WEBVTT - Bonds, Markets, and Crypto 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day, we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.520 --> 0:00:15.560 with essential market moving news. Find the Bloomberg Markets Podcast 0:00:15.600 --> 0:00:18.439 on Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:21.720 at Bloomberg dot com slash podcast. Let's bring in Noel Abert. 0:00:22.040 --> 0:00:24.599 He covers all things credit, fixed income. He's a co 0:00:24.720 --> 0:00:27.280 director of research at Bloomberg Intelligence, one of the smarter 0:00:27.400 --> 0:00:31.560 dudes out there, um that we talked to. No, let's 0:00:31.560 --> 0:00:34.120 just start here. I mean, you're all over the credit 0:00:34.159 --> 0:00:38.280 space here. What do you expect and from the Federal Reserve? 0:00:38.400 --> 0:00:41.519 I guess tomorrow and then maybe going forward. Yeah, I 0:00:41.560 --> 0:00:43.360 think well, at the high level, I mean, you're looking 0:00:43.400 --> 0:00:46.560 for maybe twenty five basis points tomorrow than another twenty 0:00:46.600 --> 0:00:48.760 five basis points. But I think one of the places 0:00:48.840 --> 0:00:52.559 where myself and uh, you know, my group kind of 0:00:52.600 --> 0:00:55.440 disagrees with broader consensus is that after that, I think 0:00:55.480 --> 0:00:58.040 the the higher for longer sort of FED holding path 0:00:58.080 --> 0:00:59.320 through the end of the year is sort of the 0:00:59.320 --> 0:01:01.960 base case for says if you look at where the 0:01:02.040 --> 0:01:04.480 rates markets are. Obviously they're looking for a little bit 0:01:04.480 --> 0:01:07.440 of retracement or pivots somewhere around mid year. So why 0:01:07.440 --> 0:01:09.640 do you think the market what what's the market maybe 0:01:09.680 --> 0:01:12.520 looking at? And yeah, I mean, you're right, the feder 0:01:12.560 --> 0:01:14.720 reserve is pretty clear in the messaging that we're going 0:01:14.760 --> 0:01:17.600 to stay higher for some period of time, but as 0:01:17.640 --> 0:01:20.480 you mentioned, the markets not necessarily buying that. What do 0:01:20.480 --> 0:01:22.840 you think is going on there? Well, I think it's 0:01:22.840 --> 0:01:26.480 probably a decade's worth of the Fed sort of facilitating 0:01:26.520 --> 0:01:30.399 sort of the market enthusiasm combined with sort of a 0:01:30.520 --> 0:01:33.360 very mixed macroeconomic picture, right. I mean, I think it's 0:01:33.360 --> 0:01:36.760 hard to you know, pull out or distinguish sort of 0:01:36.800 --> 0:01:38.200 the good and the bad. I mean, I think there's 0:01:38.200 --> 0:01:40.039 a lot of softness that seems to be cropping up 0:01:40.040 --> 0:01:41.840 in parts of the manufacturing sector and some of the 0:01:41.840 --> 0:01:45.160 consumer sentiments side, uh bott the flip side. We saw 0:01:45.200 --> 0:01:47.760 a strong jobs data, so I think from a standpoint 0:01:47.800 --> 0:01:49.920 you could say, hey, listen, strong jobs, but we still 0:01:49.920 --> 0:01:52.440 got this sort of elevated inflation, and so you can 0:01:52.520 --> 0:01:54.560 kind of ignore sort of the weaker consumer thing that 0:01:54.640 --> 0:01:57.880 seems to be drawing the attention of the market, Well, 0:01:57.920 --> 0:02:01.280 it looks like the inflation may turn around even more 0:02:01.320 --> 0:02:03.920 quick Well, certainly on the good side, we're starting to 0:02:03.920 --> 0:02:07.360 see what feels like deflation in the automotive sector in 0:02:07.400 --> 0:02:11.320 a lot of non grocery retail. What about the services 0:02:11.400 --> 0:02:15.760 and um, you know, the I guess rent component. Well 0:02:15.800 --> 0:02:17.920 I don't know because I just got my E V Hummer, 0:02:18.000 --> 0:02:22.720 But so, but now I think on the service design, 0:02:22.760 --> 0:02:24.200 it's a little bit of a mixed picture. I think 0:02:24.240 --> 0:02:27.840 you're seeing some softness there. Um, But you know, on 0:02:27.880 --> 0:02:29.519 the rent side, I think is a you know, I 0:02:29.560 --> 0:02:31.960 think they're changing the