1 00:00:03,990 --> 00:00:08,520 Sean Aylmer: Welcome to the FEAR & GREED Business Interview. I'm Sean Aylmer. Is 2024 going 2 00:00:08,520 --> 00:00:10,738 Sean Aylmer: to be the year of the small cap? I think 3 00:00:10,740 --> 00:00:13,139 Sean Aylmer: I've said that for the past couple of years actually. My 4 00:00:13,139 --> 00:00:16,678 Sean Aylmer: guest today specializes in global small caps and says investors 5 00:00:16,739 --> 00:00:19,800 Sean Aylmer: should strap in and hold on this year. From cheap 6 00:00:19,800 --> 00:00:22,560 Sean Aylmer: European stocks to the impact of the US election on 7 00:00:22,560 --> 00:00:24,988 Sean Aylmer: markets, we've got a lot to cover. Remember, this is 8 00:00:24,989 --> 00:00:28,139 Sean Aylmer: general information only and you should seek professional advice before 9 00:00:28,139 --> 00:00:31,830 Sean Aylmer: making investment decisions. Vaughan Nelson has around $ 25 billion of 10 00:00:31,830 --> 00:00:35,100 Sean Aylmer: funds under management and brought their Global Equity SMID strategy 11 00:00:35,100 --> 00:00:37,380 Sean Aylmer: to the Australian retail and wholesale market a couple of 12 00:00:37,380 --> 00:00:40,620 Sean Aylmer: years ago, where it's available as both a managed fund 13 00:00:40,620 --> 00:00:44,070 Sean Aylmer: and an active ETF. Chris Wallis is the CEO and 14 00:00:44,070 --> 00:00:46,860 Sean Aylmer: chief investment officer of Vaughan Nelson, which is also a 15 00:00:46,860 --> 00:00:49,888 Sean Aylmer: great supporter of this podcast. Chris is visiting Australia at 16 00:00:49,889 --> 00:00:53,279 Sean Aylmer: the moment from Texas. We grabbed him for a chat. 17 00:00:53,279 --> 00:00:54,870 Sean Aylmer: Chris Wallis, welcome to FEAR & GREED. 18 00:00:55,410 --> 00:00:57,270 Chris Wallis: Thank, you Sean. So good to be here. 19 00:00:57,750 --> 00:01:03,630 Sean Aylmer: So just set the scene here. What's the outlook generally 20 00:01:04,020 --> 00:01:07,139 Sean Aylmer: for small caps? And then I want to talk about 21 00:01:07,139 --> 00:01:09,630 Sean Aylmer: some of the local small caps as well as overseas. 22 00:01:09,630 --> 00:01:12,059 Sean Aylmer: But just broadly, what's the environment? 23 00:01:12,660 --> 00:01:16,020 Chris Wallis: Yeah. Look, the setup for small caps, and this is 24 00:01:16,020 --> 00:01:20,280 Chris Wallis: true across the globe, is, there is not an area of the 25 00:01:20,280 --> 00:01:24,269 Chris Wallis: world that is not focused on either moving a supply 26 00:01:24,270 --> 00:01:32,340 Chris Wallis: chain, recapitalizing an industry, building infrastructure, accelerating an energy transition. 27 00:01:32,730 --> 00:01:36,569 Chris Wallis: And all of that underlying investment and all of the 28 00:01:36,569 --> 00:01:40,559 Chris Wallis: monetization of the deficits that comes with that is really 29 00:01:40,559 --> 00:01:43,709 Chris Wallis: supportive for economic growth. It doesn't mean it doesn't come 30 00:01:43,709 --> 00:01:47,609 Chris Wallis: without inflation. It doesn't mean that every company gets to 31 00:01:47,609 --> 00:01:51,660 Chris Wallis: win. But what it does mean is the growth that 32 00:01:51,660 --> 00:01:55,890 Chris Wallis: is typically incredibly focused to small parts of the market, 33 00:01:56,220 --> 00:01:58,950 Chris Wallis: when you're in a commodity downturn and on the downside 34 00:01:58,950 --> 00:02:01,230 Chris Wallis: of an investment cycle and everybody can crowd into their 35 00:02:01,230 --> 00:02:04,410 Chris Wallis: