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Speaker 2: Joining us. Now, boy, do we need an update? Tiffany
Speaker 2: Wilding with this. The last time she was on it
Speaker 2: was chaos. Kembergs. Can't we remember what the excuse was,
Speaker 2: but it was nuts. Let's get some sanity now. Tiffany
Speaker 2: wild with the Pacific Investment Management Company PIMCO on America's economy.
Speaker 2: Can you be co cool, common collected, Tiffany? Or is
Speaker 2: the unknown unknown killing you?
Speaker 3: Well?
Speaker 4: You know, I think for the inflation report that was
Speaker 4: released this morning, you know, the real news was the
Speaker 4: headline report, you know, and the surge and energy prices,
Speaker 4: and that should be no surprise to anyone who has
Speaker 4: filled up their tank with gasoline lately. I think, you know,
Speaker 4: in terms of the impact of the Iran war and
Speaker 4: higher energy costs, you know, I think the you know,
Speaker 4: I think was very obvious. It's going to raise inflation.
Speaker 4: I think the key unknown right now is to what extent.
Speaker 4: It's going to impact you know, consumers purchases, real purchases
Speaker 4: of everything else. If they have higher gasoline prices they
Speaker 4: have to pay. That leaves less discretionary income for for
Speaker 4: all other things, you know. And this was coming in
Speaker 4: a time when labor income was already you know, on
Speaker 4: the soft side. So so real labor income was already
Speaker 4: running around one percent, and this will further stretch, you know,
Speaker 4: the the incomes that people have, you know. So I
Speaker 4: think the effects on the economy from you know, some
Speaker 4: weaker consumption you know, is kind.
Speaker 3: Of yet to be seen. Now.
Speaker 4: The good news is is that people are receiving higher
Speaker 4: tax refunds right now as a result of OB three bills,
Speaker 4: So that's cushioning some of the blow, you know. But
Speaker 4: we'll be watching retail sales data pretty closely moving forward
Speaker 4: to see how how the effects are playing out here.
Speaker 5: So, Tiffany, have you taken your I don't know GDP
Speaker 5: numbers down? Have you raised your inflation forecast or is
Speaker 5: it still too early here?
Speaker 3: Well?
Speaker 4: No, I mean we are certainly seeing higher energy prices,
Speaker 4: so you know, you have to raise your your your
Speaker 4: inflation forecasts. You know, we know even with the you know,
Speaker 4: the ceasefire, you know, some of the decline in you know,
Speaker 4: in the front month oil futures prices. You know, Interestingly,
Speaker 4: the market is not really pricing in a decline versus
Speaker 4: what it had priced before in some of the longer
Speaker 4: dated futures contracts.
Speaker 3: You know, So this is still expected.
Speaker 4: The market is still expecting this to be a relatively
Speaker 4: temporary situation. But the current news, you know, has it
Speaker 4: really impacted kind of the market implied longer term outlook
Speaker 4: for energy, which is still twenty percent above where it was.
Speaker 4: So I would just say, you know, we are going
Speaker 4: to see higher prices. We think inflation accelerates to four
Speaker 4: percent headline inflation the next several months, you know, and
Speaker 4: then hopefully as things dissipate, you know, we'll get some
Speaker 4: relief later this year. But we do think that will
Speaker 4: shave some off of growth as well. So we have
Speaker 4: lowered our GDP forecasts.
Speaker 2: What does it do to yields? Link it into your
Speaker 2: day job, which is helping pimpco fixed income managers survive
Speaker 2: to the end of the quarter they got to get
Speaker 2: to June thirtieth. What does the wilding inflation four percent
Speaker 2: do to yield.
Speaker 4: Yeah, I mean, you know, so I think anybody has
Speaker 4: to do scenario analysis. We always do scenario analysis, but
Speaker 4: of course it's incredibly important now, you know, just given
Speaker 4: the wide range of potential outcomes with Iran. But when
Speaker 4: we think about, you know, our positioning the bond market,
Speaker 4: you know, we still think high quality bonds provide a
Speaker 4: lot of value safe store of account here. And the
Speaker 4: reason is because if this does turn into a more
Speaker 4: prolonged disruption, the CEA fire doesn't hold. You know, we
Speaker 4: really think global recessionary risks could increase there and the
Speaker 4: bond portfolio will will probably do better in that scenario.
