Mark LaMonica: Welcome to another edition of Market Minute. I am joined by Bryce this week. And Bryce, I will say I start these off in the same way every week and say the market’s going up despite all the other headlines. So what is happening? Maybe just a quick overview.

Bryce Anderson: If we if we look at the month of May, which we’ve just closed the books on, it’s been a story of growing optimism around a, I guess, a peace deal with, with Iran. And that I think has given the markets and positive sentiment. And we’re so, so I’ve seen markets rising on the back of that.

All prices have come back a bit. And also bond yields have fallen slightly. Now, on top of that, we’ve had the continued strength in in AI and particularly the semiconductor part of the sphere. And you’ve seen some really big, big moves in that space led by SK Hynix, which has continued its March. And it’s up over 250% this year alone.

Mark: We have some strong headline stocks that are dragging the market up. But how broad is this rally. Is everything going up or is it really just the things we’re hearing about in the media.

Bryce: The markets have been going up, but underneath the hood there’s a fair bit of dispersion. If we look at global markets and start there with the sectors this month alone there’s been a dispersion of 30% or thereabouts between the best performing sector being energy and the worst performing sector being health care. That’s huge in one month alone.

Mark: We were recently on a panel together. You were on the panel, I was moderating the panel and we were talking about tech shares in general and, you know, talking about comparisons with today and the dotcom bubble. I think the point you made was that current leaders are very profitable. But we are now starting to see some maybe.com behavior.

We have these IPOs like SpaceX and there is Allbirds converting from a shoe company to a data center company and then the shares go up 600%. Does that worry you at all? What do you think when you look at this potentially speculative behavior.

Bryce: There’s certainly some speculative behavior in the market, particularly around AI. And Allbirds is perfect example. And I think with all these IPOs coming to market and some of the big ones being SpaceX and Anthropic, investors need to separate that speculative behavior with what a company is actually worth and the earnings that are attached to it.

Because there is so much excitement and it’s easy to get it caught up in the excitement. But you’ve got to look at the fundamentals of what those businesses are actually delivering and what you actually pay for it.

Mark: And then how about emerging markets? We don’t talk about them much, but they’ve been getting a little bit of attention. What’s going on there.

Bryce: Emerging markets have been performing strongly at the index level. But again it’s a dispersion story. And if you thought dispersion was big in developed markets, in emerging markets, it’s been extraordinary in this past month where there’s been nearly 100% dispersion between the best performing sector, which has been IT and the worst performing sector, which is communication services.

So really huge dispersion and a good deal of volatility that we’ve seen across the board.

Mark: We’ll keep going around looking at different asset classes. Fixed interest has been in the news a lot. I guess the good things for people investing in bonds right now is that yields are up. Not so good for people that were holding bonds. What’s happening there.

Bryce: Bond yields remain pretty elevated at the long end this month. It’s been probably pretty muted in terms of compared to what we’ve seen in equity. So bond yields have come back a bit. The yields that we are presented with now are pretty attractive entry points. Maybe something to note as well is I guess people hold bonds for diversification and the environment.

Bond yields have been rising at the same time that markets have been falling. So both equity investors and bond investors are feeling pain at the same time. It’s a bit of a good reminder that bonds are an important diversification tool, but not in every scenario and that is what we’ve seen.

So you need to have different diversification tools in your kit bag and not just one being bonds.

Mark: Now we talked about things that are going well but you mentioned how some sectors are not doing well - health care, for example. That sector is not doing well. We’ve seen a lot of this in the Aussie market. We saw in the most recent results season, we saw some really big falls. How should investors think about those negative headlines?

Because I know that’s generally where opportunities are. But it can be very hard to go and invest in something when you’re getting all this bad news.

Bryce: Yeah. I think when you say the headlines and the negative price falls, it does feel uncomfortable for investors. And I think to your point, in health care, as an example, in Australia you’ve had CSL, huge moves in stock prices there. And the way we like to think about those moves, whether it’s at the stock level or the asset class level, is try and separate the the stock market performance from from the fundamental value.

And it’s an important thing to think of when in long term investing is that a good business doesn’t necessarily make a good investment. So we like to assess things on a long term basis. Step back. Think about what we think fair value is. And then this price just cycles around that. So in terms of opportunities that we’re seeing to maybe your point the opportunities come where the negative news is and where we’re seeing that in particular is some of the consumer facing industries which have lots of pressures at the moment, whether that’s the hangovers from tariffs and they’re still going on inflation, cost of living crisis.

All these pressure points are causing uncertainty, investors uncertainty and creating that separation in price and value. And where we’re seeing that is in places like global luxury retail. So broad retail and also some of the more discretionary end of consumer staples.

Mark: Okay great. Well that’s a good place to leave it. Thank you very much for joining me.

Bryce: Thank you very much, Mark.