1 00:00:00,800 --> 00:00:04,040 Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney. Alongside 2 00:00:04,040 --> 00:00:06,920 Speaker 1: my co host Matt Miller. Every business day we bring 3 00:00:06,960 --> 00:00:11,520 Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along 4 00:00:11,560 --> 00:00:15,600 Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast 5 00:00:15,600 --> 00:00:18,479 Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and 6 00:00:18,480 --> 00:00:22,639 Speaker 1: at Bloomberg dot com slash podcast. Let's check in on 7 00:00:22,680 --> 00:00:25,640 Speaker 1: these markets. Rebecca Felt and senior market strategists at Riverfront 8 00:00:25,720 --> 00:00:29,760 Speaker 1: Investment Group located in beautiful Richmond, Virginia. Rebecca, thanks so 9 00:00:29,840 --> 00:00:32,720 Speaker 1: much for joining us here. You are a fellow University 10 00:00:32,720 --> 00:00:35,319 Speaker 1: of Richmond alumni. You know what the mascot is mat 11 00:00:35,320 --> 00:00:37,000 Speaker 1: at the University of Richmond. Wait, I thought you were 12 00:00:37,000 --> 00:00:40,680 Speaker 1: a duke guy graduate school. I see, Okay, so undergrad 13 00:00:40,920 --> 00:00:47,040 Speaker 1: the mascot is um General Lee Spiders. Oh yes, you 14 00:00:47,200 --> 00:00:49,360 Speaker 1: never would have guessed that, but Rebecca knows that. Rebecca, 15 00:00:49,360 --> 00:00:51,559 Speaker 1: thanks so much for joining us here. What are you 16 00:00:51,640 --> 00:00:54,480 Speaker 1: doing in a market where we've got interest rates rising, 17 00:00:54,520 --> 00:00:57,920 Speaker 1: we've got growth slowing? How do you have the courage 18 00:00:57,960 --> 00:01:00,959 Speaker 1: to be in this market? Thank you so much for 19 00:01:01,240 --> 00:01:02,960 Speaker 1: having me. Well for self. You know, one of the 20 00:01:03,000 --> 00:01:05,160 Speaker 1: things we rely on as our process and our tactical 21 00:01:05,160 --> 00:01:09,440 Speaker 1: indicators are still suggesting it's appropriate to be overweight stocks UM, 22 00:01:09,520 --> 00:01:12,120 Speaker 1: and we are with a preference for US equity. Now, 23 00:01:12,120 --> 00:01:14,200 Speaker 1: I'll say that and also point out that we have 24 00:01:14,319 --> 00:01:17,400 Speaker 1: taken some risk off the table um in the last 25 00:01:17,400 --> 00:01:20,120 Speaker 1: month or so. We've we've bumped up our cash just 26 00:01:20,160 --> 00:01:23,039 Speaker 1: a little bit UM, but that's really for maybe a 27 00:01:23,080 --> 00:01:26,440 Speaker 1: buying opportunity later, not because we bearish. Yeah. We heard 28 00:01:26,520 --> 00:01:28,920 Speaker 1: yesterday we're talking to Phil Orlando from Federate Hermes and 29 00:01:28,920 --> 00:01:32,880 Speaker 1: he was saying, uh, he thinks the markets rallying to 30 00:01:33,680 --> 00:01:36,800 Speaker 1: undred by year end, but this first half is going 31 00:01:36,880 --> 00:01:41,080 Speaker 1: to be choppy and almost wanting to preserve capital. I 32 00:01:41,080 --> 00:01:43,559 Speaker 1: think he said, you know for now, Um, you sound 33 00:01:43,600 --> 00:01:47,680 Speaker 1: a little bit more sanguine about the risks the headwinds 34 00:01:48,000 --> 00:01:51,280 Speaker 1: UM to to face US stock investors for for this 35 00:01:51,320 --> 00:01:54,160 Speaker 1: part of the year. Well, you know, when we put 36 00:01:54,160 --> 00:01:57,920 Speaker 1: our outlook out in at the end of December beginning 37 00:01:57,920 --> 00:02:00,440 Speaker 1: of January, the theme of it was the return of 38 00:02:00,480 --> 00:02:03,760 Speaker 1: volatility in two So of course that doesn't mean it's 39 00:02:03,800 --> 00:02:05,840 Speaker 1: going to be pleasant, um, but we think, you know, 40 00:02:05,920 --> 00:02:09,160 Speaker 1: selection is going to be t having um, you know, 41 00:02:09,360 --> 00:02:13,320 Speaker 1: some growth, some value and against some cash for ballost 42 00:02:13,360 --> 00:02:15,680 Speaker 1: if you will, against these types of periods, and we 43 00:02:15,760 --> 00:02:18,640 Speaker 1: think that you can navigate through, but we do also 44 00:02:18,680 --> 00:02:22,040 Speaker 1: agree that the volatility will likely continue through through the 45 00:02:22,080 --> 00:02:24,640 Speaker 1: first half of the year. And Rebecca, we're kind of 46 00:02:24,680 --> 00:02:27,440 Speaker 1: in getting into the meat here of earning season. What 47 00:02:27,520 --> 00:02:30,560 Speaker 1: do you need to see from corporate earnings here as 48 00:02:30,600 --> 00:02:34,280 Speaker 1: it relates to maybe valuation here? Obviously some people have 49 00:02:34,440 --> 00:02:36,520 Speaker 1: some valuation concerns. What do you need to see from 50 00:02:36,520 --> 00:02:39,720 Speaker 1: earnings to kind of address that issue? Well, when you 51 00:02:39,760 --> 00:02:42,120 Speaker 1: think about where we were in terms of growth in 52 00:02:42,200 --> 00:02:46,320 Speaker 1: twenty one right there now forecasting full year one is 53 00:02:46,320 --> 00:02:49,959 Speaker 1: going to come in north oft and we know that 54 00:02:49,960 --> 00:02:52,080 Speaker 1: that was you know, coming out of the depths, and 55 00:02:52,120 --> 00:02:55,160 Speaker 1: then now you're looking at two where you're seeing a 56 00:02:55,160 --> 