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Speaker 1: Let's get to Robert Shine, ce io at Blankie Shine

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Speaker 1: Wealth Management. So Robert, nice to have you with us here.

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Speaker 1: Here's a line. Good drivers don't increase their speed as

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Speaker 1: they get closer to the destination. That's a comment from

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Speaker 1: Mike Faroli over at JP Morgan on the FED and inflation,

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Speaker 1: and it seems to be saying, look, we're getting there,

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Speaker 1: don't get reckless. Does that does that work for you? Well?

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Speaker 1: Thanks for having me. Um. Yeah, it's a great, great quote,

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Speaker 1: and that really sums up what we saw in the

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Speaker 1: last forts of trading here in the United States as well. Uh,

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Speaker 1: the markets reacted very strongly yesterday to the CPI report,

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Speaker 1: but it seems clear that the Fed will continue to

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Speaker 1: tighten aggressively. But the question is what you were inferring

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Speaker 1: is can they continue to do so well? Today's US

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Speaker 1: price or producer pricere index shows some moderation, and that's

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Speaker 1: month over month welcome sign of relief. We saw the

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Speaker 1: US markets actually close up on the heels of that,

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Speaker 1: and that's just it. I mean, if you think of

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Speaker 1: the fourth quarter coming into it, we have peak inflation

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Speaker 1: last year in one so those cops year over year

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Speaker 1: will be coming down but has the FED really gotten

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Speaker 1: a handle on it? Is the question, and do they

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Speaker 1: go full steam ahead next week? And the answer is yes,

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Speaker 1: they have too for credibility reasons. So seventy five basis

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Speaker 1: points is baked in, uh and I think a hundred

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Speaker 1: is questionablet is off the table. I think it's expectations

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Speaker 1: as usual. They said what they said last month is

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Speaker 1: going to go next week. But you know the thing is,

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Speaker 1: when we look at it, let's say the September print

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Speaker 1: when it comes out in October, the many intrinsic parts

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Speaker 1: of the CPI basket which are actually perhaps working in

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Speaker 1: the Fed's favor and just didn't show up in this

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Speaker 1: latest CPR report. And you know, we're not trying to

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Speaker 1: get at here is perhaps you know what we did.

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Speaker 1: We had this expectation, perhaps that the CPI both cool

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Speaker 1: and headline, was actually going to be lower than what

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Speaker 1: the endlests had been all the economis have been predicting.

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Speaker 1: And that's why we saw the baby being thrown out

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Speaker 1: with the bath of water. A bit of overreaction because

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Speaker 1: as we wait for the data to come in, we

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Speaker 1: will see peak inflation and actually we could be in

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Speaker 1: the middle of that right now. Time will tell, but

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Speaker 1: the question is peak hawkishness. Um, the FEDS plan has

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Speaker 1: to thread the needle. They said this clearly the last time,

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Speaker 1: that their plan is to basically destroy job openings before jobs.

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Speaker 1: And so early October we have the Jolts report coming

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Speaker 1: out and UH, and then later that week we have

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Speaker 1: the unemployment rate for the US UM And so October

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Speaker 1: is gonna be critical and pivotal post next week's FED meeting.

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Speaker 1: But I don't think we're hand too many surprises. I

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Speaker 1: think they're gonna have to talk tough and act tough,

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Speaker 1: if you will, for credibility purposes. But then all eyes

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Speaker 1: are on October. And then keep in mind we have

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Speaker 1: the third quarter reporting season for corporations at that time,

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Speaker 1: which could be a positive net up surprise because so

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Speaker 1: many expectations have been lowered. Yeah, we did see some

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Speaker 1: aggressive selling, but I think you have to say, even

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Speaker 1: with that, we're only back to where the market was

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Speaker 1: about a week ago. So it doesn't seem like the

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Speaker 1: market is totally convinced yet that things are going to

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Speaker 1: you know, go to hell in a handbasket. Um. However,

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Speaker 1: valuations still seem a little high for a FED funds

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Speaker 1: rate that is soon to be up around three and

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Speaker 1: a half to four percent. Yeah, but the day before

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Speaker 1: the CPAY report we saw the third largest purchase of

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Speaker 1: the triple queues two point six billion shares UM. So

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Speaker 1: there was some institution and a lot of conviction behind.

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Speaker 1: At some point in time, we're gonna see whether we

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Speaker 1: get to four percent or whether we have a rollover

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Speaker 1: or a change. Of course, a pivot, a pause, tie

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Speaker 1: will tell. But I think time is on the side

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Speaker 1: of the doves, if you will, or the bulls. Robert.

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Speaker 1: You know, the thing is when you see volatility as

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Speaker 1: we have done of late, I mean I think vix

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Speaker 1: is up to what about thereabouts we up, a lot

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Speaker 1: of people get tempted to start to perhaps rebalance that

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Speaker 1: portfolios and also perhaps over trade. Have you seen any

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Speaker 1: evidence of this? Well, for our clients were slow and steady.

