WEBVTT - What's Next In The Apple, Epic Saga? 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 0:00:11.560 --> 0:00:15.600 with essential market moving news. Find the Bloomberg Markets podcast 0:00:15.600 --> 0:00:18.439 called Apple Podcasts or wherever you listen to podcasts and 0:00:18.480 --> 0:00:22.439 at Bloomberg dot com slash podcast. Now, let's talk to 0:00:22.680 --> 0:00:26.120 the founder of Mountain. This is a company that builds 0:00:26.160 --> 0:00:32.879 advertising software for brands to drive UM conversations, conversions, revenue, 0:00:32.920 --> 0:00:37.040 site visits, all you can imagine. Really, it's basically a 0:00:37.120 --> 0:00:43.640 digital advertising tool and it's so important. Um the uh, 0:00:43.680 --> 0:00:46.559 the Apple ecosystem to this world. Mark Douglas is the 0:00:46.560 --> 0:00:48.479 CEO and founder of Mountain. He joins us now to 0:00:48.520 --> 0:00:50.920 talk about what's happened just now at the app Store 0:00:50.960 --> 0:00:54.480 and Epic in this court ruling. Um, Mark, give us 0:00:54.520 --> 0:00:57.680 your take first off on um on how important the 0:00:57.720 --> 0:01:01.400 app store is the Apple App Store for you know, 0:01:01.840 --> 0:01:06.880 the entire business. Yeah, so the the obviously, the iPhone 0:01:07.080 --> 0:01:11.320 is arguably one the most important devices ever created. And 0:01:11.400 --> 0:01:13.160 the way you get software on there is the App 0:01:13.240 --> 0:01:17.680 Store and Apple. People forget the first iPhone you could 0:01:17.680 --> 0:01:20.960 only use software from Apple. So when Apple opened that 0:01:21.160 --> 0:01:25.080 up and allowed people anyone to create software for the iPhone, 0:01:25.080 --> 0:01:27.800 they created this app store, and they started to c 0:01:28.480 --> 0:01:32.080 two developers for any revenue that's created on it. And 0:01:32.160 --> 0:01:37.120 so this ruling starts to essentially possibly shape loose that 0:01:38.319 --> 0:01:43.000 which I think arguably is really excessive. So Mark, I 0:01:43.040 --> 0:01:48.000 guess app Apple's contention has been that, yes, it's is 0:01:48.600 --> 0:01:53.040 by some measures excessive, you know from the app developers perspective, 0:01:53.040 --> 0:01:58.440 But boy, you get access to Apple's two billion device users. 0:01:58.800 --> 0:02:01.560 That's huge in tern is a value to uh these 0:02:01.600 --> 0:02:05.480 app developers. Now, Yeah, but the Apple also has a Mac, 0:02:05.520 --> 0:02:09.079 and I get access to all Mac users for free. 0:02:09.760 --> 0:02:14.320 So the and all and the software is often very similar, 0:02:14.480 --> 0:02:17.680 and you know the means of distribution there's the Internet. 0:02:18.200 --> 0:02:20.760 So I think that the ruling here. I think also 0:02:20.880 --> 0:02:22.960 one thing to keep in mind on this ruling, there 0:02:22.960 --> 0:02:26.080 were ten planes against Apple. Apple one nine of the 0:02:26.120 --> 0:02:30.360 ten planes, and and it it lost one of the planes, 0:02:30.480 --> 0:02:33.359 which I think has people, um, you know, kind of 0:02:33.800 --> 0:02:37.480 very excited about the possibility that the app store fees 0:02:37.560 --> 0:02:41.200 are going to go away. But um, I think people 0:02:41.240 --> 0:02:44.640 are just excited because Apple loss that the This is 0:02:44.680 --> 0:02:47.040 not a complete loss for Apple, and it's not a 0:02:47.120 --> 0:02:50.400 complete win for developers, but it starts to make a 0:02:50.480 --> 0:02:54.240 dent in in what I think is, clearly my opinion, 0:02:54.360 --> 0:02:57.280 is a monopoly. But the judge did not rule a monopoly. 