1 00:00:00,280 --> 00:00:02,800 Speaker 1: A half minutes past the hour. Our guest is Brian Vendig, 2 00:00:03,000 --> 00:00:07,440 Speaker 1: President at m JP Wealth Advisors. So, Brian, the market 3 00:00:07,480 --> 00:00:11,200 Speaker 1: appears to be betting here that inflation has peaked, and 4 00:00:11,360 --> 00:00:14,840 Speaker 1: it seems to be comfortable with the seventy basis point 5 00:00:14,920 --> 00:00:17,400 Speaker 1: hip by the Fed this month. But then we also 6 00:00:17,520 --> 00:00:20,560 Speaker 1: have these Goldman job cuts as a reminder that tougher 7 00:00:20,680 --> 00:00:23,640 Speaker 1: times could lie ahead. So when you put all that 8 00:00:24,079 --> 00:00:27,440 Speaker 1: into the Vendig big brain, what does the competition tell 9 00:00:27,440 --> 00:00:31,960 Speaker 1: you to do with your investment profile? Thanks Brian, great question. 10 00:00:31,960 --> 00:00:34,800 Speaker 1: I appreciate that. I think in the short term we 11 00:00:34,840 --> 00:00:38,800 Speaker 1: want to stay cautious because we definitely know that there 12 00:00:38,920 --> 00:00:41,440 Speaker 1: is some book ends of data that's coming out, you know, 13 00:00:41,479 --> 00:00:45,560 Speaker 1: starting obviously tomorrow morning with cp I, than the FED meeting, 14 00:00:45,600 --> 00:00:48,279 Speaker 1: and before we know, right back into earnings, and then 15 00:00:48,280 --> 00:00:50,760 Speaker 1: that's going to take us right through mid term elections 16 00:00:50,760 --> 00:00:52,920 Speaker 1: in the being of November, and we know the Fed 17 00:00:53,000 --> 00:00:54,960 Speaker 1: is going to stay data dependent. But we need to 18 00:00:55,000 --> 00:00:58,160 Speaker 1: get a little bit more clarity on what's going to 19 00:00:58,240 --> 00:01:00,640 Speaker 1: happen with quantitative tightening. We'd like to hear a little 20 00:01:00,640 --> 00:01:03,400 Speaker 1: bit more about the balance sheet reductions and where that 21 00:01:03,480 --> 00:01:05,839 Speaker 1: liquidity is going to come out of and I think 22 00:01:05,920 --> 00:01:08,160 Speaker 1: also at the same point in time, we're seeing analysts 23 00:01:08,240 --> 00:01:11,800 Speaker 1: dropping corporate earnings right now going into the end of 24 00:01:11,840 --> 00:01:14,760 Speaker 1: the quarter by about five and a half percent on average, 25 00:01:14,760 --> 00:01:18,120 Speaker 1: which is the biggest revisions that we've seen going back 26 00:01:18,120 --> 00:01:21,000 Speaker 1: to the start of the pandemic. However, we think the 27 00:01:21,040 --> 00:01:24,880 Speaker 1: market will probably stay range bound Bryant, because um, you know, 28 00:01:25,000 --> 00:01:27,640 Speaker 1: is there a possibility we could uh, you know, pull 29 00:01:27,680 --> 00:01:30,680 Speaker 1: back to levels under four thousand. I think that's possible, 30 00:01:30,720 --> 00:01:33,959 Speaker 1: but there could be a setup if the inflation numbers 31 00:01:34,280 --> 00:01:37,039 Speaker 1: continue to come in over the balance of the year. 32 00:01:37,400 --> 00:01:40,240 Speaker 1: We're not expecting the Fed to reduce interest rates, but 33 00:01:40,319 --> 00:01:43,200 Speaker 1: we are expecting the tone to change. So with that 34 00:01:43,319 --> 00:01:46,360 Speaker 1: mildly optimistic view, maybe we'll have a little bit of 35 00:01:46,360 --> 00:01:48,920 Speaker 1: a seasonal rally towards the