1
00:00:02,520 --> 00:00:09,400
Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Lisa Shellett has been

2
00:00:09,440 --> 00:00:12,520
Speaker 1: around the black fourteen fifteen times. She was fourteen years old,

3
00:00:12,600 --> 00:00:16,040
Speaker 1: she was at Alliance Bernstein working for Sandy Bernstein years ago.

4
00:00:16,360 --> 00:00:19,480
Speaker 1: Drives a ship at Morgan Stanley. What I love about

5
00:00:19,520 --> 00:00:21,960
Speaker 1: your note is you say, get over it. It's a

6
00:00:21,960 --> 00:00:29,120
Speaker 1: complex situation. How do you sustain an investment plan given

7
00:00:29,280 --> 00:00:30,880
Speaker 1: legitimate complexity.

8
00:00:32,680 --> 00:00:36,040
Speaker 2: I think you can't sustain one plan. You can't be anchored.

9
00:00:36,120 --> 00:00:40,839
Speaker 2: We're our watchword right now is hyper vigilance. One of

10
00:00:40,880 --> 00:00:44,599
Speaker 2: the things that has been very interesting to us that

11
00:00:44,640 --> 00:00:48,320
Speaker 2: has differentiated twenty twenty six from you know, really the

12
00:00:48,320 --> 00:00:51,960
Speaker 2: first three years of this bull market has been underneath

13
00:00:51,960 --> 00:00:56,160
Speaker 2: the surface of the index. We've had extraordinary dispersion of

14
00:00:56,280 --> 00:01:00,400
Speaker 2: individual stock performance. So if you're a stock picker, which

15
00:01:00,480 --> 00:01:03,520
Speaker 2: I grew up being and haven't really been able to

16
00:01:03,560 --> 00:01:09,440
Speaker 2: do for the past fifteen seventeen years, this is you know, Christmas,

17
00:01:09,480 --> 00:01:13,160
Speaker 2: and there's lots and lots of things to do below

18
00:01:13,240 --> 00:01:17,920
Speaker 2: the surface, and so hypervigilance is one way to plan.

19
00:01:18,080 --> 00:01:22,360
Speaker 2: But I think the second element of this tom is

20
00:01:22,400 --> 00:01:26,840
Speaker 2: that you know, we're marveling at how little risk premia

21
00:01:27,440 --> 00:01:31,319
Speaker 2: is really being priced into this market given the complexity.

22
00:01:31,400 --> 00:01:35,880
Speaker 2: I mean, not to you know, venture into hyperbole, but

23
00:01:36,240 --> 00:01:40,800
Speaker 2: you know, this is a situation that is currently militarily

24
00:01:40,959 --> 00:01:46,440
Speaker 2: involving thirteen fourteen different countries. Now, I don't want to

25
00:01:46,480 --> 00:01:50,000
Speaker 2: say the words world war, but you know this is

26
00:01:50,320 --> 00:01:54,880
Speaker 2: this is the closest in my lifetime and so to me,

27
00:01:56,360 --> 00:02:00,440
Speaker 2: you know, you know, putting that complexity together with the

28
00:02:00,480 --> 00:02:04,200
Speaker 2: fact that we're now seeing you know, from the policy side,

29
00:02:04,480 --> 00:02:07,200
Speaker 2: what feels to me like not just a response but

30
00:02:07,320 --> 00:02:12,040
Speaker 2: almost a panic in terms of the global desire to

31
00:02:12,120 --> 00:02:16,120
Speaker 2: release energy reserves and the IEA in particular, you know,

32
00:02:16,200 --> 00:02:19,120
Speaker 2: going out after you know, twenty five to thirty percent

33
00:02:19,160 --> 00:02:20,519
Speaker 2: of reserves.

34
00:02:19,960 --> 00:02:20,840
Speaker 3: Ten days in.

35
00:02:21,400 --> 00:02:23,679
Speaker 2: Yeah, that means you only have two two thirds left.