0:02:57.320 --> 0:03:01.000 They just ruled that was unfair competition, and developers can 0:03:01.040 --> 0:03:05.160 now make changes that potentially eating that, you know, retain 0:03:05.360 --> 0:03:08.200 some of that. If I'm a user, I want the 0:03:08.280 --> 0:03:10.360 money for the app to go to the person that 0:03:10.440 --> 0:03:13.359 created I run, not to Apple that you know, that's 0:03:13.440 --> 0:03:16.760 my personal perspective. Let me make this personal for a second, 0:03:16.760 --> 0:03:18.400 because I always pull out of your bio mark that 0:03:18.440 --> 0:03:21.840 you grew up in the Bronx near Yankee Stadium, and 0:03:22.880 --> 0:03:26.160 you know, you're a normal person, and you went out 0:03:26.200 --> 0:03:29.600 west and started a bunch of um your own companies, 0:03:29.800 --> 0:03:34.000 and now have created this incredibly successful business and you're 0:03:34.000 --> 0:03:36.640 living the American dream. You fly to work in your 0:03:36.640 --> 0:03:38.960 own private plane every day. I don't know if you 0:03:39.000 --> 0:03:40.440 really do that, but you could if you wanted to, 0:03:40.480 --> 0:03:44.920 because you're a pilot. So isn't this um a story 0:03:45.080 --> 0:03:49.680 also uh from Apple's perspective of private property, of the 0:03:49.720 --> 0:03:52.760 American dream of you know, a company that builds something 0:03:52.760 --> 0:03:56.200 and gets to control how it's used. Right, Yeah, an 0:03:56.280 --> 0:04:00.680 Apple sells me and you know millions a hundreds of 0:04:00.720 --> 0:04:04.040 millions of other people are an incredible device and we 0:04:04.200 --> 0:04:07.720 gladly while gladly, but we pay over a thousand dollars 0:04:07.720 --> 0:04:11.720 devid device and then and then and and then they say, oh, 0:04:11.760 --> 0:04:13.560 and by the way, if you want to use anything 0:04:13.600 --> 0:04:17.360 on that advice were it takes of that also even 0:04:17.360 --> 0:04:20.080 though we didn't create what you're using. Yeah, but dude, 0:04:20.120 --> 0:04:22.800 for them that they made the device, they made the store. 0:04:22.880 --> 0:04:25.560 That's that's a good for good for Apple. Shouldn't they 0:04:25.560 --> 0:04:27.560 be able to do what they want with their own stuff? 0:04:28.560 --> 0:04:32.039 Well maybe, But that's also kind of a plastic example 0:04:32.120 --> 0:04:36.840 of a monopoly. And that was the argument that was 0:04:36.960 --> 0:04:39.720 made here, and the judge didn't go so far as 0:04:39.720 --> 0:04:43.400 to say it's a monopoly. Um And monopolies are generally 0:04:43.480 --> 0:04:47.080 anti competitive. It's not another competing app store, for example, 0:04:47.440 --> 0:04:51.440 with you know, a Apple devices, um and of accept 0:04:51.520 --> 0:04:54.479 the profit. And I think this ruling will potentially have 0:04:54.600 --> 0:04:57.200 some dent on Apple's profit if you're an investor. That's 0:04:57.240 --> 0:04:59.840 why it's one of the reasons that stock drops. But 0:05:00.320 --> 0:05:03.320 you know, the ruling is it should Apple take a 0:05:03.440 --> 0:05:07.360 cut of the whole equal system? And the ruling is 0:05:07.520 --> 0:05:11.560 is that potentially not? And um, but yeah, Apple's a 0:05:11.600 --> 0:05:15.040 great success story they've been. That's a lot. It's quite frankly, 0:05:15.080 --> 0:05:17.800 they make a lot without taking out the development well 0:05:17.839 --> 0:05:20.000 so as so is Mountain. We were talking, by the way, 0:05:20.000 --> 0:05:25.320 earlier about your acquisition of Ryan Reynolds. Ryan Reynolds Maximum Effort, 0:05:25.680 --> 0:05:29.960 such a cool agency, and um, we were each giving 0:05:30.000 --> 0:05:33.880 our favorite Ryan Reynolds movies. What's yours? Just out of curiosity, Mark, 0:05:33.920 --> 0:05:40.200 what's what's your favorite riots Ryan reylds production? Um, I'm terrible, nately, 0:05:40.279 --> 0:05:44.360 but that's Ryan asking question over dinner two months ago. 0:05:44.640 --> 0:05:48.760 And it was the vampire movie he was in. Oh 0:05:48.800 --> 0:05:51.600 my god, I'm blanking on a name. This is so embarrassing. 