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Speaker 1: M This is Mesters in Business with Very Results on

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Speaker 1: Bloomberg Radio. This week on the podcast, I have an

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Speaker 1: extra special guest. Her name is Kristin Biddoly Michelle. She

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Speaker 1: is head of North America Investments for City Global Wealth,

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Speaker 1: which is a giant wealth management arm of the giant

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Speaker 1: City Bank. They run over eight hundred billion dollars in

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Speaker 1: client assets, and Kristen's group, the North American Group, is

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Speaker 1: responsible for about half of the revenue that that massive

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Speaker 1: organization generates. She really has an incredible background in everything

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Speaker 1: from capital markets to derivatives to wealth management. And I

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Speaker 1: found this to be an absolutely fascinating conversation covering everything

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Speaker 1: from risk to inflation to how to manage markets and

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Speaker 1: how to manage investments when market show a lot of

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Speaker 1: volatility and everybody starts to get a little nervous. I

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Speaker 1: thought this was quite fascinating, and I think you will

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Speaker 1: also with no further ado, my conversation with City Global Wealth.

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Speaker 1: Kristen Bitterly Michelle, So, you have really very interesting background.

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Speaker 1: You've been involved with capital markets for your entire career.

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Speaker 1: What led you to this area. It's really interesting because

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Speaker 1: I'm not someone that you would think would be the

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Speaker 1: typical profile to end up in capital markets or or

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Speaker 1: sales and trading. I'm from a very small town in

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Speaker 1: the middle of Pennsylvania. It's a town of about four

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Speaker 1: thousand people. So exposure to markets or investment banking, or

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Speaker 1: any of the careers in finance was not something that

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Speaker 1: you really envisioned. And so coming out of school, I

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Speaker 1: studied economics and Spanish literature, and I applied to a

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Speaker 1: program that actually targeted liberal arts majors. It was at

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Speaker 1: Bank one at the time. It was called the First

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Speaker 1: Scholars Program AM, and they targeted liberal arts majors, and

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Speaker 1: the whole concept of it was, why don't we take

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Speaker 1: liberal arts majors, give them on the job training, give

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Speaker 1: them exposure to a variety of different areas of banking

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Speaker 1: and finance. And so this gave me exposure to everything

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Speaker 1: from investment banking to retail looking at like checking account

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Speaker 1: campaigns like how do you get more assets in the door?

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Speaker 1: To credit risk, and ultimately, to make a very long

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Speaker 1: story short, I fell in love with derivatives. So derivatives

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Speaker 1: were a part where I was very intimidated. I wasn't

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Speaker 1: that typical person that did a number of you know

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Speaker 1: internships during the summer had that with no No, I

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Speaker 1: was econ and kind of geeky. I love statistics, I

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Speaker 1: loved math, but really I was going to go down

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Speaker 1: that literature route more than anything else and and study

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Speaker 1: Spanish literature. And so when I arrived and got this

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Speaker 1: exposure and on the job training, I really challenged myself

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Speaker 1: to do the thing that I thought was going to

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Speaker 1: be the scariest, and so derivatives at the time seemed

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Speaker 1: like the scariest, the scariest area, and so I said,

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Speaker 1: all right, it's six months, let's see, let's see how

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Speaker 1: this goes. And so it was within the corporate equity

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Speaker 1: Derivatives team. I was very lucky to have amazing mentors,

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Speaker 1: amazing people around me who really taught me about the business,

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Speaker 1: taught me about markets. And once I started making that

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Speaker 1: translation in my mind that it's just a different language,

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Speaker 1: it's different vernacular. Like when you think of derivatives, it's

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Speaker 1: like statistics, right, if you have a base foundation in statistics,

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Speaker 1: it's just translating those different concepts to a new language.

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Speaker 1: I very quickly fell in love with it. I I

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Speaker 1: fell in love with equity derivatives. I thought they were

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Speaker 1: amazing building blocks and a really creative part. And it

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Speaker 1: was this combination of being, like I said, kind of

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Speaker 1: geeky kind of quantity, but then being client facing. And

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Speaker 1: so that was really kind of the early formation where

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Speaker 1: I'm like, this is the area where I want to be.

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Speaker 1: I want to be client facing, I want to help

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Speaker 1: client solve problems. But having this very creative, almost modular

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Speaker 1: part in terms of designing solutions and structuring solutions I loved.

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Speaker 1: So let's talk exactly about that at City in two

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Speaker 1: thousand and seven fantastic time, and you take over as

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Speaker 1: head of structured solutions. Tell us a little bit about

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Speaker 1: what that job entailed under normal circumstances, and then we'll

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Speaker 1: talk about the couple of years that followed. Sure, so

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Speaker 1: I'll tell you a little bit about how I came

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Speaker 1: to City. So I spent a long time in markets,

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Speaker 1: Like I said, big focus on derivatives, both on the

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Speaker 1: sales as well as structuring side. I covered corporate clients,

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Speaker 1: institutional clients, as well as ultra high net worth and

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Speaker 1: high net worth clients. At the time when I started

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Speaker 1: really focusing in that part of the industry, a lot

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Speaker 1: of those corporate equity derivative teams. They covered both, they

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Speaker 1: covered individuals as well as as well as the corporations.

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Speaker 1: And so throughout that journey and covering different regions, different

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Speaker 1: types of clients, I found that with the high net

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Speaker 1: worth ultra highnetworth clients you developed a much stronger relationship.

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Speaker 1: So this was a part of the market that it

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Speaker 1: really challenged your own understanding of these strategies because these

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Speaker 1: were clients that some of them were very sophisticated when

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Speaker 1: it came to financial products. Some of them it was

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Speaker 1: their first experience. They had a big liquidity event, they

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Speaker 1: sold their company to another company, their company just went public,

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Speaker 1: and it's the first time that they're talking about options,

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Speaker 1: right and strategies to exactly to be able to hedge,

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Speaker 1: maintain wealth, monetize wealth. And so this ability to either

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Speaker 1: go super technical with someone who was an expert in

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Speaker 1: that field, and also be able to roll it back

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Speaker 1: and just explain at a very high level, you know,

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Speaker 1: what is the purpose of the strategy, what is it

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Speaker 1: helping you do? What could go wrong? And so ultimately,

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Speaker 1: given the different types of client segments that I had covered,

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Speaker 1: I made the decision that I really wanted to be

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Speaker 1: in wealth management, and so two thousand seven, UM, I

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Speaker 1: came over to city. My husband, UM always teases me

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Speaker 1: on this point that he says, you know, aren't you,

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Speaker 1: in some aspects kind of a trader? And when you

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Speaker 1: think about market timing, was two thousands even the best

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Speaker 1: time to make a move, um, But it ended up

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Speaker 1: being a perfect time actually long term for for my career.

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Speaker 1: And so coming into the city a lot of changes

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Speaker 1: right on the brink of the Great Financial Crisis. And

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Speaker 1: you know, the one challenge there, Berry was the fact

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Speaker 1: that we were selling these these products and solutions that

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Speaker 1: actually were extremely relevant given market conditions. But obviously, you know,

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Speaker 1: protecting your wealth, hedging downside risk, providing liquidity, helping people

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Speaker 1: navigate margin calls. But obviously it was a really challenging environment,

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Speaker 1: a lot of market volatility, and anything that had the

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Speaker 1: counter party of a large bank was not something that

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Speaker 1: was going to go over well. So there's always risk

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Speaker 1: involve with which people tend to ignore when things are

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Speaker 1: pretty well, Let's say in two thousand seven, a lot

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Speaker 1: of people weren't thinking about counter party risk. Tell us

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Speaker 1: what it was like when everything hits the fan. In

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Speaker 1: O eight oh nine, derivatives blow up, not that you

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Speaker 1: were playing in the leverage, not at all. Risk management.

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Speaker 1: That's a different sort of derivative than c d O CMOS,

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Speaker 1: CDO squared, etcetera. You were basically doing more rational We're

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Speaker 1: helping people customize their risk return profile across asset classes,

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Speaker 1: is the way that I think about it. And so

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Speaker 1: there's definitely a pre in post. I mean, when you

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Speaker 1: look at that pre it was you know, the thought

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Speaker 1: counterparty risk of a bank was solid, right, Like that

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Speaker 1: was something it wasn't even questioned. I'm sure you remember

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Speaker 1: this as well in terms of the bond market, whether

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Speaker 1: you were looking at structured products bonds, this idea that

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Speaker 1: hey it's issued by this bank, that bank, well known,

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Speaker 1: diversified financial services institution. And then the interesting thing is

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Speaker 1: before we really saw that the unwinding of risk, I mean,

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Speaker 1: you saw credit spreads widen, right. You started to see

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Speaker 1: credit spreads to sniff things out. Kind of I hate

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Speaker 1: to anthropomorphous size markets, but there's a sense that some

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Speaker 1: participants in the market are sniffing us out and it

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Speaker 1: gets reflected in prices. You can see credit spreads widen,

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Speaker 1: and it's something you people are like Wow, that's great, Right,

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Speaker 1: they're willing to pay me more. Now I'm getting a

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Speaker 1: higher yield on this. And so I think for a reason,

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Speaker 1: looking back, you learn from every experience. But I think

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Speaker 1: that's one of those one of those moments in time

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Speaker 1: where you're like, if something is too good to be true,

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Speaker 1: it probably is too good to be true, and questioning

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Speaker 1: why something is yielding the amount that it's yielding, and

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Speaker 1: so living through that experience, I mean, from a personal standpoint,

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Speaker 1: it was tragic, right, Like lives were completely changed across

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Speaker 1: obviously the United States, the global economy, and then you

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Speaker 1: saw a lot of people that you really respected, really

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Speaker 1: cared about. There is a massive amounts of layoffs, and

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Speaker 1: so I think it was a very very seismic shift

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Speaker 1: in terms of just what we thought finance was, what

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Speaker 1: we thought sales and trading was, the stability of that

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Speaker 1: type of career. And so I think from that perspective,

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Speaker 1: you really realize that nothing is guaranteed. You have a

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Speaker 1: lot of gratitude for being able to work in this industry,

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Speaker 1: and then you also have to really make sure that

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Speaker 1: people realize and again we carry this through to wealth

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Speaker 1: management more broadly. If you don't understand what you're doing,

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Speaker 1: you should not invest in it, to say the very least.

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Speaker 1: So from there you rise to the position head of

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Speaker 1: Investments for North America for City Global Wealth. It sounds

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Speaker 1: similar to a c i A role Chief Investment officer role.

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Speaker 1: Tell us a little bit about your current role and

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Speaker 1: what it involves. Sure, I love my current role. I

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Speaker 1: love leading investments for North America for City Global Wealth.

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Speaker 1: This is an area where if you hear Jane Fraser speak,

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Speaker 1: it's it's an area where we're heavily investing UM. As

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Speaker 1: an institution, one of our key objectives is to be

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Speaker 1: a global leader in wealth management, and so my mandate

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Speaker 1: in leading North America is really to lead the investments organization.

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Speaker 1: And so that's a combination bury to your point about

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Speaker 1: the c i O role in terms of what strategy,

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Speaker 1: How are we advising our clients, how are we breaking

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Speaker 1: down markets? So there's a strategy component to that. They're

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Speaker 1: a client coverage component to that. Depending upon UM, your wealth,

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Speaker 1: depending upon your objectives, who are you interacting with, whether

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Speaker 1: it's an investment advisor, investment counselor, or whether it's product

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Speaker 1: specialists who have deep expertise in a particular asset class

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Speaker 1: or product. It's our product organization making sure that we're

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Speaker 1: offering the right products and solutions, how we're analyzing what

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Speaker 1: we offer to our clients, how we're differentiating that versus

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Speaker 1: the competition. And the last piece of it, which I've

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Speaker 1: become really passionate about over the past really kind of

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Speaker 1: five to ten years of my career, is the technology

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Speaker 1: and platform. So if you think about some of the

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Speaker 1: trends within wealth management, it's not just about the personalization

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Speaker 1: bespoke solutions, although that is something that is certainly gained

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Speaker 1: um a lot of popularity and grounded and is almost

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Speaker 1: becoming table stakes. But there's a big piece of it

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Speaker 1: that's digitization, right and the platform and how easy is

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Speaker 1: it to access your advice and put capital to work.

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Speaker 1: And you can see some of the trends just from

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Speaker 1: the digital world, right it and that comparison, if someone's

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Speaker 1: going to do an online transaction and online trade that

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Speaker 1: is almost like I use the example, it's like seamless

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Speaker 1: grubhub right where you call up and like this idea

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Speaker 1: of ordering a pizza right and calling a pizza place

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Speaker 1: if you go on like on an app, and if

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Speaker 1: that pizza place isn't open, You're going to the next one.

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Speaker 1: No one's calling anymore. And so those trends within our

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Speaker 1: industry as to some of those experiences that our clients

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Speaker 1: want where it's contactless, right, this should be frictionless, it

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Speaker 1: should be pretty easy for me to do versus where

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Speaker 1: we're really adding value in terms of advice. So the platform,

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Speaker 1: digital experience and technology is really really critical as well,

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Speaker 1: really quite quite interesting. So you've been at City for

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Speaker 1: over sixteen years. That's a long time at any one place.

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Speaker 1: Tell us about what's kept you there for this long?

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Speaker 1: It will be seventeen come December. Yeah, so it's been

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Speaker 1: a great experience. Look, I've been very fortunate at City.

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Speaker 1: I've had a lot of support, a lot of eight

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Speaker 1: people around me, a lot of great mentors, right, And

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Speaker 1: I think that one of the things that citied as

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Speaker 1: remarkably well is really allows you to transition throughout your

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Speaker 1: career in terms of exploring different areas of the business.

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Speaker 1: And so while you can see that concentration and markets

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Speaker 1: and sales and trading, once I started really working with

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Speaker 1: our private bank in a meaningful way, I was then

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Speaker 1: able to lead teams of investment counselors and investors. I

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Speaker 1: ran investments for the East region. I then came back

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Speaker 1: into capital markets and and got to really kind of see, Okay,

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Speaker 1: how are we running this business and really setting the

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Speaker 1: up this business for this client segment of family offices,

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Speaker 1: ultra highnetworth, highnetworth investors. And so while you could see

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Speaker 1: this common vein, it really has given me the ability

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Speaker 1: to flex different muscles. And that's not just me. I

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Speaker 1: mean that's something that's really really common throughout our organization.

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Speaker 1: And you'll see that with a lot of people. And

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Speaker 1: it doesn't have to be all within wealth management. It

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Speaker 1: can be a cross lines of business. So I think

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Speaker 1: city and our culture is one of let's keep our

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Speaker 1: good people, Let's give them opportunities, whether it's in their

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Speaker 1: immediate world or outside. And then the other thing that

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Speaker 1: I will say is that I think culturally it's a

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Speaker 1: very flat organization. There's access to everyone's accessible. And what

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Speaker 1: I've seen that's really special about our culture is even

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Speaker 1: when we've had those situations where we lose people, they

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Speaker 1: tend to come back. We call them boomerang um. They

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Speaker 1: try something else for one to two years and then

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Speaker 1: they say you know what this this place just in

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Speaker 1: terms of the access, the culture, that drive to kind

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Speaker 1: of grow together do stuff as a team. It feels entrepreneurial,

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Speaker 1: even though we're such an old bank, right, So that's

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Speaker 1: really what's kept me here. And I think now that

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Speaker 1: we're embarking upon with Jane taking over at CEO, this

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Speaker 1: massive focus and wealth, which is my passion as well.

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Speaker 1: I am so excited for the next several years. So

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Speaker 1: let me make sure I understand the path that led

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Speaker 1: you to City. You were at Bank one, yeah, right,

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Speaker 1: and if I recall correct, they were required by JP Morgan,

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Speaker 1: So that's how you ended up at JP Morgan. Then

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Speaker 1: Credit Swiss, that's right, what led you to go from

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Speaker 1: Credit Swiss to City. So each part of my career,

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Speaker 1: I would say, is it's something I learned a lot.

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Speaker 1: I experienced a lot um so it's like different building blocks.

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Speaker 1: But the Bank one JP Morgan days, that was out

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Speaker 1: in Chicago, So I worked out in Chicago. That was when.

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Speaker 1: It's a very fun town. I have a soft spot

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Speaker 1: for Chicago. The food. We could talk about the food first.

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Speaker 1: I'm in Chicago every year for Thanksgiving, so it's Turkey

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Speaker 1: is just where we start. Then it's yeah, we gotta yeah,

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Speaker 1: we definitely need to get into pizza. I'm a Luma

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Speaker 1: Natis girl. I don't know how i could go Mill

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Speaker 1: Natis or Eduardo's. I'm very I'm very New York, open

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Speaker 1: mind people, opportunity, there we go. But so in Chicago,

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Speaker 1: it was a really interesting time because if you remember,

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Speaker 1: that's when Jamie Diamond was running bank, right, so talk

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Speaker 1: about a flat organization, someone who at that moment in

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Speaker 1: time was truly a rising star, and he was very accessible,

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Speaker 1: spent a lot of time. I always remember him being

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Speaker 1: like very client centric, very very client centric. So if

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Speaker 1: it was a client of the firm, um making himself accessible,

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Speaker 1: making himself available to close those transactions. And so obviously

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Speaker 1: the rest is history. In terms of JPMorgan I'm a

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Speaker 1: big fan. Though I'm a big fan, I know it's

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Speaker 1: a compeating it's a competing bank. He's a phenomenal leader.

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Speaker 1: How do you not appreciate a person who steps into

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Speaker 1: that role through the takeover and just basically revitalizes the

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Speaker 1: whole organization, who was a very impressive career And I

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Speaker 1: admire him a lot and and everything that that he's

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Speaker 1: done and so I think then like the transition in

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Speaker 1: my own career. Right, So when we were going through

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Speaker 1: all of those transitions with JP Morgan acquiring Bank One,

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Speaker 1: you know, one of the downsides to that talking about

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Speaker 1: you know, our our fondness of the city of Chicago

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Speaker 1: is a lot of jobs moved to New York, Right,

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Speaker 1: So a lot of UM what was kind of that

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Speaker 1: big bank that was like one of the last banks

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Speaker 1: in Chicago and trading floors and things like that. I'm

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Speaker 1: talking about diversified financial services. Obviously we weren't going to

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Speaker 1: have two of everything, and we we had to to

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Speaker 1: move that to New York. And so with that experience

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Speaker 1: moving to New York, I did move to to credit

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Speaker 1: suite and really that was to flex a slightly different

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Speaker 1: muscle in the job. There was building out the Latin

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Speaker 1: American business UM selling derivatives, structured products UM to Latin

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Speaker 1: American UM banks and broker dealer. So let me stop

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Speaker 1: you right there. You have a background undergraduate your economics

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Speaker 1: degree from Notre Dame, but you were dual major Spanish

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Speaker 1: language and literature degree. How useful was that in Latin America? Like,

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Speaker 1: how did you end up in finance Spanish language and literature.

