Speaker 1: This is Bloomberg business Week. I'm Carole Masser and I'm
Speaker 1: Bloomberg Quick Takes Tim Stanibek. We're here every day bringing
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Speaker 1: You can also listen to our radio show at two
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Speaker 1: YouTube search Bloomberg Global News. This story, by the way, Katie,
Speaker 1: comes from Bloomberg business Week. It's found on the Bloomberg
Speaker 1: and Bloomberg dot com slash business Week. It's about how
Speaker 1: the work from home revolution. Initially we thought it would
Speaker 1: be a big step to women might finally finally be
Speaker 1: having it all. But as Bloomberg Business Week contributor and
Speaker 1: Peterson writes, it has also become a trap for women.
Speaker 1: So let's see what she has to say. She joins
Speaker 1: us from Loomie Island, Washington. Hey, and good to have
Speaker 1: you here with Katie and myself. So it was. I
Speaker 1: feel like this was like it to be the great
Speaker 1: um leveler, if you will um and it hasn't necessarily
Speaker 1: working from home played out like we thought for women.
Speaker 1: You know, it's hard because I think, like before the pandemic,
Speaker 1: if you would say to moms in particular and sexual families,
Speaker 1: if you would say, hey, what if you could do
Speaker 1: your job from home and you could be there for
Speaker 1: pickup and to facilitate a bunch of other stuff, and
Speaker 1: you could figure out where work would sit in your
Speaker 1: own life and you wouldn't have to commute and you
Speaker 1: wouldn't have to necessarily like but all the time putting
Speaker 1: on work clothes every day, Like would you choose that, right?
Speaker 1: And I think a lot of people said, yes, I
Speaker 1: would choose that it would make my life a lot easier.
Speaker 1: And what we've seen, which is not surprising given the
Speaker 1: state of different supports in the United States in particular
Speaker 1: right now, is that instead a lot of women who
Speaker 1: are have flexible work options have become a sort of
Speaker 1: one woman safety net. So they are providing the sort
Speaker 1: of support and care that maybe they split more equally
Speaker 1: with their husbands, maybe the school district provided a bit
Speaker 1: more of or maybe even just like child could care,
Speaker 1: infrastructure provided more of and so there's so many different
Speaker 1: sort of combinations that flexible work as a woman could take.
Speaker 1: And it's a beautifully reported piece. You say that you've
Speaker 1: conducted hundreds of interviews with women over the past two years.
Speaker 1: So I mean it's sort of walk us through the
Speaker 1: common denominator, because you can't paint a flexible work arrangement
Speaker 1: with the same brush. I mean, some people might have
Speaker 1: some children in different stages of life, maybe their spouse
Speaker 1: is in the office, maybe their spouses home. What was
Speaker 1: the sort of when you boiled all down the common
Speaker 1: element there, I would say that the people who are
Speaker 1: struggling the most would burnout right now are people who
Speaker 1: are working these flexible sorts of jobs where they have
Speaker 1: a much more control over how much time they're spending
Speaker 1: in their home and their partner, especially in heterosexual marriages,
Speaker 1: um doesn't have as much flex or is not taking
Speaker 1: as much flex and so what they're doing is they're
Speaker 1: essentially working this full time job for pay that they've
Speaker 1: been working for a long time, but then they're also
Speaker 1: taking on even more of that unpaid labor in the
Speaker 1: home and a lot of that includes what's often called
Speaker 1: like the mental load, right, so like keeping the list
Speaker 1: in their head of all of the different things that
Speaker 1: have to be happening right now, and so they are
Speaker 1: working all the time on their salary job and then
Speaker 1: also taking up a lot more of that other unpaid labor.
Speaker 1: And that includes even things like, oh, they don't have
Speaker 1: enough bus drivers for the school district, so I guess
Speaker 1: that I will pick up my kid every day after
Speaker 1: school instead of them taking the bus home, or something
Speaker 1: like oh, my kids sick and has to stay home.
Speaker 1: Used to be my husband and I would rotate who
Speaker 1: would stay home with him, But since I'm already in
Speaker 1: the home, I guess I'll just stay here and my
Speaker 1: work will be affected and then I'll need to stay
Speaker 1: it wait to put in that work then I missed.
