WEBVTT - Fading the New Year's Bounce 0:00:14.080 --> 0:00:17.320 Hello, and welcome to What Goes Up, a weekly market podcast. 0:00:17.520 --> 0:00:19.520 My name is Mike Reagan. I'm a senior editor at 0:00:19.560 --> 0:00:22.720 Bloomberg and I'm a donna hired across Acid Record with Bloomberg. 0:00:23.000 --> 0:00:27.080 This week on the show, well, after a rough some 0:00:27.240 --> 0:00:31.040 of last year's worst hit investments, from tech companies to 0:00:31.200 --> 0:00:35.000 meme stocks, even Bitcoin, have gotten off to a roaring 0:00:35.080 --> 0:00:38.120 start to the year. So is this rebound finally the 0:00:38.159 --> 0:00:40.680 one that's gonna stick or is it just another head fake. 0:00:41.280 --> 0:00:43.920 We'll get into it with the co chief investment officer 0:00:44.040 --> 0:00:47.559 at a wealth management firm, but Vildonna. Before we get 0:00:47.600 --> 0:00:50.800 into it, I gotta I gotta apologize for for I'm 0:00:50.840 --> 0:00:54.680 gonna be cranky for this episode because I made the 0:00:54.720 --> 0:00:59.360 mistake of stepping on a scale on Monday that I 0:00:59.400 --> 0:01:01.600 had a feeling. I can into it. You just look 0:01:01.600 --> 0:01:03.600 it at me. You could tell that stepping on a 0:01:03.640 --> 0:01:06.800 scale is not going to bring me joy. Yeah. No, no, 0:01:06.880 --> 0:01:09.279 it's not that. It's because I gave you a gift 0:01:09.400 --> 0:01:11.760 I bought. I bought you this like special heart to 0:01:11.760 --> 0:01:14.520 find dip that I really like, and I asked you 0:01:14.560 --> 0:01:17.880 if you like it and you said it's good, which 0:01:17.920 --> 0:01:20.080 means that you didn't like it, and you weren't eating it, 0:01:21.040 --> 0:01:23.520 and you tried it, there's no way you wouldn't have 0:01:23.560 --> 0:01:25.679 liked it. Well, why would I be mad at the 0:01:25.720 --> 0:01:28.800 scale if I didn't like it? Though? I got you there. Yeah, 0:01:29.040 --> 0:01:31.679 Joe Wisenthal did a like a three day fast the 0:01:31.720 --> 0:01:34.640 other day. Yeah, it's like four days. I can do 0:01:34.720 --> 0:01:39.520 like a four hour fast. Yeah, I just say five minutes. 0:01:39.640 --> 0:01:41.760 But the lesson is never stepped on a scale in January. 0:01:41.800 --> 0:01:45.680 I think just in general, who cares, don't don't step 0:01:45.720 --> 0:01:48.760 on it. Well, let's uh put the markets on the 0:01:48.800 --> 0:01:50.840 scale here? How about that? Oh that's good. That's a 0:01:50.880 --> 0:01:53.360 really good transition. I do want to bring in our guest, 0:01:53.480 --> 0:01:57.680 Keith Learner, co chief investment Officer at truest Wealth. Keith, 0:01:57.720 --> 0:01:59.840 thanks so much for joining us. Great to be with 0:02:00.000 --> 0:02:02.240 of Aldanna is so so great to be on the podcast. 0:02:02.240 --> 0:02:04.960 I know you and I have spoken for several years, 0:02:04.960 --> 0:02:07.440 so this is just a great uh you know set up. 0:02:07.480 --> 0:02:10.519 And Mike, great to meet you as well. Yeah, Keith, 0:02:10.560 --> 0:02:12.800 why don't we start off just give us a little 0:02:12.800 --> 0:02:15.880 bit about your background and the background of Truists. Now 0:02:15.960 --> 0:02:19.359 for listeners, are who aren't familiar. Truist was formed basically 0:02:19.400 --> 0:02:21.359 by the merger of sun Trust and bb and T 0:02:21.680 --> 0:02:23.840 a couple of years ago, is the right. That's right? Um, 0:02:23.880 --> 0:02:27.359 you know, right before the pandemic we merged and we're 0:02:27.360 --> 0:02:30.360 the six largest bank in the country, big presence in 0:02:30.400 --> 0:02:33.880 the southeast. Also, you might see these big purpose signs 0:02:33.960 --> 0:02:37.040 up in the Northeast as well, like New York and California. 0:02:37.080 --> 0:02:39.360 So we're really acrourse the country at this point. And 0:02:39.400 --> 0:02:42.240 we have a very vibrant and growing wealth business which 0:02:42.280 --> 0:02:45.760 I am fortunate to be the co chief investment officer 0:02:46.160 --> 0:02:49.520 and lead our you know, asset allocation, market views, economic views, 0:02:49.720 --> 0:02:53.760 and really hopping out clients. Uh navigate these complicated markets. 