Speaker 1: Welcome to the Bloomberg Penel Podcast. I'm Paul swing you
Speaker 1: along with my co host Lisa brahma Witz. Each day
Speaker 1: we bring you the most noteworthy and useful interviews for
Speaker 1: you and your money. Whether at the grocery store or
Speaker 1: the trading floor. Find a Bloomberg Penl podcast on Apple
Speaker 1: podcast or wherever you listen to podcasts, as well as
Speaker 1: at Bloomberg dot com. Well, yesterday we had what is
Speaker 1: now being coined a hawkish interest rate cut by the
Speaker 1: Fed and table. We got some mixed economic news consumer
Speaker 1: perhaps a little bit weaker than expect that. The question
Speaker 1: is what is this mean for fixed income markets going forward?
Speaker 1: To adjust that? We welcome Tony Rodriguez, head of fixed
Speaker 1: income strategy at muvine. He joins us here in our
Speaker 1: Bloomberg Interactive Broker studio. So, Tony, thanks so much for
Speaker 1: joining us. Let's start with what we got yesterday from
Speaker 1: the Fed and from Chairman Pal. What was your key takeaway?
Speaker 1: Let mean, my key takeaway was that I thought that
Speaker 1: the key was that they did not communicate a very
Speaker 1: hawkish ease, and I think they kind of were able
Speaker 1: to thread that need a little bit. I know, it's
Speaker 1: being referred to as a as a hawk is she's
Speaker 1: But they did talk in the press conference very much
Speaker 1: about how the three things that they consider to be
Speaker 1: the rationale for lowering rates were, you know, global growth,
Speaker 1: trade uncertainty, and that inflation is gonna be is not
Speaker 1: at their target, and they re emphasize that they are
Speaker 1: not going to raise rates until inflation really exceeds their target.
Speaker 1: They talk about a symmetric target. So I think that
Speaker 1: kind of gave the market the idea to look, they're
Speaker 1: not going to raise rates. The bar for that is
Speaker 1: enormously high, and the risks remain really unaddressed in terms
Speaker 1: of weaker global growth and in terms of trade uncertainty.
Speaker 1: So I think it's more than likely that you we
Speaker 1: believe you'll see them actually come back to the market
Speaker 1: to cut rates again in the first half of next year.
Speaker 1: Because of those two concerns on trade and on global growth.
Speaker 1: Everyone seems to agree that the risk to not cut
Speaker 1: enough is much bigger than cutting two quickly. That seems
Speaker 1: to be what everyone is saying is that basically, if
Speaker 1: you air on the side of easing, uh, that's just fine.
Speaker 1: My concern is that no one's talking about moral hazard
Speaker 1: anymore in any way, shape or form. Are we seeing
Speaker 1: anything in credit markets that indicates that perhaps companies are
Speaker 1: taking advantage of this easy money era that has gone
Speaker 1: on for a very long time and we'll continue for
Speaker 1: a very long time. Yeah, some of the credit markets,
Speaker 1: I would say, what you're seeing is certainly elevated levels
Speaker 1: of debt, debt to cash flow, any kind of metric
Speaker 1: you look at has risen, but they are not at
Speaker 1: troubling levels. Okay, So companies have, I think, just fundamentally
Speaker 1: begun to target a different capital structure. Whereas years ago
Speaker 1: people would have said double A or single as where
Speaker 1: I want my balance sheet to be, and you in
Speaker 1: fact even had an occasional triple A corporate credit out there.
