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Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside

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Speaker 1: my co host Matt Miller.

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Speaker 2: Every business day we bring you interviews from CEOs, market pros,

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Speaker 2: and Bloomberg experts, along with essential market moving news.

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Speaker 1: Find the Bloomberg Markets podcast called Apple Podcasts or wherever

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Speaker 1: you listen to podcasts, and at Bloomberg dot com slash podcast.

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Speaker 3: Let's bring in our next guest. My question is for you, Molly,

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Speaker 3: do the rich invest differently than Schmoe's like me?

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Speaker 4: Well, you have to define the rich as our next

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Speaker 4: guest is going to, because there are the mere mortal millionaires,

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Speaker 4: and then there are billionaires, and then there's a nice

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Speaker 4: group in between called the cent to millionaires. A lot

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Speaker 4: more about them.

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Speaker 3: Barbara Goodstein is the CEO at R three sixty, catering

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Speaker 3: to the investment needs of high net worth individuals. Thanks

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Speaker 3: for stopping buying the studio. What does R three sixty do?

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Speaker 5: First of all, it's a community for ultra high net

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Speaker 5: worth wealth creators and their fan families who are trying

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Speaker 5: to navigate the challenges of having these very large family enterprises.

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Speaker 5: And so we bring this community together and people meet

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Speaker 5: and talk about opportunities and challenges.

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Speaker 3: Why do they need to come together, Because when I

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Speaker 3: become an ultra high net worth industry center, I don't

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Speaker 3: want to talk to anybody.

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Speaker 5: Well, you would be surprised you actually would want to

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Speaker 5: talk to people because, first of all, that level of

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Speaker 5: wealth can be isolating, but even more importantly, people are

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Speaker 5: getting ideas from each other. We have some of the

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Speaker 5: most successful people in the country and they're sharing ideas

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Speaker 5: on macro global trends with each other, and then they're

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Speaker 5: all benefiting from hearing those different ideas.

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Speaker 4: So tell us about who some of these quote cent

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Speaker 4: to millionaires are, and those are people that have at

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Speaker 4: least one hundred million dollars in wealth, that's right.

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Speaker 5: So one of the people that we have in our

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Speaker 5: network is one of the largest hedge fund managers in

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Speaker 5: the country, and he has been very vocal educating our

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Speaker 5: group about the benefits of investing in bitcoin. And had

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Speaker 5: I listened to him, I would have tripled my money.

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Speaker 5: He told us that three things are going to happen.

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Speaker 5: That bitcoin is going to be marked to market, and

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Speaker 5: it was in January that ETFs were going to come

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Speaker 5: out and they just did. And now we have a

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Speaker 5: phenomena called having and that's going to happen in April

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Speaker 5: of this year, and he told the group that this

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Speaker 5: is going to generate enormous growth and opportunity in bitcoin.

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Speaker 5: So that's the type of person that we have in

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Speaker 5: the group.

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Speaker 3: These are people who inherited their wealth or they actually

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Speaker 3: made the money with hard work and starting a business.

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Speaker 6: So it's actually both.

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Speaker 5: We have a lot of wealth creators. We also have

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Speaker 5: some people who have inherited the wealth and now they're

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Speaker 5: extending the business that they inherited through the next generation.

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Speaker 4: So we have both and these are so a lot

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Speaker 4: of this is what they're talking about with each other.

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Speaker 6: You said, like macro ideas.

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Speaker 4: I don't think though that these people really want to

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Speaker 4: share where their money's being invested though, right, Like does

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Speaker 4: that all? Well?

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Speaker 5: They actually are happy to share with each other. And

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Speaker 5: that's the fascinating part about this community. Everybody sharing lots

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Speaker 5: of information, personal information as well as investment information. And

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Speaker 5: so again we've got another member who has written six

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Speaker 5: books on theoretical physics and he's got a PhD in

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Speaker 5: quantum computing.

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Speaker 3: And I think I know who this is, and.

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Speaker 5: He's been advising everybody to invest in quantum computing, that

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Speaker 5: there's going to be an enormous rise there. Russia and

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Speaker 5: China are creating something called hack proof quantum computing, and

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Speaker 5: so we're now looking at investing in South Korea. Telecom

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Speaker 5: has built an alternative to that.

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Speaker 3: Okay, So as an individual investor myself, what can I

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Speaker 3: learn from them?

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Speaker 5: So I think you could learn about again macro global

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Speaker 5: economic trends, things that are coming. So we are very

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Speaker 5: focused on the defense area. We think that there's going

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Speaker 5: to be an enormous increase in defense spending across the world,

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Speaker 5: and we've already seen it. Poland just bought a thousand

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Speaker 5: tanks from South Korea. That's more than Germany, France, and

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Speaker 5: the UK combined, and that is small compared to what's

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Speaker 5: about to happen in the United States and Russia. So

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Speaker 5: if you're interested in global defense spending, there are a

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Speaker 5: lot of opportunities in that space.