methodology a little bit later this year, 0:02:32.760 --> 0:02:34.799 but we're seeing some moderation, but it's still going to 0:02:34.919 --> 0:02:37.080 kind of we're still running a little bit hot on 0:02:37.120 --> 0:02:40.160 that side, because I mean, remember that rents aren't necessarily 0:02:40.200 --> 0:02:43.560 related to home prices, where we're seeing a little bit 0:02:43.560 --> 0:02:46.680 more rapid deceleration. Hey, no, I know you've had a 0:02:46.720 --> 0:02:49.520 long career on Wall Street looking at this credit business 0:02:49.720 --> 0:02:53.040 and last year you know, it's just one for the 0:02:53.080 --> 0:02:56.160 books in terms of underperformance. But you guys are bouncing 0:02:56.200 --> 0:02:57.840 back a little bit here in January. Talk to us 0:02:57.840 --> 0:03:01.560 about the performance we're seeing in January austocratic space. Yeah. 0:03:01.560 --> 0:03:04.040 So I mean in investment grade, you're gonna be looking 0:03:04.040 --> 0:03:08.840 at probably the third best uh year going back forty years. 0:03:08.880 --> 0:03:10.880 So uh, you know, in a lot of that's going 0:03:10.919 --> 0:03:13.839 to be rates driven, right, because an investment grade you're 0:03:13.960 --> 0:03:17.000 sensitive to duration, i e. You know, the more interest 0:03:17.080 --> 0:03:20.520 rates moved, the more pricing moves. So with treasury yields 0:03:20.520 --> 0:03:22.840 coming down, that's driven a lot of you know, our 0:03:22.919 --> 0:03:25.480 performance on the investment grade side, but even high yields 0:03:25.880 --> 0:03:28.720 uh seem a pretty healthy starting pretty much anything kinidi 0:03:28.800 --> 0:03:32.000 fixed income. Uh, you know, whether you're talking municipals or 0:03:32.000 --> 0:03:35.320 mortgage bats, etcetera. You know, all sort of keying in 0:03:35.440 --> 0:03:38.160 on what are the better starts to the year that 0:03:38.240 --> 0:03:40.120 we've seen, you know, in the last couple of decades 0:03:40.160 --> 0:03:43.480 at the very least. Um not surprising, I mean, given 0:03:43.520 --> 0:03:48.320 the prepentous year that you have for mentioned. But you know, nonetheless, 0:03:48.320 --> 0:03:50.040 I think you know, it takes the edge off for 0:03:50.080 --> 0:03:52.120 people that are still looking their wounds. What are the 0:03:52.120 --> 0:03:56.320 biggest headwinds you think? No, I mean, if we uh, 0:03:56.520 --> 0:03:59.560 if we see a repeat of you know, everyone talks 0:03:59.600 --> 0:04:01.840 about our their burns, you know, the FED kind of 0:04:01.880 --> 0:04:04.600 calms down a little bit and then inflation starts, um 0:04:05.120 --> 0:04:07.560 poking up a bit. Is that is that very bad 0:04:07.720 --> 0:04:10.520 for for the credit world? Well, I think it will 0:04:10.600 --> 0:04:13.600 learn a little bit tomorrow, right, I mean I think, uh, 0:04:13.720 --> 0:04:16.919 you know, if POWE comes out and sort of tries 0:04:17.000 --> 0:04:19.400 to really re established that sort of hackish under the 0:04:19.400 --> 0:04:22.080 spectrum and we start to reprice the curve, I think 0:04:22.200 --> 0:04:24.520 that's where I don't know that you'd necessarily get a 0:04:24.520 --> 0:04:26.919 big sell off, but you'd certainly get a little bit 0:04:26.960 --> 0:04:30.240 of a pause and sort of the enthusiasm that's out there, 0:04:30.240 --> 0:04:32.280 because one of the things that we've seen, you know, 0:04:32.640 --> 0:04:35.040 early on is it's not only rates that are driving 0:04:35.040 --> 0:04:37.200 the returns, but people have been very aggressive in the 0:04:37.279 --> 0:04:40.560 risk bit, i e. Spreads have compressed quite a bit 0:04:40.600 --> 0:04:44.599 as well, despite the macro economic headwinds. So if you 0:04:44.640 --> 0:04:46.280 get a FED that says no, no, no, no, you 0:04:46.960 --> 0:04:49.800 gotta believe us, right, you could start to see some 0:04:49.880 --> 0:04:51.880 reprice them settling in the right side, and then some 0:04:52.000 --> 0:04:55.560 repricing in the spread side that maybe you know, tempers 0:04:56.040 --> 0:04:58.640 the