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Speaker 1: Forty nine minutes pass there. This is Daybreak Asia, that

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Speaker 1: Thanksgiving Day edition US and we're particularly pleased that Greg

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Speaker 1: Swenson could join us. He is founding partner at Bridge

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Speaker 1: macadam uh. They are based in Chicago, and Greg joins

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Speaker 1: us from the Windy City. Happy Thanksgiving to you, sir.

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Speaker 1: I hope you're doing well here. Thank thanks for having me.

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Speaker 1: You're quite welcome. Give me a sense of where you

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Speaker 1: are now. As we approached the end of the year,

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Speaker 1: we know that the FED is intent on tightening more.

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Speaker 1: Inflation is clearly a problem. Many people are favoring the

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Speaker 1: bond market these days versus equities. What's your strategy as

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Speaker 1: we wrap UPO, Yeah, I think I think it. The

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Speaker 1: strategy is to be patient and wait because we don't

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Speaker 1: know if the worst is over yet. I think that

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Speaker 1: this this jump the gun philosophy of looking at the

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Speaker 1: FED and reducing their you know, their aggressive stance, you know,

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Speaker 1: bringing down the increases from seventy points to fifty. Yes,

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Speaker 1: that's a good sign. Maybe you know they're they're going

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Speaker 1: to dial it back a bit. But I think there

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Speaker 1: could be a lot of inflation ahead and we have

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Speaker 1: some growth challenges as well. So my my philosophy is,

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Speaker 1: you know, be patient weight. Our firm is advocating the

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Speaker 1: wait for keep the dry powder. Let's wait for the

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Speaker 1: liquid markets to sell off a bit more, because I

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Speaker 1: think they will. They're still overvalued in mental respects. And

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Speaker 1: then and then, um, you know, look at it traditional

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Speaker 1: inflation protected investments that that can have a you know,

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Speaker 1: a non correlated return to the liquid markets. And and

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Speaker 1: then let's be patient and maybe next year at this

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Speaker 1: time we'll be talking about a bull market again. Greg.

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Speaker 1: I mean they're saying sixty faulty. Is there something consigned

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Speaker 1: now at least time being into the into the dustbin?

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Speaker 1: But is it really? I mean, I'm gonna change the

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Speaker 1: sixty into the bottom holdings that you should have in

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Speaker 1: fourteen equities? With that workout for you? Yeah, I don't.

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Speaker 1: I mean, look what happened with with the bond mark

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Speaker 1: in the last year. You know, at the two basis

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Speaker 1: point we move in in interest rates, can can you know,

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Speaker 1: crush your your bond your long bond portfolio. I mean

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Speaker 1: there is risk that people don't typically associate with fixed

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Speaker 1: income portfolios, and I think that I think the old

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Speaker 1: mix is probably a bit dated and I hope that,

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Speaker 1: you know, especially investors who can look at alternative investments,

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Speaker 1: real assets, infrastructure, anything that's that's correlated to food prices,

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Speaker 1: energy prices, and critical infrastructure. I think that's the long

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Speaker 1: term you know, inflation plus returns that people should think

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Speaker 1: about rather than the traditional you know, sixty mix. You know,

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Speaker 1: it's it's fixed income looks great when it's double digits,

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Speaker 1: but it doesn't look so great even even with the

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Speaker 1: ten year you know, in the three and three quarters

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Speaker 1: or or pushing for even at that level, that's still

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Speaker 1: below historical norms. I'd be really careful about fixed income

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Speaker 1: right now. So, Greg, since uh Brig McCadam is an

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Speaker 1: investment bank, I'd like to get your take on deal

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Speaker 1: flow for the year ahead. I mean, are you expecting

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Speaker 1: a contraction, whether it's new companies coming to market, whether

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Speaker 1: it's m and a type of transactions. Is it basically

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Speaker 1: going to be a rough year in three for for deals. Yeah. Look,

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Speaker 1: there's no doubt there's going to be challenges in the

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Speaker 1: I p O market. I don't think that that venture

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Speaker 1: capital valuations are hanging in there as as much as

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Speaker 1: you know we've enjoyed in the last the last decade.

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Speaker 1: So I think it will be a tough year for

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Speaker 1: big corporate M and A. I think it will be

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Speaker 1: a tough year for the I P O market, no doubt.

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Speaker 1: The liquid markets without the FED put without without you know,

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Speaker 1: billion of securities being purchased by the FED every month,

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Speaker 1: There's going to be some challenges. But I do think

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Speaker 1: there's that brings a lot of opportunity in real assets,

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Speaker 1: and whether it's in you know, the North America with

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Speaker 1: traditional real assets like timber, like energy, you know, agriculture.

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Speaker 1: You know, there's a big bid for ag assets right now.

