Speaker 1: Let's get to our guest who joins us here in
Speaker 1: New York, Nicole Webb, Senior VP and financial advisor at
Speaker 1: Wealth Enhancement Group. Thanks for joining us. A pleasure to
Speaker 1: see you in person after what we've been through over
Speaker 1: it feels like the last two and a half plus
Speaker 1: going on three years, right, Yeah, it's it's absolutely fun
Speaker 1: to be here with And is that what we're seeing
Speaker 1: in the market kind of a resumption of normalcy. We're
Speaker 1: seeing a lot of the air come out of those
Speaker 1: high flying tech stocks that everyone was pounding the table
Speaker 1: out during the pandemic. Yes, I absolutely think that right
Speaker 1: now a lot of these trades are all about the
Speaker 1: American psyche. It's no surprise to me that we're seeing
Speaker 1: resilience McDonald, Chippotle. Why people are driving their kids to
Speaker 1: school again, kids are doing sports Boeing, there's a demand
Speaker 1: for more airplanes. This isn't shocking visa. People want to
Speaker 1: spend and the consumer still looks pretty strong. The economy
Speaker 1: as a whole hasn't weakened yet. And right now as
Speaker 1: we're seeing some of these cyclical trades where mega tech
Speaker 1: is pulling back, but there's these under lying blue chip
Speaker 1: companies that are doing so well that bodes well for
Speaker 1: the FED and what the FED may do next. We
Speaker 1: want strength and resilience, that's broad, but we also need
Speaker 1: a pullback here that that makes people a little less wealthy,
Speaker 1: and that cap waiting of mega technology may do that
Speaker 1: without systemically breaking That's an interesting point, Nicole. I mean,
Speaker 1: that's interesting. But having said that, the as you just
Speaker 1: alluded to as well, the FED needs the economy too weaken.
Speaker 1: It needs those that's spending to be less strong if
Speaker 1: they are going to reign in price hikes. Absolutely, but
Speaker 1: this is where I think we should focus a little
Speaker 1: bit more on the cap waiting of mega technology and
Speaker 1: the wealth destruction in the pullback in those in those companies.
Speaker 1: And when we talk about, even though it's been thrown
Speaker 1: to the wayside, this notion of a soft landing, it
Speaker 1: wasn't destruction of everything that the soft landing was this
Speaker 1: idea that perhaps we can create a pullback, which we
Speaker 1: saw initially simply in the duration sensitivity of these technology companies. Um,
Speaker 1: but there's still going to be pockets of strength. I
Speaker 1: don't think we want the the American consumer. I don't
Speaker 1: think we want massive layoffs or this deep profits recession um.
Speaker 1: So I do think a lot of what's happening right
Speaker 1: now this week could bode well for the next FED
Speaker 1: meeting in the American public. So we have the GDP
Speaker 1: report for Q three to six. That's not bad after
Speaker 1: a lot of negativity in the first half of the year, right.
Speaker 1: And then on top of that, if you look at
Speaker 1: the GDP price index four point one percent, which is
Speaker 1: less than half what we saw in Q two. So
Speaker 1: it may be that we've seen the peak in inflation.
Speaker 1: Things are softening just a bit, prices are coming down,
Speaker 1: and maybe we can have a serious conversation about the
Speaker 1: FED pivoted FED pivot or I think more about a
Speaker 1: FED stall out, the notion of a pivot to an
Speaker 1: ease the moving of levers um. We don't want that,
Speaker 1: and I can't foresee it because again, duration sensitivity would
Speaker 1: shoot the market value of some of these more sensitive
Speaker 1: stocks back up, and they don't want that either. That's
Speaker 1: part of financial tightening, right. They want the equity market
Speaker 1: to settle down, they really do, and so that sensitivity
Speaker 1: will remain. Will see some of that probably more stagnant
Speaker 1: interest rate environment, That holding pattern will be difficult, especially
Speaker 1: for technology companies. But what we still want or hope
Speaker 1: for is some strength and resilience in the broader market
Speaker 1: sectors where Americans are still living a fairly normal life.
Speaker 1: And and that's some of those trades that I was
Speaker 1: mentioning earlier. So what's the bond market telling in, Nico
Speaker 1: m h. The bond market is very interesting, uh, in
Speaker 1: that I believe that it has come to close to
Speaker 1: a bottom. And because of that, you know, it's probably
Speaker 1: in my twenty years doing this the time that clients
Speaker 1: aren't objecting to the same notion of why am I
Speaker 1: investing in bonds? They don't do anything for me, Nicole,
Speaker 1: given what's been going on market, WI is it going
Speaker 1: to change the name of your company to the Wealth
Speaker 1: Protection Group? I actually really like that one. Uh. You know.
Speaker 1: One of the things that I will say, you know,
Speaker 1: before we move on from fixed income is twofold. When
Speaker 1: we look at the equity markets right now, it's pretty
Speaker 1: clear that this isn't cash moving in from the sideline.
