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Speaker 1: Let's get to our guest, Michael Landsburg, ce IO at

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Speaker 1: Landsburg Bennett Private Wealth Management. Michael, everyone knows the market

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Speaker 1: was oversold and that sentiment got extremely negative, so bounce

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Speaker 1: was thought maybe likely. UM. The debate, of course here

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Speaker 1: will rage whether or not the bounces of bear market

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Speaker 1: rally or whether or not it has staying power. Now

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Speaker 1: the people who think that it has staying power are

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Speaker 1: are thinking about aspects like what happened in the UK,

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Speaker 1: some considerations about financial system instability, and still thinking about

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Speaker 1: a FED pivot. Seeing in your notes, I don't think

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Speaker 1: you buy it. I don't I look at the specifically

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Speaker 1: you mentioned Europe. I think the fact that they didn't

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Speaker 1: know what they're doing in the UK is not a

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Speaker 1: real reason to go in there and start buying UM.

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Speaker 1: Inflation over there is out of control, worse than it

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Speaker 1: is here, and they're coming into a winter where a

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Speaker 1: lot of those countries can't get their own energy. Just

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Speaker 1: have to look at what happened to a natural gas

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Speaker 1: year over year to and fifth few percent in Germany.

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Speaker 1: Electricities up over in Germany, I would say away from Europe, uh,

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Speaker 1: you know, with a ten foot poll at this point

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Speaker 1: and and in fact, actually we've been short in Europe

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Speaker 1: and actually one of our better positions all year. So

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Speaker 1: the adage of be fearful when others of greedy and

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Speaker 1: vice versa doesn't apply here. Then I think it's a

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Speaker 1: matter of we're looking at the data and the data

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Speaker 1: doesn't really tell me that. You know that people that

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Speaker 1: fearful I looked to actually have haven't seen the data

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Speaker 1: yet for tomorrow. But a week ago people are still

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Speaker 1: that long n ASTEC futures the United States, and their

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Speaker 1: short volatility means they think, uh, nastak is cheap and

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Speaker 1: volatility is expensive. And I think that's the apposite way.

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Speaker 1: When people are fearful, as we saw, let's say, back

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Speaker 1: in the COVID times, you saw nastec futures that were

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Speaker 1: amazingly bearish. Everybody was short those. You still got people

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Speaker 1: that are not long those. So I am in favor

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Speaker 1: of buying when when people are fearful, I just don't

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Speaker 1: think people are fearful. I think they tell you they're fearful.

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Speaker 1: But when I look at actually the data, what people

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Speaker 1: own the street was still long nasted. Well, I looked

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Speaker 1: at the when you see what happened in the bond market,

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Speaker 1: and when you see you know, stocks down year to date,

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Speaker 1: you could argue that a lot of this what was

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Speaker 1: built in and there was a lot of negativity. I mean,

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Speaker 1: I think many would agree with you that financial system

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Speaker 1: instability can't be a good thing you should certainly can't

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Speaker 1: be something that would you know, prompt people to buy.

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Speaker 1: But maybe inflation coming down, the fact that shipping costs

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Speaker 1: are down, rents are down, prices on houses are down.

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Speaker 1: Maybe the weight of the argument is the FED will

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Speaker 1: shift at some point soon. You'd hope that. My fear

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Speaker 1: with the Fed has been they probably should have raised

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Speaker 1: last year and actually, just fun I went back to

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Speaker 1: look at what they told me a year ago in

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Speaker 1: the FED notes in place, she was around four percent.

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Speaker 1: They told us this year this time we'd be at

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Speaker 1: two point two. It's in the eight. Not only do

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Speaker 1: they get it wrong, they got the direction wrong. So

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Speaker 1: my fear is they're going to continue using history as

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Speaker 1: a guy. They're going to continue to raise rates trying

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Speaker 1: to get the sad funds rate of inflation, and that

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Speaker 1: means they're gonna raise a lot longer than people think. Michael.

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Speaker 1: It's anything out of that that is really not being

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Speaker 1: probably considered at the moment, and some many people are overlooking,

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Speaker 1: which could either be a tailwind or even a headwind.

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Speaker 1: I think most investors, at least on the retail side,

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Speaker 1: seem to only think you can be long assets, and

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Speaker 1: I think one of the ways to play a very

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Speaker 1: volatible market we've had globally is to look at having,

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Speaker 1: you know, working some of the short sides, you know,

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Speaker 1: being able to look at something instalmity long this part

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Speaker 1: of the world. I'm gonna be short this part of

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Speaker 1: the world, um, you know. So for example, you know,

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Speaker 1: in the US, obviously we've been we've been short hil bonds.