36
00:02:23,840 --> 00:02:26,239
Speaker 1: The heritage of Morgan Stanley starts with a woman named

37
00:02:26,280 --> 00:02:28,680
Speaker 1: Mary who used to put out a deck eighty pages.

38
00:02:28,720 --> 00:02:31,120
Speaker 1: I hated or you had to read every page of it.

39
00:02:31,440 --> 00:02:35,120
Speaker 1: You people own the analysis of technology, particularly on the

40
00:02:35,240 --> 00:02:39,320
Speaker 1: Left coast. Is this the mother of all opportunities in

41
00:02:39,360 --> 00:02:41,040
Speaker 1: a software AI scare?

42
00:02:41,960 --> 00:02:44,160
Speaker 2: I don't know that I'd call it the mother of

43
00:02:44,200 --> 00:02:46,880
Speaker 2: all opportunities. I mean twenty twenty two, the selloff in

44
00:02:46,919 --> 00:02:50,440
Speaker 2: twenty twenty two is a pretty good opportunity because that

45
00:02:50,560 --> 00:02:54,240
Speaker 2: was so focused on technology. But there are a lot

46
00:02:54,280 --> 00:02:56,680
Speaker 2: of things to do, and we are, you know, picking

47
00:02:56,720 --> 00:02:59,080
Speaker 2: through the rubble. We're picking through, you know, some of

48
00:02:59,120 --> 00:03:03,400
Speaker 2: the software. We're funding it from some of the semiconductor makers.

49
00:03:03,400 --> 00:03:06,040
Speaker 2: In fact, you know, I'm trying to remind people that

50
00:03:06,120 --> 00:03:09,960
Speaker 2: semiconductors are actually cyclical and typically trade on normalized earnings,

51
00:03:10,040 --> 00:03:10,880
Speaker 2: not peak earnings.

52
00:03:10,880 --> 00:03:15,120
Speaker 3: People, Lisa, you are the CIO of Morgan Stanley Wealth Management,

53
00:03:15,160 --> 00:03:17,560
Speaker 3: and you just wrote that US equity resilience in the

54
00:03:17,600 --> 00:03:20,679
Speaker 3: face of Warren oil shocks is largely unprecedented, like such

55
00:03:20,680 --> 00:03:22,639
Speaker 3: as like we're seeing and you're going back at least

56
00:03:22,680 --> 00:03:25,720
Speaker 3: eighty years here. I mean the investors you're talking to, you,

57
00:03:25,720 --> 00:03:28,520
Speaker 3: do you find more of them interested in bargain hunting

58
00:03:28,560 --> 00:03:31,480
Speaker 3: in the current environment or looking to put on protection

59
00:03:31,600 --> 00:03:34,280
Speaker 3: or looking for safe haven places to hide in the

60
00:03:34,320 --> 00:03:37,080
Speaker 3: current environment. What have your conversations with client's been like, So.

61
00:03:37,080 --> 00:03:41,480
Speaker 2: It really depends on where you sit. For much of

62
00:03:41,520 --> 00:03:46,640
Speaker 2: our private wealth, business, family offices, ultra high net worth individuals,

63
00:03:46,920 --> 00:03:51,800
Speaker 2: they're much more defensive. They're much more concerned about about,

64
00:03:51,920 --> 00:03:55,000
Speaker 2: you know, risk premium about being defensive about having some

65
00:03:55,080 --> 00:03:59,880
Speaker 2: cash on the sidelines. But you know, the more institutional folks,

66
00:04:00,400 --> 00:04:04,480
Speaker 2: uh have still have some animal spirit here, and uh

67
00:04:04,720 --> 00:04:07,720
Speaker 2: you know, have have kind of deep belief that this

68
00:04:07,840 --> 00:04:10,840
Speaker 2: is going to be over quickly and that the underlying

69
00:04:10,880 --> 00:04:16,640
Speaker 2: fundamental story of profit acceleration because of AI still lives.