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Speaker 1: It was incredibly useful and it's still useful to this day.

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Speaker 1: So I am a fluent Spanish speaker. I lived in Spain,

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Speaker 1: I lived in Mexico, my husband's from Mexico. Um so

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Speaker 1: I speak Spanish and my personal life, I've I've used

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Speaker 1: it in my professional life, and so when I was

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Speaker 1: covering Latin America, I will say it was a competitive

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Speaker 1: advantage in which everybody speaks English, but you show up

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Speaker 1: speaking the local language. I have to think that's well received.

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Speaker 1: It is well received, and I think Americans have have

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Speaker 1: a reputation for not being multi lingual, for not speaking

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Speaker 1: another language, and you know, working at a global bank

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Speaker 1: like city where we're constantly interacting with people from around

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Speaker 1: the globe, and you see how many other languages are

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Speaker 1: our colleagues speak. But at that moment in time, really

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Speaker 1: kind of focusing on Latin America and then going in region,

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Speaker 1: going down to Miami, being able to have meetings in Spanish.

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Speaker 1: And one thing that I did have to learn though,

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Speaker 1: is I so while I was fluent in Spanish, I

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Speaker 1: wasn't fluent in let's call it financial language. And so

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Speaker 1: you start to learn things like well, so, how do

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Speaker 1: you say call option? How do you say so? As

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Speaker 1: I was like chating with different people are communicating with

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Speaker 1: different people on on Bloomberg, let's say I would, then

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Speaker 1: you know what word are they saying? What does that

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Speaker 1: mean in terms of financial slang. So it was really

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Speaker 1: fun because it developed that part of my language skills.

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Speaker 1: But most importantly it was great because, like the client

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Speaker 1: base was different, their risk appetite was different. And one

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Speaker 1: of the things that I learned is, you know, the

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Speaker 1: difference when you look at a US average let's say

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Speaker 1: wealth client versus someone who grew up in Latin America.

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Speaker 1: Someone who grew up in Latin America has and I'm

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Speaker 1: just saying on average, right, this isn't a generalization, but

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Speaker 1: they have a higher risk tolerance, they've seen hyper inflationary environments, um,

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Speaker 1: they understand currencies, and so when you think of the

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Speaker 1: area that I was very passionate about in derivatives, there's

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Speaker 1: a natural understanding just by growing up in an economy

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Speaker 1: like that that interest rate risk matters, f X risk matters,

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Speaker 1: commodity risk matters, and so inflation really can impact, right,

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Speaker 1: can severely impact you were net worth, and so it

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Speaker 1: was almost like this client base grew up with a

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Speaker 1: natural understanding of derivatives and markets, even though maybe they

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Speaker 1: didn't recognize that it was derivatives. But there is such

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Speaker 1: an easy and it was very facile because of what

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Speaker 1: they lived through. So it was definitely an advantage. But

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Speaker 1: then when I ran capital markets UM in North America

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Speaker 1: and Latin America. UM, you can ask many of my

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Speaker 1: colleagues if the dominant language is Spanish, we have meetings

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Speaker 1: in Spanish if it's a one on one meeting, and

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Speaker 1: you find you know, people's personalities can be different in

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Speaker 1: different languages. Their sense of humor, for sure, can be different.

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Speaker 1: And so it's been a great experience. So let me

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Speaker 1: flip that on its head. The concept of being more

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Speaker 1: risk embracing, more aware of inflation, currencies, etcetera. Here in

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Speaker 1: the US, how complacent are we because the dollar is

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Speaker 1: the reserve currency of the world. We don't think about currencies.

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Speaker 1: We don't usually think about inflation, except since the pandemic.

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Speaker 1: I haven't thought about it int years. It was a

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Speaker 1: little spike pre financial crisis, but for the most part

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Speaker 1: it's been a deflationary environment. How does working in North

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Speaker 1: America with a client base that doesn't have those same

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Speaker 1: sort of sensitivities. How different is that than Latin America.

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Speaker 1: So I would say there's a couple of things that

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Speaker 1: are really important from a and i'll say US perspective, right,

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Speaker 1: So from a US perspective, um, how you hold your

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Speaker 1: assets is just as important as what you hold, right,

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Speaker 1: So the ship or meaning custodians of course, like in

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Speaker 1: terms of of counterparty, but also thinking of like your

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Speaker 1: wealth planning and the structure of your assets, um, the

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Speaker 1: trusts that are available to you, how you want to

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Speaker 1: think about trust and estate planning, and so within the

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Speaker 1: U s there's a big focus on how do we

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Speaker 1: optimize for tax efficiency too? And so what you'll notice is,

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Speaker 1: you know, I think there's almost this thought process that

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Speaker 1: everyone wants to be an active trader, And what you

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Speaker 1: realize is, yes, there are people who are sincerely interested

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Speaker 1: in gets and they follow them and they're passionate about them,

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Speaker 1: but they're also really concerned about the after tax impact

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Speaker 1: of what they're doing and how they're investing. So I

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Speaker 1: think that's a piece of it. I think your average

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Speaker 1: US investor aware of interest rates, right, So aware of

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Speaker 1: interest rates in terms of what am I earning on

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Speaker 1: my deposits, kind of what are the average yields an

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Speaker 1: investment grade debt and understanding mortgage rates and and the

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Speaker 1: impact in terms of liabilities f X is almost absent

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Speaker 1: to a large degree, right for the the average investor.

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Speaker 1: That being said, like I mentioned earlier, we're a global bank,

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Speaker 1: and so like one of the major advantages we have

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Speaker 1: is bringing those international opportunities to our clients, to investors

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Speaker 1: and making sure that we're not we don't suffer from

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Speaker 1: that home bias in terms of how we're allocating capital.

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Speaker 1: And so that's an area where you can then combine

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Speaker 1: all of these things that I've that I've talked about.

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Speaker 1: You know, what regional exposures do you want? Where do

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Speaker 1: you see opportunity? And do you want to take on

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Speaker 1: that currency risk or do you not? And so it's

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Speaker 1: a little bit of an educational process. But but it's different, right,

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Speaker 1: It's different wealth regimes, it's different tax regimes, and so

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Speaker 1: a lot of that will drive the decision making process

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Speaker 1: as well. So let's stay in the US and stay

408
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Speaker 1: with structures and how you hold assets. What sort of

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Speaker 1: an appetite do you see amongst your clients for traditional

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Speaker 1: alternatives like hedge funds, venture capital, and private equity. It's

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Speaker 1: interesting because that's something that has changed substantially over the

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Speaker 1: past let's say, even twelve months. It feels like, Yeah,

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Speaker 1: I think there's a little bit of a shift going on,

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Speaker 1: and I think you have to separate out if we

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Speaker 1: think of alternatives, maybe in three different buckets, private equity

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Speaker 1: and I'll put private credit in there as well, private

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Speaker 1: equity credit, real estate, and then hedge funds. We've seen strong,

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Speaker 1: strong demand pretty consistently for building out alternatives portfolios, particularly

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Speaker 1: when it comes to opportunities with great financial sponsors on

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Speaker 1: the private equity side. Looking at these long term secular trends, right,

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Speaker 1: and I think one of the interesting trends that we

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Speaker 1: seen year to date is really while people have been

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Speaker 1: conservatively positioned, really kind of shocked by the start of

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Speaker 1: the year that we've had one of the worst ones

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Speaker 1: on record when we look at both equities and fixed

426
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Speaker 1: income being in tandem, down over ten percent exactly exactly,

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Speaker 1: so pretty intense start of the year. But we're clients

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Speaker 1: were consistently allocating capital was in private markets, and I think,

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Speaker 1: you know, part of that is this ability to take

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Speaker 1: a long term view. Right, So short term we know

431
00:23:30,119 --> 00:23:33,240
Speaker 1: some of these changes that we're going through, we're nervous

432
00:23:33,280 --> 00:23:35,560
Speaker 1: about what the fed's trajectory is going to be. I

433
00:23:35,600 --> 00:23:37,840
Speaker 1: think Friday may have cleared that up a little bit

434
00:23:37,880 --> 00:23:41,480
Speaker 1: in Jackson Hole. However, you know what happens next year, right,

435
00:23:41,520 --> 00:23:43,280
Speaker 1: so what happens next year? But being able to take

436
00:23:43,280 --> 00:23:46,760
Speaker 1: a view out five, seven, ten years much easier. So

437
00:23:47,200 --> 00:23:51,359
Speaker 1: I think that those flows into private equity in particular

438
00:23:51,440 --> 00:23:54,360
Speaker 1: have remained really strong. So let's talk about that. Because

439
00:23:54,400 --> 00:23:57,760
Speaker 1: a year ago, the FED wizard zero. You couldn't get

440
00:23:57,840 --> 00:24:02,040
Speaker 1: yield anywhere except for play is like private equity and

441
00:24:02,280 --> 00:24:07,199
Speaker 1: structured credit and structured notes, etcetera, etcetera. Now was the

442
00:24:07,240 --> 00:24:10,920
Speaker 1: tenure we're recording this, it's quarter or something like that,

443
00:24:11,480 --> 00:24:13,639
Speaker 1: and you can get yield. And if we want to

444
00:24:13,640 --> 00:24:16,920
Speaker 1: look at Muni's on a on a tax adjusted basis

445
00:24:17,600 --> 00:24:21,280
Speaker 1: digits depending upon your state, it's almost respectable. Right, So

446
00:24:22,520 --> 00:24:25,080
Speaker 1: what do you think that's gonna do? And I don't

447
00:24:25,080 --> 00:24:28,480
Speaker 1: like to ask people for predictions and forecasts, but you're

448
00:24:28,520 --> 00:24:31,560
Speaker 1: looking at the flows and you get client questions all

449
00:24:31,560 --> 00:24:35,080
Speaker 1: the time. Do you think that we've had this amazing

450
00:24:35,200 --> 00:24:39,360
Speaker 1: run in structured products and private equity because yields were

451
00:24:39,600 --> 00:24:42,880
Speaker 1: so low. Now that yields are higher, what might that

452
00:24:42,920 --> 00:24:46,080
Speaker 1: do to demand for those products. So what we've seen

453
00:24:46,560 --> 00:24:51,520
Speaker 1: is that absolutely bonds are back. So thinking through what

454
00:24:51,640 --> 00:24:54,320
Speaker 1: was not in vogue last year or the year before,

455
00:24:54,359 --> 00:24:57,960
Speaker 1: and this was our advice to in terms of UM

456
00:24:58,000 --> 00:25:01,560
Speaker 1: advising our clients is you know, have and overweight exposure

457
00:25:01,600 --> 00:25:03,920
Speaker 1: to fix income just didn't make sense over the past

458
00:25:03,960 --> 00:25:06,119
Speaker 1: couple of years. You're you're talking what you mean at

459
00:25:06,119 --> 00:25:08,480
Speaker 1: the end of a forty year bowl marketing bonds? You

460
00:25:08,480 --> 00:25:11,080
Speaker 1: don't want to be overweight. You don't want to be overweight.

461
00:25:11,119 --> 00:25:13,280
Speaker 1: And when you know of the world's government dead is

462
00:25:13,359 --> 00:25:17,120
Speaker 1: negative yielding UM, you know, maybe not exactly the best,

463
00:25:17,160 --> 00:25:22,080
Speaker 1: which actually created some really difficult, difficult situations for those

464
00:25:22,200 --> 00:25:25,240
Speaker 1: who were retiring right and those that market was really

465
00:25:25,240 --> 00:25:27,240
Speaker 1: tough because you're like, wait, I need to be overweight

466
00:25:27,280 --> 00:25:30,040
Speaker 1: equities to get the returns that I'm looking for, but

467
00:25:30,200 --> 00:25:33,119
Speaker 1: you know, traditional investment advice is telling me I should

468
00:25:33,119 --> 00:25:35,480
Speaker 1: pull back on some of that risk. So that created

469
00:25:35,520 --> 00:25:38,320
Speaker 1: some interesting dynamics. But I think this year what we're

470
00:25:38,320 --> 00:25:43,280
Speaker 1: seeing is on the private equity alternative side, it's really

471
00:25:43,320 --> 00:25:45,399
Speaker 1: playing that long game. So that ability to kind of

472
00:25:45,400 --> 00:25:47,439
Speaker 1: see longer term and what I think is going to

473
00:25:47,600 --> 00:25:51,480
Speaker 1: really have some legs and separate the noise short term

474
00:25:51,560 --> 00:25:52,879
Speaker 1: is are we going to have a recession? Are we

475
00:25:52,880 --> 00:25:54,639
Speaker 1: not going to have a recession. When it comes to

476
00:25:54,680 --> 00:25:57,240
Speaker 1: fix income, though, we're seeing now all of a sudden,

477
00:25:57,280 --> 00:25:59,679
Speaker 1: you went from a situation where your cash was yielding

478
00:25:59,720 --> 00:26:02,760
Speaker 1: nothing right, and and now you're even looking at whether

479
00:26:02,760 --> 00:26:06,960
Speaker 1: it's short duration, intermediate duration, you're now looking at yields

480
00:26:07,000 --> 00:26:10,159
Speaker 1: that are mid single digits right on investment grade. And

481
00:26:10,200 --> 00:26:13,320
Speaker 1: so what we've seen is it doesn't completely combat, right,

482
00:26:13,359 --> 00:26:16,680
Speaker 1: it doesn't entirely combat that impact of inflation if we're

483
00:26:16,720 --> 00:26:19,600
Speaker 1: staying around eight and a half percent. But for someone

484
00:26:19,600 --> 00:26:23,760
Speaker 1: who's been sitting overweight cash and getting to marginally better outcomes.

485
00:26:23,800 --> 00:26:26,639
Speaker 1: You brought up Munis, which is an excellent example as well.

486
00:26:27,000 --> 00:26:30,480
Speaker 1: You're getting marginally better outcomes on a you know, pre

487
00:26:30,640 --> 00:26:33,640
Speaker 1: tax equivalent basis looking at high single digits depending upon

488
00:26:34,040 --> 00:26:36,640
Speaker 1: what state you reside in. And so all of a sudden,

489
00:26:37,040 --> 00:26:41,359
Speaker 1: that became an easier path versus looking at some of

490
00:26:41,400 --> 00:26:44,879
Speaker 1: the more traditional true risk assets. The one thing that

491
00:26:44,920 --> 00:26:47,439
Speaker 1: I will mention since you brought up structured products as well,

492
00:26:47,880 --> 00:26:50,399
Speaker 1: that's an interesting part of the market that if we

493
00:26:50,440 --> 00:26:53,000
Speaker 1: think about the past ten years, right, So the past

494
00:26:53,040 --> 00:26:55,520
Speaker 1: ten years, and this is someone who's worked in derivatives

495
00:26:55,520 --> 00:26:59,080
Speaker 1: and structured products for quite some time. Um, yes, they've

496
00:26:59,080 --> 00:27:01,399
Speaker 1: gained in popularity, but there was also a little bit

497
00:27:01,440 --> 00:27:04,160
Speaker 1: of a concept. We're in, you know, uh long term

498
00:27:04,160 --> 00:27:07,560
Speaker 1: secular bull market. Everything's going up, right, So this idea

499
00:27:07,600 --> 00:27:10,840
Speaker 1: of customizing my risk return profile, Well, when you think

500
00:27:10,840 --> 00:27:13,919
Speaker 1: of the components of a traditional structured note, you have,

501
00:27:14,160 --> 00:27:17,040
Speaker 1: you know, a bond and then some underlying options. Now

502
00:27:17,080 --> 00:27:20,640
Speaker 1: that rates are higher, that bond is giving you more value.

503
00:27:21,040 --> 00:27:23,920
Speaker 1: And when we see these spikes and volatility, a lot

504
00:27:23,960 --> 00:27:27,239
Speaker 1: of those strategies tend to be short volatility. And so

505
00:27:27,320 --> 00:27:31,560
Speaker 1: now you've created this environment where the market environment is

506
00:27:31,600 --> 00:27:34,480
Speaker 1: giving you the ability to use strategies where you can

507
00:27:34,520 --> 00:27:39,399
Speaker 1: earn high single digit yields with some downside protection. And

508
00:27:39,440 --> 00:27:41,640
Speaker 1: you're saying, look, if the market pulls back another ten

509
00:27:42,600 --> 00:27:45,160
Speaker 1: I'll buy in at that level and in the meantime,

510
00:27:45,200 --> 00:27:47,840
Speaker 1: I'm getting paid to wait. So I think even people

511
00:27:47,840 --> 00:27:50,800
Speaker 1: who question those strategies historically looking at I can go

512
00:27:50,840 --> 00:27:53,479
Speaker 1: into an e t F. Everything's going up. I can

513
00:27:53,560 --> 00:27:56,560
Speaker 1: kind of play some of the momentum now saying, you know,

514
00:27:56,680 --> 00:27:59,280
Speaker 1: where where do I really want to allocate capital? And

515
00:27:59,320 --> 00:28:01,879
Speaker 1: I understand that there's a lot of risks. There's a

516
00:28:01,920 --> 00:28:04,359
Speaker 1: lot of data points that we're waiting on. There's a

517
00:28:04,880 --> 00:28:06,879
Speaker 1: lot that we need to wait on for earnings. And

518
00:28:06,920 --> 00:28:10,880
Speaker 1: the impact that this this tightening, right, this tightening that

519
00:28:11,000 --> 00:28:13,119
Speaker 1: both in terms of rate hikes and quantitative tightening is

520
00:28:13,119 --> 00:28:16,160
Speaker 1: going to have on companies and consumers alike. I think

521
00:28:16,280 --> 00:28:19,639
Speaker 1: it's actually opened up a really nice market and place

522
00:28:19,720 --> 00:28:23,160
Speaker 1: in the portfolio for those strategies. Let's talk a little

523
00:28:23,160 --> 00:28:27,199
Speaker 1: bit about inflation. You mentioned eight and a half percent

524
00:28:27,359 --> 00:28:31,679
Speaker 1: inflation rate. It seems like when we look around the world,

525
00:28:31,880 --> 00:28:36,800
Speaker 1: a lot of that inflation is peak and past us.