0:02:54.400 --> 0:02:57.079 And I think Fildonna our first guests in the city 0:02:57.120 --> 0:02:59.639 of Atlanta. How about that? Is that true? True? I 0:02:59.639 --> 0:03:06.760 don't know, eter, I love a good pun. Okay, So 0:03:07.000 --> 0:03:11.320 maybe wild or weird or crazy markets is maybe even 0:03:11.360 --> 0:03:14.799 an understatement. So Mike mentioned that we are seeing this 0:03:14.960 --> 0:03:18.600 resurgence in meme stocks, in crypto, etcetera, etcetera. Maybe can 0:03:18.680 --> 0:03:22.320 you just talk about what's behind this sudden new interest 0:03:22.440 --> 0:03:26.919 in stocks. As we turned the page onto three and 0:03:27.080 --> 0:03:29.600 as the year is getting started, sure, and I think 0:03:29.680 --> 0:03:31.640 in the at the onset you mentioned, hey, is this 0:03:31.840 --> 0:03:35.280 something the beginning of something that's sustainable, and we're skeptical. 0:03:35.800 --> 0:03:38.960 You said also turn the corner, I think, or maybe 0:03:38.960 --> 0:03:41.360 the calendar, and I think that's what's happened. If you 0:03:41.400 --> 0:03:45.200 think about late last year, we saw actually a lot 0:03:45.240 --> 0:03:47.920 of tax laws selling. We saw the market, the SNP 0:03:48.400 --> 0:03:50.760 have this kind of correction in December around five or 0:03:50.760 --> 0:03:54.240 six percent. So I think as you turned the calendar, 0:03:54.360 --> 0:03:56.160 a lot of these areas that were beat up, that 0:03:56.280 --> 0:03:59.360 was sold off late last year, or seeing this meme 0:03:59.560 --> 0:04:02.240 reverse and in January is often the time when you 0:04:02.280 --> 0:04:05.480 see that mean reversion. I would say this, Uh, you know, 0:04:05.480 --> 0:04:08.320 if you think about the meme stocks, those typically will 0:04:08.400 --> 0:04:11.360 do well in a period of you know, rising liquidity, 0:04:11.560 --> 0:04:14.480 and we're still taking away liquidity. So we just don't 0:04:14.480 --> 0:04:16.200 think it's sustainable. We think it's more of a balance, 0:04:16.240 --> 0:04:19.040 but we would be fading that balance, you know. Keith, 0:04:19.080 --> 0:04:22.200 I know in your outlook for three talk about the 0:04:22.240 --> 0:04:27.240 need to remain defensive. What does that mean in this environment? 0:04:27.400 --> 0:04:29.360 The notion of defense to me, I think it kind 0:04:29.360 --> 0:04:31.479 of changes with the times. You know, for a while 0:04:31.520 --> 0:04:35.080 there it felt like big cap tech was defensive, you know, 0:04:35.160 --> 0:04:38.440 during the pandemic. What's a good defensive strategy look like 0:04:38.480 --> 0:04:41.719 these days? Sure? And uh, you know, we moved to 0:04:42.120 --> 0:04:45.479 a an underweight position and equities at the end of October, 0:04:45.920 --> 0:04:48.719 and we went to an overweight position in fixed income. 0:04:49.160 --> 0:04:51.720 And as we're thinking about kind of big picture ASCID allocation, 0:04:52.200 --> 0:04:54.279 you know, we think that the macro risk at large, 0:04:54.320 --> 0:04:57.359 we think there's still somewhat elevated recession risk, and we 0:04:57.440 --> 0:05:00.600 look at you know, equities and and credit we just 0:05:00.600 --> 0:05:02.800 don't think you're being compensated. At best. You can say, 0:05:02.800 --> 0:05:05.320 with the correction we had last year, equities and maybe 0:05:05.320 --> 0:05:08.800 fairly valued credit markets are actually you know, to us, 0:05:08.880 --> 0:05:12.480 very expensive relative to the risk. So being defensive from 0:05:12.480 --> 0:05:16.440 a stock, bonds and cast perspective is being overweight fixed 0:05:16.520 --> 0:05:20.120 income relative to equities, and then in the fixed income component, 0:05:20.640 --> 0:05:24.680 keeping it simple, keeping with high quality fixed income and 0:05:24.720 --> 0:05:26.839 not really taking a lot of credit risk at this point, 0:05:27.120 --> 0:05:29.160 and then more kind of moving down a little bit, Mike, 0:05:29.520 --> 0:05:31.400 you know, when we think about the overall markets, I 0:05:31.400 --> 0:05:34.200 think you also have to go below the markets surface. 