Speaker 4: At the same time, if you do get a resolution,
Speaker 4: you get energy prices falling. You know, under our core forecast,
Speaker 4: with energy prices falling, you could see headline inflation moving
Speaker 4: below the fed's two percent target later this year, early
Speaker 4: twenty twenty seven. Really, so that's the other thing that
Speaker 4: we have to keep in mind here, you know, that
Speaker 4: will allow the Fed, we think, to cut interest rates
Speaker 4: back towards neutral stuff.
Speaker 2: You just all this morning, Tiffany, that was almost interesting
Speaker 2: thing I heard. Don't tell Margaret Brennan she was electric
Speaker 2: Lebanon tiffity wilding to get to a sub two percent
Speaker 2: tiffany wilding call correlate that over to a price of
Speaker 2: a barrel oil. Are you saying below seventy or like
Speaker 2: a collapse? No, Michael mcgloone collapse in oil.
Speaker 3: No.
Speaker 4: I mean if if we just look at if we
Speaker 4: just assume what is priced into the energy futures curve
Speaker 4: right now. Energy futures curve is basically suggesting that after
Speaker 4: oil and energy inflation peaks in April, you will see
Speaker 4: declines and energy prices which push the year on your
Speaker 4: rate down below two percent. Now, if we get a
Speaker 4: faster drop in oil prices relative to what's pricing the curve,
Speaker 4: that would happen before you know, that could happen as
Speaker 4: early as next late this year.
Speaker 2: I'm exhausted. Are we working tomorrow?
Speaker 3: No?
Speaker 2: That was the most important.
Speaker 5: Inside I know. Well, I'll tell you what I learned
Speaker 5: from Matt Million yesterday. If you want to see the
Speaker 5: crude curve where the futures are trading, you put in
Speaker 5: cl one Commodities space CT and that gives you the
Speaker 5: futures contract table. Matt Miller told me that I guess
Speaker 5: you what's you drive?
Speaker 2: You this week.
Speaker 6: I don't know, Hope has four wheels.
Speaker 5: Hopefully it has four wheels. That's all I know about.
Speaker 5: Real quick, Tiffany, talk to us about the US consumer here,
Speaker 5: because we found out time and time again you cannot
Speaker 5: count out this US consumer.
Speaker 3: Yeah, I mean the consumer.
Speaker 4: The US consumer has just you know, defied I think,
Speaker 4: all expectations for any slowdown since the pandemic. You know,
Speaker 4: you you do have a very big wealth buffer that
Speaker 4: consumers have have been able to you know, to accumulate
Speaker 4: post pandemic that remains pretty solid.
Speaker 3: You know.
Speaker 4: Now we've all talked about the K shaped economy. There
Speaker 4: are certain differences under the surface here. Lower end consumers
Speaker 4: are not doing that well. They are getting squeezed by
Speaker 4: higher energy prices, you know. But but middle to high
Speaker 4: income consumers they will be able to weather this uh
Speaker 4: energy shock, you know. And I guess the question is,
Speaker 4: you know, they will they will maybe smooth through this
Speaker 4: with through savings and and and wealth.
Speaker 3: You know. So the question is how how well do
Speaker 3: they hold up?
Speaker 4: And if they do, then this is the US economy
Speaker 4: is going to be continue to remain.
Speaker 5: Resilient, Tiffany. So next thing fed sit on its hands.
Speaker 5: I guess is the call for the remainder of this year,
Speaker 5: do you think.
Speaker 3: Yeah, I mean, that's that's basically our call.
Speaker 2: You know.
Speaker 4: We we actually moved out, we delay, We aid our
Speaker 4: expectations for when the Fed cuts interest rates. We do
Speaker 4: think they're probably on a prolonged pause as they see
Speaker 4: how this plays out.
Speaker 3: You know.
Speaker 4: But as I mentioned, you know, they they're the inflationary
Speaker 4: headwinds right now will turn into tailwinds at least from
Speaker 4: the energy side, you know, later this year and into
Speaker 4: next year. So we do think they probably will cut
Speaker 4: a couple more times. I think the market is sort
Speaker 4: of maybe pricing one cut in twenty twenty seven right now.
