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Speaker 1: Hello, and welcome to the Credit Edge, a weekly markets podcast.

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Speaker 1: My name is James Crumby. I'm a senior editor at Bloomberg.

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Speaker 2: And I'm Jy COOPI and senior analyst at Bloomberg Intelligence.

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Speaker 2: This week, we are very pleased to welcome Victori A. Fernandez,

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Speaker 2: Chief market Strategist at Cross Market Global Investments, a multi

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Speaker 2: billion dollar investment company based in Houston, Texas. How are you,

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Speaker 2: Victoria doing well? Thank you, Victoria John Cross Market in

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Speaker 2: twenty twelve, and in addition to our market strategist role,

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Speaker 2: she's also hitting the fixed income investment team while serving

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Speaker 2: as portfolio manager for textable fixed income products. As such,

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Speaker 2: Victor has a unique perspective on the markets, particularly the

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Speaker 2: fixingcome market, which is one of the key topics on

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Speaker 2: to this podcast.

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Speaker 1: Thank you Joannie. Before we get going with the questions,

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Speaker 1: I will say credit markets are bouncing back from the

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Speaker 1: damage caused by the collapse of First Brands, which dinged

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Speaker 1: a few banks and investment firms. That and the bankruptcy

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Speaker 1: of treecy Law at around the same time, caused some

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Speaker 1: to fear that this was the beginning of the end

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Speaker 1: for corporate debt, which had been trading at the tightest

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Speaker 1: spread since the nineteen nineties and had been long due

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Speaker 1: for a correction, But the storm does seem to have

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Speaker 1: blown over. There's just so much demand for yield out

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Speaker 1: there and not enough new supply, So technically credit is

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Speaker 1: doing okay. Plus earnings have been strong, and the FED

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Speaker 1: is your friend with a cutting cycle underway. That is

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Speaker 1: not to say it's risk free and Victoria, you're a

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Speaker 1: bit more on the hawkish side when it comes to

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Speaker 1: interest rates. If they do stay high for longer. What's

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Speaker 1: the impact on weaker companies that have a lot of

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Speaker 1: debt coming due.

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Speaker 3: Yeah, I do think that's going to be an issue,

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Speaker 3: And you look at some of those small cap names

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Speaker 3: that would really suffer, and I think that's one of

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Speaker 3: the reasons. You know, we saw small caps kind of

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Speaker 3: rally for a little bit on the equity side and

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Speaker 3: then they pulled back, and it's because those earnings components

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Speaker 3: are not as strong, and I think there is some

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Speaker 3: concern that as they have to start issuing new debt,

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Speaker 3: maybe rates won't be quite as low as what people

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Speaker 3: are anticipating, and therefore their cost of capital is going

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Speaker 3: to be higher. Yes, spreads have come in like you

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Speaker 3: mentioned from some of the scare that we had what

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Speaker 3: a week ten days ago, and we're not in and

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Speaker 3: worrisome territory yet. But I think those lower credits, when

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Speaker 3: you're looking at triple c's or single be rated credits,

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Speaker 3: you're still seeing some significant movement. You're still about one

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Speaker 3: hundred basis points wider than you were a year ago

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Speaker 3: on those lower quality ones.

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Speaker 2: Just at the point of earnings, I mean, we're seeing

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Speaker 2: some company beat into third quarter, as we also so

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Speaker 2: in the second quarter, but however some of them are

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Speaker 2: beating because of cost measures enough really really revenue growth.

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Speaker 2: What's your view on current earnings and the risks that

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Speaker 2: you can see there.

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Speaker 3: Yeah, you know, it's interesting that this is actually a

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Speaker 3: quarter where we have seen earnings and revenue expectations move

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Speaker 3: higher going into a quarter than lower. And we were

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Speaker 3: kind of surprised by that, thinking that higher cost from

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Speaker 3: tariffs and wages would actually start compressing margins and we

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Speaker 3: would see that come through and it's not what we're seeing.

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Speaker 3: We were actually seeing EPs growth up close to ten

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Speaker 3: percent now as expectation revenue growth up six and a

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Speaker 3: half seven percent, So it's stronger than what I thought

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Speaker 3: it would be. Obviously, when you get the majority of

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Speaker 3: these MAGS seven names getting ready to report, there's going

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Speaker 3: to be a huge amount of scrutiny on the CAPEX components.

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Speaker 3: And I think this is really going to drive the

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Speaker 3: markets considerably here seeing the earnings that we get from them,

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Speaker 3: because in my opinion, it's really this concept of capex

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Speaker 3: really driven by these hyperscalers that is given a strong

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Speaker 3: tailwind to this market. So we'll see how they report

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Speaker 3: as those earnings reports are coming up. But earnings are

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Speaker 3: actually a little bit better than what we had anticipated.

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Speaker 3: Things just keeps, you know, appear to be pushed a

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Speaker 3: quarter out, two quarters out. Every time you think it's

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Speaker 3: about time to pay the piper, there's some type of

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Speaker 3: stimulus event that comes in, gives some support and seems

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Speaker 3: to push that that paying the piper moment further out.

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Speaker 1: And I think also a lot of people expecting a

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Speaker 1: bit more stimulus from the Fed, but you think that

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Speaker 1: they may have more challenges on the inflation side.

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Speaker 3: I do think we're going to see that, and I

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Speaker 3: know that's a little bit out of consensus. The FED

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Speaker 3: has even come out and said we're not worried about

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Speaker 3: inflation or where that's going. That concerns me a little bit.

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Speaker 3: I know tear related issues are on the goods side,

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Speaker 3: and so they're not concerned to see goods prices go higher,

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Speaker 3: but we are still seeing the services side not come

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Speaker 3: down to this two perc level. There's still some concern there,

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Speaker 3: and obviously housing.

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Speaker 4: Is one of the biggest components.

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Speaker 3: I was just looking at some of the housing reports,

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Speaker 3: both the FHFA and case Shiller. The latest pricing reports

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Speaker 3: we see for the month of August and going into

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Speaker 3: September is the first time and many many months, that

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Speaker 3: housing prices are actually higher month over month.

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Speaker 4: That leads rents by about six months.

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Speaker 3: So that tells me if I'm looking six seven months out,

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Speaker 3: we're going to start to see some higher inflation pressures

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Speaker 3: come in. And I just have a hard time accepting

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Speaker 3: that tariffs are a one time.

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Speaker 4: Event in pricing.

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Speaker 3: So even though the Fed says they're one time, they go, yes,

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Speaker 3: it's one time, but it can happen over the course

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Speaker 3: of many, many months.

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Speaker 4: Well, to me, that's not one time.

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Speaker 3: Then that is a drag you know, higher on inflation

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Speaker 3: over the course of many months.

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Speaker 4: That's going to have to feed through it sometimes.

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Speaker 3: So yes, I'm a little concerned that maybe inflation is

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Speaker 3: not something that we should just ignore right now, which

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Speaker 3: it seems like the FED is doing, and with the

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Speaker 3: lack of information coming out, I know they'll take the

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Speaker 3: opportunity to kind of take an insurance cut. But I

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Speaker 3: do think as we start to get some of the

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Speaker 3: data flowing once again, whenever the government decides that they're

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Speaker 3: ready to open back up again, there could be some

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Speaker 3: elevated levels there that I think the FED will have

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Speaker 3: to start paying attention to.

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Speaker 1: When you tile that together, Victoria, it seems like a

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Speaker 1: quite cautious outlook on the economy. How do you express

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Speaker 1: that in a credit portfolio at a time when everybody

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Speaker 1: else is trying to buy the same stuff. Everybody's trying

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Speaker 1: to stay out of the riskiest end of the market,

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Speaker 1: But there isn't a lot of net new supply of

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Speaker 1: actual corporate bonds and loans, so you know, it's very

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Speaker 1: tight out there. People keep telling themselves that the quality

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Speaker 1: is getting better, and yet with these macro headwinds, how

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Speaker 1: do you invest?

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Speaker 3: Yeah, it's actually a very strong predicament to be in

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Speaker 3: right now because of exactly what you're saying you're not

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Speaker 3: seeing a tremendous amount of new issuance coming out, But

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Speaker 3: I was looking actually just this morning, I was like, Okay,

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Speaker 3: Southwest Airlines, Ford Tech, Stron these are some of the

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Speaker 3: companies that I saw this morning that are getting ready

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Speaker 3: to come to market. And you look at a ten

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Speaker 3: year basically anywhere between ninety to maybe one hundred and

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Speaker 3: thirty basis points on the spread for these new issues,

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Speaker 3: Ford being higher, Ford being closer to two hundred because

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Speaker 3: it's split rated, so you've got a little bit of

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Speaker 3: that concern in there from a junk bond rating from

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Speaker 3: one of the issuers. But there's not a lot out there.

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Speaker 3: And obviously we want to focus on quality. It's the

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Speaker 3: type of manager we are, it's the type of clients

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Speaker 3: that utilize us want that quality in there. This is

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Speaker 3: not a portfolio that they are looking at to swing

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Speaker 3: for the fences for returns. They want that consistent cash

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Speaker 3: flow and not have a lot of credit concerns or

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Speaker 3: credit risk in their portfolios.

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Speaker 4: So when we're looking.

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Speaker 3: At names without paying a high premium, because that's the

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Speaker 3: other element of it, you know, to your question is

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Speaker 3: if everyone is trying to get this same high quality paper,

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Speaker 3: the premiums go up pretty significantly, then it doesn't make

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Speaker 3: as much sense to put in the portfolio. So we

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Speaker 3: have actually been increasing our treasury allocation in our portfolios

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Speaker 3: in order to compensate for that a little bit, especially

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Speaker 3: because depending on where you buy on the treasury curve,

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Speaker 3: you can get yield comparable to what you're seeing in

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Speaker 3: investment grade credit. We had previously used fixed rate preferreds

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Speaker 3: sometimes in our in our fixed income portfolio, but again

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Speaker 3: you're not getting that much of a kick on the

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Speaker 3: income side anymore in order to justify some of the

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Speaker 3: volatility that you could see in the market value of

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Speaker 3: your portfolios from there. So we want to keep continue

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Speaker 3: to start to continue to focus on the quality credit names,

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Speaker 3: but then use treasuries more and more, use some agencies

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Speaker 3: more if that's available to you as well, to kind

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Speaker 3: of fill in where you need to, especially if the

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Speaker 3: FED is lowering rates, which even though we may not

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Speaker 3: get as many as we think over the next year,

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Speaker 3: pretty sure they're gonna cut here at this meeting in October.

