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Speaker 1: Let's get to Walter Todd. He is with us for

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Speaker 1: the half hour. Walter is the president. He is also

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Speaker 1: the chief investment officer and managing director at Greenwood Capital.

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Speaker 1: On the line from South Carolina. I believe Walter, thanks

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Speaker 1: for joining us tricky markets to try to Yeah, well,

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Speaker 1: we're glad to have you with us. These are very

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Speaker 1: challenging markets to try to navigate. The FED obviously is

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Speaker 1: in firm control here of psychology, and we're on tenderhooks

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Speaker 1: trying to anticipate what may come next. How did you

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Speaker 1: make sense of the tape on Friday and what we

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Speaker 1: had in terms of the ECO data? Yeah, well, I

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Speaker 1: think it was a nice Um. It was the pleasant

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Speaker 1: recovery obviously from you know, very kind of challenging Wednesday

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Speaker 1: and Thursday trade with the CPI, and then the disappointing,

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Speaker 1: you know, perceived disappointing earnings from some of the banks

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Speaker 1: like JP Morgan and Morgan Stanley, and then um, you know,

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Speaker 1: just see the nice rally and recovery. That's encouraging. Um.

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Speaker 1: You know, when you whenever you can rally on on

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Speaker 1: bad news, that's a good that's a start to something

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Speaker 1: good potentially. And then from an economic data perspective. Obviously

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Speaker 1: retail sales came in better, but I mean, if you

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Speaker 1: look at real retail sales backing out inflation, it's still

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Speaker 1: you know, still lower UM. But really, I think the

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Speaker 1: focus of the market and the rally was the University

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Speaker 1: of Michigan survey and the slight takedown UH in the

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Speaker 1: inflation expectation components of that UM. It's hard to believe

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Speaker 1: that a survey of five to six hundred out households

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Speaker 1: can move trillions of dollars. But here we are, well,

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Speaker 1: I mean, the number of members in the fm O

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Speaker 1: C right, Well, well, I guess on that note, Walter

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Speaker 1: David here in Hong Kong. Well, so what's the top

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Speaker 1: of mind for you then? Looking looking at UH this week? Yeah,

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Speaker 1: I think obviously we're getting ready to enter kind of

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Speaker 1: the teeth of earnings just started last week, and then

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Speaker 1: you know, the next two weeks are gonna be a

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Speaker 1: huge amount of earnings that get reported obviously in the

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Speaker 1: FED meeting a week you know, next following week. So

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Speaker 1: our focus this coming week is gonna be on the

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Speaker 1: earnings and listen to what management teams have to say.

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Speaker 1: But import really kind of like we did last week,

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Speaker 1: watching stock reactions to what is likely to be you know,

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Speaker 1: disappointing or cautious guidance from companies, and that's kind of

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Speaker 1: where we are. But there's a lot of bad news

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Speaker 1: discounted in certain parts of the market, and I think

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Speaker 1: we're starting to see that evidence with some of these

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Speaker 1: rallies on bad news. So that's what we'll be focused

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Speaker 1: on next week, and then obviously the Fed, you know,

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Speaker 1: the following week. Yeah, and I'm wondering how much of

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Speaker 1: the guidance is going to involve the dollars strength that

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Speaker 1: we have seen here that's nothing short of phenomenal, and

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Speaker 1: it was on Thursday the Bloomberg's Dollar Spot index was

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Speaker 1: at a record high. Are you worried about headwinds from

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Speaker 1: a stronger dollar, Yeah, for sure. I mean it's it's

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Speaker 1: definitely gonna be pervasive among the global operators in terms

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Speaker 1: of the impact. Now, you know, maybe the market kind

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Speaker 1: of looks through some of that and just really technically

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Speaker 1: in the short term, it looked like kind of a

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Speaker 1: blowoff top in the dollar on Thursday when you blew

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Speaker 1: through that one o nine level on the d X

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Speaker 1: Y and then you've come you know, you come way

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Speaker 1: off that level, but still very elevated. So that's yet

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Speaker 1: another kind of headwind for uping. Is on top of

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Speaker 1: all these other things you guys are talking about in

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Speaker 1: the lead end. Um, it's just gonna be another challenge

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Speaker 1: to be overcome there, Walter, Can I trust that the

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Speaker 1: Fed has got this? In twelve months time, do we

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Speaker 1: see inflation fall? And obviously growth will as a function

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Speaker 1: of what they're doing now, it's probably going to fall.

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Speaker 1: But do they do all of this and we end

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Speaker 1: up with still high inflation twelve months from now? Uh? Well, no,

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Speaker 1: I think I think the wheels have been set in

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Speaker 1: motion to have lower inflation if the FED stopped right now.

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Speaker 1: But they're not going to stop right now. They're gonna unfortunately. Um,

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Speaker 1: I think they have they have the potential to make

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Speaker 1: a mistake here in terms of being too aggressive and tightening.

