1 00:00:00,040 --> 00:00:03,360 Speaker 1: Our guest is Victoria Green, ce IO of G squared 2 00:00:03,520 --> 00:00:07,960 Speaker 1: Private Wealth. Victoria a lot of views expressed just by 3 00:00:08,039 --> 00:00:11,080 Speaker 1: looking at the market action. For me, the key line 4 00:00:11,240 --> 00:00:14,760 Speaker 1: was that the Fed wants to get real rates positive 5 00:00:14,960 --> 00:00:19,120 Speaker 1: all across the curve. Pal said that even a sort 6 00:00:19,160 --> 00:00:22,000 Speaker 1: of the benign reading of core PC is above four 7 00:00:22,040 --> 00:00:24,640 Speaker 1: and a half percent, So that's likely where we're going, 8 00:00:24,640 --> 00:00:28,200 Speaker 1: and we're going there in a hurry. And although so 9 00:00:28,360 --> 00:00:30,560 Speaker 1: it's it's hard to expect any pause. I wouldn't say 10 00:00:30,600 --> 00:00:33,880 Speaker 1: that the pivot is dead, but it needs it won't 11 00:00:33,920 --> 00:00:38,240 Speaker 1: be resuscitated for some period of time. The pivots like transitory, 12 00:00:38,360 --> 00:00:41,280 Speaker 1: the pivots definitely dead. It'll come at some point, but 13 00:00:41,360 --> 00:00:43,839 Speaker 1: it's way down the road. And Powell's really used this 14 00:00:44,040 --> 00:00:46,879 Speaker 1: entire month after Jackson Hole to try to rip the 15 00:00:46,880 --> 00:00:49,519 Speaker 1: band aid off and reset the market expectations that had 16 00:00:49,600 --> 00:00:52,519 Speaker 1: gotten in front of itself. Everybody got excited, and then 17 00:00:52,920 --> 00:00:56,520 Speaker 1: briefly even today, we have this moment of euphoria that 18 00:00:56,640 --> 00:00:59,480 Speaker 1: this is peak Halkishness, It's gonna get better. But then 19 00:00:59,520 --> 00:01:02,760 Speaker 1: again reality came smack the markets down. I mean, we 20 00:01:02,840 --> 00:01:04,640 Speaker 1: had like a hundred and twenty point round trip in 21 00:01:04,680 --> 00:01:06,760 Speaker 1: the sm people. I've undered between where we went to 22 00:01:06,800 --> 00:01:09,520 Speaker 1: peak to ending down one point seven, it's about three 23 00:01:09,560 --> 00:01:12,640 Speaker 1: percent total move. It was the pretty violatile day, So 24 00:01:12,800 --> 00:01:15,440 Speaker 1: I mean, what next. You know, we've also got QUT 25 00:01:15,560 --> 00:01:17,679 Speaker 1: and that makes it. Isn't there a feeling out there 26 00:01:17,720 --> 00:01:21,160 Speaker 1: as well? Perhaps that j power should be just giving 27 00:01:21,200 --> 00:01:24,440 Speaker 1: a little bit of time now for these interest rate 28 00:01:24,520 --> 00:01:27,240 Speaker 1: hikes to play into the economy and see what they've done. 29 00:01:28,160 --> 00:01:30,280 Speaker 1: And I think that's what twenty three is for. I mean, 30 00:01:30,319 --> 00:01:32,880 Speaker 1: they really slow down dramatically after twenty two. I think 31 00:01:32,920 --> 00:01:34,679 Speaker 1: they're in a hurry to try to get in front 32 00:01:34,680 --> 00:01:36,840 Speaker 1: of this. But even today, I think one of his 33 00:01:37,000 --> 00:01:39,559 Speaker 1: biggest tact emissions was one it is going to push 34 00:01:39,560 --> 00:01:42,039 Speaker 1: into a recession. He danced around it, but I feel 35 00:01:42,080 --> 00:01:44,480 Speaker 1: like it was implied very strongly. They're just going to 36 00:01:44,560 --> 00:01:47,000 Speaker 1: get a pushed into recession. And then too, he talked 