0:05:34.279 --> 0:05:36.560 As you mentioned, tech is still not leadership, so we've 0:05:36.600 --> 0:05:39.520 been seeing more opportunities below the markets surface, things like 0:05:39.520 --> 0:05:43.120 they equated SMP. And then lastly, more of on a 0:05:43.160 --> 0:05:47.680 sector standpoint, bar bellan kind of defensive sectors like healthcare 0:05:48.240 --> 0:05:52.440 with things like energy and industrials that have some unique circumstances, 0:05:52.720 --> 0:05:55.720 you know, in this environment. So Keith, just going with 0:05:55.800 --> 0:05:59.480 that defensive team, I think you are also for seeing 0:05:59.760 --> 0:06:02.600 you US recession this year, right, whereas we've had some 0:06:02.600 --> 0:06:05.120 people coming out recently and being maybe a bit more 0:06:05.120 --> 0:06:08.800 optimistic or saying that any potential recession is likely to 0:06:08.800 --> 0:06:11.919 be pushed back or delayed. So tell us about what 0:06:12.040 --> 0:06:15.880 you're projecting for the economy. Sure, and I think we 0:06:15.960 --> 0:06:17.440 all know if we do a recessing it will be 0:06:17.520 --> 0:06:20.760 the most called one beforehand in history. But listen, we 0:06:21.080 --> 0:06:23.040 follow the way to the evidence, and we look at 0:06:23.080 --> 0:06:26.000 some timely indicators and with those indicators, whether it's the 0:06:26.040 --> 0:06:28.760 deep and version of the yield curve, the leading economic 0:06:28.800 --> 0:06:30.800 indicators which are down more than four percent on a 0:06:30.880 --> 0:06:33.880 year over year basis, you know housing market which peaked 0:06:34.000 --> 0:06:39.680 last year, those historically suggests elevated recession risk. But you know, 0:06:39.960 --> 0:06:42.920 as we look even at the yield curve, when you say, okay, 0:06:42.920 --> 0:06:46.400 on average, once you invert, which happened last year, that 0:06:46.440 --> 0:06:49.599 would push us more into the middle to the fall 0:06:49.680 --> 0:06:52.040 of neck of this year. So you know, as far 0:06:52.080 --> 0:06:55.160 as the recession, and I would say, right now, the 0:06:55.240 --> 0:06:57.240 data suggests we are not in recession, but we still 0:06:57.279 --> 0:07:00.159 think there's risk of one happening later this year. I 0:07:00.160 --> 0:07:03.039 think the biggest reason behind that is, as we all know, 0:07:03.160 --> 0:07:05.080 as we've all been talking about the last year, we've 0:07:05.080 --> 0:07:09.640 had the most aggressive increase in monetary policy, not only 0:07:09.680 --> 0:07:13.600 domestically but also globally in the last forty years, and 0:07:13.600 --> 0:07:15.760 we just think that's gonna weigh on growth as we 0:07:15.800 --> 0:07:19.080 move further into this year. Keith, one theme I keep 0:07:19.080 --> 0:07:21.880 hearing people talk about a lot this year is UH 0:07:22.000 --> 0:07:25.280 the outperformance of the rest of the world versus the US. 0:07:25.680 --> 0:07:29.480 And I'm looking at UH some of your positioning advice here. 0:07:30.080 --> 0:07:33.680 You rank international developed equity markets and emerging markets as 0:07:33.680 --> 0:07:37.400 sort of the less attractive side there, which I find 0:07:37.440 --> 0:07:39.280 interesting because there is there does seem to be a 0:07:39.320 --> 0:07:43.040 lot of bullishness elsewhere towards you know, the rest of 0:07:43.080 --> 0:07:46.520 the world excluding the US. So walk us through what 0:07:46.600 --> 0:07:49.560 you're seeing that makes you sort of want to stay 0:07:49.560 --> 0:07:53.360 away from international equities. Sure, and maybe a little context. 0:07:53.360 --> 0:07:55.840 I mean, we've been big bows on the US for 0:07:55.840 --> 0:07:58.840 for several years. UH. Fortunately, I've benefited from the big 0:07:58.840 --> 0:08:01.720 outperformance because we've been thinking the U s is that 0:08:01.880 --> 0:08:03.920 big blue chip country. And if you look at this 0:08:04.080 --> 0:08:06.640 kind of simply, the earning trends for the US have 0:08:06.680 --> 0:08:08.960 been so much stronger than the rest of the globe. 