Speaker 1: So basically it's like what's going on in relationships? So
Speaker 1: here we are. We've gone through the pandemic working from home.
Speaker 1: Women are like, wow, this could be really cool. Great,
Speaker 1: give me some flexibility, but still pursue my career and
Speaker 1: continue to move ahead. What's happening is what's happening internally
Speaker 1: within relationships or the husband are the partner, I guess
Speaker 1: has gone the male partner predominantly maybe in some cases,
Speaker 1: has gone back to work, and so when stuff happens
Speaker 1: at home, the woman is continue to work from home,
Speaker 1: but also adding on everything else. I love there's a
Speaker 1: picture in the story I'm looking at that I looked
Speaker 1: at at the terminal of like the nineteen fifties wife
Speaker 1: sending our kids off to school, you know, and she's
Speaker 1: kind of getting stuck. Yep. Well, I would say that
Speaker 1: this is also true. And I heard a lot of
Speaker 1: feedback after the piece was published. Even if you the
Speaker 1: woman in these heterosexual relationships, if they are making more money, right,
Speaker 1: if their job is ostensibly within the paradigm of the relationship,
Speaker 1: the more important one, if they have flex they are
Speaker 1: still the one who's taking up all of this extra labor.
Speaker 1: And I think it's really frustrating, right because like what
Speaker 1: is the solution? And something I asked some people like,
Speaker 1: is there anything that your company could do to make
Speaker 1: a better policy for you? And you know, everyone has
Speaker 1: small complaints about how their companies have orchestrated flexible work policies,
Speaker 1: like there are things that absolutely need to get better.
Speaker 1: But to the person, every single person told me that like, No,
Speaker 1: this is a societal thing and it's also a relationship
Speaker 1: thing and it's really hard to fix. Well, that's sort
Speaker 1: of getting to what I want to touch on, which
Speaker 1: is where does this go from here? Too? Because back
Speaker 1: to the question you posted at the beginning, you know,
Speaker 1: if I could tell you you wouldn't have to go
Speaker 1: into the office put on word clothes, you could be
Speaker 1: at home in these flexible work arrangements. I my gut
Speaker 1: feeling is that a lot of people, even with this,
Speaker 1: spurnout this uh sort of one woman safety that that
Speaker 1: you described. It doesn't feel like going into the office
Speaker 1: would fix that. No, Well, I think in some ways
Speaker 1: it would, because it would force you to find backup care, right,
Speaker 1: it would force you to figure out what, like what
Speaker 1: were people doing before? Right there there we had emergency
Speaker 1: plans for like oh, if the kid gets sick, we
Speaker 1: rotate turns off because we both conceive of our jobs
Speaker 1: as equal, right that we would one person goes and
Speaker 1: get that person, or like school districts has more buster
Speaker 1: first and really made that a priority. And so I
Speaker 1: think that there are different ways that you can solve
Speaker 1: this problem. But we're just like instead where people I
Speaker 1: think are it's been normalized that women are taking on
Speaker 1: more and more of this work. And if you look
Speaker 1: at things like the Deloitte Study of Women in Work
Speaker 1: that the numbers of burnout amongst women and mothers in
Speaker 1: particular in in office jobs is just guy rocketing and
Speaker 1: something has to give. And a lot of cases, I
Speaker 1: think you have women who are like, I can't do
Speaker 1: it anymore. The only way to make our family work
Speaker 1: now is for me not to work at all, for
Speaker 1: me to drop out of the workforce. And that's a
Speaker 1: different problem. Well, and it's interesting, right, Katie, in terms
Speaker 1: of we've got this very tight labor market. We talk about,
Speaker 1: you know, people who are just not coming back to
Speaker 1: the workforce, and you wonder how many although we've seen
Speaker 1: some stronger numbers in terms of women. UM, but you
Speaker 1: do wonder, you do wonder how this impacts it going forward. UM.
Speaker 1: And really, as Katie said, well and beautifully reported story.
Speaker 1: Really appreciate getting some time to talk with you and
Speaker 1: Peterson contributor at Bloomberg Business Week on the phone from
Speaker 1: Loomie Island, Washington. And this story you can find on
Speaker 1: the Bloomberg terminal at Bloomberg dot com. Slash Business Week.