0:05:52.160 --> 0:05:54.960 But it's not. It's not. It's because I don't remember 0:05:54.960 --> 0:05:56.760 the Vampire movie either, And I feel like I've seen 0:05:56.800 --> 0:06:01.320 everything that he's been well states of movie he made, 0:06:01.440 --> 0:06:05.080 with the wedding movie he made, and that's what I'm 0:06:05.120 --> 0:06:09.200 talking about the proposal. I loved it too, also, it's amazing. Yeah, 0:06:09.240 --> 0:06:12.039 it was a great movie. I watched that a few 0:06:12.080 --> 0:06:14.280 months like two months ago, and I've seen a lot 0:06:14.320 --> 0:06:16.440 of Ryan movies. But I did a little refresh your 0:06:16.520 --> 0:06:18.760 course once I was put on the spot, and he 0:06:18.800 --> 0:06:22.080 didn't ask that question to him. He doesn't go around, Bud, 0:06:22.120 --> 0:06:25.040 what of my movies? Do you like? Someone else at 0:06:25.080 --> 0:06:29.560 the table at Okay, our producer Sarah Lives Lives. He 0:06:29.720 --> 0:06:33.800 told me that Blade Trinity is the vampire movie he's done. 0:06:33.839 --> 0:06:38.120 So um, that's correct. Owner Mark Douglas, founder of Mountain 0:06:41.640 --> 0:06:44.039 Just get over to David Kotalk right now, Chairman and 0:06:44.120 --> 0:06:48.159 chief investment officer at Cumberland Advisors. It's always great to 0:06:48.160 --> 0:06:52.239 get David's thoughts on the markets and the economy. David, 0:06:52.279 --> 0:06:56.039 what what do you make of this resurgence of the 0:06:56.120 --> 0:07:03.280 virus along with the incredible resistance of American people to vaccines, 0:07:03.320 --> 0:07:05.680 Not just Americans, but you know in the Western world 0:07:05.720 --> 0:07:10.040 there's such resistance to these vaccines. It looks like it's 0:07:10.040 --> 0:07:14.280 gonna the pandemic may last longer than we may have anticipated. Yeah, 0:07:14.360 --> 0:07:18.040 I fear it will. Um um. And of course there's 0:07:18.120 --> 0:07:23.320 mixed views of this vaccine hesitancy is something that we 0:07:23.400 --> 0:07:27.880 have seen in the past. We don't see a way 0:07:27.920 --> 0:07:32.520 to resolve it. I found a quote from Robert Kennedy 0:07:32.600 --> 0:07:38.440 in nineteen sixty four and he said, one of the 0:07:38.520 --> 0:07:44.080 persons are against everything all the time, and I guess 0:07:44.160 --> 0:07:50.400 that characterizes uh, this human condition. So we don't vaccinate, 0:07:50.560 --> 0:07:54.200 we get the results. I'm a little worried. Mike ostar 0:07:54.280 --> 0:07:57.200 home in his By the way, David, it's interesting because 0:07:57.840 --> 0:08:01.760 his son, Yeah, UM is one of the biggest anti 0:08:01.840 --> 0:08:07.200 vaxers who supports conspiracy theories about things like you know, 0:08:07.280 --> 0:08:11.680 Bill Gates working with UM the global elite, to inject 0:08:11.800 --> 0:08:15.760 us all with like five g nanobots. It's so true. 0:08:15.760 --> 0:08:18.840 What a quirk of fate. You know, Why can't somebody 0:08:18.880 --> 0:08:22.640 come up with something that says Ivermectin has a Chinese 0:08:22.760 --> 0:08:27.160 chip instead of Maderna. I mean, we have a crazy 0:08:27.280 --> 0:08:31.480 world and that's the nature of the human being. And unfortunately, 0:08:31.520 --> 0:08:34.000 what that does is extend the pandemic and it makes 0:08:34.000 --> 0:08:38.480 it works. It gives more time for more mutations, I 0:08:38.559 --> 0:08:43.040 was saying. Mike Osterholmen his podcast issued a warning because 0:08:43.080 --> 0:08:45.520 we're going to find out what happens when we open 0:08:45.559 --> 0:08:48.640 these large school systems, and of course we hope and 0:08:48.720 --> 0:08:50.559 pray that we don't have a lot of sick people, 0:08:51.160 --> 0:08:55.200 but we're doing it and that's the nature of the evolution. 0:08:55.320 --> 0:08:57.120 So I'm I don't think we're rather than Woods on 0:08:57.200 --> 0:09:00.720 delta virus our positions in their ports, oios in our 0:09:00.760 --> 0:09:04.479 management says, this is a pandemic and it's still underway 0:09:04.600 --> 0:09:09.040 worldwide and it's too soon to declare that it's over all. Right. 0:09:09.120 --> 0:09:11.560 So the pandemic is an issue for you, David, and 0:09:11.600 --> 0:09:14.840 for these markets. So is China. Um. You know, we've 0:09:14.840 --> 0:09:18.480 seen the crackdown that China has had on a number 0:09:18.480 --> 0:09:21.679 of its industries and the impact it's had on Western investors. 0:09:21.720 --> 0:09:27.280 How do you kind of contextualized that? Well, this is interesting. 