1
00:00:13,840 --> 00:00:16,960
Speaker 1: Hello, and welcome to What Goes Up, a weekly markets podcast.

2
00:00:17,120 --> 00:00:19,119
Speaker 1: My name is Mike Reagan. I'm a senior editor at

3
00:00:19,120 --> 00:00:22,440
Speaker 1: Bloomberg and i'm Vldana Higher, Across Asset reporter with Bloomberg.

4
00:00:22,800 --> 00:00:25,400
Speaker 1: And this week on the show, Well, the Fed pulled

5
00:00:25,440 --> 00:00:27,880
Speaker 1: the rug out from under the stock market once again

6
00:00:27,960 --> 00:00:31,760
Speaker 1: this week, and considering that tightening financial conditions is their

7
00:00:31,840 --> 00:00:35,960
Speaker 1: strategy for fighting inflation. It wasn't exactly by accident. The

8
00:00:36,000 --> 00:00:39,400
Speaker 1: Central Bank did downshift its rate hikes to just half

9
00:00:39,440 --> 00:00:43,239
Speaker 1: of one percentage point, but chair Pal push back on

10
00:00:43,400 --> 00:00:46,400
Speaker 1: expectations for a dovish tilt by saying that rates will

11
00:00:46,479 --> 00:00:49,239
Speaker 1: stay higher for longer. So what does it all mean

12
00:00:49,280 --> 00:00:52,559
Speaker 1: for markets going into We'll get into it with a

13
00:00:52,600 --> 00:00:57,600
Speaker 1: senior investment strategist at a major financial advisor. But Dana, first,

14
00:00:57,720 --> 00:00:59,720
Speaker 1: I know you wanted me to take that Harry Potter

15
00:00:59,800 --> 00:01:02,680
Speaker 1: quick is you didn't take it. I started to take it,

16
00:01:02,720 --> 00:01:04,800
Speaker 1: and I didn't even know the question. I didn't even

17
00:01:04,840 --> 00:01:09,120
Speaker 1: understand the questions. What were they? What? What do you

18
00:01:09,160 --> 00:01:12,480
Speaker 1: want your magic wand to be made out of? Like

19
00:01:13,680 --> 00:01:16,560
Speaker 1: dragon bow? And I was so long stuff and the

20
00:01:16,600 --> 00:01:18,920
Speaker 1: pressure was so great on me that I know I

21
00:01:19,880 --> 00:01:22,480
Speaker 1: can't just pick some stuff. This is important to you.

22
00:01:22,520 --> 00:01:25,119
Speaker 1: I don't want to. I'll help you take I think

23
00:01:25,120 --> 00:01:26,760
Speaker 1: I got to watch the movie or something to read

24
00:01:26,760 --> 00:01:31,160
Speaker 1: that it's not just one movie. If seven, this whole

25
00:01:31,160 --> 00:01:33,440
Speaker 1: Harry Potter thing missed me. I'm too old for it.

26
00:01:33,560 --> 00:01:36,360
Speaker 1: My kids are too young for it. So i'm I'm

27
00:01:35,600 --> 00:01:38,039
Speaker 1: I'm what's the coolest house? That's what I want to

28
00:01:38,040 --> 00:01:40,720
Speaker 1: aim for, I guess, Griffin, or you want you want

29
00:01:40,720 --> 00:01:42,800
Speaker 1: to aim for that? Yeah, I saw Harry Potter on

30
00:01:42,840 --> 00:01:46,679
Speaker 1: Broadway last night. Is on Broadway? Now? Yes? Hello? It

31
00:01:46,760 --> 00:01:49,240
Speaker 1: was like a um, it used to be like a

32
00:01:49,280 --> 00:01:52,000
Speaker 1: two night thing, like a five and a half hour

33
00:01:52,480 --> 00:01:54,960
Speaker 1: Broadway play basically, so they had to split it into

34
00:01:55,000 --> 00:01:57,960
Speaker 1: two days. So now they cut it down, I guess,

35
00:01:58,000 --> 00:01:59,760
Speaker 1: And it was like three and a half hours. But

36
00:01:59,760 --> 00:02:02,680
Speaker 1: it was awesome. They do like magic tricks, like stuff

37
00:02:02,680 --> 00:02:05,680
Speaker 1: flies around and oh my gosh, well maybe i'll maybe,

38
00:02:05,880 --> 00:02:07,720
Speaker 1: I'll maybe I'll go see that and then I'll take

39
00:02:07,760 --> 00:02:10,400
Speaker 1: the quizzit. Now you have to know the backstory. You

40
00:02:10,440 --> 00:02:13,519
Speaker 1: have to invest like thirty hours into this. Oh my gosh,

41
00:02:15,280 --> 00:02:19,239
Speaker 1: I don't know. I don't know what house our guests.

42
00:02:19,480 --> 00:02:22,040
Speaker 1: How about that segue. I do want to bring in

43
00:02:22,080 --> 00:02:26,200
Speaker 1: Monama Hodgen. She's the senior investment strategist at Edward Jones. Mona,

44
00:02:26,240 --> 00:02:28,160
Speaker 1: thank you so much for joining us on the podcast

45
00:02:28,160 --> 00:02:30,480
Speaker 1: this week. Thank you so much for having me today. Yeah,

46
00:02:30,480 --> 00:02:32,840
Speaker 1: we're thrilled to have you, and I was hoping you

47
00:02:32,880 --> 00:02:34,920
Speaker 1: could just start by laying out what happened with the

48
00:02:34,960 --> 00:02:37,280
Speaker 1: FED this week and what we heard from in terms

49
00:02:37,360 --> 00:02:39,560
Speaker 1: of what Powell was telling us. I had been reading

50
00:02:39,600 --> 00:02:43,560
Speaker 1: some notes after the press conference saying that, you know,

51
00:02:43,600 --> 00:02:46,040
Speaker 1: possibly he was a bit more hawkish than expected. So

52
00:02:46,240 --> 00:02:49,600
Speaker 1: what does it all mean for markets? Yeah, you know,

53
00:02:49,639 --> 00:02:51,480
Speaker 1: I think a couple of key things came out of

54
00:02:51,840 --> 00:02:55,320
Speaker 1: the Power press conference on Wednesday, and also we got

55
00:02:55,360 --> 00:02:57,760
Speaker 1: a new set of economic projections, and of course that

56
00:02:57,800 --> 00:03:00,920
Speaker 1: infamous do plot, So you know, based on what Powell

57
00:03:01,000 --> 00:03:03,960
Speaker 1: and the dot plot showed, um, the FED is not

58
00:03:04,040 --> 00:03:06,919
Speaker 1: done raising rates and clearly they have indicated that they're

59
00:03:06,960 --> 00:03:09,960
Speaker 1: heading towards a five point one percent is what was

60
00:03:09,960 --> 00:03:12,320
Speaker 1: in the dot plot terminal rate. And keep in mind

61
00:03:12,320 --> 00:03:15,040
Speaker 1: we're already at about four and a half percent, so

62
00:03:15,280 --> 00:03:17,560
Speaker 1: this five to five and a quarter percent range is

63
00:03:17,680 --> 00:03:21,960
Speaker 1: probably two to three more basis point rate hikes. That

64
00:03:22,040 --> 00:03:25,440
Speaker 1: wasn't too far off from where market expectations were heading

65
00:03:25,440 --> 00:03:29,200
Speaker 1: into the meeting, but given the softer CPI print we

66
00:03:29,240 --> 00:03:32,480
Speaker 1: got on Tuesday, there were some expectations that perhaps the

67
00:03:32,560 --> 00:03:34,720
Speaker 1: terminal rate would be somewhere closer to four and three

68
00:03:34,800 --> 00:03:37,600
Speaker 1: quarters to five percent, so a bit hawkish on the

69
00:03:37,720 --> 00:03:41,400
Speaker 1: terminal rate. Um Number two was, of course, when would

70
00:03:41,400 --> 00:03:43,840
Speaker 1: those rate cuts becoming? And that was the other thing.