Speaker 1: It's just all these things from the pandemic maybe not
Speaker 1: playing out as we anticipated in I know, I know,
Speaker 1: at least in this point, this UH piece points out
Speaker 1: at least kids are back in school for the large part,
Speaker 1: not doing virtual school anymore. So maybe one thing that
Speaker 1: they can cross off there. Yeah, um, be sure to
Speaker 1: check it out in more all from Bloomberg Business Week.
Speaker 1: You can find that on the terminal. You're listening to
Speaker 1: Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes
Speaker 1: Tim Stinovic on Bloomberg Radio. Well, as we mentioned, we
Speaker 1: did want to get to the Bloomberg Big Take. It's
Speaker 1: also among the most read on the Bloomberg Take. Bloomberg
Speaker 1: Big Take, by the way, is our editorial team saying, folks,
Speaker 1: you gotta read this story and it's a Bloomberg exclusive,
Speaker 1: and it is about the big bank, probably the most
Speaker 1: associated Katie with the US mortgage industry big time. Of course,
Speaker 1: we're talking about Wells Fargo. Great scoop from our handle
Speaker 1: lot that Wells Fargo plans to shrink the biggest US
Speaker 1: mortgage empire. Of course, after waves of scandal scandals, Hannah,
Speaker 1: you join us on the phone now basically walk us
Speaker 1: through the premise of this big take and how we
Speaker 1: got here. Hey ya, thank you so much for having
Speaker 1: me so as you mentioned, like when you when you
Speaker 1: thank Wells Fargo, you think the biggest US homelander, like
Speaker 1: that was their whole thing for a number of years.
Speaker 1: Right coming out of the financial crisis um in two
Speaker 1: thousand and eight, a lot of the big banks who
Speaker 1: had dominated the space prior to the crisis pulled back
Speaker 1: in a big way, and well S Fargo took the
Speaker 1: opposite approach and said, no, we're going to really dig in.
Speaker 1: You know, at one point they were turning out one
Speaker 1: in every three home loans in the US and they
Speaker 1: were aiming for higher than outer raiming for market share.
Speaker 1: So that was um. That was then, and then you know,
Speaker 1: since then, we've seen the rise of non make mortgage
Speaker 1: lenders like Quicken and stuff like that, and not so
Speaker 1: well Fargo has had um a lot of issues, some
Speaker 1: of which have been in its mortgage empire. And so
Speaker 1: now under Charlie Sharp, who has been the CEO for
Speaker 1: almost three years, they are making plans to shrink and mortgage.
Speaker 1: How important is the mortgage business though, to Wells Fargo's
Speaker 1: top and bottom line. Um. You know, that's a great
Speaker 1: question because it's less important today than it used to be.
Speaker 1: So the history of going back before even the crisis,
Speaker 1: was that they liked mortgage as a way to counterbalance um,
Speaker 1: you know, lower net interest income from lower interest rates,
Speaker 1: and so they would get seeds from lower rates when
Speaker 1: people wanted to rEFInd refinance the mortgage and stuff and such, um,
Speaker 1: And so it would be a counterway to that. But um,
Speaker 1: the company has gotten a lot bigger, so it has
Speaker 1: become less relevant. And also it's a more competitive landscape
Speaker 1: today than it was, you know, when Wells of doing
Speaker 1: one in every three homelands. Yeah, well, that's what I
Speaker 1: wanted to ask, because that's such a crazy stat one
Speaker 1: of every three home loans in the US. With Wells
Speaker 1: Fargo kind of planning to step away here, where does
Speaker 1: that leave the US mortgage market? Yeah. Well, and so
Speaker 1: they certainly aren't doing one in three today. Um, and
Speaker 1: it'll be really interesting to see. You know, they're still
Speaker 1: in the process of making plans of where they're gonna
Speaker 1: pull back. You know, I've wrote about other correspondent lending,
Speaker 1: which is when they've on uh mortgages that are made
Speaker 1: by other firms and then servicing to like billion collections
Speaker 1: for mortgages UM as as places where they're looking at um.
Speaker 1: But you know, a lot of that is building sketched out.
