Lagarde Reported to Leave ECB Before Term End, UK CPI Falls | The Opening Trade 2/18/2026
Watch on YouTube ↗  |  February 18, 2026 at 10:26 UTC  |  1:34:24  |  Bloomberg Markets
Speakers
**Anna Edwards** — Anchor, Bloomberg
**Tom Mackenzie** — Anchor, Bloomberg
**Modupe Adegbembo** — Economist, Jefferies
**Jeremy Stretch** — Chief International Strategist, CIBC
**Sophie Huynh** — Portfolio Manager & Strategist, BNP Paribas Asset Management
**Ilkka Paananen** — CEO, Supercell
**Abby Abu Omar** — Markets Reporter, Bloomberg
**Liesel Hill** — Commodities & Energy Managing Editor, Bloomberg
**Jana Randow** — ECB Editor, Bloomberg

Summary

  • UK Macro Divergence: UK inflation is falling (expected to hit 2% by April), but growth is weaker than consensus (Jefferies sees 1% vs. market 1.5%) and youth unemployment is hitting decade highs. This cements the case for Bank of England cuts starting March.
  • The "Molecules vs. Electrons" Trade: A clear rotation is occurring out of software and into "hard assets" (hardware, commodities, energy). Investors are pricing in AI disruption risk for software companies while buying the hardware/energy infrastructure required to run AI.
  • Berkshire’s Defensive Pivot: Warren Buffett has slashed his Amazon stake by 75% while rotating into media (New York Times), healthcare (AstraZeneca), and energy (Occidental), signaling a move away from consumer discretionary and tech beta.
  • ECB Leadership Rumors: Reports of Christine Lagarde leaving early are creating volatility, but strategists view this as a potential "buy the dip" for the Euro, anticipating a more hawkish successor like Joachim Nagel.
Trade Ideas
Ticker Direction Speaker Thesis Time
AUD /GBP
LONG Jeremy Stretch
Editor, Financial Times
The UK faces political risk (Reform UK challenging BoE mandate) and a dovish pivot. Conversely, Australia has tight monetary policy and a strong metals/commodities backdrop. Diverging central bank paths (BoE cutting, RBA holding/tight) plus a commodity boom favors the Aussie Dollar over the British Pound. LONG AUD / SHORT GBP. A collapse in global commodity demand (specifically China).
EUR
LONG Jeremy Stretch
Editor, Financial Times
Rumors suggest Christine Lagarde may leave the ECB early. The market initially sold the Euro on uncertainty. Potential successors (e.g., Joachim Nagel of Bundesbank) are significantly more hawkish than Lagarde. A hawkish shift at the ECB supports the currency. LONG EUR (Buy the dip on leadership rumors). Political instability in France (Macron/Le Pen dynamics) overshadowing monetary policy.
RPI
LONG Anna Edwards
Head of Content, CoinDesk
Raspberry Pi stock jumped 40%+ on the narrative that AI Agents need to run on separate, secure, cheap hardware (not your main desktop). Western Digital is spinning off SanDisk, which is surging on memory chip demand. The "Year of the Agent" (2026) requires dedicated hardware and massive memory storage. This creates a specific demand shock for niche hardware makers and memory providers. LONG RPI and MEMORY SECTOR (WDC). Supply chain constraints on memory chips squeezing margins.
LONG Sophie Huynh
Reporter, The Block
BNP Paribas is favoring "Molecules" (physical stuff) over software. Glencore reported earnings; despite a profit drop due to coal, they are retaining cash for buybacks and the copper story remains the long-term driver. AI requires energy and infrastructure (copper). As software faces disruption/uncertainty, capital rotates into tangible assets with supply constraints (Oil, Copper). LONG GLEN and BROAD COMMODITIES / ENERGY. Coal prices continuing to drag on diversified miners like Glencore. 47:39
LONG Modupe Adegbembo
Founder, CEO, Kora
UK CPI is falling (3% headline), but more importantly, youth unemployment is at a 10-year high and Jefferies forecasts UK growth at only 1% (vs market 1.5%). Weak growth and a cracking labor market force the Bank of England to cut rates aggressively (75bps expected by Jefferies in 2026). Lower rates weaken the currency but boost bonds. LONG UK GILTS (betting on yields falling) and SHORT GBP (specifically against AUD or USD). Services inflation remains sticky at 4.4%, which could delay cuts.
SHORT Sophie Huynh
Reporter, The Block
BNP Paribas has been Long Hardware / Short Software for over a year. It is unclear which software companies will survive AI disruption (zero terminal value risk for some), whereas hardware/memory demand is certain. The market is not yet pricing in the full "displacement" risk for white-collar software tools. SHORT SOFTWARE SECTOR. AI adoption happens slower than expected, allowing legacy software to adapt. 6:14
LONG Tom Mackenzie
Anchor, Bloomberg
BAE Systems reported strong earnings with sales guidance up 7-9%. Rheinmetall is trading in sympathy. Geopolitical tensions (Ukraine/Russia talks, Middle East) continue to drive government defense spending, providing a floor for these stocks regardless of the broader tech cycle. LONG DEFENSE SECTOR. Unexpected peace treaties or government budget cuts.
SHORT Abby Abu Omar
Crypto reporter, CoinDesk
Berkshire Hathaway (Warren Buffett) reduced its stake in Amazon by over 75% in Q4 filings. Buffett is rotating out of tech/consumer discretionary and into defensive value (Healthcare/Energy). This signals a lack of confidence in Amazon's current valuation or growth prospects relative to safer assets. SHORT / AVOID AMZN. Amazon AWS growth re-accelerating due to AI demand. 14:56
NYT /AZN /OXY
LONG Abby Abu Omar
Crypto reporter, CoinDesk
Berkshire Hathaway bought shares in The New York Times, AstraZeneca, and Occidental Petroleum. This represents a classic defensive rotation: Media (subscription stability), Healthcare (drug demand independent of economy), and Energy (inflation hedge). LONG NYT, AZN, OXY. Sector-specific regulatory risks (drug pricing for AZN, oil prices for OXY). 88:43
CA
SHORT Chloe Mallet
Reporter, The Block
Carrefour missed profit estimates. Bayer faces a potential $7B payout for Roundup. Unilever received two downgrades (Cap Shore/Berenberg) citing "transformation complete" (no upside left). Negative idiosyncratic news in a low-volume market leads to immediate punishment. SHORT CA, BAYN, UL. Oversold bounce or successful appeals in litigation (Bayer).