Speaker 1: I think pretty much financial kind of theory today is
Speaker 1: triple busy optimal place for me to be. We don't
Speaker 1: care about being double A at all. Single A may
Speaker 1: in fact even be unnecessary because the cost of capital
Speaker 1: is so low and an absolute level, no company complains
Speaker 1: to us about capital being too expensive or unavailable, which
Speaker 1: this is the reason why you're seeing the triple B
Speaker 1: rated segment of the investment market grow so much faster
Speaker 1: with record pace of issue and so far this year
Speaker 1: and nearly three trillion dollars of US and outstanding right
Speaker 1: and interestingly, what you are seeing is on some companies
Speaker 1: who have been kind of the poster children for being
Speaker 1: at risk of dropping into high yield the fallen angel risks,
Speaker 1: so g would be the one that really pops up
Speaker 1: on people's screens. Those companies have shown a real commitment
Speaker 1: to at least try and in many cases successfully maintain
Speaker 1: that triple B rating. So whether it's through asset sales UH,
Speaker 1: cutting down their share buy back, reducing their dividend. So
Speaker 1: there is still a focus amongst CFOs and corporate boards
Speaker 1: to try to maintain an investment grade rating and the
Speaker 1: triple B space. So we you know, we think that yes,
Speaker 1: it changes the character of the investment grade credit market
Speaker 1: quite a bit. Ultimately, when we get to a downturn,
Speaker 1: which you know, the spite the longest growth pier we've
Speaker 1: ever had here, we will get to one UH, then
Speaker 1: you may see a greater dislocation as a result of this,
Speaker 1: you know, large amount of triple B because we will
Speaker 1: have more fallen angels. There may not be the appetite
Speaker 1: then to absorb it. So the only shock absorber will
Speaker 1: be price. So you'll see spreads why now more than
Speaker 1: maybe we've seen in other previous recessionary periods. So tony,
Speaker 1: given kind of what we know about the FED, we've
Speaker 1: got some more color yesterday. Given where we are in
Speaker 1: this economic cycle, as you mentioned, the very long economic
Speaker 1: growth cycle. What do you at NUVINE doing with your
Speaker 1: portfolios right how what kind of adjustments are you making sure?
Speaker 1: So the thing that we've been doing over the course
Speaker 1: that i'd say the last call it even six to
Speaker 1: nine months, has been uh positioning for the end of
Speaker 1: the cycle at some point. We don't think it's imminent.
Speaker 1: We're not calling for a recession in twenty but we
Speaker 1: do think we're late cycle. And what that means in
Speaker 1: terms of defensive positioning is three things. Really upgrading in
Speaker 1: quality within whatever segment of fixing commure an emerging marketshigh
Speaker 1: yield and message your credit upgrading quality, Upgrading in liquidity
Speaker 1: so that you aren't able to maybe move your portfolio
Speaker 1: to an area where there is a dislocation when that happens,
Speaker 1: and increasing diversification. We don't think there is a you know,
Speaker 1: single pound the table, cheap asset out there in the
Speaker 1: fixed income space, but we also not seeing recession. You
Speaker 1: want to be exposed broadly to the greater income that's available,
Speaker 1: versus sitting in a very defensive you know, in the
Speaker 1: bunker positioning of you know, cash and treasuries. Well, it's
Speaker 1: quite a it's quite a needle to thread. And I
Speaker 1: do wonder how concerned you are about the fact that
Speaker 1: your peers are doing something similar and they're they're moving
Speaker 1: up in credit quality. We hear that a lot. And
Speaker 1: what you're seeing in the market is that the up
Speaker 1: and credit quality uh debt is actually uh giving you
Speaker 1: very little relative to history and relative to other aspects.
Speaker 1: So are you worried that it's sort of overpriced at
Speaker 1: this point given that that appetite, Right, Yeah, you always
Speaker 1: do worry about a consensus trade, right that every is
Speaker 1: on the same side of the boat. The one thing
Speaker 1: I would say is that while we're upgrading quality, we
Speaker 1: have not abandoned completely, for example, the high yield market,
Speaker 1: which would be in terms of the higher risk segments
Speaker 1: of market, high yield, emerging markets, triple be debt. We're
Speaker 1: not abandoning those areas at all. We still think in fact,
Speaker 1: there's value to be found. It's just that we're not
Speaker 1: digging into the triple C segment very much, although there's
Speaker 1: occasional opportunities there. I think the biggest thing that you
Speaker 1: need to make sure you have as an investor is
Speaker 1: an ability in this type of market to do the
Speaker 1: fundamental credit work to distinguish between the triple bees that
Speaker 1: are an opportunity and those that will be a very
Speaker 1: likely fallen angel or the single bees that could be declining.