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Speaker 1: I mean, just as they were looking at inflation this

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Speaker 1: time last year and saying there wasn't a problem because

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Speaker 1: inflation is a lagging indicator, they risk making the same

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Speaker 1: mistake in reverse. They're looking at the nine point one

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Speaker 1: percent print and saying we gotta go seven five or

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Speaker 1: you know, we thought maybe a hundred last week, um,

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Speaker 1: the next meeting, and you just talked about commodities before

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Speaker 1: the break, and you're seeing the evidence that as we

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Speaker 1: look forward, if we're looking forward three to six to

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Speaker 1: twelve months, inflation is set to go down or cool,

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Speaker 1: you know, significantly. And um so yeah, I think they're

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Speaker 1: they're gonna they're gonna slow growth, growth, they're gonna slow inflation,

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Speaker 1: but they may uh they risk overdoing it in our opinion.

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Speaker 1: So when you're trying to get a sense of where

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Speaker 1: risk assets are aheaded, how much more downside could there

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Speaker 1: be for the equity market? Well, I think in the Again, technically,

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Speaker 1: I think we we have maybe set the position to

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Speaker 1: have a decent summer rally off of this earning season

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Speaker 1: and maybe we trade back to the you know, fourth

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Speaker 1: out towards the four thousand level in the SMP, which

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Speaker 1: would be a nice rally. But if the Fed you know,

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Speaker 1: kind of continues this push and we've got a big

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Speaker 1: gap between the July and September meetings, so we'll see,

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Speaker 1: then I think there is risk further us to go,

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Speaker 1: you know, make a low or low uh in the

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Speaker 1: SMP than we then we hit in June so that's

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Speaker 1: that's the risk, and we're watching, you know, just to

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Speaker 1: how the FED reacts to the data over the next

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Speaker 1: two or three months. We we talked about earnings, and

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Speaker 1: apart from earnings itself, any other sector that's catching your

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Speaker 1: your eye right now. Well, I think to kind of

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Speaker 1: on opposite sides of the spectrum. Healthcare has acted very well.

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Speaker 1: We think we continue to like that area because it

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Speaker 1: has both offense and defense within it. We think you know,

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Speaker 1: has has growth components, but as defensive characteristics as well

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Speaker 1: in the large gap arena. And then on the energy front,

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Speaker 1: we think the pullback and energy stocks relative to the

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Speaker 1: commodity has been overdone and I think we're gonna see

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Speaker 1: just tremendous earnings and cash flow from these companies and

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Speaker 1: a few weeks when they start reporting. So we think

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Speaker 1: there's some opportunity there as well. David was highlighting a

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Speaker 1: few of the risk that remain when it comes to

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Speaker 1: China and markets there would would you be tempted to

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Speaker 1: put a little money to work in China it right now?

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Speaker 1: Or do you want to avoid that? Yeah? So, so

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Speaker 1: we have an international et F strategy, you utilizing exchange

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Speaker 1: traded funds, and we have added a little bit too

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Speaker 1: China exposure there because it has been so beaten up.

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Speaker 1: But clearly, you know you just talked about Macau continue

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Speaker 1: to be shutting down, so it's not without risk, but

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Speaker 1: the valuations are fairly compelling relative to the rest of

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Speaker 1: the world. What else is that in that international et

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Speaker 1: f baskets a little bit China, a little bit of

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Speaker 1: what else. Yeah, So it's a lot of broad exposure

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Speaker 1: to develop an emerging markets. And then what we like

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Speaker 1: to do is take you know, specific geographic beats within

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Speaker 1: within that strategy and and right now, you know, China

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Speaker 1: is one of those. Earlier in the year it was

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Speaker 1: Latin America, so we kind of move around a core

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Speaker 1: holding of broad based exposure outside the US. Yeah. The

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Speaker 1: research team over at City We're going to talk more

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Speaker 1: about this, found that many in the market are favoring

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Speaker 1: India and Korea over China. Is that about that you

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Speaker 1: would make? Yeah, well, I think, um, yeah, Korea could

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Speaker 1: be interesting because it's been beaten up because of the

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Speaker 1: semi exposure. Right. Um, we don't have any direct you know,

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Speaker 1: exposures of South Korea right now, although we do within

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Speaker 1: the emerging market E t f UM India. I think,

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Speaker 1: you know, they rest with the commodity imports, you know,

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Speaker 1: very reliant on that. Of course they're buying cheap Russia

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Speaker 1: oil from Russia right now, so maybe that helps them,

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Speaker 1: but we don't. Again, we don't have any direct exposure

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Speaker 1: outside of the UH the emerging market e t F

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Speaker 1: that we hold there. Walter Todd A pleasure to have

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Speaker 1: you unto show Sir President and c I O, Managing

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Speaker 1: Director at Greenwood Capital, one key takeaway their healthcare, both

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Speaker 1: defense and offense