71
00:03:43,880 --> 00:03:47,320
Speaker 1: Markets were hopeful that perhaps by your end we'd start

72
00:03:47,400 --> 00:03:50,560
Speaker 1: to see the Fed cutting rates, but in fact, what

73
00:03:50,640 --> 00:03:53,240
Speaker 1: this dot plot and new set of economic projection showed

74
00:03:53,680 --> 00:03:57,080
Speaker 1: no rate cuts in three and we'd start seeing rate

75
00:03:57,120 --> 00:04:01,560
Speaker 1: cuts perhaps in four. Now. One more small point I'd

76
00:04:01,600 --> 00:04:04,680
Speaker 1: note is that Powell did lay out some interesting thoughts

77
00:04:04,680 --> 00:04:08,360
Speaker 1: and detail around what inflation metrics were looking like from

78
00:04:08,400 --> 00:04:11,920
Speaker 1: their perspective. So they do see better goods inflation, so

79
00:04:12,040 --> 00:04:15,560
Speaker 1: goods inflation is cooling. They do see housing coming down

80
00:04:15,720 --> 00:04:19,279
Speaker 1: in the core inflation front. Where they don't see much

81
00:04:19,360 --> 00:04:24,120
Speaker 1: progress is what they call non housing core services inflation.

82
00:04:24,160 --> 00:04:26,080
Speaker 1: And for that to come down, you'd need to see

83
00:04:26,200 --> 00:04:30,320
Speaker 1: labor markets often and wage gains start to moderate as well,

84
00:04:30,360 --> 00:04:33,760
Speaker 1: So labor market data will become much more important going

85
00:04:33,800 --> 00:04:37,599
Speaker 1: forward as well. Yeah, right, I think, uh that key

86
00:04:37,640 --> 00:04:40,839
Speaker 1: point about when that first rate cut will will actually

87
00:04:40,839 --> 00:04:43,440
Speaker 1: come is so important. You know, if we do plateau

88
00:04:43,480 --> 00:04:46,880
Speaker 1: out at a five percent federal funds rate next year,

89
00:04:47,560 --> 00:04:52,200
Speaker 1: I don't picture that being very friendly to two equities specifically.

90
00:04:52,320 --> 00:04:55,480
Speaker 1: You know what if I'm looking at the earnings estimates

91
00:04:55,520 --> 00:04:58,159
Speaker 1: for next year for the SMP five hundred, and our

92
00:04:58,200 --> 00:05:00,880
Speaker 1: survey of analyst shows only about two and a half

93
00:05:00,920 --> 00:05:04,479
Speaker 1: percent growth expected, So maybe they'll beat that by a

94
00:05:04,520 --> 00:05:08,400
Speaker 1: little bit. But um, if you can't really get valuations

95
00:05:08,440 --> 00:05:12,400
Speaker 1: to expand because rates are high, it really makes me

96
00:05:12,480 --> 00:05:14,680
Speaker 1: wonder if if we're just looking at another sort of

97
00:05:14,720 --> 00:05:17,719
Speaker 1: dismal year for equities from the index level at least

98
00:05:17,760 --> 00:05:19,880
Speaker 1: next year, is that is that a safe assessment? Do

99
00:05:19,920 --> 00:05:22,480
Speaker 1: you think? You know, we do think that this might

100
00:05:22,520 --> 00:05:25,039
Speaker 1: be a tale of two halves um and it's hard

101
00:05:25,040 --> 00:05:26,960
Speaker 1: to call a first half second half story. But to

102
00:05:27,040 --> 00:05:29,640
Speaker 1: some extent, what we're seeing is that in the first

103
00:05:29,640 --> 00:05:32,760
Speaker 1: half of the year that economic softness that's when we

104
00:05:32,800 --> 00:05:34,599
Speaker 1: think it will emerge, and keep in mind, will have

105
00:05:34,640 --> 00:05:37,320
Speaker 1: at this point nearly five hundred basis points of FED

106
00:05:37,360 --> 00:05:40,360
Speaker 1: tightening um in less than you know, twelve month period

107
00:05:40,440 --> 00:05:43,320
Speaker 1: and so we have yet to see the impacts of

108
00:05:43,360 --> 00:05:45,440
Speaker 1: that or the full impacts of that, and that will

109
00:05:45,480 --> 00:05:47,280
Speaker 1: happen on a lag basis, and so we do think

110
00:05:47,279 --> 00:05:50,280
Speaker 1: the first half of three there's a period of softening

111
00:05:50,320 --> 00:05:52,799
Speaker 1: that will happen. It's not only economic softening. To your point,

112
00:05:53,160 --> 00:05:56,680
Speaker 1: Earnings estimates we think will continue to move lower, and

113
00:05:56,720 --> 00:05:59,800
Speaker 1: in fact, market volatility is likely to re emerge, and

114
00:05:59,800 --> 00:06:03,880
Speaker 1: that market volatility probably means we're still very defensively value

115
00:06:03,920 --> 00:06:08,240
Speaker 1: oriented um inequity markets in particular. But we do think

116
00:06:08,320 --> 00:06:10,520
Speaker 1: that there is a credible case to be made that

117
00:06:10,920 --> 00:06:13,680
Speaker 1: perhaps equity markets like they always have been, will be

118
00:06:13,800 --> 00:06:15,960
Speaker 1: for looking and even if we are in this economic

119
00:06:16,000 --> 00:06:19,920
Speaker 1: downturn and recession, when you look historically at the analysis,

120
00:06:20,320 --> 00:06:23,520
Speaker 1: markets can start rebounding or recovering anywhere from three to

121
00:06:23,560 --> 00:06:26,880
Speaker 1: six months before this recession even ends. And so, of course,

122
00:06:27,040 --> 00:06:28,400
Speaker 1: you know the other thing we talked about, this is

123
00:06:28,400 --> 00:06:31,800
Speaker 1: probably the worst kept secret of a recession that is pending.

124
00:06:31,839 --> 00:06:34,279
Speaker 1: You know, everyone's talking about it. We all know what

125
00:06:34,360 --> 00:06:37,159
Speaker 1: the impact of these FED rate hikes will be on

126
00:06:37,200 --> 00:06:40,600
Speaker 1: the broader economy going forward. So markets can very quickly

127
00:06:40,640 --> 00:06:43,400
Speaker 1: then start to look forward, and what we see maybe

128
00:06:43,400 --> 00:06:45,960
Speaker 1: towards the back half of next year is a better

129
00:06:46,000 --> 00:06:50,560
Speaker 1: inflation story, is an economy that is probably stabilizing, And

130
00:06:50,640 --> 00:06:53,680
Speaker 1: in fact, we're probably looking at a FED that may

131
00:06:53,680 --> 00:06:56,400
Speaker 1: not actually implement rate cuts, but may start to signal

132
00:06:56,520 --> 00:06:58,919
Speaker 1: rate cuts because at some point they don't need to

133
00:06:58,960 --> 00:07:01,240
Speaker 1: be so restrict. If you know, the neutral rate is

134
00:07:01,240 --> 00:07:03,520
Speaker 1: probably closer to two and a half percent. If they're

135
00:07:03,560 --> 00:07:06,600
Speaker 1: at five percent UM, there is a you know, possibility

136
00:07:06,640 --> 00:07:09,840
Speaker 1: that they start talking about UM getting a little bit

137
00:07:09,840 --> 00:07:13,280
Speaker 1: closer to neutral. So I do think those factors combined

138
00:07:13,440 --> 00:07:16,480
Speaker 1: can lead to a better market outcome, perhaps towards the

139
00:07:16,480 --> 00:07:19,000
Speaker 1: back half of the year, if we start to hear

140
00:07:19,120 --> 00:07:21,560
Speaker 1: from the FED in terms of, as you said, signaling

141
00:07:21,920 --> 00:07:24,920
Speaker 1: rate cuts. Somewhere down the line, is that, in your view,

142
00:07:24,960 --> 00:07:27,800
Speaker 1: what would be the so called pivot, Because we have

143
00:07:27,840 --> 00:07:29,880
Speaker 1: a lot of people talking about a FED pivot, but

144
00:07:30,200 --> 00:07:33,760
Speaker 1: very rarely do they sort of define what it actually means.