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Speaker 4: What happens, Barbara, if your net worth changes so substantially

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Speaker 4: that either you've been now minted as a billionaire or

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Speaker 4: maybe you're less fortunate and fall into the low single

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Speaker 4: digits of just millionaire status, can you still be in

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Speaker 4: this club?

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Speaker 5: So We actually have a lot of billionaires in the club.

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Speaker 5: So the average networth is four hundred million dollars. The

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Speaker 5: minimum requirement is one hundred million dollars, so we have

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Speaker 5: a number of billionaires. And the priority in this group

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Speaker 5: is to find people that share the same values. These

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Speaker 5: are people who want to go from prosperity to purpose.

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Speaker 5: They're going from having built extraordinary lives to building extraordinary legacies.

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Speaker 5: So that's the priority, is finding people with the same

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Speaker 5: values and the same interests.

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Speaker 3: You're talking about philanthropic endeavors.

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Speaker 5: Yes, many of these people are uniquely philanthropic. We have

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Speaker 5: people that one couple is building the largest foundation to

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Speaker 5: support cochleate ear implants in their states. We have another

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Speaker 5: person who's the largest employer of people with disabilities in

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Speaker 5: her state. So tremendous philanthropy. And one of the requirements

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Speaker 5: is that people have the same values that they're not

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Speaker 5: coming there to use each other. They're coming there to

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Speaker 5: build this community and share with each other.

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Speaker 3: Barbara, I wish we had more time. Barbara Goudstein, the

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Speaker 3: CEO at R three sixty catering to the investment needs

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Speaker 3: of high net worth individuals. Thanks for stumming by the studio.

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Speaker 7: You're listening to the Team Ken's live program Bloomberg Markets

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Speaker 7: weekdays at ten am easding on Bloomberg dot Com, the

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Speaker 7: iHeartRadio app and the Bloomberg Business app, or listen on

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Speaker 7: to that and wherever you get your podcast.

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Speaker 3: Well, traders seem to be grappling with the timing of

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Speaker 3: right cuts, Mollie even how many, And that's making for

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Speaker 3: I'm gett a guess, a pretty bumpy road ahead for it's.

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Speaker 4: A real toss up this year. Who the heck knows.

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Speaker 3: James Denvert is chief investment officer at main Street Research,

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Speaker 3: and it looks like he's in a loft in San

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Speaker 3: Francisco somewhere. Do I have that right, James?

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Speaker 8: That's a cool look office?

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Speaker 3: All right, Do you have any Do you have any

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Speaker 3: clarity for investors on the path forward? What's in the

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Speaker 3: driver's seat?

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Speaker 9: Yeah?

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Speaker 10: I think the investors should stop fretting about the FED.

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Speaker 10: I mean, that's that's over with and this economy is

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Speaker 10: very resilient and in our view, we're entering an AI

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Speaker 10: led super cycle and we sort of a lot of

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Speaker 10: logic that we bake into that is that we're going

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Speaker 10: into the era of a very different in the sense

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Speaker 10: of enhanced productivity growth, something we haven't seen in a cycle,

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Speaker 10: but we did see in the nineties, and so we

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Speaker 10: see the opportunity here in a resilient economy with stocks cheap,

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Speaker 10: that it's most likely a new business cycle, a new

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Speaker 10: ball market. And of course, as I mentioned, AI tech

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Speaker 10: led and so I think, you know, the FED will

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Speaker 10: probably cut. I'm not sure they need to cut as

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Speaker 10: much as people think they do, and I think that's

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Speaker 10: because earnings are going to probably be better than expected this

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Speaker 10: order and for the rest of the year. So I

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Speaker 10: think people should maybe just stop so much with the

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Speaker 10: FED talk, which has been really obviously consuming us all

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Speaker 10: for the last two years. I think it's going to

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Speaker 10: be more about earnings and prices of stocks.

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Speaker 4: Very refreshing to hear you say that as somebody who

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Speaker 4: is my job it is to hang onto every word

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Speaker 4: the FED says, so covering the economy and the FED.

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Speaker 4: So I appreciate your perspective there for us, James, But

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Speaker 4: this is really interesting, this AI led super cycle. I mean,

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Speaker 4: take us through that and how like people are really

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Speaker 4: going to get, you know, behind the idea that AI

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Speaker 4: seems to be what you're saying, here will be the

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Speaker 4: primary market driver.

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Speaker 6: Rather than the FED.

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Speaker 4: That's a kind of revolutionary idea.

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Speaker 10: Well, it seems revolutionary because in the last two years

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Speaker 10: that's all we hear about. But if you think about

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Speaker 10: the longer term, I've been doing this for thirty five years,

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Speaker 10: the FED is usually not the focus of the conversation

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Speaker 10: all the time. It really is more about corporate profits

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Speaker 10: or how what's the health of the economy. And that's

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Speaker 10: why we think we're going to sort of move towards that,

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Speaker 10: you know, the AI sort of supercycle that we envision.

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Speaker 10: You know, you think about how companies and it's not

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Speaker 10: just tech companies getting more productive with tech and AI.