excitement out there and maybe you know it leaves 0:04:58.680 --> 0:05:00.240 you a little bit more with the coupon and as 0:05:00.240 --> 0:05:02.960 opposed to a bigger you know return picture. Well, because 0:05:02.960 --> 0:05:05.480 the market doesn't believe the Fed's gonna get to five percent, 0:05:05.560 --> 0:05:08.599 not an effective FED funds rate of five percent? Is 0:05:08.640 --> 0:05:11.479 there any reason that? I mean, of course he's gonna 0:05:11.560 --> 0:05:14.960 job ow. He he has to, that's his job. But 0:05:15.000 --> 0:05:20.839 does anybody besides day traders like care? Uh you know, well, well, 0:05:20.880 --> 0:05:23.800 I mean I think everybody on the rate side cares, right, 0:05:23.839 --> 0:05:25.760 because I just mean, no, you know, if he's he 0:05:25.800 --> 0:05:30.200 can talk, uh the talk, but can he walk the walk? 0:05:30.279 --> 0:05:32.719 Twenty five basis points is just to me it feels 0:05:32.760 --> 0:05:35.240 so weak and luke warm. I mean, if you're gonna 0:05:35.279 --> 0:05:36.760 already do that, then I'm not going to listen to 0:05:36.800 --> 0:05:38.440 the rest of the speech unless you come out with 0:05:38.480 --> 0:05:42.680 fifty I don't buy it. No, I'm not. I'm not 0:05:43.160 --> 0:05:46.279 unsympathetic to your view, but I'm also not the rate strategist, 0:05:46.360 --> 0:05:48.960 so it's not really for me to opine. Al Right. 0:05:49.000 --> 0:05:51.080 I was not here, Yeah, we can step. I was 0:05:51.200 --> 0:05:54.280 like watching a soccer soccer match somewhere, alright, So no, 0:05:54.839 --> 0:05:57.200 you know, if I'm an issuer here, like as a 0:05:57.200 --> 0:05:59.279 former bang and put my banker had on again there. 0:05:59.600 --> 0:06:01.760 I mean, just a few months ago, I was I 0:06:01.800 --> 0:06:05.760 was issuing paper like close to zero percent. Now rates 0:06:05.760 --> 0:06:07.920 are a lot higher. This isn't as much fun anymore. 0:06:07.960 --> 0:06:10.080 Talk to us about kind of the new issuance market 0:06:10.520 --> 0:06:13.240 year to date and kind of what you expect this year. Yeah, 0:06:13.320 --> 0:06:15.360 So on the investment grade sign, I mean, I mean 0:06:15.400 --> 0:06:18.080 both markets have gotten off to a reasonably healthy start. 0:06:18.120 --> 0:06:20.480 I think last year for investment grade, we saw about 0:06:20.560 --> 0:06:23.320 one point two trillion, which is sort of in keeping 0:06:23.560 --> 0:06:26.719 if you look at years outside of the media post 0:06:26.720 --> 0:06:29.680 pandemic when things went crazy, that's sort of like an 0:06:29.720 --> 0:06:31.800 average year. I think we're gonna come down a little 0:06:31.800 --> 0:06:35.000 bit from that, maybe closer to one point one trillion, 0:06:35.200 --> 0:06:38.160 which is one owing to the higher rates that you mentioned, 0:06:38.720 --> 0:06:41.440 but also you just have a kind of a weaker 0:06:41.480 --> 0:06:44.640 maturity calendar this year. High yields a little bit different 0:06:44.640 --> 0:06:47.520 story because last year was basically shut down. Uh, you know, 0:06:47.520 --> 0:06:49.320 when we got a hundred twenty billion out of there 0:06:50.040 --> 0:06:52.680 versus you know, mid twos to low threes, which is 0:06:52.720 --> 0:06:55.839 more common. Uh. This year, I still think we're gonna 0:06:56.040 --> 0:06:59.320 not quite make it to two billion, but we're gonna 0:06:59.320 --> 0:07:02.520 start pulling forward some of that talents because high yield, 0:07:02.960 --> 0:07:05.560 you know, anytime you get a market opening any majority 0:07:05.560 --> 0:07:07.479 that's sort of within that eighteen month window, you got 0:07:07.480 --> 0:07:09.880 to start looking at uh and so we'll see some 0:07:09.920 --> 0:07:11.840 of that this year. We've actually already seen some of 0:07:11.840 --> 0:07:14.080 that in January. You know, we're a little over twenty 0:07:14.160 --> 0:07:17.640 billion for January this year, which is down from last January, 0:07:17.680 --> 0:07:20.560 but still other than last January would be the strongest 0:07:20.640 --> 0:07:22.960 month in the last year and change. Alright, the bankers 0:07:22.960 --> 0:07:24.800 are gonna get paid. That makes that warms my heart. 