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Speaker 1: We've kept some cash since last year on the sidelines.

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Speaker 1: We pick our opportunities to put it to work. But yeah,

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Speaker 1: we do see um. When volatility spikes, UH, retail investor

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Speaker 1: usually overreacts, they oversteer, and ultimately long term that's never

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Speaker 1: a good idea. You know, you mentioned in your notes

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Speaker 1: that the dollar is quite strong, and that is definitely

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Speaker 1: a headwind. With the dollar like this, you might think

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Speaker 1: under normal times that there would be central bank intervention,

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Speaker 1: of some sort of concerted action among central banks, but

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Speaker 1: it seems like the FED really needs a strong dollar

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Speaker 1: to fight inflation. And does that mean that they would

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Speaker 1: be less likely to embrace that. Each UH policymaker right

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Speaker 1: now is on their own. And as we're seeing the

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Speaker 1: FED going UH as strong as they can, as fast

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Speaker 1: as they can, I think they're setting it up for

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Speaker 1: bullets in the gun for later on if if we

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Speaker 1: do get a recession here in the US as well

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Speaker 1: as relative to other countries, I think Europe is struggling

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Speaker 1: right now, and that's why we're seeing a diversionce in

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Speaker 1: sort of policy. There's they're playing catch up, but it's

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Speaker 1: not US as strong as the US, and that's why

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Speaker 1: we're seeing the strong dollar. Yeah, this is just it,

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Speaker 1: That isn't it ultimately, And it's a it's a strange

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Speaker 1: one to keep, you know, to build up your ammunition

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Speaker 1: for future walls on economic slowdowns and the like, when

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Speaker 1: you could actually in in building up that, I mean,

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Speaker 1: they should send the country into shops slow down. Yeah,

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Speaker 1: historical perspective is always the best. It's nineteen forty in

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Speaker 1: the US, We've had CPI that's basically been above six

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Speaker 1: percent six times, and four times its resulted in a recession,

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Speaker 1: and in all six times, as soon as we saw

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Speaker 1: the peak in the inflation rate, we see the markets

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Speaker 1: higher year over year. So we advise our clients to

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Speaker 1: buy the peak of inflation. We see if a pause

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Speaker 1: happens with the FED, that's gonna basically resulting week dollar.

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Speaker 1: That makes emerging markets internationally look very interesting as well.

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Speaker 1: So that's that's another spot to be looking for opportunities,

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Speaker 1: not just yet, but when we look for opportunities to come,

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Speaker 1: that could be emerging markets look very interesting going forward

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Speaker 1: when we see a potential pause in an interested policy.

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Speaker 1: I saw a line from Cathy Wood and by the

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Speaker 1: way she's been buying. She is notorious for buying on

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Speaker 1: the dip, but she says deflation is in the pipeline.

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Speaker 1: Now I don't know how far out she means, but

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Speaker 1: do you do you do you see that we could

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Speaker 1: see that. I mean, we had fits and starts of

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Speaker 1: supply chain right, we're coming out of COVID and finally everyone,

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Speaker 1: all the retailers overdid it, and tomorrow we're gonna discretionary

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Speaker 1: spending if you will, or retail Uh, that's gonna tell

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Speaker 1: us each oil report, that's gonna tell us about discretionary spending,

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Speaker 1: which could show the signs of inflation eating away at

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Speaker 1: the kitchen table economics for the consumer. That will all

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Speaker 1: take care of itself. If we start seeing that play out,

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Speaker 1: the consumer will pull back. Therefore, we're gonna look at

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Speaker 1: earnings and we could see the FED overdoing it right,

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Speaker 1: and then that could cause a recession or even deflationary

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Speaker 1: long term spiral. Here, here's the bottom line. Every quarter

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Speaker 1: of a basis point rise will equal three hundred billion

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Speaker 1: dollars of basically adding to the US deficits. So we

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Speaker 1: potentially have escape velocity when it comes to long term

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Speaker 1: interest rates in this country. So we could have short

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Speaker 1: term interest rates go higher, but not for longer. So

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Speaker 1: just very very quickly, what do you are you positioning

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Speaker 1: yourself ahead of all this? And indeed has it evolved

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Speaker 1: short term? We continue like energy, especially at these levels

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Speaker 1: in the short term, I think the mackerel tail winds

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Speaker 1: are there. Uh. And then obviously healthcare with some dividend plays,

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Speaker 1: but again long term, as we get closer to the

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Speaker 1: four porcent of the tenure, I think corporates and longer

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Speaker 1: on the yield curve look very interesting, especially going into

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Speaker 1: potentially recession In all right, Roberts, thank you so much

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Speaker 1: for joining, as it was a pleasure to have you

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Speaker 1: on the program. Rubber to Shine there joining her c

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Speaker 1: I O at a blanky Shine Wealth Management