526
00:28:37,320 --> 00:28:40,720
Speaker 1: We look at the Baltic dry Index and gas prices

527
00:28:40,720 --> 00:28:44,240
Speaker 1: and oil prices, and go down the list of commodities

528
00:28:44,280 --> 00:28:49,240
Speaker 1: that seemed to be coming down in price, home sales declining,

529
00:28:49,720 --> 00:28:54,400
Speaker 1: although rents remain high. Let's start talking about where we

530
00:28:54,480 --> 00:28:58,400
Speaker 1: are in this rate tightening cycle. What was your takeaway

531
00:28:58,440 --> 00:29:03,960
Speaker 1: from the Jackson Hole Festival of Speeches and and Jerome Pals.

532
00:29:04,800 --> 00:29:08,680
Speaker 1: It's kind of surprising that anybody thinks, um, he didn't

533
00:29:08,960 --> 00:29:12,240
Speaker 1: communicate what was happening. But it seems like the market

534
00:29:12,320 --> 00:29:14,600
Speaker 1: was taken a little by surprise. Don't you think there's

535
00:29:14,640 --> 00:29:17,360
Speaker 1: a debate though, So I think there's this question around

536
00:29:18,160 --> 00:29:19,960
Speaker 1: what we want the FED to do, what we think

537
00:29:20,000 --> 00:29:22,720
Speaker 1: the Fed should do, versus what they're telling us they're

538
00:29:22,760 --> 00:29:26,280
Speaker 1: going to do. Right, so I think that Chair Pal

539
00:29:26,360 --> 00:29:28,800
Speaker 1: has been very clear in terms of what they're going

540
00:29:28,840 --> 00:29:32,280
Speaker 1: to do over the summer months. We got that rally

541
00:29:32,600 --> 00:29:35,600
Speaker 1: off the June lows, and you know, some of it

542
00:29:35,680 --> 00:29:38,960
Speaker 1: was kind of peak Barrish positioning, some of the abatement,

543
00:29:39,040 --> 00:29:41,720
Speaker 1: like you mentioned in terms of commodity prices in particularly

544
00:29:41,720 --> 00:29:45,719
Speaker 1: with gasoline, and then Q two earnings were pretty resilient, right.

545
00:29:45,720 --> 00:29:48,160
Speaker 1: We thought inflation was going to impact a lot more

546
00:29:48,200 --> 00:29:50,280
Speaker 1: than it did. There are a lot of surprises in

547
00:29:50,360 --> 00:29:53,080
Speaker 1: terms of top line revenue growth, and so then I

548
00:29:53,120 --> 00:29:56,440
Speaker 1: think what happened was we started sneaking in these narratives

549
00:29:56,880 --> 00:29:59,520
Speaker 1: the market did about you know, maybe there's a FED pivot,

550
00:29:59,640 --> 00:30:02,440
Speaker 1: maybe the Fed will be devish. We didn't see that.

551
00:30:02,760 --> 00:30:05,440
Speaker 1: At City Global Wealth. We did not see any signs

552
00:30:05,480 --> 00:30:08,160
Speaker 1: that the FED was going to change course, and so

553
00:30:08,480 --> 00:30:12,320
Speaker 1: I think in Jackson Hole, that very short, very deliberate

554
00:30:12,360 --> 00:30:15,640
Speaker 1: speech was one where it was make no mistake about

555
00:30:15,680 --> 00:30:18,320
Speaker 1: the fact that we are going to continue to tighten

556
00:30:18,880 --> 00:30:22,080
Speaker 1: that inflation expectations will not out of control yet, but

557
00:30:22,160 --> 00:30:23,720
Speaker 1: at a level of you know, two and a quarter

558
00:30:23,800 --> 00:30:26,000
Speaker 1: or two and a half looking far out, we need

559
00:30:26,040 --> 00:30:28,280
Speaker 1: to bring them down to two. And our job is

560
00:30:28,320 --> 00:30:30,360
Speaker 1: not yet done. We need to make sure that we're

561
00:30:30,400 --> 00:30:33,480
Speaker 1: taking that action. I think the other interesting thing too,

562
00:30:33,520 --> 00:30:36,480
Speaker 1: that may have been one of the catalysts for the

563
00:30:36,560 --> 00:30:39,920
Speaker 1: volatility that we saw on on Friday and Monday was

564
00:30:40,560 --> 00:30:46,240
Speaker 1: really this lack of mentioning a soft landing. Chair Pal

565
00:30:46,360 --> 00:30:50,520
Speaker 1: in his past couple of speeches and public comments always

566
00:30:50,520 --> 00:30:53,200
Speaker 1: said that a soft landing was possible here that was absent.

567
00:30:53,400 --> 00:30:57,040
Speaker 1: So it was much more about invoking Vulker and also

568
00:30:57,120 --> 00:30:59,560
Speaker 1: just looking at this is going to create some pain,

569
00:30:59,680 --> 00:31:02,680
Speaker 1: and he admitted that. So I think their trajectory is

570
00:31:02,800 --> 00:31:04,760
Speaker 1: very clear through the rest of this year in terms

571
00:31:04,760 --> 00:31:08,320
Speaker 1: of the tightening path that they're on. I think fifty

572
00:31:08,320 --> 00:31:11,640
Speaker 1: plus seventy five plus seventy five plus whatever happens September,

573
00:31:13,600 --> 00:31:16,960
Speaker 1: that's the end. Of the soft landing. He's telling you

574
00:31:17,120 --> 00:31:20,320
Speaker 1: we're gonna really throttle back in order to make sure

575
00:31:20,360 --> 00:31:23,040
Speaker 1: we can get the toothpaste back in the tube. But

576
00:31:23,200 --> 00:31:27,160
Speaker 1: that leads to an interesting question. We're talking about narratives

577
00:31:27,200 --> 00:31:29,600
Speaker 1: and what we hope there's a little bit of wishful

578
00:31:29,600 --> 00:31:33,080
Speaker 1: thinking going on. But you know, my perspective has been

579
00:31:33,120 --> 00:31:36,120
Speaker 1: the FED was late to start raising rates. At the

580
00:31:36,200 --> 00:31:39,040
Speaker 1: very least, they should have gotten off their emergency footing sooner.

581
00:31:39,640 --> 00:31:42,560
Speaker 1: It looks like now they're late to recognize the peak

582
00:31:42,600 --> 00:31:46,200
Speaker 1: and inflation, and they probably don't have to do a

583
00:31:46,200 --> 00:31:51,200
Speaker 1: whole lot more. Are they going to be causing unnecessary pain?

584
00:31:51,280 --> 00:31:54,360
Speaker 1: Have have they already won? Can they declare victory and

585
00:31:54,400 --> 00:31:57,800
Speaker 1: go home? Or are they gonna just keep pounding away? Uh?

586
00:31:57,840 --> 00:32:01,520
Speaker 1: And either cause a mild recession perhaps something worse. Yeah,

587
00:32:01,560 --> 00:32:03,560
Speaker 1: And I think that's one of the challenges in terms

588
00:32:03,640 --> 00:32:05,880
Speaker 1: of you know, this is where economics degrees really come

589
00:32:05,920 --> 00:32:08,680
Speaker 1: in handy in terms of breaking down all of these

590
00:32:08,880 --> 00:32:12,240
Speaker 1: these data points. But they were very specific that their

591
00:32:12,240 --> 00:32:15,160
Speaker 1: goal was, you know, headline inflation. We all talked about

592
00:32:15,200 --> 00:32:17,680
Speaker 1: the demand side of the equation, the supply side, what's

593
00:32:17,720 --> 00:32:21,240
Speaker 1: in their control, what's out of their control, and Chair

594
00:32:21,280 --> 00:32:24,280
Speaker 1: Pal again was very very direct in terms of note,

595
00:32:24,360 --> 00:32:26,800
Speaker 1: the whole thing is our mandate, right, so whether it's

596
00:32:26,800 --> 00:32:29,040
Speaker 1: supply side, demand side, we need to make sure that

597
00:32:29,080 --> 00:32:31,760
Speaker 1: we get this under control. So obviously we're seeing some

598
00:32:31,840 --> 00:32:35,160
Speaker 1: relief in the commodity sector, but more broadly, it's you know,

599
00:32:35,160 --> 00:32:37,680
Speaker 1: whether or not how quickly are we going to see

600
00:32:37,720 --> 00:32:40,360
Speaker 1: that number come down? And even if it's at let's

601
00:32:40,400 --> 00:32:42,560
Speaker 1: say six and a half six percent by your end,

602
00:32:42,880 --> 00:32:46,000
Speaker 1: that's nowhere close right to their ultimate target. And so

603
00:32:46,080 --> 00:32:48,400
Speaker 1: continuing on this path, I think the challenge that the

604
00:32:48,440 --> 00:32:51,840
Speaker 1: FEDS in is when you think of tightening financial conditions,

605
00:32:52,200 --> 00:32:54,960
Speaker 1: we don't see the full impact of that until out

606
00:32:55,000 --> 00:32:59,200
Speaker 1: probably twelve eighteen months, right, So there is this concept

607
00:32:59,240 --> 00:33:01,560
Speaker 1: of what they're doing now is not really going to

608
00:33:01,680 --> 00:33:04,400
Speaker 1: flow through to everyone, both the consumer as well as

609
00:33:04,440 --> 00:33:07,880
Speaker 1: corporations until several months out. And so what does that

610
00:33:07,960 --> 00:33:10,560
Speaker 1: mean for consumer spending? What does that mean for all

611
00:33:10,560 --> 00:33:12,959
Speaker 1: of the decisions that the consumer is making, which drives

612
00:33:14,200 --> 00:33:16,560
Speaker 1: of the the U S economy? And what does it

613
00:33:16,640 --> 00:33:19,520
Speaker 1: mean for corporations as they're making decisions? And so in

614
00:33:19,720 --> 00:33:22,240
Speaker 1: Q two we heard a lot that recession wasn't the

615
00:33:22,280 --> 00:33:25,080
Speaker 1: base case, but they're they're planning. I think it's going

616
00:33:25,120 --> 00:33:27,280
Speaker 1: to be really fascinating. I think we're going to pivot

617
00:33:27,480 --> 00:33:32,160
Speaker 1: from I shouldn't use that term pivot become a dirty word.

618
00:33:33,400 --> 00:33:37,080
Speaker 1: I think we're going to change the dialogue from what

619
00:33:37,160 --> 00:33:40,280
Speaker 1: was obsessive about the FED and debate about what they're

620
00:33:40,280 --> 00:33:43,000
Speaker 1: going to do and what is the terminal FED funds rate?

621
00:33:43,280 --> 00:33:46,240
Speaker 1: To now obsession about earnings. And I think we're really

622
00:33:46,240 --> 00:33:49,640
Speaker 1: going to focus on where are we seeing that squeeze,

623
00:33:49,640 --> 00:33:52,560
Speaker 1: where are we seeing that change in consumer spending patterns,

624
00:33:52,560 --> 00:33:55,720
Speaker 1: how are companies preparing for this, and what companies are

625
00:33:55,760 --> 00:33:58,920
Speaker 1: well prepared for what is going to be We say,

626
00:33:58,960 --> 00:34:02,320
Speaker 1: don't fight the FED, and it's easy monetary conditions, maybe

627
00:34:02,360 --> 00:34:05,560
Speaker 1: we shouldn't fight the FED when it's very clearly tighter financially.

628
00:34:05,800 --> 00:34:08,280
Speaker 1: So you raise a whole bunch of really interesting points

629
00:34:08,280 --> 00:34:12,280
Speaker 1: I want to pin you down on. First. Do investors

630
00:34:12,440 --> 00:34:14,960
Speaker 1: pay too much attention to the FED? Do they obsess

631
00:34:15,480 --> 00:34:18,600
Speaker 1: when really they should be looking past it a year out?

632
00:34:19,400 --> 00:34:22,080
Speaker 1: It's hard to say that definitively right. Because interest rates

633
00:34:22,080 --> 00:34:24,759
Speaker 1: are important, liquidity is important. The concept of a FED

634
00:34:24,840 --> 00:34:28,040
Speaker 1: put was really important in terms of the overall directions,

635
00:34:28,120 --> 00:34:32,719
Speaker 1: so it absolutely impacts the economy and markets. I think

636
00:34:32,719 --> 00:34:35,400
Speaker 1: paying too much attention to the day over day moves

637
00:34:36,120 --> 00:34:38,359
Speaker 1: is something and this is interesting Verry. I think this

638
00:34:38,440 --> 00:34:41,439
Speaker 1: is something that we actually saw starting with COVID, once

639
00:34:41,480 --> 00:34:44,399
Speaker 1: we've shifted to that work from home, stay at home

640
00:34:45,280 --> 00:34:49,640
Speaker 1: and just massive spike and volatility, massive movements in the market.

641
00:34:50,120 --> 00:34:52,120
Speaker 1: I think we've gotten into a little bit paying a

642
00:34:52,160 --> 00:34:55,000
Speaker 1: lot of attention to day over day movements, what does

643
00:34:55,040 --> 00:34:57,799
Speaker 1: this day mean? And even if we take you know,

644
00:34:57,920 --> 00:35:01,520
Speaker 1: the summer months, liquidity is like people are on vacation,

645
00:35:01,560 --> 00:35:06,080
Speaker 1: you know, credence to one day and really trying to

646
00:35:06,120 --> 00:35:08,480
Speaker 1: take that view. It doesn't need to be out five years,

647
00:35:08,560 --> 00:35:11,000
Speaker 1: but trying to take that view out several months. And

648
00:35:11,080 --> 00:35:14,080
Speaker 1: so I think we're seeing a lot of investors really

649
00:35:14,080 --> 00:35:17,720
Speaker 1: hanging on the word of every speech, every day, daily report.

650
00:35:17,960 --> 00:35:19,880
Speaker 1: And I think on average, yep, we're going to have

651
00:35:20,200 --> 00:35:22,000
Speaker 1: jobs reports that are important, We're gonna have cp I

652
00:35:22,040 --> 00:35:24,800
Speaker 1: and prints that are important. But really it's the amalgamation

653
00:35:24,840 --> 00:35:27,200
Speaker 1: of all of these things that's going to determine how

654
00:35:27,239 --> 00:35:29,960
Speaker 1: severe the recession is and the ultimate trajectory of markets

655
00:35:30,000 --> 00:35:32,600
Speaker 1: from here, going from zero percentage of strate to four

656
00:35:32,640 --> 00:35:36,560
Speaker 1: percentage of st rate obviously important, but it feels like

657
00:35:36,680 --> 00:35:40,080
Speaker 1: every CPI report it hits the tape and then people

658
00:35:40,120 --> 00:35:42,680
Speaker 1: are already talking about the following month, where you know,

659
00:35:42,880 --> 00:35:44,880
Speaker 1: in in July, it's like, is this going to be

660
00:35:44,920 --> 00:35:48,000
Speaker 1: the peak? It was barely crossing the tape, and then

661
00:35:48,040 --> 00:35:50,680
Speaker 1: suddenly August and September, chef, and we're going to see

662
00:35:50,680 --> 00:35:52,960
Speaker 1: the same thing happen in September as soon as we

663
00:35:53,040 --> 00:35:55,280
Speaker 1: get that print, people and to stop talking about October.

664
00:35:55,640 --> 00:35:57,839
Speaker 1: The next question that you alluded to, which is really

665
00:35:57,880 --> 00:36:03,960
Speaker 1: interesting about revenue you and profits, how solid and inflation

666
00:36:04,040 --> 00:36:08,880
Speaker 1: hedge our equities. Revenues seem to be unaffected. Profits have

667
00:36:08,920 --> 00:36:12,280
Speaker 1: been pretty strong, and companies have shown a pretty solid

668
00:36:12,320 --> 00:36:15,840
Speaker 1: ability to pass along UH input costs to their to

669
00:36:16,040 --> 00:36:19,120
Speaker 1: ultimately to the consumer. Do we should we be looking

670
00:36:19,160 --> 00:36:22,359
Speaker 1: at stocks as an inflation hedge? Yeah, so I think

671
00:36:22,400 --> 00:36:26,960
Speaker 1: this is to your earlier question about US investors thinking

672
00:36:27,000 --> 00:36:29,800
Speaker 1: through some of these risks. Inflation really hasn't been a

673
00:36:29,880 --> 00:36:32,279
Speaker 1: risk that we've had to think about for quite some time, right,

674
00:36:32,360 --> 00:36:37,240
Speaker 1: so obviously absent the seventies and eighties, thinking of this

675
00:36:37,440 --> 00:36:40,319
Speaker 1: level of inflation is not someone someone's had to think

676
00:36:40,320 --> 00:36:42,640
Speaker 1: about and the idea of what is the real real

677
00:36:42,719 --> 00:36:45,000
Speaker 1: rate of return? What is the real interest rate on this?

678
00:36:45,440 --> 00:36:47,600
Speaker 1: And so if you were someone who was sitting in cash,

679
00:36:47,960 --> 00:36:50,040
Speaker 1: let's say from like two thousand to two thousand ten,

680
00:36:50,640 --> 00:36:52,600
Speaker 1: you were earning on a real basis about three percent

681
00:36:52,719 --> 00:36:55,040
Speaker 1: per annum, not knocking it out of the park, but

682
00:36:55,120 --> 00:36:59,400
Speaker 1: not terrible. And the market when essentially didn't get above

683
00:36:59,480 --> 00:37:03,600
Speaker 1: two thou us until exactly And so I think that

684
00:37:04,000 --> 00:37:06,640
Speaker 1: now looking at this past decade, where you've seen that

685
00:37:06,719 --> 00:37:09,640
Speaker 1: impact and now you're just seeing it front and center

686
00:37:09,719 --> 00:37:12,560
Speaker 1: in terms of eight and a half percent, is extreme

687
00:37:12,800 --> 00:37:14,760
Speaker 1: and in terms of what that means from a spending

688
00:37:14,760 --> 00:37:17,759
Speaker 1: standpoint as well as what it means from an investment standpoint.

