[CC may contain inaccuracies] The earnings so far from the U.S. are what most beating estimates. We got the estimates from Microsoft today. Of course
not. Not a little bit disappointing. They still closed higher. What does it tell you about the U.S. stock market and the
appetite of investors around the world to keep buying stocks. Well it's the earnings which is underpinning that demand.
Obviously we have those worries about higher inflation higher bond yields but if earnings make up for it then it's not.
It's not a big threat. And that's what we're saying here that each time we have a U.S. earnings reporting season at least
since the March reporting season last year U.S. share market has increased because U.S. companies have surprised on the upside.
And of course this time around the same thing is happening. We're seeing companies beat on average by about 13 percentage
points. I know that's skewed a little bit towards financials who are releasing loan loss reserves. But even if you strip that
out. Companies are beating by about 8 percentage points. So that's a pretty good outcome. And it obviously keeps the
valuations on share markets manageable even manageable even though we're setting this back up. And but you know there's a
lot of Hang Seng hand wringing certainly over the rise in bond yields but just about the idea that rates are going to move
higher. Oh that's bad for stocks. But personally I talked to a lot of people who actually own and run companies. They tend to
be much more concerned about how fast the economy is growing whether or not their taxes are rising and if they can keep
making money. With interest rates rising many of them say that's fine. So how do you expect this this fear of rising rates to pay
out. Look historically when rates have gone up initially it's a bit
of a negative. It's a bit like when central banks stop talking about tapering initially it's a bit of a negative. But once it
stops occurring I think the market adjusts to it providing the economy is not collapsing providing earnings is still rising and
monetary policy is not overly ties. Then the sharemarket can continue to rise. Historically it doesn't go off as rapidly
as it does at the start of a bull market. When you're coming from cheap valuations ultra easy monetary policy no no
tightening in monetary policy and such as rocket fire. That's what we've seen for the last 18 months. So the environment is
now changing and that's going to constrain the rate of increase in share markets. But historically higher rates initially had
not a negative. They only become a problem when rates reach onerous levels. And I think for a long long way away from that.
In the US obviously we haven't even started rising rates. But in most other countries around the world we've got a long way to go
before higher interest rates crunch the economy. In Asia though you do have central banks starting starting their
tightening cycle as well as a lot of people saying we're starting to see the sort of the downturn in the profit cycle as
well. Right. How much does that impact and how much is that playing out when it comes to the gap between US European markets
and Asia. And where do you find the opportunities in this part of the world.
Well it is a bit messy Asia. Of course it did have that kind of problem a few months back and that sort of led to slower growth.
But I reckon if the global economy generally keeps going then that should be good for Asia.
Asian economies because they'd benefit from increasing trade and exports and of course some that should lead to another fillip in
Asian growth. And therefore I think even though the earnings season earnings growth has started to slow in Asia it might have
another per CAC as we come into next year. So I'm not particularly concerned about that. But obviously different parts
of the world will be at different parts of the cycle at different points in time. And of course like I did a little
while ago and like Europe was starting to shoot the lights out as it got Covid under control. But the US was in a problem.
Now it looks like it's reversing a little bit. So this I mean a lot of it Covid is still at the center of a lot of it's causing
a lot of noise across countries across markets. Obviously having a big impact on the inflation situation. And so
we get the pandemic behind us and it's still not quite there yet. That's going to cause that ongoing volatility and in many
ways opportunity ongoing opportunities for investors.