ease its monetary policy. So there is perhaps a monetary effect to play on a sector like the banking sector, but overall, otherwise, you have to do stock picking and rather take into account, take into account nationalities, and that is something important in investment choices for Europe. Well, we'll stop there for this overview. I'll summarize a bit of what you've told us, Christian. You say that we will indeed have an inflationary shock, that we have certain surveys that show us that well, invoiced prices will increase and therefore consumer prices will follow suit. Uh, it's a bit annoying at a time when the labor market is showing some signs of fragility. Now, we are indeed talking about some signs of fragility, but we see that we might be at an inflection point, and therefore this price increase can be a recessive aspect, since basically the consumer would not see his salary increase, at a time when there is this shock, and at a time when he cannot hope for a salary increase because the labor market is a bit stuck. So that's a concern. What we also see is that American central bankers are very divided on what will happen in the very short term, at a very short maturity. This still gives us an indication of the current lack of visibility. And you also say that Wall Street is ultimately playing the scenario of having its cake and eating it too, where everything would go well, ultimately. But in what you describe, we see clearly that either companies will absorb this inflationary shock and therefore it will have an impact on margins, or it's the consumer and it will have a delayed effect on margins. So, regarding the current expensiveness of Wall Street, you say we should still be a bit cautious because things are moving fast and even the tech sector could be affected, since it's... even if it has served as a safe haven, investors generally take their profits on what has performed well when they start to reduce their positions in the stock market. On the US bond market, you say that the Fed is rather in the process of lowering its rates, and considering the recessive effect, you say, be careful, the recessive effect is not a shift into recession, it's a pressure on growth from rising prices, well, this should support the bond market as it should attract flows towards it. So much for the American market. On the European market, you say that discrimination needs to be done. That is to say, on average, not much is happening, neither upwards nor downwards in terms of growth, economic activity. All of this is more or less stabilized. It's really not spectacular, but well, it's holding up, it's holding up. On the other hand, there are quite strong disparities between countries. We have countries that are doing well, others that are doing less well, including ours. And you also have to go for specific geographical themes and then look for companies on a case-by-case basis. That's pretty much it. That's exactly it. Christian, thank you very much. Thank you for following us. Subscribe, comment, share, and give a thumbs up if you enjoyed it. See you very soon.