0:09:27.400 --> 0:09:30.400 We published on this last weekend and on our morning 0:09:30.440 --> 0:09:34.680 call this morning, we had an extensive conversation uh Matt 0:09:34.760 --> 0:09:39.199 McLear and Bill Witheral and others on the call about 0:09:39.240 --> 0:09:43.400 the difference between the A shares and the eight shares 0:09:43.920 --> 0:09:46.480 and the old days the eight shares the A d 0:09:46.800 --> 0:09:53.120 R s the US capital market rules were accepted worldwide 0:09:53.240 --> 0:09:56.439 is the highest standard. And now it looks like this 0:09:56.520 --> 0:09:59.880 is a rotation or reversal, and we see the a 0:10:00.080 --> 0:10:02.880 Jing is going to open a Beijing stock exchange for 0:10:03.360 --> 0:10:07.400 small caps and new startup companies. So what does it 0:10:07.520 --> 0:10:11.160 mean if China says we don't need New York, we 0:10:11.200 --> 0:10:14.839 don't need the capital markets anymore. We're big enough, we're 0:10:14.880 --> 0:10:18.360 advanced enough. The rules have changed, the game has changed. 0:10:18.720 --> 0:10:22.520 That's a monumental shift between the two largest economies of 0:10:22.559 --> 0:10:27.080 the world. We're actually looking at the A shares and 0:10:27.920 --> 0:10:30.520 we haven't taken the position yet, but we're looking at 0:10:30.520 --> 0:10:34.840 the A share side and we're underweight China, and it's 0:10:35.679 --> 0:10:39.240 really in the eighth share side that we're underweight. So 0:10:40.080 --> 0:10:43.400 this will be fascinating to see how this turns out. 0:10:43.480 --> 0:10:47.400 It's huge, two largest economies in the world face off 0:10:47.440 --> 0:10:50.320 with each other. Yeah, and George Soros, I thought had 0:10:50.360 --> 0:10:54.840 an interesting opinion piece. I wonder what your take is. 0:10:55.000 --> 0:10:58.880 He was basically saying, Um, you know, put aside the 0:10:59.440 --> 0:11:02.720 profit to for a second, you can't be supporting this 0:11:02.840 --> 0:11:08.520 anti democratic regime from a moral standpoint. Well, that's that's 0:11:08.559 --> 0:11:11.560 a that's a debate. In fact, you know, there's there 0:11:11.559 --> 0:11:15.000 are e t s which are built on E s 0:11:15.040 --> 0:11:19.240 G standards and governance. They would say stay away from China. 0:11:20.080 --> 0:11:24.920 Um that there is a the behavior of large institution 0:11:25.040 --> 0:11:27.839 sorrows Cathy arc What do you do, do you go there, 0:11:27.880 --> 0:11:31.800 don't you go there? Where do you draw the line 0:11:32.000 --> 0:11:38.560 between the profit and the ethics or morals? And how 0:11:38.600 --> 0:11:41.480 do you do it? And are there ways to do 0:11:41.640 --> 0:11:46.400 it so they are aligned because and that's a difficult 0:11:47.040 --> 0:11:53.400 one for me personally, because I'm involved in policy organizations, 0:11:53.480 --> 0:11:56.840 and in the policy organization you want the best outcome 0:11:56.920 --> 0:12:00.280 from the world. And I'm a money manager. They have 0:12:00.400 --> 0:12:02.719 clients and they say, hey, your job is to make 0:12:02.720 --> 0:12:06.320 a profit for me, and so there's a tension between 0:12:06.360 --> 0:12:12.839 those things. A very profound question for the financial services industry. Hey, David, 0:12:12.840 --> 0:12:14.599 thank you so much for joining us. As always, we 0:12:14.600 --> 0:12:18.400 always appreciate your perspective. David Kotok, chairman and chief investment 0:12:18.400 --> 0:12:21.480 Officer of Cumbland Advisors, over about four billion dollars in 0:12:21.520 --> 0:12:25.800 assets under management, and he is located today out in Colorado. 0:12:25.880 --> 0:12:30.800 Good for him. All Right, We've got markets this year 0:12:30.880 --> 0:12:33.360 hitting nearly all time highs, nearly on a on a 0:12:33.440 --> 0:12:35.800 daily basis. Yet we have Wall Street strategies coming out 0:12:35.800 --> 0:12:39.679 with increasing caution. Let's get a view from the street. 