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Speaker 9: I think it's really going to go across all sectors.

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Speaker 10: I mean, at the JP Morgan Healthcare conference last week,

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Speaker 10: I am in San Francisco right now, even though I'm

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Speaker 10: based in Manhattan, but last week the buzzword across the

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Speaker 10: healthcare companies was AI. And I think investors should recognize

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Speaker 10: AI is going to be crossing lots of different sectors

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Speaker 10: and it's going to make these companies much more productive.

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Speaker 10: And we think that earnings over the next five to

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Speaker 10: seven years possibly triple and you know that that's what

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Speaker 10: leads us to these large index focus points we have,

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Speaker 10: like where the Dow will be seven to ten years

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Speaker 10: from now. We think it's a triple one hundred thousand,

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Speaker 10: one hundred thousand dow.

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Speaker 3: Okay, we're going to hold you to that, believe.

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Speaker 9: Well, yeah, I'll be back in ten years.

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Speaker 3: Having lived through the dot com bubble, Yeah, there was

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Speaker 3: a lot of flotsam and jetsam, uh, but eventually, yeah,

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Speaker 3: it was a revolutionary the Internet for all of us.

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Speaker 3: When does AI really start to jail in terms of

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Speaker 3: productivity and in terms of sales for the companies that

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Speaker 3: are doing AI? I guess, you know, in Nvidia one

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Speaker 3: of the obvious choices there.

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Speaker 10: Yeah, and I would like to say that today's a

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Speaker 10: microcost of what I view over the next three to

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Speaker 10: five years. You know, you see this big nastac move

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Speaker 10: on Taiwan Semi's numbers, and you know, how long does

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Speaker 10: it take for AI to really show up in the

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Speaker 10: earnings and the profitability and productivity. It's a very good question.

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Speaker 10: Now some places it's already showing up, and we've seen

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Speaker 10: that in the earnings reports of the early adapters in technology.

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Speaker 10: I'm talking about technology companies using the Nvidia chips, like

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Speaker 10: a Microsoft or at Google, you're already seeing that, you know,

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Speaker 10: affecting their bottom line. But you know, I think for

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Speaker 10: it to be seen across a lot of the other

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Speaker 10: sectors that we envision it affecting, investors are going to

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Speaker 10: need to be patient. But you know one thing about

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Speaker 10: the stock market that you both know, it's a discount mechanism.

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Speaker 9: So you know, the stock market's not going to.

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Speaker 10: Wait for the earnings to get a creative because of AI.

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Speaker 10: It's going to discount that before it happens. So I

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Speaker 10: think investors should be really careful here about being too bearish,

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Speaker 10: too fed centric, and just be like, okay, wait a minute,

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Speaker 10: if this is real, if this is going to lead

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Speaker 10: to productivity growth, higher margins, and in corporate profits, you

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Speaker 10: want to kind of buy dips here. And even those

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Speaker 10: dips might be shallow, as a recent one has been.

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Speaker 10: So I think we should be really careful about being

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Speaker 10: too bearish.

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Speaker 3: You gave the doll for kit. What about the Nasdaq

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Speaker 3: one hundred, Well, I.

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Speaker 9: Think that's really where you as an investor.

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Speaker 10: You can't ignore the magnificent seven in the Nasdaq one hundred.

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Speaker 9: It's very important. I know people think, oh gosh, it's

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Speaker 9: said nosed.

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Speaker 3: Leaves just had like ten seconds left there leaed leaves.

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Speaker 10: But these stocks are cheap relative through their growth, and

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Speaker 10: video has gotten lower pe as the earnings.

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Speaker 9: Have gone up this year.

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Speaker 3: All right, that's I'm going to say. That's the San Francisco.

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Speaker 4: View, the San Francisco loft view.

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Speaker 3: That is James Stammerd, Chief investment officer at main Street Research,

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Speaker 3: joining us from San Francisco.

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Speaker 7: You're listening to the tape. Catch our live program Bloomberg

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Speaker 7: Markets weekdays at ten am Eastern on Bloomberg Radio, the

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Speaker 7: tune in app, Bloomberg dot Com, and the Bloomberg Business App.

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Speaker 7: You can also listen live on Amazon Alexa from our

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Speaker 7: flagship New York station, Jo Say Alexa play Bloomberg eleven thirty.

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Speaker 3: Well, a FED pivot seems to be underway, but the

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Speaker 3: timing that's under question right now, how does this change

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Speaker 3: your investment strategy? Let's put that question to our next

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Speaker 3: guest this morning, Karen Murphy, chief investment officer with Castra

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Speaker 3: Investment Management. Good to see you again. So this back

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Speaker 3: and forth, you know, March now maybe June two cuts,

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Speaker 3: six cuts. Who knows, I can't keep track? What does

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Speaker 3: it do to your investment strategy?

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Speaker 6: We're all having a little trouble keeping track. You know.

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Speaker 11: The market has been all over the place on this one.