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Speaker 3: They'll probably cut at the December meeting. We will see,

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Speaker 3: but you're gonna be able to get at least a

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Speaker 3: little bit of positive movement on the yield curve, plus

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Speaker 3: you're getting a pretty decent coupon. So that's what we're

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Speaker 3: doing for our clients to try to compensate from that.

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Speaker 3: And you can do it really short if you want.

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Speaker 3: You can even go into T bills if you want

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Speaker 3: to and rotate that out if you're just waiting for

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Speaker 3: some particular corporate credit names to fill in.

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Speaker 2: And in terms of industry or corporate sectors that you're

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Speaker 2: looking at, how do you see any pockets of value

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Speaker 2: in some of the maybe more stable, defensive sectors or

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Speaker 2: do you think the valuation is not there?

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Speaker 3: Yeah, you know in the corporate side, I think when

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Speaker 3: you're looking at spreads, they've actually been somewhat consistent. I mean,

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Speaker 3: I'm I'm looking here by sector. Let's just look. You know,

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Speaker 3: we could look year to date and you see financials

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Speaker 3: tighter by about five basis points, industrials tighter by six

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Speaker 3: basis points.

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Speaker 4: I mean, there's some.

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Speaker 3: That are a little bit better than others, you know,

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Speaker 3: on a month to day, quarter day, year today basis,

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Speaker 3: but on investment grade they're pretty tight. And where they

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Speaker 3: are you see that widen out when you go to

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Speaker 3: high yield. We've seen healthcare on the high yield side

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Speaker 3: actually tight and pretty significantly year to date. As healthcare

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Speaker 3: starts to improve on the equity side, you're seeing some

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Speaker 3: of that flow through to spreads on the fixed income

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Speaker 3: side as well.

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Speaker 4: But areas that we like because we like the.

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Speaker 3: Strong balance sheets is really financials in the larger banks.

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Speaker 3: We're not buying really some of the smaller banks or

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Speaker 3: the regional banks, but those large banks we really like

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Speaker 3: their The paper that they have out there and where

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Speaker 3: it's being priced is pretty good. You do have some

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Speaker 3: industrials that are doing well too.

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Speaker 4: You look at some of.

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Speaker 3: The consumer goods have come in a little bit, so

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Speaker 3: you get a little bit of bonus there, but really

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Speaker 3: kind of across the board, they're doing pretty well. Even

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Speaker 3: leisures surprisingly over the last week have tightened up three

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Speaker 3: to four basis points. So there are some areas where

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Speaker 3: maybe you get a couple basis point difference on investment grade,

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Speaker 3: but not a tremendous difference in order to say overweight

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Speaker 3: one sector versus another.

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Speaker 2: And perhaps we drilled down a little bit on healthcare,

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Speaker 2: which is a sector that I cover, especially for larger companies.

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Speaker 2: It's been significant headwinds and noise in healthcare, especially in pharma,

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Speaker 2: with some uncertainty related to potential tariots into regulatory environment.

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Speaker 2: Do you see the latest developments as as maybe a

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Speaker 2: a glean of hope in healthcare, especially for large pharuma.

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Speaker 4: Yeah.

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Speaker 3: I think it might be an opportunity to come in

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Speaker 3: and maybe pick up some of these healthcare names that

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Speaker 3: again fit that criteria we've been talking about, those higher

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Speaker 3: quality names, the names that have.

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Speaker 4: Decent balance sheets.

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Speaker 3: We can go in and find some names there where

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Speaker 3: you can add to the healthcare exposure in your portfolio,

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Speaker 3: on your fixed income portfolio. And there are some healthcare

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Speaker 3: companies as well, because one thing that we do, and

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Speaker 3: we'll probably talk about it in a little bit, is

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Speaker 3: we do have kind of a responsible investing component that

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Speaker 3: flows through our investment process. But there are certain healthcare

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Speaker 3: names that score really well on that side as well.

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Speaker 3: So I think you can get an opportunity to maybe

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Speaker 3: get some healthcare names at are wider spread than maybe

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Speaker 3: some of the other sectors and get some principle appreciation

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Speaker 3: or price appreciation on those names from now through maturity

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Speaker 3: or at least over the next couple of years and

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Speaker 3: then maybe have the opportunity to come out of it.

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Speaker 3: If yields do start to move higher over the next

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Speaker 3: couple of years, which I would hope they would, then

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Speaker 3: maybe you can come out of that where you've got

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Speaker 3: both price appreciation and then you can go into a

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Speaker 3: higher coupon as well.

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Speaker 4: That would be a good move.

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Speaker 1: And on the banks, Victoria, it is a sector that

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Speaker 1: a lot of people have liked for a long time.

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Speaker 1: It is trading very tight, particularly the big banks, and

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Speaker 1: then we're seeing this pressure on the on the smaller regionals,

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Speaker 1: which you know you say you don't directly invest in those,

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Speaker 1: but they are potentially a spillover effect on the whole sector.

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Speaker 1: If we see those problems with you know, bad loans

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Speaker 1: basically we saw that a couple of years ago and

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Speaker 1: the whole market for financials widening out quite a bit.

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Speaker 1: Are you are you concerned it's all about spillover from

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Speaker 1: the regional banks.

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Speaker 3: I think if you're looking from an equity point of view, yes,

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Speaker 3: you can have some concern in regards to ice volatility

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Speaker 3: on the equity side of the market. But from a

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Speaker 3: fixed income perspective, when I'm putting this bond into a

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Speaker 3: client's portfolio, or if I'm putting it into our mutual fund.

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Speaker 3: I'm looking at those balance sheets and saying, do I

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Speaker 3: have concern around this company paying their principle and their

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Speaker 3: interest components?

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Speaker 4: Is there a credit risk here?

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Speaker 3: And I really don't because of the strength of the

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Speaker 3: balance sheets of those larger banks, they're sitting in a

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Speaker 3: much better position now than they have been in previous years,

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Speaker 3: and so I'm not concerned from a credit perspective. From

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Speaker 3: a market value or price component, where you know, clients

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Speaker 3: may be looking daily or monthly going online and looking

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Speaker 3: at the price of their bond, will there be more

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Speaker 3: volatility there?

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Speaker 4: Yes, I think there will be.

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Speaker 3: But the conversations we have with our clients is these portfolios.

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Speaker 3: We're either trying to match, you know, an asset in

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Speaker 3: their portfolio with the liability that they have coming up

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Speaker 3: in terms of maturity. We are trying to generate steady

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Speaker 3: cash flow for these clients. And so if we're looking

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Speaker 3: at it from that perspective, we're okay with the little

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Speaker 3: market value volatility or price volatility, knowing that we're not

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Speaker 3: going to have concerns around the coupons being paid or

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Speaker 3: at maturity receiving that, So, yes, I think there can

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Speaker 3: be some spillover. Yes, it could cost some price volatility,

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Speaker 3: and be more concerned on that on the equity side

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Speaker 3: than on the fixed income.

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Speaker 2: Side, and so in the fixed income side, I think

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Speaker 2: we cannot look at the market right now without talking

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Speaker 2: about some of the comments that have been made recently

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Speaker 2: about potential cracks emerging in the credit markets. Cleary Jimmie

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Speaker 2: Diamond's coquch comment comes to mind. What are your views

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Speaker 2: on what's going on in the credit market. Do you

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Speaker 2: think that there are some risks that the market is

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Speaker 2: currently ignoring.

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Speaker 3: I think there's a lot of risks that the market

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Speaker 3: is currently ignoring, and credit could be one of them.

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Speaker 3: Or a moment ago when we were discussing the big

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Speaker 3: banks and saying that really the balance sheet is one

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Speaker 3: of the reasons that we like the big banks instead

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Speaker 3: of some of the smaller banks. One of the reasons

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Speaker 3: that I think their balance sheets have been as strong

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Speaker 3: as they have been is because some of that riskier

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Speaker 3: loan business, some of the other elements have actually moved

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Speaker 3: over to private credit, So you've had that removed from

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Speaker 3: what most people consider the loan portfolio of these larger

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Speaker 3: banks and to private credit, and private credit has become

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Speaker 3: more accessible to a retail investor. You're seeing it in

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Speaker 3: people's four oh one k's the options to do some

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Speaker 3: private credit, and there's a lot of talk around the

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Speaker 3: regulatory component of that in order to make sure people

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Speaker 3: truly understand what they're getting into. But that's where I

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Speaker 3: think you're seeing some risk. I think private credit has

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Speaker 3: taken on a lot of the risk that maybe banks

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Speaker 3: had previously. You know, we think back to some of

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Speaker 3: the issues around on the banks a couple of years

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Speaker 3: ago in March what that looks like. I think a

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Speaker 3: lot of that kind of component and that risk is

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Speaker 3: now in private credit. So we don't invest in private

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Speaker 3: credit here at cross Mark in our portfolios. I do

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Speaker 3: think there could be a place for that and someone's

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Speaker 3: overall allocation if they have the due diligence components in

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Speaker 3: order to really work at that, and they don't need

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Speaker 3: the liquidity aspect of it, because again, that money gets

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Speaker 3: tied up a little bit longer than what you would

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Speaker 3: expect in a normal fixed income portfolio. But I think

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Speaker 3: that's where the credit risks are shifting. And so when

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Speaker 3: Jamie Diamond says, you know, where there's one, there's usually more.

