1 00:00:00,080 --> 00:00:02,280 Speaker 1: Okay, let's get off to an idea level seen a 2 00:00:02,400 --> 00:00:05,560 Speaker 1: US equity Strategies at UBS Global Wealth Management getting her 3 00:00:05,680 --> 00:00:08,239 Speaker 1: take on not where the markets go from here. Let's 4 00:00:08,280 --> 00:00:10,440 Speaker 1: just start off first of all with Nadia. We're looking 5 00:00:10,440 --> 00:00:13,800 Speaker 1: at the earning season. How you're at the moment interpreting 6 00:00:13,840 --> 00:00:18,560 Speaker 1: it so far? The third quarter earnest season is coming 7 00:00:18,560 --> 00:00:21,160 Speaker 1: in just okay, But reality is the bar was low. 8 00:00:21,200 --> 00:00:24,040 Speaker 1: I mean, we've seen a massive reduction and earnest expectations 9 00:00:24,040 --> 00:00:27,000 Speaker 1: over the last couple of months, from ten percent growth 10 00:00:27,040 --> 00:00:29,080 Speaker 1: just a few months ago to three percent coming into 11 00:00:29,120 --> 00:00:31,280 Speaker 1: the quarter. I mean, so far, the feat has been 12 00:00:31,320 --> 00:00:33,760 Speaker 1: few and we expect that to kind of continue few 13 00:00:33,800 --> 00:00:36,320 Speaker 1: and far between, a more muted. The banks are showing 14 00:00:36,360 --> 00:00:39,800 Speaker 1: the consumer is holding in there. That's good. Consumer staples 15 00:00:39,800 --> 00:00:42,920 Speaker 1: are flexing their muscle with the pricing power. Um, you know, 16 00:00:43,000 --> 00:00:45,479 Speaker 1: housing has been read just given the fact that we've 17 00:00:45,520 --> 00:00:47,720 Speaker 1: seen mortgage rates go through the roof and more than 18 00:00:47,800 --> 00:00:50,560 Speaker 1: double this year. We'll get the bulk of earnings this week, 19 00:00:50,600 --> 00:00:53,320 Speaker 1: so we'll you know, be listening very closely, particularly some 20 00:00:53,360 --> 00:00:56,040 Speaker 1: of those tech companies. Yeah, forward guidance, I think is 21 00:00:56,080 --> 00:00:58,120 Speaker 1: what we're going to be on the lookout for Apple, 22 00:00:58,640 --> 00:01:03,040 Speaker 1: Amazon alphabet is in there along with Meta and Microsoft. 23 00:01:03,480 --> 00:01:06,520 Speaker 1: Is there a name that you prefer among the big 24 00:01:06,600 --> 00:01:10,679 Speaker 1: cap tech? You know, actually well underweight tech as we 25 00:01:10,800 --> 00:01:13,320 Speaker 1: just expect that higher race that continue to be a 26 00:01:13,360 --> 00:01:16,520 Speaker 1: headwinds evaluation, and the evaluation has come in quite a 27 00:01:16,560 --> 00:01:18,319 Speaker 1: bit this year, but it's still elevated. This is a 28 00:01:18,360 --> 00:01:21,200 Speaker 1: sector that's still trade and out of seven premium to 29 00:01:21,240 --> 00:01:24,200 Speaker 1: the broader market. Um, we don't think that the selectors 30 00:01:24,240 --> 00:01:27,759 Speaker 1: really reflecting that potential earn his downgrade cycle lots ahead 31 00:01:27,800 --> 00:01:29,679 Speaker 1: of us that you alluded to would be listening very 32 00:01:29,720 --> 00:01:33,000 Speaker 1: closely to for guidance. I mean, we're particularly concerned about 33 00:01:33,000 --> 00:01:35,400 Speaker 1: the semis. You know, Um, we've already seen a lot 34 00:01:35,400 --> 00:01:38,440 Speaker 1: of cuts in the semi industry around PC, smartphone and 35 00:01:38,560 --> 00:01:40,400 Speaker 1: game and weekending, but we still think that there's some 36 00:01:40,520 --> 00:01:43,840 Speaker 1: raceatical log and semi cap. I think in terms of 37 00:01:43,880 --> 00:01:45,760 Speaker 1: what we like in tech, I mean right now, we 38 00:01:45,840 --> 00:01:48,920 Speaker 1: do like tech hardware and equipment right now, particularly enterprice 39 00:01:49,000 --> 00:01:53,520 Speaker 1: hardware with some exposure to communication that work and and storage. 