Speaker 3: We think they probably will get down to their.
Speaker 4: Midpoint three percent of their expectations for the kind of
Speaker 4: neutral rate of policy.
Speaker 3: We do think that'll happen.
Speaker 4: You also have the changeover from wash from Powell Tosh
Speaker 4: coming in. You know, he has you know, on the margin,
Speaker 4: we think a bit more of a dubbish reaction function.
Speaker 3: We think he probably will get the.
Speaker 4: Committee down to that three percent under at least under
Speaker 4: the base case.
Speaker 2: Jaw dropping Tiffany, Well, thank you so much, Stay with us.
Speaker 2: More from Bloomberg Surveillance coming up after this.
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Speaker 2: Cancer Commission he joins Alpha Simplex just fabulous. Trend based work, Katie,
Speaker 2: is the general statement in then unknown massive uncertainty. You
Speaker 2: lead with a dreaded word, hope, how do you do
Speaker 2: a trend based analysis here or do you just step aside?
Speaker 7: Well, I mean, it's interesting you asked that we have
Speaker 7: seen that a lot of the former trends consolidated into
Speaker 7: this move. But honestly, energy was able to offset a
Speaker 7: lot of this deleveraging and the changing in the trend direction.
Speaker 7: But it is interesting this week we're starting to see
Speaker 7: some of the old trends sort of equities doing well again.
Speaker 7: So it has been sort of a difficult pivot for
Speaker 7: the last six weeks, but something that trend has navigated
Speaker 7: reasonably well, I would say.
Speaker 5: And Katie, one of the trends that a neophyte like
Speaker 5: myself could identify this year was a weaker US dollar,
Speaker 5: but that kind of got interrupted with this war in Iran.
Speaker 5: Can the dollar re establish a little bit more of
Speaker 5: a negative trend? Do you think?
Speaker 7: I definitely think it's possible. We saw a big sort
Speaker 7: of reversal in that sort of weak US dollar trend,
Speaker 7: with the exception of some of the em currencies where
Speaker 7: there was some differences. For example, the end was, you know,
Speaker 7: kind of one that still worked very well despite most
Speaker 7: of these moves.
Speaker 2: And so what I think.
Speaker 7: Is happening now is we need some more resolution, and
Speaker 7: right now it's pretty mixed. You don't see very strong
Speaker 7: signals in currencies yet, but it has been tilting back
Speaker 7: towards weaker dollar as escalation has reduced in the markets.
Speaker 5: You know, Katie, I've always joked that, you know, one
Speaker 5: of the roles on Wall Street that I could never
Speaker 5: do was be an oil trader. The volatility is just
Speaker 5: too crazy here. But do you think we're in an
Speaker 5: upward trend here just because we've got this uncertain industry
Speaker 5: of rome moves that maybe the trend is higher for
Speaker 5: longer for global energy.
Speaker 7: So this is a good question because what we have
Speaker 7: seen energy trend signals have been very very strong, almost
Speaker 7: exponential in the month of March, but you have seen
Speaker 7: some of that consolidation with volatility really sort of exploding.
Speaker 7: And then of course the type of reversal that you
Speaker 7: saw earlier this weekend energy was just spectacular. So you
Speaker 7: have seen net on net signals pointing towards long energy,
Speaker 7: but it is a little bit less extreme than before.
Speaker 7: And I think this to me makes sense because honestly,
Speaker 7: we haven't resolved the problem yet, so energy prices should
Speaker 7: stay somewhat elevated, maybe not as hyperbolic as they work before.
Speaker 2: How do you do the how much ittness? When I
Speaker 2: give speeches on this, Katie, I talk about, you know,
Speaker 2: going to make the Wells wilder and Thorpin and all
Speaker 2: of it. So much of this is okay. You have
Speaker 2: a belief, you have a setup, you got a trend,
Speaker 2: like Paul says, you're catching a knife in the dark,
Speaker 2: and then you go position sizing. How much do I
Speaker 2: want to put in? How do you do how much
Speaker 2: it iss? If you're going to get derailed by a
Speaker 2: Secretary of Defense press conference.
