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00:00When do we start to focus on the fact that there is no growth in Europe? It's just an absence of a recession, and what we've seen so far is a bit of a squeeze and relief rally and perhaps nothing else. Well, I think we need to put it in context here. We think that the global economy is in a relatively good shape and we expect to see a soft landing in the US. But we also now expect to see a relatively soft landing in Europe. The falls in gas prices have helped the pick up in China as well. But the absence of recession, as you say, doesn't mean we're yet into a strong recovery cycle. And I think the rebound that we've seen in risk assets in the last couple of months is overstating the potential from here at the index level. We've got flat returns in the US this year, slightly positive returns in Europe. So we prefer Europe. We think most of the action is going to be below the surface of the index. Let's talk about those opportunities. Banks have ripped in Europe. They're up about 50 percent from the July lows. I picked out a minor because I know you like some of those names as well. Rio since October is up something like 40 percent. These are huge monster moves and credit to you guys because you got on board this bank's trading Europe at a time when I was sitting there thinking, you've got to be kidding me. We're gonna get rate hikes from the ECB. It's gonna crush the economy. And peripheral spreads are going to blow out all over again. Why has that trade worked and why do you think it will continue to work? Well, I think there are three things. First of all, the recession that people feared six months ago is not happening. There was a point where the market was pricing in quite a big downturn in the European economy. The expectations there are adjusting pretty quickly. We actually have point six percent GDP growth across the eurozone this year. So the economy is growing, not shrinking. That helps a lot. Second of all, the rise in interest rates we're seeing is material given where we've been, where they came from. Remember, you know, just a year and a half ago, 25 percent of new government debt in the world had a negative yield. Now that doesn't exist. European rates were negative. Now they're positive. The leverage to that in terms of net interest margins is the real game changer. And bear in mind that corporate balance sheets are reasonably healthy. So loan losses and the risk of a big downturn hitting banks is just evaporating.

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Goldman's Oppenheimer Says European Recession 'Isn't Happening'

Peter Oppenheimer, chief global equity strategist at Goldman Sachs, says fears of a recession in Europe have faded, with his team seeing a "relatively" soft landing for the area's economy due the decline in natural gas prices. "The recession that people feared six months ago is not happening," he says on "Bloomberg Surveillance." (Source: Bloomberg)

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