Hello, this is Jeremy Richardson from the RBC Global Equity Team here with another update. And I wanted to share some thoughts with you about what we've been seeing in markets recently.

Now we’re about halfway through the results season and generally I would say they’ve been coming through in an okay fashion. 80% of companies have been beating estimates - that's not an unusual proportion, but we should just acknowledge that some of those estimates have already been lowered because of fears of a business downturn and a possible recession. So, you might argue that's perhaps a lower hurdle to get over. However, the focus does appear to be more on the guidance than on the results, and any sign of more cautious statements from management teams or a reduction in their estimates for the balance of the year is being treated very harshly by investors. We've seen quite significant markdowns in a number of instances.

Generally, though, just a couple of things I really wanted to tease out of the results for you, which I think are bearing in mind quite notable, and the first would be around China. And the reason for mentioning it is because there had been a hope that China would act as an engine of economic recovery after the abolition of zero COVID rules back in January. And to an extent that has been the case. We have seen some good numbers from companies selling in China - LVMH would be one notable example. However, there's just been a few other companies reporting results which is just perhaps indicating that maybe the pace of that recovery is just beginning to lose some of that momentum. And it might be worth thinking ahead a little bit about how the pandemic expressed itself differently in China compared to many countries in the West, where lockdowns were perhaps more pervasive, whereas in China its a little bit more sort of regional focused and a bit more episodic, which means maybe there isn't that sort of the same scope for a consumption led recovery that perhaps, if we'd been anchoring a little bit more the experience in the West, we might have been of factoring into China. So maybe some signs there that China is perhaps not going to be quite as strong an engine of global economic growth as the market had been hoping or expecting.

The other thing I just really also wanted to highlight was just the dominance of one phrase, which is artificial intelligence or A.I., which seems to be coming out in a lot of results calls that we're listening to at the moment. Obviously, it's the chat GPT and it's like have captured a lot of investors and consumers attention, and businesses are thinking about ways in which they can fold some of these attributes into their business models. But the market is differentiating, you can see it in the results and in its response, and its differentiating between those businesses that it sees as being able to monetise the potential of AI in the short term, and those are being treated very favorably by the market. Conversely, there are business models which the market sees as being disrupted by artificial intelligence, and those are being penalized very aggressively. And there's a group in the middle where the market isn't quite so sure, and yet to make up its mind. And so, its something that I think we'll probably likely to see a lot more of as time goes by. And that group in the middle is going to have to make up their mind about the pace at which they would choose to invest in as they look to try and introduce characteristics of AI into the consumer offer.

More broadly though I just really wanted to sort of also share some observations, perhaps a little bit more relevant for the medium term, and that is that it seems, as a result of what we've seen so far in this results season, that fundamentals are fighting back. It had been the case for the last 12 to 18 months or so, at least it's felt like the case for the last 12 to 18 months, that everything's been really dominated by the whole discussion about what central banks will or will not do, and that does seem to be giving way now to a much more investors attention back onto company fundamentals. And I think for many investors, that is to be welcomed because although the spread of outcomes 12 to 18 months ago was very broad, very wide, and that created an awful lot of uncertainty in terms of the macroeconomic outlook, it does feel as though the spread of possible outcomes is now beginning to narrow. We are discussing whether or not we're going to see small increments, even still to interest rates. And it does look as though in most geographies, inflation has rolled over. Maybe it's not decreasing as quickly as we would like, but nevertheless, some of those sort of fat tail outcomes, like maybe a return to the 1970s, at least now seem to be disproved in investors minds. And that narrowing of those outcomes, I think, is creating the opportunity for investors to go back and look at company fundamentals. And although those fundamentals, some of them are going to be good, some of them are going to be bad, actually, I think that's a very heartening development for investors generally who if, like us, you are focusing on investing in great businesses with attractive valuations, this should mean that those great businesses, you continue to see traction.

I'm going to leave it there. Thank you for your time and attention. And I look forward to catching up with you again soon.