37 00:01:47,000 --> 00:01:49,280 Speaker 1: about housing and how difficult that is and how much 38 00:01:49,280 --> 00:01:51,080 Speaker 1: of the housing market is going to have to come down, 39 00:01:51,480 --> 00:01:54,160 Speaker 1: and the problem is housing a medical or so much 40 00:01:54,160 --> 00:01:56,120 Speaker 1: a part of the core PC. It's going to be 41 00:01:56,160 --> 00:01:59,000 Speaker 1: really hard to get those sticky numbers down. But I 42 00:01:59,000 --> 00:02:02,080 Speaker 1: think you've got you know, you might see another hundred 43 00:02:02,120 --> 00:02:04,720 Speaker 1: hundred twenty five basis points this year, but then the 44 00:02:04,760 --> 00:02:07,600 Speaker 1: trajectory really slows and it becomes more about QT and 45 00:02:07,640 --> 00:02:10,600 Speaker 1: monetary supply. And I think people need to be aware 46 00:02:11,040 --> 00:02:13,360 Speaker 1: of where we are in the economic cycle and the 47 00:02:13,360 --> 00:02:16,520 Speaker 1: market cycle. UM. I always think it's interesting the markets 48 00:02:16,520 --> 00:02:18,120 Speaker 1: are going to lead us out of this. The markets 49 00:02:18,160 --> 00:02:20,200 Speaker 1: led us into it and started, you know, kind of 50 00:02:20,240 --> 00:02:23,440 Speaker 1: panicking before the Fed panicked. Uh, And then the markets 51 00:02:23,480 --> 00:02:25,840 Speaker 1: will bottom out and lead us out of it before 52 00:02:26,400 --> 00:02:29,480 Speaker 1: necessarily the Fed pivots, because the Feds always kind of 53 00:02:29,520 --> 00:02:32,360 Speaker 1: backward looking and lagging. And that's one of the complaints 54 00:02:32,400 --> 00:02:35,680 Speaker 1: about this current trajectory is that because their effect has 55 00:02:35,720 --> 00:02:38,680 Speaker 1: such a lag, it's going to to be too little, 56 00:02:38,680 --> 00:02:40,799 Speaker 1: too late, and by the time they realized they need 57 00:02:40,840 --> 00:02:44,040 Speaker 1: to slow down, it's already out of control. Into the recession. 58 00:02:44,560 --> 00:02:46,480 Speaker 1: You could tell when he started talking that, you know, 59 00:02:46,520 --> 00:02:49,200 Speaker 1: he wanted to get the point out there that at 60 00:02:49,240 --> 00:02:51,360 Speaker 1: some point there will be a pause. Uh. And the 61 00:02:51,400 --> 00:02:54,680 Speaker 1: markets feasted on that and started going higher. But reality 62 00:02:54,800 --> 00:02:57,840 Speaker 1: set in and basically I think it boils down to 63 00:02:58,000 --> 00:03:00,800 Speaker 1: how do you get the rate of inflation to decline 64 00:03:00,880 --> 00:03:04,480 Speaker 1: faster than growth in jobs, and it's probably almost impossible 65 00:03:04,520 --> 00:03:08,320 Speaker 1: to do. He's admitting it's a very tall order. It's 66 00:03:08,320 --> 00:03:11,280 Speaker 1: called a recession. That's the only way. That's that's the 67 00:03:11,280 --> 00:03:13,280 Speaker 1: only way. I mean, nobody likes to use that. What 68 00:03:13,360 --> 00:03:15,240 Speaker 1: it was it in West Wing we called it the bagel. 69 00:03:15,520 --> 00:03:18,399 Speaker 1: Nobody likes to talk about the bagel, right, It's it's 70 00:03:18,400 --> 00:03:20,320 Speaker 1: not fun. And I know I may sound glob here. 71 00:03:20,320 --> 00:03:23,440 Speaker 1: Recessions are serious. People lose their jobs, lose their home. 72 00:03:23,560 --> 00:03:27,040 Speaker 1: Mortality rate rises during periods of recessions, and so it's 73 00:03:27,080 --> 00:03:30,120 Speaker 1: a very serious incident we're talking about in our economy. 