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Speaker 1: Let's get to our guest and Bury, chief investment officer

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Speaker 1: at Wheelhouse So and the big movers today, as we

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Speaker 1: heard from Doug, were the jump in bond yields and

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Speaker 1: then also the Chinese you'n tumbling to the weak side

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Speaker 1: of seven to the dollar at the moment seven or

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Speaker 1: one thirty four. It almost feels like we're moving into

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Speaker 1: this area of be careful what you wish for for

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Speaker 1: the FED. You know, I think I do think that's right,

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Speaker 1: because on the one hand, inflation coming under control is

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Speaker 1: is so important. But on the other hands, as we

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Speaker 1: look at this internationally, something like of revenue of SMP

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Speaker 1: five businesses is generated by overseas markets, and the strength

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Speaker 1: of the dollar, which is really a derivative of what

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Speaker 1: the FED is doing right now, is not good news

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Speaker 1: for the market. And I think that's currently being underestimated

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Speaker 1: here on the U S side. Do you think that

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Speaker 1: the inflation picture is as solid, as as strong as

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Speaker 1: it is suggested the headline? And on top of that,

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Speaker 1: do you think the labor market is as strong as

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Speaker 1: people suggest it is? The labor market at the moment,

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Speaker 1: if we start there, it definitely seems to be strong

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Speaker 1: in terms of the actual quantities of people being hired,

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Speaker 1: and we saw that with low unemployment claims data today.

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Speaker 1: But I do think what seems to be slowing down

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Speaker 1: at the moment is the huge wage inflation that we saw.

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Speaker 1: I think the labor force is perhaps struggling at the

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Speaker 1: moment with feeling as though they can't necessarily press as

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Speaker 1: aggressively as they could beforehand, because we've got noise about

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Speaker 1: layoffs when it comes to their compensation, and yet we're

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Speaker 1: still seeing hiring be pretty strong. It's a very mixed

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Speaker 1: message right now, um, And I think what we're seeing

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Speaker 1: as a result of that is, on the one hand,

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Speaker 1: we're seeing huge layoffs in bougie areas like text, but

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Speaker 1: on the other we're continuing to see real push by

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Speaker 1: unionization for the parts of the American labor force are

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Speaker 1: feeling the most pain right now. Very mixed picture. It

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Speaker 1: seems like for a while we were just sort of

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Speaker 1: juggling dealing with inflation but trying to achieve a soft landing,

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Speaker 1: And now it feels really very much to be the

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Speaker 1: case that it's either deal with inflation or hard landing.

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Speaker 1: I mean, you you're going to have to to have

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Speaker 1: the hard landing to actually deal with inflation. Do you

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Speaker 1: see it that way? I think it's a little bit

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Speaker 1: more nuance than that, because I actually think that the

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Speaker 1: soft landing is still something that's possible. And the reason

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Speaker 1: I believe that is we are beginning to see the

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Speaker 1: declining commodity prices. We are beginning to see the supply

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Speaker 1: chain that has choked so much of the pricing flexibility

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Speaker 1: of the US begin to ease off. I don't think

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Speaker 1: a hard landing is necessary, but I think what is

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Speaker 1: really critical is the FED being responsive to the data

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Speaker 1: as it's released. And we also need to start seeing

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Speaker 1: earnings coming out from companies show that they have been

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Speaker 1: able to contain costs aggressively and therefore be able to

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Speaker 1: contain the pricing um, the upward pricing pressure that that

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Speaker 1: we've seen so far, and I do think that there's

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Speaker 1: a way to do it. I think we've seen some

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Speaker 1: companies being able to respond to this environment fairly quickly

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Speaker 1: and with agility, whereas we've seen others struggle. So I

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Speaker 1: think the more we see some good news coming out

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Speaker 1: on cost containment, I think that the more optimistic iann

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Speaker 1: and soft landing is achievable well it's also going to

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Speaker 1: be what they say in the earning season about how

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Speaker 1: they're doing at the moment and also looking at the

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Speaker 1: end of the year in early part of next year. Well,

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Speaker 1: it's interesting if you look at what happened with FedEx today,

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Speaker 1: if there is ever a canary in the mind that

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Speaker 1: shows what is the state of the global economy, you

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Speaker 1: can see that, you know, expectations to revenue for the

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Speaker 1: company were missed. You know, you've seen that in the

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Speaker 1: share price come down dramatically today and earnings guidance being pulled.

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Speaker 1: But you've also seen them come out with plans to

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Speaker 1: quite aggressively shut down offices, n f X officers closing,

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Speaker 1: to reduce labor where needed. So I think we're in

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Speaker 1: this really strange moment right now where you've got companies

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Speaker 1: trying to respond quickly to reduce consumer demand, still solidifying

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Speaker 1: their operating plans, and I think this from the earning season,

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Speaker 1: we need to see what that looks like and just

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Speaker 1: having a look, you know, we're discussing what your thoughts

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Speaker 1: are about the fed and the economy generally, but how

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Speaker 1: does that all then void a place for your investment strategy.