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Speaker 11: You know, in December, as the Fed started to get

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Speaker 11: more dubvish futures, markets started to price in five to

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Speaker 11: six cuts for next year. You know, anybody who's been

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Speaker 11: a FED watcher for a long time had to be

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Speaker 11: a little suspicious about that prediction. And then, of course,

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Speaker 11: more recently we've had jobs data come in a little

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Speaker 11: bit more bullish, Retail spending today looked a little bit better.

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Speaker 11: So there continues to be a remarkable amount of momentum

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Speaker 11: on the services side of the economy, which has to

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Speaker 11: give FED policy makers pause. So no surprise really that

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Speaker 11: that cut for March is starting to be priced out

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Speaker 11: of markets.

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Speaker 6: And I think in.

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Speaker 11: General what we're going to see is fewer cuts and

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Speaker 11: later in the year than what the market had been

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Speaker 11: predicting in December.

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Speaker 4: You think that the momentum then is going to continue

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Speaker 4: into later this year as well. Is that essentially the

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Speaker 4: read through.

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Speaker 6: On that we do.

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Speaker 11: I mean, in general, we think that there's a fair

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Speaker 11: amount of momentum in the economy and in the markets

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Speaker 11: in general, so it's still a pretty good environment for investors.

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Speaker 6: Probably not a repeat of what we saw twenty twenty.

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Speaker 11: Three, but we are starting to see underlying momentum within

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Speaker 11: the manufacturing sector, right that's been really beaten up last year.

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Speaker 11: It seems to me maybe stabilizing, So that's potential tailwind

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Speaker 11: heading into next year. And then of course, if you

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Speaker 11: look at areas in the market outside you know, the

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Speaker 11: mag seven, the ones that really drove returns last year,

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Speaker 11: there are a lot of pretty interesting opportunities.

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Speaker 6: So we think that there are some nice.

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Speaker 11: You know, sort of tailwinds heading into the rest of

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Speaker 11: twenty twenty four.

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Speaker 3: Okay, so are you extending that outlook into smaller mid caps?

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Speaker 11: Yeah, I mean that's an easy place to kind of look.

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Speaker 11: You can look elsewhere in the SMP, even outside those

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Speaker 11: core group of names that have done remarkably well. But

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Speaker 11: like small caps are a really great example in that

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Speaker 11: if you look at the Russell two thousand versus S

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Speaker 11: and P five hundred, we're really extreme levels of underperformance,

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Speaker 11: extreme levels of lower evaluations relative to large caps.

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Speaker 6: So you know, we have really really negative.

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Speaker 11: Sentiment that's built into these small cap names. And even

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Speaker 11: if you do have headwinds for there, you know how

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Speaker 11: much is too much? How much pessimism is too much?

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Speaker 11: And so we think over the medium term those small

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Speaker 11: caps can actually offer some really nice re terms.

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Speaker 3: Is there like a magnificent seven in the Russell two thousand?

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Speaker 3: I'm sure?

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Speaker 6: Yeah, who's out there that I don't know?

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Speaker 5: Like that?

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Speaker 6: He's not yet? Who knows?

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Speaker 4: Who knows? They haven't announced themselves yet. Maybe you're crafts

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Speaker 4: making business or whatever you're doing because you're so hand

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Speaker 4: each John was just telling us that I'm not I

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Speaker 4: really Anyways, we're going to ask Ka this smart question.

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Speaker 4: So so Caar tell us that call in small caps?

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Speaker 4: Would you say that's your highest conviction view for this year?

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Speaker 11: So, I mean, we see opportunities in a number of

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Speaker 11: different places, and that's sort of what I like about

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Speaker 11: twenty twenty four and how it's setting up. Certainly, small

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Speaker 11: caps look attractive, mid caps look attractive. Outside the US,

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Speaker 11: you have similar issues right where non US versus US

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Speaker 11: has had remarkable underperformance, remarkable low valuations. They're also you

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Speaker 11: have the buffer of higher dividend yields, and then in

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Speaker 11: fixed income as well. You know, we talked about maybe

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Speaker 11: needing to get a little bit more cautious on when

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Speaker 11: the FED starts to cut rates, but the fact is

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Speaker 11: most asset classes within fixed income are starting at higher

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Speaker 11: yields than we've seen in ten years. So even without

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Speaker 11: FED rate cuts, I think you can have a pretty

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Speaker 11: nice return on the fixed income side as well. So

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Speaker 11: I think there are a number of areas where investors

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Speaker 11: can play.

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Speaker 3: I think I put this question to every guest that

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Speaker 3: we say, but in a disinflationary environment or a deflationary environment,

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Speaker 3: what does that do to earnings especially company sales?

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Speaker 11: Yeah, so certainly as we start to see inflation levels

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Speaker 11: come down, deflation is always a little bit of a

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Speaker 11: dangerous monster. But let's assume we're in disinflation, those rates

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Speaker 11: are coming down, it should slow top line. But what

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Speaker 11: also typically happens is that valuations then do better, right,

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Speaker 11: because you have more certainty about what those earnings levels

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Speaker 11: are going to be further out. So even if earnings

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Speaker 11: levels sort of come down a little bit, valuations then

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Speaker 11: have more room to go on the upside.