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Speaker 4: The whole cockroach component.

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Speaker 3: Then I think that's true, and we probably have not

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Speaker 3: seen the end of some of these.

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Speaker 4: I wouldn't say that they are.

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Speaker 3: That it is a scare that is spreading through the

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Speaker 3: entire sector, but I also don't think we can say

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Speaker 3: it is simply a one off or a two off.

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Speaker 3: I do think there is an underlying element going through

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Speaker 3: this of increased risk that private credit has been taking

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Speaker 3: over the last couple of years, and some of that

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Speaker 3: now is kind of floating to the surface, and we

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Speaker 3: will probably see some.

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Speaker 4: More of it.

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Speaker 1: You know, we've had quite a few private credit guests

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Speaker 1: on this show recently. A lot of them have just

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Speaker 1: dismissed this out of hand. You know, they talk about

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Speaker 1: first brands having nothing to do with private credit. And

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Speaker 1: on the other hand, you know, some very large investment

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Speaker 1: firms like Blackstone have talked about how you can get

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Speaker 1: one hundred and fifty basis points or two hundred basis

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Speaker 1: points over public credit for an ig investment in something

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Speaker 1: that you know is with a household name, data center

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Speaker 1: or something.

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Speaker 4: And there has to be a reason for that, right James.

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Speaker 3: I mean, you're not just going to get an extra

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Speaker 3: two hundred basis points nothing.

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Speaker 4: You're taking on some additional rest.

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Speaker 1: But it just sounds so good. I mean, so why

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Speaker 1: would you not do that? That's my question? Because everybody

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Speaker 1: else is doing it. Why wouldn't you do that?

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Speaker 4: Yeah?

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Speaker 3: So for me, I always a you know, I was

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Speaker 3: kind of raised in the bond world, right, the fixed

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Speaker 3: income world, And I think it's because.

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Speaker 4: I'm a very conservative person by nature.

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Speaker 3: And I don't mean that from political save and I

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Speaker 3: just mean it from a risk perspective. I am a

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Speaker 3: very conservative individual and I don't like to take risks.

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Speaker 3: And so when I am managing portfolios that are meant

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Speaker 3: to just provide some cash flow and a little bit

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Speaker 3: of price return for our clients, and it's supposed to

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Speaker 3: be that safer component of their overall allocation, I don't

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Speaker 3: want to go in and take extra risk for them.

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Speaker 3: And I think most of my clients would agree with that,

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Speaker 3: right They this is not the part of their investment

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Speaker 3: that they're saying, let's add some some high yield and

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Speaker 3: a lot of risk and see what happens. They can

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Speaker 3: do that on the equity side of their portfolio or

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Speaker 3: the currency side, if they want to do some things

382
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Speaker 3: or real estate not in their in their taxable fixed

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Speaker 3: income component of their overall allocation.

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Speaker 4: So I just don't want to take the risk.

385
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Speaker 3: I would much rather go to a client and say,

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Speaker 3: you earned five percent over this time period. Maybe we

387
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Speaker 3: underperformed by twenty five thirty basis points, but we had

388
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Speaker 3: a much lower risk in this portfolio. So if something

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Speaker 3: is to happen, or you have that black swan event,

390
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Speaker 3: we are more protected in this element. Then to go

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Speaker 3: in and say we took a big risk and it

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Speaker 3: went against us, and now you know you've lost money

393
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Speaker 3: in this strategy, that's just not what my clients are

394
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Speaker 3: looking for. So I tend to take a much more

395
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Speaker 3: conservative approach in our allocation and in our investment process

396
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Speaker 3: than maybe some other people do.

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Speaker 2: And maybe to your point of there's no extra return

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Speaker 2: without taking on a higher risk. I think it was

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Speaker 2: quite interesting to see what the Bank for International Settlements

400
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Speaker 2: said recently, or rather warn in a new paper about

401
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Speaker 2: credit ratings on private loans held by US curers. Two

402
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Speaker 2: According to them like what have been sematrically inflated, And

403
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Speaker 2: I think what they're leading the blame on maybe some

404
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Speaker 2: of the smaller rating agencies capturing a greater market share

405
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Speaker 2: of that space versus you know, Moodies and SNP and

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Speaker 2: and potentially some of the of the risk is higher

407
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Speaker 2: than than what people think. Do you do you see

408
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Speaker 2: potential for uh? I hear you're not invested in private credit,

409
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Speaker 2: but do you think there could be like a significant

410
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Speaker 2: ripple effect if something were to go wrong? And how

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Speaker 2: do you protect yourself from that happening in your portfolios? Yeah?

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Speaker 3: So I definitely think you can get a ripple effect.

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Speaker 3: And I do think that when you're looking at credit

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Speaker 3: issues that maybe do not have as much transparency as

415
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Speaker 3: others rating agency could over inflate or inflate what that

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Speaker 3: rating is. It's why you have to kind of dig

417
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Speaker 3: down deeper, and this is how you protect yourself.

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Speaker 4: You have to go yourself.

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Speaker 3: Look at the the balance sheets of these companies. You

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Speaker 3: can have a company and you know, I will give

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Speaker 3: you an example. Al CoA is a perfect example. Alca

422
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Speaker 3: was in our portfolio years ago when it got downgraded.

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Speaker 3: So you know, we always say we're at investment grade

424
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Speaker 3: in our corporate holdings, so if something gets downgraded, we

425
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Speaker 3: don't have to sell it immediately, but we do tend

426
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Speaker 3: to work out of it over time. So ol CoA

427
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Speaker 3: gets downgraded to junk bond status. But we're looking at

428
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Speaker 3: this balance sheet and we're saying, wait a minute, our

429
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Speaker 3: bonds are, you know, coming due in two and a

430
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Speaker 3: half years. We're looking at the cash flow they have,

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Speaker 3: We're looking at the assets they have on their balance sheet.

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Speaker 4: We're bond holders.

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Speaker 3: There's plenty of money in order to pay the interest

434
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Speaker 3: and the mature component the par value on maturity date

435
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Speaker 3: for these bonds. So we didn't want to go in

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Speaker 3: and sell our bonds at seventy cents on the dollar

437
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Speaker 3: to get out of the name. So we held them

438
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Speaker 3: to maturity. We got our coupon payments, we got our

439
00:23:16,200 --> 00:23:21,200
Speaker 3: par value at maturity, and made our holders our clients

440
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Speaker 3: whole on that al CoA bond. If we had just

441
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Speaker 3: listened to the rating agency, we would have lost out

442
00:23:28,240 --> 00:23:33,000
Speaker 3: tremendously on that. So when I'm talking to clients, we're

443
00:23:33,000 --> 00:23:35,479
Speaker 3: not just saying, well, it's an A rated bonder, it's

444
00:23:35,520 --> 00:23:37,760
Speaker 3: a triple B plus rated bond, and so you're good,

445
00:23:37,760 --> 00:23:38,879
Speaker 3: you don't have to worry about it.

446
00:23:38,920 --> 00:23:40,720
Speaker 4: No, we're digging in a little bit.

447
00:23:40,840 --> 00:23:43,320
Speaker 3: We have analysts that look at these names and say,

448
00:23:43,680 --> 00:23:46,560
Speaker 3: hold on, let's see what it really looks like. Maybe

449
00:23:46,560 --> 00:23:49,800
Speaker 3: they're rated A, but yet we look at their debt

450
00:23:49,880 --> 00:23:52,440
Speaker 3: ratios and we go, WHOA, hold on, that's way too

451
00:23:52,480 --> 00:23:53,120
Speaker 3: high for us.

452
00:23:53,359 --> 00:23:55,200
Speaker 4: We don't want to take that risk.

453
00:23:55,560 --> 00:23:58,800
Speaker 3: We had done that with some AT and T bonds,

454
00:23:58,840 --> 00:24:01,200
Speaker 3: some of the Communications Sect bonds a few years ago.

455
00:24:01,240 --> 00:24:04,480
Speaker 3: When those debt ratios got extremely high, we said, no,

456
00:24:04,600 --> 00:24:07,280
Speaker 3: we're not comfortable. Let's come out of these names. So

457
00:24:07,520 --> 00:24:10,280
Speaker 3: I don't think you can simply rely on a rating agency.

458
00:24:10,320 --> 00:24:13,159
Speaker 3: It's a good way to sort bonds, to kind of

459
00:24:13,200 --> 00:24:16,600
Speaker 3: do that initial look at them and group bonds together.

460
00:24:17,000 --> 00:24:18,560
Speaker 3: But I do think you have to go in and

461
00:24:18,840 --> 00:24:21,159
Speaker 3: really kind of do your homework, and that's how you

462
00:24:21,280 --> 00:24:26,200
Speaker 3: end up protecting yourself from an event that maybe was unanticipated.

463
00:24:26,760 --> 00:24:30,320
Speaker 1: Right right, We can't obviously talk about markets at all

464
00:24:30,720 --> 00:24:34,359
Speaker 1: in these times without saying AI. So I'm interested in

465
00:24:34,400 --> 00:24:36,679
Speaker 1: your view of the AI build out, and you know

466
00:24:36,680 --> 00:24:39,800
Speaker 1: what opportunity that might be for an an investor, not

467
00:24:39,920 --> 00:24:42,120
Speaker 1: just on the data center, but also on the power

468
00:24:42,200 --> 00:24:44,679
Speaker 1: and all the other associated infrastructure. Is that something you

469
00:24:44,720 --> 00:24:46,639
Speaker 1: think is going to be very exciting for credit.