0:08:09.040 --> 0:08:11.600 You know, international markets have done really well. And if 0:08:11.600 --> 0:08:13.800 you think about why that is, I think there's two 0:08:13.800 --> 0:08:18.200 main factors. One, the climate in Europe was much warmer 0:08:18.240 --> 0:08:20.920 than expected, so the energy crisis that a lot of 0:08:20.920 --> 0:08:25.040 folks were concerned about just didn't happen. So that's one positive. 0:08:25.080 --> 0:08:28.440 And then the second positive, which was unexpected was basically 0:08:28.520 --> 0:08:32.679 China ripping the band aid off of COVID and in 0:08:32.720 --> 0:08:35.800 europe's a big trading partners. So so with all that said, 0:08:35.840 --> 0:08:38.120 I listen, I think that's an area where focusing on 0:08:38.240 --> 0:08:40.920 right now on a short term basis. You know, if 0:08:40.960 --> 0:08:42.400 you look at the last two or three months, it's 0:08:42.440 --> 0:08:45.480 had one of the biggest outperformance periods UH in the 0:08:45.559 --> 0:08:48.360 last twenty or thirty years. So our position is things 0:08:48.360 --> 0:08:50.559 are getting more interest in there you've had a big 0:08:50.679 --> 0:08:53.280 run because of these unexpected events that have broken the 0:08:53.360 --> 0:08:56.200 right way. We would be looking more potentially to upgrade 0:08:56.240 --> 0:08:59.199 that on a consolidation or pull back after such a 0:08:59.240 --> 0:09:02.200 strong move up that we've seen. But again in the 0:09:02.440 --> 0:09:04.640 in the grand scheme the last ten years, it's really 0:09:04.840 --> 0:09:07.680 still underperformed by a wide margin. Is that part of 0:09:07.679 --> 0:09:10.240 being more defensive too, is leaning more towards US than 0:09:10.400 --> 0:09:13.640 than international traditionally. Yes, but I would say, you know, 0:09:13.960 --> 0:09:17.480 we all somewhat and and been underweight tech for several months, 0:09:17.559 --> 0:09:19.480 So it's not just as simple as saying, hey, by 0:09:19.480 --> 0:09:22.360 the SMP five hundred, we've been a big advocate over 0:09:22.400 --> 0:09:24.839 the last year and still are of the equal weated SMP, 0:09:24.960 --> 0:09:27.760 which basically is a proxy for the average stock. It's 0:09:27.800 --> 0:09:31.160 not weighed down so much by these big megacap tech stocks, 0:09:31.200 --> 0:09:33.800 and evaluations are more reasonable. If you look at a 0:09:33.880 --> 0:09:37.360 relative price chart, you're basically at a four year relative 0:09:37.480 --> 0:09:40.320 high to the overall market. So it's almost like a period. 0:09:40.320 --> 0:09:42.560 It's an echo of two thousand where you want to 0:09:42.559 --> 0:09:45.679 start looking different or and we've been doing that over 0:09:45.679 --> 0:09:47.960 the last year than just the SNP five hundred. It's 0:09:48.000 --> 0:09:50.320 not just buying that index and sitting back because we 0:09:50.320 --> 0:09:53.040 just don't see tech as leadership likely even for the 0:09:53.080 --> 0:09:56.560 next cycle. Okay, tell us more about your preference for 0:09:56.760 --> 0:09:59.600 the equal weight in next because it has been outperforming 0:10:00.200 --> 0:10:02.560 over the last couple of weeks. And basically what that 0:10:02.559 --> 0:10:04.880 shows us is that there's just the rally has been 0:10:04.880 --> 0:10:08.680 more broad based than previously, right correct, And as I mentioned, 0:10:08.720 --> 0:10:10.560 we really started a getting more interested, you know, early 0:10:10.679 --> 0:10:14.360 last year when when tech valuation has got pretty expensive. 0:10:14.640 --> 0:10:17.719 And the way to think about it is tech communications 0:10:17.720 --> 0:10:21.120 and growth or allocation within the SMP became so large. 