favorite large- cap techs and make money, we're just in 36 00:02:04,410 --> 00:02:08,459 Chris Wallis: a very different environment. And we really began transitioning to 37 00:02:08,550 --> 00:02:13,380 Chris Wallis: this environment in late 2019 and then obviously Covid interrupted 38 00:02:13,380 --> 00:02:16,679 Chris Wallis: that, but it also delayed it. And with all the 39 00:02:16,679 --> 00:02:21,959 Chris Wallis: excess monetization and stimulus since Covid, it's only accentuated it. 40 00:02:22,049 --> 00:02:26,190 Chris Wallis: So it's as target rich environment as I've seen, and 41 00:02:26,190 --> 00:02:28,680 Chris Wallis: I've been looking at small and mid- cap stocks for 42 00:02:29,010 --> 00:02:32,638 Chris Wallis: a quarter- century now. So it's a pretty target rich environment. 43 00:02:33,179 --> 00:02:36,210 Sean Aylmer: Okay. So what about valuations of small caps at the 44 00:02:36,210 --> 00:02:39,358 Sean Aylmer: moment then, given what you've just said is the macro 45 00:02:39,360 --> 00:02:41,520 Sean Aylmer: picture, but of course it all comes down to value. 46 00:02:42,119 --> 00:02:44,460 Chris Wallis: It does come down to value. And like they say, 47 00:02:44,460 --> 00:02:46,440 Chris Wallis: price is which you pay in value is which you 48 00:02:46,440 --> 00:02:51,450 Chris Wallis: get. And one theme we have for, whether we're talking 49 00:02:51,450 --> 00:02:55,169 Chris Wallis: to our retail investors or institutional investors is, there is 50 00:02:55,169 --> 00:02:58,469 Chris Wallis: no theme. Meaning there's not an area, there's not a 51 00:02:58,469 --> 00:03:03,090 Chris Wallis: region that is incredibly attractive from a valuation standpoint so 52 00:03:03,090 --> 00:03:06,690 Chris Wallis: we need to really overweight this sector or this region. 53 00:03:07,110 --> 00:03:12,870 Chris Wallis: Valuations are incredibly attractive across the globe, across industries, but 54 00:03:12,870 --> 00:03:16,559 Chris Wallis: they're very company specific. And for those that are a 55 00:03:16,559 --> 00:03:18,899 Chris Wallis: little bit more inclined to think through the math of 56 00:03:18,900 --> 00:03:21,360 Chris Wallis: what this implies, is if you kind of look at 57 00:03:21,360 --> 00:03:25,650 Chris Wallis: our Global SMID strategy, it's got a return on assets 58 00:03:25,980 --> 00:03:29,880 Chris Wallis: of 9% plus, which is very attractive and quite high. 59 00:03:30,150 --> 00:03:33,478 Chris Wallis: It trades, which just means these companies are incredibly profitable. 60 00:03:33,900 --> 00:03:36,599 Chris Wallis: And then when you look at a forward multiple, it's 61 00:03:36,600 --> 00:03:39,750 Chris Wallis: about a mid- teens forward multiple, but the underlying earnings 62 00:03:39,750 --> 00:03:44,160 Chris Wallis: growth is about 12%. And if you rolled those metrics 63 00:03:44,160 --> 00:03:47,759 Chris Wallis: through the more typical larger cap indices, my guess is 64 00:03:47,759 --> 00:03:50,789 Chris Wallis: you would find the valuations on a trailing and forward 65 00:03:50,790 --> 00:03:55,650 Chris Wallis: multiple much higher, 20, 30% higher. So I think valuations are 66 00:03:55,650 --> 00:03:59,700 Chris Wallis: quite attractive. The multiples haven't pulled forward a lot of 67 00:03:59,700 --> 00:04:03,569 Chris Wallis: that future earnings growth so as that earnings growth comes 68 00:04:03,570 --> 00:04:06,809 Chris Wallis: to fruition, you should get rewarded with the higher share 69 00:04:06,809 --> 00:04:10,650 Chris Wallis: prices. So I think valuations are incredibly reasonable. But again, 70 00:04:10,650 --> 00:04:14,580 Chris Wallis: it's not writ large. I can't make that comment about 71 00:04:14,580 --> 00:04:18,539 Chris Wallis: a broad index or a broad region. But the individual 72 00:04:18,540 --> 00:04:22,289 Chris Wallis: companies that really do have the reinvestment opportunities, they're fine. 73 00:04:22,290 --> 00:04:23,609 Chris Wallis: They're very attractively valued. 