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Speaker 4: So we're only really just starting to knock on the

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Speaker 4: door of earning season. Just had the big US Banks

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Speaker 4: report in the past week, any know, big calls you

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Speaker 4: know for this quarter in terms of themes to look

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Speaker 4: out for, and you know, just generally where the momentum

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Speaker 4: is heading into the new year.

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Speaker 6: Yeah.

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Speaker 11: So, you know, roun about the third quarter of last year,

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Speaker 11: we started to see corporate earnings really bottom. So number one,

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Speaker 11: in general, we want to make sure that those earnings

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Speaker 11: are continuing to lift off of the bottom. I think

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Speaker 11: another thing that we'll be looking for is being able

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Speaker 11: to hear companies talk specifically help clear out some of

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Speaker 11: the noise and the economic data that we've had. You know,

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Speaker 11: we talked about labor, we talked about retail sales. Home builders'

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Speaker 11: confidence has been increasing, but there's a ton of seasonal

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Speaker 11: volatility in those numbers, both because of COVID and because

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Speaker 11: of the holidays and whatnot. So hearing companies specifically talk

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Speaker 11: about what they're seeing on the floors of their stores

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Speaker 11: and whatnot is going to be really important.

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Speaker 4: You know. That kind of reminds me of a lot

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Speaker 4: of what Michelle Bowman at the FES been saying of

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Speaker 4: like just you know, being a bit cautious about the

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Speaker 4: hard data and what the revisions might show. You think

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Speaker 4: that's maybe something investors are also a bit wary of

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Speaker 4: if this data is really maybe not as strong as

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Speaker 4: it's been made out to be.

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Speaker 11: I think investors should always be a little weary, particularly

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Speaker 11: around this time of the year. And then we also

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Speaker 11: have this issue that's been pretty consistent over the last

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Speaker 11: couple of years about fewer and fewer people and businesses

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Speaker 11: participating in these surveys.

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Speaker 6: So just by.

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Speaker 11: That alone, the quality of the data that we get

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Speaker 11: today is lower than what it might have been a

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Speaker 11: couple of years ago.

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Speaker 3: Well, she's harping on the revisions.

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Speaker 4: Now the response rates there, that's something that's been really

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Speaker 4: poor with jolts in particular, which you know, that's what

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Speaker 4: that one We really look at a ton for those

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Speaker 4: job openings, and that one's already a bit difficult to

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Speaker 4: interpret because it's reported with a month lag, so a

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Speaker 4: lot of yeah, I mean, yeah, it's really more been

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Speaker 4: the labor ones, though they're right. Care you think response rates.

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Speaker 6: Cons confidence as well?

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Speaker 11: Yeah, so consumer confidence, and again we've seen some weird

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Speaker 11: responses in general.

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Speaker 6: Some surveys are telling us that consumers remain very low

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Speaker 6: in terms of confidence.

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Speaker 11: Other ones are looking okay, but then if you look

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Speaker 11: at the response rates within each of those are much

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Speaker 11: lower than what they used to be, so it's hard

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Speaker 11: to know how much stake to put in those. So

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Speaker 11: it's consistent across a lot of different economic data.

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Speaker 3: Before you go, can you give us name individual names,

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Speaker 3: I don't if you do that, or just sectors or

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Speaker 3: I don't know, let's do energy in general sectors.

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Speaker 11: Yeah, Well, we actually think over the medium term energy

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Speaker 11: is actually fairly interesting. You know, the underlying commodities have

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Speaker 11: kind of have their own cycle, but if we look

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Speaker 11: at investment levels in those companies, they've been remarkably low,

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Speaker 11: which often presages a pretty good kind of medium term

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Speaker 11: return environment. Valuation levels are half of what their historic

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Speaker 11: levels are. So again, over a couple of year period,

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Speaker 11: we think you can find a lot of interesting opportunities there.

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Speaker 4: I was hoping you might say some names and we

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Speaker 4: would hear with the magnificent seven Russell are.

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Speaker 7: Yes, yes, we'll all right.

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Speaker 3: Karen, thanks a lot, appreciate it. Arah Murphy, good to

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Speaker 3: see again, Chief investment officer with Castra Investment Management.

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Speaker 7: You're listening to the tape, can't our live program Bloomberg

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00:20:08,640 --> 00:20:12,240
Speaker 7: Markets weekdays at ten am Eastern on Bloomberg Radio, the

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00:20:12,280 --> 00:20:15,520
Speaker 7: tune in app, Bloomberg dot Com, and the Bloomberg Business App.

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00:20:15,560 --> 00:20:18,359
Speaker 7: You can also listen live on Amazon Alexa from our

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Speaker 7: flagship New York station. Just say Alexa play Bloomberg eleven thirty.

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Speaker 3: We'll Mascaviz as CEO and portfolio manager at Heartland Advisors.

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Speaker 3: So what is what is your method for valuing stocks?