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Speaker 1: And the thing is is it as search for defensive

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Speaker 1: companies and wealth protection and not wealth acceleration. You know,

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Speaker 1: it's one of these things where I'm trying to be

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Speaker 1: defensive in the short term but still look out for

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Speaker 1: what could be good tell winds for longer term worth creation.

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Speaker 1: But it turns into as a result, it relatively dull

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Speaker 1: investment strategy, to be honest. So where I'm putting money

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Speaker 1: to work at the moment is buying into text staples

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Speaker 1: where we've seen valuations drop off quite dramatically, companies like Apple,

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Speaker 1: where I am a believer over the long term appreciation

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Speaker 1: of that business still, or companies like GM where there

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Speaker 1: is a long term electronic vehicle tailwind with the amount

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Speaker 1: of government backing for the sector, but whether a dividends

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Speaker 1: that are going to be paid out by these businesses

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Speaker 1: in the short term, so that even if the stock

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Speaker 1: price continues to drop a little bit in the near term,

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Speaker 1: there's some dividend coverage of the cost basis. So that's

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Speaker 1: the kind of strategy, and and pursuing dividends for the

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Speaker 1: short term gives a bit of downside protection. But I

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Speaker 1: still think there are sexualist thematic growth areas long term. Yeah,

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Speaker 1: if you think about it, you can make the argument

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Speaker 1: that this is a great time to buy stocks and

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Speaker 1: it's a terrible time to buy stocks, depending upon you

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Speaker 1: know your time frame, because if you're looking out three

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Speaker 1: to five years, it's probably pretty good because there are

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Speaker 1: a lot of bargains, and if you're thinking about money

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Speaker 1: over the next one year, you could be in trouble.

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Speaker 1: Not I I note in your notes you talk about

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Speaker 1: access to capital. We've had virtually no I P O

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Speaker 1: s this year. M and A would seem to be

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Speaker 1: pretty difficult in this time. So you have companies turning

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Speaker 1: to the private markets. Now in the private market, you

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Speaker 1: don't have mark to market every day, and so you

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Speaker 1: see a story like today Adobe buying Figma, and almost

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Speaker 1: everybody on the street thinks that they've overpaid and the

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Speaker 1: stock went down sevent So how do you approach raising

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Speaker 1: capital and doing yells in this environment? To your point,

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Speaker 1: it really is the best of times and the worst

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Speaker 1: of times to mis coach Charles Dickens happening all at

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Speaker 1: the same time. And when it comes to capital access

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Speaker 1: that the private the public markets are essentially closed off

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Speaker 1: right now, Um two companies who want to raise capital

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Speaker 1: the private markets are really interesting because if you go

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Speaker 1: back and look at what happened in that two thousand

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Speaker 1: and eight, two thousand and nine, two thousand and ten

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Speaker 1: time frame, private credit funds um That means, you know,

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Speaker 1: investment platforms that are privately issuing debt, often to large

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Speaker 1: corporations and filling the void where the banks were not lending.

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Speaker 1: A lot of those funds that two thousand and ten

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Speaker 1: vintage performed incredibly well when you look at the returns

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Speaker 1: they delivered. The same was also true of private equity.

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Speaker 1: Private equity funds that were deploying capital in that two

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Speaker 1: thousand and ten eleven time frame delivered fantastic returns. So

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Speaker 1: the private capital market, at least here in the US

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Speaker 1: is very actively hunting for deals right now. And I

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Speaker 1: think whether it's credit because the yield is getting so attractive,

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Speaker 1: or whether it's on the equity side where there is

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Speaker 1: some courage still to go forth and make investments. I

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Speaker 1: think there's going to be a real rush to get

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Speaker 1: capsule out the door through over sessionary period and will

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Speaker 1: probably do quite well if history is the is the mark. Well, Okay,

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Speaker 1: I'm going to change subjects lightly now. When I look

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Speaker 1: at more your investments and having a good of view,

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Speaker 1: you see that the strength of the dollar as a

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Speaker 1: buying opportunity overseas, given that, of course, that makes you

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Speaker 1: that asset that much more discounted. I think that's exactly right.

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Speaker 1: And like I spent a lot of the last couple

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Speaker 1: of months over in Europe and also in the UK,

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Speaker 1: and you could see these aren't assets, but you can

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Speaker 1: see the level of tourism that had absolutely gone through

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Speaker 1: the roof, particularly from American tourists who are going over

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Speaker 1: to these markets because of the strength of the dollar.

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Speaker 1: That being said, I don't think that there's going to

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Speaker 1: be a surge of dollar based investment going over to Europe.

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Speaker 1: I think the recessionary risk over there is perhaps being

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Speaker 1: underestimated if you look at the shock that has happened

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Speaker 1: in terms of natural gas prices, energy prices as a

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Speaker 1: result of the Russia Ukraine conflict and the impact that

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Speaker 1: that has on the average household in both the United

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Speaker 1: Kingdom and in the major European markets. I think the

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Speaker 1: threat of consumer recession of those markets has not yet

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Speaker 1: been fully understood, at least by the US capital So

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Speaker 1: I think it's going to be domestically focused investments for now,

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Speaker 1: and thank you so much for joining us and very

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Speaker 1: there from Thread Needle getting her outlook