74 00:04:23,969 --> 00:04:25,830 Sean Aylmer: Okay, so we have the macro environment, we have the 75 00:04:25,830 --> 00:04:32,640 Sean Aylmer: valuation environment. My question is how does Vaughan Nelson go 76 00:04:32,640 --> 00:04:36,660 Sean Aylmer: about finding these small caps? Because the pool of small 77 00:04:36,660 --> 00:04:39,540 Sean Aylmer: caps is literally in the tens or hundreds of thousands. 78 00:04:40,740 --> 00:04:42,808 Sean Aylmer: What's your process about finding them? 79 00:04:43,049 --> 00:04:46,919 Chris Wallis: Look, I think the most important thing in investing anywhere 80 00:04:47,160 --> 00:04:50,428 Chris Wallis: is what is the underlying return on invested capital for 81 00:04:50,430 --> 00:04:53,550 Chris Wallis: the business? Which just means if they put a hundred 82 00:04:53,550 --> 00:04:56,610 Chris Wallis: million dollars back into the business, how much earnings do 83 00:04:56,610 --> 00:04:57,960 Chris Wallis: I get out of that? Am I going to get 84 00:04:57,960 --> 00:05:00,719 Chris Wallis: 4 million of earnings or 14 million of earnings or 85 00:05:00,719 --> 00:05:04,589 Chris Wallis: 24 million of earnings? And the higher that return is 86 00:05:04,920 --> 00:05:10,740 Chris Wallis: for the amount of capital reinvested is the higher earnings 87 00:05:10,740 --> 00:05:14,070 Chris Wallis: growth rate, the faster intrinsic value is going to increase. 88 00:05:14,370 --> 00:05:18,150 Chris Wallis: So we have always focused on return on assets and 89 00:05:18,150 --> 00:05:21,509 Chris Wallis: return on invested capital. And so quite honestly, we have 90 00:05:21,509 --> 00:05:24,870 Chris Wallis: a database that looks at all of the companies within 91 00:05:24,870 --> 00:05:29,130 Chris Wallis: our market capitalization range by industry, by region in the 92 00:05:29,130 --> 00:05:32,639 Chris Wallis: world. And we look to see who is investing, and 93 00:05:32,639 --> 00:05:35,250 Chris Wallis: are they being rewarded for that? And if they are, 94 00:05:35,428 --> 00:05:38,340 Chris Wallis: let's dig in and figure out how early are we 95 00:05:38,520 --> 00:05:40,889 Chris Wallis: in this reinvestment cycle and what is it going to 96 00:05:40,889 --> 00:05:43,950 Chris Wallis: look like? Conversely, maybe they're investing and they haven't been 97 00:05:43,950 --> 00:05:46,380 Chris Wallis: rewarded yet. And in that sense, you would have to 98 00:05:46,380 --> 00:05:50,010 Chris Wallis: assume, hey, either this management team is certifiably insane and 99 00:05:50,010 --> 00:05:53,160 Chris Wallis: they just like over- investing in a business, or hey, they're 100 00:05:53,160 --> 00:05:55,830 Chris Wallis: getting ready to give birth to a new product or 101 00:05:55,830 --> 00:05:58,619 Chris Wallis: a new geography or a new market. And so let's 102 00:05:58,619 --> 00:06:01,320 Chris Wallis: go in and look at that and let's talk to 103 00:06:01,320 --> 00:06:04,500 Chris Wallis: the management. Let's really look at the historical results. Let's 104 00:06:04,500 --> 00:06:07,979 Chris Wallis: look at what our own internal projections are. And let's 105 00:06:07,980 --> 00:06:10,409 Chris Wallis: decide if we really think the returns and the growth 106 00:06:10,410 --> 00:06:13,740 Chris Wallis: can justify the valuations. And we're pretty old school. We 107 00:06:13,740 --> 00:06:16,949 Chris Wallis: still just do discounted cash flows and we still use 108 00:06:16,949 --> 00:06:19,469 Chris Wallis: a 12% discount rate because we like that as our 109 00:06:19,470 --> 00:06:23,070 Chris Wallis: own internal cost to capital. And we apply that yardstick 110 00:06:23,070 --> 00:06:26,998 Chris Wallis: around the world and we find really little eclectic opportunities 111 00:06:27,270 --> 00:06:29,279 Chris Wallis: where these companies are going to be able to reinvest 112 00:06:29,279 --> 00:06:33,359 Chris Wallis: and growth. Regardless of what happens with interest rates going 113 00:06:33,360 --> 00:06:36,750 Chris Wallis: up or down, regardless of what happens with inflation re- 114 00:06:36,750 --> 00:06:40,260 Chris Wallis: accelerating or decelerating, we have to factor those elements in, but 115 00:06:40,260 --> 00:06:43,860 Chris Wallis: we don't want to make our investment thesis hinge on 116 00:06:43,860 --> 00:06:46,950 Chris Wallis: some macroeconomic factor coming to realization. 117 00:06:47,580 --> 00:06:49,349 Sean Aylmer: Stay with me, Chris. We'll be back in a minute. 118 00:06:55,260 --> 00:06:58,409 Sean Aylmer: I am speaking to Chris Wallis, CEO and chief investment 119 00:06:58,410 --> 00:07:02,460 Sean Aylmer: officer of Vaughan Nelson. Okay. So with all that in 120 00:07:02,460 --> 00:07:04,260 Sean Aylmer: mind, I'm now actually sort of going to go more 121 00:07:04,260 --> 00:07:07,379 Sean Aylmer: specific, though the theme, there is no theme, kind of 122 00:07:07,799 --> 00:07:11,489 Sean Aylmer: defeats the purpose a little bit here. But Europe for 123 00:07:11,490 --> 00:07:15,330 Sean Aylmer: example, you've made comments about opportunities in Europe. Why is that? 124 00:07:16,200 --> 00:07:19,620 Chris Wallis: So look, we always are going to what we call 125 00:07:19,620 --> 00:07:22,710 Chris Wallis: sift through the ashes of where there's been a lot 126 00:07:22,710 --> 00:07:26,730 Chris Wallis: of volatility. With the first ground war we've had in 127 00:07:27,030 --> 00:07:31,650 Chris Wallis: Europe in a long, long time, and then some relatively 128 00:07:32,040 --> 00:07:34,680 Chris Wallis: difficult trade- offs they had to make from an energy 129 00:07:34,680 --> 00:07:38,250 Chris Wallis: standpoint, there was a lot of volatility, there's a lot 130 00:07:38,250 --> 00:07:41,940 Chris Wallis: of drawdown. There should be some pain and angst embedded 131 00:07:41,940 --> 00:07:45,479 Chris Wallis: in those securities. What we have found is to a 132 00:07:45,480 --> 00:07:48,810 Chris Wallis: large degree, a lot of those valuations, although they seem 133 00:07:49,080 --> 00:07:52,470 Chris Wallis: low or they seem attractive, they're kind of justified. A lot 134 00:07:52,470 --> 00:07:55,110 Chris Wallis: of those businesses are impaired, but not all of them. 135 00:07:55,530 --> 00:07:59,969 Chris Wallis: And a consistent theme we have found is there's fabulous 136 00:07:59,969 --> 00:08:04,409 Chris Wallis: service companies. So you can imagine we've stumbled across an 137 00:08:04,410 --> 00:08:08,280 Chris Wallis: Italian company that makes hearing aids, and that doesn't jump 138 00:08:08,280 --> 00:08:10,770 Chris Wallis: out at you as a theme that's centered around industrial 139 00:08:10,770 --> 00:08:14,310 Chris Wallis: activity or anything like that, but it's an incredible manufacturer. 