Speaker 7: That's a good question because what we see is it's
Speaker 7: all about the numbers. It's really about balancing the measurement
Speaker 7: of price moves over time and averaging those shocks out.
Speaker 7: And so what I would say is, even though we've
Speaker 7: had some pretty difficult schalks like earlier this week, being
Speaker 7: able to be long energies and somewhat dynamic and taking position,
Speaker 7: taking profit in some of those positions as Volatiley expands
Speaker 7: was a really good hedge for many other portfolio strategies
Speaker 7: that were down quite a bit in the last month.
Speaker 7: So I'd say it's perhaps easier than just being long oil.
Speaker 7: That would be hard.
Speaker 2: What is your plan you come in on a Friday morning,
Speaker 2: are you day trading, are you fifteen minute interval trading?
Speaker 2: Or are you saying what's going to happen in September?
Speaker 7: So we're much more thinking over sort of the shorter
Speaker 7: to mid short horizon period, so in weeks to months
Speaker 7: as opposed to minutes to seconds. And I think this
Speaker 7: is important because as we know, in the shorter time horizons,
Speaker 7: there's a lot of noise, So it's really about balancing
Speaker 7: the direction of where oil is going and sort of
Speaker 7: doing that on the weeks to months horizon to kind
Speaker 7: of capture the macro themes using a data driven approach.
Speaker 5: Katie Fixed Income globally. Are there some trends you guys
Speaker 5: can play these days? Where do you see some opportunities?
Speaker 7: Fixed income has been super difficult to trade, but very interesting,
Speaker 7: and I think the interesting part has been that we
Speaker 7: have seen short signals across the board and fixed income
Speaker 7: and that means that you know, fixed income in the
Speaker 7: short term has really reacted on inflation concerns. European fixed
Speaker 7: income in particular, particularly given how you know energy sensitive
Speaker 7: and as energy importers Europe is, so I think this
Speaker 7: could be a very interesting trade if we do see
Speaker 7: continued difficulty with supply and energy and continued energy I
Speaker 7: mean inflation uncertainty. Shorting fixed income and sort of higher
Speaker 7: yields because of inflation is an interesting trade.
Speaker 2: Paul mentioned this earlier off the mic. Let's do it
Speaker 2: on the mic, Katie. Do you hold positions over the weekend?
Speaker 7: Of course the positions are we usually trade in the
Speaker 7: futures marketed, so the positions are held, but then of
Speaker 7: course they don't settle and tell the futures markets open
Speaker 7: again the next week. But you can follow the you know,
Speaker 7: the the values over the weekend periods of time. So
Speaker 7: I think you do see that and that was particularly
Speaker 7: interesting when you're looking at asia hours let's say Tuesday
Speaker 7: this week, for example, where you saw things moving and
Speaker 7: you knew things would move even more the next day.
Speaker 5: You try to, I guess, de risk your portfolio, headge
Speaker 5: your portfolio maybe a little bit more these days than
Speaker 5: you would d our normal trading our times.
Speaker 7: So actually we have seen that across the board. Hedge
Speaker 7: funds as well as CTAs have been deleveraging, and overall
Speaker 7: this is for us, it's a systematic approach. You measure
Speaker 7: more risk, you take risk off, and so it's done
Speaker 7: in sort of a systematized manner. And so when volatility
Speaker 7: expands and signals and trends change and consolidate, you actually
Speaker 7: see sort of a de leveraging. And that's what most
Speaker 7: of the banks have reported as well, is that you know,
Speaker 7: people have been taking money off the table and sort
Speaker 7: of deleveraging in an environment where risk is just much higher.
Speaker 2: And that makes sense.
Speaker 7: Because geopolitical risk increases overall equity market risk historically, and
Speaker 7: so you're seeing an environment where you want to maybe
Speaker 7: be a little you need less on the table to
Speaker 7: participate when things are this volatile.
Speaker 2: Well, said Katie Kominski. Thank you so much, hugely valuable.
Speaker 2: She's doctor Kominski with Alpha Simplex in Boston. Stay with us.
Speaker 2: More from Bloomberg Surveillance coming up after this.
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Speaker 8: The last time he was on there was a massive impact.
Speaker 2: Andrew Gilbert Reducts is again with Energy Capital Partners today.