70
00:04:16,839 --> 00:04:19,719
Speaker 3: So what about some of these I'm going to go there,

71
00:04:19,839 --> 00:04:23,880
Speaker 3: quantum computing, bitcoin mining, flying taxi companies, new energy, all

72
00:04:23,880 --> 00:04:26,920
Speaker 3: these kind of you know, small cap growth stocks, all

73
00:04:26,960 --> 00:04:29,640
Speaker 3: these meme themes. What are your thoughts there? I mean,

74
00:04:29,680 --> 00:04:31,839
Speaker 3: do you still tell investors, hey, you know you want

75
00:04:31,839 --> 00:04:33,840
Speaker 3: to you know, you have to be exposed in order

76
00:04:33,880 --> 00:04:35,760
Speaker 3: to benefit from it, right, I mean, like, is it

77
00:04:35,960 --> 00:04:38,200
Speaker 3: is it a non non zero probability that you're basically

78
00:04:38,200 --> 00:04:40,520
Speaker 3: telling investors, hey, you know you can't just run and

79
00:04:40,600 --> 00:04:42,560
Speaker 3: hide from some of these some of these sectors.

80
00:04:43,240 --> 00:04:47,479
Speaker 2: So absolutely, we are fundamental believers in thematic investing. I know,

81
00:04:47,720 --> 00:04:51,880
Speaker 2: you know, Tom has my colleague Ellen Zentner on very often,

82
00:04:51,920 --> 00:04:56,040
Speaker 2: and she's she's running thematic for us. But what we're

83
00:04:56,080 --> 00:05:00,240
Speaker 2: doing is we're trying to access those opportunities more in

84
00:05:00,320 --> 00:05:04,080
Speaker 2: venture capital today and in growth private equity than we

85
00:05:04,120 --> 00:05:06,920
Speaker 2: are in the public market. What we've said is that

86
00:05:07,200 --> 00:05:12,600
Speaker 2: public small cap, we believe is really experienced adverse selection.

87
00:05:13,400 --> 00:05:17,640
Speaker 2: That the level of the lack of profitability in the

88
00:05:17,720 --> 00:05:21,360
Speaker 2: Russell two thousand, for example, is just so uninspiring.

89
00:05:23,000 --> 00:05:26,840
Speaker 1: I'll say my book. Folks, Listen carefully to what Michelle

90
00:05:27,080 --> 00:05:30,320
Speaker 1: just said. There, profit is everything. Yeah, this is from

91
00:05:30,880 --> 00:05:34,200
Speaker 1: late magdal Lord to side at lcre Well.

92
00:05:34,240 --> 00:05:35,719
Speaker 3: I guess what we're saying is that in some of

93
00:05:35,760 --> 00:05:38,360
Speaker 3: those sectors, Tom, you know, the real companies, the real

94
00:05:38,360 --> 00:05:40,920
Speaker 3: profit orient the ones who are actually making money and

95
00:05:40,960 --> 00:05:42,839
Speaker 3: are going to benefit, they're not publicly traded.

96
00:05:43,040 --> 00:05:46,320
Speaker 1: Came up in Phoenix with Cam Dawson the other day.

97
00:05:46,480 --> 00:05:50,720
Speaker 1: Great panel. I'm sorry. Profit matters. It's all there is

98
00:05:51,640 --> 00:05:53,560
Speaker 1: to it. So here's what I did, Lise. I did

99
00:05:53,560 --> 00:05:55,920
Speaker 1: this just for you. I pulled up the Dow. It's

100
00:05:55,920 --> 00:06:00,560
Speaker 1: a winsor war chart Herman vagg Okay nineteen thirty nine

101
00:06:00,680 --> 00:06:03,520
Speaker 1: all the way out to nineteen forty six. I lectured

102
00:06:03,560 --> 00:06:07,960
Speaker 1: about the Guadalcanal low of nineteen forty two, the absolute

103
00:06:08,360 --> 00:06:12,839
Speaker 1: bottom of a perfect war, and then a moonshot for

104
00:06:12,960 --> 00:06:17,520
Speaker 1: equities off of nineteen forty two. Do stocks go up

105
00:06:17,600 --> 00:06:18,040
Speaker 1: in war.

