1 00:00:00,040 --> 00:00:03,160 Speaker 1: Let's get to EVA Autos in the meantime. EVA is 2 00:00:03,279 --> 00:00:07,680 Speaker 1: the CEO also the chief investment strategist at E. R. 3 00:00:07,840 --> 00:00:11,200 Speaker 1: Shares who joins from Boston. Eva, thanks for being with us. 4 00:00:11,640 --> 00:00:15,280 Speaker 1: When you hear um from David Solomon at Goldman SAX 5 00:00:15,360 --> 00:00:17,560 Speaker 1: and you hear from Brian moynahan today at Bank of 6 00:00:17,560 --> 00:00:20,040 Speaker 1: America that they are bracing for a recession, are you 7 00:00:20,120 --> 00:00:23,079 Speaker 1: inclined to accept that and and trade off that idea? 8 00:00:24,560 --> 00:00:27,440 Speaker 1: So we have been expecting a recession, but a mild 9 00:00:27,480 --> 00:00:31,320 Speaker 1: one in three. We do not. Our contrarian view here 10 00:00:31,600 --> 00:00:34,640 Speaker 1: is that we do think corporate earnings are coming down, 11 00:00:34,760 --> 00:00:39,519 Speaker 1: Housing is coming down. GDP will decline further. However, unemployment 12 00:00:39,640 --> 00:00:43,960 Speaker 1: will stay at low, relative relatively low levels. That's because 13 00:00:44,000 --> 00:00:47,159 Speaker 1: we have many baby boomers. We have seventy eight million 14 00:00:47,200 --> 00:00:50,320 Speaker 1: baby boomers retiring with the rate of four point three 15 00:00:50,360 --> 00:00:54,200 Speaker 1: million a year. That will help keep unemployment level slow. 16 00:00:54,440 --> 00:00:56,840 Speaker 1: We also need to remember that many of the tech 17 00:00:56,960 --> 00:01:01,320 Speaker 1: layoffs are H one babies, A workers at foreign um 18 00:01:01,760 --> 00:01:05,960 Speaker 1: young foreign people, and that number does not hit unemployment either. 19 00:01:06,080 --> 00:01:09,160 Speaker 1: So for both those reasons, we expect unemployment to stay 20 00:01:09,240 --> 00:01:14,160 Speaker 1: relatively low, which will increase the chance that the recession 21 00:01:14,160 --> 00:01:18,480 Speaker 1: will be mild rather than a strong. What gives you 22 00:01:18,520 --> 00:01:21,319 Speaker 1: that conviction though, I mean you've explained some of the 23 00:01:21,400 --> 00:01:23,560 Speaker 1: o this even but I mean it's rare that you 24 00:01:23,640 --> 00:01:26,720 Speaker 1: get a soft landing ultimately, and you know, we're an 25 00:01:26,760 --> 00:01:30,120 Speaker 1: uncharted water because we've got ut going on. We've never 26 00:01:30,160 --> 00:01:33,240 Speaker 1: had a situation where we got high inflation and a 27 00:01:33,360 --> 00:01:40,160 Speaker 1: rigidly strong jobs market. We again, we we don't say 28 00:01:40,200 --> 00:01:43,440 Speaker 1: we won't have a recession. I think we are all 29 00:01:43,520 --> 00:01:46,280 Speaker 1: expecting a recession, but our view it's is going to 30 00:01:46,319 --> 00:01:49,400 Speaker 1: be a mild one instead of a strong one. We 31 00:01:49,520 --> 00:01:53,760 Speaker 1: also look at companies, entrepreneurial companies in particular, and what 32 00:01:53,840 --> 00:01:55,880 Speaker 1: we're saying is that they had a lot of lead 33 00:01:55,880 --> 00:01:58,000 Speaker 1: time because we have been speaking about the recession for 34 00:01:58,120 --> 00:02:00,400 Speaker 1: quite a while, so they have been a a thing. 35 00:02:00,840 --> 00:02:03,840 Speaker 1: They have been containing costs, there have been laying off people. 