Speaker 1: But it will be really interesting to see, you know,
Speaker 1: when all is said and done, where Well Spargo fits
Speaker 1: into the greater mortgage picture. Hey, how much of this
Speaker 1: is just well Spargo saying I am tired of being criticized,
Speaker 1: um for you know, rejecting refinances for black homeowners, for
Speaker 1: doing other things and being fine, I'm just tired of this.
Speaker 1: And if I get rid of this business, I'm no
Speaker 1: longer on regulators radar. Yeah, that's also a super interesting
Speaker 1: question because a lot of the big bank, like you know,
Speaker 1: Bank of America did um, I want to say, over
Speaker 1: a hundred billion of originations in a single quarter during
Speaker 1: the right after the crisis, and they were down to
Speaker 1: less than a tenth of that by so a lot
Speaker 1: of these banks already kind of concluded that, Remember, there
Speaker 1: were like tens of billions of dollars and signs. I
Speaker 1: think it actually that have gone over a hundred billion
Speaker 1: total UM for the bank's behavior leading up to the
Speaker 1: crisis causing the crisis in some ways, um, so wells
Speaker 1: here is kind of you know, in some sense it's
Speaker 1: the last big bank to come to this conclusion. But
Speaker 1: also in recent years, you know, they have been very
Speaker 1: scandal written. That's why Charlie Sharp took over three years ago,
Speaker 1: and the mortgage business has been a key you know,
Speaker 1: trouble spots in them. And Hannah, we have about forty
Speaker 1: seconds left. But you write the shrinking even in a
Speaker 1: downturn will be complicated. Tell us about some of those hurdles. Yeah,
Speaker 1: So when the economy is worth, the value of the
Speaker 1: loans that they hold will go down. So that just
Speaker 1: makes it harder to um, you know, for them to
Speaker 1: potentially sell this off or do whatever they're gonna do. Um,
Speaker 1: you know, versus when it's when it's a great market
Speaker 1: and everyone is climbing to get those fascets and things
Speaker 1: like that. It is a great story. Does also make
Speaker 1: me think about, you know, all she talked about. Hannah
Speaker 1: talked about more competition today in the mortgage business, and
Speaker 1: all these up starts right then have given homeowners or
Speaker 1: prospective homeowners so many different options when it comes when
Speaker 1: it comes to either mortgages or home equity. Um. It
Speaker 1: is the Bloomberg Big Take. It's among the most read
Speaker 1: on the Bloomberg today, and it's all about Wells Fargo
Speaker 1: shrinking the biggest US mortgage empire after a bunch of
Speaker 1: scandals over the last few years. Hannah Levet, she is financial.
Speaker 1: Put her at Bloomberg News, check her out on Twitter
Speaker 1: at Hannah Levitt, and she of course joining us on
Speaker 1: the phone from New York City. This is Bloomberg Business
Speaker 1: Week with Carol Masser and Bloomberg Quick Takes. Tim Stenovic
Speaker 1: on Bloomberg Radio. All Right, so, dear Bob, I like
Speaker 1: your company, think though we could make a few changes.
Speaker 1: Sincerely yours Dan Lobe. Okay, that's not exactly what he wrote,
Speaker 1: Pretty close though, you think so, yeah, right at the
Speaker 1: main points, Well, Dan Lobe did write a letter to
Speaker 1: Disney CEO Bob Chpeck after taking a signal if you
Speaker 1: can stake at the company, and suggesting some changes at
Speaker 1: the Magic Kingdom. Indeed, again, this news breaking this morning
Speaker 1: definitely took a lot of people by surprise, just judging
Speaker 1: at the readership numbers on the Bloomberg terminal. For more,
Speaker 1: let's bring in geta rank and Nathan, she of course
Speaker 1: is a Bloomberg Intelligence analysts and geta This calling for
Speaker 1: a spinoff of the ESPN Sports Network have to assume
Speaker 1: that cha Pec and Go haven't done this for a reason. Yeah, yeah,
Speaker 1: So this is something that has come up so many times,
Speaker 1: Katie and Carol over the past few years, I mean,
Speaker 1: constant questions about whether it makes sense for ESPN to
Speaker 1: be spun off, just kind of given the secular challenges
Speaker 1: in the linear TV business model. The reason they're not
Speaker 1: doing it, and that reason is cash flow, tons and
Speaker 1: tons of cash flow from ESPN almost four and a
Speaker 1: half billion dollars every year. And remember this is almost
Speaker 1: thirty percent of uh, you know, Disney's profits. So it
Speaker 1: is a crucial part of their business and one that
Speaker 1: they're not going to be willing to let go off
Speaker 1: very easily. Quito, would this be like an activist investors saying, hey, Apple,
Speaker 1: we'd really love it if you'd spin off the iPhone
Speaker 1: in terms of seal, I mean, this is just so
Speaker 1: important to Disney, as you said, absolutely, it is a
Speaker 1: critical part of the business. Yes, agreed, there are lots
Speaker 1: of challenges in the business model, especially given that court
Speaker 1: cutting is accelerating, But the whole streaming part of the business, yes,
Speaker 1: they are having pretty good growth there. For streaming, they
Speaker 1: reported some fantastic numbers just a few days ago. They
Speaker 1: have more than if you just look at their streaming
Speaker 1: portfoolio now, they actually have more subscribers and netflix as.