00:02:58,519 Speaker 1: deceleration of growth in that eight ten percent range. That's consensus, 57 00:02:58,520 --> 00:03:00,920 Speaker 1: i think for the calendar year that are in. But 58 00:03:01,040 --> 00:03:03,880 Speaker 1: that has been well known for six months or so, 59 00:03:04,040 --> 00:03:07,920 Speaker 1: right so that that forward growth expectation has been there, 60 00:03:08,160 --> 00:03:10,520 Speaker 1: and we've also seen a couple of multiple points come 61 00:03:10,560 --> 00:03:13,919 Speaker 1: out of the SMP five hundred as we have navigated 62 00:03:13,919 --> 00:03:16,400 Speaker 1: through this year, so we're back to what we would 63 00:03:16,400 --> 00:03:20,240 Speaker 1: consider a more normal type of earnings growth trajectory, and 64 00:03:20,280 --> 00:03:23,239 Speaker 1: we think that the current valuations can bear that out, 65 00:03:23,280 --> 00:03:26,520 Speaker 1: particularly when you look at UH profit margins being so strong, 66 00:03:26,600 --> 00:03:29,720 Speaker 1: cash levels being so high, and the growth prospects still 67 00:03:30,040 --> 00:03:34,280 Speaker 1: very good for the US in terms of yields. Right 68 00:03:34,280 --> 00:03:38,000 Speaker 1: now we're headed towards two. It seems quickly. UM. How 69 00:03:38,080 --> 00:03:41,120 Speaker 1: much does that bother you, uh in terms of your 70 00:03:41,160 --> 00:03:43,960 Speaker 1: equity investments and at what point would it you know, 71 00:03:44,400 --> 00:03:46,760 Speaker 1: what level do you think you'd have to make some 72 00:03:46,840 --> 00:03:51,680 Speaker 1: changes to your strategy? Well, definitely UH north of two, 73 00:03:51,840 --> 00:03:55,080 Speaker 1: most likely before we started bumping up our our fixed 74 00:03:55,120 --> 00:03:57,440 Speaker 1: income UM. I asked that question a lot of our 75 00:03:57,440 --> 00:04:00,360 Speaker 1: fixed income folks, and I think that they serve the 76 00:04:00,440 --> 00:04:03,200 Speaker 1: right to to to hold off on giving a finite number. 77 00:04:03,240 --> 00:04:06,080 Speaker 1: But when you think about the technology space, we are 78 00:04:06,160 --> 00:04:08,480 Speaker 1: still neutral to slightly over light there. But we are 79 00:04:08,520 --> 00:04:12,000 Speaker 1: still leaning into those software companies because we think it's 80 00:04:12,040 --> 00:04:15,360 Speaker 1: worth it to pay up for names that have consistency 81 00:04:15,560 --> 00:04:18,520 Speaker 1: potential as it relates to earnings and revenues UM. And 82 00:04:18,560 --> 00:04:20,480 Speaker 1: we do expect that they're going to be a little 83 00:04:20,560 --> 00:04:22,960 Speaker 1: choppy in here as folks digest the fact that rates 84 00:04:22,960 --> 00:04:25,280 Speaker 1: are going higher, But we still think growth will win out, 85 00:04:25,320 --> 00:04:28,920 Speaker 1: and so we're content to stick with the space. I'm 86 00:04:28,920 --> 00:04:31,480 Speaker 1: looking at w t I crude oil. It's off about 87 00:04:31,480 --> 00:04:35,520 Speaker 1: two percent today but still just below nine per barrel, 88 00:04:35,560 --> 00:04:38,360 Speaker 1: and it's obviously been a good harbinger for energy stocks 89 00:04:38,960 --> 00:04:41,040 Speaker 1: actually getting a little bit more love in the marketplace. 90 00:04:41,120 --> 00:04:42,919 Speaker 1: How do you think about energy? Right here? Is are 91 00:04:42,960 --> 00:04:46,880 Speaker 1: more room to go? Well, we had come into this 92 00:04:47,000 --> 00:04:50,760 Speaker 1: year slightly underweight energy because we did not expect oil 93 00:04:50,800 --> 00:04:53,400 Speaker 1: to go as high as it has gone. Um. Obviously 94 00:04:53,680 --> 00:04:57,039 Speaker 1: for the foreseeable future, though, we expect prices to stay high, 95 00:04:57,120 --> 00:05:01,320 Speaker 1: particularly with the tensions going on on the you crane border. Um. 96 00:05:01,400 --> 00:05:04,680 Speaker 1: So we have neutralized that position and we're sitting tight 97 00:05:04,720 --> 00:05:09,200 Speaker 1: with that at this moment. All right. So the geopolitical 98 00:05:10,160 --> 00:05:13,120 Speaker 1: issues are always just difficult to get right. Let me 99 00:05:13,160 --> 00:05:16,120 Speaker 1: ask you, just with about thirty seconds left, what you 100 00:05:16,120 --> 00:05:22,239 Speaker 1: think about crazy things like crypto? Is it too crazy? Well? 101 00:05:22,440 --> 00:05:25,719 Speaker 1: I don't um have really a good answer for you. There. 102 00:05:25,720 --> 00:05:28,640 Speaker 1: It is a space that we watch, obviously because companies 103 00:05:28,680 --> 00:05:31,400 Speaker 1: that we own have exposures there um that we do 104 00:05:31,440 --> 00:05:35,000 Speaker 1: not outright invest in it. It's this time, all right, Rebecca, 105 00:05:35,040 --> 00:05:37,800 Speaker 1: crazy and it's still too crazy. It's still crazy for 106 00:05:37,839 --> 00:05:41,360 Speaker 1: a lot of people. For main Street, yes, Richmond, and 107 00:05:41,480 --> 00:05:46,279 Speaker 1: for maybe even Jamie diamond In. Yeah, but I think 108 00:05:46,320 --> 00:05:50,080 Speaker 1: like Rebecca, you know, they she has she's invested in 109 00:05:50,120 --> 00:05:54,080 Speaker 1: companies that are connected. He's willing to work with clients 110 00:05:54,120 --> 00:06:01,640 Speaker 1: that are connected. He thinks. Let's check in with Darren Schurvi. 