0:10:21.200 --> 0:10:23.040 We all know about the famoustocks and how large each 0:10:23.080 --> 0:10:25.920 of those individual companies. So what we're seeing is it's 0:10:26.000 --> 0:10:29.920 kind of reallocation from these really heavyweight growth areas to 0:10:30.080 --> 0:10:33.080 these smaller weight you know, value cyclical areas of the 0:10:33.120 --> 0:10:35.160 market and even some of the defensive areas. So we 0:10:35.120 --> 0:10:38.400 we're seeing this rotation and we just expect that's likely 0:10:38.480 --> 0:10:42.160 to continue. And unlike you know, big cap Tech, which 0:10:42.320 --> 0:10:44.559 has corrected a lot, but still I would say is 0:10:44.600 --> 0:10:48.000 not cheap from a historical standpoint, the average stock is 0:10:48.040 --> 0:10:50.800 training close to to about a fifteen times multiple. Again, 0:10:50.840 --> 0:10:53.280 I'm not saying that's deeply cheap, but it's it's more 0:10:53.320 --> 0:10:57.079 reasonable also from that perspective as well. Yeah, Keith, one 0:10:57.120 --> 0:10:59.320 note of yours that cut my eye. You called the 0:10:59.360 --> 0:11:04.840 reverse portrayed presumably David Tepper, is this betting against the 0:11:04.880 --> 0:11:07.200 Carolina Panthers? Is that what this straight is all about? 0:11:08.320 --> 0:11:10.280 Against them? I assume that's not it, but to talk 0:11:10.360 --> 0:11:12.240 to us what it really is. Yeah, I have some 0:11:12.480 --> 0:11:15.560 I have some relativis in uh Charlotte and in laws 0:11:15.559 --> 0:11:18.040 and also now our headquarters for druous is in Charlotte. 0:11:18.480 --> 0:11:21.440 So I'm not going to be rooting against them, but 0:11:23.040 --> 0:11:27.199 that's not the gave me any uh anything client exactly. 0:11:27.520 --> 0:11:30.000 So the way we put this out a note out 0:11:30.080 --> 0:11:32.520 mid last year, which is interesting. I saw him about 0:11:32.520 --> 0:11:34.240 it probably about a week after we put this note out, 0:11:34.280 --> 0:11:37.360 and he basically validated of you. I did send an 0:11:37.400 --> 0:11:39.480 email to David and said, hey, if I always send 0:11:39.520 --> 0:11:41.880 this out, I haven't heard back, so maybe he'll listen 0:11:41.920 --> 0:11:45.120 to your podcast an email. But the way we're thinking 0:11:45.120 --> 0:11:47.320 about it is this. If you remember back, you know, 0:11:47.320 --> 0:11:49.360 coming out of the financial crisis around I think it 0:11:49.480 --> 0:11:52.600 was around two thousand and ten. Back then, David made 0:11:52.600 --> 0:11:55.040 a very cojin point. It was very simple. He said, basically, 0:11:55.559 --> 0:11:57.800 either the economy is going to get better and that's 0:11:57.800 --> 0:12:00.520 gonna help stocks out, or the economy has the weekend 0:12:00.679 --> 0:12:02.559 and the FED is going to step in and support 0:12:02.559 --> 0:12:05.160 the market. So it's almost like a wind win proposition. 0:12:05.679 --> 0:12:08.400 So in some ways you have almost the polar opposite 0:12:08.400 --> 0:12:10.200 of that today and next goes back to the whole 0:12:10.240 --> 0:12:13.800 question about recession or not. Is one either the economy 0:12:13.880 --> 0:12:17.559 is going to stay somewhat strong and that's gonna force 0:12:17.640 --> 0:12:21.680 the FED to continue to be somewhat tight, or the 0:12:21.720 --> 0:12:24.240 economy is going to weaken, which is gonna hit corporate profits, 0:12:24.280 --> 0:12:26.640 and if you're training out of seventeen and a half multiple, 0:12:26.960 --> 0:12:29.840 there's some downside risk. To be fair, there there is 0:12:29.880 --> 0:12:32.440 a third scenario, which the market has started to buy 0:12:32.480 --> 0:12:34.439 into a little bit. Is this kind of soft landing 0:12:34.440 --> 0:12:38.000 where the economy, you know, slows down but doesn't go 0:12:38.000 --> 0:12:41.480 into recession. Inflation is coming down rapidly, and there is 0:12:41.720 --> 0:12:45.200 some probability. We just don't think it's high probability. And 0:12:45.240 --> 0:12:46.920 that's one of the reasons over all, while we still 0:12:46.920 --> 0:12:49.880 remain defensive, because you're just not being compensated for the 0:12:49.920 --> 0:12:53.080 macro risk that we're seeing, at least not today. I 0:12:53.120 --> 