Speaker 1: But remember, streaming is not generating any profits for this
Speaker 1: company just yet. So getting that cash flow, getting those
Speaker 1: four and a half million dollars from ESPN ear in
Speaker 1: and ear out, is so important to fund all of
Speaker 1: that content investments in the streaming platform, all the technological improvements.
Speaker 1: So absolutely, I have a core part of the business.
Speaker 1: I had trouble with the timing on this case, like, wait,
Speaker 1: Disney did really well, what's up with this? Yeah, yeah
Speaker 1: it again. I guess that they had really wolfed it
Speaker 1: in earnings. This would make a little bit more sense,
Speaker 1: but it does feel a bit unintuitive. Let's talk about
Speaker 1: some of the other suggestions here. We have Third Point
Speaker 1: also urging Disney to integrate Hulu directly into the Disney
Speaker 1: Plus platform. Of course, that's the company's flagship streaming operation.
Speaker 1: The logic there on the Third Point side is that
Speaker 1: this would save money reignite growth and domestic streaming. Does
Speaker 1: that logic hold water with you? I think it does
Speaker 1: to a certain extent. And again this has again been
Speaker 1: one of those constant conundrums for Disney. Remember Disney has
Speaker 1: a sixty six percent stake in Hulu. This is jointly
Speaker 1: owned with Comcast, and they the two companies actually have
Speaker 1: an agreement between them which allows for you know, Disney
Speaker 1: to buy back the thirty three percent in January. The
Speaker 1: problem really here is valuation. So they have agreed to
Speaker 1: a minimum valuation of about twenty seven billion dollars, which
Speaker 1: means Disney has to show out at least nine billion dollars.
Speaker 1: But Comcast is going to want much much more, and
Speaker 1: the two parties have been in arbitration. But again this
Speaker 1: price is going to be a major sticking point, which
Speaker 1: is why Disney does not want to rush into it.
Speaker 1: Is what I'm thinking, do you think on the cost
Speaker 1: cutting side of things, you look at all the metrics
Speaker 1: when it comes to the Walt Disney Company, geta when
Speaker 1: you know Lobe d and Lobe says cost cutting Disney
Speaker 1: costs among the highst in industry. We believe Disney significantlyland
Speaker 1: Er earns relative to its potential. We urge the company
Speaker 1: to embark on a cost cutting program that addresses both
Speaker 1: margins and the disposal of excess underperforming assets. Is he
Speaker 1: right in that regard? And I am reading from his letter,
Speaker 1: so he is right when he says that they have
Speaker 1: the highest costs in the industry. To remember, this year,
Speaker 1: Disney is going to pay out thirty billion dollars in
Speaker 1: terms of content costs across platforms. Now that that is
Speaker 1: the ii is by the way in the industry. But
Speaker 1: that's that's the reason it's paying that much is because
Speaker 1: of majority of it is really because of sports rights.