111 00:06:01,680 --> 00:06:06,840 Speaker 1: It's portfolio manager for jacob Asset Management. Darren, what are 112 00:06:06,839 --> 00:06:09,440 Speaker 1: you doing with this market here? We've seen I guess 113 00:06:09,520 --> 00:06:12,360 Speaker 1: volatility has been kind of the name of the game 114 00:06:12,400 --> 00:06:17,920 Speaker 1: here so far. Ino, how are you thinking about this market? Well, 115 00:06:17,960 --> 00:06:22,040 Speaker 1: it's absolutely uh remains one of the craziest market environments 116 00:06:22,440 --> 00:06:25,640 Speaker 1: I've seen. But that's pretty much been the case for uh, 117 00:06:25,760 --> 00:06:29,800 Speaker 1: you know, not just two but uh certainly I would 118 00:06:29,839 --> 00:06:32,960 Speaker 1: say for the last twelve twenty four months. Frankly, so 119 00:06:33,120 --> 00:06:36,200 Speaker 1: this is really not much different. I mean, if if 120 00:06:36,240 --> 00:06:39,560 Speaker 1: you look at the area where we generally focus on 121 00:06:39,600 --> 00:06:43,839 Speaker 1: a jacobeth In Management, which is the smaller cap portion 122 00:06:43,880 --> 00:06:46,000 Speaker 1: of the marketplace, I mean, we've been kind of in 123 00:06:46,040 --> 00:06:50,719 Speaker 1: a stealth are market for twelve months. So again I'm 124 00:06:50,760 --> 00:06:53,520 Speaker 1: you know, generally speaking, I'm looking at this this opportunity 125 00:06:53,640 --> 00:06:56,240 Speaker 1: to try and find values that are out there in 126 00:06:56,240 --> 00:07:00,960 Speaker 1: the marketplace. So where are you finding them? Oh, in 127 00:07:01,160 --> 00:07:03,440 Speaker 1: a lot of different places obviously, you know. I mean 128 00:07:04,240 --> 00:07:07,279 Speaker 1: part of the uh you know question is trying to 129 00:07:07,360 --> 00:07:11,080 Speaker 1: determine which companies are going to do well when we 130 00:07:11,560 --> 00:07:16,480 Speaker 1: come out of this uh, you know, difficult COVID pandemic environment, 131 00:07:16,480 --> 00:07:19,680 Speaker 1: which ones are going to be able to handle inflationary 132 00:07:19,800 --> 00:07:24,400 Speaker 1: environments and uh So I mean one example, for for instance, 133 00:07:24,480 --> 00:07:29,440 Speaker 1: is in cryptocurrency, which obviously, UH is a area that 134 00:07:29,440 --> 00:07:33,280 Speaker 1: that we're pretty intensely interested in. Uh. You know, in 135 00:07:33,280 --> 00:07:37,120 Speaker 1: a lot of ways, it parallels what we saw UM 136 00:07:37,160 --> 00:07:40,560 Speaker 1: as a technology focused investor way back when in the 137 00:07:40,600 --> 00:07:43,400 Speaker 1: dot com bubble. A lot of interesting opportunities, but a 138 00:07:43,400 --> 00:07:45,880 Speaker 1: lot of perils. So you know, one of the UH 139 00:07:46,240 --> 00:07:49,200 Speaker 1: stocks that we like here is is a cryptocurrency broker 140 00:07:49,280 --> 00:07:52,920 Speaker 1: called Voyager Digital. Uh. That is one area that we like. 141 00:07:53,280 --> 00:07:57,280 Speaker 1: We have investments in silver Gate and Galaxy Digital as 142 00:07:57,280 --> 00:08:00,600 Speaker 1: well in that space. So, and I know, I know 143 00:08:00,640 --> 00:08:04,040 Speaker 1: you were back at the dot com era here, boy, 144 00:08:04,240 --> 00:08:07,200 Speaker 1: that didn't end well for a lot of people you 145 00:08:07,240 --> 00:08:09,800 Speaker 1: think the risk was good for But Darren, you were 146 00:08:09,960 --> 00:08:14,080 Speaker 1: at market Watch at the time, right, Yeah, So I've 147 00:08:14,120 --> 00:08:18,320 Speaker 1: been uh, originally a journalist and and left to join 148 00:08:18,400 --> 00:08:22,240 Speaker 1: the asset management field in actually the peak of the 149 00:08:22,320 --> 00:08:27,120 Speaker 1: dot com Yeah, in hindsight is a pretty good conjuring indicator. 150 00:08:27,880 --> 00:08:30,240 Speaker 1: But you know, it's all about your timelines. I mean, 151 00:08:30,320 --> 00:08:32,640 Speaker 1: you'd say it didn't end well. And yet if you 152 00:08:32,679 --> 00:08:35,920 Speaker 1: look at the you know, ten most valuable companies in 153 00:08:35,920 --> 00:08:38,360 Speaker 1: the world, they're all basically Internet base. It was an 154 00:08:38,360 --> 00:08:42,160 Speaker 1: issue of timing more so than opportunity, and and so 155 00:08:42,320 --> 00:08:43,920 Speaker 1: you know that's part of the game in the in 156 00:08:43,960 --> 00:08:47,679 Speaker 1: the market and uh so generally speaking, you know, when 157 00:08:47,679 --> 00:08:50,680 Speaker 1: I was looking at this marketplace and all of the 158 00:08:50,720 --> 00:08:53,719 Speaker 1: crazy speculation that we saw with the meme stocks and 159 00:08:53,760 --> 00:08:56,920 Speaker 1: the cryptos and and f t s and and just 160 00:08:57,160 --> 00:09:01,439 Speaker 1: had trouble finding good opportunities in that type of marketplace. 161 00:09:01,480 --> 00:09:05,040 Speaker 1: So when I see this uh kind of come down, Uh, 162 00:09:05,080 --> 00:09:08,160 Speaker 1: you know, that gets me more excited. It opens up opportunities. 