Speaker 1: So the premium on strong credit research I think is
Speaker 1: higher now as you enter this late cycle with some
Speaker 1: of these imbalances along the credit quality scale then it
Speaker 1: would have been in previous cycles. All right, let me
Speaker 1: ask you this a weird question just right off of
Speaker 1: what you just said, credit analysis, credit research. The credit
Speaker 1: research departments don't exist on the cell side anymore. I mean,
Speaker 1: and I was there that we people doing credit research
Speaker 1: that doesn't exist anymore. What do you guys do about that? Well,
Speaker 1: primarily you do have to rely on your own internal
Speaker 1: credit research, And I would argue that you know, over time,
Speaker 1: really the credit research from the cell side, you know,
Speaker 1: while some was very high quality and truly just um,
Speaker 1: you know, effective, at determining relative value. A lot of
Speaker 1: it was maybe just supporting say the syndicate desk in
Speaker 1: the new issue market and the trading positions. Um so,
Speaker 1: so I think that the credit departments internally at the
Speaker 1: asset management firms have grown over time. We have over
Speaker 1: fifty or one of the largest in the business in
Speaker 1: that space, because the value you can get from identifying,
Speaker 1: you know, real opportunities is enormous. Right now when you
Speaker 1: think of how compressed yields our globally compressed spreads, the
Speaker 1: opportunity really isn't doing that bottom up work, whether it's
Speaker 1: on a sovereign in emerging space or on a credit tony.
Speaker 1: How much do political developments in the United States factor in,
Speaker 1: if at all, to your investing thesis. They definitely do,
Speaker 1: because just broader uncertainty is certainly something that raises the
Speaker 1: level of volatility and the potential risk in the market.
Speaker 1: And the political uncertainty not only in the US, but
Speaker 1: we can think globally with what's been taking place, whether
Speaker 1: it's around Brexit or other areas of the world, the
Speaker 1: political uncertainty size so we are paying more attention to
Speaker 1: that than we'd probably like to. And UH and therefore
Speaker 1: tapping into different sources for finding as much good political
Speaker 1: insight as you can, because it is dramatically impacting potential policy,
Speaker 1: whether it's on specific industries or broad issues like trade policy,
Speaker 1: tax policy, regulatory policy, it's pretty critical. So what do
Speaker 1: you think would happen if President Trump gets impeached? What's
Speaker 1: the market response? You know, I think it's considered to
Speaker 1: be uh in terms of in the House, you know,
Speaker 1: such an obvious that that's going to happen that right now,
Speaker 1: the market is certainly convinced that nothing would happen in
Speaker 1: the Senate. So I think it really creates maybe just
Speaker 1: some short term noise, but I don't think it will
Speaker 1: change anything really fundamentally. How do you guys factor in
Speaker 1: the all the geopolitical issue is that the market has
Speaker 1: to deal with every day and least and I have
Speaker 1: to report on every day, whether it's China trade every
Speaker 1: day every day. Let me rephrase that, Brexit comes to
Speaker 1: mind and so on and so forth. M How does
Speaker 1: that factor into kind of what you guys do day
Speaker 1: to day? Sure, well, you have to factor in higher
Speaker 1: risk premiums for that, for example, because it's not only
Speaker 1: the political you know, call it noise or issues, they
Speaker 1: actually create fundamental issues. So Hong Kong, as you just
Speaker 1: saw right recession, you know, negative three plus per saying
Speaker 1: growth quarter over quarter, So that political noise does in
Speaker 1: fact drive true fundamental economic and earnings. UM, you know results.