Speaker 1: So you know, they're paying about eight to nine billion
Speaker 1: dollars in sports rights, and that's why ESPN is the
Speaker 1: number one cable network when it comes to earning affiliate
Speaker 1: fees in the industry. That's what drives the four and
Speaker 1: a half billion dollars in eep IT down. Also, remember
Speaker 1: this is the biggest movie studio in the world. They
Speaker 1: are half of the global box office. So in order
Speaker 1: to generate you know, eleven ten or ten eleven billion
Speaker 1: dollars in global box office, they have to make significant investments. Again,
Speaker 1: a major part of the cost there. You know my
Speaker 1: my only contention with the cost argument is you want
Speaker 1: to build a streaming platform that is, you know, the leader,
Speaker 1: and you have to be careful because you know content
Speaker 1: is the key differentiator. Yeah right, we say content is
Speaker 1: king when you've got somebody like sore Love and thunder
Speaker 1: like I'm in. I'm just gonna tell you, I'm all
Speaker 1: in our Avengers watch look always great as guitar rank
Speaker 1: and outhan. She's Bloomberg in religience technology media analyst joining
Speaker 1: us on the phone in New Jersey. Guita, thank you.
Speaker 1: I'm Roly macro a journal But you let me drive? No, no,
Speaker 1: who's going home? Please? Gravels? I want to drive? Which?
Speaker 1: Good question? Good drive is the drive to the clobe
Speaker 1: on Bluebird Radio. Al Right, everybody, just about ten and
Speaker 1: a half minutes left in today's trading session, and as
Speaker 1: you know we've been talking, we've got another rally Underwear
Speaker 1: Slate rally up about nineteen on the SUP, as Charlie mentioned,
Speaker 1: up about half a percent on the Dow, and the
Speaker 1: NASDAK up by about two thirds of one percent. So
Speaker 1: let's get to it as we drive to the clothes
Speaker 1: on this Monday hick Smith is back with us, his
Speaker 1: chief investment officer, having for Trust, which as you know,
Speaker 1: is based in Radnor, Pennsylvania. Yeah, nice to have you
Speaker 1: here with Katie Greifeld and myself. You have repeatedly come
Speaker 1: on with us this year said a recession in a
Speaker 1: bear market are not likely? Is that still the case
Speaker 1: in your view? Well? Look, if one aspect, we do
Speaker 1: have a technical recession defined by two consecutive quarters with
Speaker 1: negative real GDP growth. But if we're in our recession,
Speaker 1: it's the most unusual recession in modern history, given uh,
Speaker 1: the strength of the labor market, the health of the consumer,
Speaker 1: corporate profits, corporate balance sheets, the banking system is well capitalized, UH,
Speaker 1: and there doesn't seem to beat any problems there. So,
Speaker 1: on the one hand, a lot looks good about the economy. UH.
Speaker 1: The big part thou is inflation. A lot looks good
Speaker 1: in the economy, inflation being its own special animal. What
Speaker 1: does the stock market look like? Though, because if we
Speaker 1: think about the past two months since June's lows, it's
Speaker 1: been a pretty robust rally. The question it feels like
Speaker 1: everyone is asking is whether that June loow was actually
Speaker 1: the bottom. What's your view. Well, Look, the stock market
Speaker 1: is an anticipatory vehicle. Uh. It anticipated peak inflation, which
Speaker 1: is really kind of junish uh with a very weak
Speaker 1: first half, and now I think it's anticipating that we
Speaker 1: are beyond peak inflation um and that a lot of factors,
Speaker 1: including the federal reserves policy, is starting to unlind inflation
Speaker 1: and and perhaps perhaps uh, the Fed might get lucky
Speaker 1: and engineer a somewhat soft landing. And so I think
Speaker 1: that's what the market is really focusing on. I don't
Speaker 1: think they're focusing on a FED pitot, because I think
Speaker 1: we're going to see Fed fund rate increases through two
Speaker 1: thousand and twenty two. But maybe that's it. Maybe in
Speaker 1: twenty three were done that. Hey, we love talk macro
Speaker 1: issues with you. I put out my Twitter poll this
Speaker 1: morning and I said, new week, what's top of mind
Speaker 1: for everybody? In so far the votes are coming in,
Speaker 1: say at China US slowdown or the China U slowdowns
Speaker 1: that we're already seeing almost say the retail earnings we're
Speaker 1: gonna get this week, and also the retail sales date
Speaker 1: on Wednesday, say the FOMC minutes, which we also get
Speaker 1: on Wednesday. From that last FED meeting, and about thirteen
Speaker 1: percent say other which they are weighing in on different
Speaker 1: things that are top of mind for them. Um. What's
Speaker 1: top of mind for you when you think about this
Speaker 1: week ahead? Well, I think the retail earnings are are
Speaker 1: very important, although clearly there's been a shift in spending
Speaker 1: from goods to services and experiences, because if you look
Speaker 1: at what MasterCard and Visa have been saying, that spending
Speaker 1: is still pretty pretty robust, but it's in different areas.