163 00:09:08,160 --> 00:09:11,240 Speaker 1: A great example of that is with SPACs. I mean, 164 00:09:11,320 --> 00:09:14,120 Speaker 1: you know, that was one of the the biggest indicators 165 00:09:14,120 --> 00:09:17,439 Speaker 1: that things were just getting entirely uh you know, too 166 00:09:17,520 --> 00:09:21,880 Speaker 1: speculative and goofy and some level, and and so many 167 00:09:21,960 --> 00:09:26,280 Speaker 1: of those SPACs are now totally broken with with evaluations 168 00:09:26,320 --> 00:09:29,440 Speaker 1: well under the price they became public at. You know, 169 00:09:29,880 --> 00:09:32,520 Speaker 1: are we there yet at the bottom. Probably not. You know, 170 00:09:32,559 --> 00:09:34,360 Speaker 1: a lot of these companies, just like we saw in 171 00:09:34,440 --> 00:09:36,880 Speaker 1: the in the dot com bubble, will will fail. But 172 00:09:37,440 --> 00:09:40,120 Speaker 1: there are some interesting companies, There are some interesting technologies 173 00:09:40,160 --> 00:09:42,000 Speaker 1: out there, and I think it is going to be 174 00:09:42,720 --> 00:09:44,960 Speaker 1: on us to kind of pick through some of the 175 00:09:45,000 --> 00:09:48,559 Speaker 1: carcasses that arise and and and realize where there's opportunity 176 00:09:48,600 --> 00:09:52,280 Speaker 1: and when there was just hype. All right, Darren, great 177 00:09:52,280 --> 00:09:53,680 Speaker 1: to get some time with you, and I hope to 178 00:09:54,480 --> 00:09:56,840 Speaker 1: talk to you more again in the future. I'm intensely 179 00:09:56,840 --> 00:09:59,840 Speaker 1: focused on crypto as well. So um, I'm glad we 180 00:10:00,200 --> 00:10:03,120 Speaker 1: had you on. And uh, Darren turvit's their portfolio manager 181 00:10:03,120 --> 00:10:06,560 Speaker 1: from Jacob Asset Management talking to us about what he's 182 00:10:06,600 --> 00:10:09,320 Speaker 1: looking for in terms of opportunity in terms of crypto. 183 00:10:09,440 --> 00:10:11,480 Speaker 1: You know, it's been an incredible run over the past 184 00:10:12,000 --> 00:10:14,920 Speaker 1: um few sessions for bitcoin. We're trading it just over 185 00:10:15,080 --> 00:10:18,640 Speaker 1: forty forty three thousand, I should say right now, so uh, 186 00:10:19,160 --> 00:10:22,440 Speaker 1: forty three thousand, four hundred dollars basically. But you know, 187 00:10:22,480 --> 00:10:26,120 Speaker 1: it was only two weeks ago that we were down 188 00:10:26,360 --> 00:10:30,600 Speaker 1: at thirty six and um, we had flirted. People thought 189 00:10:30,600 --> 00:10:32,480 Speaker 1: we were going down to thirty um, but we have 190 00:10:32,559 --> 00:10:34,640 Speaker 1: gone the other way and it's interesting to watch bitcoin 191 00:10:34,679 --> 00:10:40,760 Speaker 1: now get some get some real power. Let's check in 192 00:10:40,800 --> 00:10:44,680 Speaker 1: with our next. Katerina Simonetti, Senior vice president, Private Wealth 193 00:10:44,720 --> 00:10:48,160 Speaker 1: Advisor at Morgan Stanley. Katerina thinks, so much for joining 194 00:10:48,240 --> 00:10:50,599 Speaker 1: us here. I kind of feel like, you know, I 195 00:10:50,679 --> 00:10:53,480 Speaker 1: got a lot of bricks in my wall of worry here, 196 00:10:53,600 --> 00:10:57,120 Speaker 1: not the least of which is inflation. But I need 197 00:10:57,160 --> 00:10:59,480 Speaker 1: to be in the market though I just stayed defensive. 198 00:11:00,280 --> 00:11:03,839 Speaker 1: What are you telling your clients, Matt, You're right, I 199 00:11:03,880 --> 00:11:07,079 Speaker 1: mean the certainly has been a bumpy right, and it's 200 00:11:07,160 --> 00:11:10,640 Speaker 1: nice to see some green on the screen for sure. Uh. 201 00:11:10,679 --> 00:11:13,400 Speaker 1: And the uniqueness of the situation is that we not 202 00:11:13,600 --> 00:11:16,440 Speaker 1: only have inflation, but we also have this really low 203 00:11:16,559 --> 00:11:19,040 Speaker 1: rate environment and with no rates are going up. But 204 00:11:19,120 --> 00:11:22,400 Speaker 1: this combination of the low rate environment and inflation that 205 00:11:22,520 --> 00:11:28,160 Speaker 1: is higher than expected, UH, is a definite concerns for investors. 206 00:11:28,160 --> 00:11:30,439 Speaker 1: And we see it with consumer spending, with the consumers 207 00:11:30,440 --> 00:11:33,760 Speaker 1: seeing extremely relactant suspense and kind of just start looking 208 00:11:33,800 --> 00:11:37,040 Speaker 1: at the situation and perhaps inflation is not going to 209 00:11:37,080 --> 00:11:40,040 Speaker 1: stay at the current high levels that we're seeing it. 210 00:11:40,160 --> 00:11:42,200 Speaker 1: Perhaps it's going to they're going to be some type 211 00:11:42,200 --> 00:11:46,479 Speaker 1: of level of normalization. But what it means to investors 212 00:11:46,559 --> 00:11:51,559 Speaker 1: is that real returns, inflation adjusted returns, are more important 213 00:11:51,559 --> 00:11:54,640 Speaker 1: than ever and we have to very carefully analyze the 214 00:11:54,679 --> 00:11:58,760 Speaker 1: investment portfolios through the prison of are they producing enough 215 00:11:58,880 --> 00:12:01,680 Speaker 1: income to at the rear least maintained the buying power 216 00:12:02,040 --> 00:12:05,360 Speaker 1: of our portfolios and does everything that we have in 217 00:12:05,400 --> 00:12:09,559 Speaker 1: our portfolios makes sense from the perspective of real returns? 