Speaker 2: If you were to write for Monday Morning given the
Speaker 2: oil upset, that wasn't hear the last time you were
Speaker 2: in that chair. If you were to write for Monday morning,
Speaker 2: what would you write about?
Speaker 9: So we're at Energy Capital Partners, we're electricity focused and
Speaker 9: fortunately in the US we don't have to burn oil
Speaker 9: for electricity anymore. Natural gas US natural gas is a
Speaker 9: huge advantage we have and that's a big reason why
Speaker 9: electricity prices are some of the lowest in the world.
Speaker 9: What the oil crisis does mean for natural gas is
Speaker 9: perhaps that more energy goes out longer term, right, and
Speaker 9: some of the export supply that many thought was going
Speaker 9: to be sort of overbuilt in the next few years,
Speaker 9: is likely going to be fully.
Speaker 2: You said in the world for energy capital partners with
Speaker 2: your massive global reach, is President Trump basically the president
Speaker 2: for Malaysia because of hydrocarbon challenges, or Indonesia or Hungry.
Speaker 9: It's a huge challenge for those countries and puts them
Speaker 9: at countries that are burning oil for everything and including electricity,
Speaker 9: are going to be a huge competitive disadvantage. I think
Speaker 9: there's no doubt about that. That's why I'm happy we're
Speaker 9: you know, we're focused. We're North America focused where we
Speaker 9: don't have that problem in electricity.
Speaker 5: Andrew, you say in your notes, if done the right way,
Speaker 5: large load like data centers, should lower electricity bills over
Speaker 5: the long term. What do you mean by that, Because
Speaker 5: the concern is I'm paying for it, You're paying for it,
Speaker 5: and maybe it's not the Googles and the Amazons.
Speaker 2: Of the world, of course.
Speaker 9: Yeah, So there has been a short term increase in
Speaker 9: electricity prices that is driven by this, and that was
Speaker 9: really about excess demand kind of being soaked up by
Speaker 9: data centers. But the vast majority of your electricity bill,
Speaker 9: two thirds of it comes from the wires, and so
Speaker 9: when you add incremental load, you've got more megawatt hours
Speaker 9: to spread that cost. And so for utilities that now
Speaker 9: have gigawatt plus data centers to connect and double right
Speaker 9: rate base, they have a much larger customer base to
Speaker 9: spread it over.
Speaker 2: Paul's got the smartest question of the morning so far,
Speaker 2: Trophy taking. Let me add to that. Why doesn't some
Speaker 2: jillionaire Silicon Valley idiot in a white T shirt and
Speaker 2: you know whatever, Why don't they just say we're going
Speaker 2: to build a data center in Cozed Nebraska and everybody
Speaker 2: has free electric bills for ten years. It's like a
Speaker 2: rounding error to somebody living in Atherton, California.
Speaker 9: I think increasingly you're seeing data center announcements come with
Speaker 9: not exactly that, but direct savings and tangible savings for customers.
Speaker 9: I think it's going to have to be part of
Speaker 9: the solution. You want to build a data center, you've
Speaker 9: got to make promises and events to lower Just.
Speaker 2: Put a data center next to Alexis's house.
Speaker 10: Please don't do that. How to move my mic You
Speaker 10: know you catch me off guard sometimes. Tell my mic
Speaker 10: is all the way to my right.
Speaker 5: So Andrew talk to us about renewables. You talk about
Speaker 5: natural gas. We got a lot of that gas in
Speaker 5: the United State. It's not about renewables because we've got
Speaker 5: an administration that is less supportive, we can say, than
Speaker 5: maybe some other administrations. How does renewables fit into this?
Speaker 9: So the cost of new gas turbines has more than
Speaker 9: doubled in a very short amount of time. It's nearly
Speaker 9: tripled in three or four years now. And at that level,
Speaker 9: solar is the cheapest form of electricity. It's intermittent, so
Speaker 9: it doesn't run around the clock. It's not dispatchable, so
Speaker 9: it's not exactly the same product. But it is really
Speaker 9: affordable today, even with tariffs and kind of the protectionist
Speaker 9: policy that's raising prices. It's got to be part of
Speaker 9: the solution. It can also be built a lot more
Speaker 9: quickly than natural gas.