Speaker 1: Tony Rodriguez, thank you so much for being here with
Speaker 1: us all the way from Minneapolis. How to fix the
Speaker 1: come strategy at nu Ven have a wonderful Halloween. We're
Speaker 1: very pleased to say we have with us. Christina Hooper
Speaker 1: Invesco Chief Global Market Strategists Susina, how often do you
Speaker 1: feel like chief political strategist at this point? Well, it
Speaker 1: often happens, but it's usually in the context of speaking
Speaker 1: with clients who are worried about it and really need help,
Speaker 1: um making sense of the noise. What's really important in
Speaker 1: what is? So? What do you tell them? Well, what
Speaker 1: I tell them is we have to look at those
Speaker 1: events that actually have an impact on economic policy. So,
Speaker 1: for example, what I think is the big news today
Speaker 1: is of course China coming out and saying that it's
Speaker 1: unlikely UH to see anything beyond phase one of the
Speaker 1: trade deal come to fruition. That to me is what's
Speaker 1: the real news today and that which truly impacts economic policy.
Speaker 1: So what do you think, just staying with the China news, um,
Speaker 1: what do you think the market is kind of discounting?
Speaker 1: Is it just a Phase one type of light deal
Speaker 1: or does anybody really believe that will get anything me meaningful?
Speaker 1: I think the market has been incredibly optimistic. Anytime there's
Speaker 1: been positive news flow around the US China trade situation,
Speaker 1: it's always assumed the best, and so I think actually
Speaker 1: more than just Phase one has been priced in, and
Speaker 1: that's why we're seeing a stock sell stock market sell
Speaker 1: off today. How surprising is this though? I mean, we
Speaker 1: knew that the Phase one was sort of this peripheral
Speaker 1: deal or not I should say, superficial deal that would
Speaker 1: get the parties to Phase two in a sort of
Speaker 1: save the phase kind of way. All around, what's new?
Speaker 1: There isn't? This is groundhog Day over and over again.
Speaker 1: Thank you, You're like you're living the same story. But
Speaker 1: markets continue to get overly excited and positive about any news. Um,
Speaker 1: It's it's wishful thinking, and unfortunately the market continues to
Speaker 1: get let down. All right, let's focus a little bit
Speaker 1: more on fundamentals, um, switch gears. What was your takeaway
Speaker 1: from the FOMC meeting yesterday and Chairman Pal's comments, is
Speaker 1: that did it change your view of kind of how
Speaker 1: you guys want to be positioned? It didn't, but it
Speaker 1: certainly gave a lot more clarity than we often get
Speaker 1: from chair Powell. I think there was a little trepidation
Speaker 1: that they would remove the language that that they did
Speaker 1: remove um, but he was able to come back in
Speaker 1: that press conference and make investors fear more more confident
Speaker 1: about the market because it appears as though the FETE
Speaker 1: is going to be sitting on its hands for a
Speaker 1: while before it ever considers raising rights. I coined a
Speaker 1: new phrase this morning, Alice in Wonderland market hawkish cut
Speaker 1: negative rates. These contradiction in terms, I'm wondering how you're
Speaker 1: sort of deciding how to position next and light of
Speaker 1: the earnings that we're getting, the things that are not uh,
Speaker 1: you know, sort of wishy washy, complex, complicated contradictory phrases.
Speaker 1: Are you seeing this latest three Q earning season as
Speaker 1: a positive sign for the U S economy? Well, it
Speaker 1: is potti positive, but modestly positive. And I say that
Speaker 1: because companies have become very good at managing expectations and
Speaker 1: meeting or exceeding them. So this was certainly a positive
Speaker 1: earning season, but we have to recognize that probably the
Speaker 1: more positive theme as we head into is that the
Speaker 1: FED is relatively accommodative. We just don't have enough visibility
Speaker 1: on what earnings is going to be like for all
Speaker 1: of but we do have more visibility I think after today,
Speaker 1: after yesterday's press conference, in terms of what the FED
Speaker 1: may do. So unless we see a significant spike in inflation,
Speaker 1: we're likely to see continued low rates. So in this
Speaker 1: environment again continued local rates UH, late cycle UH slowing growth,
Speaker 1: still growth in US economy, but slowing. Are there sectors
Speaker 1: that you feel more comfortable with right now versus some others? Well,
Speaker 1: it's all a question of timing. Because UM for the
Speaker 1: last few weeks and possibly a bit longer, um value
Speaker 1: has looked attractive. The cyclical names have looked at track
Speaker 1: active because we saw steepening of the yield curve. UM
Speaker 1: that seems to be changing today. I do think the
Speaker 1: longer term, if we look out for the next six
Speaker 1: to twelve months, is likely to be again growth out
Speaker 1: performing value, and so that would drive me to tech UM,
Speaker 1: not the cyclical tech names, but the more secular growth
Speaker 1: names as an area that continue to perform well. So UH,
Speaker 1: software for example, UM, cloud computing. Uh, those areas where
Speaker 1: we're seeing very nice levels of growth. It's some good
Speaker 1: numbers out just on the tech front last night Apple
Speaker 1: on Facebook. So does that give you I'm not sure
Speaker 1: what your exposure is there, but at least it appears
Speaker 1: that the consumer facing technology continues to be quite strong.
