WEBVTT - Nicole Webb on the Markets (Radio)

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<v Speaker 1>Let's get to our guest who joins us here in

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<v Speaker 1>New York, Nicole Webb, Senior VP and financial advisor at

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<v Speaker 1>Wealth Enhancement Group. Thanks for joining us. A pleasure to

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<v Speaker 1>see you in person after what we've been through over

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<v Speaker 1>it feels like the last two and a half plus

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<v Speaker 1>going on three years, right, Yeah, it's it's absolutely fun

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<v Speaker 1>to be here with And is that what we're seeing

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<v Speaker 1>in the market kind of a resumption of normalcy. We're

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<v Speaker 1>seeing a lot of the air come out of those

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<v Speaker 1>high flying tech stocks that everyone was pounding the table

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<v Speaker 1>out during the pandemic. Yes, I absolutely think that right

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<v Speaker 1>now a lot of these trades are all about the

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<v Speaker 1>American psyche. It's no surprise to me that we're seeing

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<v Speaker 1>resilience McDonald, Chippotle. Why people are driving their kids to

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<v Speaker 1>school again, kids are doing sports Boeing, there's a demand

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<v Speaker 1>for more airplanes. This isn't shocking visa. People want to

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<v Speaker 1>spend and the consumer still looks pretty strong. The economy

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<v Speaker 1>as a whole hasn't weakened yet. And right now as

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<v Speaker 1>we're seeing some of these cyclical trades where mega tech

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<v Speaker 1>is pulling back, but there's these under lying blue chip

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<v Speaker 1>companies that are doing so well that bodes well for

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<v Speaker 1>the FED and what the FED may do next. We

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<v Speaker 1>want strength and resilience, that's broad, but we also need

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<v Speaker 1>a pullback here that that makes people a little less wealthy,

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<v Speaker 1>and that cap waiting of mega technology may do that

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<v Speaker 1>without systemically breaking That's an interesting point, Nicole. I mean,

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<v Speaker 1>that's interesting. But having said that, the as you just

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<v Speaker 1>alluded to as well, the FED needs the economy too weaken.

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<v Speaker 1>It needs those that's spending to be less strong if

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<v Speaker 1>they are going to reign in price hikes. Absolutely, but

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<v Speaker 1>this is where I think we should focus a little

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<v Speaker 1>bit more on the cap waiting of mega technology and

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<v Speaker 1>the wealth destruction in the pullback in those in those companies.

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<v Speaker 1>And when we talk about, even though it's been thrown

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<v Speaker 1>to the wayside, this notion of a soft landing, it

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<v Speaker 1>wasn't destruction of everything that the soft landing was this

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<v Speaker 1>idea that perhaps we can create a pullback, which we

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<v Speaker 1>saw initially simply in the duration sensitivity of these technology companies. Um,

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<v Speaker 1>but there's still going to be pockets of strength. I

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<v Speaker 1>don't think we want the the American consumer. I don't

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<v Speaker 1>think we want massive layoffs or this deep profits recession um.

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<v Speaker 1>So I do think a lot of what's happening right

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<v Speaker 1>now this week could bode well for the next FED

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<v Speaker 1>meeting in the American public. So we have the GDP

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<v Speaker 1>report for Q three to six. That's not bad after

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<v Speaker 1>a lot of negativity in the first half of the year, right.

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<v Speaker 1>And then on top of that, if you look at

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<v Speaker 1>the GDP price index four point one percent, which is

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<v Speaker 1>less than half what we saw in Q two. So

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<v Speaker 1>it may be that we've seen the peak in inflation.

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<v Speaker 1>Things are softening just a bit, prices are coming down,

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<v Speaker 1>and maybe we can have a serious conversation about the

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<v Speaker 1>FED pivoted FED pivot or I think more about a

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<v Speaker 1>FED stall out, the notion of a pivot to an

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<v Speaker 1>ease the moving of levers um. We don't want that,

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<v Speaker 1>and I can't foresee it because again, duration sensitivity would

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<v Speaker 1>shoot the market value of some of these more sensitive

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<v Speaker 1>stocks back up, and they don't want that either. That's

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<v Speaker 1>part of financial tightening, right. They want the equity market

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<v Speaker 1>to settle down, they really do, and so that sensitivity

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<v Speaker 1>will remain. Will see some of that probably more stagnant

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<v Speaker 1>interest rate environment, That holding pattern will be difficult, especially

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<v Speaker 1>for technology companies. But what we still want or hope

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<v Speaker 1>for is some strength and resilience in the broader market

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<v Speaker 1>sectors where Americans are still living a fairly normal life.

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<v Speaker 1>And and that's some of those trades that I was

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<v Speaker 1>mentioning earlier. So what's the bond market telling in, Nico

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<v Speaker 1>m h. The bond market is very interesting, uh, in

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<v Speaker 1>that I believe that it has come to close to

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<v Speaker 1>a bottom. And because of that, you know, it's probably

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<v Speaker 1>in my twenty years doing this the time that clients

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<v Speaker 1>aren't objecting to the same notion of why am I

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<v Speaker 1>investing in bonds? They don't do anything for me, Nicole,

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<v Speaker 1>given what's been going on market, WI is it going

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<v Speaker 1>to change the name of your company to the Wealth

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<v Speaker 1>Protection Group? I actually really like that one. Uh. You know.