74 00:03:30,360 --> 00:03:32,800 Speaker 1: But if you don't see the slowdown coming, I really 75 00:03:32,840 --> 00:03:34,720 Speaker 1: think you need to to take off your rose colored 76 00:03:34,720 --> 00:03:36,960 Speaker 1: glasses and look at where we are in the cycle. 77 00:03:37,040 --> 00:03:40,320 Speaker 1: We are contracting. We have not hit bottom yet, Victoria. 78 00:03:40,840 --> 00:03:42,600 Speaker 1: How does this change your narrative? I mean, if you've 79 00:03:42,640 --> 00:03:46,600 Speaker 1: got peak inflation right and peak hawkishness, if you will, 80 00:03:47,280 --> 00:03:50,040 Speaker 1: gives a sense of how that changes and how your 81 00:03:50,120 --> 00:03:54,040 Speaker 1: strategy evolves. Well, I think today that surviveses to move 82 00:03:54,120 --> 00:03:56,080 Speaker 1: up about a hundred basis points on the dot thought. 83 00:03:56,160 --> 00:03:58,160 Speaker 1: You know, we have been defensive and we thought this 84 00:03:58,320 --> 00:04:00,240 Speaker 1: was you know, this rally off the June low os 85 00:04:00,440 --> 00:04:02,760 Speaker 1: wasn't the rally out, it was a bear market rally, 86 00:04:02,800 --> 00:04:05,200 Speaker 1: and then you saw the classic head and shoulders top form. 87 00:04:05,520 --> 00:04:08,280 Speaker 1: Now we keep pushing, you know, lower highs, which often 88 00:04:08,320 --> 00:04:10,480 Speaker 1: signal lower low So I think you're going to retest 89 00:04:10,480 --> 00:04:13,120 Speaker 1: the thirty six thirty four hundred. I also think that 90 00:04:13,240 --> 00:04:15,920 Speaker 1: at Tina, you know, there is no alternative equities as 91 00:04:16,120 --> 00:04:19,520 Speaker 1: rapidly changing as this front end kind of becomes attractive, 92 00:04:19,640 --> 00:04:22,120 Speaker 1: especially as you maybe have another hundred and twenty five 93 00:04:22,120 --> 00:04:25,279 Speaker 1: basis points at some point, then you basically fully produced 94 00:04:25,360 --> 00:04:27,719 Speaker 1: in and people are gonna start looking at these treasuries 95 00:04:27,760 --> 00:04:30,440 Speaker 1: as a very impractive parking place. So I think it's 96 00:04:30,440 --> 00:04:33,200 Speaker 1: still risk off and defensive for me value over growth. 97 00:04:33,440 --> 00:04:36,360 Speaker 1: I want companies with strong balance sheet, strong cash flows, 98 00:04:36,400 --> 00:04:39,280 Speaker 1: dividends be boring. It's kind of ar mantra this year, 99 00:04:39,320 --> 00:04:42,400 Speaker 1: and obviously don't fight the fed um. I think sometimes 100 00:04:42,400 --> 00:04:46,240 Speaker 1: investors get impatient and they they can't just wait a 101 00:04:46,279 --> 00:04:49,080 Speaker 1: few months. You know, September is a bad months historically, 102 00:04:49,120 --> 00:04:51,520 Speaker 1: if you look at seasonality, October is a little weaker, 103 00:04:51,880 --> 00:04:53,440 Speaker 1: and I think sometimes you just need to be a 104 00:04:53,440 --> 00:04:56,000 Speaker 1: little patient and let this bear market play out. Right now, 105 00:04:56,120 --> 00:04:59,400 Speaker 1: you're in a very normal classic bear market. It usually 106 00:04:59,480 --> 00:05:03,359 Speaker 1: lasts o nine to twelve months percent down on average, 107 00:05:03,360 --> 00:05:05,200 Speaker 1: and and we're right around