689
00:37:17,960 --> 00:37:20,840
Speaker 1: And so this becomes the question around how do I create,

690
00:37:20,840 --> 00:37:23,720
Speaker 1: depending upon how I'm currently positioned, how do I create

691
00:37:23,800 --> 00:37:26,560
Speaker 1: better outcomes? So if you're someone who has been hiding

692
00:37:26,600 --> 00:37:29,879
Speaker 1: a little bit in cash, maybe overweight cash for not

693
00:37:29,960 --> 00:37:32,600
Speaker 1: just the past two years, but the past ten years,

694
00:37:33,040 --> 00:37:35,160
Speaker 1: that's that conversation. But how do we get to marginally

695
00:37:35,200 --> 00:37:38,000
Speaker 1: better outcomes? How do we add things like COMMUNI bonds,

696
00:37:38,000 --> 00:37:40,359
Speaker 1: how do we add things even like preferreds in terms

697
00:37:40,440 --> 00:37:43,320
Speaker 1: of some of the yields that we're seeing in preferreds

698
00:37:43,520 --> 00:37:47,160
Speaker 1: for investors. Because I recognize that, Barry, if we're thinking of,

699
00:37:47,200 --> 00:37:49,839
Speaker 1: like what are the best hedges against inflation, well, if

700
00:37:49,840 --> 00:37:52,000
Speaker 1: we go through the highest beta, it's almost like you

701
00:37:52,000 --> 00:37:55,719
Speaker 1: can break it down as commodities direct commodity exposure. A

702
00:37:55,719 --> 00:37:58,160
Speaker 1: lot of individual investors are not going to take that on,

703
00:37:58,520 --> 00:38:01,720
Speaker 1: so then you're looking at commodity stocks. Are there opportunities

704
00:38:01,719 --> 00:38:06,520
Speaker 1: within energy commodity stocks. We actually had positions within commodity

705
00:38:06,640 --> 00:38:09,440
Speaker 1: stocks um for a period of time as a hedge

706
00:38:09,560 --> 00:38:12,000
Speaker 1: as a portion of the portfolio, not as a directional

707
00:38:12,400 --> 00:38:14,919
Speaker 1: that at all, but we we pulled back on those

708
00:38:14,960 --> 00:38:17,879
Speaker 1: positions just given some of the turnover that we've seen,

709
00:38:17,960 --> 00:38:21,759
Speaker 1: particularly with the giant spike from last year plus once

710
00:38:21,800 --> 00:38:26,480
Speaker 1: the invasion in Ukraine started in February, hedging right like,

711
00:38:26,560 --> 00:38:29,440
Speaker 1: you needed that hedging because it wasn't just impacting energy,

712
00:38:29,520 --> 00:38:33,120
Speaker 1: was impacting food, it was impacting natural resources. We saw

713
00:38:33,160 --> 00:38:37,160
Speaker 1: that concentrated exposure right with the the stats that came

714
00:38:37,160 --> 00:38:40,319
Speaker 1: out that of the world's wheat production, and you saw

715
00:38:40,360 --> 00:38:42,480
Speaker 1: these were coming out of Russia and the Ukraine. Things

716
00:38:42,520 --> 00:38:46,120
Speaker 1: we never never knew before. And so getting to your

717
00:38:46,200 --> 00:38:50,719
Speaker 1: question about equities, were were positioned right now? Equities absolutely

718
00:38:50,800 --> 00:38:54,759
Speaker 1: can conserve um um an important part in the portfolio.

719
00:38:54,880 --> 00:38:57,480
Speaker 1: But given the concerns that I have as to where

720
00:38:57,520 --> 00:39:00,640
Speaker 1: the US is right now, US equities we're not pricing

721
00:39:00,680 --> 00:39:03,080
Speaker 1: in a recession right now, We're not pricing in a

722
00:39:03,120 --> 00:39:09,120
Speaker 1: meaningful earnings contraction or tightening financial conditions impacting companies, and

723
00:39:09,160 --> 00:39:13,480
Speaker 1: so we're we're invested is in quality in um. If

724
00:39:13,480 --> 00:39:17,000
Speaker 1: you look at like the Spend Aristocrats Index, you're talking

725
00:39:17,040 --> 00:39:20,440
Speaker 1: about companies, not high dividend pairs, but companies that have

726
00:39:20,520 --> 00:39:23,560
Speaker 1: been able to consistently grow to their dividends, consistently grow

727
00:39:23,600 --> 00:39:26,560
Speaker 1: their earnings. And so looking at the yields on that

728
00:39:26,800 --> 00:39:30,280
Speaker 1: around three three and a half percent, and diversification across

729
00:39:30,280 --> 00:39:33,360
Speaker 1: sectors like healthcare, even info tech is in there because

730
00:39:33,640 --> 00:39:35,799
Speaker 1: you know, you have some infotech companies that are now

731
00:39:35,960 --> 00:39:38,839
Speaker 1: durable demand. That's the part of the market we're from

732
00:39:38,880 --> 00:39:43,719
Speaker 1: an equity standpoint, we're very comfortable maintaining that exposure. So

733
00:39:43,840 --> 00:39:46,839
Speaker 1: you said something there that I'm intrigued by. Do you

734
00:39:46,880 --> 00:39:50,680
Speaker 1: believe markets are pricing in a recession or a market's

735
00:39:50,760 --> 00:39:54,520
Speaker 1: just pricing in a slowdown of the growth, a little

736
00:39:54,560 --> 00:39:58,520
Speaker 1: bit of the FED having some bite, but not necessarily

737
00:39:58,600 --> 00:40:02,160
Speaker 1: causing a full blown traction. I don't think they're pricing

738
00:40:02,160 --> 00:40:05,399
Speaker 1: in a recession or earnings contraction right now. I'm not

739
00:40:05,520 --> 00:40:08,319
Speaker 1: saying that we're going to see substantial downside from here.

740
00:40:08,320 --> 00:40:10,480
Speaker 1: There's a lot of debates right about what are we

741
00:40:10,600 --> 00:40:13,439
Speaker 1: going to retest those lows? So so let's put put

742
00:40:13,440 --> 00:40:15,839
Speaker 1: a little framework on what we're talking about. If people

743
00:40:15,880 --> 00:40:19,120
Speaker 1: are listening to this in the future. Um, it's late

744
00:40:19,120 --> 00:40:24,880
Speaker 1: in the summer in markets sold off, recovered about half

745
00:40:24,920 --> 00:40:27,640
Speaker 1: of those losses, then gave a little bit of that

746
00:40:27,680 --> 00:40:31,920
Speaker 1: back after Jackson Hole, so down ten or so on

747
00:40:31,960 --> 00:40:35,560
Speaker 1: the SMP. Not really pricing in a hole. And when

748
00:40:35,560 --> 00:40:39,439
Speaker 1: you look at those analyzes of recessionary bear markets versus

749
00:40:39,520 --> 00:40:43,880
Speaker 1: non recessionary bear markets, it's a huge difference both in

750
00:40:43,960 --> 00:40:46,759
Speaker 1: terms of the duration, right so you tend to see

751
00:40:47,280 --> 00:40:49,640
Speaker 1: recessionary and it depends on what data points you use,

752
00:40:49,719 --> 00:40:53,879
Speaker 1: but again on its duration, it's a big difference. Where

753
00:40:53,880 --> 00:40:57,799
Speaker 1: you see, you know, the duration in non recessionary bear

754
00:40:57,880 --> 00:41:01,520
Speaker 1: markets on average about a hundred eight days maybe max.

755
00:41:01,560 --> 00:41:05,000
Speaker 1: Some of those max observations around two right, so well

756
00:41:05,080 --> 00:41:08,799
Speaker 1: under well under a year where recessionary bear markets are

757
00:41:08,920 --> 00:41:12,160
Speaker 1: four hundred, So that that's a that's a big difference.

758
00:41:12,480 --> 00:41:15,480
Speaker 1: And also the draw downs if we're using US equities,

759
00:41:15,920 --> 00:41:20,080
Speaker 1: non recessionary bear markets down around so yea, we may

760
00:41:20,080 --> 00:41:23,839
Speaker 1: have done that work, but recessionary bear markets can be

761
00:41:23,920 --> 00:41:27,240
Speaker 1: an excess of thirty percent and even closer to depending

762
00:41:27,280 --> 00:41:30,439
Speaker 1: upon what data set you're using. So it is very

763
00:41:30,520 --> 00:41:35,919
Speaker 1: different when companies are making tough decisions about where they're investing, right,

764
00:41:36,080 --> 00:41:41,000
Speaker 1: and how they're investing, and how that impacts obviously wages, employment,

765
00:41:41,080 --> 00:41:44,080
Speaker 1: et cetera. So what we've seen with the you know,

766
00:41:44,160 --> 00:41:47,360
Speaker 1: the two negative quarters of GDP growth, a lot of

767
00:41:47,360 --> 00:41:50,200
Speaker 1: people say, well, that's a technical recession, and then again

768
00:41:50,239 --> 00:41:52,640
Speaker 1: all of our economic students are like, no, there's the

769
00:41:52,719 --> 00:41:56,120
Speaker 1: National Buro of Economic Research and this is how it's calculated.

770
00:41:56,400 --> 00:41:59,719
Speaker 1: But we're looking at that in terms of you'd have

771
00:41:59,760 --> 00:42:03,239
Speaker 1: to some significant increase in the unemployment rate and you're

772
00:42:03,280 --> 00:42:05,399
Speaker 1: going to have to see that earnings contraction. And so

773
00:42:06,120 --> 00:42:10,240
Speaker 1: do we anticipate here's here's I'm gonna I'm gonna share

774
00:42:10,280 --> 00:42:14,800
Speaker 1: some positive news, right, So that was that was very cautionary.

775
00:42:14,840 --> 00:42:17,319
Speaker 1: But I think one of the positive things is we

776
00:42:17,360 --> 00:42:21,520
Speaker 1: haven't had a recession that has been this anticipated either,

777
00:42:22,040 --> 00:42:25,560
Speaker 1: so whether the markets pricing it in or not, consumers

778
00:42:25,560 --> 00:42:28,879
Speaker 1: are planning for it, corporations are planning for it. This

779
00:42:28,960 --> 00:42:31,279
Speaker 1: is not something that's coming out of left field. The

780
00:42:31,280 --> 00:42:34,319
Speaker 1: FED is clear about their trajectory. So in terms of

781
00:42:34,360 --> 00:42:38,520
Speaker 1: taking some of those decisions and mitigating the depth and

782
00:42:38,600 --> 00:42:42,520
Speaker 1: duration of that. Recessions are painful, right, but the depth

783
00:42:42,520 --> 00:42:46,200
Speaker 1: and duration of that economic pain, hopefully that can be mitigated.

784
00:42:46,520 --> 00:42:49,799
Speaker 1: Let's stick with that, because that's really interesting. I'm gonna

785
00:42:49,840 --> 00:42:52,560
Speaker 1: preface what I'm gonna ask you with with a caveat,

786
00:42:52,640 --> 00:42:58,640
Speaker 1: so heading into there's surely we're pockets of froth. Crypto

787
00:42:58,840 --> 00:43:05,680
Speaker 1: had gone, ballistic technology had exploded. Anytime the smpup. Hey,

788
00:43:05,760 --> 00:43:10,319
Speaker 1: there's probably a little bit of speculation going on. But

789
00:43:10,840 --> 00:43:14,759
Speaker 1: given all that, the first half of this year, the

790
00:43:14,880 --> 00:43:18,880
Speaker 1: data and just the general field wasn't like consumers and

791
00:43:18,920 --> 00:43:22,360
Speaker 1: companies were leaning too far out over their skis. Everybody's

792
00:43:22,400 --> 00:43:26,080
Speaker 1: balance sheets were pretty clean. They had refinanced at very

793
00:43:26,120 --> 00:43:29,200
Speaker 1: low rates. It looked like both the household and the

794
00:43:29,239 --> 00:43:32,919
Speaker 1: business sector. Hey, if things slow down they're pretty well

795
00:43:32,960 --> 00:43:36,080
Speaker 1: prepared for this, or am I oversimplified? I think you're right.

796
00:43:36,160 --> 00:43:41,319
Speaker 1: I think you're absolutely right that on average, the average company,

797
00:43:41,400 --> 00:43:45,799
Speaker 1: average consumer came into this year in pretty good shape. Right.

798
00:43:45,840 --> 00:43:48,359
Speaker 1: Their balance sheets were very strong. I'm saying they're both

799
00:43:48,400 --> 00:43:51,600
Speaker 1: across companies and consumers. They were able to take advantage

800
00:43:51,600 --> 00:43:53,759
Speaker 1: of the low interest rate environment to really kind of

801
00:43:53,760 --> 00:43:57,879
Speaker 1: clean up liabilities. And so I think that we came

802
00:43:57,920 --> 00:44:02,200
Speaker 1: into this year prepared, um from a balance sheet perspective,

803
00:44:02,239 --> 00:44:05,240
Speaker 1: not prepared for what was then going to transpire. Yeah,

804
00:44:05,320 --> 00:44:08,439
Speaker 1: in terms of not only that quick movement and interest rates.

805
00:44:08,440 --> 00:44:10,960
Speaker 1: Remember in January that was the story, the kind of

806
00:44:11,160 --> 00:44:14,800
Speaker 1: very quick movement and interest rates, and then obviously geopolitics

807
00:44:14,800 --> 00:44:18,160
Speaker 1: and Russia's war in the Ukraine um really exacerbating some

808
00:44:18,200 --> 00:44:20,959
Speaker 1: of those supply shocks. And so I just think that

809
00:44:21,560 --> 00:44:26,600
Speaker 1: those types of risks and the overall prospect of what

810
00:44:26,680 --> 00:44:30,239
Speaker 1: that means from a recession standpoint, it's better to be

811
00:44:30,320 --> 00:44:32,880
Speaker 1: in that position, right, is better to be in that position.

812
00:44:32,880 --> 00:44:35,920
Speaker 1: We're coming into it from a place of strength, and

813
00:44:36,000 --> 00:44:38,120
Speaker 1: you are starting to see some cracks, right, So let's

814
00:44:38,120 --> 00:44:42,000
Speaker 1: talk about the cracks inventories building, right, That's that's probably

815
00:44:42,960 --> 00:44:45,720
Speaker 1: from hey, we can't get anything, let's just get everything.

816
00:44:45,760 --> 00:44:48,880
Speaker 1: Now we're seeing a massive inventory build. We're seeing housing

817
00:44:48,920 --> 00:44:51,440
Speaker 1: starts come down. We're seeing just the time right that

818
00:44:51,520 --> 00:44:56,120
Speaker 1: homes are on the market and extending. You're starting to

819
00:44:56,120 --> 00:44:58,840
Speaker 1: see that. But that's also good in terms of showing

820
00:44:58,880 --> 00:45:01,719
Speaker 1: some of that froth being taken out of the the

821
00:45:01,760 --> 00:45:04,719
Speaker 1: economy and and some of that that slowed down. I

822
00:45:04,719 --> 00:45:06,120
Speaker 1: think some of the things that we need to keep

823
00:45:06,160 --> 00:45:10,319
Speaker 1: an eye on just from a the impact of the

824
00:45:10,320 --> 00:45:14,320
Speaker 1: FEDS tightening is a couple of things. One, we also

825
00:45:14,360 --> 00:45:17,719
Speaker 1: saw record number of credit card openings and Q one

826
00:45:17,960 --> 00:45:21,200
Speaker 1: and Q two, and so some of the stats um

827
00:45:21,239 --> 00:45:23,640
Speaker 1: that we've seen. Q one of this year was a

828
00:45:23,719 --> 00:45:29,600
Speaker 1: record number two million new credit card issuances. And so

829
00:45:29,640 --> 00:45:32,920
Speaker 1: on one hand, people like consumers are continuing to spend YEP,

830
00:45:33,000 --> 00:45:36,799
Speaker 1: they're continuing to spend. We're reaching pre pandemic levels in

831
00:45:36,920 --> 00:45:40,799
Speaker 1: terms of balances on credit cards. We're not going above that,

832
00:45:40,840 --> 00:45:43,719
Speaker 1: we're just pre pandemic level relative to income. It's you

833
00:45:43,760 --> 00:45:46,840
Speaker 1: know that always people always show you the debt, but

834
00:45:46,960 --> 00:45:49,160
Speaker 1: they sometimes fail to show you what does the debt

835
00:45:49,200 --> 00:45:52,640
Speaker 1: look like relative to discretionary income? That's a really good

836
00:45:52,719 --> 00:45:54,959
Speaker 1: levels and a very good levels. But when you see

837
00:45:55,360 --> 00:45:58,040
Speaker 1: so it's interesting because then you see these trends. Okay,

838
00:45:58,040 --> 00:46:01,120
Speaker 1: we're opening more and more credit cards. Okay, interesting, how

839
00:46:01,120 --> 00:46:04,239
Speaker 1: are people than spending Previously it was stimulus, right, there

840
00:46:04,320 --> 00:46:07,279
Speaker 1: was stimulus fueling the economy, and now it's okay, now

841
00:46:07,280 --> 00:46:09,560
Speaker 1: I'm buying on credit. That's not the end of the world, right,

842
00:46:09,600 --> 00:46:13,879
Speaker 1: that is access to capital. But when we see those

843
00:46:13,880 --> 00:46:17,359
Speaker 1: balances increase, and now they're increasing at higher interest rates,

844
00:46:17,800 --> 00:46:20,200
Speaker 1: that's something that we want to watch and keep an

845
00:46:20,200 --> 00:46:22,160
Speaker 1: eye on. And obviously in Q two a lot of

846
00:46:22,200 --> 00:46:25,120
Speaker 1: financials reported and they talked about lone loss reserves very

847
00:46:25,120 --> 00:46:28,399
Speaker 1: well in check, very healthy, and so I think that's

848
00:46:28,440 --> 00:46:30,000
Speaker 1: a trend that we need to keep on eye on.

