WEBVTT - Frost's Stringfellow: Consumer Sectors Still Attractive (Audio)

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<v Speaker 1>Global business news twenty four hours a day. If Bloomberg

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<v Speaker 1>this is a Bloomberg Business fla on Bloomberg World Handquarters.

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<v Speaker 1>I'm Charlie Pellett. Stocks are rallying, consumer confidence jumping, banking

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<v Speaker 1>shares rebounding. The SMP five hundred index up thirteen now

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<v Speaker 1>TOFT nine, a gain of six tenths of one percent,

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<v Speaker 1>as stack up forty six points, a gain of nine

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<v Speaker 1>tenths of one percent. Down in US reels off on

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<v Speaker 1>eight points, a gain of seven tenths of one percent,

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<v Speaker 1>Gold down thirty to thirteen twenty six or drop of

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<v Speaker 1>one percent, and crude oil West Texas Intermediate down three

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<v Speaker 1>point two percent forty four forty seven for barrel of

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<v Speaker 1>dot I I'm Charlie Pallett, and that's a Bloomberg Business Flash.

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<v Speaker 1>Thank you very much, Charlie Pellett. It's time now for

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<v Speaker 1>the et F Report. It's brought you buy withim Smith

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<v Speaker 1>That's go to Catherine Calgary for the et F Report.

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<v Speaker 1>When it comes to income inequality, there's someone in the

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<v Speaker 1>financial world who has helped in a subtle way. He's

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<v Speaker 1>Jack Bogel, the founder of the multi trillion dollar investment

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<v Speaker 1>firm Vanguard Group. Bloomberg intelligence analyist Eric Beltunist estimates that

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<v Speaker 1>Damgard has directly saved investors at least five hundred billion

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<v Speaker 1>dollars by charging lower fees that would otherwise have gone

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<v Speaker 1>to Wall Street investment firms. On Bloomberg TV, Bogel put

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<v Speaker 1>that savings even higher. So if you put some kind

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<v Speaker 1>of a return on the money that we save investors

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<v Speaker 1>each year and look at it over twenty years or so,

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<v Speaker 1>you find out a huge, staggering number. Whether a trion

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<v Speaker 1>is the right number, a treeion and a half, I

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<v Speaker 1>wouldn't know. But it's big, very big, and it's good

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<v Speaker 1>for the investor. That's the important thing. Bogel has been

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<v Speaker 1>nominated for the Presidential Medal of Freedom Beltunist his impact

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<v Speaker 1>on the financial industry mind blowing. In addition to launching

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<v Speaker 1>the S and p FI founded index fund for retail investors,

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<v Speaker 1>Vocal Structured Vanguard in such a way that as the

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<v Speaker 1>company makes a profit, it goes to lower fees benefiting

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<v Speaker 1>it's fund investors. That's your Bloomberg et F report. I'm

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<v Speaker 1>Katherine Calderie. You're listening to Taking Stock with Pinn Fox

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<v Speaker 1>and Kathleen Hayes on Bloomberg Radio. What's hurting the markets?

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<v Speaker 1>Can consumers drive it fast enough to attempt the feed

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<v Speaker 1>into another interest rate increase? And is there a new

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<v Speaker 1>debt bubble? We've heard some FETE officials worry allowed about that.

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<v Speaker 1>And above all, what does this all mean for your investments?

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<v Speaker 1>Were very happy to welcome to the show now. Tom Stringfeld,

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<v Speaker 1>chief investment officer at Frost Investment Advisors with eleven point

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<v Speaker 1>one billion dollars of assets under management across all asset classes,

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<v Speaker 1>including the firm's five star rated fund f A t

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<v Speaker 1>r X, based in San Antonio in New York City today.

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<v Speaker 1>So Tom, thanks for stoff by. Appreciate it very much.

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<v Speaker 1>So tell us a little bit more about Frost Investment

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<v Speaker 1>Advisors UM and your your five star rated fund. We'll do.

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<v Speaker 1>Frost is a Texas BACE company, Our parent is Frost Bank.

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<v Speaker 1>Our investment advisor was fun out of the Wealth Advisor

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<v Speaker 1>Group back in two thousand and eight, and Uh, at

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<v Speaker 1>that point in time, we were at about four billion.