there. So if you wait 108 00:05:05,279 --> 00:05:07,359 Speaker 1: this out a little bit longer, I just think you 109 00:05:07,360 --> 00:05:09,960 Speaker 1: don't want to have fomo either way. I think people, well, 110 00:05:09,960 --> 00:05:12,600 Speaker 1: it could be tough, though. I mean if if you know, 111 00:05:12,680 --> 00:05:14,800 Speaker 1: if if you stay up there, if rates stay if 112 00:05:14,800 --> 00:05:17,320 Speaker 1: you get to real rates positive, that's bad for assets 113 00:05:17,720 --> 00:05:20,080 Speaker 1: real assets. And if you stay there and if you 114 00:05:20,120 --> 00:05:23,760 Speaker 1: stay there, then it's tricky. But I guess the assumption 115 00:05:23,800 --> 00:05:28,640 Speaker 1: at the long end is that longer term inflation expectations 116 00:05:28,760 --> 00:05:34,040 Speaker 1: are somewhat somewhat normal, uh, and that that probably will 117 00:05:34,080 --> 00:05:36,080 Speaker 1: have to come down quickly. Do you think that they've 118 00:05:36,120 --> 00:05:37,839 Speaker 1: gone up quickly and they will have to come down 119 00:05:37,880 --> 00:05:40,440 Speaker 1: quickly or do you think that will sort of stay 120 00:05:40,480 --> 00:05:43,440 Speaker 1: up at high levels? They will, But I mean, he 121 00:05:43,520 --> 00:05:45,600 Speaker 1: is in love with what happened with Buckler and the 122 00:05:46,080 --> 00:05:47,960 Speaker 1: both are sorry in the eighties, and I think he 123 00:05:48,040 --> 00:05:50,000 Speaker 1: really doesn't want to do start stop, start stop in 124 00:05:50,040 --> 00:05:51,840 Speaker 1: the nineteen seventies. So I think you have to look 125 00:05:51,839 --> 00:05:53,520 Speaker 1: at this as a little bit of a commitment to 126 00:05:53,600 --> 00:05:56,560 Speaker 1: staying where we are through three. He has tried to 127 00:05:56,640 --> 00:05:59,080 Speaker 1: let this you know, his runway right now. You know, 128 00:05:59,080 --> 00:06:02,160 Speaker 1: obviously that can change. Change of liquidity completely drives off 129 00:06:02,200 --> 00:06:04,800 Speaker 1: if unemployment shoots the five or six percent. You know 130 00:06:05,240 --> 00:06:07,599 Speaker 1: it's right now with the data. His commitment is he 131 00:06:07,640 --> 00:06:09,640 Speaker 1: doesn't want to start stop. So I think you want 132 00:06:09,640 --> 00:06:11,640 Speaker 1: to listen to Powell, and it's gonna take us a 133 00:06:11,640 --> 00:06:13,800 Speaker 1: little bit longer. I don't think he's really gonna start 134 00:06:13,800 --> 00:06:17,359 Speaker 1: easing until you actually see a sustained improvement in inflation. 135 00:06:17,600 --> 00:06:20,000 Speaker 1: And the inflation numbers year over year are gonna come 136 00:06:20,040 --> 00:06:23,359 Speaker 1: down just because they're you're resetting higher every month. You know, 137 00:06:23,400 --> 00:06:25,960 Speaker 1: you're starting to get to the point where we're entering 138 00:06:26,000 --> 00:06:29,320 Speaker 1: in a area. Once we hit January February of next year, 139 00:06:29,400 --> 00:06:32,839 Speaker 1: obviously inflation could easily come down slightly just because we're 140 00:06:32,839 --> 00:06:36,880 Speaker 1: coming off of elevated prices to be here as well. Victoria, 141 00:06:36,880 --> 00:06:39,320 Speaker 1: I mean, what about tech? Tech doesn't have a good 142 00:06:39,400 --> 00:06:42,800 Speaker 1: history during times of a sloat out. No, And