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Speaker 1: Let's get to our guest, J. Pulaski, founder and principle

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Speaker 1: at TPW Advisory. Well, we had some week earnings after

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Speaker 1: the bell and and that may be coloring some of

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Speaker 1: the mood now the weak economic data J that we

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Speaker 1: saw during the session. UM throws a little bit of

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Speaker 1: cold water on this thesis that companies and consumers are

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Speaker 1: are doing pretty well with with higher rates. UM, stalks

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Speaker 1: are up today, but that might be really on the

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Speaker 1: bad news is good news kind of thinking. But that

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Speaker 1: could morph into recession thinking pretty soon. Your thoughts, Well,

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Speaker 1: he covered a lot of ground there, Brian, So, UM,

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Speaker 1: I think, first of all, it's nice to see some

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Speaker 1: green on the screen. It's nice to see some green

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Speaker 1: on the screen for more than a day or two. UM.

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Speaker 1: I think we've only been up what two of the

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Speaker 1: last ten of twelve weeks, so it's been a very

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Speaker 1: uh difficult period for long only investors, which makes up

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Speaker 1: the best folk of the investment community. And UM, I

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Speaker 1: have to think that, uh, we're you know, we're an

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Speaker 1: a bottoming process. That's been our view for some time

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Speaker 1: and we have had some solid earnings results and our

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Speaker 1: our thinking has been continues to be that high nominal growth. Uh.

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Speaker 1: The environment that we're a nominal growth is growing in

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Speaker 1: the US and in Europe six per annum um. That

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Speaker 1: allows for earnings growth to be met because revenues are

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Speaker 1: growing at a double digit uh pace and companies have

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Speaker 1: the ability to grow earnings. I think the consensus for

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Speaker 1: Q two in the US is four year over year,

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Speaker 1: and it seems like so far that's that's being met

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Speaker 1: in earnings. And what really are important at this point,

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Speaker 1: we've had the valuation kind of reset um, the markets

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Speaker 1: down in the bear market, and I get that. I

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Speaker 1: I just want to you know, the point being that,

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Speaker 1: you know, we've had about a good month here, but

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Speaker 1: now all of a a sudden, there's a little bit more

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Speaker 1: to worry about. But that's good. Seems like you're still

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Speaker 1: very positive. Uh, well, yes, we're We think we're in

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Speaker 1: a bottoming process. And the recession worries. Uh. You know,

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Speaker 1: we'll maybe get more of that next week with the

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Speaker 1: first readings of Q two. But in our view, UM,

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Speaker 1: the reality of a fully employed workforce, a workforce that's

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Speaker 1: fully cashed up, a company, corporate sector fully cast up,

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Speaker 1: a bank infector that's in robust shape. None of that

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Speaker 1: really suggests recession or um, you know, something like an

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Speaker 1: O eight situation, which some people have been talking about.

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Speaker 1: And how do you look at the China recovery right now?

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Speaker 1: It's it's been shaky to say the least. How big

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Speaker 1: the swing factor is the China story to you? Um,

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Speaker 1: we think it's quite large, actually, Van because um, you know,

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Speaker 1: one of the things that keeps us constructive on the

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Speaker 1: global economy is and it's somewhat desynchronized because the US

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Speaker 1: in Europe are clearly slowing. There's no argument there. But

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Speaker 1: slowing does not mean recession, does not mean collapsed, while

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Speaker 1: China is now accelerating out of its lockdown period and

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Speaker 1: the June p M I s, for example in China

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Speaker 1: were the best have been in a year. Jay, we

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Speaker 1: were any the last segment just talking about how optimistic

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Speaker 1: you seem to be about the China recovery, which is

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Speaker 1: probably what could actually help in the second half. I'm

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Speaker 1: just wondering in terms of exposure, how big of exposure

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Speaker 1: do you have in China right now? Yeah, we we

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Speaker 1: have had in remain overweight Chinese equity and Chinese fixed income.