36 00:02:04,240 --> 00:02:07,160 Speaker 1: I think that's all beneficial news, and I think that 37 00:02:07,240 --> 00:02:09,799 Speaker 1: will be surprised that some of them will be able 38 00:02:10,160 --> 00:02:14,000 Speaker 1: to adjust to the new macroeconomic conditions in three better 39 00:02:14,040 --> 00:02:17,399 Speaker 1: than others. That being said, of course, corporate earnest will 40 00:02:17,440 --> 00:02:22,040 Speaker 1: come down. Every fifty billion loss in corporate earnings will 41 00:02:22,040 --> 00:02:26,079 Speaker 1: look on for months one percent reduction in GDP housing weeks, 42 00:02:26,080 --> 00:02:29,959 Speaker 1: but housing to come way down. But again I think 43 00:02:30,080 --> 00:02:34,280 Speaker 1: unemployment will stay less relatively low, which will help mitigate 44 00:02:35,200 --> 00:02:38,320 Speaker 1: the risk of having a very strong recession. We spoke 45 00:02:38,360 --> 00:02:41,760 Speaker 1: are should say the Morning Shows spoke Bloomberg Surveillance with 46 00:02:42,480 --> 00:02:45,600 Speaker 1: Lisa Shallotte over at Morgan Stanley Wealth Management this morning, 47 00:02:45,600 --> 00:02:48,680 Speaker 1: and she said pretty bluntly that a lot of corporate 48 00:02:48,680 --> 00:02:51,560 Speaker 1: guidance is delusional. Does she have a point that we 49 00:02:51,600 --> 00:02:56,600 Speaker 1: have to rethink the magnitude of earnings growth? I think 50 00:02:56,600 --> 00:02:59,280 Speaker 1: there are examples still. You see Manga Deban now after 51 00:02:59,400 --> 00:03:03,560 Speaker 1: hours twenty five twenty seven percent, so you see companies 52 00:03:03,560 --> 00:03:06,320 Speaker 1: that have been able to go from a loss to 53 00:03:06,440 --> 00:03:09,760 Speaker 1: a profit. They've been able to maintain their costs in 54 00:03:09,800 --> 00:03:12,520 Speaker 1: a way that other companies were not. So I think 55 00:03:12,520 --> 00:03:16,520 Speaker 1: it's again it's a company by company UM type of analysis. 56 00:03:16,720 --> 00:03:19,680 Speaker 1: And I think many companies did have the time to 57 00:03:19,760 --> 00:03:23,079 Speaker 1: adjust on time, like the companies have started to laying 58 00:03:23,080 --> 00:03:26,679 Speaker 1: off people months ago UM, so I think that will 59 00:03:26,800 --> 00:03:30,800 Speaker 1: be beneficial. Of course, I think there's a big difference 60 00:03:30,800 --> 00:03:34,440 Speaker 1: from how we you tech now and and companies on 61 00:03:34,480 --> 00:03:39,000 Speaker 1: the fundamental basis. I think investors now are focused more 62 00:03:39,120 --> 00:03:41,400 Speaker 1: on the bottom line rather than the top line. We 63 00:03:41,480 --> 00:03:44,360 Speaker 1: do not want to see the top line being pursued 64 00:03:44,400 --> 00:03:48,160 Speaker 1: at the expense of profits. So I think many companies 65 00:03:48,280 --> 00:03:52,320 Speaker 1: and investors have adjusted their way they view things based 66 00:03:52,320 --> 00:03:55,920 Speaker 1: on what's coming up. Well, tell me if is any 67 00:03:55,920 --> 00:03:59,200 Speaker 1: particularly industry group, any sectors that you're particularly vulnerable in 68 00:03:59,240 --> 00:04:04,160 Speaker 1: your in your view retail, for example, So I think 69 00:04:04,280 --> 00:04:08,600 Speaker 1: we're heading into a moderate, um mediocre, I would say 70 00:04:08,960 --> 00:04:13,240 Speaker 1: um holiday season. I'm