0:07:24.960 --> 0:07:27.040 All right, No, thanks so much for joining us. Noel Hibert, 0:07:27.400 --> 0:07:30.920 Bloomberg Intelligence chiefs Credit Strategists. He's co director of research 0:07:31.280 --> 0:07:34.160 for that. All that credit research coming out of Bloomberg Intelligence, 0:07:34.160 --> 0:07:36.800 and Bloomberg Intelligence was one of the few shops on 0:07:36.880 --> 0:07:40.440 Wall Street that still provides credit research, and they do 0:07:40.480 --> 0:07:43.600 it across the board. More than two thousand companies, hundred 0:07:43.640 --> 0:07:49.760 twenty industries. Lots of earnings this week, lots of eco data, 0:07:49.760 --> 0:07:53.200 We got the Fed tomorrow, Lots for investors to chew on. 0:07:53.320 --> 0:07:55.040 You can call for your financial bias and say what 0:07:55.040 --> 0:07:58.240 am I doing now? After the brutal let's check out 0:07:58.240 --> 0:08:00.440 with somebody who does this stuff for living Gene Bolvin. 0:08:00.680 --> 0:08:04.040 She's a president of Bovin Wealth Management. Gina, thanks so 0:08:04.120 --> 0:08:06.560 much for taking the time here. Um, boy, after what 0:08:06.720 --> 0:08:12.200 was just a brutally and the old sixty portfolio, I'd 0:08:12.200 --> 0:08:15.040 love to know kind of what your initial communication was 0:08:15.080 --> 0:08:19.400 to your clients about what to do in twenty three. Yeah, 0:08:19.440 --> 0:08:22.600 thanks for having me. It's great to see you. Um. 0:08:22.880 --> 0:08:25.200 You know, we are having a great year so far. 0:08:25.280 --> 0:08:27.239 We have the S and P up about five point 0:08:27.280 --> 0:08:31.400 four percent, the nastacks up about ten two. We've been 0:08:31.440 --> 0:08:34.560 telling our clients to sit tight because if you miss 0:08:34.640 --> 0:08:37.199 those great days in the market, you're really not going 0:08:37.280 --> 0:08:42.440 to participate in the upside. And um, we're expecting more 0:08:42.520 --> 0:08:45.640 of the same for this year. Outlook. Our base case 0:08:47.640 --> 0:08:50.840 is to be up by by the year end, but 0:08:51.000 --> 0:08:58.679 expect by year end, but we think it's going to 0:08:58.760 --> 0:09:01.839 take all year to get there. Well good, I mean, 0:09:01.880 --> 0:09:03.839 if you're gonna find that high, you don't want to 0:09:03.840 --> 0:09:07.080 do it in a month, right, Um, you want to build. Yeah, 0:09:07.080 --> 0:09:09.080 So we do think that it's going to be another 0:09:09.160 --> 0:09:11.880 choppy year. Um. This is as you know, as you've 0:09:11.920 --> 0:09:15.560 been talking about. It's a pivotal week with the FED meeting. 0:09:15.760 --> 0:09:18.880 Tomorrow's the first f o MC meeting of this year. 0:09:19.480 --> 0:09:24.800 The markets are expecting UM to base point hike and 0:09:24.840 --> 0:09:29.360 another and you know, well, we know that we've reached 0:09:29.520 --> 0:09:33.680 peak inflation, but I think the main question is have 0:09:33.880 --> 0:09:39.320 we have we reached peak hawkishness? Interesting, Well, we'll part 0:09:39.440 --> 0:09:41.640 that a little bitmorrow. We'll see a little bit tomorrow, 0:09:41.640 --> 0:09:44.280 we'll see what kind of tone, uh, this takes. I've 0:09:44.280 --> 0:09:47.040 certainly been talking tough, So, Gina, it give us a 0:09:47.080 --> 0:09:50.160 sense of kind of who your average client is and 0:09:50.200 --> 0:09:53.880 maybe what an average portfolio looks for your client these 0:09:53.960 --> 0:09:57.720 days a two year in terms of your talk in return, 0:09:57.840 --> 0:10:00.800 what a portfolio should look like? Yeah, yeah, just kind 0:10:00.800 --> 0:10:02.319 of you know, when you sit down with somebody for 0:10:02.360 --> 0:10:03.760 the first time, how do you think about, you know, 0:10:03.800 --> 0:10:06.719 constructing your portfolio, given given the year we just had 0:10:06.720 --> 0:10:10.480 in given that we've got so much you know, across 0:10:10.520 --> 