849
00:46:30,200 --> 00:46:32,759
Speaker 1: The same thing when it comes to corporations. Right, so

850
00:46:32,800 --> 00:46:36,920
Speaker 1: when we think about credit spreads in the market, and

851
00:46:36,960 --> 00:46:39,239
Speaker 1: we look at high yield spreads, we look at we

852
00:46:39,320 --> 00:46:42,640
Speaker 1: haven't really seen that widen out. And if that does

853
00:46:42,760 --> 00:46:45,480
Speaker 1: widen out, right, it's widened a little bit buried, to

854
00:46:45,480 --> 00:46:48,520
Speaker 1: be fair, but it hasn't really to this level of Okay,

855
00:46:48,520 --> 00:46:52,000
Speaker 1: we're really going to see companies stretched. Those are some

856
00:46:52,120 --> 00:46:55,600
Speaker 1: areas that could create some continued pain in the market.

857
00:46:55,840 --> 00:46:59,520
Speaker 1: So you sit in a really unique perch, your reference

858
00:46:59,600 --> 00:47:03,759
Speaker 1: to all of the new credit card openings. You at

859
00:47:03,840 --> 00:47:08,480
Speaker 1: City also get, which is a giant credit card entity.

860
00:47:09,840 --> 00:47:15,520
Speaker 1: You get to see delinquencies, delays, default, all all those

861
00:47:15,560 --> 00:47:19,520
Speaker 1: sorts of things. How do you manage to tap into

862
00:47:19,880 --> 00:47:23,239
Speaker 1: that huge amount of data that you have? Can you

863
00:47:23,320 --> 00:47:26,200
Speaker 1: crunch those numbers and use it for your own benefit?

864
00:47:26,200 --> 00:47:30,040
Speaker 1: Because who better than someone at one of the nation's

865
00:47:30,040 --> 00:47:34,000
Speaker 1: biggest credit card issuers to look at those numbers and say, hey,

866
00:47:34,040 --> 00:47:37,480
Speaker 1: what are we seeing internally before it hits BLS or

867
00:47:37,560 --> 00:47:40,880
Speaker 1: commerce department. Yeah, so any data that we have obviously

868
00:47:40,920 --> 00:47:45,360
Speaker 1: as a large financial yeah, large financial institution, there's obviously walls,

869
00:47:45,440 --> 00:47:47,920
Speaker 1: there's data that can be shared, data that cannot be shared,

870
00:47:47,960 --> 00:47:51,600
Speaker 1: and there's a lot of protection around that. However, when

871
00:47:51,600 --> 00:47:53,960
Speaker 1: we look at things like like flows, right, and we

872
00:47:54,000 --> 00:47:56,640
Speaker 1: can see average cash balances that our clients have, are

873
00:47:56,680 --> 00:47:59,800
Speaker 1: they building cash balances? Are they taking more risk in

874
00:47:59,840 --> 00:48:02,560
Speaker 1: the market? So all of those trends and insights that

875
00:48:02,640 --> 00:48:05,279
Speaker 1: we get from our clients are critically important in terms

876
00:48:05,320 --> 00:48:07,720
Speaker 1: of the pulse of the economy as well as the markets,

877
00:48:07,719 --> 00:48:10,320
Speaker 1: and so yes, we we pay a lot of attention

878
00:48:10,360 --> 00:48:13,359
Speaker 1: not only to what we think right, what we think

879
00:48:13,400 --> 00:48:15,600
Speaker 1: is going to happen in the economy and markets, but

880
00:48:15,640 --> 00:48:18,200
Speaker 1: those signs that we're getting from our investors, what's actually

881
00:48:18,239 --> 00:48:20,960
Speaker 1: occur on our clients at large exactly, And it's a

882
00:48:21,000 --> 00:48:22,920
Speaker 1: really important thing. We always think about that. On the

883
00:48:22,920 --> 00:48:25,239
Speaker 1: institutional side in terms of flows, a lot of people

884
00:48:25,280 --> 00:48:28,480
Speaker 1: are measuring every single day, right, But that's something that

885
00:48:28,520 --> 00:48:32,080
Speaker 1: you can see within private wealth as well, and it's significant.

886
00:48:32,160 --> 00:48:35,640
Speaker 1: It can move the market really interesting. So let's talk

887
00:48:35,680 --> 00:48:38,120
Speaker 1: a little bit about the current environment in the past

888
00:48:38,560 --> 00:48:43,120
Speaker 1: couple of years, starting with the pandemic. How did that

889
00:48:43,200 --> 00:48:46,960
Speaker 1: affect clients? Did they react to the volatility? What what

890
00:48:47,040 --> 00:48:49,319
Speaker 1: sort of questions did you get? So I think we

891
00:48:49,320 --> 00:48:51,399
Speaker 1: could break it down into two different parts. How did

892
00:48:51,400 --> 00:48:54,720
Speaker 1: it impact us and how did it impact clients? Because

893
00:48:55,480 --> 00:48:57,879
Speaker 1: at that moment in time, Barry I was running our

894
00:48:57,920 --> 00:49:00,800
Speaker 1: capital markets division in the America as North America, in

895
00:49:00,880 --> 00:49:05,320
Speaker 1: Latin America, and I remember March, there was no thought

896
00:49:05,320 --> 00:49:07,200
Speaker 1: in our mind that we were going to work from home,

897
00:49:07,680 --> 00:49:11,200
Speaker 1: working on a trading floor, trading desk. This idea that

898
00:49:11,200 --> 00:49:13,440
Speaker 1: you were going to somehow mobilize and be able to

899
00:49:13,480 --> 00:49:17,440
Speaker 1: take an organization of dozens of people and somehow figure

900
00:49:17,480 --> 00:49:20,440
Speaker 1: out how to work from home. Um. So I was

901
00:49:20,480 --> 00:49:23,160
Speaker 1: one of those people that definitely left kicking and screaming,

902
00:49:23,200 --> 00:49:25,799
Speaker 1: eyes like I can stay here, I can still work

903
00:49:25,840 --> 00:49:29,040
Speaker 1: from here. I remember someone saying, don't worry, it'll be

904
00:49:29,080 --> 00:49:30,840
Speaker 1: a week or two, you'll be back in the We

905
00:49:30,880 --> 00:49:32,839
Speaker 1: all thought that, right, We we all thought that it

906
00:49:32,920 --> 00:49:37,240
Speaker 1: was maybe a month, maybe three months max. And so um,

907
00:49:37,280 --> 00:49:39,520
Speaker 1: but we did it right. We had to. We were

908
00:49:39,560 --> 00:49:41,600
Speaker 1: doing at that moment in time at City. We had

909
00:49:41,640 --> 00:49:44,280
Speaker 1: the contingency plans, we had people working on different days

910
00:49:44,360 --> 00:49:47,840
Speaker 1: and continuity of business sites. And then we got the

911
00:49:47,840 --> 00:49:49,719
Speaker 1: phone call that no, we need to find a way

912
00:49:49,760 --> 00:49:53,040
Speaker 1: to move everyone to work from home and that that

913
00:49:53,120 --> 00:49:56,000
Speaker 1: continuity that was all set up post nine eleven. I

914
00:49:56,360 --> 00:49:58,840
Speaker 1: think a lot of people don't realize one of the

915
00:49:59,200 --> 00:50:03,759
Speaker 1: few good things that had come out of our you know,

916
00:50:03,880 --> 00:50:07,919
Speaker 1: closing of the stock markets for a week, and everybody realized, oh,

917
00:50:08,120 --> 00:50:10,759
Speaker 1: we have to have a plan being in case something

918
00:50:10,800 --> 00:50:13,480
Speaker 1: like this ever happens again. We have different sites exactly.

919
00:50:13,520 --> 00:50:15,720
Speaker 1: So we have one in New Jersey where we can

920
00:50:15,760 --> 00:50:17,680
Speaker 1: recreate and it's part of your job, right, you do

921
00:50:17,719 --> 00:50:21,000
Speaker 1: the continuity of business testing, and so that was helpful.

922
00:50:21,000 --> 00:50:22,400
Speaker 1: But then it was you know what, we need to

923
00:50:22,440 --> 00:50:26,280
Speaker 1: have everyone work from home, and so it was um

924
00:50:26,320 --> 00:50:28,400
Speaker 1: a mad rush to be able to make that happen.

925
00:50:28,480 --> 00:50:30,920
Speaker 1: And I think we all learned a lot about our technology.

926
00:50:30,960 --> 00:50:35,520
Speaker 1: We learned a lot about phone lines, phone lines, and

927
00:50:35,520 --> 00:50:38,279
Speaker 1: and how to to make sure that every call was

928
00:50:38,320 --> 00:50:40,640
Speaker 1: going to be answered because you couple not only that

929
00:50:41,040 --> 00:50:44,200
Speaker 1: with one of the most volatile markets in history, and

930
00:50:44,200 --> 00:50:46,200
Speaker 1: so you're like, the one thing that we can't fail

931
00:50:46,239 --> 00:50:48,200
Speaker 1: to do is help our clients if they need to

932
00:50:48,200 --> 00:50:50,600
Speaker 1: get out of risk, if they need to sell, we

933
00:50:50,640 --> 00:50:53,120
Speaker 1: want to make sure that we're able to answer those

934
00:50:53,120 --> 00:50:56,799
Speaker 1: calls and help them out. And so we were very fortunate. Um,

935
00:50:56,840 --> 00:50:59,799
Speaker 1: looking back on it, I think everyone has those surreal experiences,

936
00:51:00,080 --> 00:51:01,960
Speaker 1: right that you don't even know how many hours you

937
00:51:02,040 --> 00:51:05,840
Speaker 1: worked or what was happening, or your kids doing virtual

938
00:51:05,920 --> 00:51:08,399
Speaker 1: school next to you while you're trying to manage this,

939
00:51:08,440 --> 00:51:11,840
Speaker 1: And so I think we we really helped our clients

940
00:51:11,840 --> 00:51:14,719
Speaker 1: through that that period of time because this wasn't like

941
00:51:14,760 --> 00:51:17,719
Speaker 1: any other market correction, right, this was a once in

942
00:51:17,760 --> 00:51:22,480
Speaker 1: a hundred year pandemic down less than six weeks. You've

943
00:51:22,520 --> 00:51:26,000
Speaker 1: never seen anything like that before. We never is the

944
00:51:26,040 --> 00:51:29,240
Speaker 1: closest thing, and that was really more plumbing than anything.

945
00:51:29,600 --> 00:51:31,960
Speaker 1: And so one of the things that we did um

946
00:51:32,200 --> 00:51:35,239
Speaker 1: was we started communicating more frequently with our clients. And

947
00:51:35,320 --> 00:51:39,239
Speaker 1: so our chief investment officer and our chief investment strategist

948
00:51:39,880 --> 00:51:42,479
Speaker 1: we all got together and decided that this was something

949
00:51:42,520 --> 00:51:45,040
Speaker 1: we need to communicate to our clients every week as

950
00:51:45,080 --> 00:51:47,160
Speaker 1: to what's going on, and so we continue to do

951
00:51:47,200 --> 00:51:49,959
Speaker 1: this to this day. We we published once a week

952
00:51:50,040 --> 00:51:52,400
Speaker 1: breaking down what's happened in the markets, what's happened in

953
00:51:52,400 --> 00:51:55,200
Speaker 1: the economy, how people should be thinking about their portfolios.

954
00:51:55,600 --> 00:52:00,319
Speaker 1: And then we do a weekly webcast every Thursday say things.

955
00:52:00,400 --> 00:52:02,319
Speaker 1: Some people they like to read it, some people liked

956
00:52:02,400 --> 00:52:06,279
Speaker 1: the live interaction, but people were craving that information. How

957
00:52:06,280 --> 00:52:08,040
Speaker 1: should I think about this? How should I think about

958
00:52:08,040 --> 00:52:12,000
Speaker 1: what's next? And so that frequency of communication and having

959
00:52:12,040 --> 00:52:15,399
Speaker 1: that access to information and how to think about how

960
00:52:15,440 --> 00:52:18,399
Speaker 1: you should be positioned and staying the course right, because

961
00:52:18,400 --> 00:52:21,480
Speaker 1: that's the most difficult challenge. And when you see those

962
00:52:21,520 --> 00:52:26,880
Speaker 1: severe drawdowns human psychology and all of our heuristic biases

963
00:52:27,040 --> 00:52:30,400
Speaker 1: right that come into play. As you're seeing the market tank,

964
00:52:30,600 --> 00:52:33,640
Speaker 1: it is very hard to stay invested. What about the

965
00:52:33,640 --> 00:52:37,320
Speaker 1: flip side of that? Starting in April, the market begins

966
00:52:37,320 --> 00:52:40,600
Speaker 1: to recover and takes off. Were you getting phone calls

967
00:52:40,640 --> 00:52:43,279
Speaker 1: from clients saying, Hey, what's going on? This doesn't make

968
00:52:43,320 --> 00:52:45,840
Speaker 1: any sense? Everything around me is closed? How can the

969
00:52:45,880 --> 00:52:48,799
Speaker 1: market be rallying? Absolutely? And then you know some of

970
00:52:48,840 --> 00:52:51,880
Speaker 1: the calls that we had about adding to home builders,

971
00:52:51,920 --> 00:52:54,680
Speaker 1: thinking about human behavior and how it was going to change,

972
00:52:54,719 --> 00:52:57,200
Speaker 1: and I remember when we added some of those exposures

973
00:52:57,200 --> 00:52:59,400
Speaker 1: to the portfolio. The knee jerk was that reaction was

974
00:52:59,520 --> 00:53:02,560
Speaker 1: really you crazy, really like who's who's buying a house

975
00:53:02,680 --> 00:53:04,839
Speaker 1: right now? Like we're in a pandemic, and it's like, well,

976
00:53:04,880 --> 00:53:07,560
Speaker 1: actually everyone people want to get the hell out. Everyone

977
00:53:07,600 --> 00:53:09,839
Speaker 1: want to get out of apartments. Everyone wants to which

978
00:53:09,880 --> 00:53:13,800
Speaker 1: is so intuitive now. But we became a lot more

979
00:53:13,800 --> 00:53:16,759
Speaker 1: tactical with some of our allocations. Of course we have

980
00:53:16,840 --> 00:53:21,120
Speaker 1: strategic asset allocations, strategic portfolios, but to really take advantage

981
00:53:21,120 --> 00:53:24,120
Speaker 1: of some of these movements because it was it was intense,

982
00:53:24,280 --> 00:53:26,399
Speaker 1: right and it continues to be intense in terms of

983
00:53:26,719 --> 00:53:29,120
Speaker 1: navigating these markets. And so we became a lot more

984
00:53:29,239 --> 00:53:33,560
Speaker 1: nimble and a lot more opportunistic in some of our investments,

985
00:53:33,560 --> 00:53:36,520
Speaker 1: and so it really increased I will say, I think

986
00:53:36,560 --> 00:53:39,239
Speaker 1: one of the surprises to us was it only made

987
00:53:39,280 --> 00:53:42,759
Speaker 1: our client relationship stronger. You would think that this very

988
00:53:42,800 --> 00:53:47,040
Speaker 1: personal business of your constantly visiting clients, You're meeting in

989
00:53:47,080 --> 00:53:50,520
Speaker 1: their homes, you get to know their families. The pandemic

990
00:53:50,600 --> 00:53:54,799
Speaker 1: created a need to understand markets better, the economy better,

991
00:53:54,880 --> 00:53:58,319
Speaker 1: the global economy better, all of these different dynamics, and

992
00:53:58,400 --> 00:54:01,480
Speaker 1: having like a go to advise and someone who was

993
00:54:01,600 --> 00:54:06,120
Speaker 1: accessible pretty much because we're all we're all working from

994
00:54:06,160 --> 00:54:10,560
Speaker 1: home and living, yeah, trying to stay healthy and taking

995
00:54:10,560 --> 00:54:13,520
Speaker 1: care of our families and and and so I actually

996
00:54:13,520 --> 00:54:17,400
Speaker 1: think it's strengthened a lot of the relationships. Um. It

997
00:54:17,440 --> 00:54:19,560
Speaker 1: was a way for us to actually when we see

998
00:54:19,760 --> 00:54:23,160
Speaker 1: look at our new client acquisition statistics, when we look

999
00:54:23,160 --> 00:54:25,759
Speaker 1: at our a U M growth, we actually brought in

1000
00:54:25,800 --> 00:54:28,040
Speaker 1: a lot of assets. And so you know, hopefully that's

1001
00:54:28,080 --> 00:54:31,040
Speaker 1: a testament to how we were advising our clients through

1002
00:54:31,080 --> 00:54:34,600
Speaker 1: that time, the frequency, the accessibility, and and their trusting

1003
00:54:34,719 --> 00:54:37,080
Speaker 1: us to continue to do that going forward. So you

1004
00:54:37,160 --> 00:54:40,120
Speaker 1: have this rally off of the lows in the pandemic.

1005
00:54:41,640 --> 00:54:44,759
Speaker 1: Then the calendar flips and its one. Not only does

1006
00:54:44,840 --> 00:54:48,479
Speaker 1: it not slow down, it accelerates. What were you hearing

1007
00:54:48,480 --> 00:54:52,239
Speaker 1: from clients the following year, Yeah, so was dominated by

1008
00:54:52,239 --> 00:54:55,759
Speaker 1: this concept of COVID defensives, COVID cyclicals, Right, who are

1009
00:54:55,760 --> 00:54:57,919
Speaker 1: the winners and losers when it comes to being work

1010
00:54:58,000 --> 00:55:02,279
Speaker 1: from home state? Yeah, you saw that whole thing of

1011
00:55:02,400 --> 00:55:04,880
Speaker 1: like stay at home versus leave your home. Right, So

1012
00:55:05,440 --> 00:55:08,600
Speaker 1: that was what really dominated, and it continued to dominate.