145
00:07:33,800 --> 00:07:36,840
Speaker 1: And I feel like it could mean that the FED

146
00:07:36,920 --> 00:07:38,840
Speaker 1: is just being less aggressive, or it could mean that

147
00:07:38,880 --> 00:07:41,440
Speaker 1: they actually start cutting. So what in your view would

148
00:07:41,480 --> 00:07:44,400
Speaker 1: be a FED pivot? Yeah, that's a great point, because

149
00:07:44,440 --> 00:07:47,040
Speaker 1: pivot has had many different definitions, but I do think

150
00:07:47,080 --> 00:07:48,880
Speaker 1: to your point, I think it is when they signal

151
00:07:49,080 --> 00:07:51,480
Speaker 1: rate cuts. So keep in mind, the markets won't wait

152
00:07:51,720 --> 00:07:54,240
Speaker 1: for the FED to actually cut rates before they start

153
00:07:54,480 --> 00:07:56,520
Speaker 1: pricing those cuts in. So as soon as we start

154
00:07:56,600 --> 00:07:59,560
Speaker 1: getting the signal that rates are moving lower, UM, that

155
00:07:59,680 --> 00:08:02,640
Speaker 1: is the you for markets to start thinking about an

156
00:08:02,720 --> 00:08:05,320
Speaker 1: environment where you know, if rates do move lower, what

157
00:08:05,360 --> 00:08:08,480
Speaker 1: does that really support. Well, you think about the recovery playbook,

158
00:08:09,120 --> 00:08:13,080
Speaker 1: quality parts of the growth market, perhaps more cyclical oriented

159
00:08:13,440 --> 00:08:16,360
Speaker 1: UH stocks, even in bonds, you know, thinking about longer

160
00:08:16,440 --> 00:08:21,000
Speaker 1: duration all of those recovery UM playbook and its small

161
00:08:21,040 --> 00:08:23,680
Speaker 1: caps is large cap comes into play there. Uh, that

162
00:08:23,760 --> 00:08:27,480
Speaker 1: starts becoming more and more in play and in the

163
00:08:27,520 --> 00:08:30,520
Speaker 1: forefront for investors. And so I do think you know

164
00:08:30,560 --> 00:08:32,559
Speaker 1: the pivot that markets will be watching for. And keep

165
00:08:32,559 --> 00:08:36,120
Speaker 1: in mind, markets love lower rates. It's been the trend

166
00:08:36,480 --> 00:08:40,800
Speaker 1: since the financial crisis, UM, and that pivot towards signaling

167
00:08:40,960 --> 00:08:43,000
Speaker 1: you know that this is a peek and we're heading

168
00:08:43,040 --> 00:08:45,360
Speaker 1: down from this five percent level. That's really what we

169
00:08:45,400 --> 00:08:49,439
Speaker 1: think will spark a more sustainable recovery ahead. You know,

170
00:08:49,760 --> 00:08:53,240
Speaker 1: I'm curious what kind of conversations, uh, you and your

171
00:08:53,320 --> 00:08:57,280
Speaker 1: your colleagues at Edward Jones have with clients given this

172
00:08:57,400 --> 00:09:01,600
Speaker 1: sort of shift in UM the leadership of the market

173
00:09:01,720 --> 00:09:03,520
Speaker 1: that we've seen, you know, for a long time, it

174
00:09:03,640 --> 00:09:06,640
Speaker 1: seemed like, you know, it was great advice to just

175
00:09:06,679 --> 00:09:10,400
Speaker 1: be a passive index investor by by the index, don't

176
00:09:10,760 --> 00:09:12,600
Speaker 1: you know, be a hero and try to pick stocks.

177
00:09:12,960 --> 00:09:16,280
Speaker 1: But we've seen such a dispersion uh lately and you

178
00:09:16,320 --> 00:09:18,880
Speaker 1: see that value out performance, which is you know, a

179
00:09:18,920 --> 00:09:21,760
Speaker 1: lower weighting than the big growth companies in the index.

180
00:09:22,360 --> 00:09:24,800
Speaker 1: Is you know, is it time to rethink the notion

181
00:09:24,840 --> 00:09:27,000
Speaker 1: of just being a passive index investor. Do you think

182
00:09:27,040 --> 00:09:30,320
Speaker 1: for your average sort of Joe saving for retirement first

183
00:09:30,320 --> 00:09:33,199
Speaker 1: of all, time in the market, UM, whether you are

184
00:09:33,320 --> 00:09:36,080
Speaker 1: more equity oriented, whether you're more fixed income oriented, whether

185
00:09:36,080 --> 00:09:40,319
Speaker 1: you're balanced investor. We do still say that time in

186
00:09:40,360 --> 00:09:42,600
Speaker 1: the market is so much better than trying to time

187
00:09:42,600 --> 00:09:44,079
Speaker 1: yourself in and out of the market. So one of

188
00:09:44,120 --> 00:09:46,800
Speaker 1: the things we face this year with clients, as UH

189
00:09:46,920 --> 00:09:50,880
Speaker 1: stocks and bonds were simultaneously selling off was this, you know,

190
00:09:51,080 --> 00:09:55,280
Speaker 1: fear reaction and letting your emotions kind of dictate your

191
00:09:55,360 --> 00:09:57,640
Speaker 1: financial decisions. So that's the first thing we have to

192
00:09:57,679 --> 00:10:00,679
Speaker 1: fight against because if you do sell, you do have

193
00:10:00,720 --> 00:10:03,320
Speaker 1: two decisions to make, when to sell and then of

194
00:10:03,320 --> 00:10:06,000
Speaker 1: course when to get back in. And we all know investors,

195
00:10:06,040 --> 00:10:09,480
Speaker 1: individuals humans are notoriously bad at calling market bottoms and

196
00:10:09,520 --> 00:10:12,360
Speaker 1: market tops. So I do think making sure that you

197
00:10:12,600 --> 00:10:14,880
Speaker 1: have that time in the market. But then you have

198
00:10:14,920 --> 00:10:16,840
Speaker 1: to start thinking about to your point, how do you

199
00:10:16,840 --> 00:10:19,000
Speaker 1: want to position? You have to think about of course

200
00:10:19,040 --> 00:10:22,320
Speaker 1: your own risk, your own financial goals, your own tolerances

201
00:10:22,320 --> 00:10:26,200
Speaker 1: and preferences. But generally speaking, uh, the environment that we

202
00:10:26,240 --> 00:10:29,160
Speaker 1: saw over the last ten years since the financial crisis,

203
00:10:29,440 --> 00:10:31,960
Speaker 1: where the FED was closer to the zero bound, that

204
00:10:32,040 --> 00:10:36,439
Speaker 1: was an environment where probably more risk assets, but certainly

205
00:10:36,480 --> 00:10:40,160
Speaker 1: growth parts of the market outperformed and outperformed pretty sustainably

206
00:10:40,240 --> 00:10:43,120
Speaker 1: for for nearly that decade. Now we're looking at this

207
00:10:43,280 --> 00:10:46,800
Speaker 1: environment where the FED is is moved rates upward pretty

208
00:10:46,840 --> 00:10:51,280
Speaker 1: rapidly to five we think about the next ten years, Uh,

209
00:10:51,360 --> 00:10:53,959
Speaker 1: they will likely you know, at some point take the

210
00:10:53,960 --> 00:10:56,120
Speaker 1: FED funds rate from five percent, maybe back to two

211
00:10:56,160 --> 00:10:57,920
Speaker 1: and a half percent or so. But will we get

212
00:10:57,920 --> 00:11:01,000
Speaker 1: back to that zero bound? Not as likely this time around,

213
00:11:01,040 --> 00:11:03,800
Speaker 1: And so there's certainly a better balance between value and growth.