218 00:12:09,640 --> 00:12:13,040 Speaker 1: And that's what inflation, That's what investors are asking us about. 219 00:12:13,200 --> 00:12:15,920 Speaker 1: And these are the conversations that we're having over and over, 220 00:12:16,200 --> 00:12:20,000 Speaker 1: you know, looking at everything through the perspective of being 221 00:12:20,040 --> 00:12:24,200 Speaker 1: prepared for being at the higher rate um inflation environment 222 00:12:24,280 --> 00:12:26,880 Speaker 1: for a quite some time. Yeah, it's the rates that 223 00:12:26,960 --> 00:12:30,600 Speaker 1: are the concern. Right, how far do you expect the 224 00:12:30,720 --> 00:12:32,760 Speaker 1: FED to go? How far do you set a ten 225 00:12:32,800 --> 00:12:37,079 Speaker 1: year ago? Well said has done you know, very good 226 00:12:37,160 --> 00:12:41,960 Speaker 1: job setting expectations and their decisions are very much economically driven, 227 00:12:42,040 --> 00:12:45,480 Speaker 1: not market driven, and economy has remained strong. I mean, 228 00:12:45,559 --> 00:12:48,240 Speaker 1: there are challenges without shadow of a doubt, you know. 229 00:12:48,320 --> 00:12:50,079 Speaker 1: So we think that they're going to be a number 230 00:12:50,080 --> 00:12:52,320 Speaker 1: of rate hikes, you know, probably the quarter point at 231 00:12:52,320 --> 00:12:55,440 Speaker 1: the time. UM, it's hard to know exactly how far 232 00:12:55,559 --> 00:12:58,240 Speaker 1: the rates are going to get, you know, but the 233 00:12:58,360 --> 00:13:03,120 Speaker 1: concern is really for the existing portfolios and existing positioning 234 00:13:03,600 --> 00:13:07,040 Speaker 1: UM and the quality right now of fixing com portfolios. 235 00:13:07,160 --> 00:13:09,839 Speaker 1: You know, it's important more than ever. Um. Now, this 236 00:13:09,920 --> 00:13:13,480 Speaker 1: is not an unprecedented times you know, the environment of 237 00:13:13,559 --> 00:13:16,120 Speaker 1: raising races a little bit not writing for investors, but 238 00:13:16,440 --> 00:13:18,560 Speaker 1: you know, we get through it, you know, over and over. 239 00:13:19,360 --> 00:13:23,720 Speaker 1: But it is unprecedented when we're dealing with hiking market volatility, 240 00:13:24,000 --> 00:13:27,240 Speaker 1: inflution and the environment would fed as a raising rate 241 00:13:27,360 --> 00:13:29,560 Speaker 1: all at the same time. So it's going to be 242 00:13:29,600 --> 00:13:34,120 Speaker 1: a bumpy, right, heightened volatility, and we should mentally prepare 243 00:13:34,160 --> 00:13:38,080 Speaker 1: for it. Katarina, When your clients call up and ask 244 00:13:38,160 --> 00:13:42,679 Speaker 1: about crypto broadly defined or bitcoin, how do you kind 245 00:13:42,679 --> 00:13:47,040 Speaker 1: of have that conversation, Well, you know, it's it's there. 246 00:13:47,200 --> 00:13:50,560 Speaker 1: There's a lot of uncertainty in that effort pass and 247 00:13:50,679 --> 00:13:52,680 Speaker 1: you know, we see the volatility that is at the 248 00:13:52,760 --> 00:13:56,280 Speaker 1: highest level you know possible. So we really are very 249 00:13:56,320 --> 00:13:59,520 Speaker 1: thankful about having those discussions. You know, from the perspective 250 00:13:59,679 --> 00:14:02,000 Speaker 1: of you know, we want to make sure that that 251 00:14:02,200 --> 00:14:05,760 Speaker 1: investors themselves do a lot of homework trying to understand 252 00:14:05,920 --> 00:14:08,560 Speaker 1: what the assets class is all about and what will 253 00:14:08,720 --> 00:14:11,720 Speaker 1: in place, you know, in their investment portfolios. You know, 254 00:14:11,840 --> 00:14:15,120 Speaker 1: so we we just you know, our job as advisors, 255 00:14:15,200 --> 00:14:18,480 Speaker 1: you know, EA is to set expectations and prepare the 256 00:14:18,640 --> 00:14:21,400 Speaker 1: general investment public for a much much higher level of 257 00:14:21,480 --> 00:14:26,880 Speaker 1: volatility and asset class versus traditional stock market investments and uh, 258 00:14:27,000 --> 00:14:30,760 Speaker 1: you know, more expected volatilities. We've seen some reasonable volatility 259 00:14:30,760 --> 00:14:33,400 Speaker 1: and commodities other commodities, right because a lot of people 260 00:14:33,440 --> 00:14:37,120 Speaker 1: think of cryptos just as digital commodities. What do you 261 00:14:37,160 --> 00:14:41,200 Speaker 1: think about the the o G commodities though? I mean, 262 00:14:41,760 --> 00:14:47,440 Speaker 1: you know, the oils, the metals, the eggs. Is that important? Well, 263 00:14:47,520 --> 00:14:51,359 Speaker 1: it's bring you bring me to the original question about inflation. 264 00:14:51,680 --> 00:14:56,200 Speaker 1: So commodities traditionally are viewed as one of the inflation hedges. 265 00:14:56,400 --> 00:14:58,720 Speaker 1: And you know what we're doing right now is we're 266 00:14:58,720 --> 00:15:03,040 Speaker 1: putting making sure that an investors do have a diversified portfolio. 