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Speaker 1: We've got an attractive way to lower risk, and a

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Speaker 1: rising rate environment with a gift recession continues to be

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Speaker 1: kind of the name of the game. Lower quality companies

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Speaker 1: are gonna have some problems. I mentioned our our short

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Speaker 1: positions in Europe. But I think you can look at

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Speaker 1: high quality companies in the US, for example in healthcare,

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Speaker 1: and if you want to, you know, kind of lessen

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Speaker 1: the risk is along some of those asset classes and

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Speaker 1: then short maybe the index at large. I think again,

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Speaker 1: most individual investors and even some institutions don't really look

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Speaker 1: at a risk mitigation process. I think they think it's

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Speaker 1: gonna be long, always, risk always, and this's is just

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Speaker 1: not the time to do that, right, So rather than

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Speaker 1: just heads, you'd be aggressively short. I think for those

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Speaker 1: umm Barris turning bulls, something to think about is earnings.

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Speaker 1: Because even if you think that the FED will pause

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Speaker 1: in December, and it's reasonable if they do fifty fifty

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Speaker 1: there at four four plus and might be a time

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Speaker 1: to pause, but the hikes already in the system will

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Speaker 1: will definitely retard US growth over the next um year,

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Speaker 1: one would think, and thus earnings as well. So are

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Speaker 1: you expecting earnings to be a big disappointment. I think

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Speaker 1: they have to be. And just look at where we are.

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Speaker 1: Margins are pretty much all time highs. You're starting to

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Speaker 1: see fs inventory everywhere in the system, lessening demand. A

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Speaker 1: consumer in the US is not in grade shape. I've

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Speaker 1: heard that a lot. I see savings rates plummeting, credit

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Speaker 1: card debt skyrocketing, and you've got a strong dollar, So

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Speaker 1: I don't know how you know, and obviously the comps

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Speaker 1: and we hit basically the all time higher the market.

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Speaker 1: You know, the economy last fault, so I gotta think

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Speaker 1: these are are going to be particularly good when they're reported.

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Speaker 1: I think they've done a really good job of managing expectations.

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Speaker 1: A lot of companies are very good at that. But

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Speaker 1: the numbers are the numbers, and I can't imagine them

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Speaker 1: being real strong. Yeah. I mean, but it's gonna be

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Speaker 1: by industry group as well. And I'll tell you a

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Speaker 1: lot about whether people's you know, thesis about free cash

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Speaker 1: flow and value versus growth is bearing fruit. Yeah. Absolutely,

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Speaker 1: when it gets at the end of the day, you

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Speaker 1: really got to look at the companies that can deliver

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Speaker 1: in this type of environment are going to get rewarded.

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Speaker 1: The companies that cannot are gonna get really pounded. And

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Speaker 1: I think sometimes people get anchored on valuations. I look

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Speaker 1: at some of the tech names and people will say, well,

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Speaker 1: they're down fifty from where they were allowed November. We

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Speaker 1: got to buy them. I'll look and say, yeah, but

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Speaker 1: there's still up two or three times where they were

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Speaker 1: two and a half years ago. That's not really a

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Speaker 1: valuation called I still think some of these stocks have

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Speaker 1: gotten on the tech side way ahead of themselves. So

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Speaker 1: I think that still scares me because some of those

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Speaker 1: numbers still can come down because they're not they're not

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Speaker 1: growing at where they were that he's not going to

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Speaker 1: be there. So I think you're right, and they were

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Speaker 1: expensive in the first place. Yeah, sure, sure. But you know,

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Speaker 1: for people that are looking at sort of hiding out

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Speaker 1: in the storm, corporate bonds might might be a place

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Speaker 1: to look, particularly investment grade. And you know, even these

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Speaker 1: big tech companies, I mean they're they're they're in the

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Speaker 1: market borrowing. Would you agree that that is a viable space,

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Speaker 1: particularly if you can find companies that have more cash

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Speaker 1: on the balance sheet than debt. Yeah. Yeah, I think

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Speaker 1: it's through the company specific. I think for the last

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Speaker 1: couple of years, you pretty much could have bought anything

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Speaker 1: and it went up. And I think now it's really

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Speaker 1: happened is you've got to really look at balance sheet,

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Speaker 1: can gotta really look at what people have. And oftentimes

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Speaker 1: there's been an environment we haven't seen this in a

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Speaker 1: while where short term treasury is good, good place to be.

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Speaker 1: I mean we've been buying some CDs for clients. You know,

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Speaker 1: I can get you know one, you know, a one

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Speaker 1: year CD at four percent. That's not a bad place

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Speaker 1: to hang out either. So um, again, I think that

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Speaker 1: the dollar is a place that we like, we continue

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Speaker 1: to like it. We look at the dollar as as

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Speaker 1: a place that more money will flow to a leak

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Speaker 1: that continues to do well. But I think short term

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Speaker 1: treasury is a good place to go when you can

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Speaker 1: get you know, is a pretty good good spot without

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Speaker 1: credit risk. YEP, and fous of the short attend as well.

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Speaker 1: Thank you very much, indeed for that. That was Michael Landsbeck,

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Speaker 1: ce IO at lansmud Bennett Private Wealth Management,