214
00:11:03,800 --> 00:11:07,079
Speaker 1: We think um in the years ahead that are more sustainable.

215
00:11:07,360 --> 00:11:09,440
Speaker 1: Now near term you have to think about, you know,

216
00:11:09,600 --> 00:11:13,240
Speaker 1: there is this rebound potentially that could happen in the

217
00:11:13,280 --> 00:11:15,480
Speaker 1: more beaten up parts of the market, especially if we

218
00:11:15,520 --> 00:11:18,520
Speaker 1: start hearing about you know, FED pivot down the road,

219
00:11:18,559 --> 00:11:21,600
Speaker 1: and that's still months ahead. But we'd say generally it

220
00:11:21,679 --> 00:11:24,680
Speaker 1: is important to make sure that you set your strategic

221
00:11:24,720 --> 00:11:27,760
Speaker 1: acid allocations you stick with it. But there are tactical

222
00:11:27,880 --> 00:11:31,400
Speaker 1: and what we call opportunistic opportunities that are playing out,

223
00:11:31,640 --> 00:11:34,480
Speaker 1: especially now when we're getting these inflection points in terms

224
00:11:34,520 --> 00:11:44,760
Speaker 1: of yields, inflation perhaps to bed Okay, so say more

225
00:11:44,760 --> 00:11:47,439
Speaker 1: about how people should be positioning because I think in

226
00:11:47,520 --> 00:11:49,880
Speaker 1: one of your recent notes you said, we believe that

227
00:11:49,920 --> 00:11:53,319
Speaker 1: any forthcoming market volatility could be an opportunity to position

228
00:11:53,400 --> 00:11:57,560
Speaker 1: portfolios for potentially the more gradual you you shaped rebound

229
00:11:57,640 --> 00:12:00,400
Speaker 1: in the year ahead. So what'r yes? Love that you

230
00:12:00,440 --> 00:12:02,920
Speaker 1: called out the U shaped It's something we've been talking

231
00:12:02,920 --> 00:12:05,800
Speaker 1: about all year. You know, this is a U shaped

232
00:12:05,960 --> 00:12:08,800
Speaker 1: versus the V shape that we've seen, for example, in

233
00:12:09,559 --> 00:12:12,040
Speaker 1: when we had a very sharp downturn because of the pandemic,

234
00:12:12,040 --> 00:12:14,680
Speaker 1: but we also rebounded quite quickly because the FED was

235
00:12:14,720 --> 00:12:17,200
Speaker 1: able to step in and we saw that market recovery

236
00:12:17,200 --> 00:12:19,760
Speaker 1: happened within three months or so. This time, we think

237
00:12:19,800 --> 00:12:22,520
Speaker 1: it will be a gradual recovery process, in part because

238
00:12:22,559 --> 00:12:25,920
Speaker 1: the FED is not going to pivot as we talked

239
00:12:25,960 --> 00:12:28,920
Speaker 1: about earlier. They'll probably be on hold for at least

240
00:12:29,280 --> 00:12:32,200
Speaker 1: the months ahead. Now to your point, we do think

241
00:12:32,280 --> 00:12:35,600
Speaker 1: we alluded to this earlier. Any market volatility we do

242
00:12:35,679 --> 00:12:38,720
Speaker 1: get in the next few months ahead, that could be

243
00:12:38,760 --> 00:12:42,480
Speaker 1: the opportunity to position portfolios. And we talked about, you know,

244
00:12:42,520 --> 00:12:45,280
Speaker 1: we do think there's one leg left in this defensive

245
00:12:45,360 --> 00:12:48,360
Speaker 1: value play, especially as we head towards an economic downturn.

246
00:12:48,920 --> 00:12:51,000
Speaker 1: But then you want to start thinking about what works

247
00:12:51,160 --> 00:12:54,720
Speaker 1: as markets recover, and those were those cyclical quality growth

248
00:12:55,120 --> 00:12:58,080
Speaker 1: and uh, perhaps small cap parts of the market. The

249
00:12:58,120 --> 00:13:00,120
Speaker 1: other point that I'd like to highlight, or we we

250
00:13:00,160 --> 00:13:03,680
Speaker 1: are highlighting, is that the bond market is presenting opportunities

251
00:13:03,800 --> 00:13:06,400
Speaker 1: now that we haven't seen really in any time in

252
00:13:06,440 --> 00:13:10,480
Speaker 1: recent history. And that is because not only are yields higher, uh,

253
00:13:10,640 --> 00:13:13,080
Speaker 1: you can lock in longer duration, you can lock in

254
00:13:13,120 --> 00:13:15,480
Speaker 1: these yields for a longer period of time, but also

255
00:13:15,520 --> 00:13:18,760
Speaker 1: you have this opportunity for price appreciation if over time

256
00:13:18,840 --> 00:13:21,360
Speaker 1: yields start to stabilize and move lower. And so we

257
00:13:21,440 --> 00:13:24,719
Speaker 1: do think, um, there is an opportunity, probably even for

258
00:13:24,760 --> 00:13:28,000
Speaker 1: those investors that hadn't considered bonds as much UM an

259
00:13:28,080 --> 00:13:30,880
Speaker 1: interesting time to start considering, at least in the months ahead,

260
00:13:31,000 --> 00:13:33,960
Speaker 1: especially when the Fed does its last few rate hikes,

261
00:13:34,120 --> 00:13:36,560
Speaker 1: we maybe get one like higher in in the yield space,

262
00:13:36,559 --> 00:13:38,560
Speaker 1: and that's really a great time to kind of think

263
00:13:38,600 --> 00:13:42,640
Speaker 1: about extending duration or locking in some of those yields.

264
00:13:42,679 --> 00:13:46,200
Speaker 1: And so yes, I think generally speaking, the volatility that

265
00:13:46,240 --> 00:13:48,440
Speaker 1: we get and I will call out also that the

266
00:13:48,480 --> 00:13:51,760
Speaker 1: average beer market lasts about fifteen months, you do get

267
00:13:51,800 --> 00:13:54,880
Speaker 1: a draw down of between twenty five and but the

268
00:13:54,880 --> 00:13:58,360
Speaker 1: good news here is historically one every beer market has ended,

269
00:13:58,720 --> 00:14:02,200
Speaker 1: and two it's been followed by a bull market that

270
00:14:02,480 --> 00:14:05,040
Speaker 1: is longer and stronger. So the average bull market three

271
00:14:05,040 --> 00:14:07,760
Speaker 1: point eight years up a hundred and sixty seven percent.