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Speaker 1: But if you look at the market globally, the world

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Speaker 1: needs energy, it needs natural gas, it needs infrastructure associated

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Speaker 1: with natural gas, and it needs food. And so those

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Speaker 1: are the things that we're focusing on. We think they

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Speaker 1: make sense in the long term, but they definitely make

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Speaker 1: sense in the short term because there's a real you know,

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Speaker 1: there's an energy crisis and in an emerging food risis.

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Speaker 1: So we we really believe in food security, energy, energy security,

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Speaker 1: and it's a great way to make money but also

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Speaker 1: do some good. Yeah, it's all very well to do that.

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Speaker 1: I'm just looking, you know, at what you do next

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Speaker 1: next year though, and how many not many people have

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Speaker 1: really been talking about the effects of quantitative tightening. What's

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Speaker 1: your take on this? And you know, where do we

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Speaker 1: go with this, greg in terms of liquidity at least, Yeah,

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Speaker 1: it's that's a great question. And this there's still some

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Speaker 1: more pain ahead in the liquid markets. If you look

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Speaker 1: at you know, the so called buffet rule. You know,

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Speaker 1: for for generations, US equities were at you know, some

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Speaker 1: metric like one and a half times um G d P,

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Speaker 1: but you know in November of twenty one that was

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Speaker 1: up to two and a half times GDP. It's still

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Speaker 1: has some more room to come down. And I think

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Speaker 1: that's what people are forgetting or at least ignoring, because naturally,

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Speaker 1: those of us in the market and financial media, we're optimists, right,

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Speaker 1: We want to think things will will be great. But

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Speaker 1: it is still overvalued by most metrics, and we don't

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Speaker 1: have the FED put. We don't have you know, twenty

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Speaker 1: billion being purchased. I guess the one thing that we

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Speaker 1: still do have is the natural tendency for four oh

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Speaker 1: one ks and retirement plan investment schemes to buy the

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Speaker 1: indices every month when you know, paychecks are paid, so

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Speaker 1: you know, there are some technicals that will favor you know,

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Speaker 1: the US liquid markets, but we are we've been we

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Speaker 1: we got used to the FED buying a lot of

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Speaker 1: securities and keeping rates artificially low, and that it is

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Speaker 1: not going to continue. It just can't with the inflation

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Speaker 1: challenges that we have. Do you think it's possible that

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Speaker 1: we see some tweak to the unwind of the balance

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Speaker 1: sheet than given all the stress that you're laying out,

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Speaker 1: you know, possibly, and you're seeing pressure from that, you know,

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Speaker 1: pressure to do that, and and you know, especially from

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Speaker 1: uh from the left where you know there, I think

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Speaker 1: there's a bit of nerve that. Um, they're a bit

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Speaker 1: unsettled about, you know, the idea of recession. But let's

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Speaker 1: face it, it's all the it's the only tools that

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Speaker 1: we have now to fight inflation is monetary policy, because

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Speaker 1: the fiscal policy is basically not is not going to

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Speaker 1: do it. It's it's um, it's still inflationary by nature. Um.

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Speaker 1: The supply side is not going to be liberated, at

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Speaker 1: least not in the next two years. So I'm looking

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Speaker 1: at a problem where it's the FED and only the

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Speaker 1: FED that can stop the inflation doing well. Let me

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Speaker 1: push back a little bit in terms of fiscal policy.

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Speaker 1: If you raise taxes, is that a way of dealing

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Speaker 1: with inflation? Yeah, I mean, I guess if if you

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Speaker 1: think that, you know that that by raising taxes you

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Speaker 1: will will curb eck economic growth and also take more

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Speaker 1: money out of people's pockets so they'll have less money

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Speaker 1: to spend, and that by nature is going to reduce inflation. Yes,

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Speaker 1: it's a shame that economic destruction is the only alternative

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Speaker 1: right now. But if you liberate the supply side, that's

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Speaker 1: what That's what I'm arguing. By reducing taxes, you're liberating

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Speaker 1: the supply side, so you're encouraging investment and producing more goods.

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Speaker 1: And I think the unfortunately the Fed, their only option

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Speaker 1: is to address the demand side. But but I think

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Speaker 1: with fiscal policy, if you liberate the supply side, produce

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Speaker 1: more goods and that's you know, again, if you look

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Speaker 1: at forty years ago, you know the yes, Boker had

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Speaker 1: to you know, raise rates to you know, it was painful,

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Speaker 1: it was really equal on the economy and on people,

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Speaker 1: but he got it done. He got it done. Greg,

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Speaker 1: thank you so much for being with us. Uh. Greg

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Speaker 1: Swinson from McCadam or Brig mccadem i should say