1013
00:55:10,000 --> 00:55:12,279
Speaker 1: And one of the questions that we were asking ourselves

1014
00:55:12,880 --> 00:55:16,359
Speaker 1: is you did see particularly within the hyper growth part

1015
00:55:16,440 --> 00:55:19,239
Speaker 1: of the market, right, hyper growth? And you know, I

1016
00:55:19,239 --> 00:55:21,640
Speaker 1: think it's unfair we tend to talk about technology very

1017
00:55:21,680 --> 00:55:23,759
Speaker 1: broadly as though it's you know, all one thing and

1018
00:55:23,800 --> 00:55:26,520
Speaker 1: all the same. It's very different and the subsectors are

1019
00:55:26,600 --> 00:55:29,080
Speaker 1: very different. But I think one way to slice and

1020
00:55:29,120 --> 00:55:32,239
Speaker 1: dice it is looking at, Okay, you have some technology

1021
00:55:32,280 --> 00:55:34,920
Speaker 1: companies that have durable demand, right, you can put them

1022
00:55:34,960 --> 00:55:39,839
Speaker 1: in that bucket of dividend growers, durable demand um quality companies.

1023
00:55:40,200 --> 00:55:43,560
Speaker 1: And then you have hyper growth companies that, you know,

1024
00:55:43,640 --> 00:55:45,920
Speaker 1: the way that their stocks trade is almost like a

1025
00:55:46,000 --> 00:55:48,799
Speaker 1: call option on an unknown future. Right, So just like

1026
00:55:48,840 --> 00:55:50,560
Speaker 1: a coll option premium is going to have a lot

1027
00:55:50,640 --> 00:55:53,240
Speaker 1: more volatility than you would see in a stock price,

1028
00:55:53,640 --> 00:55:56,640
Speaker 1: you see similar behavior. And I think the momentum that

1029
00:55:56,680 --> 00:55:59,360
Speaker 1: we saw in the pandemic and coming out of the pandemic,

1030
00:55:59,560 --> 00:56:02,880
Speaker 1: a lot of hyper growth benefited from that. And so

1031
00:56:03,600 --> 00:56:05,960
Speaker 1: one of the changes that we made to our portfolios

1032
00:56:06,000 --> 00:56:09,000
Speaker 1: probably in Q three Q four of last year, was

1033
00:56:09,040 --> 00:56:11,239
Speaker 1: this idea, Okay, there's going to be this shift. We're

1034
00:56:11,239 --> 00:56:14,520
Speaker 1: no longer going to have this dominance of COVID cyclicals,

1035
00:56:14,520 --> 00:56:17,600
Speaker 1: COVID defensives, and where we should be invested. But this

1036
00:56:17,719 --> 00:56:19,680
Speaker 1: is going to be a question of what's going to

1037
00:56:19,760 --> 00:56:22,319
Speaker 1: do well in a rising rate environment, how are we

1038
00:56:22,480 --> 00:56:24,600
Speaker 1: how do we want to be positioned in a rising

1039
00:56:24,680 --> 00:56:29,480
Speaker 1: rate environment? What companies can withstand inflationary pressures? Which was

1040
00:56:29,560 --> 00:56:32,520
Speaker 1: really our shift in our portfolios away from some of

1041
00:56:32,560 --> 00:56:36,600
Speaker 1: those hyper growth technology companies and then into more quality.

1042
00:56:36,960 --> 00:56:39,200
Speaker 1: So let's stay with that because that's really an interesting

1043
00:56:39,280 --> 00:56:45,200
Speaker 1: distinction heading into two. Sure, the broad market sold off

1044
00:56:45,440 --> 00:56:48,520
Speaker 1: and we were down twenty or so percent, but when

1045
00:56:48,560 --> 00:56:50,400
Speaker 1: you look at the hyper grows, when you look at

1046
00:56:50,400 --> 00:56:53,400
Speaker 1: the high flyers, some of these got shall lacked forty

1047
00:56:53,520 --> 00:56:57,280
Speaker 1: fifty six or worse. What do you do when clients

1048
00:56:57,320 --> 00:57:00,319
Speaker 1: call up who are sitting in those sorts of things?

1049
00:57:00,360 --> 00:57:04,880
Speaker 1: How do you manage that? I think finding so for

1050
00:57:04,880 --> 00:57:08,360
Speaker 1: for clients who are sitting in individual stocks and looking

1051
00:57:08,400 --> 00:57:11,359
Speaker 1: at okay, I am you know, part of that experience

1052
00:57:11,400 --> 00:57:15,839
Speaker 1: where these positions are down fifty six. To be fair,

1053
00:57:15,880 --> 00:57:18,120
Speaker 1: they had a giant run the past, had a massive

1054
00:57:18,200 --> 00:57:20,280
Speaker 1: run exactly, and so you look at it net net

1055
00:57:20,320 --> 00:57:23,120
Speaker 1: obviously that that's an important part of that equation. But

1056
00:57:23,160 --> 00:57:25,400
Speaker 1: I think breaking it down into are we talking about

1057
00:57:25,400 --> 00:57:28,120
Speaker 1: a profitable company? Are we talking about that call option

1058
00:57:28,240 --> 00:57:30,160
Speaker 1: on an unknown future, or are we talking about there's

1059
00:57:30,160 --> 00:57:34,040
Speaker 1: a clear path to profitability. I think there's a misunderstanding

1060
00:57:34,120 --> 00:57:36,120
Speaker 1: sometimes in the market that you know, just because something

1061
00:57:36,200 --> 00:57:39,040
Speaker 1: is sold off substantially, it has to go up. You know.

1062
00:57:39,080 --> 00:57:41,400
Speaker 1: There there's a number of analyzes out there where it

1063
00:57:41,440 --> 00:57:44,600
Speaker 1: talks about stocks that are trading, you know, eighty percent

1064
00:57:44,680 --> 00:57:47,280
Speaker 1: off their all time highs, and you really look back

1065
00:57:47,320 --> 00:57:48,960
Speaker 1: at it and people think that happened last year or

1066
00:57:48,960 --> 00:57:51,760
Speaker 1: the year before. It could have happened twenty years ago.

1067
00:57:51,920 --> 00:57:55,000
Speaker 1: There are still stocks that are trading significantly off. So

1068
00:57:55,360 --> 00:57:57,720
Speaker 1: not everything that goes down must go up, So I

1069
00:57:57,760 --> 00:58:00,480
Speaker 1: think it it is a function of understand ending that

1070
00:58:00,560 --> 00:58:05,560
Speaker 1: we are in a tightening financial conditions environment. Don't fight

1071
00:58:05,600 --> 00:58:08,560
Speaker 1: the FED, right, don't fight that FED, and and try

1072
00:58:08,600 --> 00:58:10,840
Speaker 1: to determine is this something I'm willing to hold long

1073
00:58:10,960 --> 00:58:13,960
Speaker 1: term because I see that path to profitability or is

1074
00:58:13,960 --> 00:58:16,360
Speaker 1: this something where I don't see it and we could

1075
00:58:16,360 --> 00:58:19,640
Speaker 1: see continued volatility or continued So that's the question about

1076
00:58:19,680 --> 00:58:22,320
Speaker 1: the other side of the recession. Are you buying things

1077
00:58:22,880 --> 00:58:29,439
Speaker 1: in two especially that you're comfortable riding up and down

1078
00:58:29,560 --> 00:58:33,160
Speaker 1: until we come out of whatever takes place in twenty

1079
00:58:33,200 --> 00:58:35,919
Speaker 1: three and twenty four precisely So at the like I,

1080
00:58:35,960 --> 00:58:37,920
Speaker 1: like I mentioned Q three, Q four of last year,

1081
00:58:37,960 --> 00:58:39,920
Speaker 1: we started to make some of these portfolio changes on

1082
00:58:39,920 --> 00:58:42,720
Speaker 1: the equity side. This year we came into the year

1083
00:58:43,320 --> 00:58:47,680
Speaker 1: UM underweight fix income like most people right anticipating UM

1084
00:58:47,920 --> 00:58:52,520
Speaker 1: rising rates. We added fix income exposure again quality fixingcome exposure,

1085
00:58:52,520 --> 00:58:56,600
Speaker 1: looking at Muni's investment grade preferred really once that tenure

1086
00:58:56,840 --> 00:58:59,440
Speaker 1: the tenure crossover three for the first time, that was

1087
00:58:59,480 --> 00:59:01,360
Speaker 1: an area where we said, all right, are we going

1088
00:59:01,400 --> 00:59:03,400
Speaker 1: to see peak inflation? Are we going to see peak

1089
00:59:03,480 --> 00:59:06,800
Speaker 1: rates in this year probably, and so we became very

1090
00:59:06,800 --> 00:59:09,720
Speaker 1: comfortable adding that exposure. And now when you think of

1091
00:59:09,720 --> 00:59:12,760
Speaker 1: what we were talking about earlier, this debate of are

1092
00:59:12,800 --> 00:59:14,640
Speaker 1: we going to see some resiliency here or we're going

1093
00:59:14,680 --> 00:59:17,600
Speaker 1: to tip over into a recession and preparing your portfolio

1094
00:59:17,680 --> 00:59:20,360
Speaker 1: for both of those things, I think patients is a

1095
00:59:20,440 --> 00:59:23,760
Speaker 1: virtue in this market, not chasing some of these rallies

1096
00:59:23,800 --> 00:59:26,920
Speaker 1: that we see, but being very comfortable with those exposures,

1097
00:59:26,960 --> 00:59:29,040
Speaker 1: both across equities, fixing come and as we were talking

1098
00:59:29,040 --> 00:59:31,919
Speaker 1: about earlier private markets as well, so what you're really

1099
00:59:31,960 --> 00:59:36,680
Speaker 1: describing our portfolios that are robust, resilient and can ride

1100
00:59:36,680 --> 00:59:40,040
Speaker 1: out at downtown. And when you even go back to

1101
00:59:40,480 --> 00:59:44,520
Speaker 1: really difficult times like the nineteen seventies and you say, okay,

1102
00:59:44,520 --> 00:59:47,520
Speaker 1: well what happened to large cap quality shares during that

1103
00:59:47,560 --> 00:59:50,120
Speaker 1: period of time? They were able to double their share prices. Right,

1104
00:59:50,200 --> 00:59:54,600
Speaker 1: So even when you start analyzing companies about durable demand,

1105
00:59:54,640 --> 00:59:57,080
Speaker 1: are acknowledging that we're going to be it doesn't mean

1106
00:59:57,200 --> 00:59:59,960
Speaker 1: I I view tightening financial conditions. It's very similar to

1107
01:00:00,000 --> 01:00:02,680
Speaker 1: a climbing a mountain. Right, if you have a heavier load,

1108
01:00:02,800 --> 01:00:04,400
Speaker 1: it's going to take you longer. Right, it doesn't mean

1109
01:00:04,400 --> 01:00:07,160
Speaker 1: you can't climb the mountain. That's what corporations are faced with,

1110
01:00:07,240 --> 01:00:10,439
Speaker 1: that's what consumers are faced with, and so putting your

1111
01:00:10,480 --> 01:00:13,120
Speaker 1: capital in those areas and then if we do tip

1112
01:00:13,160 --> 01:00:16,520
Speaker 1: over into that recessionary environment, that fixed income portion of

1113
01:00:16,520 --> 01:00:19,400
Speaker 1: the portfolio is going to do well. Right, So the

1114
01:00:19,480 --> 01:00:23,160
Speaker 1: anticipation in terms of raids coming down, flight to quality

1115
01:00:23,520 --> 01:00:26,960
Speaker 1: is a balance and a diversifier in the portfolio that,

1116
01:00:27,400 --> 01:00:30,320
Speaker 1: as we were talking about, previously didn't make sense when

1117
01:00:30,320 --> 01:00:33,000
Speaker 1: we were dealing with negative yielding dead but now now

1118
01:00:33,040 --> 01:00:35,160
Speaker 1: makes sense. Right, you get some ballast at three and

1119
01:00:35,160 --> 01:00:37,000
Speaker 1: a quarter three and a half that you don't really

1120
01:00:37,000 --> 01:00:40,560
Speaker 1: see it forgetting me negative when when yields are, you know,

1121
01:00:40,640 --> 01:00:43,560
Speaker 1: below one percent, how much room is there to that

1122
01:00:43,680 --> 01:00:46,840
Speaker 1: offset any sort of downs on and we saw that

1123
01:00:46,960 --> 01:00:49,640
Speaker 1: in the first half of this year. So you mentioned

1124
01:00:49,800 --> 01:00:52,000
Speaker 1: high net worth and ultra high net worth. I want

1125
01:00:52,000 --> 01:00:55,720
Speaker 1: to ask a question about family offices, which seemed to

1126
01:00:55,760 --> 01:01:00,720
Speaker 1: be sort of their own specific category of investors. Do

1127
01:01:00,920 --> 01:01:05,920
Speaker 1: they approach markets like this similarly to high net worth investors?

1128
01:01:06,360 --> 01:01:10,080
Speaker 1: How is their approach different? Tell us a little bit

1129
01:01:10,080 --> 01:01:12,880
Speaker 1: about what your experiences are with that group. Sure, So

1130
01:01:12,960 --> 01:01:16,880
Speaker 1: with family offices, I think the interesting thing is we

1131
01:01:16,920 --> 01:01:19,440
Speaker 1: try to view them as one client segment. It's not

1132
01:01:19,480 --> 01:01:22,080
Speaker 1: the case at all. So well, there's a big difference

1133
01:01:22,120 --> 01:01:25,000
Speaker 1: between a fifty million dollar office and a five million

1134
01:01:25,040 --> 01:01:28,520
Speaker 1: dollar absolutely, and and not every family office is a

1135
01:01:28,600 --> 01:01:31,240
Speaker 1: little bit different in terms of what they're dealing with,

1136
01:01:31,400 --> 01:01:35,360
Speaker 1: how the wealth was created, the existing assets. And so

1137
01:01:35,680 --> 01:01:37,840
Speaker 1: we're very fortunate we work with over a quarter of

1138
01:01:37,840 --> 01:01:41,320
Speaker 1: the world's billionaires, we have experience working with family offices.

1139
01:01:41,360 --> 01:01:44,600
Speaker 1: We actually have a dedicated global family office team, and

1140
01:01:44,760 --> 01:01:47,720
Speaker 1: we do a lot of research in this area and

1141
01:01:47,920 --> 01:01:49,840
Speaker 1: we provide a lot of information both in terms of

1142
01:01:49,880 --> 01:01:53,760
Speaker 1: networking opportunities for family offices as well as family offices

1143
01:01:53,800 --> 01:01:56,840
Speaker 1: recognizing kind of their own benchmarking, right, so data around

1144
01:01:56,840 --> 01:01:59,280
Speaker 1: what are other family offices doing, how are they set up,

1145
01:01:59,600 --> 01:02:01,920
Speaker 1: what is they're staffing, what are the roles of the

1146
01:02:01,920 --> 01:02:05,640
Speaker 1: different people on on staff, and so um. We spend

1147
01:02:05,640 --> 01:02:08,080
Speaker 1: a lot of time with this client segment. With the

1148
01:02:08,080 --> 01:02:11,480
Speaker 1: acknowledgment that family offices are markedly different. I think it

1149
01:02:11,520 --> 01:02:14,400
Speaker 1: all goes back to the size, as you mentioned, right,

1150
01:02:14,440 --> 01:02:17,600
Speaker 1: So the size and amount of capital can greatly change

1151
01:02:17,760 --> 01:02:20,280
Speaker 1: the way that the family office is structured. And then

1152
01:02:20,320 --> 01:02:23,960
Speaker 1: it's also how the wealth was generated. Sometimes it's within

1153
01:02:24,000 --> 01:02:28,160
Speaker 1: our industry. Sometimes it was within hedge funds, for example,

1154
01:02:28,640 --> 01:02:31,520
Speaker 1: whether there's an asset that's a non negotiable, we're not

1155
01:02:31,640 --> 01:02:35,880
Speaker 1: selling this asset. So someone who started an amazing company

1156
01:02:36,000 --> 01:02:38,840
Speaker 1: right still is on the board, owns a big chunk

1157
01:02:38,840 --> 01:02:41,400
Speaker 1: of their wealth and a concentrated stock position, and then

1158
01:02:41,440 --> 01:02:43,760
Speaker 1: it's like, what are we doing around that? Right? Because

1159
01:02:43,760 --> 01:02:47,600
Speaker 1: we're not touching this, I still remain active in the company.

1160
01:02:47,720 --> 01:02:50,960
Speaker 1: And so I would say each family office is different.

1161
01:02:51,000 --> 01:02:54,520
Speaker 1: We work with institutional family offices that tend to, you know,

1162
01:02:54,600 --> 01:02:58,680
Speaker 1: trade more actively. They're looking for opportunities that are very

1163
01:02:58,720 --> 01:03:02,360
Speaker 1: similar to our institution client base. We we partner with

1164
01:03:02,400 --> 01:03:05,200
Speaker 1: other family offices exactly what we're talking about, right, So,

1165
01:03:05,240 --> 01:03:07,560
Speaker 1: how should we think about liquidity, how should we think

1166
01:03:07,600 --> 01:03:11,000
Speaker 1: about the markets? No asset classes off limits? And then

1167
01:03:11,160 --> 01:03:13,360
Speaker 1: you know, there's there's certain family offices that we're seeing

1168
01:03:13,400 --> 01:03:17,080
Speaker 1: nowadays especially that have very precise mandates right where you

1169
01:03:17,120 --> 01:03:19,919
Speaker 1: see where you see mandates that are heavily weighted towards

1170
01:03:20,000 --> 01:03:23,920
Speaker 1: private markets, mandates that are heavily weighted towards sustainable investing

1171
01:03:24,000 --> 01:03:27,240
Speaker 1: or impact investing. So that's something that's really come out

1172
01:03:27,320 --> 01:03:30,120
Speaker 1: over the past several years where the mandate is not

1173
01:03:30,200 --> 01:03:34,200
Speaker 1: just about investments and asset classes, but actually thinking through

1174
01:03:34,200 --> 01:03:37,000
Speaker 1: the full journey of the principle and what they want

1175
01:03:37,000 --> 01:03:39,440
Speaker 1: to do, both from an investment standpoint as well as

1176
01:03:39,480 --> 01:03:42,919
Speaker 1: a philanthropic standpoint reflecting their values. So let's I'm glad

1177
01:03:42,960 --> 01:03:44,800
Speaker 1: you brought that up, because we haven't talked about that.