I 143 00:06:42,800 --> 00:06:45,000 Speaker 1: think it's early on innovation. I hate to hate on 144 00:06:45,080 --> 00:06:47,599 Speaker 1: Cathy Wood and the Arc phones. Innovation is fantastic, but 145 00:06:47,680 --> 00:06:49,840 Speaker 1: during times of stress, you kind of want your big, old, 146 00:06:49,920 --> 00:06:52,359 Speaker 1: ugly so you want everybody that has good cash flow, 147 00:06:52,640 --> 00:06:55,279 Speaker 1: good balance sheets, they're not having to borrow to expand, 148 00:06:55,920 --> 00:06:58,839 Speaker 1: and and they have actually recurring revenues that are defensible 149 00:06:58,920 --> 00:07:01,440 Speaker 1: and good modes. So I think tech growth and innovation 150 00:07:01,560 --> 00:07:04,359 Speaker 1: right now is is an expensive place to be, even 151 00:07:04,400 --> 00:07:07,880 Speaker 1: with multiple fallowing doesn't matter if multiples are following, if 152 00:07:07,880 --> 00:07:09,840 Speaker 1: earnings are going to come down as well, and so 153 00:07:10,000 --> 00:07:12,280 Speaker 1: you know, part of that pe equation is what happens 154 00:07:12,320 --> 00:07:14,400 Speaker 1: to the e and I think some of those ease 155 00:07:14,440 --> 00:07:17,080 Speaker 1: are very that have not come down far enough on 156 00:07:17,080 --> 00:07:19,600 Speaker 1: on some of the more aggressive tech and remember, growth 157 00:07:19,600 --> 00:07:21,640 Speaker 1: stocks are longer duration, and I don't think you want 158 00:07:21,640 --> 00:07:23,760 Speaker 1: to own as much of that right now because the 159 00:07:23,880 --> 00:07:27,120 Speaker 1: ration when real rates are coming up hurts. So how 160 00:07:27,200 --> 00:07:30,000 Speaker 1: much of a portfolio would you put into some of 161 00:07:30,000 --> 00:07:34,320 Speaker 1: these short term fixed income securities? Uh, that's always to me, 162 00:07:34,400 --> 00:07:37,200 Speaker 1: it's dependent on your liquidity needs and your risk tolerance. 163 00:07:37,240 --> 00:07:39,000 Speaker 1: And I know that I'm hedging there and that's not 164 00:07:39,080 --> 00:07:41,560 Speaker 1: at the non answer, but you know, I think it 165 00:07:41,560 --> 00:07:44,080 Speaker 1: it depends on on your your ability to wait this out, 166 00:07:44,200 --> 00:07:46,360 Speaker 1: how aggressive you want to get with buying. But I 167 00:07:46,400 --> 00:07:49,080 Speaker 1: do think people need to understand their consuls coming over 168 00:07:49,120 --> 00:07:51,400 Speaker 1: the next twelve to eighteen months and make sure you 169 00:07:51,480 --> 00:07:53,720 Speaker 1: have enough that you're not forced to sell something, because 170 00:07:53,760 --> 00:07:56,440 Speaker 1: that's the really the only way you technically destroy value 171 00:07:56,840 --> 00:07:59,760 Speaker 1: if you're forced to sell, or you capitulate and sell 172 00:07:59,800 --> 00:08:02,880 Speaker 1: when Marcus down. You know, we all tend to want 173 00:08:02,920 --> 00:08:06,880 Speaker 1: to violate the prime directive of investing of bylow, sell high. 174 00:08:07,280 --> 00:08:11,040 Speaker 1: That's all good until the market, stock market crashes. Victoria, 175 00:08:11,080 --> 00:08:13,040 Speaker 1: always a pleasure, Thank you very much. The need Victoria Green, 176 00:08:13,120 --> 00:08:16,760 Speaker 1: there's c I O of g Squared, a private wealth 177 00:08:16,800 --> 00:08:18,680 Speaker 1: and her take on the Fed and beyond