470
00:24:47,920 --> 00:24:52,399
Speaker 3: We absolutely do, and so when we go through our

471
00:24:52,440 --> 00:24:55,600
Speaker 3: investment process, we have multiple steps to it, and one

472
00:24:55,600 --> 00:24:57,879
Speaker 3: of it is looking at, you know, individual sectors, and

473
00:24:57,920 --> 00:25:00,200
Speaker 3: we work with our equity team on that as well

474
00:25:00,359 --> 00:25:02,640
Speaker 3: to see where we think there's some sectors that might

475
00:25:02,680 --> 00:25:06,000
Speaker 3: give us a little bit of additional alpha in the portfolio.

476
00:25:06,080 --> 00:25:08,439
Speaker 4: And obviously the energy sector.

477
00:25:08,480 --> 00:25:12,159
Speaker 3: And I sit here in Houston, Texas, right, so everyone

478
00:25:12,200 --> 00:25:15,520
Speaker 3: will go, well, she's biased for the energy companies, but

479
00:25:15,640 --> 00:25:18,200
Speaker 3: not really. We haven't had a large exposure to energy

480
00:25:18,280 --> 00:25:22,880
Speaker 3: for a while, but now you have this extra tailwind

481
00:25:23,119 --> 00:25:25,479
Speaker 3: for some of the power companies. I mean, we saw

482
00:25:26,359 --> 00:25:29,360
Speaker 3: this week next Tarra, right, there's an announcement from them

483
00:25:29,400 --> 00:25:31,240
Speaker 3: that they're teaming up and they're.

484
00:25:31,600 --> 00:25:32,840
Speaker 4: Stock got a big boost.

485
00:25:33,800 --> 00:25:36,520
Speaker 3: You could see some benefits coming from some of these

486
00:25:36,560 --> 00:25:41,439
Speaker 3: power companies. As more and more partnerships are made with

487
00:25:41,520 --> 00:25:44,960
Speaker 3: some of the hyperscalers or you know, some infra AI

488
00:25:45,040 --> 00:25:47,960
Speaker 3: infrastructure deals are made, you can see some more of

489
00:25:48,000 --> 00:25:49,520
Speaker 3: these power companies really.

490
00:25:49,280 --> 00:25:50,679
Speaker 4: Coming in and benefiting from that.

491
00:25:50,840 --> 00:25:53,879
Speaker 3: So I do think you want to look at adding

492
00:25:53,920 --> 00:25:57,600
Speaker 3: some exposure from the energy side, just like we were saying,

493
00:25:57,920 --> 00:25:59,760
Speaker 3: add a little bit to your healthcare, go in and

494
00:25:59,760 --> 00:26:03,280
Speaker 3: find some of those areas where maybe spreads were wider

495
00:26:03,320 --> 00:26:05,080
Speaker 3: and you could go in and take an opportunity. I

496
00:26:05,119 --> 00:26:06,600
Speaker 3: think you can do that on the energy and on

497
00:26:06,640 --> 00:26:09,760
Speaker 3: the power side as well. Find some of those elements

498
00:26:09,800 --> 00:26:13,119
Speaker 3: that feed into that AI theme that are not just

499
00:26:13,240 --> 00:26:16,760
Speaker 3: the hyperscalers, and use that to your advantage. I think

500
00:26:16,800 --> 00:26:19,000
Speaker 3: it will be beneficial over.

501
00:26:18,840 --> 00:26:19,520
Speaker 4: The long term.

502
00:26:19,600 --> 00:26:21,080
Speaker 1: It is also a bit of a gold rush at

503
00:26:21,119 --> 00:26:23,840
Speaker 1: this point, and things, you know, often go wrong when

504
00:26:23,880 --> 00:26:26,800
Speaker 1: everybody's just hysterical about one particular thing. So I'm wondering

505
00:26:26,760 --> 00:26:29,439
Speaker 1: if there's any caution out there about things like you know,

506
00:26:29,440 --> 00:26:31,919
Speaker 1: obsolescence risk and you know the fact that all this

507
00:26:31,920 --> 00:26:34,840
Speaker 1: stuff's been created in terms of like pure blue sky thinking,

508
00:26:34,840 --> 00:26:37,080
Speaker 1: we don't know where it's going to go. So for

509
00:26:37,119 --> 00:26:39,960
Speaker 1: a credit investor that you know, we're pretty cautious people,

510
00:26:40,000 --> 00:26:41,439
Speaker 1: you know, we do ask a lot of questions. But

511
00:26:41,840 --> 00:26:44,440
Speaker 1: how how careful should we be about all this?

512
00:26:45,640 --> 00:26:49,080
Speaker 3: Yeah, I think when we talk about risk, I mean

513
00:26:49,119 --> 00:26:52,199
Speaker 3: we've been talking about that, you know, for quite a

514
00:26:52,200 --> 00:26:55,280
Speaker 3: while here in our conversation. Obviously, you've got to look

515
00:26:55,320 --> 00:26:57,600
Speaker 3: at those balance sheets and look and see, you know,

516
00:26:57,720 --> 00:26:58,200
Speaker 3: do they.

517
00:26:58,080 --> 00:27:00,080
Speaker 4: Have a lot of debt, are they going to be

518
00:27:00,119 --> 00:27:02,840
Speaker 4: able to pay that off? What does their cash flow

519
00:27:02,880 --> 00:27:03,280
Speaker 4: look like?

520
00:27:03,600 --> 00:27:06,280
Speaker 3: Those are important components, But I think the other element

521
00:27:06,320 --> 00:27:09,399
Speaker 3: that you have to look at is what is the premium?

522
00:27:09,520 --> 00:27:11,720
Speaker 3: Is there a very high premium on these bonds, because,

523
00:27:11,720 --> 00:27:14,520
Speaker 3: like you're saying, everyone's rushing into something. I never like

524
00:27:15,000 --> 00:27:17,480
Speaker 3: to be on the side of the boat where everybody's going, right,

525
00:27:17,520 --> 00:27:21,000
Speaker 3: that's the part that goes underwater. So you don't want

526
00:27:21,000 --> 00:27:23,879
Speaker 3: to go in and pay a really high premium for

527
00:27:24,000 --> 00:27:26,359
Speaker 3: this bond because everyone's doing it.

528
00:27:26,480 --> 00:27:28,000
Speaker 4: Wait for your opportunity.

529
00:27:28,160 --> 00:27:30,359
Speaker 3: Just like you see on the equity side, people you know,

530
00:27:30,400 --> 00:27:33,040
Speaker 3: they buy the dips, right, they have a shopping list

531
00:27:33,359 --> 00:27:35,240
Speaker 3: and they go in and they buy companies that they

532
00:27:35,240 --> 00:27:36,880
Speaker 3: really like when the market pulls back.

533
00:27:37,119 --> 00:27:38,520
Speaker 4: I think you can do the same thing on the

534
00:27:38,520 --> 00:27:39,680
Speaker 4: fixed income side.

535
00:27:39,920 --> 00:27:43,199
Speaker 3: You know, if you like certain power names, but the

536
00:27:43,200 --> 00:27:46,640
Speaker 3: premiums are getting pretty are up there, pretty high, then

537
00:27:46,760 --> 00:27:50,840
Speaker 3: just wait when we have a headline come through where

538
00:27:50,880 --> 00:27:53,399
Speaker 3: spreads widen out a little bit, then that's your opportunity

539
00:27:53,440 --> 00:27:55,280
Speaker 3: to go in. If you still feel confident in that

540
00:27:55,400 --> 00:27:58,439
Speaker 3: name and add to it so you don't have to

541
00:27:58,440 --> 00:28:03,199
Speaker 3: be skeptical just on the balance sheet side, on the

542
00:28:03,240 --> 00:28:05,080
Speaker 3: credit side, I think you have to be a little

543
00:28:05,119 --> 00:28:09,120
Speaker 3: bit skeptical on where you're buying on the spread component

544
00:28:09,160 --> 00:28:12,639
Speaker 3: as well.

545
00:28:12,760 --> 00:28:15,800
Speaker 2: Let's maybe just switchgear a little bit and talk about

546
00:28:16,080 --> 00:28:18,280
Speaker 2: you know, one of the wholemarks of course mark and

547
00:28:18,320 --> 00:28:21,520
Speaker 2: no pen intended. It's clearly doing good and maybe in

548
00:28:21,520 --> 00:28:24,320
Speaker 2: line with a face based approach to investment principles. This

549
00:28:24,359 --> 00:28:28,480
Speaker 2: involves respect for the environment, responsible governance practices, fair treatment

550
00:28:28,520 --> 00:28:31,359
Speaker 2: of employees, just to name a few. How do you

551
00:28:31,400 --> 00:28:35,159
Speaker 2: see your mission being affected, if at all, by perceived

552
00:28:35,160 --> 00:28:38,040
Speaker 2: as a bit of a pullback on ESG, at least

553
00:28:38,080 --> 00:28:41,120
Speaker 2: in the US, and as many people maybe turn more

554
00:28:41,160 --> 00:28:43,040
Speaker 2: to doing well as opposed to doing good. I mean,

555
00:28:43,040 --> 00:28:44,840
Speaker 2: I'd be interested to hear your views on that.

556
00:28:45,160 --> 00:28:46,920
Speaker 4: Yeah, of course, So you're right.

557
00:28:47,360 --> 00:28:49,880
Speaker 3: One of the things that we talk to our clients

558
00:28:49,880 --> 00:28:54,360
Speaker 3: about is really aligning their investments with their values. So

559
00:28:55,040 --> 00:28:59,360
Speaker 3: we are not an ESG product per se. We're not saying,

560
00:29:00,080 --> 00:29:03,480
Speaker 3: you know, oh, these these whole sectors, were just eliminating

561
00:29:03,520 --> 00:29:07,360
Speaker 3: them because they don't fit a particular narrative. We actually

562
00:29:07,400 --> 00:29:12,040
Speaker 3: do two different types of screening for our clients, and

563
00:29:12,080 --> 00:29:15,120
Speaker 3: so there it can be the negative screening, which is

564
00:29:15,120 --> 00:29:17,800
Speaker 3: what a lot of people associate with the ESG components

565
00:29:17,800 --> 00:29:22,320
Speaker 3: and other elements, and those are revenue based exclusions for us.