1178
01:03:45,160 --> 01:03:48,520
Speaker 1: There's been a lot of political pushback to E s

1179
01:03:48,600 --> 01:03:51,520
Speaker 1: G and that's sort of investing, but it sounds like

1180
01:03:52,000 --> 01:03:55,760
Speaker 1: the investors themselves, at least a portion of them, are

1181
01:03:55,840 --> 01:03:59,280
Speaker 1: asking for that. How do you balance the two or

1182
01:03:59,360 --> 01:04:01,840
Speaker 1: do you just ignore the political noise. When you look

1183
01:04:01,880 --> 01:04:05,880
Speaker 1: at the growth rates overall of sustainable investing versus just

1184
01:04:06,120 --> 01:04:10,040
Speaker 1: broad broad based wealth right and wealth growth and and

1185
01:04:10,200 --> 01:04:14,919
Speaker 1: assets coming into traditional let's say traditional investing, the anticipated

1186
01:04:14,960 --> 01:04:17,840
Speaker 1: growth rate is anywhere from three to five times higher

1187
01:04:18,000 --> 01:04:21,280
Speaker 1: and sustainable investing over the next five years. Huge, it's

1188
01:04:21,360 --> 01:04:24,280
Speaker 1: really significant. Um, we're talking about, you know, trillions of

1189
01:04:24,280 --> 01:04:27,400
Speaker 1: dollars coming into this space. And so I think the

1190
01:04:27,520 --> 01:04:30,840
Speaker 1: important thing is really from an education standpoint, right, So

1191
01:04:31,160 --> 01:04:34,240
Speaker 1: this is partially about what's happened within the industry, and

1192
01:04:34,280 --> 01:04:36,960
Speaker 1: it's partially about what is the desire of the investor.

1193
01:04:37,360 --> 01:04:40,760
Speaker 1: What's happened in the industry is a massive proliferation of products, right,

1194
01:04:40,800 --> 01:04:43,920
Speaker 1: but there is a scale, right, how we've evolved over time.

1195
01:04:44,280 --> 01:04:47,760
Speaker 1: You could say sustainable investing originally came, right, it came

1196
01:04:47,800 --> 01:04:50,920
Speaker 1: from exclusionary, I don't want to invest in certain things,

1197
01:04:51,520 --> 01:04:54,680
Speaker 1: and then it's become okay, maybe more broad based in

1198
01:04:54,800 --> 01:04:57,520
Speaker 1: terms of some of the criteria and then looking at

1199
01:04:57,560 --> 01:05:01,160
Speaker 1: really making an impact, right, so both a return financially

1200
01:05:01,240 --> 01:05:04,360
Speaker 1: and being able to measure the impact the trends that

1201
01:05:04,400 --> 01:05:07,040
Speaker 1: we're seeing in this space that are much more personalized.

1202
01:05:07,240 --> 01:05:09,520
Speaker 1: So where you see that higher kind of five times

1203
01:05:09,560 --> 01:05:12,120
Speaker 1: growth rate is really more on the line of I

1204
01:05:12,160 --> 01:05:15,240
Speaker 1: want thematic, I want things that are personalized to what

1205
01:05:15,400 --> 01:05:18,120
Speaker 1: I want to do. And it's no longer. And this

1206
01:05:18,160 --> 01:05:20,280
Speaker 1: is where a lot of people get confused. It's not

1207
01:05:20,320 --> 01:05:24,720
Speaker 1: about philanthropy, right, So philanthropy is something entirely different. This

1208
01:05:24,760 --> 01:05:27,880
Speaker 1: is about where am I investing capital that is then

1209
01:05:27,960 --> 01:05:31,880
Speaker 1: aligned to my values and it's not concessionaire. It's not

1210
01:05:31,960 --> 01:05:35,680
Speaker 1: about taking inferior returns. It's about creating that mandate and

1211
01:05:35,720 --> 01:05:38,240
Speaker 1: being very specific about it. So the ability to be

1212
01:05:38,280 --> 01:05:41,200
Speaker 1: able to customize that and personalize that is something that's

1213
01:05:41,240 --> 01:05:44,160
Speaker 1: going to be significant for wealth managers going forward. So

1214
01:05:45,240 --> 01:05:47,320
Speaker 1: last question on this topic and then we'll get to

1215
01:05:47,360 --> 01:05:51,880
Speaker 1: our favorite questions. Some of the studies I've seen have

1216
01:05:52,560 --> 01:05:56,560
Speaker 1: mentioned that when it comes to sustainable investing or impact

1217
01:05:56,640 --> 01:06:02,320
Speaker 1: investing UM, the younger generation embraces it much more wholeheartedly

1218
01:06:02,880 --> 01:06:06,760
Speaker 1: than do the boomers or or younger than them, And

1219
01:06:06,800 --> 01:06:09,880
Speaker 1: the boomers are really on the verge of a multi

1220
01:06:09,880 --> 01:06:14,640
Speaker 1: trillion dollar generational wealth transfer. Is part of that, underlying

1221
01:06:14,720 --> 01:06:18,960
Speaker 1: that big change in growth of for sustainable investing. Absolutely,

1222
01:06:19,000 --> 01:06:23,640
Speaker 1: I think there's demographics, there's trends UM. You even see

1223
01:06:23,640 --> 01:06:26,919
Speaker 1: that in gen Z Right. It's it's about passion and purpose, right,

1224
01:06:27,040 --> 01:06:29,480
Speaker 1: It's it's not just about where you're investing, but what

1225
01:06:29,640 --> 01:06:31,800
Speaker 1: is my career? Where am I working day to day? Right?

1226
01:06:31,840 --> 01:06:35,240
Speaker 1: And really finding that from a from a value perspective.

1227
01:06:35,560 --> 01:06:37,600
Speaker 1: But I think we're also a little bit too flippant

1228
01:06:37,640 --> 01:06:43,280
Speaker 1: in terms of of saying the the boomers are not

1229
01:06:43,440 --> 01:06:46,360
Speaker 1: interested in this. I think everyone's interested in it. I

1230
01:06:46,840 --> 01:06:48,760
Speaker 1: really really do. I think you know, when you think

1231
01:06:48,800 --> 01:06:51,360
Speaker 1: about who am I giving my money to write? Who

1232
01:06:51,360 --> 01:06:53,760
Speaker 1: am I giving my money to? Investing is giving your

1233
01:06:53,760 --> 01:06:57,520
Speaker 1: money to someone right? It is betting on someone else's ingenuity.

1234
01:06:57,600 --> 01:07:00,080
Speaker 1: And so having that type of thing, if I are

1235
01:07:00,080 --> 01:07:02,600
Speaker 1: going to lend money to someone you know personally or

1236
01:07:02,600 --> 01:07:05,120
Speaker 1: invest equity in someone, I would want them to be,

1237
01:07:05,640 --> 01:07:07,920
Speaker 1: you know, aligned in terms of values, make sure that

1238
01:07:07,960 --> 01:07:10,800
Speaker 1: there are you know, a good person treating their employees well,

1239
01:07:11,200 --> 01:07:14,600
Speaker 1: making you know, investments in the right in in the

1240
01:07:14,680 --> 01:07:19,440
Speaker 1: right areas, embracing things like diversity, not just from a

1241
01:07:19,480 --> 01:07:22,439
Speaker 1: diversity and inclusion standpoint, but also from diversity of thought

1242
01:07:22,520 --> 01:07:25,240
Speaker 1: and background and ideas, and so you know, when you

1243
01:07:25,240 --> 01:07:27,040
Speaker 1: think of that on a micro level and then you

1244
01:07:27,080 --> 01:07:29,080
Speaker 1: expand it to a macro level in terms of how

1245
01:07:29,120 --> 01:07:32,800
Speaker 1: you're investing, it becomes intuitive that everyone wants to do that,

1246
01:07:33,120 --> 01:07:35,360
Speaker 1: but do they have the time? Right? Like, do they

1247
01:07:35,400 --> 01:07:37,800
Speaker 1: have the time? And so that's where I do think

1248
01:07:38,200 --> 01:07:41,160
Speaker 1: there is a huge responsibility for wealth managers to filter

1249
01:07:41,280 --> 01:07:44,160
Speaker 1: through and make sure we're not labeling certain things. And

1250
01:07:44,200 --> 01:07:46,680
Speaker 1: then there's a huge opportunity for wealth managers because then

1251
01:07:46,720 --> 01:07:51,400
Speaker 1: if you're presented with that, you understand the risk mitigation factors,

1252
01:07:51,560 --> 01:07:55,080
Speaker 1: you can view this as a risk mitigant, right governance.

1253
01:07:55,440 --> 01:07:57,959
Speaker 1: Governance is a big piece of that. Right, so better

1254
01:07:58,040 --> 01:08:04,160
Speaker 1: governance is less of the sort of outcome. Absolutely, and

1255
01:08:04,240 --> 01:08:07,200
Speaker 1: so I think it's applicable to everyone. Um. I think

1256
01:08:07,200 --> 01:08:10,040
Speaker 1: there's a lot more education that has to happen within

1257
01:08:10,080 --> 01:08:12,920
Speaker 1: the space. There's a lot more personalization, a lot more

1258
01:08:12,960 --> 01:08:16,559
Speaker 1: demand for thematic investing. But this is something where it's

1259
01:08:16,560 --> 01:08:20,799
Speaker 1: a great opportunity to bridge what the investors really want.

1260
01:08:21,040 --> 01:08:24,960
Speaker 1: And also the current offerings really quite interesting. Alright, I

1261
01:08:25,000 --> 01:08:27,320
Speaker 1: know I only have you for a limited amount of time,

1262
01:08:27,360 --> 01:08:31,120
Speaker 1: so I'm going to jump to my favorite questions. I

1263
01:08:31,200 --> 01:08:34,160
Speaker 1: know you have young ones at home that you had

1264
01:08:34,160 --> 01:08:37,800
Speaker 1: to deal with during during the pandemic. What did you

1265
01:08:37,840 --> 01:08:40,120
Speaker 1: do to entertain them? What sort of things was the

1266
01:08:40,120 --> 01:08:43,400
Speaker 1: family watching on Netflix or whatever? What were we doing

1267
01:08:43,479 --> 01:08:47,080
Speaker 1: during the pandemic? I mean we did, uh. We we

1268
01:08:47,160 --> 01:08:50,160
Speaker 1: set up makeshifts like zip lines in our house. It's

1269
01:08:50,160 --> 01:08:54,160
Speaker 1: an engineering feat. Um. I have two boys, So two boys. Um,

1270
01:08:54,200 --> 01:08:57,280
Speaker 1: they're now six and eight. Okay, So at the pandemic,

1271
01:08:57,439 --> 01:09:00,160
Speaker 1: they were a little yeah, they were, they were all

1272
01:09:00,200 --> 01:09:02,679
Speaker 1: they're still young. Um, so we were trying to find

1273
01:09:02,680 --> 01:09:06,840
Speaker 1: ways to burn energy, right, Um, it was for them.

1274
01:09:06,960 --> 01:09:09,360
Speaker 1: I think it was Hopefully they'll remember this way. I

1275
01:09:09,360 --> 01:09:12,160
Speaker 1: think it was delightful for them because I travel a lot,

1276
01:09:12,240 --> 01:09:13,920
Speaker 1: so they've got used to, you know, me being at

1277
01:09:13,920 --> 01:09:17,439
Speaker 1: home cooking pancakes in the morning. Um, but what have

1278
01:09:17,520 --> 01:09:21,559
Speaker 1: we been watching? So two boys obviously are dominating my

1279
01:09:22,080 --> 01:09:25,960
Speaker 1: Netflix and any type of streaming. Uh, there's a lot

1280
01:09:25,960 --> 01:09:28,000
Speaker 1: of wild crats going on. Not even sure if you

1281
01:09:28,040 --> 01:09:33,160
Speaker 1: know this program. I have nieces and nephews. Yes, I'm familiar, Yes, yes, Um,

1282
01:09:33,280 --> 01:09:35,639
Speaker 1: and then I would say I had no idea how

1283
01:09:35,640 --> 01:09:40,040
Speaker 1: many Avenger movies there were endless, there's millions. They just

1284
01:09:40,080 --> 01:09:44,400
Speaker 1: don't stop. They don't stop. Um. Godzillas a whole franchise

1285
01:09:44,479 --> 01:09:46,800
Speaker 1: I didn't know existed. I missed this over the past

1286
01:09:46,840 --> 01:09:48,920
Speaker 1: two decades. I know it's a franchise. I haven't seen

1287
01:09:48,960 --> 01:09:51,200
Speaker 1: any of the recent ones. You can ask me anything

1288
01:09:51,200 --> 01:09:55,640
Speaker 1: about that. Um. And then any of the Star Wars Mandalorian.

1289
01:09:56,600 --> 01:09:59,400
Speaker 1: Are they too young for Star Wars? I tried, we're

1290
01:09:59,400 --> 01:10:02,720
Speaker 1: not there yet. We are into the Jurassic World. We

1291
01:10:02,800 --> 01:10:05,600
Speaker 1: got to see that in the theater. Um. So I

1292
01:10:06,080 --> 01:10:08,360
Speaker 1: you know what, I I let them lead the way.

1293
01:10:08,520 --> 01:10:11,799
Speaker 1: Someday they'll they'll get into two star Wars, I hope,

1294
01:10:11,920 --> 01:10:15,800
Speaker 1: but personally so, here's my current recommendation, which I just

1295
01:10:15,880 --> 01:10:18,040
Speaker 1: discovered and I don't know how I didn't know about

1296
01:10:18,040 --> 01:10:23,479
Speaker 1: this earlier is yellow Stone. We haven't started it yet.

1297
01:10:23,520 --> 01:10:26,920
Speaker 1: It is remarkable. So Kevin Costner, I mean, who doesn't

1298
01:10:26,920 --> 01:10:30,080
Speaker 1: love Kevin Costner? Right? Like Field of Dreams The Bodyguard.

1299
01:10:30,160 --> 01:10:35,440
Speaker 1: Do you remember the famous Whitney It was Robin Hood,

1300
01:10:35,479 --> 01:10:39,639
Speaker 1: I mean Dances with Wolves. But this is an incredible show.

1301
01:10:39,680 --> 01:10:43,960
Speaker 1: There's four seasons out there. It is like Succession meets

1302
01:10:44,600 --> 01:10:47,960
Speaker 1: I don't there's like a Succession meets the West meets

1303
01:10:48,000 --> 01:10:52,280
Speaker 1: It's worth it. Check it out. Next question, you mentioned

1304
01:10:52,320 --> 01:10:55,679
Speaker 1: some of your mentors. Tell us who helped to shape

1305
01:10:55,720 --> 01:10:59,040
Speaker 1: your career. I have been so lucky that I've had

1306
01:10:59,200 --> 01:11:02,519
Speaker 1: so many amazing mentors and people around me. I may

1307
01:11:02,520 --> 01:11:04,960
Speaker 1: flip this question a little bit, just in the sense of,

1308
01:11:05,000 --> 01:11:08,240
Speaker 1: like some early pieces of advice that have stuck with me,

1309
01:11:08,720 --> 01:11:13,880
Speaker 1: I'll mention two uh one, Um, I played tennis growing up,

1310
01:11:13,920 --> 01:11:16,880
Speaker 1: and and I had a great tennis coach in high school.

1311
01:11:17,000 --> 01:11:19,200
Speaker 1: And one of the things that she said, and I

1312
01:11:19,200 --> 01:11:21,400
Speaker 1: still remember this, this is like so vivid, and I

1313
01:11:21,520 --> 01:11:23,800
Speaker 1: tell it to myself some sometimes, because we we all

1314
01:11:23,840 --> 01:11:26,720
Speaker 1: need to to check ourselves. Is She would tell the

1315
01:11:26,760 --> 01:11:29,880
Speaker 1: story that basically went something like this, that you know,

1316
01:11:29,920 --> 01:11:33,360
Speaker 1: when you're in your twenties and thirties, you're always worrying

1317
01:11:33,400 --> 01:11:36,439
Speaker 1: about what everyone is saying about you, and then when

1318
01:11:36,479 --> 01:11:39,559
Speaker 1: you get into your forties, you realize you don't really

1319
01:11:39,560 --> 01:11:42,000
Speaker 1: care what they're saying about you. And then when you're

1320
01:11:42,000 --> 01:11:44,360
Speaker 1: in your fifties and sixties, you realize they weren't talking

1321
01:11:44,400 --> 01:11:49,599
Speaker 1: about you in the first place. And it is so true, Barry,

1322
01:11:49,680 --> 01:11:52,080
Speaker 1: it is so true. And so sometimes when you're feeling,

1323
01:11:52,360 --> 01:11:54,639
Speaker 1: you know, a little anxious, or you're wondering how something

1324
01:11:54,720 --> 01:11:57,920
Speaker 1: went or whether it was bad good, I use that also.

1325
01:11:58,240 --> 01:11:59,840
Speaker 1: I don't know if you play golf. Do you play golf?

1326
01:11:59,880 --> 01:12:02,479
Speaker 1: I play tennis. I don't play golf all right, So golf.

1327
01:12:02,520 --> 01:12:04,720
Speaker 1: I'm a terrible golfer, but I love to do it.

1328
01:12:04,880 --> 01:12:07,880
Speaker 1: And so golf I used to get really nervous playing

1329
01:12:07,880 --> 01:12:11,040
Speaker 1: with clients and playing with with other people. And then

1330
01:12:11,040 --> 01:12:14,479
Speaker 1: I realized that advice applies to golf as well, because

1331
01:12:14,760 --> 01:12:17,439
Speaker 1: everyone is so obsessed with their own game, they're not

1332
01:12:17,439 --> 01:12:21,280
Speaker 1: paying attention to your game. So there's there's numerous ways

1333
01:12:21,320 --> 01:12:24,160
Speaker 1: you can apply this. The other story that I'll tell

1334
01:12:24,479 --> 01:12:27,439
Speaker 1: really quickly, which has carried with me is um I

1335
01:12:27,439 --> 01:12:31,840
Speaker 1: went to Notre Dame undergrad. One of Notre Dames very

1336
01:12:31,920 --> 01:12:35,519
Speaker 1: long standing, very well known presidents is is a gentleman

1337
01:12:35,520 --> 01:12:39,400
Speaker 1: who passed away various years ago named Father Hesburg. So

1338
01:12:39,479 --> 01:12:41,960
Speaker 1: he was president of the university for thirty five years,

1339
01:12:42,720 --> 01:12:46,439
Speaker 1: very present, very very present. Um. He had an office

1340
01:12:46,439 --> 01:12:48,599
Speaker 1: on the thirteenth floor of the library. So for anyone

1341
01:12:48,680 --> 01:12:51,679
Speaker 1: kind of geeky you could, you could hang out with him,

1342
01:12:51,840 --> 01:12:54,360
Speaker 1: go into his office. He would give you, give you advice.