267 00:15:03,320 --> 00:15:06,840 Speaker 1: You know, all the sectors that are you know, historically 268 00:15:06,880 --> 00:15:11,000 Speaker 1: known as inflation hedges, and commodities absolutely play a role 269 00:15:11,040 --> 00:15:13,200 Speaker 1: there we can deny that. You know, there has been 270 00:15:13,280 --> 00:15:15,880 Speaker 1: a serious subject in the price of oil, you know. 271 00:15:15,920 --> 00:15:18,160 Speaker 1: But the other area that that works really well in 272 00:15:18,200 --> 00:15:21,000 Speaker 1: this environment is real estate because as we look at 273 00:15:21,040 --> 00:15:24,320 Speaker 1: the inflation heades, you know, would ideally would we try 274 00:15:24,400 --> 00:15:29,400 Speaker 1: to combine is not only the appreciation potential and maintaining 275 00:15:29,440 --> 00:15:32,680 Speaker 1: the ability of these sectors to maintain the purchasing value 276 00:15:32,720 --> 00:15:35,240 Speaker 1: of the investors, but also looking at asset classes that 277 00:15:35,320 --> 00:15:38,440 Speaker 1: produced currents become and this is where you know, industrials 278 00:15:38,440 --> 00:15:41,520 Speaker 1: and reads, you know, really common to play. But historically, 279 00:15:41,600 --> 00:15:44,359 Speaker 1: you know, coming back to your question about commodity, commodities 280 00:15:44,560 --> 00:15:48,720 Speaker 1: can be used very effectively as inflation hedges. All right, Katerina, 281 00:15:48,720 --> 00:15:51,560 Speaker 1: thank you so much for joining us. Always appreciate getting 282 00:15:51,640 --> 00:15:54,320 Speaker 1: your thoughts and perspective. Katerina Semineity. She's a senior vice 283 00:15:54,360 --> 00:15:59,200 Speaker 1: president and a private wealth adviser for Morgan Stanley. And 284 00:15:59,280 --> 00:16:02,640 Speaker 1: you know, it's just math. We've seen the commodities inflation. 285 00:16:03,320 --> 00:16:05,160 Speaker 1: You know, everybody that comes on and there are a 286 00:16:05,160 --> 00:16:08,160 Speaker 1: lot smarter than me, say, inflation is going to come 287 00:16:08,200 --> 00:16:11,680 Speaker 1: down markedly throughout this year and maybe it's even peaky 288 00:16:11,760 --> 00:16:16,240 Speaker 1: now or perhaps next month. Boy I guess I haven't 289 00:16:16,240 --> 00:16:21,320 Speaker 1: seen it yet. I mean I also hear that from UM. 290 00:16:21,440 --> 00:16:24,120 Speaker 1: Most of the people who come on, all of whom 291 00:16:24,120 --> 00:16:28,600 Speaker 1: are also smarter than I. UM. I will say, and 292 00:16:28,680 --> 00:16:30,800 Speaker 1: again I'm going to revert to N I Gilbert. I 293 00:16:30,880 --> 00:16:34,360 Speaker 1: highly recommend people type NI space Gilbert on the terminal. 294 00:16:34,400 --> 00:16:38,960 Speaker 1: I'm doing it as Mark's story number three on on 295 00:16:39,080 --> 00:16:43,200 Speaker 1: his ticker. There is about a couple of really big 296 00:16:43,280 --> 00:16:46,280 Speaker 1: names on Wall Street. Nikolai Tangan, who's I guess Global 297 00:16:46,280 --> 00:16:48,480 Speaker 1: Wall Street right because he runs the Norwegian Wealth Fund, 298 00:16:48,800 --> 00:16:52,960 Speaker 1: and Blackrock are both saying inflation is here to stay. Yeah, 299 00:16:53,680 --> 00:16:55,640 Speaker 1: I don't know, but you're right. Most people have said 300 00:16:55,840 --> 00:16:58,200 Speaker 1: it's going to be tempered in the second half, come 301 00:16:58,240 --> 00:16:59,880 Speaker 1: back down to earth. So we'll have to see a 302 00:17:00,000 --> 00:17:06,080 Speaker 1: that's certainly an issue for investors today. David Cats, president 303 00:17:06,080 --> 00:17:09,960 Speaker 1: and chief investment officer for Matrix Asset Advisors, joins us, David, 304 00:17:09,960 --> 00:17:11,800 Speaker 1: I love chatting with you. I love to get your 305 00:17:11,840 --> 00:17:15,800 Speaker 1: thoughts here as we struggle here early in the equity 306 00:17:15,840 --> 00:17:18,840 Speaker 1: markets a lot of altility, which people warned us about, 307 00:17:19,560 --> 00:17:23,160 Speaker 1: how do you think about value versus growth here? Given 308 00:17:23,200 --> 00:17:26,000 Speaker 1: what we've seen so far this year, So we went 309 00:17:26,040 --> 00:17:30,119 Speaker 1: into the year cautiously optimistic about the market, but a 310 00:17:30,119 --> 00:17:32,879 Speaker 1: little bit concerned about the growthier areas of the market 311 00:17:32,960 --> 00:17:35,639 Speaker 1: because we saw a lot of accesses in light of 312 00:17:35,680 --> 00:17:39,040 Speaker 1: the fact that you had a ten to sell off 313 00:17:39,080 --> 00:17:41,240 Speaker 1: in that area for the first month of the year. 314 00:17:41,640 --> 00:17:43,960 Speaker 1: We think it's a more level playing field right now, 315 00:17:44,000 --> 00:17:46,159 Speaker 1: and we think that you can buy in both areas, 316 00:17:46,240 --> 00:17:48,760 Speaker 1: both value and growth, but you do have to be 317 00:17:48,800 --> 00:17:52,119 Speaker 1: a lot more discerning on the growth side. What do 318 00:17:52,160 --> 00:17:54,160 Speaker 1: you think when you look at what's happening in rates 319 00:17:54,280 --> 00:17:56,080 Speaker 1: right now? I mean, we're all on kind of two 320 00:17:56,080 --> 00:17:58,960 Speaker 1: percent watch with a tenure um right now trading at 321 00:17:59,000 --> 00:18:03,160 Speaker 1: one plus. We have in It's not just the US, 322 00:18:03,320 --> 00:18:06,400 Speaker 1: right You've got UM, the b o E, and now 323 00:18:06,400 --> 00:18:09,400 Speaker 1: the ECB on board with kind of a global rate 324 00:18:09,920 --> 00:18:14,359 