Speaker 1: It does. It does. Technology continues to be the go
Speaker 1: to place for corporate spending as well. UM. In environment
Speaker 1: where you have a tight labor market, we're likely to
Speaker 1: see companies spend more on innovation, spend more on technology
Speaker 1: that in a productivity. So while we're seeing a decline
Speaker 1: in business investment overall, I think we'll see more dollars
Speaker 1: allocated to technology going forward. And we are seeing today
Speaker 1: Apple shares as well as Facebook shares rising after beating expectations.
Speaker 1: Apple shares up two percent at Facebook up three and
Speaker 1: a quarter percent. We're speaking with Christina Hooper, Investco, Chief
Speaker 1: Global market Strategist. I don't know if you knew this,
Speaker 1: but it is philosophical Thursday and earlier today on this
Speaker 1: program right here. You heard it first. Um, you know,
Speaker 1: we did get Twitter announcing that they were going to
Speaker 1: strip out of political ads this morning shares spell perhaps
Speaker 1: in response to that, perhaps into response and something else. Meanwhile,
Speaker 1: Facebook coming out adding subscribers not taking a similar measure
Speaker 1: shares popping. What does that tell you about investors and
Speaker 1: how much they care about some of the sort of
Speaker 1: social implications that is that are talked a lot about
Speaker 1: in Washington, d C. But aren't necessarily do anything. You
Speaker 1: hit the nail on the head. They've been talked about
Speaker 1: for a while, and so until we actually see the
Speaker 1: issues coming at us UM and very very close proximity,
Speaker 1: investors aren't going to worry about it. We've had that
Speaker 1: overhang of greater regulation hanging over tech for a long
Speaker 1: time now, totally. But it makes me wonder all these
Speaker 1: people saying that E s G filters are so important
Speaker 1: to them, and they're looking at all of these like
Speaker 1: so at the social consequences. Uh, they're not making much
Speaker 1: traction here because it doesn't seem to matter. Am I wrong? Uh?
Speaker 1: You're right, But we're looking at a snapshot in time,
Speaker 1: and I think E s G will be one of
Speaker 1: those factors that over time rewards those companies that it
Speaker 1: believes are UM more in keeping with with the values
Speaker 1: of E s G. But over the shorter term, I
Speaker 1: think what we're going we're likely to see is reaction
Speaker 1: to the democratic primaries that this could be UM. This
Speaker 1: could be where you actually start to see some nervousness
Speaker 1: filter into tech prices UM for those companies that are
Speaker 1: are perhaps on the front lines of potential regulation UM,
Speaker 1: depending upon which candidates do best in in certain primaries.
Speaker 1: Just real quickly, any sectors that you're just or any
Speaker 1: asset classes you're just staying away from right here, well,
Speaker 1: I think we need to be very well diversified. So
Speaker 1: there's no asset class that I can say we should
Speaker 1: have no exposure too. But I would say that this
Speaker 1: is an important time to be emphasizing dividends. So all
Speaker 1: else being equal, UM in a given sector, migrate to
Speaker 1: those with that are fundamentally solid but have a dividends.
Speaker 1: Christina Hubert, thank you, Thank you, always wonderful having you.