140 00:08:14,550 --> 00:08:18,000 Chris Wallis: And these companies that have new product innovations, they're rolling 141 00:08:18,000 --> 00:08:21,900 Chris Wallis: out into new geographies, and unfortunately maybe their stock sold 142 00:08:21,900 --> 00:08:26,190 Chris Wallis: off for the valuation compressed because of things associated with 143 00:08:26,190 --> 00:08:29,220 Chris Wallis: the Russia- Ukraine war and people just selling out of 144 00:08:29,220 --> 00:08:31,740 Chris Wallis: their passive funds and it kind of creates the valuations 145 00:08:31,740 --> 00:08:34,348 Chris Wallis: we need to hit our targeted returns. We're going to 146 00:08:34,349 --> 00:08:38,759 Chris Wallis: find unique situations like that. Also, there's regions of the 147 00:08:38,759 --> 00:08:42,029 Chris Wallis: world that are a little bit behind maybe where the 148 00:08:42,029 --> 00:08:46,980 Chris Wallis: US is in moving digital infrastructure into the cloud. And some of those are in 149 00:08:46,980 --> 00:08:49,800 Chris Wallis: Europe, so we've been able to find IT services companies 150 00:08:49,800 --> 00:08:52,139 Chris Wallis: in France. Some of those are outside of Europe. We've 151 00:08:52,139 --> 00:08:55,710 Chris Wallis: been able to find similar situations in Japan as well. 152 00:08:56,009 --> 00:09:01,410 Chris Wallis: Which everything is consistent with, hey, there's an underlying reinvestment 153 00:09:01,410 --> 00:09:05,580 Chris Wallis: theme. We have an inflection or stability in the return 154 00:09:05,580 --> 00:09:09,330 Chris Wallis: and the profitability of these businesses. But there's some reason 155 00:09:09,330 --> 00:09:13,349 Chris Wallis: that the valuation has been pressured and it's usually unrelated 156 00:09:13,349 --> 00:09:16,439 Chris Wallis: to the underlying business. And Europe has just been right 157 00:09:16,440 --> 00:09:19,380 Chris Wallis: for that kind of volatility given what we've known they've 158 00:09:19,380 --> 00:09:21,569 Chris Wallis: gone through for the last two years with the ground 159 00:09:21,570 --> 00:09:22,290 Chris Wallis: war in Ukraine. 160 00:09:22,950 --> 00:09:26,490 Sean Aylmer: Okay. Another thing I've seen you say, or right at 161 00:09:26,490 --> 00:09:28,500 Sean Aylmer: least, or someone reported you I think it was, anything 162 00:09:28,500 --> 00:09:31,890 Sean Aylmer: but biotech. Is that right? 163 00:09:32,219 --> 00:09:34,738 Chris Wallis: It is. Anything but biotech. But Sean, I got to 164 00:09:34,740 --> 00:09:37,500 Chris Wallis: be honest, that reflects our own limitations. Look, we are 165 00:09:37,500 --> 00:09:42,569 Chris Wallis: not the guys that are going to figure out what molecule is 166 00:09:42,570 --> 00:09:45,510 Chris Wallis: going to be the next way to cure cancer. That's 167 00:09:45,510 --> 00:09:49,380 Chris Wallis: not what we do. And it's okay. We do track 168 00:09:49,380 --> 00:09:52,830 Chris Wallis: investment trends. I don't want to be just dismissive of 169 00:09:52,830 --> 00:09:57,358 Chris Wallis: biotech and MedTech. Look, there is real capital that gets 170 00:09:57,360 --> 00:10:01,199 Chris Wallis: deployed there and there's real innovation that occurs to those 171 00:10:01,200 --> 00:10:05,940 Chris Wallis: areas. While we may not invest in true biotechs, we 