566
00:29:22,320 --> 00:29:26,000
Speaker 3: So there are certain areas that we want to avoid.

567
00:29:26,560 --> 00:29:28,720
Speaker 3: That would be you know, think of like alcohol or

568
00:29:28,720 --> 00:29:33,760
Speaker 3: think of tobacco. If a company generates revenue over a

569
00:29:33,800 --> 00:29:37,560
Speaker 3: certain percentage, it usually ranges anywhere from zero to accumulation

570
00:29:37,680 --> 00:29:41,320
Speaker 3: of ten percent in certain industries, then that gets excluded out.

571
00:29:41,440 --> 00:29:44,280
Speaker 3: So you know, I talk about alcohol, just think of

572
00:29:44,360 --> 00:29:47,280
Speaker 3: Anheuser bush right, eighty percent of its revenue comes from

573
00:29:47,320 --> 00:29:50,880
Speaker 3: alcohol production. Well, okay, are we saying that you know,

574
00:29:50,960 --> 00:29:52,840
Speaker 3: it's horrible that someone drinks alcohol?

575
00:29:52,880 --> 00:29:55,440
Speaker 4: Will know, But we can look and say, you know

576
00:29:56,080 --> 00:29:57,800
Speaker 4: that alcohol.

577
00:29:57,400 --> 00:30:01,040
Speaker 3: Consumption is actually the third leading prevent cause of cancer

578
00:30:01,160 --> 00:30:02,320
Speaker 3: in the United States.

579
00:30:02,440 --> 00:30:05,160
Speaker 4: We've got over ten percent of Americans.

580
00:30:04,640 --> 00:30:09,200
Speaker 3: Age twelve or older that have alcohol use disorders. So

581
00:30:09,320 --> 00:30:13,200
Speaker 3: there are elements that are harmful to our society as

582
00:30:13,200 --> 00:30:16,520
Speaker 3: a whole coming from some of these, and so we

583
00:30:16,640 --> 00:30:19,200
Speaker 3: choose not to invest in those. You know, you can

584
00:30:19,240 --> 00:30:21,480
Speaker 3: see the same thing on tobacco with like a Philip

585
00:30:21,520 --> 00:30:25,600
Speaker 3: Morris right, even though they're shifting away from cigarettes to

586
00:30:25,680 --> 00:30:29,560
Speaker 3: other things those are there's still risks associated with those

587
00:30:29,760 --> 00:30:35,800
Speaker 3: lung functions, cardiovascular diseases, addictions. So there's that negative component,

588
00:30:35,840 --> 00:30:38,280
Speaker 3: but I think where it fits into kind of what

589
00:30:38,400 --> 00:30:41,560
Speaker 3: you're talking about is more what we call our responsible

590
00:30:41,560 --> 00:30:46,440
Speaker 3: investing component or the positive inclusions. So part of my

591
00:30:46,600 --> 00:30:50,640
Speaker 3: investing process, I have four steps. My fourth step of

592
00:30:50,640 --> 00:30:54,120
Speaker 3: my investing process is I'm looking at not just the

593
00:30:54,160 --> 00:30:57,320
Speaker 3: fundamentals and the balance sheets of these companies. Yes, we

594
00:30:57,400 --> 00:30:59,280
Speaker 3: do that because it's important and we've spent a lot

595
00:30:59,280 --> 00:31:02,080
Speaker 3: of time talking about that, but we also want to

596
00:31:02,120 --> 00:31:05,080
Speaker 3: look at what some of their value scores are. We

597
00:31:05,200 --> 00:31:08,080
Speaker 3: use third parties to look at that. So an example,

598
00:31:08,120 --> 00:31:10,000
Speaker 3: so you can see what I'm talking about, think of

599
00:31:10,440 --> 00:31:14,480
Speaker 3: Elevant's Health, right we're talking about healthcare names earlier. Elevants

600
00:31:14,520 --> 00:31:18,600
Speaker 3: Health is a top scoring name within the healthcare service

601
00:31:18,640 --> 00:31:21,960
Speaker 3: and equipment sector. So it's in name because we like

602
00:31:22,000 --> 00:31:25,040
Speaker 3: the balance sheet and because they have good value scores,

603
00:31:25,040 --> 00:31:27,840
Speaker 3: we want to put them in play. And why are

604
00:31:27,840 --> 00:31:31,560
Speaker 3: they scoring high well, because they are doing a tremendous

605
00:31:31,600 --> 00:31:36,160
Speaker 3: amount of work in regards to postpartum depression. They are educating,

606
00:31:36,240 --> 00:31:39,640
Speaker 3: they're doing best practices, they have partnered up and they

607
00:31:39,680 --> 00:31:44,240
Speaker 3: have a twenty four to seven virtual medical practice to

608
00:31:44,600 --> 00:31:49,920
Speaker 3: help mothers in the first year postpartum. And it's interesting

609
00:31:49,960 --> 00:31:53,800
Speaker 3: because you see almost half of the people that engage

610
00:31:53,880 --> 00:31:58,760
Speaker 3: with this program are asking questions outside of normal business hours,

611
00:31:58,760 --> 00:32:01,400
Speaker 3: So it's middle of the night when a brand new

612
00:32:01,400 --> 00:32:05,800
Speaker 3: mother probably is not sleeping and she's you know, having issues,

613
00:32:05,840 --> 00:32:08,400
Speaker 3: she's able to call and talk to someone and they

614
00:32:08,440 --> 00:32:12,239
Speaker 3: can help. So things like that where Elevant's Help is

615
00:32:12,960 --> 00:32:16,320
Speaker 3: supporting these types of initiatives, These are reasons.

616
00:32:15,920 --> 00:32:17,040
Speaker 4: That we would include them.

617
00:32:17,160 --> 00:32:19,720
Speaker 3: And you might not think of a staples company like

618
00:32:19,840 --> 00:32:25,920
Speaker 3: General Mills as having a really strong positive values component,

619
00:32:26,480 --> 00:32:30,120
Speaker 3: but they do a tremendous amount of work with the

620
00:32:30,160 --> 00:32:34,760
Speaker 3: WICK services for people that are at the poverty line

621
00:32:34,960 --> 00:32:38,280
Speaker 3: or below it. We've got over forty percent of infants

622
00:32:38,480 --> 00:32:42,240
Speaker 3: that are on WICK right now, and General Mills has

623
00:32:42,280 --> 00:32:47,520
Speaker 3: over two hundred and twenty products that are available to

624
00:32:47,680 --> 00:32:53,360
Speaker 3: families on WICK and they actually provide them with these recipes,

625
00:32:53,400 --> 00:32:55,520
Speaker 3: which is really kind of a cool thing where they

626
00:32:55,600 --> 00:32:59,719
Speaker 3: take some of their lowest cost items and make new

627
00:33:00,520 --> 00:33:03,360
Speaker 3: meals from them and provide them to these families so

628
00:33:03,720 --> 00:33:05,960
Speaker 3: they are getting the nutrition they need. They're doing it

629
00:33:06,000 --> 00:33:10,080
Speaker 3: at a cost that is beneficial to them, and it's

630
00:33:10,120 --> 00:33:15,720
Speaker 3: extremely helpful to these families. They support the Special Supplemental

631
00:33:15,800 --> 00:33:18,440
Speaker 3: Nutrition Program. They've done it for over forty five years,

632
00:33:18,840 --> 00:33:21,600
Speaker 3: and they're using ninety three percent of their packaging as

633
00:33:21,640 --> 00:33:24,560
Speaker 3: recyclable now, so trying to help the components there.

634
00:33:24,640 --> 00:33:27,640
Speaker 4: So these types of stories for these.

635
00:33:27,520 --> 00:33:31,400
Speaker 3: Companies, we feel like are things that our clients can say,

636
00:33:32,320 --> 00:33:35,760
Speaker 3: we're proud to invest in these companies and we're you know,

637
00:33:35,800 --> 00:33:39,120
Speaker 3: they have strong fundamentals, which you have to have in

638
00:33:39,160 --> 00:33:45,080
Speaker 3: a portfolio, but yet they also have these responsible components

639
00:33:45,160 --> 00:33:47,560
Speaker 3: to them, So we combine the two. We're not just

640
00:33:47,640 --> 00:33:50,680
Speaker 3: gonna invest in a company because they do good, they

641
00:33:50,760 --> 00:33:54,440
Speaker 3: have to have strong fundamentals as well. So the combination

642
00:33:54,600 --> 00:33:56,840
Speaker 3: of those two things is what we do at Crossmark,

643
00:33:57,360 --> 00:33:57,760
Speaker 3: and we.

644
00:33:57,680 --> 00:34:00,120
Speaker 4: Feel it's something very beneficial for our clients.

645
00:34:00,160 --> 00:34:02,480
Speaker 1: But we're also operating in a political environment in this country,

646
00:34:02,480 --> 00:34:04,760
Speaker 1: in the US where a lot of it's been dismissed

647
00:34:04,760 --> 00:34:09,560
Speaker 1: as quote woke or you know, just wasteful virtual virtual signaling.

648
00:34:09,560 --> 00:34:12,240
Speaker 1: I mean, I obnestly think what you're saying, it sounds brilliant,

649
00:34:12,360 --> 00:34:15,400
Speaker 1: but you know, what's what's gone on in the country.

650
00:34:15,480 --> 00:34:17,080
Speaker 1: A lot of it's been pushed back in and so

651
00:34:17,120 --> 00:34:20,080
Speaker 1: why why isn't that stuff covered by public health or

652
00:34:20,200 --> 00:34:23,200
Speaker 1: charity or whatever? How does it fit into to a

653
00:34:23,200 --> 00:34:25,560
Speaker 1: corporate mandate? But but I also also wanted to ask

654
00:34:25,560 --> 00:34:28,160
Speaker 1: you about energy because you know, fossil fuels have become

655
00:34:28,239 --> 00:34:31,960
Speaker 1: such a big political football as well, and when you're

656
00:34:31,960 --> 00:34:34,440
Speaker 1: talking about AI and power, you know, how does that

657
00:34:34,480 --> 00:34:38,560
Speaker 1: fit into into this this value based investing? And you know,

658
00:34:38,640 --> 00:34:41,160
Speaker 1: do you do you consider nuclear to be a clean option?