very concerned with the high inventory 71 00:04:13,320 --> 00:04:18,120 Speaker 1: levels that retailers have. They have been. They were piling 72 00:04:18,160 --> 00:04:22,000 Speaker 1: on inventory because they were expecting more supply issues, and 73 00:04:22,040 --> 00:04:25,359 Speaker 1: now they now have excessive inventory which they need to shed, 74 00:04:25,920 --> 00:04:30,159 Speaker 1: and for that reason, they'll have more discounts, bigger discounts, 75 00:04:30,200 --> 00:04:33,680 Speaker 1: and we're already observing that. So that's gonna hit retailers, 76 00:04:33,720 --> 00:04:37,159 Speaker 1: and of course we should. We should remember that inflation 77 00:04:37,960 --> 00:04:41,440 Speaker 1: is taking a big part of the consumer's pocket So 78 00:04:41,920 --> 00:04:45,800 Speaker 1: that means that even though the net amount being spent 79 00:04:46,080 --> 00:04:49,800 Speaker 1: may be similar to previous periods in nominal terms, I 80 00:04:49,839 --> 00:04:52,480 Speaker 1: think if you adjusted for inflation, will be way lower 81 00:04:52,520 --> 00:04:56,320 Speaker 1: the scarning this holiday season. So if you're negative on retail, 82 00:04:56,440 --> 00:04:59,840 Speaker 1: cautious on tech energy maybe over extended. I mean that 83 00:05:00,000 --> 00:05:02,360 Speaker 1: has been kind of a shelter in the storm here. 84 00:05:02,400 --> 00:05:04,960 Speaker 1: Although crude oil prices were down quite a bit today. 85 00:05:05,000 --> 00:05:07,200 Speaker 1: A lot of what we're hearing in the oil market 86 00:05:07,240 --> 00:05:09,799 Speaker 1: is that the FED is going to drive the economy 87 00:05:09,839 --> 00:05:12,240 Speaker 1: into a recession. We can debate that, yet we've already 88 00:05:12,279 --> 00:05:16,200 Speaker 1: done some of that. Away from equities, I'm wondering now, 89 00:05:16,240 --> 00:05:18,400 Speaker 1: if you're looking for cover, maybe you've got to favor 90 00:05:18,440 --> 00:05:22,120 Speaker 1: the bond market the on the short terms, so on 91 00:05:22,200 --> 00:05:25,080 Speaker 1: the short term, with so yields rise again today, I 92 00:05:25,080 --> 00:05:27,479 Speaker 1: think the short and short term treasuries are a good 93 00:05:27,480 --> 00:05:30,440 Speaker 1: place to be a safe place to be from the 94 00:05:30,560 --> 00:05:33,479 Speaker 1: long On the long term, we do not encourage people 95 00:05:33,480 --> 00:05:36,040 Speaker 1: to get on long term bonds because interest rates are 96 00:05:36,080 --> 00:05:39,320 Speaker 1: still going higher. Um. But that being said, on the 97 00:05:39,360 --> 00:05:42,839 Speaker 1: equity market, I do expect to see a Christmas rally 98 00:05:42,880 --> 00:05:45,599 Speaker 1: coming up. So we're all looking at the next LEFO 99 00:05:45,680 --> 00:05:48,440 Speaker 1: and C meeting, the next CPI reading. I think CPI 100 00:05:48,480 --> 00:05:51,120 Speaker 1: will will come at a very favorable level, and that 101 00:05:51,160 --> 00:05:54,120 Speaker 1: will be bullish news for equities in particular towards the 102 00:05:54,200 --> 00:05:56,800 Speaker 1: end of the year. Uh tell me here is well 103 00:05:56,839 --> 00:05:59,360 Speaker 1: you know when when it comes to how you look 104 00:05:59,400 --> 00:06:03,760 Speaker 1: at monkeys and how are your investment strategies being informed 105 00:06:03,760 --> 00:06:07,599 Speaker 1: by what you've been just talking about. So we