0:12:55.640 wanted to ask you, speaking of the FED, how the 0:12:55.720 --> 0:12:59.920 recent rally in stocks actually works against the Fed's goals. Right, 0:13:00.000 --> 0:13:03.280 So we have a loosening of financial conditions and it's 0:13:03.320 --> 0:13:06.959 not exactly like the FED wants to be seeing stocks rallying, 0:13:08.840 --> 0:13:11.040 That's right, And I mean it's it's not just the 0:13:11.160 --> 0:13:14.280 equity market. Also, you look at the credit markets. I mean, 0:13:14.280 --> 0:13:16.560 look how yield spreads are back to where where they 0:13:16.559 --> 0:13:19.480 were several months ago. So we're not embedding any uh, 0:13:19.520 --> 0:13:22.040 you know, recession risks as a whole. And I think 0:13:22.160 --> 0:13:25.400 if you're the FED and you're focused on financial conditions 0:13:25.440 --> 0:13:27.400 which you can impact, I think at some point they're 0:13:27.400 --> 0:13:30.559 gonna start jaw boarding the market again. So I think 0:13:30.600 --> 0:13:32.560 that's that's a challenge. And then also you know the 0:13:32.640 --> 0:13:35.640 unemployment rate. You know, if you're in the soft landing camp, 0:13:35.840 --> 0:13:38.240 the unemployment rate is still at three and a half percent. 0:13:38.360 --> 0:13:40.040 I mean, that's not a place where even if you 0:13:40.080 --> 0:13:42.800 see disinflationary trends that we think the Fed's going to 0:13:42.880 --> 0:13:44.680 take their foot off the pedal, at least on the 0:13:44.760 --> 0:13:47.080 jaw boarding side. And we also think the FED has 0:13:47.120 --> 0:13:50.079 some scard tissue from what's happened over the last year, 0:13:50.120 --> 0:13:53.280 which will make them maybe not as aggressive when they 0:13:53.280 --> 0:14:02.600 do eventually pin. So talk us through what you're thinking 0:14:02.640 --> 0:14:04.280 from the Fed. You know, this week we did get 0:14:04.320 --> 0:14:08.640 some some new inflation data. The p p I index, Uh, 0:14:09.000 --> 0:14:12.000 it was down half a percentage point month over month 0:14:12.559 --> 0:14:16.120 UM at the same time we saw downward surprise and 0:14:16.240 --> 0:14:19.000 retail sales uh, you know, down more than one percent. 0:14:19.560 --> 0:14:23.480 Some of the regional FED indexes have been pretty bad. 0:14:23.640 --> 0:14:26.160 You know, is this enough to make the FED at 0:14:26.200 --> 0:14:30.000 least pause after maybe another fifty basis points or or 0:14:30.040 --> 0:14:32.200 what we're we're how do you see it all playing 0:14:32.200 --> 0:14:33.840 out in in sort of the first half of the 0:14:33.880 --> 0:14:36.120 year with the Fed? Yeah, I think in general they 0:14:36.120 --> 0:14:38.920 probably should be somewhat happy. Looking does look like we're 0:14:38.920 --> 0:14:41.880 seeing this inflation any precious CPI looks like it it 0:14:41.960 --> 0:14:44.560 did come down, you know, the rents we all know 0:14:44.680 --> 0:14:47.440 is going to work with the lag. So I think 0:14:47.440 --> 0:14:49.000 they should be you know, probably the p p I 0:14:49.040 --> 0:14:51.400 as you mentioned, I think, well, they'll be happy that 0:14:51.480 --> 0:14:54.240 things I'm moving in the right directions. And but you know, 0:14:54.600 --> 0:14:56.480 even if they all go into pivot I don't think 0:14:56.480 --> 0:14:57.920 they're gonna let you know that. I mean, there's no 0:14:57.960 --> 0:15:01.640 reason for them to really, you know, talk too too 0:15:01.680 --> 0:15:04.160 much about taking their their foot off the pedal, even 0:15:04.160 --> 0:15:06.440 though it's more likely to the point is probably another 0:15:06.480 --> 0:15:08.360 fifty basis points or so to go and then just 0:15:08.400 --> 0:15:11.120 to pause and then just to hold. And going back 0:15:11.160 --> 0:15:13.720 to the premise of scar tissue, this is when we 0:15:13.720 --> 0:15:16.640 started talking about a lot last year. Is that you know, 0:15:16.680 --> 0:15:20.480 for for over you know, two decades, the Fed really 0:15:20.480 --> 0:15:22.680 didn't have to worry about inflation, right if you think 0:15:22.680 --> 