659
00:34:41,360 --> 00:34:43,359
Speaker 1: And you know that there's been a big nuclear deal

660
00:34:43,719 --> 00:34:46,799
Speaker 1: just just announced in these days, so heurius to help you.

661
00:34:48,280 --> 00:34:50,600
Speaker 3: Yes, So the way that we look at it, and

662
00:34:50,800 --> 00:34:52,880
Speaker 3: you know, like I said, we use a third party

663
00:34:53,080 --> 00:34:56,000
Speaker 3: to value these so that we can be very objective

664
00:34:56,440 --> 00:35:00,359
Speaker 3: on these and a lot of it is score on

665
00:35:00,480 --> 00:35:05,240
Speaker 3: the risk that these companies have in regards to having

666
00:35:05,600 --> 00:35:08,000
Speaker 3: when it comes to energy companies in regards to having

667
00:35:08,080 --> 00:35:12,239
Speaker 3: something bad for society happened. So let's go back to BP,

668
00:35:12,600 --> 00:35:16,200
Speaker 3: right and the issues that we had there. Following that,

669
00:35:16,920 --> 00:35:21,719
Speaker 3: BP put so many buffers in place and new procedures

670
00:35:21,719 --> 00:35:25,120
Speaker 3: and things in place that their risk level to being

671
00:35:25,280 --> 00:35:28,919
Speaker 3: part of something that would cause those issues again came

672
00:35:28,960 --> 00:35:33,680
Speaker 3: down tremendously, so their values forlore actually moved higher because

673
00:35:33,719 --> 00:35:36,799
Speaker 3: their risk came down. So I think it's important for

674
00:35:36,840 --> 00:35:39,600
Speaker 3: a lot of people to kind of understand there's different

675
00:35:39,600 --> 00:35:42,960
Speaker 3: ways that companies can do things. They may not be

676
00:35:43,040 --> 00:35:46,600
Speaker 3: out there, you know, charging at the front of a

677
00:35:47,239 --> 00:35:50,799
Speaker 3: march for something, but internally the companies are doing things

678
00:35:50,880 --> 00:35:53,120
Speaker 3: to try to do better and be better for their

679
00:35:53,160 --> 00:35:56,239
Speaker 3: employees and be better for the community around them. And

680
00:35:56,320 --> 00:36:00,000
Speaker 3: so there's a lot of companies that do that. Yeah,

681
00:36:00,280 --> 00:36:03,960
Speaker 3: when you look at oil and gas companies overall, many

682
00:36:04,000 --> 00:36:08,440
Speaker 3: of them are screened out for some of the elements

683
00:36:08,600 --> 00:36:11,959
Speaker 3: that people are looking for, but not all of them.

684
00:36:12,080 --> 00:36:14,800
Speaker 3: So I do think you have to look and see

685
00:36:15,000 --> 00:36:18,080
Speaker 3: what the risk level is of these companies, what they're

686
00:36:18,120 --> 00:36:22,480
Speaker 3: doing to help mitigate any issues that their company could cause,

687
00:36:23,680 --> 00:36:25,440
Speaker 3: and then those are the types of names that we

688
00:36:25,440 --> 00:36:27,640
Speaker 3: would be able to put into the portfolio.

689
00:36:28,040 --> 00:36:31,560
Speaker 2: So I see this is a very detailed, open minding

690
00:36:32,040 --> 00:36:36,480
Speaker 2: kind of approach to investing and looking at very specifics

691
00:36:36,760 --> 00:36:39,560
Speaker 2: of each company and now just taking a view on

692
00:36:39,840 --> 00:36:42,680
Speaker 2: a single sector. What I'd be interested to hear you

693
00:36:42,800 --> 00:36:46,239
Speaker 2: talk about is performance. I mean, have you done any

694
00:36:46,320 --> 00:36:50,759
Speaker 2: work on how the performance of these responsible and investments

695
00:36:51,239 --> 00:36:54,520
Speaker 2: fare compared to a broader index for instance.

696
00:36:54,760 --> 00:36:57,640
Speaker 3: Absolutely, and I'm gonna throw a plug in here real quick,

697
00:36:57,680 --> 00:37:00,160
Speaker 3: so don't get mad at me, James. But people you

698
00:37:00,239 --> 00:37:03,319
Speaker 3: go to our website, Crossmarkglobal dot com, look on our

699
00:37:03,360 --> 00:37:06,480
Speaker 3: insights page. We actually did a white paper not too

700
00:37:06,520 --> 00:37:10,600
Speaker 3: long ago on this topic and what you notice is

701
00:37:10,880 --> 00:37:15,880
Speaker 3: from quarter to quarter, absolutely there can be differences and performance.

702
00:37:15,960 --> 00:37:19,279
Speaker 3: So if you know, if we are screening out for

703
00:37:19,520 --> 00:37:24,120
Speaker 3: life ethics, some pharmacy companies and pharma does really well

704
00:37:24,160 --> 00:37:28,040
Speaker 3: because there was you know, some type of policy that

705
00:37:28,120 --> 00:37:31,600
Speaker 3: was passed by the administration and so pharma names jumped

706
00:37:31,680 --> 00:37:35,600
Speaker 3: that quarter, well, then yes, your portfolio will probably have

707
00:37:35,719 --> 00:37:39,320
Speaker 3: a drag on performance from not owning the pharma sector.

708
00:37:39,480 --> 00:37:41,640
Speaker 4: Or the same thing could be done for alcohol.

709
00:37:41,680 --> 00:37:44,239
Speaker 3: You know, we talked about alcohol and tobacco components. If

710
00:37:44,280 --> 00:37:48,120
Speaker 3: something happened there, and it could be the flip side, right,

711
00:37:48,120 --> 00:37:50,040
Speaker 3: you could have a ton of regulation all of a

712
00:37:50,080 --> 00:37:53,480
Speaker 3: sudden being put on tobacco companies. So not owning them

713
00:37:53,800 --> 00:37:57,280
Speaker 3: is actually a positive element, and we review that every quarter.

714
00:37:57,400 --> 00:38:00,920
Speaker 3: In our Investment Policy committee, what was as either the

715
00:38:01,040 --> 00:38:05,760
Speaker 3: drag or the added value by owning or not owning

716
00:38:05,800 --> 00:38:09,359
Speaker 3: a particular sector because of the screening that we do.

717
00:38:10,000 --> 00:38:14,520
Speaker 3: But when you look longer term, and I'm talking one, three, five,

718
00:38:14,719 --> 00:38:19,440
Speaker 3: ten years, when you look out over time, there's basically

719
00:38:19,680 --> 00:38:25,240
Speaker 3: zero difference in the performance of strategies. So obviously short

720
00:38:25,320 --> 00:38:28,319
Speaker 3: term there can be some volatility, but no, on the

721
00:38:28,400 --> 00:38:32,960
Speaker 3: longer term, you're not seeing a drag on your performance

722
00:38:33,440 --> 00:38:37,200
Speaker 3: because you are implementing these values components into your portfolio.

723
00:38:38,360 --> 00:38:40,839
Speaker 3: And remember we're doing a lot of this work. It's

724
00:38:40,880 --> 00:38:46,040
Speaker 3: still the fundamental, right, the fundamental drive, So that's driving

725
00:38:46,080 --> 00:38:49,160
Speaker 3: your overall performance. We look at the screening, it's that

726
00:38:49,360 --> 00:38:53,000
Speaker 3: kind of your extra little element that is in your portfolio,

727
00:38:53,120 --> 00:38:55,239
Speaker 3: kind of your whip cream or your cherry on top

728
00:38:55,320 --> 00:38:56,520
Speaker 3: of your of your Sunday.

729
00:38:56,520 --> 00:38:58,080
Speaker 4: It's an important part of it.

730
00:38:58,680 --> 00:39:03,400
Speaker 3: But you still have all that underneath, that fundamental analysis

731
00:39:03,400 --> 00:39:07,520
Speaker 3: and investment thesis underneath that drives performance.

732
00:39:08,040 --> 00:39:09,800
Speaker 1: You think being in Texas gives you an edge on

733
00:39:09,840 --> 00:39:13,280
Speaker 1: this stuff, Victoria, I mean you get tough questions probably

734
00:39:13,280 --> 00:39:14,840
Speaker 1: from the people around you.

735
00:39:15,560 --> 00:39:17,680
Speaker 3: Yeah, you know, James, I'd like to say being in

736
00:39:17,719 --> 00:39:20,640
Speaker 3: Texas gives us an advantage across the board on everything,

737
00:39:20,719 --> 00:39:25,360
Speaker 3: But that's just how we Texans like to think about ourselves. Yeah,

738
00:39:25,520 --> 00:39:29,839
Speaker 3: you know, everything's bigger and better, right. So I do

739
00:39:30,040 --> 00:39:35,560
Speaker 3: think from an energy perspective, we would get more questions

740
00:39:35,600 --> 00:39:38,520
Speaker 3: because obviously, I mean, you know my office, I can

741
00:39:38,520 --> 00:39:40,960
Speaker 3: look out my window here and you know I've got

742
00:39:41,480 --> 00:39:44,200
Speaker 3: BP and Conico, Phillips and all these companies right across

743
00:39:44,200 --> 00:39:44,880
Speaker 3: the street from me.

744
00:39:45,640 --> 00:39:46,920
Speaker 4: So you can get some pushback.