172 00:10:05,940 --> 00:10:08,670 Chris Wallis: will invest in and around that supply chain. So we're 173 00:10:08,670 --> 00:10:11,670 Chris Wallis: happy to invest in the companies that will run the 174 00:10:11,670 --> 00:10:14,790 Chris Wallis: medical trials. We're happy to invest in the companies that 175 00:10:14,790 --> 00:10:18,718 Chris Wallis: sell the instruments and the reagents and the testing equipment, 176 00:10:19,020 --> 00:10:21,810 Chris Wallis: or the companies that are going to ultimately market and distribute 177 00:10:23,099 --> 00:10:25,890 Chris Wallis: the drugs and the technology that comes out of that. 178 00:10:26,130 --> 00:10:28,139 Chris Wallis: We're just not going to risk the capital on the 179 00:10:28,139 --> 00:10:32,309 Chris Wallis: science. We're fairly simple. What we like to say is, " 180 00:10:33,000 --> 00:10:35,850 Chris Wallis: If we can't value it, then we can't invest in 181 00:10:35,850 --> 00:10:38,639 Chris Wallis: it." And if you don't have a product, then I 182 00:10:38,639 --> 00:10:41,879 Chris Wallis: can't model you. I can't tell you what your addressable 183 00:10:41,880 --> 00:10:44,790 Chris Wallis: market's going to be. I can't understand what the profitability 184 00:10:44,790 --> 00:10:46,500 Chris Wallis: is going to be. And in that situation, I can't 185 00:10:46,500 --> 00:10:48,809 Chris Wallis: value it. And if I can't value it, I can't 186 00:10:48,809 --> 00:10:50,790 Chris Wallis: invest in it. I'd just be a speculator at that 187 00:10:50,790 --> 00:10:54,450 Chris Wallis: point. So by and large, we just do not invest 188 00:10:54,450 --> 00:10:56,010 Chris Wallis: in early stage biotech. 189 00:10:56,790 --> 00:10:58,889 Sean Aylmer: Okay. The final issue I just want to mention is 190 00:10:58,889 --> 00:11:02,099 Sean Aylmer: the US election. In recent days, we've found out that 191 00:11:02,099 --> 00:11:06,750 Sean Aylmer: it is officially on again. We have President Biden vs. 192 00:11:06,750 --> 00:11:10,740 Sean Aylmer: President Trump. What's it mean for markets? But particularly around small 193 00:11:10,740 --> 00:11:13,380 Sean Aylmer: caps, because small caps don't always like volatility. 194 00:11:13,950 --> 00:11:18,809 Chris Wallis: No, they don't like volatility. The interesting thing, unfortunately in 195 00:11:18,809 --> 00:11:21,449 Chris Wallis: North America, I think if you ask most Americans, we've 196 00:11:21,450 --> 00:11:25,770 Chris Wallis: got two poor choices to pick from. As it relates 197 00:11:25,770 --> 00:11:30,809 Chris Wallis: to economic policy, neither candidate is really going to make 198 00:11:30,870 --> 00:11:34,260 Chris Wallis: a significant difference. And what I mean by that is 199 00:11:34,469 --> 00:11:37,110 Chris Wallis: neither one is going to soften their approach on China, 200 00:11:37,410 --> 00:11:40,169 Chris Wallis: which obviously has a huge impact on the movements of 201 00:11:40,170 --> 00:11:45,750 Chris Wallis: supply chains and tariffs and underlying incremental inflationary pressure. So 202 00:11:46,620 --> 00:11:49,380 Chris Wallis: neither one is going to make any significant shifts there. 