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<v Speaker 1>One of the things that I will say, you know,

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<v Speaker 1>before we move on from fixed income is twofold. When

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<v Speaker 1>we look at the equity markets right now, it's pretty

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<v Speaker 1>clear that this isn't cash moving in from the sideline.

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<v Speaker 1>So when we're looking at daily volumes, what we're seeing

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<v Speaker 1>is these trades out of technology, cyclical trades into the

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<v Speaker 1>industrials um and on the fixed income side. The reason

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<v Speaker 1>why because you can pick up the two year treasury

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<v Speaker 1>hovering around four to four and a half percent on

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<v Speaker 1>any given day, and and that that works well for

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<v Speaker 1>people in this environment. UM, when it comes to reaching

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<v Speaker 1>the bottom of the bond market forward looking, we think

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<v Speaker 1>we're either in a holding pattern. We might even see

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<v Speaker 1>an equity market rally if we only see fifty base

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<v Speaker 1>this points in December. UM, just simply on this notion

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<v Speaker 1>of a pivot. And so for all of those reasons,

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<v Speaker 1>a great time to be buying in the fixed income market.

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<v Speaker 1>So Rischus in Hong Kong, he's going to ask you

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<v Speaker 1>about opportunities where he happens to be. But I want

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<v Speaker 1>to get to a lot of the volatility that we

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<v Speaker 1>have seen and how that impacts investor psychology. You and

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<v Speaker 1>I were talking during the break about the fact that

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<v Speaker 1>so many people who are now participants in the market

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<v Speaker 1>are unaccustomed, not really thinking about how to deal with

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<v Speaker 1>this enormous volatility. We have seen huge price wings there

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<v Speaker 1>in for the long term, and yet that creates that

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<v Speaker 1>volatility creates an emotional response, and sometimes they become reactive.

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<v Speaker 1>Right Absolutely. I think when I think about the world,

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<v Speaker 1>we live in today, which has been intensified by COVID.

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<v Speaker 1>So many things move at a robotic tempo, not necessarily

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<v Speaker 1>a human tempo, and and so unjust lee retail investors

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<v Speaker 1>who are trying to do the right thing participate in

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<v Speaker 1>the equity markets are being hurt by not fully being

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<v Speaker 1>able to digest what all of this volatility means, but

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<v Speaker 1>feeling like they're doing the wrong thing when they're not participating.

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<v Speaker 1>It's a tough moment in time for them. And UM,

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<v Speaker 1>I actually have some empathy in that regard. Um, I'm

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<v Speaker 1>not gonna ask you about what's going on in this

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<v Speaker 1>part of one. If you look at the Hong Kong market,

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<v Speaker 1>Hank saying, is it levels not seen since two thousand

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<v Speaker 1>and nine, would you believe? And on top of that,

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<v Speaker 1>we've got pe ratios of about five and a half

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<v Speaker 1>to six six or thereabouts. Tell me something. I mean

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<v Speaker 1>that would normally be a screaming by, but it isn't

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<v Speaker 1>for many. Yeah, it is a screaming by. Uh. You know,

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<v Speaker 1>if we track back the US markets versus non and

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<v Speaker 1>you can go developed Europe Asia. Um, you know, these

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<v Speaker 1>waves about performance are somewhat cyclical. I was saying that

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<v Speaker 1>the broad markets were a buy when they were trading

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<v Speaker 1>at a thirty percent discount to the US markets. Looking

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<v Speaker 1>at them today, they look like an absolute by when

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<v Speaker 1>we think about the heads of the economic table um,

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<v Speaker 1>there's certainly no reason to be so US centric or dominant.

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<v Speaker 1>It really though, comes down to anticipation of are you

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<v Speaker 1>managing a p n L for day to day returns?

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<v Speaker 1>Are you a long term investor? Someone like myself certainly

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<v Speaker 1>has an overwaiting right now to the international landscape for

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<v Speaker 1>money that I'm not going to touch for a long time.

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<v Speaker 1>So generally speaking, if we were to tease out some

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<v Speaker 1>themes here, are you avoiding technology? Are you looking at

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<v Speaker 1>more economically sensitive areas of the market, industrials, materials, that

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<v Speaker 1>sort of thing. I like to think about diversification across

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<v Speaker 1>styles of investing. So when it comes to passive investing,

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<v Speaker 1>the SNP gives you that predominant waiting towards technology. When

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<v Speaker 1>it comes to your active and tactical compos own and

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<v Speaker 1>I think that's where you get mindful about where am

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<v Speaker 1>I making my purchases to round out that construction and

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<v Speaker 1>so taking a value cyclical industrial tilt. As we anticipate

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<v Speaker 1>a slower growth environment that's paid to wait. Idea around

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<v Speaker 1>dividend paying stocks, picking them up at attractive prices is great.

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<v Speaker 1>And then when you think about that, that that tactical

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<v Speaker 1>component of where are we in a global market cycle? Again,

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<v Speaker 1>there's so much opportunity outside and while we might not

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<v Speaker 1>give back purchasing power the US dollar may say strong

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<v Speaker 1>for a bit um, on the far side of that,

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<v Speaker 1>I think there is this resurgence of growth abroad. Nicole,

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<v Speaker 1>thank you so much for joining us today. Just Nicole Webscinia,

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<v Speaker 1>vice president and Financial Advice and Wealth Enhancement Group Enhancement Group,

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<v Speaker 1>giving her take on I was getting on the market wise.

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<v Speaker 1>They've got a lot more, including a data check coming up.

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<v Speaker 1>This is bloom Bag