40 00:01:53,560 --> 00:01:55,440 Speaker 1: So we know that the supply chain has been a 41 00:01:55,440 --> 00:01:58,120 Speaker 1: headwind and so as some of those issues get resolved, 42 00:01:58,120 --> 00:01:59,800 Speaker 1: it should be a nice sail word for the B 43 00:02:00,040 --> 00:02:03,800 Speaker 1: kind of area. And you have to I suppose ultimately 44 00:02:03,800 --> 00:02:07,680 Speaker 1: not be you know, looking at companies and sectors et cetera, 45 00:02:08,240 --> 00:02:12,200 Speaker 1: and how they perform in an era or a return 46 00:02:12,240 --> 00:02:16,360 Speaker 1: to an era where we don't have free money anymore. Absolutely, 47 00:02:16,400 --> 00:02:18,800 Speaker 1: I mean from a sector position in standpoint, we have 48 00:02:18,880 --> 00:02:21,240 Speaker 1: been positioned in more defensively all this year, and we 49 00:02:21,280 --> 00:02:25,639 Speaker 1: continue to lean in more defensively because we're just concerned about, 50 00:02:25,720 --> 00:02:28,720 Speaker 1: like you know, the FED raising aggressively and what that 51 00:02:28,760 --> 00:02:31,079 Speaker 1: means for economic growth. We're likely well the low trent 52 00:02:31,200 --> 00:02:34,400 Speaker 1: economic growth, and so we do think that you want 53 00:02:34,400 --> 00:02:35,800 Speaker 1: to look for those companies that are going to be 54 00:02:35,840 --> 00:02:38,600 Speaker 1: more resilient in the slowdown, so such as like uh 55 00:02:38,800 --> 00:02:41,880 Speaker 1: consumer staples as well as healthcare. And then on the 56 00:02:41,919 --> 00:02:45,720 Speaker 1: more circulable side, which is becoming somewhat of a structural play, 57 00:02:45,960 --> 00:02:48,880 Speaker 1: is is energy, which is continually like energy here, we 58 00:02:48,919 --> 00:02:51,560 Speaker 1: think that Brand Oil will get to hundred and ten 59 00:02:51,600 --> 00:02:54,200 Speaker 1: dollars by year in and maintain that level as we 60 00:02:54,240 --> 00:02:57,919 Speaker 1: head into three. So the FED pivot is what we're 61 00:02:57,919 --> 00:03:01,560 Speaker 1: waiting for. I think of San Francisco FED President Mary 62 00:03:01,639 --> 00:03:06,040 Speaker 1: Daly was talking on Friday about policymakers planning for a 63 00:03:06,120 --> 00:03:08,800 Speaker 1: reduction in the size of rate hikes. That time is 64 00:03:08,800 --> 00:03:11,959 Speaker 1: not now, but at some point in the near term. 65 00:03:12,000 --> 00:03:16,040 Speaker 1: I think she's looking for some moderation. Chicago President Charlie 66 00:03:16,040 --> 00:03:17,679 Speaker 1: Evans was saying at the end of last week that 67 00:03:17,760 --> 00:03:20,240 Speaker 1: front loading was a good thing, so they seem to 68 00:03:20,280 --> 00:03:22,320 Speaker 1: have a little bit of confidence that they have done 69 00:03:22,360 --> 00:03:24,880 Speaker 1: their jobs so far. Would you be looking for a 70 00:03:24,919 --> 00:03:29,600 Speaker 1: pivot after the let's say first quarter, Yes, after the 71 00:03:29,720 --> 00:03:31,639 Speaker 1: first quarter, we will be looking for that amy in 72 00:03:31,680 --> 00:03:34,240 Speaker 1: their term and in November meeting. I think that's kind 73 00:03:34,240 --> 00:03:37,080 Speaker 1: of fully baked into the market. Seventy five basis points, 74 00:03:37,080 --> 00:03:39,360 Speaker 1: we're looking for that, but I mean reality is I 75 00:03:39,400 --> 00:03:42,240 Speaker 1: mean inflation sort of remains continued, remains high, the job 76 00:03:42,280 --> 00:03:44,200 Speaker 