end of the year, Brian 36 00:01:48,920 --> 00:01:51,000 Speaker 1: tell me, I mean, with a lot of the data 37 00:01:51,040 --> 00:01:54,120 Speaker 1: out there showing perhaps the inflation is getting a little 38 00:01:54,160 --> 00:01:56,680 Speaker 1: bit under control, if you will, do you think that 39 00:01:56,760 --> 00:02:00,360 Speaker 1: the CPI read later on today or tomorrow, of you 40 00:02:00,360 --> 00:02:02,640 Speaker 1: guys is going to surprise us to the downside, And 41 00:02:02,680 --> 00:02:06,080 Speaker 1: if it was likely to be the reaction, good day 42 00:02:06,120 --> 00:02:08,840 Speaker 1: we shot I appreciate that. Um, I mean, I think 43 00:02:08,960 --> 00:02:13,720 Speaker 1: right now we're not expecting a significant move down in inflation. 44 00:02:13,800 --> 00:02:16,920 Speaker 1: If anything, you might even look at the core X 45 00:02:16,919 --> 00:02:20,640 Speaker 1: food and energy and might see a month over month 46 00:02:20,720 --> 00:02:23,880 Speaker 1: increase just from the fact that we know that things 47 00:02:23,919 --> 00:02:27,520 Speaker 1: are changing in the labor markets. Wages are getting stickier, 48 00:02:27,760 --> 00:02:29,400 Speaker 1: and at the same point in time, we know that 49 00:02:29,639 --> 00:02:32,400 Speaker 1: rents are increasing. However, on the flip side, we are 50 00:02:32,440 --> 00:02:36,080 Speaker 1: seeing that from a headline perspective, there is moderation and 51 00:02:36,120 --> 00:02:38,480 Speaker 1: food and energy prices. I think that's a good news 52 00:02:38,480 --> 00:02:41,600 Speaker 1: for the consumer, but I think it's a path moving forward, 53 00:02:41,720 --> 00:02:44,160 Speaker 1: not just one read that we know isn't going to 54 00:02:44,320 --> 00:02:48,360 Speaker 1: cause the FED to change their seventy five basis point 55 00:02:48,760 --> 00:02:51,480 Speaker 1: decision that that we know is priced in. And it's 56 00:02:51,480 --> 00:02:54,560 Speaker 1: also possible that we might see another hundred basis points 57 00:02:54,680 --> 00:02:56,480 Speaker 1: or one percent increase in rates by the end of 58 00:02:56,480 --> 00:03:00,320 Speaker 1: the year something. How at the moment is you know 59 00:03:00,360 --> 00:03:04,040 Speaker 1: you advice to clients changing here, Briant? And also, how 60 00:03:04,120 --> 00:03:09,040 Speaker 1: is your strategy evolving? Two? Given obviously the changing landscape 61 00:03:09,040 --> 00:03:10,440 Speaker 1: out the and how it has it evolved from the 62 00:03:10,440 --> 00:03:14,600 Speaker 1: start of the year. Sure, I appreciate the question of shot. 63 00:03:14,639 --> 00:03:18,320 Speaker 1: I think as more and more UH information came out 64 00:03:18,360 --> 00:03:21,480 Speaker 1: with exactly where inflation is going and well the FED 65 00:03:21,560 --> 00:03:23,320 Speaker 1: has been doing over the course of the year, and 66 00:03:23,360 --> 00:03:25,880 Speaker 1: then now the energy crisis in Europe. You know, we 67 00:03:26,000 --> 00:03:31,840 Speaker 1: definitely have reduced in our portfolios early on UM international 68 00:03:31,880 --> 00:03:36,160 Speaker 1: equities to guard against this recession that we feel is 69 00:03:36,200 --> 00:03:40,440 Speaker 1: eminent in developed Europe. You know, for example, we've shortened 70 00:03:40,520 --> 00:03:43,119 Speaker 1: duration on bonds, We've made sure we have enough