745
00:39:46,960 --> 00:39:49,400
Speaker 3: But I think when we explain how we approach it,

746
00:39:50,040 --> 00:39:53,239
Speaker 3: when we talk about how things are revenue based and

747
00:39:53,280 --> 00:39:56,919
Speaker 3: we're not just making subjective calls on elements, I think

748
00:39:56,920 --> 00:40:00,839
Speaker 3: people tend to understand that a little bit better. These

749
00:40:00,880 --> 00:40:04,120
Speaker 3: are things that you know, if a client decides they

750
00:40:04,160 --> 00:40:07,360
Speaker 3: don't want this on their portfolio.

751
00:40:06,719 --> 00:40:08,040
Speaker 4: That's okay. Right.

752
00:40:08,120 --> 00:40:09,640
Speaker 3: We could have a client say, but I want to

753
00:40:09,719 --> 00:40:12,960
Speaker 3: own energy, Okay, perfect, We can put energy in your

754
00:40:13,000 --> 00:40:13,960
Speaker 3: portfolio for you.

755
00:40:14,040 --> 00:40:14,200
Speaker 4: Right.

756
00:40:14,239 --> 00:40:18,080
Speaker 3: This is just something that we like to provide to

757
00:40:18,160 --> 00:40:18,840
Speaker 3: our clients.

758
00:40:19,120 --> 00:40:21,040
Speaker 4: So you do get a little bit of pushback.

759
00:40:21,080 --> 00:40:24,680
Speaker 3: But I also think, you know, Texas has become such

760
00:40:24,800 --> 00:40:30,320
Speaker 3: a varied economy. Used to it was driven about seventy

761
00:40:30,360 --> 00:40:34,560
Speaker 3: percent by oil and gas. Really that has come down tremendously.

762
00:40:35,040 --> 00:40:37,799
Speaker 3: It's closer now to thirty to forty percent by oil

763
00:40:37,840 --> 00:40:42,040
Speaker 3: and gas. Healthcare has actually taken a huge component of that,

764
00:40:42,160 --> 00:40:45,640
Speaker 3: and tech is growing more and more every day, especially

765
00:40:45,640 --> 00:40:49,440
Speaker 3: in the Austin areas. So a much more varied economy

766
00:40:49,640 --> 00:40:52,840
Speaker 3: than it used to be. And so I think a

767
00:40:52,880 --> 00:40:56,560
Speaker 3: lot of people look at an opportunity to, like I

768
00:40:56,600 --> 00:40:59,120
Speaker 3: mentioned before, kind of align those investments with some of

769
00:40:59,160 --> 00:41:02,879
Speaker 3: their values, and they find this is a great option to.

770
00:41:02,880 --> 00:41:06,360
Speaker 1: Do that excellently. I'm interested also in your view of

771
00:41:06,480 --> 00:41:07,880
Speaker 1: the rest of the world. I mean, we don't have

772
00:41:07,920 --> 00:41:09,960
Speaker 1: a lot of time left, but you know, a lot

773
00:41:09,960 --> 00:41:12,160
Speaker 1: of people did kind of shift a bit of a

774
00:41:12,239 --> 00:41:15,520
Speaker 1: little bit out of the US when the tariffs were announced,

775
00:41:15,760 --> 00:41:16,960
Speaker 1: but I think a lot of that money has just

776
00:41:17,000 --> 00:41:19,279
Speaker 1: come back in. I'm wondering monding's any value for you

777
00:41:19,320 --> 00:41:22,200
Speaker 1: in Europe or Asia. And also when you step back

778
00:41:22,200 --> 00:41:25,040
Speaker 1: and look at credit against other asset classes that you cover,

779
00:41:25,200 --> 00:41:26,200
Speaker 1: how does it stack up.

780
00:41:27,560 --> 00:41:30,799
Speaker 3: Yeah, So obviously, when you know, when we had a

781
00:41:30,840 --> 00:41:33,520
Speaker 3: shift in the dollar, you saw some money kind of

782
00:41:33,520 --> 00:41:36,160
Speaker 3: flowing out to other countries. You saw it on the

783
00:41:36,160 --> 00:41:39,200
Speaker 3: equity side, you saw ETFs that there was a big shift,

784
00:41:39,600 --> 00:41:40,080
Speaker 3: and that.

785
00:41:40,320 --> 00:41:41,840
Speaker 4: On the fixed income side.

786
00:41:42,200 --> 00:41:46,680
Speaker 3: We stay focused on US for the credit that we hold,

787
00:41:46,800 --> 00:41:50,279
Speaker 3: but I watch spread So I mean you look right

788
00:41:50,320 --> 00:41:54,000
Speaker 3: now some of the widening that you've seen over the year.

789
00:41:54,160 --> 00:41:58,800
Speaker 3: Over the last quarter, even UK has widened out tremendously,

790
00:41:59,680 --> 00:42:03,520
Speaker 3: much more so than the US. The Euro has widened out,

791
00:42:03,560 --> 00:42:06,480
Speaker 3: but not near to the extent that you've seen in

792
00:42:06,520 --> 00:42:11,560
Speaker 3: the UK. Euro and Asia are pretty are pretty similar,

793
00:42:11,640 --> 00:42:15,280
Speaker 3: and emerging markets a little bit more but still tighter

794
00:42:15,320 --> 00:42:18,239
Speaker 3: on the year than where we were a little bit

795
00:42:18,480 --> 00:42:22,760
Speaker 3: wider on the quarter, but tighter on the year. Really,

796
00:42:22,800 --> 00:42:26,399
Speaker 3: looking at sterling bonds is where you have seen the

797
00:42:26,440 --> 00:42:30,360
Speaker 3: widest move year to date. So yes, I think you

798
00:42:30,480 --> 00:42:34,000
Speaker 3: have to watch spreads globally. We know that when you

799
00:42:34,040 --> 00:42:39,440
Speaker 3: look at sovereign debt globally, yields tend to track each other, right,

800
00:42:39,520 --> 00:42:42,840
Speaker 3: So we saw for a long time we were seeing

801
00:42:43,000 --> 00:42:45,520
Speaker 3: yields move up in Germany, we were seeing yields move

802
00:42:45,600 --> 00:42:48,399
Speaker 3: up in France, and that was trickling through to some of.

803
00:42:48,360 --> 00:42:50,120
Speaker 4: The higher moves here in the US.

804
00:42:50,920 --> 00:42:53,080
Speaker 3: Now that has started to shift and we're seeing things

805
00:42:53,280 --> 00:42:55,319
Speaker 3: seeing yields come back down globally as well.

806
00:42:55,400 --> 00:42:57,000
Speaker 4: So I think you pay attention to it.

807
00:42:57,000 --> 00:43:00,400
Speaker 3: It's important what happens globally because it does have effect

808
00:43:00,480 --> 00:43:04,319
Speaker 3: on us, which is where we're investing. But when you

809
00:43:04,360 --> 00:43:07,640
Speaker 3: come down into the actual credit, out of sovereign and

810
00:43:07,719 --> 00:43:12,080
Speaker 3: into credit, obviously a lot of these companies have global exposure,

811
00:43:12,400 --> 00:43:14,799
Speaker 3: so you want to be mindful of what's happening in

812
00:43:14,800 --> 00:43:21,000
Speaker 3: a macro perspective globally. But we're not investing in foreign

813
00:43:21,120 --> 00:43:25,879
Speaker 3: currency bonds. We are investing in US dollar US dollar

814
00:43:25,920 --> 00:43:26,720
Speaker 3: domestic bonds.

815
00:43:26,960 --> 00:43:28,440
Speaker 1: I will say the UK is a great place, and

816
00:43:28,440 --> 00:43:30,640
Speaker 1: I'm not going to drag my colleague John Eve into

817
00:43:30,680 --> 00:43:34,280
Speaker 1: the French political discussion because what's going to happen.

818
00:43:34,400 --> 00:43:37,160
Speaker 4: Sorry, Johnny, I did not mean to bring that up.

819
00:43:37,160 --> 00:43:41,320
Speaker 1: But what about equity against credit or credit in the portfolio?

820
00:43:41,360 --> 00:43:43,840
Speaker 1: I mean, how does it stack up against other products

821
00:43:43,840 --> 00:43:44,759
Speaker 1: that you can invest in.

822
00:43:45,800 --> 00:43:47,440
Speaker 4: Yeah, so it's interesting.

823
00:43:47,600 --> 00:43:51,960
Speaker 3: Are actually our best selling strategy at Crossmark, and it

824
00:43:52,000 --> 00:43:53,600
Speaker 3: has been for quite a while, is what we call

825
00:43:53,640 --> 00:43:57,000
Speaker 3: our balance core strategy. So it's a fifty to fifty

826
00:43:57,440 --> 00:44:00,920
Speaker 3: large cap core and core fixed in and it has

827
00:44:01,000 --> 00:44:04,279
Speaker 3: actually been what our clients have really been clamoring for

828
00:44:04,320 --> 00:44:06,200
Speaker 3: and I think because it does give them kind of

829
00:44:06,239 --> 00:44:08,640
Speaker 3: the best of both worlds. Look, you've got an equity

830
00:44:08,680 --> 00:44:12,800
Speaker 3: market that, even though you know, we see some warning signs,

831
00:44:14,040 --> 00:44:16,200
Speaker 3: it is a bull market right now, and you don't

832
00:44:16,200 --> 00:44:17,960
Speaker 3: really want to stand in the way of that of

833
00:44:17,960 --> 00:44:21,080
Speaker 3: that train, and so you want to have exposure to

834
00:44:21,280 --> 00:44:23,879
Speaker 3: that side. We've actually been calling it a high risk

835
00:44:23,960 --> 00:44:26,520
Speaker 3: bull market because of some of the warning signs we've seen.