1343
01:12:54,600 --> 01:12:59,840
Speaker 1: And he had this homily during Lent, which is when

1344
01:13:00,200 --> 01:13:02,640
Speaker 1: Catholics generally you give up something for for lunch, you

1345
01:13:02,640 --> 01:13:07,519
Speaker 1: make some type of sacrifice. And so normally you people

1346
01:13:07,560 --> 01:13:10,040
Speaker 1: like to give up food. They like to they like

1347
01:13:10,080 --> 01:13:12,559
Speaker 1: to become a vegetarian for that that period of time.

1348
01:13:12,880 --> 01:13:16,080
Speaker 1: And so he would tell this story that, Um, you

1349
01:13:16,080 --> 01:13:18,120
Speaker 1: know when he thinks about Lent, you know there are

1350
01:13:18,200 --> 01:13:20,559
Speaker 1: periods of time where you know, at first he thought

1351
01:13:20,600 --> 01:13:23,120
Speaker 1: he would give up drinking. So let's give up drinking

1352
01:13:23,200 --> 01:13:24,559
Speaker 1: for Lent. That's what I'm going to do. And a

1353
01:13:24,560 --> 01:13:27,639
Speaker 1: couple of days into it, it becomes too hard. It's

1354
01:13:27,680 --> 01:13:29,720
Speaker 1: too hard. So then you know what, I'm going to

1355
01:13:29,800 --> 01:13:32,360
Speaker 1: give up smoking. I like to smoke cigars, so I'm

1356
01:13:32,360 --> 01:13:34,320
Speaker 1: going to give up smoking. But then I have a

1357
01:13:34,400 --> 01:13:36,519
Speaker 1: drink in my hand, and that cigar kind of seems

1358
01:13:36,560 --> 01:13:39,519
Speaker 1: to make sense. So that was too hard. And so

1359
01:13:39,840 --> 01:13:42,400
Speaker 1: then I'm thinking, instead of giving something up, why don't

1360
01:13:42,400 --> 01:13:45,679
Speaker 1: I do something challenging yet healthy. I'm going to start running.

1361
01:13:46,080 --> 01:13:49,200
Speaker 1: But then with all the smoking and drinking, there's no

1362
01:13:49,280 --> 01:13:51,720
Speaker 1: way I could be a runner. And so what he

1363
01:13:51,760 --> 01:13:53,920
Speaker 1: said is, you know, we spend all of this time

1364
01:13:54,560 --> 01:13:57,720
Speaker 1: thinking about like how we're making sacrifices, what we're gonna do,

1365
01:13:57,760 --> 01:14:00,400
Speaker 1: And he's like, just be kind, like be aware of

1366
01:14:00,439 --> 01:14:03,799
Speaker 1: how you're treating other people. That's probably the most important

1367
01:14:03,840 --> 01:14:06,200
Speaker 1: thing to do, not just during Lent, but during any

1368
01:14:06,200 --> 01:14:09,720
Speaker 1: time of the year. And I think that's really applicable

1369
01:14:09,800 --> 01:14:13,040
Speaker 1: to your personal life, your professional life. It's like, just

1370
01:14:13,479 --> 01:14:15,240
Speaker 1: you know, take a moment to check yourself and just

1371
01:14:15,360 --> 01:14:18,559
Speaker 1: be kind. I like it. Let's talk about books. What

1372
01:14:18,600 --> 01:14:20,519
Speaker 1: are some of your favorites and what are you reading

1373
01:14:20,600 --> 01:14:23,839
Speaker 1: right now? So I'll give you one from Spanish literature.

1374
01:14:24,360 --> 01:14:27,320
Speaker 1: Um so one of my favorite books of all time

1375
01:14:28,120 --> 01:14:32,760
Speaker 1: was written by a Spanish philosopher named Una Muno, So,

1376
01:14:33,760 --> 01:14:37,160
Speaker 1: a very famous Spanish philosopher. Uh. He wrote this book

1377
01:14:37,240 --> 01:14:42,479
Speaker 1: called San Manuelitude, which is San Manuel Saint Manuel the

1378
01:14:42,600 --> 01:14:46,880
Speaker 1: Good Murder, and it is effectively it's a really short story,

1379
01:14:47,240 --> 01:14:49,560
Speaker 1: but it is about a priest who doesn't believe in

1380
01:14:49,600 --> 01:14:52,240
Speaker 1: God and kind of the impact that he has. It's

1381
01:14:52,360 --> 01:14:55,880
Speaker 1: it's a beautiful book. It's like really challenges a lot

1382
01:14:55,920 --> 01:14:58,240
Speaker 1: of things. So that's one of my all time favorite

1383
01:14:58,240 --> 01:15:01,280
Speaker 1: parable or is it? How how it's like a parable? Yeah,

1384
01:15:01,320 --> 01:15:03,559
Speaker 1: it's like a parable. Um. And so you know, at

1385
01:15:03,600 --> 01:15:05,960
Speaker 1: face value, you think it's an entertaining story, but there's

1386
01:15:06,000 --> 01:15:09,559
Speaker 1: a lot of you know, undercurrents in it. Um. So

1387
01:15:09,640 --> 01:15:13,479
Speaker 1: anyone who has studied Spanish literature from Spain probably knows

1388
01:15:13,600 --> 01:15:16,280
Speaker 1: the author certainly and and and this book pretty well,

1389
01:15:16,880 --> 01:15:19,519
Speaker 1: um in terms of some of the things that I'm

1390
01:15:19,600 --> 01:15:23,920
Speaker 1: reading right now. So another podcast that I'm a big

1391
01:15:23,960 --> 01:15:28,519
Speaker 1: fan of. Have you listened to Dak Shepherd's podcasts Armchair Expert?

1392
01:15:28,560 --> 01:15:31,559
Speaker 1: Have you ever know? But it sounds familiar. So Dak

1393
01:15:31,560 --> 01:15:36,080
Speaker 1: Shepherd actor, comedic actor. Um, he also happened to study

1394
01:15:36,640 --> 01:15:39,920
Speaker 1: I believe anthropology at U c l A. He does

1395
01:15:39,960 --> 01:15:43,400
Speaker 1: an amazing podcast right interviews people from all different walks

1396
01:15:43,439 --> 01:15:49,160
Speaker 1: of life, um, politicians, authors, scientists, um, you name it.

1397
01:15:49,240 --> 01:15:52,160
Speaker 1: And so he had a recent guest on Anna lemke

1398
01:15:52,960 --> 01:15:55,599
Speaker 1: Um who was a psychiatrist, and she wrote this book,

1399
01:15:55,600 --> 01:15:58,679
Speaker 1: Dopamine Nation, which is I'm in the middle of that.

1400
01:15:58,840 --> 01:16:02,439
Speaker 1: It's really fascinating ing. It's kind of like the science

1401
01:16:02,479 --> 01:16:05,800
Speaker 1: of addiction, and it's not addiction in your traditional sense.

1402
01:16:05,800 --> 01:16:08,800
Speaker 1: It's like addiction to digital devices and some of the

1403
01:16:08,840 --> 01:16:11,639
Speaker 1: things that are kind of plaguing modern times right now.

1404
01:16:11,760 --> 01:16:13,840
Speaker 1: So I haven't finished it. I'm like square in the

1405
01:16:13,840 --> 01:16:16,559
Speaker 1: middle of it, and it's been a really really good read.

1406
01:16:17,240 --> 01:16:19,600
Speaker 1: And then the next one that I'm reading, which is

1407
01:16:19,640 --> 01:16:23,559
Speaker 1: great because it's short stories, is um. David Sedaris has

1408
01:16:23,600 --> 01:16:26,280
Speaker 1: a new collection it's called The Best of Me that

1409
01:16:26,520 --> 01:16:29,000
Speaker 1: is kind of vignettes from his life and some of

1410
01:16:29,040 --> 01:16:31,200
Speaker 1: his best stories that he's written in the past. So

1411
01:16:31,240 --> 01:16:32,720
Speaker 1: I like anything we can kind of get like a

1412
01:16:32,720 --> 01:16:35,439
Speaker 1: little snippet and you finish it, start to finish. He

1413
01:16:35,720 --> 01:16:38,880
Speaker 1: and I believe his sister are both hilarious, and they

1414
01:16:38,920 --> 01:16:42,160
Speaker 1: are hilarious hilarious, right, I think David Sedaris. You know

1415
01:16:42,200 --> 01:16:46,160
Speaker 1: those books, the books where you laugh out loud. I

1416
01:16:46,240 --> 01:16:48,559
Speaker 1: think you're reading like it's easy to laugh out loud

1417
01:16:48,600 --> 01:16:51,559
Speaker 1: you're in person. But when you're reading a book, someone

1418
01:16:51,600 --> 01:16:55,840
Speaker 1: who's humor comes through on a page. Insanely talented writer

1419
01:16:56,040 --> 01:17:00,720
Speaker 1: in my book, absolutely Our final two questions, what sort

1420
01:17:00,720 --> 01:17:03,439
Speaker 1: of advice would you give to a recent college grad

1421
01:17:03,520 --> 01:17:08,240
Speaker 1: who was interested in a career in either capital markets,

1422
01:17:08,320 --> 01:17:12,519
Speaker 1: derivatives or wealth management. I would say it's an amazing career,

1423
01:17:12,720 --> 01:17:16,640
Speaker 1: so I would highly recommend it. I would say, you know,

1424
01:17:16,720 --> 01:17:19,639
Speaker 1: one piece of advice if you go into it, don't

1425
01:17:19,760 --> 01:17:22,200
Speaker 1: don't exclude wealth management. I think a lot of times,

1426
01:17:22,200 --> 01:17:26,519
Speaker 1: you know the the sexier UM analyst programs and entry

1427
01:17:26,560 --> 01:17:29,439
Speaker 1: level programs, everyone historically has always focused so much on

1428
01:17:29,800 --> 01:17:33,240
Speaker 1: investment banking and sales and trading. Don't ignore wealth management.

1429
01:17:33,240 --> 01:17:35,559
Speaker 1: It's a high growth rate, and it's a It's a

1430
01:17:35,640 --> 01:17:38,920
Speaker 1: really interesting and rewarding part of the market. The other

1431
01:17:38,960 --> 01:17:41,040
Speaker 1: thing that I would say is, I think there's this

1432
01:17:41,120 --> 01:17:46,040
Speaker 1: habit that when you graduate from school and you get

1433
01:17:46,120 --> 01:17:49,120
Speaker 1: your first job, you basically have this moment you're like,

1434
01:17:49,120 --> 01:17:51,360
Speaker 1: I did it right. I've been planning for so long.

1435
01:17:51,680 --> 01:17:54,320
Speaker 1: I you know, I was building up my resume and

1436
01:17:54,400 --> 01:17:56,519
Speaker 1: high school so I would get into the right college.

1437
01:17:56,640 --> 01:17:59,519
Speaker 1: And I did well in college, and I you know,

1438
01:17:59,560 --> 01:18:01,800
Speaker 1: applied to various jobs and now I have this job,

1439
01:18:01,840 --> 01:18:04,880
Speaker 1: and like I've done it. And so we spend you know,

1440
01:18:04,960 --> 01:18:07,679
Speaker 1: the big chunk of our life planning for the next phase.

1441
01:18:07,720 --> 01:18:12,200
Speaker 1: So approaching everything as though you're always a student, never

1442
01:18:12,280 --> 01:18:15,400
Speaker 1: stop planning. Always think about that, right, Like you have

1443
01:18:15,439 --> 01:18:17,080
Speaker 1: to do a good job at what you're doing. That's

1444
01:18:17,120 --> 01:18:20,280
Speaker 1: table stakes. But having this constant it can change this

1445
01:18:20,400 --> 01:18:22,720
Speaker 1: constant plan, like what do I want to do right

1446
01:18:22,800 --> 01:18:25,640
Speaker 1: in five years. So it's a great career, it's a

1447
01:18:25,640 --> 01:18:28,800
Speaker 1: great industry. It's a growing area of our industry. But

1448
01:18:28,840 --> 01:18:32,599
Speaker 1: I think if you bring that same innovation planning drive

1449
01:18:32,680 --> 01:18:34,760
Speaker 1: to it, you'll be just amazed at where it takes you.

1450
01:18:35,400 --> 01:18:38,000
Speaker 1: And our final question, what do you know about the

1451
01:18:38,040 --> 01:18:43,400
Speaker 1: world of markets and investing today you wish you knew

1452
01:18:43,880 --> 01:18:47,200
Speaker 1: years ago when you were first getting started. So I

1453
01:18:47,200 --> 01:18:51,400
Speaker 1: mean so many things, probably so many things. I would

1454
01:18:51,439 --> 01:18:55,960
Speaker 1: say a couple of things as I've progressed in the industry,

1455
01:18:56,000 --> 01:18:58,280
Speaker 1: and some of the things that I've thought about is

1456
01:18:59,120 --> 01:19:02,000
Speaker 1: when you get very comfortable, is when you get a

1457
01:19:02,000 --> 01:19:05,800
Speaker 1: little lazy and complacent, right, So this idea that one

1458
01:19:05,920 --> 01:19:08,120
Speaker 1: something you're you're doing it and it almost becomes at

1459
01:19:08,120 --> 01:19:10,960
Speaker 1: first it's really challenging, but you find yourself in that

1460
01:19:11,520 --> 01:19:15,360
Speaker 1: environment where it's on autopilot pivot, right. So so find

1461
01:19:15,360 --> 01:19:18,360
Speaker 1: a way to either expand your responsibilities, learn something new,

1462
01:19:18,439 --> 01:19:21,320
Speaker 1: reach out to colleagues. And so there's just it's such

1463
01:19:21,320 --> 01:19:24,120
Speaker 1: a vast industry. And I think it's going back to

1464
01:19:24,120 --> 01:19:27,200
Speaker 1: my comment about always a student. We're always learning things, right,

1465
01:19:27,240 --> 01:19:29,960
Speaker 1: So I think that's one component to it. And then

1466
01:19:30,000 --> 01:19:33,719
Speaker 1: another thing that I'll share is this is something Jamie Ferreese,

1467
01:19:33,720 --> 01:19:36,400
Speaker 1: who is the former he let our Institutional Clients group.

1468
01:19:36,439 --> 01:19:39,120
Speaker 1: He as a former president of City. You know, one

1469
01:19:39,120 --> 01:19:40,479
Speaker 1: of the things that he shared with me is I

1470
01:19:40,560 --> 01:19:43,080
Speaker 1: was playing a terrible golf round with him. By the way,

1471
01:19:43,240 --> 01:19:47,920
Speaker 1: one of one of my embarrassing golf golf rounds is

1472
01:19:48,000 --> 01:19:50,120
Speaker 1: I asked him a question about, you know, just thinking

1473
01:19:50,120 --> 01:19:52,920
Speaker 1: about his success and how he really rose through the

1474
01:19:53,000 --> 01:19:55,720
Speaker 1: ranks at City, and he said, you know what, one

1475
01:19:55,720 --> 01:19:58,680
Speaker 1: of the challenges that I have is that, you know,

1476
01:19:58,720 --> 01:20:02,360
Speaker 1: you reach a certain seniority level and people don't challenge

1477
01:20:02,360 --> 01:20:06,719
Speaker 1: you anymore. Every idea that you have, everyone says is brilliant,

1478
01:20:06,840 --> 01:20:09,080
Speaker 1: and it's it's not the case. It's certainly not the case.

1479
01:20:09,120 --> 01:20:12,120
Speaker 1: It can't be the case. And so what he said

1480
01:20:12,160 --> 01:20:13,840
Speaker 1: is he's like, you know, you have to really create

1481
01:20:13,840 --> 01:20:17,479
Speaker 1: those opportunities and environments where people can challenge you. Right.

1482
01:20:17,520 --> 01:20:22,800
Speaker 1: And the second part of that is that pivoting or

1483
01:20:22,920 --> 01:20:25,120
Speaker 1: changing your mind is not a sign of weakness. It's

1484
01:20:25,120 --> 01:20:27,200
Speaker 1: actually a sign of strength. Right, So to be able

1485
01:20:27,280 --> 01:20:30,320
Speaker 1: to admit that you did something wrong or that you

1486
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Speaker 1: made the wrong decision, but you're going to change that

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Speaker 1: and you have an action plan. I think we tend

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01:20:35,680 --> 01:20:40,200
Speaker 1: to value things like confidence and conviction, but humility is

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Speaker 1: a virtue, and I think knowing and admitting when you're

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01:20:43,439 --> 01:20:47,040
Speaker 1: wrong is actually a superpower that's way underrated. I couldn't

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Speaker 1: agree more. Um, thank you, Kristen for being so generous

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Speaker 1: with your time. We have been speaking with Kristin Biddely Michelle,

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Speaker 1: head of North American Investments for City Global Wealth. If

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Speaker 1: you enjoy this conversation, well, be sure and check out

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Speaker 1: any of the previous four hundred plus we've done over

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Speaker 1: the past eight years. You can find those at iTunes, Spotify,

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Speaker 1: wherever you get your favorite podcast from. We love your comments, feedback,

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01:21:14,800 --> 01:21:18,479
Speaker 1: end suggestions right to us at m IB podcast at

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Speaker 1: Bloomberg dot net. Sign up from my Daily reads at

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01:21:22,240 --> 01:21:25,599
Speaker 1: rid Halts dot com. Follow me on Twitter at rid Halts.

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Speaker 1: I would be remiss if I did not thank the

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Speaker 1: crack team who helps us put these conversations together each week.

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01:21:32,560 --> 01:21:36,600
Speaker 1: My audio engineer is Justin Miller Atka Val Brond is

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01:21:36,640 --> 01:21:41,160
Speaker 1: my project director. Paris Wold is my producer. Sean Russo

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01:21:41,320 --> 01:21:44,920
Speaker 1: is my head of research. I'm Barry Hults. You've been

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Speaker 1: listening to Masters in Business on Bloomberg radioa