0:15:25.240 about coming out of the financial crisis or the printing 0:15:25.240 --> 0:15:27.480 back then, which actually looks small relative to the last 0:15:27.720 --> 0:15:31.160 couple of years, There was all this discussion about inflation, inflation, inflation, 0:15:31.240 --> 0:15:33.720 it never came, so that really gave the Fed the 0:15:33.720 --> 0:15:36.080 green light to come in at any point to support 0:15:36.160 --> 0:15:38.480 the market. Well, this is the first time in decades 0:15:38.480 --> 0:15:40.640 they've had to worry about inflation. So we think that 0:15:40.720 --> 0:15:43.800 scar tissue of what's happened over the last year is 0:15:43.840 --> 0:15:47.200 going to make them, you know, more reluctant to be aggressive. 0:15:47.200 --> 0:15:48.880 And I think one of the things, you know, if 0:15:48.880 --> 0:15:50.920 we do have a recession, which again is that based 0:15:50.960 --> 0:15:52.920 case I think there's a lot of discussion is this 0:15:53.040 --> 0:15:54.920 gonna be harder soft? I think a lot of the 0:15:54.920 --> 0:15:58.000 things like the labor market load, delinquency rates suggests maybe, 0:15:58.280 --> 0:16:00.520 you know, somewhat short and shallow. But at the risk 0:16:00.600 --> 0:16:02.480 is this is not much of a you know, much 0:16:02.480 --> 0:16:04.840 of a policy response relatives to the past if we 0:16:04.880 --> 0:16:07.400 have some type of outlier event, and that's the risk. 0:16:08.200 --> 0:16:11.640 What about this idea that the reopening in China can 0:16:11.680 --> 0:16:14.920 complicate what the feed is trying to do in that 0:16:14.960 --> 0:16:17.920 with their reopening, we could maybe see a resurgence in 0:16:17.920 --> 0:16:21.120 inflation numbers here in the US. I'm wondering about that, 0:16:21.200 --> 0:16:23.920 and also how maybe whatever is going on with China 0:16:24.000 --> 0:16:27.160 might complicate your outlook as well. Yeah, no, it's I mean, 0:16:27.200 --> 0:16:28.840 and that's the thing. You can look back at history. 0:16:28.880 --> 0:16:32.240 There's a historical playbook, but you know, the historical playbooks 0:16:32.280 --> 0:16:34.280 likely challenged because, I mean, how many times that we 0:16:34.320 --> 0:16:36.240 have the most of the global slowering and then the 0:16:36.280 --> 0:16:42.120 second largest economy actually stimulating and also showing um economic 0:16:42.160 --> 0:16:44.600 growth which is certainly likely to be much higher than 0:16:44.640 --> 0:16:47.840 the past year in China with the stimulus. So to 0:16:47.880 --> 0:16:51.040 your point, I do think if you know, as China reopens, 0:16:51.320 --> 0:16:53.760 that likely put some upward pressure on commodities at least 0:16:53.760 --> 0:16:56.160 support maybe what won't go down as much as as typical. 0:16:56.440 --> 0:16:59.400 And that's where I think that the main translation could 0:16:59.440 --> 0:17:01.560 be for the fad is if some of these commodity 0:17:01.560 --> 0:17:04.560 prices stay higher for longer because of that, I will say, 0:17:04.800 --> 0:17:06.960 just like what we experienced here in the US, a 0:17:07.000 --> 0:17:09.800 lot of I think what you're gonna see is more 0:17:09.840 --> 0:17:12.359 of kind of this pent up consuming spending, especially on 0:17:12.400 --> 0:17:15.439 the service side. Um. But then I saw a stat 0:17:16.160 --> 0:17:19.840 this week, Um, you think about them reopening. I haven't 0:17:19.920 --> 0:17:23.320 verified it, but it came from a legitimate sources. Every 0:17:23.359 --> 0:17:28.399 call is that in twenty nine, tourism from China to Europe, 0:17:28.400 --> 0:17:30.119 I want to say it was or the amount of 0:17:30.240 --> 0:17:33.639 nights UM stayed from Chinese tourists and Europe was like 0:17:33.680 --> 0:17:38.120 twenty million, and then one that fell to about one 0:17:38.160 --> 0:17:41.560 and a half million, again million plus to one point 0:17:41.680 --> 0:17:43.879 five million, And that wasn't at the end of one 0:17:43.920 --> 0:17:45.920 We don't even have the stats for the last year. 0:17:46.280 --> 0:17:48.800 So if they