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Speaker 1: We have exposure through the A shares, through the tech

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Speaker 1: sector through k Web, which I would just note is

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Speaker 1: up from it's April low. China and the innovation space

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Speaker 1: led us into the bear market back in Q one,

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Speaker 1: and it's leading us out of the bear market. We

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Speaker 1: believe that both China equity and innovation equity such as

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Speaker 1: our Tesla et cetera, have bottomed and are pointing the

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Speaker 1: direction forward. So we're overweight both debt and equity in

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Speaker 1: China and um, we think that the second half is

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Speaker 1: going to be um, quite constructive. Not they're not going

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Speaker 1: to make their five percent growth targets for the year,

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Speaker 1: but that they grow at five percent in the second

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Speaker 1: half of the year and helped the global economy avert

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Speaker 1: a global economic recession. We think that it begs the

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Speaker 1: question about confidence in policymakers. I mean to the extent

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Speaker 1: that the mess that we're in here and have been

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Speaker 1: in has been largely due in a sense to policymaking,

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Speaker 1: and it's sort of on steroids in China. Do you

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Speaker 1: feel comfortable with policymaking going forward? UM, yeah, I think

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Speaker 1: we'd probably take a little bit of issue with that. Uh,

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Speaker 1: with that analysis, Brian, we think that there's been a

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Speaker 1: lot of things like the Russia invasion that disrupted energy

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Speaker 1: and food costs and supplies is really driving a lot

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Speaker 1: of what's happened, particularly on the inflation frontum. But in

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Speaker 1: our mind we think actually China has been quite limited

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Speaker 1: with their policy action, both monetary and fiscal, and we

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Speaker 1: note that they have room UH to do much more

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Speaker 1: both fiscal and monetary um zero COVID. They seem to

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Speaker 1: be adjusting that um and the property sector is obviously

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Speaker 1: an issue, but I believe given how important it is

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Speaker 1: to the broad Chinese economy, that they're not going to

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Speaker 1: let it UH implode. And therefore, um, you know, China

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Speaker 1: equity is extremely keep it's cheap as it's been in

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Speaker 1: twenty years versus the rest of the world. That seems

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Speaker 1: to us to be a reasonably place to be. And

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Speaker 1: as as I pointed out, uh k web is up

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Speaker 1: twenty five sent from the low in the spring, arc

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Speaker 1: is from its low in the spring. Things have moved considerably,

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Speaker 1: and I think the market in many instances is kind

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Speaker 1: of behind the curve. And our view is that earnings

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Speaker 1: are going to be the bridge that gets us between

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Speaker 1: now and when inflation peaks in the US. We expect

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Speaker 1: that in the next month or two. Obviously it's been

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Speaker 1: a long way, but we expected in the next month

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Speaker 1: or two. And history is very clear. Once inflation clearly peaks,

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Speaker 1: stocks move aggressively. Happened in seventies, happened in the eighties,

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Speaker 1: happened in the nineties, and we think it will happen

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Speaker 1: in the twenty point. And what sort of indicators do

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Speaker 1: you look at to look for that peak inflation? Do

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Speaker 1: you look at margins? Do you look at you know, efects, volatility?

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Speaker 1: What is it that you look at to see that movie?

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Speaker 1: Perhaps prices are going to be cooling off from here?

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Speaker 1: We haven't. We've been looking for a while of on.

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Speaker 1: I mean, I was part of team Transitory, so it's

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Speaker 1: been We've been quite wrong, and it's been tameful. And

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Speaker 1: I think that's one of the reasons why the market

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Speaker 1: is so hesitant to embrace the idea that maybe we're

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Speaker 1: at a bottoming process. The kates what we're looking for

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Speaker 1: is UH rates, we believe are telling us that inflation

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Speaker 1: worries have pete. Rake evens are telling us inflation worries

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Speaker 1: have have have pete commodities have rolled over aggressively. UH

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Speaker 1: In the news segment. You talked about the Philly numbers.

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Speaker 1: Our view on the Philly numbers were that the supplier

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Speaker 1: and order delivery data was very strong to suggest that

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Speaker 1: supply chain worries are are ebbing, and that's very yeah,

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Speaker 1: good point. J will leave it there. Founder in principle

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Speaker 1: at t p W Advisory, this is Bloomberg