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Speaker 1: Let's get to our guest, Marion Montange, portfolio manager at

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Speaker 1: Gradient Investments. So Jim Bullard sounding less hawkish is kind

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Speaker 1: of interesting. We know he doesn't vote this year, but

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Speaker 1: he is a leader, and although the comments were somewhat

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Speaker 1: nullified by the labor data today, because he is a leader,

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Speaker 1: do you think these words come back to play an

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Speaker 1: important role later? You know, I think we just have

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Speaker 1: to look at the data and everything we're seeing from

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Speaker 1: the manufacturing side from H in the yesterday's report and

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Speaker 1: also from the private employment numbers today and numbers we're

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Speaker 1: going to see tomorrow indicate that we still have inflation

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Speaker 1: pressures from the labor side of things. Now. We know

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Speaker 1: that a lot of commodities have rolled over from their

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Speaker 1: June peaks, but labor and that feeds quite a bit

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Speaker 1: into the consumer services side of things. Uh. That is

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Speaker 1: still a pressure on on pricing and we think going

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Speaker 1: to keep the uh the Fed UHH raising rates in

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Speaker 1: the coming months. Uh. So you know, this less hawkish stuff,

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Speaker 1: I'm just going to glide past that and numbers. Yeah,

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Speaker 1: I think we understand that. But the job market, job

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Speaker 1: market is a lagging indicator, right, and the bonding stock

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Speaker 1: markets are leading. Um, the Fed seems to be hanging

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Speaker 1: its hat on a on a lagging indicator, and maybe

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Speaker 1: Bullard senses that I. You know, I think we're just

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Speaker 1: going to have to work through the increases that have

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Speaker 1: taken place the path that they've been on, which is

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Speaker 1: to continue to increase at a probably much lesser pace

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Speaker 1: I and then wait for all of this to roll through.

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Speaker 1: And you know, at some point in time, we think

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Speaker 1: that the Federal Reserve will certainly stop raising uh, but

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Speaker 1: cutting UH. That could be you know next uh, at

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Speaker 1: the end of this year into next year. Well, tell

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Speaker 1: me something, Marrion, I mean, is it possible that we

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Speaker 1: could be in a slightly different economic paradigm now, given

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Speaker 1: all that we've been through with the QE, the bond market,

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Speaker 1: the GFC, etcetera, etcetera, and cheap money, that the job

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Speaker 1: market will remain solid as the as the interests as

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Speaker 1: interest is keeping going up and up and up, and

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Speaker 1: that would lead them in a real conundrum. Well, I

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Speaker 1: think we are in a different situation right now, and

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Speaker 1: that is that, UM, you know, the the uh the

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Speaker 1: economy is starting to trail off a bit, uh, and

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Speaker 1: we're going to have uh you know, reduced demand, uh,

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Speaker 1: and we we have quantitative tightening going on at this point. UH.

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Speaker 1: So those are all areas that indicate to us that

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Speaker 1: interest rates will remain elevated for a while. So it

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Speaker 1: seems like dred on the S and P five has

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Speaker 1: been an important level, perhaps technically more than anything else.

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Speaker 1: It was support back in July when we really tanked,

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Speaker 1: and and we've been pivoting around it. If we move

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Speaker 1: lower in the next couple of days, does that open

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Speaker 1: a whole new downward push in your view? I, you know,

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Speaker 1: I think uh. I hate to try to time these

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Speaker 1: things over a few days time, but we were actually,

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Speaker 1: you know, closer to thirty six hundred level when we

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Speaker 1: started to you know, show support in there. UM, And

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Speaker 1: right now we're just trading in a very narrow range. H.

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Speaker 1: Do do we uh do we go back to that um,

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Speaker 1: that thirty six hundred area, that could happen? I do

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Speaker 1: think that would show uh support once again. UM. But UM,

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Speaker 1: I just think we have to get through earning season

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Speaker 1: and we'll probably see a lot of management differ from

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Speaker 1: raising expectations for the year UM, and they'll probably have

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Speaker 1: good enough numbers. But it's going to be that lack

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Speaker 1: of confidence in the rest of the year that will

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Speaker 1: probably you know, pressure us down to that support area

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Speaker 1: in the thirty six hundreds. Mary, and I'd like to

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Speaker 1: say that you, of course looking at the market for

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Speaker 1: some of those companies which you may well do well,

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Speaker 1: didn't do well last year, and it's like sesame set

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Speaker 1: and today's episode begins with a letter A. That's right.

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Speaker 1: So I happen to like alliteration. And three of the

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Speaker 1: stocks that were dogs last year are Alphabet, Amazon and

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Speaker 1: American Tower. And Alphabets along with Amazon, are you know,

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Speaker 1: those tech stocks that really took a hammering with rising

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Speaker 1: interest rates and lower valuations. But we think the fundamentals

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Speaker 1: are there to support good stock UH price movement. With Alphabet,

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Speaker 1: the stock is trading at about seventeen times UH this

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Speaker 1: year's earnings and UH they're expected to grow mid teams.

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Speaker 1: So that's pretty good valuation on something like an Alphabet

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Speaker 1: or Google as people used to call it. UM. There's

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Speaker 1: so much negativity out there. UH. We just think that

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Speaker 1: UH management can make some uh more aggressive layoffs and

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Speaker 1: helped to boost margins and that would be received well

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Speaker 1: by investors. And in the case of Amazon. Um, you

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Speaker 1: know it's this is one that may benefit from the

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Speaker 1: fact that the founder is chairman of the board and

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Speaker 1: he may be just frustrated enough to spin out that

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Speaker 1: AWS group under Andy Jassy, the current CEO, there's nothing

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Speaker 1: wrong with that part of the business. Uh, it'll give

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Speaker 1: better value to the stockholders and let bezos go back

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Speaker 1: and manage the remainder of the businesses. Uh. That kind

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Speaker 1: of founders return to active management has been good for

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Speaker 1: the shareholders of Starbucks and Disney. In the latter it's

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Speaker 1: not already to ask you about about Disney skipping over

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Speaker 1: the B in the C and getting there because it

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Speaker 1: had a tough time last year, but it's had a

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Speaker 1: pretty good start to this year. Well, you know, the

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Speaker 1: hemorrhaging has stopped in the stock valuation that was going

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Speaker 1: on under the prior CEO. And I think there's a

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Speaker 1: lot of things I need to clean up. Uh. So

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Speaker 1: it's not one of our favorite this year. UM. I

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Speaker 1: think it may tread water for a while as they

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Speaker 1: go through that cleanup process. It might take longer than

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Speaker 1: most people expect. But the third a for me is

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Speaker 1: American Tower, which is the largest cell tower reet globally.

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Speaker 1: And now includes some data centers. So evaluation twenty times

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Speaker 1: UH forward funds flow. That's is their EPs UM. It's

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Speaker 1: at the low end of the historical valuation range on

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Speaker 1: both an absolute basis and relative to the market as

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Speaker 1: a whole. UM we think it's going to have earnings

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Speaker 1: growth in the mid to high single digits, and it

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Speaker 1: tends to be very stable in defensive business UM. They

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Speaker 1: had a rough when Sprint and T Mobile combined, but

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Speaker 1: now we've established a new base and we think that

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Speaker 1: we're going to have strong demand UH in three across

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Speaker 1: their services. All Right, Marianne, thanks very much for joining us.

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Speaker 1: Marian Montange, portfolio manager at Gradia Investment. Sorry we didn't

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Speaker 1: get a chance to get to China, Hong Kong in China.

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Speaker 1: We'll save that for next time with Marianne