106
00:06:19,880 --> 00:06:26,520
Speaker 2: It depends. But I think look, fundamentally, yes, you know, fundamentally,

107
00:06:26,839 --> 00:06:31,160
Speaker 2: wars are reflationary, right, whether we're talking about you know,

108
00:06:31,279 --> 00:06:33,640
Speaker 2: just a world based on the inflation and the nominals,

109
00:06:33,720 --> 00:06:36,480
Speaker 2: or we're talking about defense spending and quote unquote the

110
00:06:36,520 --> 00:06:42,360
Speaker 2: military industrial complex. Wars get economies moving and doing things well.

111
00:06:42,520 --> 00:06:44,880
Speaker 3: For audience, If you ever have the benefit of reading

112
00:06:45,120 --> 00:06:47,039
Speaker 3: Lisa Shallitt's work, you know you're going to see that

113
00:06:47,080 --> 00:06:49,520
Speaker 3: she knows everything from equities to fixed income, to commodities,

114
00:06:49,560 --> 00:06:51,400
Speaker 3: you name it. But hidden within her note is a

115
00:06:51,400 --> 00:06:54,560
Speaker 3: little bit on emerging markets, tom and she is suggesting

116
00:06:54,560 --> 00:06:57,080
Speaker 3: that investors focus on Latin America as opposed to Asia.

117
00:06:57,120 --> 00:06:59,560
Speaker 3: And I'm curious, is that more driven by what's going

118
00:06:59,560 --> 00:07:01,919
Speaker 3: on in the energy markets, the fact that Asian economies

119
00:07:01,960 --> 00:07:04,479
Speaker 3: tend to be oil importers, or is there something else there?

120
00:07:04,680 --> 00:07:07,680
Speaker 2: So there's something else going on. Certainly the oil and

121
00:07:07,839 --> 00:07:13,320
Speaker 2: energy dynamics have reinforced that dichotomy between Latin and and Asia.

122
00:07:13,400 --> 00:07:17,800
Speaker 2: But what had gotten our attention really is, you know,

123
00:07:17,960 --> 00:07:22,280
Speaker 2: the the change in US policy to the extent that

124
00:07:22,280 --> 00:07:26,120
Speaker 2: that uh, you know, the new Monroe doctrine or or

125
00:07:26,320 --> 00:07:31,560
Speaker 2: new implementation of it. That that creates backing for a

126
00:07:31,640 --> 00:07:38,680
Speaker 2: more business centric or or business oriented and less progressive

127
00:07:38,760 --> 00:07:42,320
Speaker 2: governments down there that are stable, that are are attracting

128
00:07:43,200 --> 00:07:47,640
Speaker 2: investment that is sponsored by US, development of supply chains.

129
00:07:47,720 --> 00:07:51,080
Speaker 2: That's a good thing, and uh you know, that's part

130
00:07:51,120 --> 00:07:53,120
Speaker 2: of our thesis of of why you should be looking

131
00:07:53,160 --> 00:07:53,560
Speaker 2: down there.

132
00:07:53,680 --> 00:07:56,040
Speaker 1: Lisa, thank you so much for coming. I really appreciate the.

133
00:07:55,960 --> 00:07:57,280
Speaker 2: Stem my pleasure

134
00:07:57,320 --> 00:08:02,440
Speaker 1: Sporting Morgan stand Lisa driving all of their wealth management

135
00:08:02,560 --> 00:08:03,680
Speaker 1: uh work here