0:10:13.800 winds out there. Well, I think it's really important to 0:10:13.800 --> 0:10:16.800 take a look at what your income needs are right 0:10:16.840 --> 0:10:19.600 before you build a portfolio. You have to get a 0:10:19.640 --> 0:10:23.840 sense of somebody's risk tolerance, time horizon, and what income 0:10:24.200 --> 0:10:27.200 needs that they have. So we would start by doing 0:10:27.280 --> 0:10:31.439 a financial plan and doing an intake of UM, what 0:10:31.520 --> 0:10:36.439 they're looking for, and aggressive or conservative mean different things 0:10:36.440 --> 0:10:39.239 to different people. I think that's what was so difficult 0:10:39.280 --> 0:10:42.560 about last year is it was one of the worst 0:10:42.800 --> 0:10:48.160 bond markets ever in the history, and conservative investors really 0:10:48.200 --> 0:10:53.080 didn't see any diversification that helped their portfolio. But we 0:10:53.160 --> 0:10:55.360 do think that's going to change this year, and we 0:10:55.400 --> 0:10:57.800 do think it will be a better year for stocks 0:10:57.840 --> 0:11:01.560 and for bonds. So, Gina, you were named one of 0:11:01.559 --> 0:11:05.640 the top advisors, top female advisor and Forbes. Um, what 0:11:05.720 --> 0:11:10.480 do you think got you those accolades? Great clients, hard work, 0:11:10.920 --> 0:11:13.920 being honest with my clients, trying to do the best 0:11:13.920 --> 0:11:18.480 things for them. I've a great research team, and really 0:11:18.520 --> 0:11:21.600 not making um the wrong decision at the long time. 0:11:21.679 --> 0:11:26.240 You know, not panic buying, but not panic selling. So 0:11:26.320 --> 0:11:29.120 here's this kind of a it sounds like, if I 0:11:29.160 --> 0:11:30.920 hear correctly, it's kind of a you're kind of a 0:11:30.920 --> 0:11:33.000 buy on the weakness here for this market. You think 0:11:33.040 --> 0:11:36.880 we're gonna move higher this year, but you know, are 0:11:36.880 --> 0:11:39.960 you adding capital to the market today? Are you waiting 0:11:40.000 --> 0:11:44.400 for pullbacks? How are you tactically getting that done? Well? Um, 0:11:44.440 --> 0:11:47.520 so right now, we and in the past year, we've 0:11:47.559 --> 0:11:50.440 had a value kilt. So what that means we've been 0:11:50.480 --> 0:11:55.040 investing in like quality blue chip stocks that paid dividends. UM. 0:11:55.240 --> 0:12:01.000 That would be oil stocks. In We like industrials, erro space, defense. 0:12:01.440 --> 0:12:04.920 You know, we see an uptrend in defense spending. Capital 0:12:04.960 --> 0:12:11.000 spending has been resilient. They are strong technicals. We like healthcare, farmer, biotech, 0:12:11.160 --> 0:12:14.480 medical equipment. Because of COVID, there's been a lot of 0:12:14.920 --> 0:12:19.000 pent up demand for procedures. UM, there's a good demographic 0:12:19.080 --> 0:12:22.960 kale wind. We also like UM banks, big banks, and 0:12:23.040 --> 0:12:27.760 pokerage farms. There are some cheap evaluations. UM. We think 0:12:27.760 --> 0:12:32.160 their recession resistant and UM, you know, think about what 0:12:32.280 --> 0:12:35.680 happened in two thousand and eight when they had to 0:12:35.720 --> 0:12:38.200 go through Since two thousand and ate a lot of 0:12:38.240 --> 0:12:42.280 stress tests, so they're in really good shape. And UM 0:12:42.280 --> 0:12:44.800 we think earnings growth for the banks were likely to 0:12:44.880 --> 0:12:49.400 continue this year. And we also like oil oil UM stocks. 0:12:49.440 --> 0:12:54.920 They've volatile, but there's good valuations. UM. However, you know, 0:12:55.280 --> 0:12:57.800 so those are the more conservative stocks that we have 0:12:58.040 --> 0:13:03.520 been tilted in. However, as we get closer to interest 0:13:03.600 --> 0:13:10.040 rate hike hikes ending, UM, we are going to be 0:13:10.120 --> 0:13:13.439 a buy you more on some of the technology stocks. 