Speaker 5: I kind of feel like the solution to energy demand,
Speaker 5: if we listen to all the piper scillers and the
Speaker 5: data center people, it seems like we're going to need
Speaker 5: everything absolutely, including nuclear. Talk to me about what you
Speaker 5: think is a reasonable nuclear go to market strategy.
Speaker 9: So I mentioned the cost of natural gas, which went
Speaker 9: from about a thousand of kilo lot four years ago
Speaker 9: to over twenty five hundred today nuclear is as well
Speaker 9: over ten thousand as best we know, and we really
Speaker 9: don't know, so it will absolutely be a part of
Speaker 9: the solution. I think it has to be. But it's
Speaker 9: quite expensive and there's a lot of risk involved in that.
Speaker 2: Is there Gougey like it with all your experience like it?
Speaker 2: You know what was it? Symbols D dominion? Sure, dominion? Yeah,
Speaker 2: the big utilities, how do they manage the pressures that
Speaker 2: people face? I mean, forget about Great Britain right here,
Speaker 2: it's terrible. We just did that in the last hour.
Speaker 2: But do the utilities, like do they understand the pressure
Speaker 2: people are under?
Speaker 9: Absolutely? I think they're doing the best they can. I
Speaker 9: think quickly they're figuring out ways to use data centers
Speaker 9: and the opportunity it presents to spread the cost over
Speaker 9: more over the right days, So spread the cost of
Speaker 9: those wires over the new customers.
Speaker 2: Okay, I got one final question. It's critical. N y
Speaker 2: U Stern was the first people to got behind me.
Speaker 2: They're the first people that advertised my act. What was
Speaker 2: it like your first day at NYU Stern. I was
Speaker 2: sort of shocked by what I saw the rigor was Oh,
Speaker 2: is that what it felt like?
Speaker 9: Coming from a town of about five or six thousand
Speaker 9: people in Massachusetts, My first day at NYU was a
Speaker 9: bit of a shock.
Speaker 2: Diversity of.
Speaker 9: My classmates, the side of the city. It was a shock,
Speaker 9: but an exciting one.
Speaker 2: Very good. Please come back, really really, I love it.
Speaker 2: Andrew Gilbert, that why you stern?
Speaker 8: He's with the Energy Capital Partners.
Speaker 2: Stay with us. More from Bloomberg Surveillance coming up after this.
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Speaker 1: weekday afternoons from seven to ten am Eastern Listen on Apple,
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Speaker 2: Walter Todd, president's CIO at Greenwood Capital.
Speaker 8: Who for years has made pimento sandwiches in Augusta, joining
Speaker 8: us now from the south is a say, how far
Speaker 8: are you from Augusta?
Speaker 6: So Greenwood is about an hour due north of Augusta.
Speaker 2: So you've been there zillion times?
Speaker 6: Right, I've been there a few times.
Speaker 2: What do you like tell people? Are you one of
Speaker 2: those people?
Speaker 6: Yes?
Speaker 11: I am, and I prefer the chicken sandwich to the
Speaker 11: pomena cheese, but the eggs old is also very good,
Speaker 11: so it's all very nice.
Speaker 2: What's your most magical experience?
Speaker 11: Well, Tom, interestingly, I actually got engaged on the seventeenth t.
Speaker 6: In twenty.
Speaker 2: Thank you Alexis for to don't you You got engaged
Speaker 2: in the seventeenth t Yes, sir, stopping people.
Speaker 6: People were looking around thinking what's going on?
Speaker 2: But Paul Walter Todd the Greenwood Capital Walter.
Speaker 5: What's the conversations you're having with your clients these days?
Speaker 5: We've had six seven weeks of these crazy black Swan
Speaker 5: event in Iran. It's kind of pushed the markets all
Speaker 5: over the place. How do you communicate to your clients
Speaker 5: in that kind of environment.
Speaker 11: Yeah, I mean we try to be proactive and so
Speaker 11: you know, our job is to worry so our clients
Speaker 11: don't have to.
Speaker 6: So I do quite a bit of worrying.
Speaker 11: But so the conversations, you know, especially given the market
Speaker 11: is back to basically where it was before this all started,
Speaker 11: which we I know, we can talk about more, but
Speaker 11: so the conversations haven't been you know, to you know
Speaker 11: significant or you know, people aren't that concerned, just you know,
Speaker 11: given the dynamic of the market, just you know.