0:12:39.679 --> 0:12:42.320 If you are Katarina Semeneti, Senior Vice president and Private 0:12:42.360 --> 0:12:45.520 wealth advisor for Morgan Stanley Private Wealth Management, joining us 0:12:45.559 --> 0:12:47.600 on the phone from the town of brotherly love. That 0:12:47.640 --> 0:12:50.959 would be Philadelphia, Katarina, thanks so much for joining us. 0:12:51.160 --> 0:12:54.440 What are you hearing from your clients as you talk 0:12:54.520 --> 0:12:58.840 to them over the last several weeks and months, Well, 0:12:58.880 --> 0:13:02.200 thank you for having me on the show. And you're right, 0:13:02.559 --> 0:13:06.520 it's um. You know, it's been crazy market and investors 0:13:06.559 --> 0:13:08.960 can't ignore the fact that S and T five hundred 0:13:09.040 --> 0:13:13.120 is up over twenty percent UM so far for the year. 0:13:13.400 --> 0:13:15.600 And as exciting as it might be, you know, seeing 0:13:15.600 --> 0:13:17.760 your portfolio go up this much, you know, it also 0:13:18.160 --> 0:13:23.360 raises concerns and investors are naturally worried about the economy 0:13:23.480 --> 0:13:27.000 staying power. Um. They're looking at the position of their 0:13:27.040 --> 0:13:32.040 portfolio and they're hearing about the negative impact on the 0:13:32.040 --> 0:13:36.200 future earnings of the companies based on everything they're seeing, 0:13:36.240 --> 0:13:41.280 including the labor shortages, strice pressures, supply chain interruptions. You know, 0:13:41.320 --> 0:13:43.680 it's something that we see every day. You know, there's 0:13:43.679 --> 0:13:46.319 a lot of talk about inflation, and it's one thing 0:13:46.400 --> 0:13:50.000 talking about it theoretically, and another thing is when the 0:13:50.040 --> 0:13:53.880 consumers and investors see the increased cost of goods and 0:13:53.960 --> 0:13:57.480 services the normal basket. You know, that is something that 0:13:57.760 --> 0:14:01.200 is their day to the experience, so naturally, you know, 0:14:01.240 --> 0:14:03.719 it's something that on our side, from the investment and 0:14:03.800 --> 0:14:08.080 vice perspective, we are advocating to risking portfolios. We're advocating 0:14:08.800 --> 0:14:13.360 taking profits reasonable profits within uh certain parts of the portfolio, 0:14:13.440 --> 0:14:16.440 specifically when it comes to the market indexes. But this 0:14:16.520 --> 0:14:19.080 would be a great time to take profit from S 0:14:19.120 --> 0:14:22.320 and D by hundred from Russell two thousand in reposition 0:14:22.560 --> 0:14:28.000 into individual equities and very carefully selected um specific sectors. 0:14:28.080 --> 0:14:30.640 Like so it's time to pick stocks. I mean, Lisa 0:14:30.680 --> 0:14:32.960 Shallott was on with US last week and she said 0:14:33.480 --> 0:14:36.640 ten to fifteen percent pullback isn't unlikely by the end 0:14:36.680 --> 0:14:40.800 of the year. I agree with her. You know, as 0:14:40.840 --> 0:14:43.360 a matter of fact, like everything that we're hearing from 0:14:43.400 --> 0:14:46.360 the US corporations is that all of the pressures that 0:14:46.400 --> 0:14:49.520 I already mentioned are going to be resulting in the 0:14:49.600 --> 0:14:52.440 earnings that are not going to be quite as exciting 0:14:52.520 --> 0:14:54.720 as what we have been seeing so far. There's a 0:14:54.760 --> 0:14:58.560 lot of negative pressures. Intend to fifteen percent correction in 0:14:58.640 --> 0:15:01.520 this space would be there, very much expected, but it 0:15:01.600 --> 0:15:05.320 also presents great buying opportunity for investors as long as 0:15:05.360 --> 0:15:08.800 they are strategically prepared for that. So if I want 0:15:08.800 --> 0:15:12.320 to de risk my portfolio, how do I do that? 0:15:12.360 --> 0:15:16.000 Though I just raise cash? Or how do I do that? 0:15:17.280 --> 0:15:20.640 I would take profits from the broad market sectors profits 0:15:20.640 --> 0:15:22.880 from S and P five hundered from Russell two thousand, 0:15:23.200 --> 0:15:26.440 and look specifically at sectors that are well positioned for 0:15:26.640 --> 0:15:32.160 this environment. Sectors like healthcare, sectors like financials, like consumer staples. 