had 106 00:06:08,160 --> 00:06:10,800 Speaker 1: we had a lot of cash all this year on 107 00:06:10,839 --> 00:06:15,640 Speaker 1: the sidelines, so we were allocating opportunistically. I think, for example, 108 00:06:15,680 --> 00:06:18,200 Speaker 1: now it's a good time to allocate because we had 109 00:06:18,200 --> 00:06:21,839 Speaker 1: a few bad days in the market. So we have 110 00:06:21,920 --> 00:06:27,520 Speaker 1: been benefiting tech recently. And we we have been adding 111 00:06:27,600 --> 00:06:31,680 Speaker 1: to our international portfolio too, because as the dollar starts 112 00:06:31,680 --> 00:06:34,640 Speaker 1: coming down, that will benefit e M markets and other 113 00:06:34,680 --> 00:06:38,360 Speaker 1: international markets too. And and we believe that when we 114 00:06:38,520 --> 00:06:43,440 Speaker 1: see rates starting flattening or inflation starting coming down, that 115 00:06:43,720 --> 00:06:46,039 Speaker 1: means that the dollar will also come down, which will 116 00:06:46,080 --> 00:06:49,200 Speaker 1: benefit e M s further. A great segue to get 117 00:06:49,240 --> 00:06:52,960 Speaker 1: your thoughts on China. We have appears like some type 118 00:06:53,000 --> 00:06:56,719 Speaker 1: of inflection point in the COVID policy. Beijing no longer 119 00:06:56,800 --> 00:07:01,600 Speaker 1: requiring a negative test in to enter most public venues. 120 00:07:01,640 --> 00:07:04,120 Speaker 1: That was the big news yesterday. Would you be inclined 121 00:07:04,120 --> 00:07:05,880 Speaker 1: to put some money to work on China? Have we 122 00:07:05,960 --> 00:07:10,400 Speaker 1: reached an inflection point there? Yes, and we already did 123 00:07:10,720 --> 00:07:13,000 Speaker 1: some money, though we are not We think it's going 124 00:07:13,040 --> 00:07:16,960 Speaker 1: to be modest the growth in China, both for external 125 00:07:17,000 --> 00:07:20,760 Speaker 1: and internal factors. As you said, COVID is good news, 126 00:07:20,800 --> 00:07:24,080 Speaker 1: but still there is risk with their COVID policies and 127 00:07:24,120 --> 00:07:28,280 Speaker 1: in general with the political situation there, and also the 128 00:07:28,360 --> 00:07:31,680 Speaker 1: real estate market has been contracting since the Ever Grand event. 129 00:07:32,120 --> 00:07:35,080 Speaker 1: Now from the external side of things, the global economy 130 00:07:35,160 --> 00:07:38,880 Speaker 1: is contracting, which means there is less demand for Chinese 131 00:07:38,960 --> 00:07:42,640 Speaker 1: products and services, which of course does not benefit Chinese 132 00:07:42,680 --> 00:07:46,000 Speaker 1: the Chinese GDP, So I would say to have a 133 00:07:46,080 --> 00:07:49,400 Speaker 1: modest allocation in China as well, because as we said, 134 00:07:49,440 --> 00:07:51,960 Speaker 1: the dollar will benefit that market. And I think as 135 00:07:51,960 --> 00:07:55,520 Speaker 1: the global risk comes down, when the US risk come downs, 136 00:07:55,600 --> 00:07:59,440 Speaker 1: that that means that globally risk comes down, which will 137 00:07:59,480 --> 00:08:02,640 Speaker 1: benefit E. M. S. Two Eva. Thank you so much 138 00:08:02,640 --> 00:08:05,280 Speaker 1: for joining us. If I add us the CEO and 139 00:08:05,360 --> 00:08:08,720 Speaker 1: chief investment Strategists that E. R shares getting her take 140 00:08:09,080 --> 00:08:09,800 Speaker 1: on the market.