0:13:13.559 --> 0:13:17.360 You know they've had a fabulous year. We wouldn't chase 0:13:17.480 --> 0:13:20.840 that just yet. They've up about the nastacks up about 0:13:20.920 --> 0:13:23.240 over ten this year, so it's one of the best 0:13:23.320 --> 0:13:27.439 years since nine. But we might see a little bit 0:13:27.440 --> 0:13:31.160 of weakness as we get closer to the FED easing 0:13:31.880 --> 0:13:36.160 or pausing even that that would be benefit tech stocks, 0:13:36.200 --> 0:13:38.640 but we do expect them to be volatile. Well. They've 0:13:38.640 --> 0:13:41.680 definitely done well in the first month, that is for sure, 0:13:41.800 --> 0:13:45.240 up almost ten percent on the last trading day of January. 0:13:45.400 --> 0:13:48.400 S and P s up uh five. Gina, thanks so 0:13:48.480 --> 0:13:51.440 much for joining us. Pleasure having you on the program. 0:13:51.480 --> 0:13:53.800 Gina Bolden there from Bolden Wealth Management talking to us 0:13:54.000 --> 0:13:57.880 about her view on the markets. A fifteen percent gain 0:13:58.040 --> 0:14:01.640 by year end would be that would be good. I 0:14:01.679 --> 0:14:07.680 think everybody would take that. Think back to October coming 0:14:07.679 --> 0:14:10.240 off of those lows. It's been a nice move up 0:14:10.280 --> 0:14:12.520 in these markets. Here A lot of folks are saying 0:14:12.800 --> 0:14:15.640 is that it is this the beginning of another bullmark 0:14:15.720 --> 0:14:18.719 and another leg up in the market. Katrina Simonettie, she's 0:14:18.760 --> 0:14:21.600 a senior vice president private wealth advisor at Morgan Stanley, 0:14:21.680 --> 0:14:24.320 joins us. How do you for you this equity market here. 0:14:24.360 --> 0:14:27.120 I mean, you know, as such a brutal last year, 0:14:27.160 --> 0:14:29.040 but if you kind of, you know, just kind of 0:14:29.440 --> 0:14:31.520 got into the game in October, it's been a good 0:14:31.520 --> 0:14:35.200 market here. What are you telling your clients? Well, it 0:14:35.240 --> 0:14:37.840 has been a good market. And you know, you can't 0:14:37.880 --> 0:14:41.400 blame the investors for wanting to be optimistic. You know, 0:14:41.440 --> 0:14:44.360 we're just so desperately, you know, kind of just clinging 0:14:44.400 --> 0:14:46.760 for that little bit of a release. And you know, 0:14:46.840 --> 0:14:48.600 the fact of it is is that for the entire 0:14:48.640 --> 0:14:52.280 twenty two we have been focused on the FED on inflation, 0:14:52.440 --> 0:14:54.960 and we can't really ignore the fact that, you know, 0:14:55.000 --> 0:14:58.640 following inflution shows the effectiveness of the FED quality. In 0:14:58.680 --> 0:15:03.520 our view, though this optimism is highly premature. We think 0:15:03.520 --> 0:15:06.680 that there is a lot more volatility ahead. And in 0:15:06.760 --> 0:15:09.960 our review, the story for twenty three is not the 0:15:10.000 --> 0:15:12.840 story of the fat or installation, or even the fact 0:15:12.880 --> 0:15:16.359 the CPI is getting under control, which is good news. 0:15:16.400 --> 0:15:20.479 This is the story about the earning since, specifically earnings revisions, 0:15:20.520 --> 0:15:23.640 because the earnings has to be properly revised and be 0:15:23.760 --> 0:15:26.320 set at the realistic level in order for us to 0:15:26.440 --> 0:15:31.320 pivot into the next is exactly what I was thinking. 0:15:31.360 --> 0:15:33.680 You know, I get in trouble a lot here at work. 0:15:33.840 --> 0:15:37.160 He does with my wife legally, um, but I never 0:15:37.280 --> 0:15:41.840 feel any better than when I've told everyone what I've done. 0:15:41.920 --> 0:15:44.160 I've been completely open about it, and I can start 0:15:44.240 --> 0:15:46.920 making amends. Then it's off to the races, right. That's 0:15:47.000 --> 0:15:48.680 kind of why I was hoping for a kitchen Sinc. 0:15:48.760 --> 0:15:51.320 What people call a kitchen Sinc. Quarter this earning season, 0:15:51.720 --> 0:15:56.680 but we haven't really seen that. Nonetheless, with the horrible, terrible, 0:15:56.720 --> 0:16:00.080 no good year we had last year and equities and bonds, 0:16:00.120 --> 0:16:04.080 maybe all the bad news is priced in, you know, 0:16:04.160 --> 0:16:06.280 and it's it's a really