Speaker 1: But I still think it's important what we see from
Speaker 1: Walmart or get home depot U lows uh, because that's
Speaker 1: a good measure of the strength of the consumer. So
Speaker 1: that's the top online of this week. And um, yes,
Speaker 1: geo political um events, Uh, you know, I think the
Speaker 1: market has gotten I hate to say it this way,
Speaker 1: almost used to the conflict in in Ukraine. Um. And
Speaker 1: and there's potential that you know that that could get
Speaker 1: worse given the fall and early winner approaching in a
Speaker 1: handful of months in terms of in terms of oil
Speaker 1: and natural gas throughout throughout Europe. And so how do
Speaker 1: you sort of structure your portfolio with some of those
Speaker 1: geo political concerns in mind, particularly when it comes to
Speaker 1: the energy sector. For example, if I look at the
Speaker 1: SMP five hundred at the sector level, that's by far
Speaker 1: the winner. Do you think that trade has sort of
Speaker 1: run its course at this point. Yeah. We are very
Speaker 1: very light in the energy sector, so we missed much
Speaker 1: of the move in the second half of twenty one
Speaker 1: into twenty two, except for some of our yield oriented
Speaker 1: strategies where we do have some energy exposure because of
Speaker 1: the very high high yields and names like Chevron. But
Speaker 1: you know, the IT we're continuing to stay away of
Speaker 1: from the sector due to the cyclicality of it UM
Speaker 1: and the lower quality. I mean, when you look at
Speaker 1: how many companies in the energy patch one out business
Speaker 1: UH in two thousand and twenty, when you have the
Speaker 1: complete collapse in the oil prices, UM, it's a it's
Speaker 1: a tough sector to invest in. UM. In terms of
Speaker 1: where we're focusing on, our biggest weight is in the
Speaker 1: healthcare industry UH sector, and there I think there are
Speaker 1: three things going on. The reopening play people are finally
Speaker 1: get procedures that have been delayed because of the pandemic. UM. Also,
Speaker 1: it's a defensive sector, and UM it's a attractively priced
Speaker 1: sector and you get good yields with growth of income.
Speaker 1: And that's a nice combination in an inflationary environment. Where
Speaker 1: don't you want to be right now? Well, you know
Speaker 1: I did mention UH energy, which we are We don't
Speaker 1: in our growth strategies. We don't have any um waiting there,
Speaker 1: and we're absent um utilities UH and reach. Those are
Speaker 1: the three areas where we have no exposure. And so
Speaker 1: also say we continue to favor equities over fixed income,
Speaker 1: Well that's where I wanted to go. Actually, I'm glad
Speaker 1: you brought that up. Talk to me a little bit
Speaker 1: about that, because if I look at the treasury market,
Speaker 1: for example, we've seen a big, big rally. Yeah, and
Speaker 1: and clearly yields are higher today even even with the
Speaker 1: rally and prices recently, yields are higher today than than
Speaker 1: they were a year ago. For for sure. But if
Speaker 1: you if you have an outlook of five, seven, ten years, UH,
Speaker 1: you're hard pressed to make a case that you're going
Speaker 1: to get a better rate of return in fixed income,
Speaker 1: whether it's corporates or treasuries, than you are in owning
Speaker 1: UH equities and particularly dividend pain and dividend growing equities,
Speaker 1: and and so I think you'd have to see yields
Speaker 1: much higher before they're a competition for for equities. All Right,
Speaker 1: we're gonna leave it there, Hey, Hank, good to check
Speaker 1: in with you again. Hank Smith, Chief investment Officer, and
Speaker 1: have a for trust that company based in Redner, Pennsylvania.
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