0:15:32.480 --> 0:15:36.320 Were less excited about consumer discretionary for example, because we 0:15:36.440 --> 0:15:40.440 feel like the buying power of consumer went down. Stimulus 0:15:40.520 --> 0:15:43.240 check already went out. You know that they are not 0:15:43.240 --> 0:15:45.920 not that many of them are expected to go forward, 0:15:46.240 --> 0:15:49.320 and all of these discretionary purchases that we so initially 0:15:49.360 --> 0:15:52.600 happening are really subsiding right now. We see a lot 0:15:52.640 --> 0:15:55.800 of appetite for services still. But coming back to the 0:15:55.840 --> 0:15:58.480 sectors that I've mentioned, health care, for example, is a 0:15:58.520 --> 0:16:00.880 perfect sector to be There's a lot of pent up 0:16:00.960 --> 0:16:05.080 demand in that state. Both pharmaceutical companies and healthcare in general. 0:16:05.480 --> 0:16:10.800 Financials are historically positively correlated for writing interest rate environment, 0:16:11.120 --> 0:16:15.440 so banks, um steam and facilitators are very well positioned. 0:16:15.640 --> 0:16:18.640 So again We'll have to look at valuations, we have 0:16:18.760 --> 0:16:21.000 to look at future earnings, we have to look at 0:16:21.040 --> 0:16:25.640 the overall positioning or these individual equities within their sectors. 0:16:25.680 --> 0:16:28.560 But this is a great time to pick up some 0:16:28.680 --> 0:16:32.160 high quality positions and be ready for a market callback 0:16:32.280 --> 0:16:34.560 and be ready to you know, have some cash on 0:16:34.640 --> 0:16:38.080 the sidelines in order to be making the strategic purchases. 0:16:39.760 --> 0:16:42.360 What when you look at individual stocks, what are you 0:16:42.400 --> 0:16:45.000 looking at? What do you like here? Or how do 0:16:45.040 --> 0:16:48.200 you go ahead and screen for those We we look 0:16:48.200 --> 0:16:52.800 at quality, you know, we look at the valuation, the 0:16:53.040 --> 0:16:56.640 earning positioning. In other words, you know, when we are 0:16:56.760 --> 0:17:00.200 discussing all the cost pressures, there are certain sect ares 0:17:00.200 --> 0:17:03.760 and certain stocks that are someone just just sensitized to 0:17:04.080 --> 0:17:07.680 this risk. So that's where security selection comes into play. 0:17:07.800 --> 0:17:10.080 You know, this is not you know, there are going 0:17:10.119 --> 0:17:12.560 to be times again when we look at broad market 0:17:12.600 --> 0:17:14.960 index ism they will make a lot of sense. But 0:17:15.160 --> 0:17:19.240 right now, you know, looking at quality, looking at dividend fields, 0:17:19.520 --> 0:17:23.639 looking at just overall, how is this certain positions a 0:17:23.720 --> 0:17:27.760 certain certain company positions within their overall sector, what is 0:17:27.800 --> 0:17:30.960 their competitive advantage? This is the time to to make 0:17:31.000 --> 0:17:33.960 this deep dive analysis. You know, and know what you 0:17:34.040 --> 0:17:37.760 own going into this market, this mid cycle transition, as 0:17:37.760 --> 0:17:40.360 we see, there's going to be a lot of volatility, 0:17:40.600 --> 0:17:42.840 there's going to be a lot of noise, and knowing 0:17:43.520 --> 0:17:48.719 what we own, having higher quality portfolios, um having this 0:17:48.720 --> 0:17:52.359 this very thoughtful type of accidilication. This is the time 0:17:52.400 --> 0:17:55.600 for that. Karina, just thirty seconds, do you recommend any 0:17:55.840 --> 0:17:58.280 bonds in your portfolio? We got the tenure at one 0:17:58.280 --> 0:18:02.439 point three. Absolutely, there's always time for the bonds in 0:18:02.440 --> 0:18:05.080 the portfolio. This is like when you're building a house. 