Speaker 1: Thank you. Christina our investcor TEF global market strategist. Joining
Speaker 1: us here in our investue, in our interactive broker studios.
Speaker 1: Let's bring in Mark stoke O. He's CEO and portfolio
Speaker 1: manager of Adams Funds. Mark, thanks so much for joining
Speaker 1: us here in a Bloomberg in our Actor broker studio.
Speaker 1: You know this, today's impeachment is just another piece of
Speaker 1: quote unquote noise, uh, that investors have to deal with.
Speaker 1: It's trade, it's Brexit. How do you suggest investors should
Speaker 1: kind of factor in our factor out the noise in
Speaker 1: their investment process. Well, it's it's a really good question
Speaker 1: and it's something that we are pretty passionate about because
Speaker 1: one of the concerns that we have is most of
Speaker 1: the time when um, there are uneasy things happening, investors
Speaker 1: get nervous, they get scared, and their first reaction, because
Speaker 1: it's easy, is to trade, and they'll trade out of
Speaker 1: their positions. And you know, there's a there's a statistic
Speaker 1: that is is actually troublesome and most individual investors that
Speaker 1: invest in the SPY, just a regular smp FI funderd
Speaker 1: t F, do not get the sp F t F
Speaker 1: return because they trade. And you know, I think it's
Speaker 1: it's trying to be more one intellectually honest about how
Speaker 1: much risk you should be taking given where you are
Speaker 1: in your life and what you're just saving for. Number two,
Speaker 1: decide what asset classes you want to be invested in
Speaker 1: and leave it alone. There's a lot of noise, and
Speaker 1: a lot of this noise tends not to really matter
Speaker 1: at the end of the day. It will matter today,
Speaker 1: might tomorrow, might for a week. But the idea that
Speaker 1: it's it scares you into trading is exactly the wrong thing.
Speaker 1: You know, over time, bowl markets last twice as long
Speaker 1: as bear markets. The markets go up over time. And
Speaker 1: if you're again, if you're intellectually honest about how much
Speaker 1: risk you want to take and you invest leave it alone.
Speaker 1: Doesn't mean you can't adjust if something changes in your life,
Speaker 1: but you really do need to stay invested in order
Speaker 1: to really get the power of compounding uh that long
Speaker 1: term investing offers. So I have active managers. Why not
Speaker 1: just as you know, a person creating a retirement fund
Speaker 1: just put their money in spy and leave it there
Speaker 1: until they're older and they rejigger it and make it safer.
Speaker 1: They could. The problem is you you take away any
Speaker 1: opportunity to outperform that. And I think that one of
Speaker 1: the things is an active manager. If you're not choosing
Speaker 1: active manager. But but yes, exactly. But then the question is,
Speaker 1: as an active manager, how do you know when to
Speaker 1: trade given the noise? What what what's the sort of
Speaker 1: threshold of change? Um, you need to try to tune
Speaker 1: out the noise and concentrate as best you can on data.
Speaker 1: If you concentrate on data, that will lead you to
Speaker 1: place that that will lead you to decisions that we
Speaker 1: think are better decisions as opposed to I can't believe
Speaker 1: that X y Z happened. Maybe we should get more defensive,
Speaker 1: Well maybe not. Maybe that's not the right answer, um,
Speaker 1: And you know, defensive stocks might be and maybe in
Speaker 1: vogue might not be. But I think it's it's it's
Speaker 1: the concept of trying to tune it out and have
Speaker 1: a longer term perspective. And again, as I said earlier,
Speaker 1: part of the problem here is it's easy to trade.