good point, and I think 0:16:06.320 --> 0:16:09.280 that that we have to separate the actual fourth quarter 0:16:09.360 --> 0:16:13.040 earnings from the earnings estimates. You know. It is really 0:16:13.040 --> 0:16:15.720 the forward looking projections that we need to be looking 0:16:15.760 --> 0:16:18.600 at because the fact is that the cost of running 0:16:18.680 --> 0:16:22.040 the businesses are high. And the high inflation on some 0:16:22.280 --> 0:16:26.640 level was really positive for many businesses because it allowed 0:16:26.840 --> 0:16:31.080 those broader profit margins. It was easier to be profitable 0:16:31.160 --> 0:16:34.240 in the environment of higher inflation. But what it is 0:16:34.280 --> 0:16:37.680 going to be going forward, and while the earnings are 0:16:37.680 --> 0:16:40.960 actually coming in mixed and positive in many ways, when 0:16:40.960 --> 0:16:43.320 we're looking at the revisions when we're looking at the 0:16:43.360 --> 0:16:46.600 new levels and the profit margins that are getting tight, 0:16:46.840 --> 0:16:50.000 you know in labor market is you know, is quite complex. 0:16:50.240 --> 0:16:52.480 You know. The issue is that what is the new normal? 0:16:52.600 --> 0:16:55.080 What are the levels that are going to be realistic? 0:16:55.320 --> 0:16:57.720 Because in order for our companies here in the US 0:16:57.800 --> 0:17:00.760 to be able to meet and exceed the earnings, you know, 0:17:00.800 --> 0:17:04.080 we have to be um, you know, adequately pricing them. 0:17:04.119 --> 0:17:06.359 And therefore we think that they're going to be this 0:17:06.720 --> 0:17:08.840 you know, revisions that are going to be mostly to 0:17:08.880 --> 0:17:11.600 the negative and it will catch a lot of investors 0:17:11.600 --> 0:17:14.560 by surprise. And we're expecting for this market to be 0:17:15.000 --> 0:17:17.320 worth before it gets better, you know. And I think 0:17:17.359 --> 0:17:19.440 that if we go into this market with that level 0:17:19.440 --> 0:17:23.160 of an expectation and stay defensive and stay high quality 0:17:23.440 --> 0:17:26.280 and focus on dividend being stocks, you know, will be 0:17:26.320 --> 0:17:29.560 good to go for the next bull market when it's 0:17:29.720 --> 0:17:33.440 when it gets here. Katarina, it talked us about fixed 0:17:33.440 --> 0:17:36.240 income here. I like income as much as the next person, 0:17:36.359 --> 0:17:37.879 and you know, I look at some of these I 0:17:37.880 --> 0:17:41.560 can actually get a yield now in the fixed income market. Um, 0:17:41.680 --> 0:17:43.080 how do you think about bonds? What are you telling 0:17:43.119 --> 0:17:47.520 your clients about bonds. You got the year treasury at four. Well, 0:17:47.560 --> 0:17:50.400 that's actually good news. You know, the environment last year 0:17:50.480 --> 0:17:53.080 was challenging because for the first time in many years, 0:17:53.359 --> 0:17:56.200 both stocks and bonds were down at the same time 0:17:56.520 --> 0:17:58.960 Dad was raising race. That was pressure on bonds. It 0:17:59.040 --> 0:18:01.560 was really difficult to invest in fixed income. It's a 0:18:01.720 --> 0:18:05.600 very different environment right now. Yields are actually high. You know, 0:18:05.600 --> 0:18:07.920 how how many years have it been when we can 0:18:07.960 --> 0:18:10.879 get excited about what even the money markets are paying 0:18:11.000 --> 0:18:14.440 right not to mention the treasuries and you know, high 0:18:14.480 --> 0:18:18.119 quality corporates, you know, just well diversed about fixed income 0:18:18.160 --> 0:18:21.760 portfolio right now is saying field in a significantly higher 0:18:21.840 --> 0:18:24.600 that we had seen for years to investors that are 0:18:24.680 --> 0:18:28.199 looking for yield, investors that are looking for safety, you know, 0:18:28.280 --> 0:18:30.800 for this cushion in their portfolio. You know, this is 0:18:30.880 --> 0:18:33.439 the time where they're actually getting the value out of 0:18:33.480 --> 0:18:36.600 their fixed income portion of their portfolio. You