203 00:11:49,590 --> 00:11:52,800 Chris Wallis: The other big element is, look, we're way down the 204 00:11:52,800 --> 00:11:55,860 Chris Wallis: road on our sovereign debt crisis. And with that it 205 00:11:55,860 --> 00:11:59,100 Chris Wallis: means our central bank's going to have to monetize deficits, 206 00:11:59,400 --> 00:12:03,510 Chris Wallis: and our economy can't grow without expanding deficits. And so we're 207 00:12:03,510 --> 00:12:08,429 Chris Wallis: going to run very loose fiscal policy. And whoever wins 208 00:12:08,429 --> 00:12:10,469 Chris Wallis: the election, that is in fact going to be the 209 00:12:10,469 --> 00:12:12,809 Chris Wallis: case. So that's not going to change. I think where 210 00:12:12,809 --> 00:12:16,799 Chris Wallis: it really matters, and I typically would tell you elections 211 00:12:16,799 --> 00:12:19,319 Chris Wallis: do not matter to the asset values, but it does 212 00:12:19,320 --> 00:12:22,260 Chris Wallis: in the US this time. And that's because some of 213 00:12:22,260 --> 00:12:25,620 Chris Wallis: the tax cuts that were enacted under Trump are going 214 00:12:25,620 --> 00:12:29,309 Chris Wallis: to set to expire in '25. And so the makeup 215 00:12:29,309 --> 00:12:31,679 Chris Wallis: of who's in the White House and the makeup of 216 00:12:31,679 --> 00:12:35,760 Chris Wallis: Congress is going to influence the negotiations around whether some 217 00:12:35,760 --> 00:12:40,770 Chris Wallis: of those tax cuts are extended or modifications are made. 218 00:12:41,070 --> 00:12:44,220 Chris Wallis: And inevitably, as I mentioned, we're going through our sovereign 219 00:12:44,220 --> 00:12:46,380 Chris Wallis: debt crisis, we're going to have a little bit of 220 00:12:46,380 --> 00:12:48,838 Chris Wallis: a hiccup in '25, and that's going to force probably 221 00:12:49,200 --> 00:12:53,250 Chris Wallis: one of the last political negotiations before we just acknowledge 222 00:12:53,250 --> 00:12:55,439 Chris Wallis: we're going to monetize our debt and deal with a 223 00:12:55,440 --> 00:12:58,290 Chris Wallis: little bit higher inflation in the US. And that trade- 224 00:12:58,290 --> 00:13:02,040 Chris Wallis: off could mean higher corporate tax rates. We'll tax a 225 00:13:02,040 --> 00:13:04,709 Chris Wallis: few wealthy, and the trade- off with that may be 226 00:13:04,740 --> 00:13:07,228 Chris Wallis: a little bit of a pullback in federal spending. So 227 00:13:07,230 --> 00:13:09,389 Chris Wallis: in that sense, look, it's going to matter, but it's 228 00:13:09,389 --> 00:13:12,208 Chris Wallis: really going to be just localized to the US. To 229 00:13:12,208 --> 00:13:15,450 Chris Wallis: the rest of the world, whether we let the crazy 230 00:13:15,450 --> 00:13:17,850 Chris Wallis: old man or the crazy orange guy just isn't going 231 00:13:17,850 --> 00:13:18,840 Chris Wallis: to make a bit of difference. 232 00:13:19,530 --> 00:13:21,449 Sean Aylmer: Chris, what a way to finish it. Thank you very 233 00:13:21,450 --> 00:13:22,830 Sean Aylmer: much for talking to FEAR & GREED. 234 00:13:23,250 --> 00:13:24,359 Chris Wallis: You bet. Thank you, Sean. 235 00:13:25,170 --> 00:13:28,049 Sean Aylmer: That was Chris Wallis, CEO and chief investment officer of 236 00:13:28,139 --> 00:13:31,260 Sean Aylmer: Vaughan Nelson, a great supporter of this podcast. This is 237 00:13:31,260 --> 00:13:34,320 Sean Aylmer: the FEAR & GREED Business Interview. Remember, this is general information 238 00:13:34,320 --> 00:13:36,929 Sean Aylmer: only and you should always seek professional advice before making 239 00:13:36,929 --> 00:13:39,569 Sean Aylmer: investment decisions. Join us every morning for the full episode 240 00:13:39,570 --> 00:13:43,410 Sean Aylmer: of FEAR & GREED, Australia's best business podcast. I'm Sean Aylmer. 241 00:13:43,770 --> 00:13:44,189 Sean Aylmer: Enjoy your day.