272
00:14:07,880 --> 00:14:09,719
Speaker 1: So you know, history may not repeat itself, but we

273
00:14:09,720 --> 00:14:12,640
Speaker 1: could certainly get something that rhymes to that, And so

274
00:14:12,679 --> 00:14:14,840
Speaker 1: that's why we think, you know, making sure that you

275
00:14:14,920 --> 00:14:17,320
Speaker 1: use some of the opportunities that are presented during this

276
00:14:17,360 --> 00:14:21,000
Speaker 1: period is important. So it does seem like you think,

277
00:14:21,000 --> 00:14:24,160
Speaker 1: you know, the whole risk reward equation for fixed income

278
00:14:24,400 --> 00:14:27,800
Speaker 1: has has changed a lot, and maybe it's time to

279
00:14:27,840 --> 00:14:30,720
Speaker 1: allocate a little bit more to fixed income then you

280
00:14:30,760 --> 00:14:34,040
Speaker 1: know anyone did during the zero interest rate phase. But

281
00:14:34,440 --> 00:14:37,160
Speaker 1: I wonder where in fixed income do you think UM

282
00:14:37,240 --> 00:14:40,880
Speaker 1: is attractive? Is it just stick with the safest treasuries?

283
00:14:41,000 --> 00:14:43,600
Speaker 1: Do you sort of take a little risk and get

284
00:14:43,600 --> 00:14:48,840
Speaker 1: into mortgages? You know, uh, mortgage backed ETFs is high yield, risky.

285
00:14:48,880 --> 00:14:52,440
Speaker 1: Where where in fixed income is the risk reward the

286
00:14:52,440 --> 00:14:55,200
Speaker 1: most favorable. What we've seen this here is a lot

287
00:14:55,280 --> 00:14:58,440
Speaker 1: of investors have crowded into the CD space. You know,

288
00:14:59,120 --> 00:15:01,920
Speaker 1: shorter term one or two your treasury yields as well,

289
00:15:02,480 --> 00:15:05,320
Speaker 1: shorter duration fixed income, which you know, to some extent

290
00:15:05,400 --> 00:15:07,960
Speaker 1: makes sense as well. We've we've not seen short term

291
00:15:08,000 --> 00:15:09,800
Speaker 1: yields at these rates as well, and your kind of

292
00:15:10,040 --> 00:15:12,440
Speaker 1: locking in cash equivalents that are offering you more than

293
00:15:12,560 --> 00:15:15,160
Speaker 1: than cash does. But now where I think at a

294
00:15:15,200 --> 00:15:17,720
Speaker 1: point where we can start complementing some of that short

295
00:15:17,800 --> 00:15:21,800
Speaker 1: duration cash like fixed income with what we'd call probably

296
00:15:21,840 --> 00:15:25,400
Speaker 1: the investment grades space broadly, but that includes corporate investment

297
00:15:25,440 --> 00:15:28,560
Speaker 1: grade bonds and I think you know your favorite corporate UH,

298
00:15:28,720 --> 00:15:31,840
Speaker 1: investment grade et F would be a great proxy for that,

299
00:15:32,360 --> 00:15:35,320
Speaker 1: and in fact those are giving you exposure to higher

300
00:15:35,400 --> 00:15:38,240
Speaker 1: quality credits. So if we do hit this economic downturn,

301
00:15:38,560 --> 00:15:41,200
Speaker 1: we do think one bonds and especially investment grade bonds

302
00:15:41,240 --> 00:15:43,880
Speaker 1: will be that kind of flight to safety. We would

303
00:15:43,880 --> 00:15:46,080
Speaker 1: be still a little cautious on the high yield space.

304
00:15:46,280 --> 00:15:49,080
Speaker 1: Um if we get into this downturn period and we

305
00:15:49,080 --> 00:15:51,120
Speaker 1: we do enter a default cycle, of course the highled

306
00:15:51,120 --> 00:15:53,680
Speaker 1: bonds are more at risk, but at some point we

307
00:15:53,720 --> 00:15:56,440
Speaker 1: do think high yield will offer that opportunity. If you

308
00:15:56,480 --> 00:15:59,400
Speaker 1: follow credit spreads at all, you'll see that both investment

309
00:15:59,440 --> 00:16:02,720
Speaker 1: grade and high yield credit spreads have been pretty contained

310
00:16:02,760 --> 00:16:06,000
Speaker 1: throughout this whole period. You know, could we potentially see

311
00:16:06,320 --> 00:16:09,400
Speaker 1: a widening, Yes, But again I think that's where people

312
00:16:09,600 --> 00:16:12,240
Speaker 1: investors are waiting for to get that opportunity in the

313
00:16:12,320 --> 00:16:14,400
Speaker 1: high old space. It's probably a little early there, but

314
00:16:14,440 --> 00:16:17,080
Speaker 1: certainly investment grade bonds we think is a good opportunity. Here.

315
00:16:17,800 --> 00:16:20,120
Speaker 1: When I'm wondering how you're thinking about what the current

316
00:16:20,120 --> 00:16:23,160
Speaker 1: market narrative is, because it used to be that whenever

317
00:16:23,200 --> 00:16:25,960
Speaker 1: we got a bad piece of economic data, that it

318
00:16:26,040 --> 00:16:28,000
Speaker 1: was sort of seen as good news because it was

319
00:16:28,040 --> 00:16:30,640
Speaker 1: helping in terms of what the FED was trying to achieve.

320
00:16:30,920 --> 00:16:32,960
Speaker 1: But I'm wondering if we're at the point now where

321
00:16:33,000 --> 00:16:35,840
Speaker 1: bad news is just simply bad news and people are

322
00:16:35,960 --> 00:16:39,240
Speaker 1: starting to worry more about growth. It's a great question

323
00:16:39,320 --> 00:16:41,480
Speaker 1: because certainly the concern for most of the year was

324
00:16:41,480 --> 00:16:44,720
Speaker 1: around inflation and inflationary pressure as an inflation moving higher

325
00:16:44,760 --> 00:16:46,960
Speaker 1: and how high can we go? And now we're starting

326
00:16:46,960 --> 00:16:49,640
Speaker 1: to see that shift, and now the concern is growth

327
00:16:50,000 --> 00:16:51,920
Speaker 1: and what's going to happen to the economy and is

328
00:16:51,960 --> 00:16:54,240
Speaker 1: a FED pushing us into a session? And how low

329
00:16:54,240 --> 00:16:57,680
Speaker 1: can earnings estimates go and earnings boadcast go, And so

330
00:16:57,760 --> 00:17:01,680
Speaker 1: the market narrative has shifted from that perspective. Um. You know,

331
00:17:01,920 --> 00:17:03,800
Speaker 1: probably the good news there is that some of the

332
00:17:03,840 --> 00:17:07,679
Speaker 1: forward looking indicators of inflation in our view are starting

333
00:17:07,680 --> 00:17:09,720
Speaker 1: to roll over more meaningfully. So things like the I

334
00:17:09,840 --> 00:17:13,480
Speaker 1: S M prices paid, the supply chain pressure indicies that

335
00:17:13,520 --> 00:17:16,399
Speaker 1: we track even break even inflation rates. Um. A lot

336
00:17:16,440 --> 00:17:18,800
Speaker 1: of these are leading indicators, and a lot of them

337
00:17:19,000 --> 00:17:21,439
Speaker 1: are moving in the right direction. They're moving lower, So

338
00:17:21,440 --> 00:17:24,119
Speaker 1: we do think over time these will be reflected in

339
00:17:24,280 --> 00:17:26,879
Speaker 1: you know, CPI inflation prints, and we have, in fact

340
00:17:26,960 --> 00:17:29,640
Speaker 1: think core inflation could head back towards you know, three

341
00:17:29,680 --> 00:17:33,040
Speaker 1: percent levels, at least towards end of three So the

342
00:17:33,040 --> 00:17:37,000
Speaker 1: inflation concern has become It's still there, it's still elevated,

343
00:17:37,000 --> 00:17:39,760
Speaker 1: but not as high now as as the growth concern.