know. But 0:18:36.640 --> 0:18:39.440 the diversification is the key on the fixed income site 0:18:39.480 --> 0:18:41.679 as much as it is it's on the equities. I mean, 0:18:41.720 --> 0:18:45.920 Paul is excited. He's in a genuinely good mood. He's 0:18:46.000 --> 0:18:48.800 driving home every day in the BMW he switches serious 0:18:48.920 --> 0:18:52.240 X time the yacht rock. You know. Uh, he's listening 0:18:52.240 --> 0:18:54.560 to as much Michael McDonald as he can because he's 0:18:54.560 --> 0:18:57.119 got those munis. And now he gets a chance to 0:18:57.160 --> 0:19:00.600 put all of his dry powder into fixed income, dividend 0:19:00.600 --> 0:19:03.800 growing stocks, value stocks. This is a Paul Sweeney market 0:19:03.880 --> 0:19:07.240 right now. Um, is this the do you think this 0:19:07.359 --> 0:19:10.399 is a chance to pounce? Like do we do? We 0:19:10.520 --> 0:19:15.320 look at this period of higher rates as you know, uh, 0:19:15.440 --> 0:19:18.280 once in a decade opportunity to get in or or 0:19:18.320 --> 0:19:22.080 is this the new normal? Well? Absolutely, you know, investors 0:19:22.119 --> 0:19:25.080 for years we're saying, you know, if only rates where 0:19:25.280 --> 0:19:27.720 where they were years ago, you know, I would love 0:19:27.760 --> 0:19:30.560 to have you know, like this, this in comportion of 0:19:30.600 --> 0:19:33.440 the portfolio, you know, and for in the zero rate 0:19:33.520 --> 0:19:37.000 environment which we were in just recently, you know, that 0:19:37.160 --> 0:19:39.360 wasn't even a possibility. You know. So when you think 0:19:39.400 --> 0:19:41.760 about the higher rates that we can enjoy in the 0:19:41.800 --> 0:19:45.359 fixed income site, higher quality that we can enjoy, you know, 0:19:45.440 --> 0:19:49.000 and and that risk management that comes with us coupled 0:19:49.080 --> 0:19:52.639 with this amazing stock picking environment, So we do believe 0:19:52.680 --> 0:19:55.920 that the volatility is ahead, but it's not necessarily negative 0:19:55.920 --> 0:19:58.879 because in this time of volatility. This is the time 0:19:58.880 --> 0:20:04.040 to pick great individual positions, defensive place, improve the quality 0:20:04.040 --> 0:20:07.480 of the portfolio, stay within the sectors you know that 0:20:07.680 --> 0:20:11.240 will be the in our view, the leading sectors going forward, 0:20:11.359 --> 0:20:15.360 like healthcare, like consumer stables and you know, utilities energy. 0:20:15.640 --> 0:20:18.000 You know, it might not be the same exact things 0:20:18.040 --> 0:20:21.080 that we've experienced in the possible market, you know, So 0:20:21.200 --> 0:20:25.040 that rotation to quality to dividend ping stuff you know, 0:20:25.080 --> 0:20:27.600 we think will serve the investors for many years to come. 0:20:29.119 --> 0:20:32.399 What do you in your practice and Morgan Stanley in 0:20:32.400 --> 0:20:34.200 the private wealth business, what do you guys do to 0:20:34.280 --> 0:20:39.640 attract younger investors? Um to Morgan Stanley, Well, I think 0:20:39.640 --> 0:20:43.360 that the question with younger investors is, you know, where 0:20:43.520 --> 0:20:46.080 is why are we investing? You know, where is this 0:20:46.359 --> 0:20:50.560 leading to? You know? And the the the young investors 0:20:50.560 --> 0:20:53.240 have been dealing with so much risk and so much volatility, 0:20:53.359 --> 0:20:56.119 you know, and they've been growing up in this market 0:20:56.160 --> 0:20:58.679 being so volatile. You know. So the question here is 0:20:58.680 --> 0:21:03.159 to really than the time frame, you know, and developed 0:21:03.359 --> 0:21:07.520 this habit of putting together the portfolio of high quality 0:21:08.240 --> 0:21:11.840 place the individual positions that they can own for many 0:21:11.880 --> 0:21:14.000 many years to come. You know that come with a 0:21:14.160 --> 0:21:18.000 story that diversify, that that really gives them access to 0:21:18.080 --> 0:21:20.800 every sector of the market, you know, but also that 0:21:20.800 --> 0:21:25.120