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<v Speaker 1>We've since grown to eleven billion. We've launched a number

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<v Speaker 1>of mutual funds, some institutionals, some retail class. Uh. You

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<v Speaker 1>mentioned one of the funds that's our fixed income total return.

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<v Speaker 1>We have both an institutional class and a investor class.

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<v Speaker 1>Toss a little bit about your investment strategy and the

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<v Speaker 1>themes that you see playing out absolutely the there's a

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<v Speaker 1>number of strategies. We run traditional equity, we run traditional

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<v Speaker 1>fixed income. The equity is a value and growth MidCap

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<v Speaker 1>bent on the fixed income. It's credit. It's a total return,

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<v Speaker 1>which is an intermediate and low duration. Those are are

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<v Speaker 1>primary funds. We also have ascid allocations strategies. So the

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<v Speaker 1>clients that we have worked with over the years tend

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<v Speaker 1>to run the we'll call the traditional institutional, traditional high

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<v Speaker 1>net worth clients. So you know, we're very cognizant of

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<v Speaker 1>the macro events driving the market. Um. You know, those

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<v Speaker 1>tend to be the the most impactful on traditional investing,

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<v Speaker 1>both on the fixed income side and the equity sign

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<v Speaker 1>so on the on the private wealth management side, how

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<v Speaker 1>has your business been affected by the big downturn and

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<v Speaker 1>energy in you know, Texas. I know Texas is more

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<v Speaker 1>diversified than it used to be. Nevertheless, still a pretty

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<v Speaker 1>big deal. And I would think there's a lot of

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<v Speaker 1>a lot of people who are wealthy in Texas or

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<v Speaker 1>are they Are they in a different position than they

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<v Speaker 1>weren't As it aff at your business, I would the answers, yes,

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<v Speaker 1>the the impaire As you mentioned, Texas is a lot

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<v Speaker 1>more diversified, and I can tell you the impact to

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<v Speaker 1>our our base customer on our investment side was relatively

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<v Speaker 1>unchanged this time around. You know, it speaks to the

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<v Speaker 1>diversification of the of this of the state, and i'd

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<v Speaker 1>say the diversification of our of our investment client base.

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<v Speaker 1>As you know, Surprisingly, as the old prices were tanking,

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<v Speaker 1>we talked a lot about what the impact would be

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<v Speaker 1>to the consumer ultimately, which was going to be a

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<v Speaker 1>little bit more money in their pocket, whether they used

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<v Speaker 1>it to pay off debt or they used it to

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<v Speaker 1>save you know, Eventually that started to resonate. I think

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<v Speaker 1>we eventually saw it actually taking place with our consumers

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<v Speaker 1>and and you know, consumer health started improving. So the

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<v Speaker 1>impact was definitely felt in certain parts of the state

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<v Speaker 1>prone to energy. You know, West Texas, South Texas are

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<v Speaker 1>great examples, but overall for most of the state, you know,

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<v Speaker 1>we saw unemployment head south, but you still saw a

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<v Speaker 1>fairly stable economy, a fairly stable economy. Is it too

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<v Speaker 1>early do you think for people to start buying and

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<v Speaker 1>inchy assets. I'll tell you I've heard a number of

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<v Speaker 1>industry we'll call them experts here recently talking about the

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<v Speaker 1>time is still now that all prices are attractive moving

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<v Speaker 1>into the fifty dollar barrel range. The problem with a

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<v Speaker 1>number of the experts is, I don't know anybody that's

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<v Speaker 1>actually gotten all prices right over any period of time.

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<v Speaker 1>When it's all fit and done, All prices are going

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<v Speaker 1>to depend on the emotions of the market. So tell

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<v Speaker 1>me about your bond strategy right now, because we have

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<v Speaker 1>one story on the Bloomberg today about this very very

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<v Speaker 1>narrow range that treasury bonds, sovereign bonds are locked into.

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<v Speaker 1>And of course there's the bank in Japan that wants

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<v Speaker 1>to steepen the yield curve. There's big of being that

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<v Speaker 1>started buying corporate bonds ECBs open that I got the

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<v Speaker 1>doorp into buying more bonds as well. You've got very

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<v Speaker 1>low yield, You've got a debate over how much yields

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<v Speaker 1>are going to It seems to me, what do you

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<v Speaker 1>do just to stick in the shortest term bonds possible

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<v Speaker 1>for a while? Now a lot of this gonna be

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<v Speaker 1>answered A lot better buy out of our fixed income.