0:18:05.160 --> 0:18:08.400 You absolutely need that foundation. You know, this is our 0:18:09.000 --> 0:18:12.880 risk management. But with bonds, just like with stocks, this 0:18:13.000 --> 0:18:15.080 is the time to look at quality and this is 0:18:15.119 --> 0:18:17.760 the time to make sure that the bonds positioning the 0:18:17.800 --> 0:18:20.440 portfolio makes a lot of sense. You know, get away 0:18:20.440 --> 0:18:24.200 from high yield, get away from those higher risk exposures 0:18:24.200 --> 0:18:26.160 and bonds, you know, and look at the very very 0:18:26.240 --> 0:18:29.760 high quality of strategic positioning in that sector. But they 0:18:29.840 --> 0:18:32.959 always make sense in the portfolio. Katerina, thanks so much 0:18:32.960 --> 0:18:36.400 for joining us, Katerina Seminetti. They're a private wealth advisor, 0:18:36.520 --> 0:18:41.399 Senior VP at Morgan Stanley Private Wealth Management. Great to 0:18:41.440 --> 0:18:45.040 get your outlook on the market. Especially as UM we 0:18:45.920 --> 0:18:49.200 bounce along the top here, it's time maybe to take 0:18:49.240 --> 0:18:56.680 some profits. Katerina tells us this is Bloomberg. Just get 0:18:56.680 --> 0:18:59.399 over at Matt Maldy now managing director and chief market 0:18:59.480 --> 0:19:03.239 strategy did Miller tay back And there's a number of 0:19:03.280 --> 0:19:06.440 things that I want to get to with you, Matt, 0:19:06.480 --> 0:19:09.560 but I'm gonna start off with UM rates. We're looking 0:19:09.560 --> 0:19:12.560 at a tenure that's now coming back down to one 0:19:12.600 --> 0:19:16.440 thirty two, and it has looked like since Jackson Hole 0:19:16.520 --> 0:19:21.800 it was rising from one UM and headed for one forty. 0:19:22.080 --> 0:19:26.120 Where do you see rates and y well, I mean, yeah, 0:19:26.320 --> 0:19:28.400 they have been climbing here. It's it's very interesting because 0:19:28.440 --> 0:19:30.720 we had that you know, that period from last August 0:19:30.760 --> 0:19:34.159 August for two thousand twenties through March where obviously they 0:19:34.160 --> 0:19:37.400 were training higher from his you know, crazy historic low level, 0:19:37.880 --> 0:19:39.560 and then of course we went for four or five 0:19:39.600 --> 0:19:43.200 months there from March to early August where it was 0:19:43.240 --> 0:19:45.920 going down. Now they're keeping back up. I think they're 0:19:45.960 --> 0:19:48.359 poised to go higher. I mean, this whole issue with inflation, 0:19:48.920 --> 0:19:51.160 I think is is a big concern. And I'm looking 0:19:51.200 --> 0:19:53.600 at the one point three seven level that was the 0:19:53.680 --> 0:19:55.960 high we saw a couple of times in August and 0:19:55.960 --> 0:19:58.800 the once just a little over a week ago. But 0:19:58.880 --> 0:20:00.480 the real number gonna be one. It for because you 0:20:00.480 --> 0:20:02.040 always need to see more of it, more than just 0:20:02.080 --> 0:20:06.000 a slight move above any key resistance level. At one 0:20:06.000 --> 0:20:07.920 point four, that's gonna be a problem. I'll pose a 0:20:08.000 --> 0:20:10.640 John Farrell question for you, do we get to two 0:20:10.640 --> 0:20:15.280 percent or one percent? For well, I mean, the thing 0:20:15.359 --> 0:20:18.000 is I I definitely think we get to two percent. First. 0:20:18.480 --> 0:20:20.560 The one thing, of course, that we're in the seasonally 0:20:21.000 --> 0:20:23.439 a tough time for the stock market. People get worried 0:20:24.080 --> 0:20:27.960 if there's a severe correction rather than just a mild one. Uh, 0:20:28.000 --> 0:20:29.840 you'd have flight to safety that may take us down 0:20:29.880 --> 0:20:32.320 to one percent. But I just don't see that from happening. 0:20:32.320 --> 0:20:34.400 I think we could very well see a correction, but 0:20:34.680 --> 0:20:36.960 not want to send it that low and then uh 0:20:36.760 --> 0:20:38.720 uh And I do think that right. I think the 0:20:38.840 --> 0:20:41.679 changing we get above one point four uh in the tenure, 0:20:41.760 --> 0:20:44.560 that's gonna signal important change in the near term trend 0:20:44.560 --> 0:20:46.160 FORER for interest rate, So that's going to be important. 