344
00:17:39,840 --> 00:17:42,320
Speaker 1: And I think that is the concern that UM. Really

345
00:17:42,560 --> 00:17:46,439
Speaker 1: markets are wary that, UM, if we do enter a

346
00:17:46,480 --> 00:17:49,040
Speaker 1: period of recession, what does that mean in terms of

347
00:17:49,040 --> 00:17:50,840
Speaker 1: how low can we go? And then, of course, we

348
00:17:50,840 --> 00:17:54,280
Speaker 1: were down as much as in the SMP five earlier

349
00:17:54,320 --> 00:17:56,760
Speaker 1: this year, we've rebounded quite a bit. We're up probably

350
00:17:56,760 --> 00:17:59,960
Speaker 1: even off the lows now. UM, if we do enter

351
00:18:00,160 --> 00:18:02,560
Speaker 1: a downturn, first of all, we don't We're in the

352
00:18:02,600 --> 00:18:05,160
Speaker 1: camp that we don't see yet any scope for a deep,

353
00:18:05,680 --> 00:18:08,560
Speaker 1: prolonged period of recession. We think this could be a

354
00:18:08,600 --> 00:18:12,919
Speaker 1: potentially milder downturn driven by the FED. But I do

355
00:18:13,040 --> 00:18:16,080
Speaker 1: think UH markets won't ignore the fact that we're entering

356
00:18:16,080 --> 00:18:18,359
Speaker 1: a downturn, and so could we kind of head back

357
00:18:18,640 --> 00:18:20,480
Speaker 1: towards those lows give up some of the games that

358
00:18:20,480 --> 00:18:23,600
Speaker 1: we've seen recently. We think that is UM certainly a

359
00:18:23,600 --> 00:18:26,480
Speaker 1: scenario that that is a credible one, UM. But again,

360
00:18:26,560 --> 00:18:30,000
Speaker 1: we don't see the scope for anything that goes meaningfully

361
00:18:30,040 --> 00:18:32,680
Speaker 1: lower than what we've already done this year, so a

362
00:18:32,720 --> 00:18:34,719
Speaker 1: lot of the work to the downside has been put in.

363
00:18:35,359 --> 00:18:38,480
Speaker 1: We do think there could be some volatility ahead. But again,

364
00:18:38,480 --> 00:18:40,359
Speaker 1: and you know, it sounds like a broken record, but

365
00:18:40,400 --> 00:18:58,200
Speaker 1: maybe there's an opportunity there too. Well, you know, whenever

366
00:18:58,240 --> 00:19:01,040
Speaker 1: I hear this sort of growth first is valued debate

367
00:19:01,160 --> 00:19:02,840
Speaker 1: and and to your point, maybe it's time for a

368
00:19:02,840 --> 00:19:06,359
Speaker 1: more balanced uh you know, uh ratio of the two

369
00:19:07,040 --> 00:19:08,720
Speaker 1: you know, another way to play that in my mind

370
00:19:08,720 --> 00:19:11,000
Speaker 1: at least um and correct me if you think I'm wrong.

371
00:19:11,040 --> 00:19:13,720
Speaker 1: But is US versus rest of the world? You know,

372
00:19:13,800 --> 00:19:17,480
Speaker 1: the the US is is very much a growth story, uh.

373
00:19:17,520 --> 00:19:20,720
Speaker 1: That the index is heavily tilted towards growth, or at

374
00:19:20,800 --> 00:19:22,760
Speaker 1: least it was. That's obviously come down a little bit

375
00:19:22,760 --> 00:19:24,880
Speaker 1: this year because of the you know this the sell

376
00:19:24,880 --> 00:19:27,640
Speaker 1: off and tech um and the rest of the world,

377
00:19:27,720 --> 00:19:29,440
Speaker 1: many other parts of the world. At least I think

378
00:19:29,440 --> 00:19:33,920
Speaker 1: of as is almost buying a value index. Um, does

379
00:19:33,960 --> 00:19:37,200
Speaker 1: that trade look attractive to to sort of look outside

380
00:19:37,240 --> 00:19:40,199
Speaker 1: of the US. If if you're expecting uh, you know,

381
00:19:40,359 --> 00:19:43,679
Speaker 1: some strength and value or um. You know, does the

382
00:19:43,760 --> 00:19:46,240
Speaker 1: risk of a recession in the US? I mean, you

383
00:19:46,280 --> 00:19:49,360
Speaker 1: know US catches a cold, U s sneezes, the rest

384
00:19:49,359 --> 00:19:51,960
Speaker 1: of the world catches a cold. That you know, the

385
00:19:52,000 --> 00:19:54,520
Speaker 1: beta there will be will be to the downside and

386
00:19:54,520 --> 00:19:58,000
Speaker 1: and they'll they'll fall one of us. To sort of

387
00:19:58,040 --> 00:19:59,920
Speaker 1: put it all into one question, how do you think

388
00:20:00,080 --> 00:20:02,840
Speaker 1: about the US versus the rest rest of the world inequities.

389
00:20:02,880 --> 00:20:05,480
Speaker 1: So it's it's a great question. And it's interesting because

390
00:20:05,560 --> 00:20:09,480
Speaker 1: during this last quarter or so, even though the SMP

391
00:20:09,560 --> 00:20:12,280
Speaker 1: has rallied about eleven percent, we've seen international markets actually

392
00:20:12,320 --> 00:20:16,640
Speaker 1: outperform and even e M marching China went gangbusters in November.

393
00:20:16,960 --> 00:20:21,280
Speaker 1: China of course going through its very idiosyncratic story there

394
00:20:21,320 --> 00:20:24,359
Speaker 1: with the COVID euer policy starting to ease finally and

395
00:20:24,400 --> 00:20:27,520
Speaker 1: what impact that has on really the Asia Pact, but

396
00:20:27,560 --> 00:20:30,600
Speaker 1: even European regions, which are both bigger trading partners in

397
00:20:30,800 --> 00:20:34,320
Speaker 1: the US UM. Generally speaking, what we'd say is that

398
00:20:34,920 --> 00:20:37,520
Speaker 1: Europe and Tier point, the European story does tend to

399
00:20:37,560 --> 00:20:40,320
Speaker 1: be a value story. We think there is still a

400
00:20:40,320 --> 00:20:42,439
Speaker 1: little bit of risk there in terms of you know,

401
00:20:42,440 --> 00:20:44,880
Speaker 1: the recessionary risk we think are higher near term, they've

402
00:20:44,920 --> 00:20:48,119
Speaker 1: already rebounded quite nicely, so the risk reward not as attractive.

403
00:20:48,440 --> 00:20:50,479
Speaker 1: But we're starting to think about more seriously is the

404
00:20:50,480 --> 00:20:53,359
Speaker 1: e M story. And that's partly driven not only because

405
00:20:53,400 --> 00:20:56,840
Speaker 1: we think China can stabilize and potentially recover, but of

406
00:20:56,840 --> 00:20:59,240
Speaker 1: course the US dollar plays a big role there as well.

407
00:20:59,440 --> 00:21:01,320
Speaker 1: And what we've most of this year at least is

408
00:21:01,359 --> 00:21:04,600
Speaker 1: a dollar strengthening story that has put downward pressure on

409
00:21:04,640 --> 00:21:08,320
Speaker 1: the emerging market story. But more recently we started to

410
00:21:08,359 --> 00:21:10,639
Speaker 1: see the dollar soften That may have supported some of

411
00:21:10,640 --> 00:21:14,120
Speaker 1: this international performance as well, but we can we think

412
00:21:14,160 --> 00:21:17,159
Speaker 1: that there is a possibility that we see even a

413
00:21:17,200 --> 00:21:20,520
Speaker 1: further leg lower sometime in the back half again next year.