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Speaker 3: Let's start there, because I think I know what your

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Speaker 3: answer is.

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Speaker 8: Well, thanks for the opportunity to be here.

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Speaker 12: Our process is our ten principles of value invested, and

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Speaker 12: we utilize it to keep our exposures and check. There's

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Speaker 12: a lot of uncertain in the marketplace today, the election, geopolitical, hardsoft, no.

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Speaker 8: Landing, et cetera.

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Speaker 12: So we want to be mindful of where we're exposed, overweight, underweight,

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Speaker 12: given the uncertainties out there, then use our process, our

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Speaker 12: ten principles of value to keep those at check.

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Speaker 4: So you know something that John's been wanting to ask

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Speaker 4: a lot of our guests here is who is the

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Speaker 4: Magnificent seven. I'm just saying I think if John wants

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Speaker 4: to know, then someone else does do you were a

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Speaker 4: man of the people. So if anyways, the question for

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Speaker 4: you then will what is the magnificent seven of the

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Speaker 4: Russell two thousand. We'd all love to know.

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Speaker 12: Well, that's a great question. I'm not sure that there

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Speaker 12: is a mag seven within the rust of two thousand.

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Speaker 12: It's a benchmark that's populated with a significant chunk of

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Speaker 12: companies that are unprofitable. I think that creates lots of

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Speaker 12: opportunities that said, too, for active investors to pick off

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Speaker 12: those businesses that are high quality that are getting caught

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Speaker 12: up in the near term uncertainty and create value through

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Speaker 12: for our client's longer term.

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Speaker 3: Okay, let's get more into the differentiation between the smaller caps,

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Speaker 3: the mids and the mega camps at this and the

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Speaker 3: advantages to investors at this point.

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Speaker 8: Well, I think that's the make has had some big

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Speaker 8: ex ecues.

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Speaker 12: We have some wonderful companies within it, but there's also

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Speaker 12: wonderful companies in MidCap and small cap places. You know,

441
00:22:04,880 --> 00:22:08,440
Speaker 12: we're optimistic on JBI Hunt they report later today. It's

442
00:22:08,440 --> 00:22:12,320
Speaker 12: in the industrial space. It's a leader in the intermodal offering.

443
00:22:12,400 --> 00:22:15,159
Speaker 12: Their scale and their relationship with Berlin General, and it

444
00:22:15,240 --> 00:22:17,919
Speaker 12: is second to none, and we see this as a

445
00:22:18,080 --> 00:22:21,120
Speaker 12: classic self help opportunity or catalyty.

446
00:22:21,160 --> 00:22:23,200
Speaker 3: And I see their trucks on the road on the turnpike.

447
00:22:23,400 --> 00:22:25,000
Speaker 3: They're a shipper or what are they do again?

448
00:22:25,720 --> 00:22:28,600
Speaker 12: They provide that container on the back of that tractor.

449
00:22:28,600 --> 00:22:31,160
Speaker 12: They're the leader in that space. They have a long

450
00:22:31,240 --> 00:22:33,520
Speaker 12: term agreement with Berlinton Northernd that container that goes on

451
00:22:33,560 --> 00:22:37,359
Speaker 12: a rail. The cost advantages of intermodal relative truckloader are

452
00:22:37,440 --> 00:22:41,600
Speaker 12: very significant. The broader space has been challenged because of

453
00:22:41,680 --> 00:22:44,679
Speaker 12: rail service issues. We think that's in the rear mirror,

454
00:22:44,920 --> 00:22:48,040
Speaker 12: and we think that intermodal in general is going to

455
00:22:48,040 --> 00:22:50,640
Speaker 12: continue to take share away from truckle That I would

456
00:22:50,720 --> 00:22:53,639
Speaker 12: obviously be very positive for Jbhunt, which we think is

457
00:22:53,640 --> 00:22:54,200
Speaker 12: in the cards.

458
00:22:54,359 --> 00:22:57,199
Speaker 4: So would you say you're pretty bullish on that sector

459
00:22:57,280 --> 00:22:59,800
Speaker 4: more broadly or it's really just this name and if so,

460
00:23:00,160 --> 00:23:03,120
Speaker 4: where maybe some other areas you're looking at too well.

461
00:23:03,160 --> 00:23:05,280
Speaker 12: I think it's important for investors, back to that earlier

462
00:23:05,359 --> 00:23:08,560
Speaker 12: commentary of understanding your exposures. Everyone wants to talk about

463
00:23:08,640 --> 00:23:12,360
Speaker 12: what they're overweight, what the opportunity is. It's equally important

464
00:23:12,520 --> 00:23:15,600
Speaker 12: all maybe even more so, to understand that downside. Are

465
00:23:15,640 --> 00:23:17,280
Speaker 12: you comfortable with those underweights?

466
00:23:17,400 --> 00:23:17,640
Speaker 8: JB.