just you know, go back to half 0:17:49.160 --> 0:17:51.080 and start traveling, and I'm sure there's a lot of 0:17:51.080 --> 0:17:54.840 folks that are antsy to to to start traveling again. Um, 0:17:54.920 --> 0:17:57.520 that's that's huge, that's huge demand and probably one of 0:17:57.560 --> 0:17:59.160 the reasons going back to the question about the Nascal, 0:17:59.200 --> 0:18:03.480 you've seen this this really v shaped rebound and international markets. Yeah, 0:18:03.680 --> 0:18:06.720 probably good for the Euro too, I would assume gets 0:18:06.960 --> 0:18:10.280 get a rebound there too. Keith, I know one thing 0:18:10.320 --> 0:18:12.560 you said in your outlook is you need to remain 0:18:12.840 --> 0:18:16.760 tactical this year. So I'm curious what sort of signs 0:18:16.760 --> 0:18:19.800 it would take or what sort of market action you 0:18:19.800 --> 0:18:22.439 would need to see to get you in the bullish 0:18:22.520 --> 0:18:24.880 camp of things. You know, what is there any sort 0:18:24.920 --> 0:18:29.040 of target you have for the market or or something 0:18:29.080 --> 0:18:30.960 that would make you go, you know, now now is 0:18:31.000 --> 0:18:33.240 the time to really jump in with both feet into 0:18:33.240 --> 0:18:36.240 the stocks, into growth, into you know, all these things 0:18:36.280 --> 0:18:39.280 were kind of shirking at the moment. Sure, and you know, 0:18:39.400 --> 0:18:42.280 we don't have a specific price targets. We will find 0:18:42.280 --> 0:18:45.560 it more helpful to have kind of conditions and then 0:18:45.840 --> 0:18:47.159 you know, use the way of the evidence. So a 0:18:47.160 --> 0:18:50.040 lot of times when we say be tactical, like last year, 0:18:50.040 --> 0:18:53.199 as I mentioned, we've had we had six moves of 0:18:53.200 --> 0:18:55.240 at least ten percent in the market right three to 0:18:55.320 --> 0:18:57.160 the downside three to the up side. So I think 0:18:57.160 --> 0:19:01.440 as this whole debate rages on about hard landings, soft landing, China, 0:19:01.480 --> 0:19:05.040 reopening Europe, I think we don't have those toctical opportunities 0:19:05.040 --> 0:19:07.439 as well. So things that we would be looking for, 0:19:07.480 --> 0:19:09.520 I guess to take money off the table, like maybe 0:19:09.600 --> 0:19:13.240 start there is you know, we combine you know, valuations. 0:19:13.280 --> 0:19:15.520 So like if you think about this market, you know 0:19:15.800 --> 0:19:19.080 as an eighteen p has been kind of a you know, 0:19:19.200 --> 0:19:21.160 top end of the range even before the pandemic around 0:19:21.160 --> 0:19:22.879 eighteen and a half. And then you look at some 0:19:22.920 --> 0:19:25.639 technical things like even with the recent rally, we were 0:19:25.640 --> 0:19:27.520 now the most overboard we've been for a few months. 0:19:27.760 --> 0:19:29.520 To us, the risky ward is not the compelling as 0:19:29.520 --> 0:19:31.639 you kind of moved from you know, four thousand, forty 0:19:31.640 --> 0:19:34.040 one hundred to the other side. More direct to your question, 0:19:34.600 --> 0:19:37.560 you know what gives more positive fire lower prices and 0:19:37.560 --> 0:19:39.800 and sentiment that gets a bit washed out, more and 0:19:40.200 --> 0:19:43.600 cheap evaluations. So and when we think of back around 0:19:43.760 --> 0:19:46.800 um October, we were around you know, thirty five hundred 0:19:46.880 --> 0:19:50.400 or so trading around the fifteen multiple sentiment very negative, 0:19:50.480 --> 0:19:53.680 and we saw our technical indicator is very oversold. That's 0:19:53.720 --> 0:19:56.480 the same thing that we're looking for. And I think, listen, 0:19:56.480 --> 0:19:59.359 you're not gonna we're not trying to top bomb ticking 0:19:59.400 --> 0:20:01.960 to this. It's in possible, But I'll focus is there's 0:20:02.000 --> 0:20:04.160 gonna be these extremes. And when we start to see 0:20:04.160 --> 0:20:06.240 those conditions moved an extreme, we want to be a 0:20:06.359 --> 0:20:09.199 tactical to add risk or take risk off. So I 0:20:09.200 --> 0:20:11.600