Speaker 2: Paul continued, but just to observe, I looked at a
Speaker 2: couple growth mutual funds yesterday. The rebound, Paul, in the
Speaker 2: last five days, I don't think it's in the zeitgeist.
Speaker 2: It's been extraorda dinner, it had been.
Speaker 5: And Walter, I mean, I guess the question for a
Speaker 5: lot of folks is where do we go from here?
Speaker 5: I mean, do we think about, you know, some of
Speaker 5: these growth names that have been such star warts for
Speaker 5: this market for as long as we can remember, or
Speaker 5: do we kind of embrace that rotation we saw a
Speaker 5: little bit late last year earlier this year into maybe
Speaker 5: some more value names, maybe some more cyclical names, maybe
Speaker 5: small and MidCap.
Speaker 2: How do you think about that?
Speaker 11: Yeah, I mean, first of all, to set the stage right,
Speaker 11: you know, from pre war to to now.
Speaker 6: Right, So the ten year was it four Now at four.
Speaker 11: To three, Oil is at sixty six an hour, at
Speaker 11: ninety eight GDP growth was estimated at three percent in
Speaker 11: the first core now at one point three percent. So
Speaker 11: the markets where it was, but a lot has changed
Speaker 11: for our portfolios. We think it's a balance of the
Speaker 11: two things that you outline, So it's having some defense
Speaker 11: and offense. It's having exposure to some of those big names,
Speaker 11: and by the way, the valuations on those have gotten
Speaker 11: very attractive.
Speaker 6: You saw the price action at Amazon yesterday. I think
Speaker 6: that makes sense.
Speaker 11: But also having some exposure, as you said, to those
Speaker 11: equal weight type names energy for example, we were iyres
Speaker 11: of energy on the weakness on Wednesday when oil came
Speaker 11: off real hard for new clients and new money as
Speaker 11: an example. So I think you've got to have, you know,
Speaker 11: balance in the portfolio. I think this is a time,
Speaker 11: as I say, the dual mandate of a CIO, you know,
Speaker 11: maximize returns while managing risk. I think you want to
Speaker 11: skew to managing risk right here, especially given the rebound.
Speaker 5: Does that mean maybe leaning a little bit more towards
Speaker 5: fixed income? I mean you can sit there at a
Speaker 5: two year US government treasury three point eight percent here,
Speaker 5: or do you take credit risk on top of that?
Speaker 2: Yeah?
Speaker 11: I think so what we've been doing in our fixed
Speaker 11: income portfolio is shifting, you know, reducing credit credit exposure
Speaker 11: a little bit. So we were two three years ago
Speaker 11: where eighty percent credit. Today we're about fifty to fifty.
Speaker 11: So the spreads have near they did widen temporarily but
Speaker 11: have come back in. So Yeah, we think fixed income
Speaker 11: can be a very important part of a portfolio. You
Speaker 11: kind of you're going in at four and a half
Speaker 11: to five percent.
Speaker 6: Depending on that. You know you're going to get that
Speaker 6: at the end of the day.
Speaker 2: Tell me about the repricing, Meg seven. I mean, we're
Speaker 2: into Friday, we're going to play Friday music and five
Speaker 2: day work week, and we're just sort of slogging her
Speaker 2: up here. It hasn't been more I think it's been
Speaker 2: a cold spring, but you know, maybe do we get
Speaker 2: eighties this week not next week?
Speaker 6: Very chilly this morning, yeah.
Speaker 2: Snow fit Avenue. But you know, I look, Walter tut
Speaker 2: where we are, and the thing that I noticed is
Speaker 2: a repricing of tech. What do you do with that?
Speaker 2: Is a responsible wealth manager?
Speaker 11: Yeah, I think I think it's a good you know, again,
Speaker 11: to the extent you don't have exposure to it, I
Speaker 11: think it's a good time to start legging into that.