Speaker 1: All of these companies have made it incredibly easy to trade,
Speaker 1: and um, which is fine, and it's cheaper, which is great. Um,
Speaker 1: but most people should be in it for a longer
Speaker 1: term and and just try their best to to tune
Speaker 1: out the noise. And again, as I said, if if
Speaker 1: you're trading, you are not getting the benefit of compounding,
Speaker 1: which over the time is an incredibly powerful concept. What
Speaker 1: any ATMOS funds? How are you positioned right now? We're
Speaker 1: ten plus years into this economic cycle. Um. You know
Speaker 1: that's getting people to think about, g do I need
Speaker 1: to be out reallocating my assets here for what the
Speaker 1: next five years is likely to be probably lower growth
Speaker 1: in the last five How are you positioned? Uh? We
Speaker 1: we are positioned looking for stocks that we believe can
Speaker 1: out perform the SMP have haven't heard. So in some
Speaker 1: respects we're a little different because our bogie is to
Speaker 1: try to out perform the SMP. I found it. We've
Speaker 1: been fortunate we've been able to do that very well. Um.
Speaker 1: But so that that's different than somebody who's looking for
Speaker 1: an absolute return. I mean our the way that we
Speaker 1: manage the fund is we're sector neutral, which means we
Speaker 1: have the same waitings in healthcare and technology and all
Speaker 1: the sectors as the sp We at our value by
Speaker 1: selecting the right stocks within each of those sectors. Um.
Speaker 1: There's been a lot of debate about growth versus value. UM.
Speaker 1: You know, we tend to be core managers, and I
Speaker 1: think that one of the challenges with growth versus value
Speaker 1: is everybody today, I believe, is guessing that it's time
Speaker 1: to go into value. There really isn't much in the
Speaker 1: way of empirical data to to to convince us that
Speaker 1: the the the the the growth uh when over value
Speaker 1: is going to change anytime. So again I go back
Speaker 1: to to data. I would I would prefer to see
Speaker 1: rather than say, I think right now is the right time.
Speaker 1: You could have said that a year ago, two years ago,
Speaker 1: five years ago, you could have said that. So we
Speaker 1: would prefer to see value stocks begin to have an
Speaker 1: inflection point versus growth, and that to us would lead
Speaker 1: lead us to believe that now is maybe a better
Speaker 1: time to begin to look at value. Take Facebook, and
Speaker 1: and and uh Apple that reported yesterday, so they reported
Speaker 1: really good quarters. Um, so your your your value alternative
Speaker 1: is IBM, Cisco, Oracle. So I I don't believe that
Speaker 1: this is this is the time to just put a
Speaker 1: stake in the ground and say it's a really good
Speaker 1: time to go to value. We would prefer to see
Speaker 1: data tell us that in fact, they they are uh
Speaker 1: producing better revenues, better earnings, and they're sustainable. So mark,
Speaker 1: what's your highest conviction stock? Pick right now? Microsoft? It's
Speaker 1: our biggest overweight in the fund is Microsoft, all right,
Speaker 1: and what's your what's your thesis? The Microsoft thesis does
Speaker 1: revolve a lot around the cloud. Um, it's uh, they
Speaker 1: do a lot of they do a lot of really
Speaker 1: good things. But the cloud to us has a lot
Speaker 1: more runway to go than I think a lot of
Speaker 1: people expect. We think there's at least five year runway
Speaker 1: in the cloud. They they've proven they are really good
Speaker 1: competitor to Amazon's uh aws. Azure has has proven that.
Speaker 1: The other thing that I think is really important is
Speaker 1: in the cloud, we've seen higher revenue go in how
Speaker 1: revenue in the cloud companies. A lot of that is
Speaker 1: not prices going up, but companies buying buying cloud equipment
Speaker 1: and find buying cloud equipment for leverage and and hoping
Speaker 1: to be able to do and realizing they can get
Speaker 1: a lot more leverage. They're they're buying more equipment is
Speaker 1: opposed to prices are going up significantly. So I think
Speaker 1: that's a that's a that's a good guide post too.
Speaker 1: There's there's a lot of momentum here and they're really
Speaker 1: good at it. Mark Socle, thank you so much for
Speaker 1: being with us. Chief executive officer and portfolio manager for
Speaker 1: Adams Funds. Thanks for listening to the Bloomberg P and
Speaker 1: L podcast. You can subscribe and listen to interviews at
Speaker 1: Apple Podcasts or whatever podcast platform you prefer. Paul Sweeney,
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