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<v Speaker 1>I'll give you the the overview. The total return fund,

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<v Speaker 1>which I'll tell you a few years ago was around

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<v Speaker 1>two hundred million. Now it's pushing two billion actively managed.

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<v Speaker 1>And what that means is the team can move up

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<v Speaker 1>and down the duration spread by plus minus three to

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<v Speaker 1>the intermediate. So what that does allow them to do

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<v Speaker 1>is manage an intermediate like strategy with the duration of

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<v Speaker 1>around three what's minus today and in a fairly attractive yield.

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<v Speaker 1>I want to say it's it's somewhere in the three

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<v Speaker 1>and three quarters for sent range today. But it is

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<v Speaker 1>a group that it's not afraid of stepping into assetbacks

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<v Speaker 1>when it's time, treasuries when it's time. But what you

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<v Speaker 1>are seeing is a little more defensive strategy in anticipation

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<v Speaker 1>of that inevitable hike. You know it's inevitable. We've were

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<v Speaker 1>missing the timing at this point. We've recently spoken about

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<v Speaker 1>the new SMP industry group for the Real Estate Investment

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<v Speaker 1>Trust used to be part of financials. Comes about that

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<v Speaker 1>specific industry and whether you think that big investors are

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<v Speaker 1>going to have to own a piece of this and

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<v Speaker 1>that could help the stocks just because you've got to

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<v Speaker 1>own something. I don't disagree. Uh, Given it was a

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<v Speaker 1>major slice of the financials. Given it is a new sector,

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<v Speaker 1>I think by definition you're going to see the passive

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<v Speaker 1>moving into it. You're going to see large institutional managers

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<v Speaker 1>moving into it. It becomes a self fulfilling prophecy at

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<v Speaker 1>that point in time. So I'm actually kind of positive

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<v Speaker 1>and I find it interesting. You know, it's the real

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<v Speaker 1>estate sector has had a nice run. I don't think

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<v Speaker 1>for those reasons that run is over again. So in equities,

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<v Speaker 1>where do you see the most value? Where? Where your

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<v Speaker 1>where your team saying you're you're looking for some good

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<v Speaker 1>places to add to your positions. I can talk sectors,

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<v Speaker 1>um Uh. Assumptions are the recessions aren't around the corner

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<v Speaker 1>that you know, yields are going to interest rates are

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<v Speaker 1>going to stay fairly but nine hike or two over

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<v Speaker 1>the next six months, maybe two or three over the

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<v Speaker 1>next year, we do look at we are looking at

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<v Speaker 1>consumer discretionaries, We are looking at some of the technologies. Uh.

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<v Speaker 1>You know, the transportation stocks have have been interesting. Uh.

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<v Speaker 1>The energy stocks have not been an area that we've

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<v Speaker 1>jumped into, primarily because it's it's been a matter of

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<v Speaker 1>more of a want to wait and see to uh

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<v Speaker 1>see if fifty price is a is a solid number.

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<v Speaker 1>But when you start looking at what's attractive, it's still

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<v Speaker 1>the consumer lead sectors in this market. And if you

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<v Speaker 1>start looking at some of the politics, uh, healthcare becomes

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<v Speaker 1>uh either interesting or suspect. Defense becomes either interesting or suspect.

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<v Speaker 1>We just need to let some of the politics play out.

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<v Speaker 1>You mentioned politics, and this way I'll need get to

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<v Speaker 1>give you back ten seconds that what is the general

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<v Speaker 1>zeitgeists coming from Texas from San Antonio. Well, I would

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<v Speaker 1>say that it all the markets probably lead the way,

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<v Speaker 1>and uh, the market's reaction to the the debates last

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<v Speaker 1>night probably tells the story. All Right, I want to

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<v Speaker 1>thank you very much, absolutely appreciate the time. Tom string Fellow,

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<v Speaker 1>chief investment Officer for Investment Advisers, helping to manage more

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<v Speaker 1>than eleven billion dollars based in San Antonio, Texas. We're

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<v Speaker 1>gonna take you through to the close on Wall Street.

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<v Speaker 1>That's next. This is Bloomberg