414
00:21:20,600 --> 00:21:23,200
Speaker 1: You know, in the near term, we dollar tends to

415
00:21:23,240 --> 00:21:25,320
Speaker 1: be a flight to safety assets, so if we get

416
00:21:25,320 --> 00:21:28,399
Speaker 1: this global downturn, maybe still see a little bit of

417
00:21:28,400 --> 00:21:31,280
Speaker 1: stabilization there. But over time, we think that the dollar,

418
00:21:31,840 --> 00:21:34,440
Speaker 1: the dollar trends will continue to offten and we think

419
00:21:34,480 --> 00:21:37,199
Speaker 1: that supports EM in particular. Now, EM does tend to

420
00:21:37,200 --> 00:21:39,040
Speaker 1: be a higher beatas and maybe not the value play

421
00:21:39,119 --> 00:21:41,800
Speaker 1: that you alluded to, but I do think UM for

422
00:21:41,800 --> 00:21:45,600
Speaker 1: those investors that are looking to complement domestic positioning, and

423
00:21:45,640 --> 00:21:47,720
Speaker 1: we think the US is still the best player on

424
00:21:47,760 --> 00:21:52,159
Speaker 1: the block UM economic resilience, but also you know, energy

425
00:21:52,160 --> 00:21:56,080
Speaker 1: and dependent UH still has that technology story as you mentioned,

426
00:21:56,080 --> 00:21:58,879
Speaker 1: so a lot more innovation and productivity coming out of

427
00:21:58,920 --> 00:22:02,080
Speaker 1: the country UM and so we think that's probably where

428
00:22:02,359 --> 00:22:04,320
Speaker 1: still the majority of assets are. But I think there's

429
00:22:04,320 --> 00:22:07,120
Speaker 1: an opportunity to start the about complimenting a little bit

430
00:22:07,680 --> 00:22:10,840
Speaker 1: with especially the e M story. And wanted just to

431
00:22:10,880 --> 00:22:13,919
Speaker 1: wrap up our discussion on the FED. I'm wondering how

432
00:22:14,000 --> 00:22:17,560
Speaker 1: you're thinking about financial conditions because on that front, the

433
00:22:17,600 --> 00:22:19,960
Speaker 1: FED really isn't getting a lot of help, right because

434
00:22:20,000 --> 00:22:23,399
Speaker 1: we did have stocks rallying in between the November and

435
00:22:23,520 --> 00:22:26,400
Speaker 1: the December meeting, I think something like six percent, which

436
00:22:26,480 --> 00:22:31,440
Speaker 1: is not exactly what the FED wants to be seeing, right. Yeah, No,

437
00:22:31,600 --> 00:22:33,479
Speaker 1: that's a great point. I think somebody even asked them

438
00:22:33,480 --> 00:22:36,640
Speaker 1: maybe it was the first question on on the conference

439
00:22:36,640 --> 00:22:40,840
Speaker 1: press conference on Wednesday, and it was interesting because certainly

440
00:22:41,600 --> 00:22:44,200
Speaker 1: it does feel like Jerome Powell and and the team

441
00:22:44,240 --> 00:22:47,440
Speaker 1: pushed back a little bit on what was happening in markets,

442
00:22:47,560 --> 00:22:50,399
Speaker 1: even if they didn't say it explicitly, the tone was

443
00:22:50,840 --> 00:22:53,879
Speaker 1: probably more hawkish. We're not done yet. Inflation has not

444
00:22:53,920 --> 00:22:56,360
Speaker 1: reached our two percent target. We're going to continue to move,

445
00:22:56,400 --> 00:22:59,719
Speaker 1: no rate cuts coming. So the messaging pretty consistent with

446
00:22:59,760 --> 00:23:01,280
Speaker 1: what I have been trying to do all year. When

447
00:23:01,280 --> 00:23:04,359
Speaker 1: they see maybe markets move ahead of themselves, we do

448
00:23:04,480 --> 00:23:07,359
Speaker 1: think after an eleven percent move or so, UM, a

449
00:23:07,359 --> 00:23:10,760
Speaker 1: period of consolidation is probably healthy. Uh. You know, markets

450
00:23:10,800 --> 00:23:12,879
Speaker 1: don't tend to move up in a straight line, you know,

451
00:23:13,440 --> 00:23:17,320
Speaker 1: forever in an extended period. Even so, I think there

452
00:23:17,400 --> 00:23:21,080
Speaker 1: is some opportunity for the risk reward to become more attractive,

453
00:23:21,480 --> 00:23:24,720
Speaker 1: especially if we can get through the next few months,

454
00:23:24,840 --> 00:23:26,960
Speaker 1: UM in a meaningful way. So I do think, you know,

455
00:23:27,160 --> 00:23:31,240
Speaker 1: loosening financial conditions overall can be a bit inflationary, especially

456
00:23:31,280 --> 00:23:35,280
Speaker 1: if it has impacts on consumer demand or wealth impacts, um.

457
00:23:35,440 --> 00:23:37,959
Speaker 1: And so the FET is of course trying to do

458
00:23:38,000 --> 00:23:41,600
Speaker 1: the opposite and make sure that inflation is contained. So

459
00:23:41,640 --> 00:23:44,880
Speaker 1: I do think they don't love to see outside moves

460
00:23:44,880 --> 00:23:47,120
Speaker 1: in the market. But that being said, I think generally

461
00:23:48,000 --> 00:23:50,840
Speaker 1: we've moved in a pretty steady fashion and we haven't

462
00:23:50,880 --> 00:23:56,439
Speaker 1: seen any uh anything particularly look bubblished or excessive easing

463
00:23:56,480 --> 00:23:59,560
Speaker 1: of financial conditions, so hopefully they're okay with that pace,

464
00:23:59,680 --> 00:24:02,880
Speaker 1: but I generally they their their tone this week indicated

465
00:24:02,920 --> 00:24:04,520
Speaker 1: that they were okay if we saw a little bit

466
00:24:04,560 --> 00:24:09,040
Speaker 1: of moderation there, Mona Mahagen, senior investment strategist at Edward Jones.

467
00:24:09,080 --> 00:24:12,520
Speaker 1: So great to allow us to pick your brain like this.

468
00:24:12,600 --> 00:24:15,200
Speaker 1: I think you're joining us from St. Louis. Is that right? Yes,

469
00:24:15,359 --> 00:24:17,680
Speaker 1: I am. I'm in the home office today. So thank

470
00:24:17,720 --> 00:24:20,359
Speaker 1: you guys so much. As wonderful conversation we covered so much.

471
00:24:20,480 --> 00:24:24,480
Speaker 1: Appreciate it. Anyway, enough with that frivolous market talk. It's time.