1: market to do tight. So we're looking even in the 77 00:03:44,280 --> 00:03:46,680 Speaker 1: December meeting for a seventy five basis point. I mean 78 00:03:46,720 --> 00:03:49,800 Speaker 1: there's some races downside to the December just given what 79 00:03:49,840 --> 00:03:51,840 Speaker 1: you've just said in terms of reports coming out later 80 00:03:51,880 --> 00:03:55,440 Speaker 1: on Friday around the potential to discuss the moderation in 81 00:03:55,480 --> 00:03:58,000 Speaker 1: the December meeting. I think that even if you get 82 00:03:58,000 --> 00:04:01,760 Speaker 1: a fed FED pause early next year, I don't think 83 00:04:01,760 --> 00:04:04,600 Speaker 1: that that's enough to have a sustainable rally in the market, 84 00:04:04,640 --> 00:04:06,720 Speaker 1: you might get a need jerk reaction of force and 85 00:04:06,800 --> 00:04:09,520 Speaker 1: need jerk sort of rally. The reality is you still 86 00:04:09,600 --> 00:04:12,080 Speaker 1: have that earns recession, which we think is coming, and 87 00:04:12,320 --> 00:04:14,680 Speaker 1: we think that earnings are going to contract in twenty 88 00:04:14,760 --> 00:04:17,279 Speaker 1: twenty three, and right now the consensus estimates still looking 89 00:04:17,320 --> 00:04:19,520 Speaker 1: for seven percent road so we think that you sort 90 00:04:19,520 --> 00:04:21,320 Speaker 1: of need to get through that in order to have 91 00:04:21,440 --> 00:04:25,080 Speaker 1: a more sustainable rally in the equity markets in twenty three. 92 00:04:25,120 --> 00:04:29,040 Speaker 1: What sectors you actually therefore go into in a more 93 00:04:29,080 --> 00:04:31,640 Speaker 1: meaningful way and which are the ones you stay way 94 00:04:31,640 --> 00:04:34,720 Speaker 1: way clear of. I mean, I guess SI early in 95 00:04:34,839 --> 00:04:37,880 Speaker 1: terms of staples, um consumer staples as well healthcare and 96 00:04:38,000 --> 00:04:40,800 Speaker 1: energy continue to leading into those sectors. The areas that 97 00:04:40,839 --> 00:04:44,799 Speaker 1: we continue to avoid right now is consumer discretionary. Those 98 00:04:44,920 --> 00:04:47,599 Speaker 1: estimacies to come down. You know, the consumer is still 99 00:04:47,640 --> 00:04:50,960 Speaker 1: remains pretty strong, but the consumers shipped and spreading continue 100 00:04:51,000 --> 00:04:54,040 Speaker 1: to shift to pruning away from goods and tours services, 101 00:04:54,120 --> 00:04:56,919 Speaker 1: and as we see the drag of monetary policy, consumer 102 00:04:56,960 --> 00:04:59,760 Speaker 1: spending soft on even more as we get into sophomore 103 00:04:59,760 --> 00:05:03,120 Speaker 1: and two in twenty three. I mean, tech also we 104 00:05:03,120 --> 00:05:07,000 Speaker 1: were avoiding parts of tech. Uh, we underweight that sector 105 00:05:07,080 --> 00:05:09,640 Speaker 1: just given the evaluation. And you know, tech in past 106 00:05:09,680 --> 00:05:12,520 Speaker 1: slowdown has been more resilient from our earning stample, but 107 00:05:12,680 --> 00:05:14,640 Speaker 1: this time around, we just think it's it's going to 108 00:05:14,680 --> 00:05:17,360 Speaker 1: be different, and we're seeing some size of crap, particularly 109 00:05:17,400 --> 00:05:21,039 Speaker 1: on the consumer related tech names and so forth. Nowadia, 110 00:05:21,120 --> 00:05:23,320 Speaker 1: thank you for joining us and sharing your perspective on 111 00:05:23,400 --> 00:05:27,320 Speaker 1: market action. Nadia Level is senior US equity strategist at 112 00:05:27,400 --> 00:05:30,520 Speaker 1: UBS Global Wealth Management, joining us from here in New 113 00:05:30,600 --> 00:05:31,080 Speaker 1: York City.