0:20:46.560 --> 0:20:51.520 Him at um you know markets, equity markets hitting a 0:20:51.640 --> 0:20:54.120 new high seemingly on a daily basis. Yet we've seen 0:20:54.880 --> 0:20:57.159 Tom Keene this morning was just pointing out in his 0:20:58.080 --> 0:21:01.119 email inbox over the weekend a lot Wall Street strategist 0:21:01.160 --> 0:21:03.800 getting more and more cautious. Here, how do you think 0:21:03.840 --> 0:21:08.000 about these equity markets? Again, this wall of worry, everybody's 0:21:08.000 --> 0:21:12.200 been climbing it. But are we getting a little yes, exactly, 0:21:13.119 --> 0:21:15.520 And yeah, It's it's funny because as more people get 0:21:15.600 --> 0:21:18.160 more concerned, you tend to see that there's say, there's 0:21:18.160 --> 0:21:20.280 too many bears around, and then that should actually be 0:21:20.320 --> 0:21:23.960 a you know, a contrary contrary and indicator and and 0:21:24.440 --> 0:21:26.960 be bullish for the market. But I do understand why 0:21:26.960 --> 0:21:28.800 people are coming more more concerned. I mean, I'm just 0:21:28.840 --> 0:21:31.199 thinking and I'm in that boat. I mean, look just 0:21:31.280 --> 0:21:35.240 what we saw again today with the market opened very strongly. Uh, 0:21:35.280 --> 0:21:37.120 and now it's sold off. It's it's it's not down, 0:21:37.160 --> 0:21:40.480 it's down unchanged. All the NASDAC is down. But that's 0:21:40.480 --> 0:21:42.399 a definite And we've seen that for a couple of 0:21:42.480 --> 0:21:44.000 days in the last week. You know, we really saw 0:21:44.040 --> 0:21:46.560 it almost every day last week. We're seeing it again today. 0:21:46.760 --> 0:21:48.480 And we used to see just the opposite where the 0:21:48.480 --> 0:21:50.720 market opened down and then rallied then to the end 0:21:50.720 --> 0:21:52.480 of the day. And so this kind of change in 0:21:52.520 --> 0:21:55.240 trend is has got some people worried and and rightfully 0:21:55.280 --> 0:21:57.480 so I just think that with the concerns over inflation 0:21:57.560 --> 0:22:01.199 and maybe even stagflation, uh, those aren't good from markets. 0:22:01.200 --> 0:22:04.520 And you know, correcsitions are normal and healthy and there's 0:22:04.520 --> 0:22:07.359 nothing to worry about. But uh, do people do do 0:22:07.480 --> 0:22:09.560 need to be careful about them? But do we expect 0:22:09.600 --> 0:22:11.880 do you expect the correction? So many people have come out, 0:22:11.920 --> 0:22:15.639 from Deutsche Bank to Morgan Stanley to Goldman Sachs saying 0:22:15.640 --> 0:22:20.440 it's time and um, you know, maybe ten to fifteen percent. Yeah, 0:22:20.480 --> 0:22:22.680 I don't want to sound too alarming, but the one 0:22:22.680 --> 0:22:24.280 problem we get, we get is if we get to 0:22:24.359 --> 0:22:27.280 tender tender fifteen percent. Uh you're well, if you get 0:22:27.280 --> 0:22:28.920 to ten to twelve percent, I think you get the 0:22:29.000 --> 0:22:32.240 fifteen and I do think there's a good chance of that. 0:22:32.320 --> 0:22:34.240 And the reason why I say, why why would get there, 0:22:34.920 --> 0:22:38.840 why would accelerate, is because of this massive levels of 0:22:38.960 --> 0:22:40.800 leverage in the system. You know, this whole thing with 0:22:40.840 --> 0:22:43.040 margin dead. Margin dead isn't a problem when it's going up, 0:22:43.040 --> 0:22:45.520 it's when it rolls over. Well, sure enough, in July 0:22:45.680 --> 0:22:47.600 started to roll out a little bit. If it's starts 0:22:47.680 --> 0:22:50.400 if the markets down, people don't get margin calls until 0:22:50.440 --> 0:22:52.359 the market has gone down a certain amount. So the 0:22:52.359 --> 0:22:54.560 market goes down ten percent, it's almost certainly going to 0:22:54.680 --> 0:22:56.840 kick in some margin calls and therefore be a little 0:22:56.840 --> 0:22:59.360 bit more severe. Uh so it could be as much 0:22:59.359 --> 0:23:02.320 as fifteen to That may sound like a lot of alarming, 0:23:02.359 --> 0:23:04.080 but I think if people raise just a little bit 0:23:04.119 --> 0:23:06.480 of cash right now, then you're gonna be one here, 0:23:06.480 --> 0:23:07.920 will be gonna be the one who keeps your head. 0:23:07.960 --> 0:23:10.240 What of those around them are losing theirs or being 0:23:10.280 --> 0:23:11.960 forced to sell, and you're gonna be able to pick 0:23:12.040 --> 0:23:14.400 up some unbelievably great bargains. Yeah, that's kind of where 0:23:14.400 --> 0:23:15.920 I wanted to go, Matt, if I wanted to get 0:23:15.960 --> 0:23:18.639