467
00:23:17,800 --> 00:23:21,880
Speaker 12: Hunt falls within industrials. We actually have an active underweight

468
00:23:21,920 --> 00:23:25,600
Speaker 12: there that's unique for us. We've historically added value there,

469
00:23:26,320 --> 00:23:28,800
Speaker 12: but right now that universe in terms of the risk

470
00:23:28,840 --> 00:23:31,480
Speaker 12: reward of the broader big cap industrial space is not

471
00:23:31,640 --> 00:23:35,000
Speaker 12: super compelling. We do find opportunities Bill or if I

472
00:23:35,000 --> 00:23:37,800
Speaker 12: think there's an opportunity in JA behind another active underweight

473
00:23:37,840 --> 00:23:40,800
Speaker 12: we have has been with financials. That's a big component

474
00:23:40,800 --> 00:23:44,040
Speaker 12: of both the big cap and small cap. Russell Indsy's

475
00:23:44,080 --> 00:23:44,800
Speaker 12: our benchmarks.

476
00:23:44,800 --> 00:23:45,280
Speaker 8: If you will.

477
00:23:45,560 --> 00:23:47,600
Speaker 12: One name that we're excited about, it's down today and

478
00:23:47,680 --> 00:23:51,679
Speaker 12: report is Northern Trust. That's a duration catalyst. Expectations we

479
00:23:51,800 --> 00:23:54,719
Speaker 12: believe are very low and we think we don't know

480
00:23:54,760 --> 00:23:56,800
Speaker 12: what the Fed's going to do, we don't know where

481
00:23:56,800 --> 00:23:58,520
Speaker 12: the economy is going to go, but all likeli that

482
00:23:58,640 --> 00:24:01,679
Speaker 12: we're probably going to see some cret deteriorate here in

483
00:24:01,720 --> 00:24:05,080
Speaker 12: the cores at Northern Trust should be a relative winner

484
00:24:05,359 --> 00:24:08,600
Speaker 12: within the financial space that also have a significant degree

485
00:24:08,600 --> 00:24:10,960
Speaker 12: of higher fee based revenue. And we see a cell

486
00:24:11,359 --> 00:24:14,400
Speaker 12: self help story here too, as they're addressing perhaps some

487
00:24:14,480 --> 00:24:18,400
Speaker 12: cost float associated with the significant wage pressure. We're there

488
00:24:18,640 --> 00:24:21,560
Speaker 12: right now they are prey tax margins or somewhere on

489
00:24:21,640 --> 00:24:25,040
Speaker 12: the mid twenty percent range. We see a pathway to

490
00:24:25,160 --> 00:24:27,879
Speaker 12: thirty percent or guys their long term guidance and we

491
00:24:27,960 --> 00:24:31,120
Speaker 12: think that is that is byside and sales side expectations

492
00:24:31,160 --> 00:24:33,760
Speaker 12: adopt that that should be very positive for Northern Trust.

493
00:24:33,840 --> 00:24:37,640
Speaker 3: It's safe to say these are more domestically oriented stocks

494
00:24:37,720 --> 00:24:40,480
Speaker 3: because they are smaller cap as such, does that mean

495
00:24:40,520 --> 00:24:43,560
Speaker 3: they're immune from some of the concerns that we see

496
00:24:43,560 --> 00:24:46,280
Speaker 3: with the larger cap stocks, whether it be geopolitical or

497
00:24:46,600 --> 00:24:47,440
Speaker 3: I don't know whatever.

498
00:24:49,080 --> 00:24:51,159
Speaker 12: I think the reality is we're an intertwined world of

499
00:24:51,280 --> 00:24:53,240
Speaker 12: every business in some shape or form is going to

500
00:24:53,240 --> 00:24:56,919
Speaker 12: be impacted from higher commodity prices. Obviously, which was an

501
00:24:56,920 --> 00:24:59,600
Speaker 12: occurrence associated with the Rusher who came conflict. Now we're

502
00:24:59,600 --> 00:25:02,639
Speaker 12: having challenges with the container rates, with the issues that

503
00:25:02,680 --> 00:25:04,280
Speaker 12: we're seeing in the Red Sea, et cetera. So you

504
00:25:04,320 --> 00:25:08,080
Speaker 12: just have to be aware of those exposures, understand them,

505
00:25:08,359 --> 00:25:10,280
Speaker 12: and make sure you're comfortable with them in terms of

506
00:25:10,280 --> 00:25:13,120
Speaker 12: that over and underweight and balancing it out with your process.

507
00:25:13,880 --> 00:25:17,440
Speaker 4: Tell us then about maybe the risk from election perspectives,

508
00:25:17,440 --> 00:25:20,200
Speaker 4: That certainly got to be a domestic one on your mind.

509
00:25:21,280 --> 00:25:22,240
Speaker 8: That's a great question.