Speaker 1: So when we're looking at daily volumes, what we're seeing
Speaker 1: is these trades out of technology, cyclical trades into the
Speaker 1: industrials um and on the fixed income side. The reason
Speaker 1: why because you can pick up the two year treasury
Speaker 1: hovering around four to four and a half percent on
Speaker 1: any given day, and and that that works well for
Speaker 1: people in this environment. UM, when it comes to reaching
Speaker 1: the bottom of the bond market forward looking, we think
Speaker 1: we're either in a holding pattern. We might even see
Speaker 1: an equity market rally if we only see fifty base
Speaker 1: this points in December. UM, just simply on this notion
Speaker 1: of a pivot. And so for all of those reasons,
Speaker 1: a great time to be buying in the fixed income market.
Speaker 1: So Rischus in Hong Kong, he's going to ask you
Speaker 1: about opportunities where he happens to be. But I want
Speaker 1: to get to a lot of the volatility that we
Speaker 1: have seen and how that impacts investor psychology. You and
Speaker 1: I were talking during the break about the fact that
Speaker 1: so many people who are now participants in the market
Speaker 1: are unaccustomed, not really thinking about how to deal with
Speaker 1: this enormous volatility. We have seen huge price wings there
Speaker 1: in for the long term, and yet that creates that
Speaker 1: volatility creates an emotional response, and sometimes they become reactive.
Speaker 1: Right Absolutely. I think when I think about the world,
Speaker 1: we live in today, which has been intensified by COVID.
Speaker 1: So many things move at a robotic tempo, not necessarily
Speaker 1: a human tempo, and and so unjust lee retail investors
Speaker 1: who are trying to do the right thing participate in
Speaker 1: the equity markets are being hurt by not fully being
Speaker 1: able to digest what all of this volatility means, but
Speaker 1: feeling like they're doing the wrong thing when they're not participating.
Speaker 1: It's a tough moment in time for them. And UM,
Speaker 1: I actually have some empathy in that regard. Um, I'm
Speaker 1: not gonna ask you about what's going on in this
Speaker 1: part of one. If you look at the Hong Kong market,
Speaker 1: Hank saying, is it levels not seen since two thousand
Speaker 1: and nine, would you believe? And on top of that,
Speaker 1: we've got pe ratios of about five and a half
Speaker 1: to six six or thereabouts. Tell me something. I mean
Speaker 1: that would normally be a screaming by, but it isn't
Speaker 1: for many. Yeah, it is a screaming by. Uh. You know,
Speaker 1: if we track back the US markets versus non and
Speaker 1: you can go developed Europe Asia. Um, you know, these
Speaker 1: waves about performance are somewhat cyclical. I was saying that
Speaker 1: the broad markets were a buy when they were trading
Speaker 1: at a thirty percent discount to the US markets. Looking
Speaker 1: at them today, they look like an absolute by when
Speaker 1: we think about the heads of the economic table um,
Speaker 1: there's certainly no reason to be so US centric or dominant.
Speaker 1: It really though, comes down to anticipation of are you
Speaker 1: managing a p n L for day to day returns?
Speaker 1: Are you a long term investor? Someone like myself certainly
Speaker 1: has an overwaiting right now to the international landscape for
Speaker 1: money that I'm not going to touch for a long time.
Speaker 1: So generally speaking, if we were to tease out some
Speaker 1: themes here, are you avoiding technology? Are you looking at
Speaker 1: more economically sensitive areas of the market, industrials, materials, that
Speaker 1: sort of thing. I like to think about diversification across
Speaker 1: styles of investing. So when it comes to passive investing,
Speaker 1: the SNP gives you that predominant waiting towards technology. When
Speaker 1: it comes to your active and tactical compos own and
Speaker 1: I think that's where you get mindful about where am
Speaker 1: I making my purchases to round out that construction and
Speaker 1: so taking a value cyclical industrial tilt. As we anticipate
Speaker 1: a slower growth environment that's paid to wait. Idea around
Speaker 1: dividend paying stocks, picking them up at attractive prices is great.
Speaker 1: And then when you think about that, that that tactical
Speaker 1: component of where are we in a global market cycle? Again,
Speaker 1: there's so much opportunity outside and while we might not
Speaker 1: give back purchasing power the US dollar may say strong
Speaker 1: for a bit um, on the far side of that,
Speaker 1: I think there is this resurgence of growth abroad. Nicole,
Speaker 1: thank you so much for joining us today. Just Nicole Webscinia,
Speaker 1: vice president and Financial Advice and Wealth Enhancement Group Enhancement Group,
Speaker 1: giving her take on I was getting on the market wise.
Speaker 1: They've got a lot more, including a data check coming up.
Speaker 1: This is bloom Bag