472
00:24:24,560 --> 00:24:27,600
Speaker 1: It's time to get serious with the real news of

473
00:24:27,600 --> 00:24:30,880
Speaker 1: the week. The craziest things we've seen in markets this Weekda,

474
00:24:30,920 --> 00:24:33,760
Speaker 1: what do you got? Okay? Mine is about Elon Musk again,

475
00:24:33,800 --> 00:24:37,040
Speaker 1: and I'm just gonna I'm gonna put a stop to myself,

476
00:24:37,119 --> 00:24:39,000
Speaker 1: like for the rest of the year. I can't use

477
00:24:39,240 --> 00:24:42,920
Speaker 1: anything new loan related. It's my own fault, but I'm

478
00:24:42,960 --> 00:24:46,399
Speaker 1: sick of it. So this is courtesy of a New

479
00:24:46,480 --> 00:24:49,439
Speaker 1: York Times story which and you really have to like

480
00:24:49,560 --> 00:24:51,640
Speaker 1: read through the story to get to these parts, which

481
00:24:51,680 --> 00:24:54,640
Speaker 1: is just so to cut costs. Twitter hasn't paid rent

482
00:24:54,800 --> 00:24:58,240
Speaker 1: on its San Francisco headquarters or any of its global

483
00:24:58,280 --> 00:25:02,040
Speaker 1: offices for weeks. They also didn't pay a nineteen dollar

484
00:25:02,119 --> 00:25:04,720
Speaker 1: bill for private charter flights that were made the week

485
00:25:04,760 --> 00:25:10,679
Speaker 1: of the takeover. And then the best part is Twitter

486
00:25:10,760 --> 00:25:13,560
Speaker 1: has laid off it's kitchen staff and begun to list

487
00:25:13,680 --> 00:25:17,560
Speaker 1: office supplies, industrial grade kitchen equipment and electronics, and they're

488
00:25:17,600 --> 00:25:20,040
Speaker 1: putting it up for I. As you know, I love

489
00:25:20,080 --> 00:25:22,720
Speaker 1: a good auction. I've got my eye on that auction,

490
00:25:22,800 --> 00:25:25,760
Speaker 1: betting on the big burners and the and the the

491
00:25:25,800 --> 00:25:30,480
Speaker 1: big giant tweety bird statue that yeah, it's starting. Bids

492
00:25:30,480 --> 00:25:33,359
Speaker 1: are only bucks for everything, so keep an eye on.

493
00:25:33,400 --> 00:25:35,919
Speaker 1: It's our price range. All right, that's pretty good. I'm

494
00:25:35,960 --> 00:25:38,600
Speaker 1: gonna go for once. I'm going to go into the

495
00:25:38,640 --> 00:25:42,960
Speaker 1: traditional markets because uh this this really caught my eye.

496
00:25:43,000 --> 00:25:47,560
Speaker 1: A story by our own Michael mackenzie. Now everyone knows

497
00:25:47,600 --> 00:25:50,040
Speaker 1: inflation was the big story this year. And how do

498
00:25:50,040 --> 00:25:53,240
Speaker 1: you protect yourself against inflation? Well, one way is through

499
00:25:53,440 --> 00:25:58,640
Speaker 1: Treasury inflation protected securities TIPS. So it's time to play

500
00:25:58,680 --> 00:26:02,760
Speaker 1: that game. The prices per crisis precise What did tips

501
00:26:02,760 --> 00:26:05,920
Speaker 1: do this year? According to the Bloomberg Tips index? What

502
00:26:06,320 --> 00:26:09,720
Speaker 1: was what's their return year to date in tips? Remind

503
00:26:09,720 --> 00:26:13,640
Speaker 1: you inflation got up to what nine percent? Um? How

504
00:26:13,640 --> 00:26:18,000
Speaker 1: about mon? Okay? How about is it negative? Now? The

505
00:26:18,040 --> 00:26:25,240
Speaker 1: way you're phrasing it, it makes me think checking terminal checks.

506
00:26:25,280 --> 00:26:31,840
Speaker 1: I'm gonna say six six percent return? Positive six percent? Mona?

507
00:26:31,920 --> 00:26:36,000
Speaker 1: What's your guess? Okay, I'm gonna go with negative one.

508
00:26:36,760 --> 00:26:40,679
Speaker 1: It has to be positive, otherwise you wouldn't be asking motive?

509
00:26:40,720 --> 00:26:45,800
Speaker 1: Is closer to the pen? Negative eleven? That nuts? Isn't

510
00:26:45,800 --> 00:26:48,840
Speaker 1: that credit? If you hold the maturity, you're you know,

511
00:26:48,920 --> 00:26:51,840
Speaker 1: you're You're fine, I guess, But you know the total

512
00:26:51,880 --> 00:26:54,280
Speaker 1: return of the index itself for the year negative eleven?

513
00:26:54,720 --> 00:26:59,200
Speaker 1: And tips so well for inflation protection, But how about

514
00:26:59,200 --> 00:27:01,960
Speaker 1: your money? You see anything crazy lately? I thought about

515
00:27:02,000 --> 00:27:05,680
Speaker 1: this from a broader perspectives, since we're heading into your end.

516
00:27:05,760 --> 00:27:08,120
Speaker 1: I just thought it was so interesting as we came

517
00:27:08,119 --> 00:27:11,520
Speaker 1: into the year to see a lot of these bubblicious

518
00:27:11,880 --> 00:27:13,920
Speaker 1: parts of the market one by one get taken down.

519
00:27:13,960 --> 00:27:17,080
Speaker 1: So you remember the meme stocks, remember this back market.

520
00:27:17,640 --> 00:27:20,359
Speaker 1: Of course, the arc type funds, and now it's of

521
00:27:20,400 --> 00:27:23,719
Speaker 1: course all about crypto. So I guess My kind of

522
00:27:23,760 --> 00:27:27,480
Speaker 1: crazy story is that fed rate hikes and higher rates

523
00:27:27,480 --> 00:27:31,679
Speaker 1: actually do work to help bring some of these maybe

524
00:27:31,800 --> 00:27:35,800
Speaker 1: valuations that were heading towards bubblicious territory back down to reality.

525
00:27:35,800 --> 00:27:38,000
Speaker 1: Who who would have thought? Right? Who would have thought?

526
00:27:38,240 --> 00:27:41,040
Speaker 1: Remember when crypto was three trillion dollars? Oh my god?

527
00:27:41,520 --> 00:27:44,560
Speaker 1: Who could forget all the froth gone? Do you think er?

528
00:27:44,680 --> 00:27:47,679
Speaker 1: Is there more to go? You know? I think, uh,

529
00:27:48,040 --> 00:27:50,640
Speaker 1: housing we'll see a little bit of that froth continue

530
00:27:50,640 --> 00:27:53,280
Speaker 1: to come out. But I think we're getting into better

531
00:27:53,320 --> 00:27:56,520
Speaker 1: valuations all around, and that's good for investors and long

532
00:27:56,640 --> 00:27:59,720
Speaker 1: term investors. Yeah. Absolutely, Well, it's been good for us

533
00:27:59,760 --> 00:28:03,119
Speaker 1: to have you on the show. Mona Mahadgen, Senior Investment

534
00:28:03,119 --> 00:28:05,359
Speaker 1: Strategies at Edward Jones. Thank you so much and hopefully

535
00:28:05,359 --> 00:28:07,640
Speaker 1: we can do it again. Thank you guys. This is great.

536
00:28:07,680 --> 00:28:17,680
Speaker 1: Thank you Mona. What goes up? We'll be back next

537
00:28:17,720 --> 00:28:19,280
Speaker 1: week and so then you can find us on the

538
00:28:19,280 --> 00:28:23,240
Speaker 1: Bloomberg Terminal website and app or wherever you get your podcasts.

539
00:28:23,960 --> 00:28:25,520
Speaker 1: We love it if you took the time to rate

540
00:28:25,560 --> 00:28:28,600
Speaker 1: and review the show on Apple Podcasts, so more listeners

541
00:28:28,600 --> 00:28:30,919
Speaker 1: can find us. And you can find us on Twitter

542
00:28:31,320 --> 00:28:34,720
Speaker 1: follow me at reag Anonymous, Well, Donna Hirach is at

543
00:28:34,760 --> 00:28:39,320
Speaker 1: Bildanna Hirach. You can also follow Bloomberg Podcasts at Podcasts.

544
00:28:40,440 --> 00:28:43,600
Speaker 1: What Goes Up is produced by Stacy Wong. Thanks for listening,

545
00:28:43,720 --> 00:29:01,000
Speaker 1: See you next time, U,