Speaker 11: I mean I was looking this morning. Amazon trades at
Speaker 11: you know, fifteen times cash flow. Microsoft trades at about
Speaker 11: the same multiple of cash flow, not free cash flow,
Speaker 11: and that's a debate, right, They're spending a lot of
Speaker 11: money on free cash flow side, but still, I mean
Speaker 11: those those have come down quite dramatically, Microsoft in particular,
Speaker 11: but Amazon as well, so we would we would find
Speaker 11: those attractive.
Speaker 5: Greenwood, South Carolina.
Speaker 6: I'm looking at the map.
Speaker 5: Where do you fly into?
Speaker 11: Well, you can fly into Greenville, which is about an
Speaker 11: hour north, or you get fly into Columbia. No, you
Speaker 11: don't fly into Atlanta because Atlanta Airport is a disaster.
Speaker 2: Yeah. Where are you guys?
Speaker 5: I mean hopefully, Yeah, we're an hour north of Augusta
Speaker 5: to the.
Speaker 2: Paul thinks so much for bringing us up to the Carolinas.
Speaker 2: You know, we talked to people from Columbus, Ohio. They're
Speaker 2: surrounded by budding data centers. Yes, I'm assuming maybe maybe
Speaker 2: not you are you know, everybody's retiring to the Carolinas.
Speaker 3: Of that?
Speaker 2: Is AI good for you down there?
Speaker 6: Yeah, it's a great question, Tom.
Speaker 11: I mean Google's actually made a huge investment in South
Speaker 11: Carolina to build data centers towards the lower part of
Speaker 11: the state. So we are you know, some would say
Speaker 11: benefiting from that investment. Obviously there's a debate on you know,
Speaker 11: the adverse consequences of that, but yes, we are benefiting
Speaker 11: from AI. We are benefiting from people moving out of
Speaker 11: other parts of the country into our part of the country,
Speaker 11: manufacturers coming in there.
Speaker 6: You BMW has their North American.
Speaker 2: I mean, everybody left at BMW and made South dumb
Speaker 2: South Carolina jokes. And it's been enough humly.
Speaker 6: Successful, right absolutely, and the ABOA is there all.
Speaker 2: The execution of it. I had the seeds, ye see.
Speaker 2: Treated somebody's moving from California to Phoenix. They just announced
Speaker 2: it yesterday.
Speaker 3: I know.
Speaker 5: I just ordered the home of my new BMW and
Speaker 5: it's getting built as we speak in your backyard.
Speaker 6: You got to come through the racetrack that it's really
Speaker 6: fun to do. The driving course.
Speaker 5: We got to get down there.
Speaker 2: Well, there's a lot of that. I mean, a Lexus
Speaker 2: is thinking, are you going Western East Carolina? Have you
Speaker 2: figured out?
Speaker 8: I don't know yet.
Speaker 10: It's still it's out for debate. But you know what,
Speaker 10: speaking of this bmgby of course, there's one in upstate
Speaker 10: New York that that my husband did and just raved
Speaker 10: about it.
Speaker 6: It's fabulous.
Speaker 3: It seems really cool.
Speaker 10: I get myself behind the wheel.
Speaker 5: Your clients want to be an alternative investments. They don't
Speaker 5: want private equity, private credit, hedge funds, because I hear
Speaker 5: so much more about that from all right ri I
Speaker 5: A's around the tuntry.
Speaker 11: Yeah, so our client base not so much. But we
Speaker 11: are kind of, you know, talking to the more about that.
Speaker 11: About adding exposure. I think alternatives is such a broad term, right,
Speaker 11: and you are you adding alternatives to goose your returns?
Speaker 11: Are you adding it for diversification purposes? And that's an
Speaker 11: important distinction that you have to have.
Speaker 2: Okay, we got to run do the news and catch
Speaker 2: up on what's going on the Eastern Mediterranean. When you
Speaker 2: get out of the car at Augusta, what's the first
Speaker 2: thing you do when you're there?
Speaker 6: You can put your phone away because you can take
Speaker 6: it in.
Speaker 2: You just leave your phone in the car.
Speaker 6: Yeah you can't. I mean that you can't get through
Speaker 6: security with the phone.
Speaker 5: Yeah, So market should professional golfer got tossed a couple
Speaker 5: of days ago.
Speaker 2: We should have a Bloomberg Yeah, exactly, Absolutely well, Joey Walter,
Speaker 2: thank you so much.
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