836
00:44:26,960 --> 00:44:30,680
Speaker 3: But with a FED saying they're going to lower rates,

837
00:44:30,719 --> 00:44:35,680
Speaker 3: with tailwinds coming from stimulus both monetary and fiscal coming

838
00:44:35,760 --> 00:44:38,600
Speaker 3: in the new year, with some of the tax incentives

839
00:44:38,600 --> 00:44:41,759
Speaker 3: that are happening in the capex components, I think you

840
00:44:41,800 --> 00:44:44,120
Speaker 3: want to have some exposure to equity, but I do

841
00:44:44,160 --> 00:44:47,320
Speaker 3: think because there are elements out there that cause us concern.

842
00:44:47,440 --> 00:44:50,560
Speaker 3: We've talked about some of them already today, you need

843
00:44:50,600 --> 00:44:53,640
Speaker 3: to have that exposure to fixed income And for us,

844
00:44:53,840 --> 00:44:55,759
Speaker 3: we think you want to lock in some of these

845
00:44:55,840 --> 00:44:59,000
Speaker 3: rates that you can get north of four percent and

846
00:44:59,040 --> 00:45:01,480
Speaker 3: able to have that cash flow which can help buffer

847
00:45:01,520 --> 00:45:04,520
Speaker 3: any kind of volatility from the equity side. So we

848
00:45:04,640 --> 00:45:07,839
Speaker 3: do believe in a diversified portfolio you need to have

849
00:45:08,160 --> 00:45:12,320
Speaker 3: that exposure in there, But overall, we would have your

850
00:45:12,520 --> 00:45:15,200
Speaker 3: your total portfolio allocation take a little bit more of

851
00:45:15,239 --> 00:45:18,760
Speaker 3: a defensive tone even when you're looking at things outside

852
00:45:18,800 --> 00:45:21,239
Speaker 3: of fixed income, even when you're looking at equities or

853
00:45:21,280 --> 00:45:25,919
Speaker 3: real estate or currency or alternatives. You know a good

854
00:45:25,960 --> 00:45:28,319
Speaker 3: way that a lot of our clients are having other

855
00:45:28,360 --> 00:45:33,120
Speaker 3: components in their portfolio but still being income generating. So

856
00:45:33,160 --> 00:45:35,600
Speaker 3: something that kind of mirrors fixed income is to use

857
00:45:35,640 --> 00:45:38,120
Speaker 3: covered calls. So that's the way you can be in

858
00:45:38,160 --> 00:45:42,160
Speaker 3: the equity market but still have income cash flow like

859
00:45:42,200 --> 00:45:44,760
Speaker 3: you do on the fixed income. Many people combine those

860
00:45:44,840 --> 00:45:48,520
Speaker 3: two elements core fixed and a covered call strategy in

861
00:45:48,640 --> 00:45:50,560
Speaker 3: order to get that income that they're looking for and

862
00:45:50,640 --> 00:45:53,000
Speaker 3: have exposure to equities and fixed.

863
00:45:53,040 --> 00:45:54,759
Speaker 1: Where's the best relative value though? Do you think in

864
00:45:54,880 --> 00:45:55,759
Speaker 1: credit right now?

865
00:45:56,280 --> 00:46:01,279
Speaker 3: It's an interesting question because I think it shifts. I

866
00:46:01,320 --> 00:46:05,120
Speaker 3: think it's been shifting this year. But honestly, I don't

867
00:46:05,160 --> 00:46:07,920
Speaker 3: want someone going out and paying a high premium to

868
00:46:08,000 --> 00:46:11,640
Speaker 3: get investment grade credit. So maybe you wait a little

869
00:46:11,640 --> 00:46:14,640
Speaker 3: bit and let those spreads widen to go in. But

870
00:46:14,719 --> 00:46:16,800
Speaker 3: I think you can go in and buy the shorter

871
00:46:16,960 --> 00:46:19,640
Speaker 3: end of the treasury curve, knowing that the FED is

872
00:46:19,680 --> 00:46:24,319
Speaker 3: probably lowering rates twice more this year and maybe not

873
00:46:24,520 --> 00:46:26,520
Speaker 3: into next year. You can buy on the short end

874
00:46:26,520 --> 00:46:29,879
Speaker 3: of that treasury curve, get some price appreciation or curve.

875
00:46:29,920 --> 00:46:32,640
Speaker 3: You know, the carry works in your favor, and you're

876
00:46:32,680 --> 00:46:36,200
Speaker 3: getting a nice coupon on that. So I think that's

877
00:46:36,239 --> 00:46:39,080
Speaker 3: kind of where your best bet is right now, is that.

878
00:46:39,080 --> 00:46:40,800
Speaker 4: Shorter end of the treasury curve.

879
00:46:41,400 --> 00:46:44,279
Speaker 3: But I would be watching very closely for spreads, and

880
00:46:44,320 --> 00:46:47,040
Speaker 3: if I started to see something widen out, I would

881
00:46:47,080 --> 00:46:49,719
Speaker 3: hop in and get some credit in there further out

882
00:46:49,719 --> 00:46:51,840
Speaker 3: the curve to lock in some income.

883
00:46:52,640 --> 00:46:55,320
Speaker 1: I should also say for listeners that we are speaking

884
00:46:55,360 --> 00:46:58,279
Speaker 1: ahead of the September decision, so you don't expect more

885
00:46:58,280 --> 00:47:01,080
Speaker 1: than September and October in tons of cuts.

886
00:47:01,880 --> 00:47:04,319
Speaker 3: I think the December cut is a little more up

887
00:47:04,360 --> 00:47:09,000
Speaker 3: in the air. It probably will happen, but I think

888
00:47:09,040 --> 00:47:11,319
Speaker 3: depending on when the government opens back up and the

889
00:47:11,400 --> 00:47:15,120
Speaker 3: data that we get the backlog of data, the December.

890
00:47:14,680 --> 00:47:16,360
Speaker 4: One could be a little more iffy.

891
00:47:16,960 --> 00:47:19,520
Speaker 3: But odds are right now and the market is pricing

892
00:47:19,600 --> 00:47:22,920
Speaker 3: in two more rate cuts, which means if they don't

893
00:47:22,920 --> 00:47:24,960
Speaker 3: go in December, or it starts to look like they're

894
00:47:25,000 --> 00:47:27,480
Speaker 3: not going to, we could see a pushback on yields

895
00:47:27,480 --> 00:47:28,680
Speaker 3: and see them move a little higher.

896
00:47:28,680 --> 00:47:34,000
Speaker 2: Okay, and maybe just to finish, what is your key

897
00:47:34,080 --> 00:47:37,399
Speaker 2: concern and I'm maybe talking to the portfolio manager here

898
00:47:38,160 --> 00:47:39,520
Speaker 2: when you look at the market right now.

899
00:47:40,640 --> 00:47:44,840
Speaker 3: Yeah, my key concern is the complacency that we see

900
00:47:44,960 --> 00:47:48,719
Speaker 3: in the market right now. I think too many investors

901
00:47:48,800 --> 00:47:52,520
Speaker 3: and too many portfolio managers are saying we are just

902
00:47:52,760 --> 00:47:56,000
Speaker 3: all in. Nothing's going to rock this market. You know,

903
00:47:56,239 --> 00:47:59,120
Speaker 3: Jamie Diamond talks about the cockroaches, but the investors don't

904
00:47:59,120 --> 00:48:02,359
Speaker 3: seem to care. This complacency that they see in the

905
00:48:02,360 --> 00:48:04,759
Speaker 3: belief that we're going to continue to see earnings, just

906
00:48:04,800 --> 00:48:07,480
Speaker 3: support this market and have it continue to move higher

907
00:48:07,880 --> 00:48:11,640
Speaker 3: is a concern for me. I would feel much better

908
00:48:12,040 --> 00:48:15,440
Speaker 3: if there were more people out there that were cautious

909
00:48:15,600 --> 00:48:18,640
Speaker 3: and putting a little more defensive component into their portfolio.

910
00:48:18,840 --> 00:48:20,640
Speaker 4: That would make me feel a little bit better.

911
00:48:21,480 --> 00:48:25,239
Speaker 3: I think we could be kind of climbing, you know,

912
00:48:25,440 --> 00:48:28,920
Speaker 3: up and inflating the markets right now on the belief

913
00:48:29,360 --> 00:48:31,640
Speaker 3: that everything's going to be just fine, even though there

914
00:48:31,640 --> 00:48:32,640
Speaker 3: are warning signs.

915
00:48:32,680 --> 00:48:34,840
Speaker 4: So that is my biggest concern.

916
00:48:35,640 --> 00:48:38,480
Speaker 1: Great stuff, Victoria Fernandez, chief market strategist at cross Mark

917
00:48:38,520 --> 00:48:40,960
Speaker 1: Global Investments. Been a real pleasure having you on the

918
00:48:41,000 --> 00:48:41,680
Speaker 1: credit Edge Money.

919
00:48:41,719 --> 00:48:44,239
Speaker 4: Thanks, it's my pleasure. Thanks so much, and of.

920
00:48:44,120 --> 00:48:46,880
Speaker 1: Course very grateful to John ef Coupan from Bloomberg Intelligence.

921
00:48:46,960 --> 00:48:49,600
Speaker 1: Thanks so much for joining us today, My pleasure. For

922
00:48:49,680 --> 00:48:52,480
Speaker 1: even more credit market analysis, read all of John eve

923
00:48:52,560 --> 00:48:55,840
Speaker 1: Coupin's great work on the Bloomberg Terminal. Bloomberg Intelligence is

924
00:48:55,880 --> 00:48:58,160
Speaker 1: part of our research department, with five hundred analysts and

925
00:48:58,280 --> 00:49:01,600
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926
00:49:01,600 --> 00:49:04,400
Speaker 1: equities and credits and outlooks on more than ninety industries

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932
00:49:22,040 --> 00:49:25,359
Speaker 1: Bloomberg dot net. I'm James Crombie. It's been a real

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Speaker 1: pleasure having you join us again next week on the

934
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Speaker 1: Credit Edge