510
00:25:22,440 --> 00:25:24,440
Speaker 12: If I think, if you sticking with the two names

511
00:25:24,440 --> 00:25:27,840
Speaker 12: that we talked about, if Trump wins, I suspect that

512
00:25:27,920 --> 00:25:30,119
Speaker 12: would be good for Hunt. I think we'll continue to

513
00:25:30,119 --> 00:25:33,600
Speaker 12: see this reshoring trend. He was obviously big on tariffs,

514
00:25:34,040 --> 00:25:37,040
Speaker 12: discussing trade, You're going to continue to see businesses invest

515
00:25:37,400 --> 00:25:38,560
Speaker 12: back at here in the United States.

516
00:25:38,640 --> 00:25:40,639
Speaker 8: That should be good for HUNT.

517
00:25:41,040 --> 00:25:43,000
Speaker 12: I don't know this for certain, but I think his

518
00:25:43,200 --> 00:25:47,760
Speaker 12: victory would probably lift CEO confidence, high net worth confidence

519
00:25:47,760 --> 00:25:50,640
Speaker 12: because there'd be thinking that there'd be less regulation coming

520
00:25:50,680 --> 00:25:51,320
Speaker 12: out of the Beltway.

521
00:25:51,400 --> 00:25:52,879
Speaker 8: That should be good for Northern Trust.

522
00:25:53,200 --> 00:25:55,280
Speaker 12: If Biden gets re elected, I'm not sure what the

523
00:25:55,320 --> 00:25:58,639
Speaker 12: headwinds would be for JAB in the near term. Northern

524
00:25:58,640 --> 00:26:02,520
Speaker 12: Trust being a financial suspect that there'd be continued regulatory

525
00:26:02,520 --> 00:26:06,480
Speaker 12: screwtiny across the broader financial space, although I don't think

526
00:26:06,760 --> 00:26:10,240
Speaker 12: Northern Trust would be you know, under the microscope.

527
00:26:09,400 --> 00:26:12,840
Speaker 3: All right, where do you see your benchmarks? Time to

528
00:26:12,880 --> 00:26:16,320
Speaker 3: put you on the spot. Year end. I mean, everybody's

529
00:26:16,640 --> 00:26:18,119
Speaker 3: told us what they think about the S and P

530
00:26:18,200 --> 00:26:21,159
Speaker 3: five hundred five thousand. This year benchmark is what the Russell?

531
00:26:22,000 --> 00:26:24,800
Speaker 12: Yeah, the Russell two thousand value for our small cat

532
00:26:24,840 --> 00:26:27,840
Speaker 12: products and the Russell MidCap value for our MidCat product.

533
00:26:28,119 --> 00:26:29,440
Speaker 8: We don't have a long.

534
00:26:29,280 --> 00:26:31,359
Speaker 12: Term target for either of those, but we're going to

535
00:26:31,400 --> 00:26:34,719
Speaker 12: continue to focus on taking what the market gives us.

536
00:26:34,720 --> 00:26:36,720
Speaker 12: A good example of this, you know, we're talking about

537
00:26:36,760 --> 00:26:38,960
Speaker 12: the FED a little bit here too. If you rewind

538
00:26:38,960 --> 00:26:41,640
Speaker 12: the clock back to August of twenty twenty two, hol

539
00:26:41,720 --> 00:26:46,600
Speaker 12: had a very aggressive, intense presentation in Jackson Hold early

540
00:26:46,640 --> 00:26:49,719
Speaker 12: cyclical stocks sold off into the vault. We pounced on

541
00:26:49,840 --> 00:26:53,160
Speaker 12: that opportunity in our shareholders of benefit. I suspect whether

542
00:26:53,200 --> 00:26:56,040
Speaker 12: the FED raises, folds or cuts rates, there's going to

543
00:26:56,080 --> 00:26:58,919
Speaker 12: be volatility. So stick to your process, understand how your

544
00:26:58,920 --> 00:27:02,000
Speaker 12: portfolio is exposed, capitalize on those opportunities that can present

545
00:27:02,000 --> 00:27:02,280
Speaker 12: it to you.

546
00:27:02,480 --> 00:27:04,119
Speaker 3: All Right, Thanks, well, nice to talk to you. A

547
00:27:04,119 --> 00:27:09,840
Speaker 3: great discussion. Will Nascovitzi's the CEO portfolio manager at Heartline Heartlam,

548
00:27:10,080 --> 00:27:14,600
Speaker 3: the advisors making the case for MIA and smaller cap stocks.

549
00:27:14,880 --> 00:27:17,960
Speaker 2: Thanks for listening to the Bloomberg Markets podcasts. You can

550
00:27:18,000 --> 00:27:21,760
Speaker 2: subscribe and listen to interviews at Apple Podcasts or whatever

551
00:27:21,840 --> 00:27:25,560
Speaker 2: podcast platform you prefer. I'm Matt Miller. I'm on Twitter

552
00:27:25,760 --> 00:27:29,000
Speaker 2: at Matt Miller nineteen seventy three, and I'm fall Sweeney.

553
00:27:29,040 --> 00:27:31,679
Speaker 1: I'm on Twitter at pt Sweeney. Before the podcast, you

554
00:27:31,680 --> 00:27:35,119
Speaker 1: can always catch us worldwide at Bloomberg Radio