Speaker 1: raising uh cycle. So we do think that rates are 325 00:18:14,359 --> 00:18:16,320 Speaker 1: going to be going up this year. That's you know, 326 00:18:16,560 --> 00:18:18,199 Speaker 1: locked and load of the fet is going to be 327 00:18:18,280 --> 00:18:22,480 Speaker 1: raising rates. Whether it's three or four or five times, 328 00:18:22,520 --> 00:18:25,600 Speaker 1: it's going to be happening. We think inflation is definitely 329 00:18:25,600 --> 00:18:27,919 Speaker 1: out there. We do believe it's going to start to 330 00:18:27,960 --> 00:18:31,560 Speaker 1: come down a little bit by the July August time frame, 331 00:18:31,840 --> 00:18:33,760 Speaker 1: but we think interest rates are going higher, and you 332 00:18:33,800 --> 00:18:37,320 Speaker 1: want to invest accordingly because it shouldn't be a surprise 333 00:18:37,400 --> 00:18:39,480 Speaker 1: when the tenure does hit too. It's going to happen 334 00:18:40,359 --> 00:18:42,480 Speaker 1: small caps. Is it a time for small caps to 335 00:18:42,960 --> 00:18:47,560 Speaker 1: really shine? Here? David So again, small caps opened the 336 00:18:47,680 --> 00:18:51,840 Speaker 1: year pretty horribly. They're down about fifteen to so we 337 00:18:51,920 --> 00:18:54,680 Speaker 1: do think from here, in a better economy and as 338 00:18:54,720 --> 00:18:58,240 Speaker 1: count COVID takes a back seat eventually that they will 339 00:18:58,240 --> 00:19:01,160 Speaker 1: come back very sharply. So we like small caps here. 340 00:19:01,800 --> 00:19:05,800 Speaker 1: We don't traffic as much in individual small stocks. We 341 00:19:05,880 --> 00:19:08,639 Speaker 1: focus on mid and large. On the small cap side, 342 00:19:08,680 --> 00:19:11,080 Speaker 1: we like the e t f s like the Russell 343 00:19:11,240 --> 00:19:13,720 Speaker 1: two thousand or the SMP Small Cap Index. We think 344 00:19:13,840 --> 00:19:16,600 Speaker 1: is your real good exposure to that area of the market, 345 00:19:16,600 --> 00:19:18,480 Speaker 1: and we would be buying the step. You know, you've 346 00:19:18,480 --> 00:19:20,520 Speaker 1: had a very sharp sell off. We think if you 347 00:19:20,560 --> 00:19:22,359 Speaker 1: have a six or twelve month time arise and there 348 00:19:22,359 --> 00:19:24,399 Speaker 1: are lots of different places to put money to work, 349 00:19:24,720 --> 00:19:27,000 Speaker 1: we would not chase the strong days like today, but 350 00:19:27,040 --> 00:19:29,600 Speaker 1: on the days where the markets off two hundred five 351 00:19:29,680 --> 00:19:32,680 Speaker 1: hundred points small caps are down, we'd buy small caps 352 00:19:32,680 --> 00:19:34,439 Speaker 1: and we think there are, you know, lots of places 353 00:19:34,480 --> 00:19:36,960 Speaker 1: to make money, whether it's small, mid, or large. And 354 00:19:37,040 --> 00:19:40,639 Speaker 1: what about regionally, I mean, do you focus on only 355 00:19:40,680 --> 00:19:42,439 Speaker 1: the US? Do you look at what's going on in 356 00:19:42,440 --> 00:19:47,000 Speaker 1: Europe emerging markets? So our primary expertise is in the US. 357 00:19:47,080 --> 00:19:49,600 Speaker 1: We do look at the international markets, and we we 358 00:19:49,680 --> 00:19:53,359 Speaker 1: think after a decade of underperforming that the international markets 359 00:19:53,359 --> 00:19:56,080 Speaker 1: are also poised to do better. So we like the 360 00:19:56,160 --> 00:19:59,840 Speaker 1: developed markets this year again, we would do that probably 361 00:20:00,000 --> 00:20:02,600 Speaker 1: where e t f s or some active managers. We 362 00:20:02,720 --> 00:20:05,000 Speaker 1: also think the emerging markets are probably one of the 363 00:20:05,080 --> 00:20:08,480 Speaker 1: better opportunities in the globe. There's a lot more uncertainty there, 364 00:20:08,520 --> 00:20:11,480 Speaker 1: there's a lot more volatility, but as long as you 365 00:20:11,480 --> 00:20:13,400 Speaker 1: can put a small percentage there, we think you can 366 00:20:13,400 --> 00:20:16,040 Speaker 1: buy some e t f s in the emerging market 367 00:20:16,080 --> 00:20:18,840 Speaker 1: area and you'll be well rewarded. Rewarded on a twelve 368 00:20:18,840 --> 00:20:22,200 Speaker 1: month basis um. Just to understand that there's a lot 369 00:20:22,240 --> 00:20:24,679 Speaker 1: more risk associated with it. And in terms of the 370 00:20:24,680 --> 00:20:27,320 Speaker 1: emerging markets, we think they're about six to twelve months 371 00:20:27,320 --> 00:20:30,080 Speaker 1: behind the United States in terms of trying to deal 372 00:20:30,119 --> 00:20:32,080 Speaker 1: with COVID. But we do think you're gonna have a 373 00:20:32,119 --> 00:20:36,280 Speaker 1: global economic recovery and that helps the emerging markets, all right, David, 374 00:20:36,720 --> 00:20:39,280 Speaker 1: we have inflation, and one of the discussions that Matt 375 00:20:39,320 --> 00:20:41,760 Speaker 1: and I continue to have is, you know, we know 376 00:20:41,880 --> 00:20:44,240 Speaker 1: the feed is retired the term transitory, but a lot 377 00:20:44,280 --> 00:20:46,840 Speaker 1: of folks that we talked to on this program talk 378 00:20:46,840 --> 00:20:51,200 Speaker 1: about inflation ebbing materially in the second half of the years. 