real 71 00:03:43,200 --> 00:03:46,800 Speaker 1: assets to protect on inflation, and we also are optimistic 72 00:03:46,800 --> 00:03:50,920 Speaker 1: about valuation differences that we've seen between small cap stocks 73 00:03:51,000 --> 00:03:54,280 Speaker 1: versus large cap stocks. UM Obviously being very active this 74 00:03:54,360 --> 00:03:58,160 Speaker 1: year is another theme that you needed to UH implement 75 00:03:58,240 --> 00:04:00,440 Speaker 1: for your clients due to the heightened volatio that we've 76 00:04:00,480 --> 00:04:03,680 Speaker 1: seen rivals levels of the Great Financial Crisis and the 77 00:04:03,720 --> 00:04:06,000 Speaker 1: dot com bubble. So it's been a very busy year. 78 00:04:06,000 --> 00:04:09,320 Speaker 1: I think moving forward, as I said before, still optimistic 79 00:04:09,360 --> 00:04:11,040 Speaker 1: for the set up at the balance of the year, 80 00:04:11,080 --> 00:04:14,280 Speaker 1: so we're neutral and equities, still holding short duration on 81 00:04:14,360 --> 00:04:17,000 Speaker 1: bonds and sticking with those real assets the hedge inflation. 82 00:04:17,920 --> 00:04:21,280 Speaker 1: We have President Shi Jinping going to Central Asia this week, 83 00:04:21,320 --> 00:04:23,880 Speaker 1: which is pretty unusual. This is the first trip abroad 84 00:04:23,960 --> 00:04:29,080 Speaker 1: for him since the pandemic began like almost three years ago. Really, uh, 85 00:04:29,160 --> 00:04:32,479 Speaker 1: that might be a sign that conditions are getting back 86 00:04:32,520 --> 00:04:35,280 Speaker 1: to normal in China. And and if you look at 87 00:04:35,279 --> 00:04:37,680 Speaker 1: the valuations and everything, I mean, we probably don't need 88 00:04:37,720 --> 00:04:39,880 Speaker 1: meat Is to tell you, but maybe the audience does. 89 00:04:39,880 --> 00:04:42,799 Speaker 1: The Hanksing Index is a long way below it's fifty 90 00:04:43,520 --> 00:04:46,440 Speaker 1: two hundred day moving averages and it trades on like 91 00:04:46,520 --> 00:04:49,760 Speaker 1: seven times earning. At some point these foreign markets are 92 00:04:49,760 --> 00:04:52,120 Speaker 1: going to start moving again. But you think not yet. 93 00:04:53,640 --> 00:04:56,520 Speaker 1: That's a great point, Brian, I don't think so just yet. 94 00:04:56,600 --> 00:04:59,960 Speaker 1: And to me, it's really based more on the dot. 95 00:05:00,440 --> 00:05:03,640 Speaker 1: And we know we've seen recently the dollar weekend, which 96 00:05:03,680 --> 00:05:06,320 Speaker 1: I think played a little bit in today's action. But 97 00:05:06,400 --> 00:05:09,120 Speaker 1: I think when we think about international equities, I think 98 00:05:09,160 --> 00:05:13,840 Speaker 1: there are still more macro economic risks that haven't been 99 00:05:13,880 --> 00:05:16,960 Speaker 1: priced in. And as we think about things next year, 100 00:05:17,080 --> 00:05:20,800 Speaker 1: when central banks around the world catch up to what 101 00:05:20,839 --> 00:05:24,080 Speaker 1: the US is doing on rates and policy, and obviously 102 00:05:24,200 --> 00:05:27,440 Speaker 1: China being a little bit different as well as Japan 103 00:05:27,520 --> 00:05:30,359 Speaker 1: on on that. On that point, um, that could add 104 00:05:30,400 --> 00:05:33,919 Speaker 1: to the dollar weakening and as a result, maybe sometime 105 00:05:34,000 --> 00:05:37,760 Speaker 1: next year we start thinking about adding back to international 106 00:05:37,800 --> 00:05:40,400 Speaker 1: equities and even emerging markets. So I think you're I 107 00:05:40,400 --> 00:05:43,480 Speaker 1: think your valuation point is completely fair, but I think 108 00:05:43,480 --> 00:05:45,520 Speaker 1: in light of a lot of the moving variables that 109 00:05:45,520 --> 00:05:48,919 Speaker 1: are still playing out, we want to be cautious on 110 00:05:49,040 --> 00:05:52,039 Speaker 1: that trade uh as we go into the end of 111 00:05:52,040 --> 00:05:55,279 Speaker 1: the year. Um I just having a look at the 112 00:05:55,360 --> 00:05:57,880 Speaker 1: SMP five and having look at year to date um 113 00:05:58,160 --> 00:06:00,960 Speaker 1: UH performance of the various industry groups, and you would 114 00:06:00,960 --> 00:06:03,840 Speaker 1: have thought, with the fears out there, that consumer staples 115 00:06:03,839 --> 00:06:06,120 Speaker 1: would be right at the top of the list in 116 00:06:06,200 --> 00:06:07,839 Speaker 1: terms of it, and it's not even in the top ten. 117 00:06:08,279 --> 00:06:11,560 Speaker 1: Why do you think that's the case. Well, it's the 118 00:06:11,600 --> 00:06:14,240 Speaker 1: same for utilities. I believe utility said at all time 119 00:06:14,320 --> 00:06:16,800 Speaker 1: high today as well as shot. It's yeah. I think 120 00:06:16,880 --> 00:06:21,120 Speaker 1: people are positioning right now in certain asset classes to 121 00:06:21,240 --> 00:06:25,160 Speaker 1: try to be defensive, not knowing exactly what's going to 122 00:06:25,240 --> 00:06:27,640 Speaker 1: happen with that inflation number, what the FET is going 123 00:06:27,680 --> 00:06:30,159 Speaker 1: to do, and how is corporate earning is gonna look. 124 00:06:30,200 --> 00:06:32,640 Speaker 1: And I think if we can move through this period 125 00:06:32,640 --> 00:06:37,200 Speaker 1: of time and still keep a broadly diversified approach, not 126 00:06:37,320 --> 00:06:39,800 Speaker 1: focused on one asset class versus the other. When it 127 00:06:39,800 --> 00:06:43,680 Speaker 1: comes to a sector perspective specifically, and we and we 128 00:06:43,760 --> 00:06:46,760 Speaker 1: get a a a hung jury in Congress, meaning we 129 00:06:46,839 --> 00:06:50,160 Speaker 1: get a split between the House and the Senate. Yep. 130 00:06:50,320 --> 00:06:53,280 Speaker 1: I think then what we should see is a setup 131 00:06:53,279 --> 00:06:55,800 Speaker 1: based on valuation, going back to some of your questions 132 00:06:55,800 --> 00:06:58,080 Speaker 1: there which might help us going into the end of 133 00:06:58,120 --> 00:07:01,120 Speaker 1: the year. Quick final question to any seconds or so, 134 00:07:01,560 --> 00:07:06,839 Speaker 1: would you be shorting Europe? I think right now Europe 135 00:07:06,880 --> 00:07:09,200 Speaker 1: is definitely something that, as I said before, we're not 136 00:07:09,279 --> 00:07:12,400 Speaker 1: in favor of, but we are in favor of companies 137 00:07:12,400 --> 00:07:15,400 Speaker 1: that are helping Europe get out of their energy crisis. 138 00:07:17,000 --> 00:07:19,440 Speaker 1: All right, Brian, thank you so much for joining us 139 00:07:19,480 --> 00:07:22,840 Speaker 1: there with his thoughts to Brian Vendig, president at m 140 00:07:22,960 --> 00:07:25,360 Speaker 1: JP Wealth Advice, is getting his take on the market.