379 00:20:51,240 --> 00:20:55,240 Speaker 1: That's something you ascribe to. So the question is what's 380 00:20:55,280 --> 00:20:57,800 Speaker 1: materially We think that inflation is going to start to 381 00:20:57,840 --> 00:21:00,199 Speaker 1: move lower, you think we think the comparisons start to 382 00:21:00,200 --> 00:21:04,800 Speaker 1: get easier by uh June July, August. We think inflation 383 00:21:04,920 --> 00:21:07,520 Speaker 1: ultimately settles down and like the three and a half 384 00:21:07,600 --> 00:21:10,480 Speaker 1: to four percent range and then then goes lower from there. 385 00:21:10,520 --> 00:21:12,240 Speaker 1: But we don't think you're going back to two percent, 386 00:21:12,600 --> 00:21:14,280 Speaker 1: But we don't think you're going to stay at seven 387 00:21:14,359 --> 00:21:19,480 Speaker 1: or eight percent. So you do think UM inflation is 388 00:21:19,600 --> 00:21:22,439 Speaker 1: here to stay UM to a point? What does that 389 00:21:22,520 --> 00:21:26,080 Speaker 1: mean the Fed has to do to fight it? Well, 390 00:21:26,080 --> 00:21:29,200 Speaker 1: we think the Fed is correctly raising rates this year, 391 00:21:29,359 --> 00:21:33,840 Speaker 1: and we think that as the logistics problems from that 392 00:21:33,920 --> 00:21:37,159 Speaker 1: our COVID related go into the rear view mirror, and 393 00:21:37,200 --> 00:21:41,160 Speaker 1: as the labor market settled down, UM inflation settles back 394 00:21:41,160 --> 00:21:43,320 Speaker 1: at the three and a half percent level, and we 395 00:21:43,359 --> 00:21:45,720 Speaker 1: think if the Fed has raised rates a number of 396 00:21:45,760 --> 00:21:49,480 Speaker 1: times this year, um, they will have correctly slowed inflation down. 397 00:21:49,480 --> 00:21:51,640 Speaker 1: And that's a very livable number, we think in terms 398 00:21:51,680 --> 00:21:55,280 Speaker 1: of the stock market. Uh, inflation under three and a 399 00:21:55,320 --> 00:21:58,520 Speaker 1: half percent is very good for the long term. When 400 00:21:58,560 --> 00:22:02,119 Speaker 1: inflation gets above percent on a longer term basis, and 401 00:22:02,200 --> 00:22:04,600 Speaker 1: we don't think that's going to happen, that typically is 402 00:22:04,600 --> 00:22:07,200 Speaker 1: a negative for the stock market, So we don't think 403 00:22:07,200 --> 00:22:09,719 Speaker 1: we're gonna get there. We think we're in a sweet 404 00:22:09,760 --> 00:22:13,320 Speaker 1: spot of the equity markets where you have a good economy, 405 00:22:13,680 --> 00:22:16,880 Speaker 1: inflation should be manageable, interest rates are still relatively low, 406 00:22:16,920 --> 00:22:20,800 Speaker 1: so stocks can do okay over time. David, what's the 407 00:22:20,880 --> 00:22:25,080 Speaker 1: best idea that you've heard recently and maybe actually actioned 408 00:22:25,119 --> 00:22:28,960 Speaker 1: on it? Well, generally, as you know, we look at 409 00:22:28,960 --> 00:22:31,040 Speaker 1: things at six to twelve months. So what I might 410 00:22:31,080 --> 00:22:34,000 Speaker 1: put out as a good stock idea today probably looks 411 00:22:34,040 --> 00:22:36,440 Speaker 1: pretty stupid today, but six and twelve months out we 412 00:22:36,480 --> 00:22:38,879 Speaker 1: think will make you money. Uh. So you know, we 413 00:22:39,040 --> 00:22:41,919 Speaker 1: like a lot of stocks here again longer term, so 414 00:22:42,040 --> 00:22:46,520 Speaker 1: companies like Comcast, FedEx Us, Bancorp, Metronic, and Gilead. On 415 00:22:46,560 --> 00:22:49,119 Speaker 1: the value side, we think are really good businesses at 416 00:22:49,119 --> 00:22:52,239 Speaker 1: a very attractive prices. On the growth side, Google had 417 00:22:52,280 --> 00:22:55,560 Speaker 1: a great quarter, Microsoft had a great quarter, Thermo Fisher 418 00:22:55,600 --> 00:22:58,320 Speaker 1: had a great quarter, and you're paying about twenty to 419 00:22:58,480 --> 00:23:02,560 Speaker 1: twenty four times earnings of those companies, which is okay 420 00:23:02,560 --> 00:23:05,080 Speaker 1: for great growth company. So we think that sort of 421 00:23:05,200 --> 00:23:09,040 Speaker 1: basket of stocks is a very good place to start, 422 00:23:09,160 --> 00:23:11,320 Speaker 1: and we'd be buying, um, you know, into any sort 423 00:23:11,320 --> 00:23:13,679 Speaker 1: of down days here. All right, David, thank you so 424 00:23:13,720 --> 00:23:16,400 Speaker 1: much for joining us. We appreciate you sharing your thoughts here, 425 00:23:16,400 --> 00:23:19,360 Speaker 1: sharing some names that you guys are looking at at 426 00:23:19,400 --> 00:23:23,720 Speaker 1: the moment. H David Kat's President in chief investment officer 427 00:23:23,840 --> 00:23:29,800 Speaker 1: Matrix Asset Advisers here. Thanks for listening to the Bloomberg 428 00:23:29,840 --> 00:23:33,240 Speaker 1: Markets podcast. You can subscribe and listen to interviews with 429 00:23:33,320 --> 00:23:38,080 Speaker 1: Apple Podcasts or whatever podcast platform you prefer. I'm Matt Miller. 430 00:23:38,400 --> 00:23:42,639 Speaker 1: I'm on Twitter at Matt Miller. Pet On Ball Sweeney 431 00:23:42,640 --> 00:23:45,280 Speaker 1: I'm on Twitter at pt Sweeney. Before the podcast, you 432 00:23:45,320 --> 00:23:47,680 Speaker 1: can always catch us worldwide at Bloomberg Radio.